Saga Communications, Inc. Reports 1st Quarter 2006 Results

Saga Communications, Inc. Reports 1st Quarter 2006 Results

GROSSE POINTE FARMS, Mich., May 4 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported net operating revenue for the three month period decreased 2.0% from the comparable period in 2005 to $31.2 million, operating income decreased 15.8% to $4.5 million and station operating expense was approximately flat with the same period last year at $24.7 million (station operating expense includes depreciation and amortization attributable to the stations). Net income decreased 29.6% to $1.5 million ($.07 per fully diluted share) for the quarter ended March 31, 2006 compared to $2.2 million ($.10 per fully diluted share) for 2005. Free cash flow increased to $1.9 million for the quarter from $696 thousand for the comparable period last year. On a same station basis for the year, net operating revenue decreased 3.9% to $30.6 million, operating income decreased 15.8% to $4.5 million and station operating expense decreased 2.5% to $24.1 million.

Capital expenditures in the first quarter of 2006 were approximately $2.0 million with approximately $0.4 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 2006 and 2005 acquisitions and dispositions occurred as of January 1, 2005.

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 first quarter 2006 results conference call will be on Thursday, May 4 at 10:00 a.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 824873. 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 March 31, 2006 and 2005
(amounts in 000's except per share data)

Three Months Ended
March 31,
2006 2005
Operating Results
Net Operating Revenue $31,191 $31,830
Station operating expense 24,703 24,698
Corporate general and administrative 1,981 1,778
Operating income 4,507 5,354
Interest expense 2,277 1,623
Other (income) expense, net (355) 67
Income before income tax 2,585 3,664
Income tax expense 1,060 1,499
Net income $1,525 $2,165
Earnings per share
Basic $0.07 $0.10
Diluted $0.07 $0.10
Weighted average common shares 20,480 20,631
Weighted average common shares and
common shares equivalents 20,503 20,941

Free Cash Flow
Net Income $1,525 $2,165
Plus: Depreciation and amortization:
Station 1,931 2,095
Corporate 48 50
Deferred tax provision 460 561
Other (income) expense, net (355) 67
Non-cash compensation 230 25
Less: Capital expenditures (1,967) (4,267)
Free cash flow $1,872 $696

Balance Sheet Data
Working capital $24,222 $17,141
Net fixed assets 69,621 71,268
Net intangible assets and other assets 206,116 196,568
Total assets 312,061 302,243
Long term debt (including current
portion of $0 and $1,061, respectively) 141,911 140,911
Stockholders' equity 127,610 118,665

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
March 31, 2006 and 2005
(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
March 31, March 31, March 31,
2006 2005 2006 2005 2006 2005
Consolidated
Net operating
revenue $31,191 $31,830 $30,577 $31,830 $31,191 $32,397
Station operating
expense 24,703 24,698 24,087 24,698 24,703 25,281
Corporate general
and administrative 1,981 1,778 1,981 1,778 1,981 1,778
Operating income 4,507 5,354 $4,509 $5,354 4,507 5,338
Interest expense 2,277 1,623 2,277 1,755
Other expense, net (355) 67 (355) 57
Income tax expense 1,060 1,499 1,060 1,447
Net income $1,525 $2,165 $1,525 $2,079
Earnings per share:
Basic $0.07 $0.10 $0.07 $0.10
Diluted $0.07 $0.10 $0.07 $0.10

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
2006 2005 2006 2005 2006 2005
Radio Segment
Net operating
revenue $27,280 $28,372 $26,666 $28,372 $27,280 $28,939
Station operating
expense 21,415 21,409 20,799 21,409 21,415 21,992
Operating income $5,865 $6,963 $5,867 $6,963 $5,865 $6,947

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
2006 2005 2006 2005 2006 2005
Television Segment
Net operating
revenue $3,911 $3,458 $3,911 $3,458 $3,911 $3,458
Station operating
expense 3,288 3,289 3,288 3,289 3,288 3,289
Operating income $623 $169 $623 $169 $623 $169

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
2006 2005 2006 2005 2006 2005
Depreciation and
amortization
by segment
Radio Segment $1,539 $1,653 $1,399 $1,653 $1,539 $1,791
Television Segment 392 442 392 442 392 442
Corporate and
Other 48 50 48 50 48 50
$1,979 $2,145 $1,839 $2,145 $1,979 $2,283

(1) Pro Forma results assume all acquisitions and dispositions in 2005 and 2006 occurred as of January 1, 2005.

Saga Communications, Inc.
Selected Supplemental Financial Data
Quarterly Pro Forma Information
March 31, 2006 and 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,
2006 2005 2005
Consolidated
Net operating revenue $31,191 $32,397 $38,000
Station operating expense 24,703 25,281 27,030
Corporate general and
administrative 1,981 1,778 2,348
Impairment of intangible assets - - -
Operating income 4,507 5,338 8,622
Interest expense 2,277 1,755 1,894
Other (income) expense, net (355) 57 1,466
Income tax expense 1,060 1,447 2,196
Net income $1,525 $2,079 $3,066
Earnings per share:
Basic $0.07 $0.10 $0.15
Diluted $0.07 $0.10 $0.15

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2006 2005 2005
Radio Segment
Net operating revenue $27,280 $28,939 $34,051
Station operating expense 21,415 21,992 23,690
Impairment of intangible assets - - -
Operating income $5,865 $6,947 $10,361

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2006 2005 2005
Television Segment
Net operating revenue $3,911 $3,458 $3,949
Station operating expense 3,288 3,289 3,340
Impairment of intangible assets - - -
Operating income $623 $169 $609

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2006 2005 2005
Depreciation and amortization
by segment
Radio Segment $1,539 $1,791 $1,808
Television Segment 392 442 422
Corporate and Other 48 50 49
$1,979 $2,283 $2,279

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31,
2005 2005
Consolidated
Net operating revenue $35,961 $35,445
Station operating expense 26,110 26,947
Corporate general and administrative 1,934 2,114
Impairment of intangible assets - 1,168
Operating income 7,917 5,216
Interest expense 2,082 2,075
Other (income) expense, net (35) 1,165
Income tax expense 2,430 87
Net income $3,440 $1,889
Earnings per share:
Basic $0.17 $0.09
Diluted $0.17 $0.09

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31,
2005 2005
Radio Segment
Net operating revenue $32,263 $31,357
Station operating expense 22,728 23,514
Impairment of intangible assets - 890
Operating income $9,535 $6,953

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31,
2005 2005
Television Segment
Net operating revenue $3,698 $4,088
Station operating expense 3,382 3,433
Impairment of intangible assets - 278
Operating income $316 $377

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31,
2005 2005
Depreciation and amortization
by segment
Radio Segment $1,812 $1,894
Television Segment 446 456
Corporate and Other 50 50
$2,308 $2,400

(1) Pro Forma results assume all acquisitions and dispositions in 2005 and 2006 occurred as of January 1, 2005.

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Three Months Ended
March 31, 2006 and 2005
(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
March 31, Entire Comparable March 31,
2006 Period 2006
Consolidated
Net operating revenue $31,191 ($614) $30,577
Station operating expense 24,703 (616) 24,087
Corporate general and
administrative 1,981 - 1,981
Operating income $4,507 $2 $4,509

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
March 31, Entire Comparable March 31,
2006 Period 2006
Radio Segment
Net operating revenue $27,280 ($614) $26,666
Station operating expense 21,415 (616) 20,799
Operating income $5,865 $2 $5,867

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
March 31, Entire Comparable March 31,
2006 Period 2006
Television Segment
Net operating revenue $3,911 $- $3,911
Station operating expense 3,288 - 3,288
Operating income $623 $- $623

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
March 31, Entire Comparable March 31,
2005 Period 2005
Consolidated
Net operating revenue $31,830 $- $31,830
Station operating expense 24,698 - 24,698
Corporate general and
administrative 1,778 - 1,778
Operating income $5,354 $- $5,354

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
March 31, Entire Comparable March 31,
2005 Period 2005
Radio Segment
Net operating revenue $28,372 $- $28,372
Station operating expense 21,409 - 21,409
Operating income $6,963 $- $6,963

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
March 31, Entire Comparable March 31,
2005 Period 2005
Television Segment
Net operating revenue $3,458 $- $3,458
Station operating expense 3,289 - 3,289
Operating income $169 $- $169

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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