SEC Filing - Saga Communications, Inc.

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1 United States Securities and Exchange Commission Washington, D.C. 20549 - -------------------------------------------------------------------------------- FORM 11-K (MARK ONE) [x] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year ended December 31, 1999 or [ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to _________ Commission file number 333-63321 Saga Communications, Inc. Employees' 401(K) Savings and Investment Plan ----------------------------------------------------------------------- (Full title of plan) Saga Communications, Inc. 73 Kercheval Avenue Grosse Pointe Farms, Michigan 48236 ---------------------------------------------------------------------- (Name of Issuer of Securities Held Pursuant to Plan and Address of its Principal Executive Office)

2 Financial Statements and Supplemental Schedule Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Years ended December 31, 1999 and 1998 with Report of Independent Auditors 2

3 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Table of Contents Financial Statements and Supplemental Schedule December 31, 1999 and 1998 Page Report of Independent Auditors 4 Financial Statements: Statements of Assets Available for Benefits - December 31, 1999 and 1998 5 Statements of Changes in Assets Available for Benefits - Years ended December 1999 and 1998 6 Notes to Financial Statements 7 Supplemental Schedule Schedule H line 4(i)--Schedule of Assets Held for Investment Purposes 12 Other Information: Signatures 14 Exhibit 23 - Consent of Independent Auditors 15 3

4 4 Report of Independent Auditors Plan Administrator Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan We have audited the accompanying statements of assets available for benefits of Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan as of December 31, 1999 and 1998 and the related statements of changes in assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998 and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999 is presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and is not a required part of the basic financial statements. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the 1999 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the 1999 basic financial statements taken as a whole. /s/ Ernst & Young LLP --------------------- May 18, 2000 Detroit, Michigan 4

5 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Statements of Assets Available For Benefits DECEMBER 31 1999 1998 ------------------------------- ASSETS Investments, at fair value: Mutual funds $ 6,604,447 $ 4,788,815 Guaranteed Investment Fund 1,025,494 961,135 Saga Common Stock Fund 1,151,572 703,066 Participant loans 167,941 169,804 ------------------------------- 8,949,454 6,622,820 Participant contributions receivable -- 27,586 Employer contributions receivable 169,385 138,399 ------------------------------- Net assets available for benefits $ 9,118,839 $ 6,788,805 =============================== See accompanying notes. 5

6 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Statements of Changes in Assets Available For Benefits YEAR ENDED DECEMBER 31 1999 1998 ------------------------------- Additions: Participant contributions $ 1,208,580 $ 1,035,535 Employer contributions 169,385 138,399 Investment income: Interest 73,049 67,064 Net appreciation in fair value of investments: Mutual funds 1,244,288 940,577 Saga common stock fund 237,335 119,883 ------------------------------- Total additions 2,932,637 2,301,458 Deductions: Benefit payments (602,603) (513,661) ------------------------------- Net additions 2,330,034 1,787,797 Net assets available for benefits: Beginning of year 6,788,805 5,001,008 ------------------------------- End of year $ 9,118,839 $ 6,788,805 =============================== See accompanying notes. 6

7 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Notes to Financial Statements Years ended December 31, 1999 and 1998 1. DESCRIPTION OF PLAN The following description of Saga Communications, Inc. (the "Company") Employees' 401(k) Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for more complete information. GENERAL The Plan is a defined contribution plan which includes, as participants, all employees who have completed one year of employment and reached the age of twenty-one. The Plan is administered by the Company and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Contributions to employees' accounts are effected through voluntary reductions in their compensation. Annual contributions for each participant are subject to the participation and discrimination standards of Internal Revenue Code Section 401(k)(3). The Company may make a discretionary match; for 1999 and 1998 the discretionary employer match was $169,385 and $138,399, respectively. Upon enrollment, a participant may direct their contributions to any of the Plan's fund options. Employer contributions are invested in Saga Communications, Inc. common stock. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 7

8 10 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF PLAN (CONTINUED) VESTING Participants are immediately vested in their contributions and the employer discretionary match plus actual earnings thereon. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lessor of $50,000 or 50% of their vested account balance. Loan terms range from 1-5 years or up to 15 years for purchase of primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate as determined by the Plan Administrator which approximates the prime interest rate in effect on the first business day of the calendar quarter plus 1%. Principal and interest is paid ratably through monthly payroll deductions. DISTRIBUTIONS Participants or their beneficiaries may receive distributions of their account balances upon the earlier of reaching age 59-1/2, disability, death or termination of service, as defined in the Plan. Further, the Plan Administrator may permit a participant who experiences a qualified financial hardship, as defined, to receive a distribution or a portion of the participant's account balance. Such distributions are generally made in a lump sum. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provision of ERISA. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements have been prepared on the accrual basis of accounting. 8

9 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Notes to Financial Statements (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT VALUATION AND INCOME RECOGNITION Except for the investment contracts, the Plan's investments are stated at fair value which equals the quoted market price on the last business day of the plan year. The shares of mutual funds are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end. The participant loans are valued at their outstanding balances, which approximate fair value. Guaranteed investment contracts are recorded at their contract values, which represent contributions and reinvested income, less any withdrawals plus accrued interest, because these investments have fully benefit-responsive features. For example, participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against contract values for credit risk of contract issues or otherwise. The average yield was approximately 5.5% in 1999 and 5.9% in 1998. The crediting interest rate for these investment contracts is reset semiannually by the issuer but cannot be less than zero and was 6.05% and 6.25% at December 31, 1999 and 1998, respectively. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. 9

10 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Notes to Financial Statements (continued) 3. INVESTMENTS Investments that represent 5% or more of fair value of the Plan's net assets are as follows: DECEMBER 31 1999 1998 ------------ ----------- Guaranteed Investment Fund $ 1,025,494 $ 961,135 Saga Common Stock Fund* 1,151,572 703,066 Vanguard Wellington Fund 483,718 517,436 Twentieth Century Ultra Investors Fund 1,545,638 1,016,388 Fidelity Investments Contrafund 1,933,248 1,430,119 CIGNA Stock Index Fund 857,440 695,195 INVESCO Total Return Fund 486,489 479,049 * Non-participant directed 4. NONPARTICIPANT-DIRECTED INVESTMENTS Information about the significant components of changes in net assets related to the nonparticipant-directed investment is as follows: YEAR ENDED DECEMBER 31 SAGA COMMON STOCK FUND: 1999 1998 ----------- ---------- Contributions $ 297,455 $ 290,250 Net appreciation in fair value 237,335 119,883 Benefit payments (81,353) (33,051) Transfers out (4,931) (3,447) ----------- ---------- Net increase 448,506 373,635 Net assets available for benefits at beginning of year 703,066 329,431 ----------- ---------- Net assets available for benefits at end of year $ 1,151,572 $ 703,066 =========== ========== 10

11 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Notes to Financial Statements (continued) 5. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated April 4, 1994, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. However, the Plan has been restated in its entirety subsequent to the issuance of the determination. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 11

12 Saga Communications, Inc. Employees' 401(k) Savings and Investment Plan Employer ID # 38-2683519 Plan # 001 Schedule of Assets Held for Investment Purposes At End of Year December 31, 1999 IDENTITY DESCRIPTION OF INVESTMENT INCLUDING OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, CURRENT LESSOR OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE VALUE - ----------------------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company Guaranteed Investment Fund $ 1,025,494 * Connecticut General Life Insurance Company CIGNA Stock Index Fund 857,440 * Connecticut General Life Insurance Company CIGNA High Yield Bond Fund 12,856 Fidelity Investments Fidelity Investments Contrafund 1,933,248 Fidelity Investments Fidelity Growth and Income Portfolio Fund 398,708 Invesco Mutual Funds INVESCO Total Return Fund 486,489 Twentieth Century Mutual Funds Twentieth Century Ultra Investors Fund 1,545,638 The Vanguard Group of Investment Companies Vanguard Wellington Fund 483,718 Warburg-Pincus Mutual Funds Warburg-Pincus Emerging Growth Fund 317,652 Warburg-Pincus Mutual Funds Warburg-Pincus International Equity Fund 97,184 Putnam Mutual Funds Putnam Stock Growth Fund 58,253 Janus Mutual Funds Janus Fund 274,637 Janus Mutual Funds Janus Worldwide Fund 106,456 Baron Mutual Funds Baron Asset Fund 32,168 ** Saga Communications, Inc. Saga Common Stock Fund 1,151,572 * Participant loans receivable Interest rates 8.0% to 10.0% 167,941 ----------- Total investments $ 8,949,454 =========== *Party-in-interest. ** Party-in-interest, Nonparticipant directed fund 12

13 EXHIBIT INDEX Exhibits 23 Consent of Ernst & Young LLP 13

14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. SAGA COMMUNICATIONS, INC. EMPLOYEES' 401(K) SAVINGS AND INVESTMENT PLAN Date: June 9, 2000 /s/ Marcia K. Lobaito --------------------- Marcia K. Lobaito Plan Administrator 14

1 Exhibit 23 - Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-63321) pertaining to the Saga Communications, Inc. Employees 401(k) Savings and Investment Plan, , of our report dated May 18, 2000 with respect to the financial statements and schedule of Saga Communications, Inc. Employees'401(k) Savings and Investment Plan included in this Annual Report on Form 11-K for the year ended December 31, 1999. /s/ Ernst & Young LLP --------------------- Ernst & Young LLP Detroit, Michigan June 6, 2000