11-K 1 b65833sce11vk.htm SAGA COMMUNICATIONS, INC. 11-K e11vk
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United States Securities and Exchange Commission
Washington, D.C. 20549
 
FORM 11-K
(Mark One)
     
þ   Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year ended December 31, 2006
or
     
o   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)
 
 

 

 

Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Table of Contents
Financial Statements and Supplemental Schedule
Years ended December 31, 2006 and 2005
     
    Page
 
    
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Financial Statements:
    
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  6
 
    
Supplemental Schedule:
    
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Other Information:
    
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Exhibit 23.1 — Consent of Independent Registered Public Accounting Firm
    
 EX-23.1 Consent of Ernst & Young LLP

 

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Report of Independent Registered Public Accounting Firm
Plan Administrator
Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
We have audited the accompanying statements of net assets available for benefits of the Saga Communications, Inc. Employees’ 401(k) Savings and Investment Plan as of December 31, 2006 and 2005, and the related statements of changes in net 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 the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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, 2006 and 2005, and the changes in its assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2006, is presented for purposes of additional analysis and is not a required part of the financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.
         
Detroit, MI    
June 25, 2007  /S/ Ernst & Young LLP    
     
     

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Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Statements of Net Assets Available for Benefits
                 
    December 31,
    2006   2005
     
Assets
                
Investments, at fair value:
                
Mutual funds
   $ 14,041,634     $ 11,670,862  
Guaranteed Income Fund
     2,187,600       1,996,596  
Saga Common Stock Fund
     1,735,768       1,647,899  
Participant loans
     217,790       288,431  
     
 
     18,182,792       15,603,788  
 
                
Employer contributions receivable
     283,065       278,168  
     
Net assets available for benefits
   $ 18,465,857     $ 15,881,956  
     
See accompanying notes.

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Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Statements of Changes in Net Assets Available for Benefits
                 
    Years ended December 31,
    2006   2005
     
Additions
                
Participant contributions
   $ 2,061,104     $ 1,972,330  
Employer contributions
     283,065       278,168  
Investment income:
                
Interest and dividends
     92,173       89,721  
Net realized and unrealized appreciation (depreciation) in fair value of investments:
                
Mutual funds
     1,448,372       784,957  
Saga common stock fund
     (181,008 )     (949,272 )
     
Total additions
     3,703,706       2,175,904  
 
                
Deductions
                
Benefit payments
     1,119,805       926,195  
     
Net increase
     2,583,901       1,249,709  
Net assets available for benefits:
                
Beginning of year
     15,881,956       14,632,247  
     
End of year
   $ 18,465,857     $ 15,881,956  
     
See accompanying notes.
                

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Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Notes to Financial Statements
Years ended December 31, 2006 and 2005
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). The Company may make a discretionary match; for 2006 and 2005 the discretionary employer match was $283,065 and $278,168, 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. Class A 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.

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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 lesser 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 are paid ratably through 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.
Administrative Expenses
Administrative expenses of the Plan are paid by the Company.

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Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
2. Significant Accounting Policies
Basis of Accounting
The financial statements have been prepared on the accrual basis of accounting.
Investment Valuation and Income Recognition
Except for the guaranteed income fund, 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.
The guaranteed income fund is recorded at contract value, which approximates fair value. Contract value represents 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 3.8% and 3.7% for 2006 and 2005, respectively. The crediting interest rate for these guaranteed funds is reset semiannually by the issuer but cannot be less than zero and was 4.15% and 3.75% at December 31, 2006 and 2005, 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 accounting principles generally accepted in the United States 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.

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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,
    2006   2005
     
 
Guaranteed Income Fund*
   $ 2,187,600     $ 1,996,596  
Saga Common Stock Fund*
     1,735,768       1,647,899  
Vanguard Wellington — Admiral Fund*
     1,399,512       1,315,606  
American Century Ultra Account*
     895,076       1,116,770  
Fidelity Contrafund Account*
     2,468,895       2,392,148  
Dryden S&P 500 Index Fund*
     1,174,184       1,073,979  
Fidelity Growth & Income Account*
     995,245       829,214  
 
*   Fund is sponsored by Plan Trustee
4. Income Tax Status
The underlying volume submitter plan has received an opinion letter from the Internal Revenue Service dated September 4, 2001, stating that the form of the plan is qualified under Section 401 of the Internal Revenue Code, and therefore, the related trust is tax exempt. In accordance with Revenue Procedure 2002-6 and Announcement 2001-77, the Plan Sponsor has determined that it is eligible to and has chosen to rely on the current IRS volume submitter plan opinion letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. 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.
5. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

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Saga Communications, Inc.
Employees’ 401(k) Savings and Investment Plan
Employer ID # 38-2683519       Plan #001
Schedule H, line 4i—Schedule of Assets (Held at End of Year)
December 31, 2006
             
Identity   Description of Investment Including      
of Issue, Borrower,   Maturity Date, Rate of Interest,   Current  
Lessor or Similar Party   Collateral, Par or Maturity Value   Value  
 
 
*Prudential Retirement Insurance Company
   Guaranteed Income Fund   $ 2,187,600  
*Prudential Retirement Insurance Company
   Dryden S&P 500 Index Fund     1,174,184  
*Prudential Retirement Insurance Company
   Artisan Partners Growth Fund     443,382  
*Prudential Retirement Insurance Company
   Investment Grade Coprorate Bond /BSAM Fund     132,572  
*Prudential Retirement Insurance Company
   Fidelity Contrafund Account     2,468,895  
*Prudential Retirement Insurance Company
   Fidelity Growth and Income Account     995,245  
*Prudential Retirement Insurance Company
   Balanced I/ Wellington Management Fund     740,127  
*Prudential Retirement Insurance Company
   American Century Ultra Account     895,076  
*Prudential Retirement Insurance Company
   Vanguard Wellington - Admiral Fund     1,399,512  
*Prudential Retirement Insurance Company
   Janus Fund     510,824  
*Prudential Retirement Insurance Company
   Small Cap Value/Kennedy Capital Fund     410,238  
*Prudential Retirement Insurance Company
   High Yield Bond/Caywood-Scholl Fund     329,582  
*Prudential Retirement Insurance Company
   Large Cap Value/Barrow Hanley     344,893  
*Prudential Retirement Insurance Company
   Oakmark Equity and Income Class I     347,626  
*Prudential Retirement Insurance Company
   Lifetime20     110,266  
*Prudential Retirement Insurance Company
   Lifetime30     51,098  
*Prudential Retirement Insurance Company
   Lifetime40     90,054  
*Prudential Retirement Insurance Company
   Lifetime50     42,348  
*Prudential Retirement Insurance Company
   Lifetime60     42,842  
*Prudential Retirement Insurance Company
   Oppenheimer Global Class A     806,787  
*Prudential Retirement Insurance Company
   International Equity Julius Baer     766,251  
*Prudential Retirement Insurance Company
   Small Cap Blend/WHV Fund     357,076  
*Prudential Retirement Insurance Company
   T Rowe Price Growth Stock     400,221  
*Prudential Retirement Insurance Company
   Small Cap Growth/Granahan Fund     65,017  
*Prudential Retirement Insurance Company
   Mid Cap Value/Integrity Fund     406,738  
*Prudential Retirement Insurance Company
   Mid Cap Growth/Times Square Fund     523,788  
*Prudential Retirement Insurance Company
   Large Cap Value/LSV Asset Management     151,597  
*Prudential Retirement Insurance Company
   Large Cap Blend/Victory Fund     3,272  
*Prudential Retirement Insurance Company
   AllianceBern International Value K Fund     32,123  
 
            
*Saga Communications, Inc.
   Saga Common Stock Fund     1,735,768  
*Participant loans receivable
   Interest rates 5.00% to 10.50%     217,790  
 
          
Total investments
       $ 18,182,792  
 
          
 
*   Party-in-interest

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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 26, 2007  /S/ Marcia K. Lobaito    
  Marcia K. Lobaito   
  Plan Administrator   
 
     
Date: June 26, 2007  /S/ Catherine Bobinski    
  Catherine Bobinski   
  Vice President, Corporate Controller and
Chief Accounting Officer 		  

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EXHIBIT INDEX
Exhibits
23.1          Consent of Ernst & Young LLP

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