Saga Communications, Inc. Reports 2nd Quarter 2005 Results

Saga Communications, Inc. Reports 2nd Quarter 2005 Results

GROSSE POINTE FARMS, Mich., Aug. 3 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported that 2nd quarter 2005 net operating revenue increased 6.9% over the comparable period in 2004 to approximately $37.6 million and operating income decreased 6.2% to approximately $8.6 million. Net income decreased approximately $1.8 million to approximately $3.1 million ($.15 per fully diluted share) for the quarter ended June 30, 2005 compared to $4.9 million ($.23 per fully diluted share) for the comparable period in 2004. Net of taxes, approximately $767 thousand of this decrease in net income during the quarter was due to the disposition of a tower made obsolete by our DTV conversion project in Victoria, TX. Increased interest and healthcare expenses, net of taxes, decreased net income by approximately $425 thousand and $355 thousand, respectively, for the quarter. For the same period, station operating expense increased 12.3% to approximately $26.7 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue increased 2.4% to approximately $36.0 million, operating income decreased 8.0% to $8.4 million and station operating expense increased 6.4% to $25.2 million.

For the six month period ended June 30, 2005, net operating revenue increased 7.9% over the comparable period in 2004 to approximately $69.4 million, operating income decreased 3.3% to approximately $13.9 million and net income was approximately $5.2 million ($.25 per fully diluted share) compared to $7.4 million ($.35 per fully diluted share) for the comparable period in 2004 primarily attributable to the 2nd quarter expense increases referenced above. For the same period, station operating expense increased 11.8% to approximately $51.4 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the six months, net operating revenue increased 2.3% to approximately $64.7 million, operating income decreased 5.7% to $13.3 million and station operating expense increased 4.7% to $47.3 million.

Saga has been subjected to increased format competition in the Milwaukee, Columbus, Norfolk and Portland markets. To date, this increased competitive pressure has not materially impacted the Milwaukee or Columbus market's financial performance. The financial results in the Norfolk and Portland markets, however, have been materially impacted due to the increased competition. Net revenue in these markets decreased approximately 15% compared to the 2nd quarter 2004. Combined, operating income for these two markets decreased $837 thousand from the comparable quarter in 2004. We believe that the financial impact on these markets will not be long term as rating data indicates that the impacted stations are beginning to return to previous levels of audience share. Excluding the results for the Norfolk and Portland markets, net revenue and operating income on a historical basis for the quarter increased approximately 11% and 4% respectively.

Capital expenditures in the second quarter of 2005 were approximately $3.5 million of which approximately $2.2 million was routine capital expenditures and $1.3 million resulted from other activities including $1.1 million as a result of acquisitions and our DTV related television projects. Future capital expenditures on DTV related projects are expected to be minimal. Previously, Saga estimated capital expenditures for the year to be approximately $9 million. 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 second quarter 2005 results conference call will be on Wednesday, August 3 at 2:00 p.m. The dial in number for domestic calls is 800/230-1059. For international callers the number is 612/288-0318. The call can be replayed for 7 days by calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 789870. 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, 2005 and 2004 (amounts in 000's except per share data)

Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Operating Results Net operating revenue $37,554 $35,127 $69,384 $64,300 Station operating expense 26,656 23,733 51,354 45,918 Corporate general and administrative 2,348 2,279 4,126 4,011 Operating income 8,550 9,115 13,904 14,371 Interest expense 1,806 1,085 3,429 2,180 Other expense, net 1,471 65 1,538 73 Income before income tax 5,273 7,965 8,937 12,118 Income tax expense 2,201 3,104 3,700 4,726 Net income $3,072 $4,861 $5,237 $7,392 Earnings per share: Basic $0.15 $0.23 $0.26 $0.36 Diluted $0.15 $0.23 $0.25 $0.35 Weighted average common shares 20,388 20,816 20,508 20,813 Weighted average common shares and common equivalents 20,596 21,285 20,771 21,283

Free Cash Flow Net Income $3,072 $4,861 $5,237 $7,392 Plus: Depreciation and amortization: Station 2,138 1,726 4,233 3,393 Corporate 49 50 99 99 Deferred tax provision 1,029 1,274 1,590 1,939 Less: Capital expenditures (3,534) (1,732) (7,801) (4,263) Free cash flow $2,754 $6,179 $3,358 $8,560

Balance Sheet Data Working capital $23,673 $18,561 Net fixed assets 73,301 63,718 Net intangible and other assets 205,654 174,421 Total assets 317,868 270,918 Long term debt (including current portion of $1,061 and $0, respectively) 155,911 121,161 Stockholders' equity 120,223 113,522

Saga Communications, Inc. Selected Supplemental Financial Data For the Three Months Ended June 30, 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 June 30, June 30, June 30, 2005 2004 2005 2004 2005 2004

Net operating revenue $37,554 $35,127 $35,971 $35,127 $38,000 $37,022 Station operating expense 26,656 23,733 25,241 23,733 27,030 25,401 Corporate general and administrative 2,348 2,279 2,348 2,279 2,348 2,279 Operating income 8,550 9,115 $8,382 $9,115 8,622 9,342 Interest expense 1,806 1,085 1,894 1,418 Other expense, net 1,471 65 1,466 57 Income tax expense 2,201 3,104 2,196 3,067 Net income $3,072 $4,861 $3,066 $4,800 Earnings per share: Basic $0.15 $0.23 $0.15 $0.23 Diluted $0.15 $0.23 $0.15 $0.22

As-Reported Same Station Pro Forma (1) Radio Segment Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, 2005 2004 2005 2004 2005 2004

Net operating revenue $33,605 $31,362 $32,022 $31,362 $34,051 $33,257 Station operating expense 23,316 20,469 21,901 20,469 23,690 22,137 Operating income $10,289 $10,893 $10,121 $10,893 $10,361 $11,120

As-Reported Same Station Pro Forma (1) Television Three Months Ended Three Months Ended Three Months Ended Segment June 30, June 30, June 30, 2005 2004 2005 2004 2005 2004

Net operating revenue $3,949 $3,765 $3,949 $3,765 $3,949 $3,765 Station operating expense 3,340 3,264 3,340 3,264 3,340 3,264 Operating income $609 $501 $609 $501 $609 $501

As-Reported Same Station Pro Forma (1) Three Months Ended Three Months Ended Three Months Ended Depreciation June 30, June 30, June 30, and amortization 2005 2004 2005 2004 2005 2004 by segment

Radio Segment $1,716 $1,300 $1,389 $1,300 $1,808 $1,781 Television Segment 422 426 422 426 422 426 Corporate and Other 49 50 49 50 49 50 $2,187 $1,776 $1,860 $1,776 $2,279 $2,257

(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 Six Months Ended June 30, 2005 and 2004 (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, 2005 2004 2005 2004 2005 2004

Net operating revenue $69,384 $64,300 $64,697 $63,253 $70,397 $68,627 Station operating expense 51,354 45,918 47,270 45,132 52,311 49,709 Corporate general and administrative 4,126 4,011 4,126 4,011 4,126 4,011 Operating income $13,904 $14,371 $13,301 $14,110 $13,960 $14,907 Interest expense 3,429 2,180 3,649 2,846 Other expense, net 1,538 73 1,523 56 Income tax expense 3,700 4,726 3,643 4,690 Net income $5,237 $7,392 $5,145 $7,315 Earnings per share: Basic $0.26 $0.36 $0.25 $0.35 Diluted $0.25 $0.35 $0.25 $0.34

As-Reported Same Station Pro Forma (1) Radio Segment Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2005 2004 2005 2004 2005 2004

Net operating revenue $61,977 $57,381 $57,290 $56,334 $62,990 $61,708 Station operating expense 44,725 39,618 40,641 38,832 45,682 43,409 Operating income $17,252 $17,763 $16,649 $17,502 $17,308 $18,299

As-Reported Same Station Pro Forma (1) Television Segment Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2005 2004 2005 2004 2005 2004

Net operating revenue $7,407 $6,919 $7,407 $6,919 $7,407 $6,919 Station operating expense 6,629 6,300 6,629 6,300 6,629 6,300 Operating income $778 $619 $778 $619 $778 $619

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 2005 2004 2005 2004 2005 2004 by segment

Radio Segment $3,369 $2,552 $2,672 $2,530 $3,599 $3,530 Television Segment 864 841 864 841 864 841 Corporate and Other 99 99 99 99 99 99 $4,332 $3,492 $3,635 $3,470 $4,562 $4,470

(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 June 30, 2005 (amounts in 000's except per share data) (Unaudited)

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

Net operating revenue $32,397 $31,605 $38,000 $37,022 $36,071 $38,045 Station operating expense 25,281 24,308 27,030 25,401 25,506 26,526 Corporate general and administrative 1,778 1,732 2,348 2,279 1,927 2,405 Operating income 5,338 5,565 8,622 9,342 8,638 9,114 Interest expense 1,755 1,428 1,894 1,418 1,369 1,639 Other (income) expense, net 57 (1) 1,466 57 202 (259) Income tax expense 1,447 1,623 2,196 3,067 2,759 3,539 Net income $2,079 $2,515 $3,066 $4,800 $4,308 $4,195 Earnings per share: Basic $0.10 $0.12 $0.15 $0.23 $0.20 $0.20 Diluted $0.10 $0.12 $0.15 $0.22 $0.20 $0.20

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

Net operating revenue $28,939 $28,451 $34,051 $33,257 $32,425 $34,157 Station operating expense 21,992 21,272 23,690 22,137 22,281 23,190 Operating income $6,947 $7,179 $10,361 $11,120 $10,144 $10,967

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

Net operating revenue $3,458 $3,154 $3,949 $3,765 $3,646 $3,888 Station operating expense 3,289 3,036 3,340 3,264 3,225 3,336 Operating income $169 $118 $609 $501 $421 $552

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

Radio Segment $1,791 $1,749 $1,808 $1,781 $1,785 $1,837 Television Segment 442 415 422 426 422 454 Corporate and Other 50 49 49 50 49 50 $2,283 $2,213 $2,279 $2,257 $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 June 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 Consolidated Ended Not Included in Ended June 30, Entire Comparable June 30, 2005 Period 2005

Net operating revenue $37,554 ($1,583) $35,971 Station operating expense 26,656 (1,415) 25,241 Corporate general and administrative 2,348 - 2,348 Operating income $8,550 ($168) $8,382

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 ($1,583) $32,022 Station operating expense 23,316 (1,415) 21,901 Operating income $10,289 ($168) $10,121

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

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, 2004 Period 2004

Net operating revenue $35,127 - $35,127 Station operating expense 23,733 - 23,733 Corporate general and administrative 2,279 - 2,279 Operating income $9,115 - $9,115

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, 2004 Period 2004

Net operating revenue $31,362 - $31,362 Station operating expense 20,469 - 20,469 Operating income $10,893 - $10,893

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, 2004 Period 2004

Net operating revenue $3,765 - $3,765 Station operating expense $3,264 - $3,264 Operating income $501 - $501

Saga Communications, Inc. Selected Financial Data Non-GAAP Disclosures For the Six Months Ended June 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 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 ($4,687) $64,697 Station operating expense 51,354 (4,084) 47,270 Corporate general and administrative 4,126 - 4,126 Operating income $13,904 ($603) $13,301

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 ($4,687) $57,290 Station operating expense 44,725 (4,084) 40,641 Operating income $17,252 ($603) $16,649

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

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, 2004 Period 2004

Net operating revenue $64,300 ($1,047) $63,253 Station operating expense 45,918 (786) 45,132 Corporate general and administrative 4,011 - 4,011 Operating income $14,371 ($261) $14,110

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, 2004 Period 2004

Net operating revenue $57,381 ($1,047) $56,334 Station operating expense 39,618 (786) 38,832 Operating income $17,763 ($261) $17,502

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, 2004 Period 2004

Net operating revenue $6,919 $0 $6,919 Station operating expense 6,300 0 6,300 Operating income $619 $0 $619

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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