International Entertainment News: Saga Communications, Inc. Reports 3rd Quarter 2006 Results

Saga Communications, Inc. Reports 3rd Quarter 2006 Results

GROSSE POINTE FARMS, Mich., Nov. 2 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported that 3rd quarter 2006 net operating revenue decreased $0.2 million over the comparable period in 2005 to $35.8 million and operating income decreased 1.4% to $7.8 million. Net income decreased $0.2 million to $3.3 million ($.16 per fully diluted share) for the quarter ended September 30, 2006 compared to $3.4 million ($.17 per fully diluted share) for the comparable period in 2005. For the same period, station operating expense decreased 1.3% to $25.8 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue decreased 0.5% to $35.8 million, operating income remained flat at $7.9 million and station operating expense decreased 1.7% to $25.7 million.

For the nine month period ended September 30, 2006, net operating revenue decreased 0.6% over the comparable period in 2005 to $104.7 million, operating income decreased 2.9% to $21.2 million and net income increased 1.1% to $8.8 million ($.43 per fully diluted share) compared to $8.7 million ($.42 per fully diluted share) for the comparable period in 2005. For the same period, station operating expense decreased 0.8% to approximately $76.8 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the nine months, net operating revenue decreased 1.5% to $102.7 million, operating income decreased 3.0% to $21.0 million and station operating expense decreased 2.1% to $75.0 million.

Capital expenditures in the third quarter of 2006 were $2.1 million of which $0.7 million were as a result of acquisitions, $0.1 million were related to digital radio and $0.2 million were related to digital television. For the nine months, capital expenditures were $6.8 million of which $1.4 million were as a result of acquisitions, $0.8 million were related to digital radio and $1.1 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 tables disclose "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 59 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. Saga has also entered into an agreement to buy an AM station and a FM station serving the Cortland, NY radio market. For additional information, contact us at (313) 886-7070 or visit our website at http://www.sagacommunications.com/ .

Saga's third quarter 2006 results conference call will be on Thursday, November 2 at 2:00 p.m. The dial in number for domestic calls is 866/233-3843. For international callers the number is 612/332-0932. The call can be replayed for 7 days by calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 844084. 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 herein.

Saga Communications, Inc.
Selected Consolidated Financial Data
For The Three and Nine Month Periods
Ended September 30, 2006 and 2005
(amounts in 000's except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Operating Results
Net operating revenue $35,791 $35,961 $104,727 $105,345
Station operating expense 25,761 26,110 76,833 77,464
Corporate general and administrative 2,225 1,934 6,705 6,060
Operating income 7,805 7,917 21,189 21,821
Interest expense 2,375 2,082 7,007 5,511
Other (income) expense, net (75) (35) (645) 1,503
Income before income tax 5,505 5,870 14,827 14,807
Income tax expense 2,241 2,430 6,050 6,130
Net income $3,264 $3,440 $8,777 $8,677
Earnings per share:
Basic $0.16 $0.17 $0.43 $0.42
Diluted $0.16 $0.17 $0.43 $0.42
Weighted average common shares 20,488 20,453 20,515 20,489
Weighted average common shares and
common share equivalents 20,502 20,631 20,532 20,726

Free Cash Flow
Net Income $3,264 $3,440 $8,777 $8,677
Plus: Depreciation and amortization:
Station 1,903 2,258 5,784 6,491
Corporate 48 50 144 149
Deferred tax provision 1,339 2,045 3,110 3,635
Other (income) expense, net (75) (35) (645) 1,503
Non-cash compensation 385 85 984 194
Less: Capital expenditures (2,124) (1,666) (6,836) (9,054)
Free cash flow $4,740 $6,177 $11,318 $11,595

Balance Sheet Data
Working capital $21,774 $21,946
Net fixed assets 70,542 72,977
Net intangible assets and other assets 211,745 205,980
Total assets 320,148 322,547
Long term debt (including current portion of
$0 and $8,061, respectively) 136,911 155,911
Stockholders' equity 133,564 123,770

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

Net operating
revenue $35,791 $35,961 $35,778 $35,961 $35,791 $35,961
Station operating
expense 25,761 26,110 25,659 26,110 25,761 26,110
Corporate general
and administrative 2,225 1,934 2,225 1,934 2,225 1,934
Operating income 7,805 7,917 $7,894 $7,917 7,805 7,917
Interest expense 2,375 2,082 2,375 2,082
Other income, net (75) (35) (75) (35)
Income tax expense 2,241 2,430 2,241 2,430
Net income $3,264 $3,440 $3,264 $3,440
Earnings per share:
Basic $0.16 $0.17 $0.16 $0.17
Diluted $0.16 $0.17 $0.16 $0.17

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

Net operating
revenue $31,402 $32,263 $31,389 $32,263 $31,402 $32,263
Station operating
expense 22,300 22,728 22,198 22,728 22,300 22,728
Operating income $9,102 $9,535 $9,191 $9,535 $9,102 $9,535

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

Net operating
revenue $4,389 $3,698 $4,389 $3,698 $4,389 $3,698
Station operating
expense 3,461 3,382 3,461 3,382 3,461 3,382
Operating income $928 $316 $928 $316 $928 $316

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

Radio Segment $1,494 $1,812 $1,494 $1,812 $1,494 $1,812
Television Segment 409 446 409 446 409 446
Corporate and
Other 48 50 48 50 48 50
$1,951 $2,308 $1,951 $2,308 $1,951 $2,308

(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 Nine Months Ended
September 30, 2006 and 2005
(amounts in 000's except per share data)
(Unaudited)

As-Reported Same Station Pro Forma (1)
Consolidated Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
2006 2005 2006 2005 2006 2005
Net operating
revenue $104,727 $105,345 $102,713 $104,323 $104,727 $106,358
Station operating
expense 76,833 77,464 75,019 76,610 76,833 78,421
Corporate general
and administrative 6,705 6,060 6,705 6,060 6,705 6,060
Operating income 21,189 21,821 20,989 21,653 21,189 21,877
Interest expense 7,007 5,511 7,007 5,731
Other (income)
expense, net (645) 1,503 (645) 1,488
Income tax expense 6,050 6,130 6,050 6,073
Net income $8,777 $8,677 $8,777 $8,585
Earnings per share:
Basic $0.43 $0.42 $0.43 $0.42
Diluted $0.43 $0.42 $0.43 $0.41

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

Net operating
revenue $92,100 $94,240 $90,086 $93,218 $92,100 $95,253
Station operating
expense 66,675 67,453 64,861 66,599 66,675 68,410
Operating income $25,425 $26,787 $25,225 $26,619 $25,425 $26,843

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

Net operating
revenue $12,627 $11,105 $12,627 $11,105 $12,627 $11,105
Station operating
expense 10,158 10,011 10,158 10,011 10,158 10,011
Operating income $2,469 $1,094 $2,469 $1,094 $2,469 $1,094

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

Radio Segment $4,569 $5,181 $4,274 $4,997 $4,569 $5,411
Television Segment 1,215 1,310 1,215 1,310 1,215 1,310
Corporate and Other 144 149 144 149 144 149
$5,928 $6,640 $5,633 $6,456 $5,928 $6,870

(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 September 30, 2006
(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,

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)
Radio Segment Three Months Three Months
Ended 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)
Three Months Three Months
Ended 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 Three Months
Ended Ended
Depreciation and Amortization March 31, June 30,
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 Three Months
Consolidated Ended Ended
September 30, December 31,
2006 2005 2005

Net operating revenue $35,791 $35,961 $35,445
Station operating expense 25,761 26,110 26,947
Corporate general and
administrative 2,225 1,934 2,114
Impairment of intangible assets - - 1,168
Operating income 7,805 7,917 5,216
Interest expense 2,375 2,082 2,075
Other (income) expense, net (75) (35) 1,165
Income tax expense 2,241 2,430 87
Net income $3,264 $3,440 $1,889
Earnings per share:
Basic $0.16 $0.17 $0.09
Diluted $0.16 $0.17 $0.09

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Radio Segment Ended Ended
September 30, December 31,
2006 2005 2005

Net operating revenue $31,402 $32,263 $31,357
Station operating expense 22,300 22,728 23,514
Impairment of intangible assets - - 890
Operating income $9,102 $9,535 $6,953

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Television Segment Ended Ended
September 30, December 31,
2006 2005 2005

Net operating revenue $4,389 $3,698 $4,088
Station operating expense 3,461 3,382 3,433
Impairment of intangible assets - - 278
Operating income $928 $316 $377

Pro Forma (1) Pro Forma (1)
Three Months Three Months
Depreciation and Amortization Ended Ended
by Segment September 30, December 31,
2006 2005 2005

Radio Segment $1,494 $1,812 $1,894
Television Segment 409 446 456
Corporate and Other 48 50 50
$1,951 $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
September 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 For
Acquisitions and
As-Reported Dispositions Same Station
Three Months Not Included Three Months
Ended in Entire Ended
Consolidated September 30, Comparable September 30,
2006 Period 2006

Net operating revenue $35,791 ($13) $35,778
Station operating expense 25,761 (102) 25,659
Corporate general and
administrative 2,225 - 2,225
Operating income $7,805 $89 $7,894

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

Net operating revenue $31,402 ($13) $31,389
Station operating expense 22,300 (102) 22,198
Operating income $9,102 $89 $9,191

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

Net operating revenue $4,389 $- $4,389
Station operating expense $3,461 - $3,461
Operating income $928 $- $928

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

Net operating revenue $35,961 $- $35,961
Station operating expense 26,110 - 26,110
Corporate general and
administrative 1,934 - 1,934
Operating income $7,917 $- $7,917

Net operating revenue $32,263 $- $32,263
Station operating expense 22,728 - 22,728
Operating income $9,535 $- $9,535

Net operating revenue $3,698 $- $3,698
Station operating expense $3,382 - $3,382
Operating income $316 $- $316

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Nine Months Ended
September 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 For
Acquisitions and
As-Reported Dispositions Same Station
Nine Months Not Included Nine Months
Ended in Entire Ended
Consolidated September 30, Comparable September 30,
2006 Period 2006

Net operating revenue $104,727 ($2,014) $102,713
Station operating expense 76,833 (1,814) 75,019
Corporate general and
administrative 6,705 - 6,705
Operating income $21,189 ($200) $20,989

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

Net operating revenue $92,100 ($2,014) $90,086
Station operating expense 66,675 (1,814) 64,861
Operating income $25,425 ($200) $25,225

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

Net operating revenue $12,627 $- $12,627
Station operating expense 10,158 - 10,158
Operating income $2,469 $- $2,469

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

Net operating revenue $105,345 ($1,022) $104,323
Station operating expense 77,464 (854) 76,610
Corporate general and
administrative 6,060 - 6,060
Operating income $21,821 ($168) $21,653

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

Net operating revenue $94,240 ($1,022) $93,218
Station operating expense 67,453 (854) 66,599
Operating income $26,787 ($168) $26,619

Net operating revenue $11,105 $- $11,105
Station operating expense 10,011 - 10,011
Operating income $1,094 $- $1,094

First Call Analyst:
FCMN Contact:

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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