Saga Communications, Inc. Reports 2nd Quarter 2006 Results

Saga Communications, Inc. Reports 2nd Quarter 2006 Results

GROSSE POINTE FARMS, Mich., Aug. 8 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported that 2nd quarter 2006 net operating revenue increased 0.5% over the comparable period in 2005 to $37.8 million and operating income increased 3.8% to $8.9 million. Net income increased $.9 million to $4.0 million ($.19 per fully diluted share) for the quarter ended June 30, 2006 compared to $3.1 million ($.15 per fully diluted share) for the comparable period in 2005. For the same period, station operating expense decreased 1.1% to $26.4 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue decreased 0.7% to $37.0 million, operating income increased 2.8% to $8.7 million and station operating expense decreased 2.4% to $25.8 million.

For the six month period ended June 30, 2006, net operating revenue decreased 0.7% over the comparable period in 2005 to $68.9 million, operating income decreased 3.7% to $13.4 million and net income increased to $5.5 million ($.27 per fully diluted share) compared to $5.2 million ($.25 per fully diluted share) for the comparable period in 2005. For the same period, station operating expense decreased 0.6% to approximately $51.1 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the six months, net operating revenue decreased 2.2% to $67.6 million, operating income decreased 4.4% to $13.2 million and station operating expense decreased 2.5% to $49.9 million.

Capital expenditures in the second quarter of 2006 were $2.8 million of which $0.3 million were as a result of acquisitions, $0.6 million were related to digital radio and $0.5 million were related to digital television. For the six months capital expenditures were $4.7 million of which $0.7 million were as a result of acquisitions, $0.7 million were related to digital radio and $0.9 million were related to digital television. Currently, we expect capital expenditures for the year to be approximately $9.5 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 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 58 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. For additional information, contact us at (313) 886-7070 or visit our website at http://www.sagacommunications.com/ .

Saga's second quarter 2006 results conference call will be on Tuesday, August 8 at 2:00 p.m. The dial in number for domestic calls is 800/230-1059. For international callers the number is 612/332-0226. The call can be replayed for 7 days by calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 836137. 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 Six Month Periods
Ended June 30, 2006 and 2005
(amounts in 000's except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Operating Results
Net operating revenue $37,745 $37,554 $68,936 $69,384
Station operating expense 26,369 26,656 51,072 51,354
Corporate general and administrative 2,499 2,348 4,480 4,126
Operating income 8,877 8,550 13,384 13,904
Interest expense 2,355 1,806 4,632 3,429
Other (income) expense, net (215) 1,471 (570) 1,538
Income before income tax 6,737 5,273 9,322 8,937
Income tax expense 2,749 2,201 3,809 3,700
Net income $3,988 $3,072 $5,513 $5,237
Earnings per share:
Basic $0.19 $0.15 $0.27 $0.26
Diluted $0.19 $0.15 $0.27 $0.25
Weighted average common shares 20,575 20,388 20,528 20,508
Weighted average common shares and
common share equivalents 20,593 20,596 20,547 20,771

Free Cash Flow
Net Income $3,988 $3,072 $5,513 $5,237
Plus: Depreciation and amortization:
Station 1,950 2,138 3,881 4,233
Corporate 48 49 96 99
Deferred tax provision 1,311 1,029 1,771 1,590
Other (income) expense, net (215) 1,471 (570) 1,538
Non-cash compensation 369 84 599 109
Less: Capital expenditures (2,745) (3,121) (4,712) (7,388)
Free cash flow $4,706 $4,722 $6,578 $5,418

Balance Sheet Data
Working capital $21,755 $23,673
Net fixed assets 70,337 73,301
Net intangible assets and other
assets 208,203 205,654
Total assets 316,783 317,868
Long term debt (including current
portion of $0 and $1,061,
respectively) 136,911 155,911
Stockholders' equity 131,210 120,223

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
June 30, 2006 and 2005
(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
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating
revenue $37,745 $37,554 $37,026 $37,286 $37,745 $38,000
Station operating
expense 26,369 26,656 25,801 26,447 26,369 27,030
Corporate general
and
administrative 2,499 2,348 2,499 2,348 2,499 2,348
Operating income 8,877 8,550 $8,726 $8,491 8,877 8,622
Interest expense 2,355 1,806 2,355 1,894
Other (income)
expense, net (215) 1,471 (215) 1,466
Income tax expense 2,749 2,201 2,749 2,196
Net income $3,988 $3,072 $3,988 $3,066
Earnings per
share:
Basic $0.19 $0.15 $0.19 $0.15
Diluted $0.19 $0.15 $0.19 $0.15

As-Reported Same Station Pro Forma (1)
Radio Segment Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating
revenue $33,418 $33,605 $32,699 $33,337 $33,418 $34,051
Station operating
expense 22,960 23,316 22,392 23,107 22,960 23,690
Operating income $10,458 $10,289 $10,307 $10,230 $10,458 $10,361

As-Reported Same Station Pro Forma (1)
Three Months Three Months Three Months
Television Segment Ended Ended Ended
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating revenue $4,327 $3,949 $4,327 $3,949 $4,327 $3,949
Station operating
expense 3,409 3,340 3,409 3,340 3,409 3,340
Operating income $918 $609 $918 $609 $918 $609

As-Reported Same Station Pro Forma (1)
Three Months Three Months Three Months
Ended Ended Ended
Depreciation and June 30, June 30, June 30,
Amortization by Segment 2006 2005 2006 2005 2006 2005

Radio Segment $1,536 $1,716 $1,426 $1,669 $1,536 $1,808
Television Segment 414 422 414 422 414 422
Corporate and Other 48 49 48 49 48 49
$1,998 $2,187 $1,888 $2,140 $1,998 $2,279

(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
For the Six Months Ended
June 30, 2006 and 2005
(amounts in 000's except per share data)
(Unaudited)

As-Reported Same Station Pro Forma (1)
Consolidated Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating
revenue $68,936 $69,384 $67,604 $69,116 $68,936 $70,397
Station operating
expense 51,072 51,354 49,889 51,145 51,072 52,311
Corporate general
and
administrative 4,480 4,126 4,480 4,126 4,480 4,126
Operating income $13,384 $13,904 $13,235 $13,845 $13,384 $13,960
Interest expense 4,632 3,429 4,632 3,649
Other (income)
expense, net (570) 1,538 (570) 1,523
Income tax expense 3,809 3,700 3,809 3,643
Net income $5,513 $5,237 $5,513 $5,145
Earnings per share:
Basic $0.27 $0.26 $0.27 $0.25
Diluted $0.27 $0.25 $0.27 $0.25

As-Reported Same Station Pro Forma (1)
Radio Segment Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating
revenue $60,698 $61,977 $59,366 $61,709 $60,698 $62,990
Station operating
expense 44,375 44,725 43,192 44,516 44,375 45,682
Operating income $16,323 $17,252 $16,174 $17,193 $16,323 $17,308

As-Reported Same Station Pro Forma (1)
Television Segment Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005

Net operating revenue $8,238 $7,407 $8,238 $7,407 $8,238 $7,407
Station operating
expense 6,697 6,629 6,697 6,629 6,697 6,629
Operating income $1,541 $778 $1,541 $778 $1,541 $778

As-Reported Same Station Pro Forma (1)
Six Months Ended Six Months Ended Six Months Ended
Depreciation and June 30, June 30, June 30,
Amortization by Segment 2006 2005 2006 2005 2006 2005

Radio Segment $3,075 $3,369 $2,825 $3,322 $3,075 $3,599
Television Segment 806 864 806 864 806 864
Corporate and Other 96 99 96 99 96 99
$3,977 $4,332 $3,727 $4,285 $3,977 $4,562

(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 Proforma Information
As of June 30, 2006
(amounts in 000's except per share data)
(Unaudited)

Pro Forma (1) Pro Forma (1)
Consolidated Three Months Ended Three Months Ended
March 31, June 30,
2006 2005 2006 2005

Net operating revenue $31,191 $32,397 $37,745 $38,000
Station operating expense 24,703 25,281 26,369 27,030
Corporate general and
administrative 1,981 1,778 2,499 2,348
Impairment of intangible assets - - - -
Operating income 4,507 5,338 8,877 8,622
Interest expense 2,277 1,755 2,355 1,894
Other (income) expense, net (355) 57 (215) 1,466
Income tax expense 1,060 1,447 2,749 2,196
Net income $1,525 $2,079 $3,988 $3,066
Earnings per share:
Basic $0.07 $0.10 $0.19 $0.15
Diluted $0.07 $0.10 $0.19 $0.15

Pro Forma (1) Pro Forma (1)
Consolidated Three Months Ended Three Months Ended
2005 2005

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)
Radio Segment Three Months Ended Three Months Ended
March 31, June 30,
2006 2005 2006 2005

Net operating revenue $27,280 $28,939 $33,418 $34,051
Station operating expense 21,415 21,992 22,960 23,690
Impairment of intangible
assets - - - -
Operating income $5,865 $6,947 $10,458 $10,361

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

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
March 31, June 30,
Television Segment 2006 2005 2006 2005

Net operating revenue $3,911 $3,458 $4,327 $3,949
Station operating expense 3,288 3,289 3,409 3,340
Impairment of intangible assets - - - -
Operating income $623 $169 $918 $609

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

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
Depreciation and March 31, June 30,
Amortization by Segment 2006 2005 2006 2005

Radio Segment $1,539 $1,791 $1,536 $1,808
Television Segment 392 442 414 422
Corporate and Other 48 50 48 49
$1,979 $2,283 $1,998 $2,279

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
Depreciation and September 30, December 31,
Amortization by Segment 2005 2005

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
June 30, 2006 and 2005
(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
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $37,745 ($719) $37,026
Station operating
expense 26,369 (568) 25,801
Corporate general
and administrative 2,499 - 2,499
Operating income $8,877 ($151) $8,726

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Radio Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $33,418 ($719) $32,699
Station operating
expense 22,960 (568) 22,392
Operating income $10,458 ($151) $10,307

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Television Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $4,327 - $4,327
Station operating
expense $3,409 - $3,409
Operating income $918 - $918

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
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $37,554 ($268) $37,286
Station operating
expense 26,656 (209) 26,447
Corporate general
and administrative 2,348 - 2,348
Operating income $8,550 ($59) $8,491

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Radio Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $33,605 ($268) $33,337
Station operating
expense 23,316 (209) 23,107
Operating income $10,289 ($59) $10,230

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Television Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $3,949 - $3,949
Station operating
expense $3,340 - $3,340
Operating income $609 - $609

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Six Months Ended
June 30, 2006 and 2005
(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
Six Months and Dispositions Six Months
Consolidated Ended Not Included in Ended
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $68,936 ($1,332) $67,604
Station operating
expense 51,072 (1,183) 49,889
Corporate general
and administrative 4,480 - 4,480
Operating income $13,384 ($149) $13,235

Adjustment
As-Reported For Acquisitions Same Station
Six Months and Dispositions Six Months
Radio Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $60,698 ($1,332) $59,366
Station operating
expense 44,375 (1,183) 43,192
Operating income $16,323 ($149) $16,174

Adjustment
As-Reported For Acquisitions Same Station
Six Months and Dispositions Six Months
Television Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2006 Period 2006

Net operating
revenue $8,238 $0 $8,238
Station operating
expense 6,697 0 6,697
Operating income $1,541 $0 $1,541

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

Adjustment
As-Reported For Acquisitions Same Station
Six Months and Dispositions Six Months
Consolidated Ended Not Included in Ended
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $69,384 ($268) $69,116
Station operating
expense 51,354 (209) 51,145
Corporate general
and administrative 4,126 - 4,126
Operating income $13,904 ($59) $13,845

Adjustment
As-Reported For Acquisitions Same Station
Six Months and Dispositions Six Months
Radio Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $61,977 ($268) $61,709
Station operating
expense 44,725 (209) 44,516
Operating income $17,252 ($59) $17,193

Adjustment
As-Reported For Acquisitions Same Station
Six Months and Dispositions Six Months
Television Segment Ended Not Included in Ended
June 30, Entire Comparable June 30,
2005 Period 2005

Net operating
revenue $7,407 $0 $7,407
Station operating
expense 6,629 0 6,629
Operating income $778 $0 $778

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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