Saga Communications, Inc. Reports 4th Quarter and Year End 2005 Results

Saga Communications, Inc. Reports 4th Quarter and Year End 2005 Results

GROSSE POINTE FARMS, Mich., Feb. 28 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported net operating revenue for the twelve month period increased 4.6% over the comparable period in 2004 to $140.8 million, operating income decreased 13.9% to $27.0 million and station operating expense increased 10.0% to $104.4 million (station operating expense includes depreciation and amortization attributable to the stations). Net income decreased 33.3% to $10.6 million ($.51 per fully diluted share) for the year ended December 31, 2005 compared to $15.8 million ($.75 per fully diluted share) for 2004. Free cash flow increased 2.7% to $16.6 million for the year. On a same station basis for the year, net operating revenue decreased 0.9% to $129.7 million, operating income decreased 16.9% to $25.3 million and station operating expense increased 3.2% to $95.1 million.

For the quarter ended December 31, 2005, net operating revenue decreased 1.8% over the comparable period in 2004 to $35.5 million, operating income decreased 40.0% to $5.2 million and station operating expense increased 7.8% to $26.9 million (station operating expense includes depreciation and amortization attributable to the stations). Net income decreased 54.3% to $1.9 million ($.09 per fully diluted share) for the quarter ended December 31, 2005 compared to $4.1 million ($.20 per fully diluted share) for 2004. Free cash flow increased 29.4% to $5.2 million for the quarter. On a same station basis for the quarter, net operating revenue decreased 7.2% to $33.5 million, operating income decreased 42.1% to $5.0 million and station operating expense increased 0.7% to $25.2 million.

The Company recorded $3.9 million and $2.2 million in gross political revenue for the twelve and three month periods ended December 31, 2004 compared to $561 thousand and $326 thousand for the comparable periods in 2005. On a same station basis, excluding political, net revenue increased 1.1% for the year and decreased 2.8% for the quarter due to a $1.3 million decrease in automotive and wireless advertising.

The decrease in net income for the twelve month period reflects a $1.2 million impairment charge related to the goodwill and FCC license values recorded a charge of $2.7 million in losses on the disposal of assets including the disposal of a television tower, and the sale of land in Columbus, and a $3.1 million increase in interest expense. For the quarter ended December 31, 2005 the impairment charge is the same as the full year and the losses incurred on the disposal of assets was $1.2 million and the increase in interest expense was $0.8 million. The sale of the Columbus land resulted in a $0.7 million tax benefit in the 4th quarter as the gain for tax purposes was offset against a capital loss carry forward that was expiring as of the end of the year.

Capital expenditures in the fourth quarter of 2005 were approximately $1.4 million with approximately $0.1 million being spent as a result of acquisitions. For the 2005 fiscal year total capital expenditures were approximately $10.4 million with approximately $2.2 million being spent as a result of acquisitions.

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 30 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. The closing of this transaction is subject to receiving FCC approval. For additional information, contact us at (313) 886-7070 or visit our website at http://www.sagacommunications.com/ .

Saga's fourth quarter and year end 2005 results conference call will be on Tuesday, February 28 at 2:00 p.m. The dial in number for domestic calls is 877/209-0397. For international callers the number is 612/332-1213. The call can be replayed for 7 days by calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 818378. 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, 2005 and 2004
(amounts in 000's except per share data)

Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Operating Results
Net Operating Revenue $35,445 $36,082 $140,790 $134,644
Station operating expense 26,947 24,990 104,411 94,914
Corporate general and administrative 2,114 2,405 8,174 8,343
Impairment of intangible assets 1,168 - 1,168 -
Operating income 5,216 8,687 27,037 31,387
Interest expense 2,075 1,306 7,586 4,522
Other (income) expense, net 1,165 (251) 2,668 32
Income before income tax 1,976 7,632 16,783 26,833
Income tax expense 87 3,500 6,217 10,991
Net income $1,889 $4,132 $10,566 $15,842
Earnings per share
Basic $0.09 $0.20 $0.52 $0.76
Diluted $0.09 $0.20 $0.51 $0.75
Weighted average common shares 20,459 20,635 20,482 20,752
Weighted average common shares and
common shares equivalents 20,546 20,983 20,675 21,167

Free Cash Flow
Net Income $1,889 $4,132 $10,566 $15,842
Plus: Depreciation and amortization:
Station 2,350 1,878 8,841 7,054
Corporate 50 50 199 198
Deferred tax provision (45) 1,063 3,590 4,137
Impairment of intangible
assets 1,168 - 1,168 -
Other (income) expense, net 1,165 (251) 2,668 32
Less: Capital expenditures (1,372) (2,849) (10,426) (11,098)
Free cash flow $5,205 $4,023 $16,606 $16,165

Balance Sheet Data
Working capital $22,618 $21,778
Net fixed assets 69,669 66,364
Net intangible assets and other
assets 205,434 176,166
Total assets 318,865 280,154
Long term debt (including current
portion of $7,000 and $0,
respectively) 148,911 121,161
Stockholders' equity 125,824 117,225

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
December 31, 2005 and 2004
(amounts in 000's except per share data)
(Unaudited)

As-Reported Same Station Pro Forma (1)
Consolidated Three Months Ended Three Months Ended Three Months Ended
December 31, December 31, December 31,
2005 2004 2005 2004 2005 2004

Net operating
revenue $35,445 $36,082 $33,483 $36,082 $35,445 $38,045
Station operating
expense 26,947 24,990 25,167 24,990 26,947 26,526
Corporate general
and
administrative 2,114 2,405 2,114 2,405 2,114 2,405
Impairment of
intangible assets 1,168 - 1,168 - 1,168 -
Operating income 5,216 8,687 $5,034 $8,687 5,216 9,114
Interest expense 2,075 1,306 2,075 1,639
Other (income)
expense, net 1,165 (251) 1,165 (259)
Income tax expense 87 3,500 87 3,539
Net income $1,889 $4,132 $1,889 $4,195
Earnings per
share:
Basic $0.09 $0.20 $0.09 $0.20
Diluted $0.09 $0.20 $0.09 $0.20

As-Reported Same Station Pro Forma (1)
Radio Segment Three Months Ended Three Months Ended Three Months Ended
December 31, December 31, December 31,
2005 2004 2005 2004 2005 2004

Net operating
revenue $31,357 $32,194 $29,395 $32,194 $31,357 $34,157
Station operating
expense 23,514 21,654 21,734 21,654 23,514 23,190
Impairment of
intangible assets 890 - 890 - 890 -
Operating income $6,953 $10,540 $6,771 $10,540 $6,953 $10,967

As-Reported Same Station Pro Forma (1)
Three Months Three Months Three Months
Television Segment Ended Ended Ended
December 31, December 31, December 31,
2005 2004 2005 2004 2005 2004

Net operating revenue $4,088 $3,888 $4,088 $3,888 $4,088 $3,888
Station operating
expense 3,433 3,336 3,433 3,336 3,433 3,336
Impairment of intangible
assets 278 - 278 - 278 -
Operating income $377 $552 $377 $552 $377 $552

As-Reported Same Station Pro Forma (1)
Three Months Three Months Three Months
Ended Ended Ended
Depreciation and
amortization December 31, December 31, December 31,
by segment 2005 2004 2005 2004 2005 2004

Radio Segment $1,894 $1,424 $1,468 $1,424 $1,894 $1,837
Television Segment 456 454 456 454 456 454
Corporate and Other 50 50 50 50 50 50
$2,400 $1,928 $1,974 $1,928 $2,400 $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 Supplemental Financial Data
For the Twelve Months Ended
December 31, 2005 and 2004
(amounts in 000's except per share data)
(Unaudited)

As-Reported Same Station
Consolidated Twelve Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004

Net operating revenue $140,790 $134,644 $129,696 $130,880
Station operating expense 104,411 94,914 95,076 92,127
Corporate general and
administrative 8,174 8,343 8,174 8,343
Impairment of intangible assets 1,168 - 1,168 -
Operating income 27,037 31,387 $25,278 $30,410
Interest expense 7,586 4,522
Other expense, net 2,668 32
Income tax expense 6,217 10,991
Net income $10,566 $15,842
Earnings per share:
Basic $0.52 $0.76
Diluted $0.51 $0.75

As-Reported Same Station
Radio Segment Twelve Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004

Net operating revenue $125,597 $120,191 $114,503 $116,427
Station operating expense 90,967 82,053 81,632 79,266
Impairment of intangible assets 890 - 890 -
Operating income $33,740 $38,138 $31,981 $37,161

As-Reported Same Station
Twelve Months Ended Twelve Months Ended
Television Segment December 31, December 31,
2005 2004 2005 2004
Net operating
revenue $15,193 $14,453 $15,193 $14,453
Station operating
expense 13,444 12,861 13,444 12,861
Impairment of
intangible assets 278 - 278 -
Operating income $1,471 $1,592 $1,471 $1,592

As-Reported Same Station
Twelve Months Ended Twelve Months Ended
Depreciation and December 31, December 31,
amortization 2005 2004 2005 2004
by segment

Radio Segment $7,075 $5,337 $5,448 $5,142
Television Segment 1,766 1,717 1,766 1,717
Corporate and Other 199 198 199 198
$9,040 $7,252 $7,413 $7,057

Pro Forma (1)
Consolidated Twelve Months Ended
December 31,
2005 2004

Net operating revenue $141,803 $142,743
Station operating expense 105,368 101,741
Corporate general and
administrative 8,174 8,343
Impairment of intangible assets 1,168 -
Operating income 27,093 32,659
Interest expense 7,806 5,854
Other expense, net 2,653 (1)
Income tax expense 6,160 10,988
Net income $10,474 $15,818
Earnings per share:
Basic $0.51 $0.75
Diluted $0.50 $0.74

Pro Forma (1)
Radio Segment Twelve Months Ended
December 31,
2005 2004

Net operating revenue $126,610 $128,290
Station operating expense 91,924 88,880
Impairment of intangible assets 890 -
Operating income $33,796 $39,410

Pro Forma (1)
Television Segment Twelve Months Ended
December 31,
2005 2004

Net operating revenue $15,193 $14,453
Station operating expense 13,444 12,861
Impairment of intangible assets 278 -
Operating income $1,471 $1,592

Pro Forma (1)
Twelve Months Ended
Depreciation and December 31,
amortization by segment 2005 2004

Radio Segment $7,305 $7,152
Television Segment 1,766 1,717
Corporate and Other 199 198
$9,270 $9,067

(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 December 31, 2005
(amounts in 000's except per share data)
(Unaudited)

Pro Forma (1) Pro Forma (1)
Consolidated Three Months Three Months
Ended Ended
March 31, June 30,
2005 2004 2005 2004

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
Impairment of intangible assets - - - -
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)
Radio Segment Three Months Three Months
Ended Ended
March 31, June 30,
2005 2004 2005 2004

Net operating revenue $28,939 $28,451 $34,051 $33,257
Station operating expense 21,992 21,272 23,690 22,137
Impairment of intangible assets - - - -
Operating income $6,947 $7,179 $10,361 $11,120

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Ended Ended
March 31, June 30,
Television Segment 2005 2004 2005 2004

Net operating revenue $3,458 $3,154 $3,949 $3,765
Station operating expense 3,289 3,036 3,340 3,264
Impairment of intangible assets - - - -
Operating income $169 $118 $609 $501

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Ended Ended
Depreciation and amortization March 31, June 30,
by segment 2005 2004 2005 2004

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)
Consolidated Three Months Three Months
Ended Ended
September 30, December 31,
2005 2004 2005 2004

Net operating revenue $35,961 $36,071 $35,445 $38,045
Station operating expense 26,110 25,506 26,947 26,526
Corporate general and
administrative 1,934 1,927 2,114 2,405
Impairment of intangible assets - - 1,168 -
Operating income 7,917 8,638 5,216 9,114
Interest expense 2,082 1,369 2,075 1,639
Other (income) expense, net (35) 202 1,165 (259)
Income tax expense 2,430 2,759 87 3,539
Net income $3,440 $4,308 $1,889 $4,195
Earnings per share:
Basic $0.17 $0.20 $0.09 $0.20
Diluted $0.17 $0.20 $0.09 $0.20

Pro Forma (1) Pro Forma (1)
Radio Segment Three Months Three Months
Ended Ended
September 30, December 31,
2005 2004 2005 2004

Net operating revenue $32,263 $32,425 $31,357 $34,157
Station operating expense 22,728 22,281 23,514 23,190
Impairment of intangible assets - - 890 -
Operating income $9,535 $10,144 $6,953 $10,967

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Ended Ended
September 30, December 31,
Television Segment 2005 2004 2005 2004

Net operating revenue $3,698 $3,646 $4,088 $3,888
Station operating expense 3,382 3,225 3,433 3,336
Impairment of intangible assets - - 278 -
Operating income $316 $421 $377 $552

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Ended Ended
Depreciation and amortization September 30, December 31,
by segment 2005 2004 2005 2004

Radio Segment $1,812 $1,785 $1,894 $1,837
Television Segment 446 422 456 454
Corporate and Other 50 49 50 50
$2,308 $2,256 $2,400 $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
December 31, 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
Consolidated Ended Not Included in Ended
December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $35,445 ($1,962) $33,483
Station operating expense 26,947 (1,780) 25,167
Corporate general and
administrative 2,114 - 2,114
Impairment of intangible
assets 1,168 - 1,168
Operating income $5,216 ($182) $5,034

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Radio Segment Ended Not Included in Ended
December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $31,357 ($1,962) $29,395
Station operating expense 23,514 (1,780) 21,734
Impairment of
intangible assets 890 - 890
Operating income $6,953 ($182) $6,771

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Television Segment Ended Not Included in Ended
December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $4,088 - $4,088
Station operating expense $3,433 - $3,433
Impairment of
intangible assets $278 - $278
Operating income $377 - $377

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Consolidated Ended Not Included in Ended
December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $36,082 - $36,082
Station operating expense 24,990 - 24,990
Corporate general and
administrative 2,405 - 2,405
Impairment of
intangible assets - - -
Operating income $8,687 - $8,687

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Radio Segment Ended Not Included in Ended
December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $32,194 - $32,194
Station operating expense 21,654 - 21,654
Impairment of
intangible assets - - -
Operating income $10,540 - $10,540

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Television Segment Ended Not Included in Ended
December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $3,888 - $3,888
Station operating expense $3,336 - $3,336
Impairment of
intangible assets - - -
Operating income $552 - $552

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Twelve Months Ended
December 31, 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
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Consolidated December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $140,790 ($11,094) $129,696
Station operating expense 104,411 (9,335) 95,076
Corporate general and
administrative 8,174 - 8,174
Impairment of intangible
assets 1,168 - 1,168
Operating income $27,037 ($1,759) $25,278

Adjustment
As-Reported For Acquisitions Same Station
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Radio Segment December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $125,597 ($11,094) $114,503
Station operating expense 90,967 (9,335) 81,632
Impairment of intangible
assets 890 - 890
Operating income $33,740 ($1,759) $31,981

Adjustment
As-Reported For Acquisitions Same Station
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Television Segment December 31, Entire Comparable December 31,
2005 Period 2005

Net operating revenue $15,193 - $15,193
Station operating expense 13,444 - 13,444
Impairment of intangible
assets 278 - 278
Operating income $1,471 - $1,471

Adjustment
As-Reported For Acquisitions Same Station
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Consolidated December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $134,644 ($3,764) $130,880
Station operating expense 94,914 (2,787) 92,127
Corporate general and
administrative 8,343 - 8,343
Impairment of intangible
assets - - -
Operating income $31,387 ($977) $30,410

Adjustment
As-Reported For Acquisitions Same Station
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Radio Segment December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $120,191 ($3,764) $116,427
Station operating expense 82,053 (2,787) 79,266
Impairment of intangible
assets - - -
Operating income $38,138 ($977) $37,161

Adjustment
As-Reported For Acquisitions Same Station
Twelve Months and Dispositions Twelve Months
Ended Not Included in Ended
Television Segment December 31, Entire Comparable December 31,
2004 Period 2004

Net operating revenue $14,453 - $14,453
Station operating expense 12,861 - 12,861
Impairment of intangible
assets - - -
Operating income $1,592 - $1,592

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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