<PAGE> 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, 1998
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)
<PAGE> 2
Saga Communications, Inc.
Employees' 401(k) Savings and
Investment Plan
Financial Statements for the
Years ended December 31, 1998, 1997 and 1996,
Supplemental Schedules for the
Year ended December 31, 1998
with Report of Independent Auditors
2
<PAGE> 3
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Table of Contents
Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
Page
Report of Independent Auditors 4
Financial Statements
Statements of Assets Available for Plan Benefits--December 31,
1998 and 1997 5
Statements of Changes in Assets Available for Plan Benefits--Year
ended December 31, 1998 6
Statements of Changes in Assets Available for Plan Benefits--Year
ended December 31, 1997 7
Statements of Changes in Assets Available for Plan Benefits--Year
ended December 31, 1996 8
Notes to Financial Statements 9
Supplemental Schedules
Item 27(a)--Schedule of Assets Held for Investment Purposes 14
Item 27(d)--Schedule of Reportable Transactions 15
Other Information
Signatures 17
Exhibit 23 - Consent of Independent Auditors 18
3
<PAGE> 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 plan
benefits of Saga Communications, Inc. Employees' 401(k) Savings and Investment
Plan as of December 31, 1998 and 1997 and the related statements of changes in
assets available for plan benefits for each of the three years in the period
ended December 31, 1998. 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 generally accepted auditing
standards. 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 plan benefits of the Plan at
December 31, 1998 and 1997 and the changes in its net assets available for plan
benefits for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998 and reportable
transactions for the year then ended are 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 are
not a required part of the basic financial statements. The Fund Information in
the statements of changes in assets available for plan benefits is presented for
purposes of additional analysis rather than to present the changes in assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in our audit
of the 1998 basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the 1998 basic financial statements taken
as a whole.
/s/ Ernst & Young LLP
---------------------
May 14, 1999
Detroit, Michigan
4
<PAGE> 5
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statement of Assets Available For Plan Benefits, with Fund Information
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------------------
Twentieth
Saga Century CIGNA
Guaranteed Common Vanguard Ultra Fidelity Stock
Investment Stock Wellington Investors Investments Index
Fund Fund Fund Fund Contrafund Fund
------------------------------------------------------------------------------------
December 31, 1998
Assets
<S> <C> <C> <C> <C> <C> <C>
Investments at fair value $961,135 $703,066 $ 517,436 $1,016,388 $1,430,119 $695,195
Participant loans receivable
-------- -------- ---------- ---------- ---------- --------
961,135 703,066 517,436 1,016,388 1,430,119 695,195
Contributions receivable 3,441 142,413 1,979 4,481 5,147 2,800
-------- -------- ---------- ---------- ---------- --------
Total assets available for benefits $964,576 $845,479 $ 519,415 $1,020,869 $1,435,266 $697,995
======== ======== ========== ========== ========== ========
December 31, 1997
Assets
Investments at fair value $943,796 $471,844 $ 419,207 $ 686,523 $1,026,489 $527,187
Participant loans receivable
-------- -------- ---------- ---------- ---------- --------
Total assets available for benefits $943,796 $471,844 $ 419,207 $ 686,523 $1,026,489 $527,187
======== ======== ========== ========== ========== ========
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------------------
Fidelity
Growth Warburg- Warburg- CIGNA
and INVESCO Pincus Pincus Putnam High
Income Total Emerging International Stock Yield
Portfolio Return Growth Equity Growth Bond
Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------
December 31, 1998
Assets
<S> <C> <C> <C> <C> <C> <C>
Investments at fair value $302,379 $479,049 $189,565 $68,147 $14,809 $2,591
Participant loans receivable
-------- -------- -------- ------- ------- ------
302,379 479,049 189,565 68,147 14,809 2,591
Contributions receivable 2,630 1,709 1,610 427 338 190
-------- -------- -------- ------- ------- ------
Total assets available for benefits $305,009 $480,758 $191,175 $68,574 $15,147 $2,781
======== ======== ======== ======= ======= ======
December 31, 1997
Assets
Investments at fair value $157,905 $421,726 $128,644 $90,058 $ 0 $ 0
Participant loans receivable
-------- -------- -------- ------- ------- ------
Total assets available for benefits $157,905 $421,726 $128,644 $90,058 $ 0 $ 0
======== ======== ======== ======= ======= ======
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------
Janus
World Baron
Janus Wide Asset Loan
Fund Fund Fund Fund Total
----------------------------------------------------------------------
December 31, 1998
Assets
<S> <C> <C> <C> <C> <C>
Investments at fair value $42,896 $23,442 $6,799 $6,453,016
Participant loans receivable $169,804 169,804
------- ------- ------ -------- ----------
42,896 23,442 6,799 169,804 6,622,820
Contributions receivable 374 415 120 (2,089) 165,985
------- ------- ------ -------- ----------
Total assets available for benefits $43,270 $23,857 $6,919 $167,715 $6,788,805
======= ======= ====== ======== ==========
December 31, 1997
Assets
Investments at fair value $ 0 $ 0 $ 0 $4,873,379
Participant loans receivable $127,629 127,629
------- ------- ------ -------- ----------
Total assets available for benefits $ 0 $ 0 $ 0 $127,629 $5,001,008
======= ======= ====== ======== ==========
See accompanying notes.
</TABLE>
5
<PAGE> 6
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statement of Changes in Assets Available For Plan Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
FUND INFORMATION
-------------------------------------------------------------------------------
TWENTIETH
SAGA CENTURY CIGNA
GUARANTEED COMMON VANGUARD ULTRA FIDELITY STOCK
INVESTMENT STOCK WELLINGTON INVESTORS INVESTMENTS INDEX
FUND FUND FUND FUND CONTRAFUND FUND
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $118,997 $151,851 $ 81,801 $ 166,416 $ 182,909 $ 93,452
Employer contributions 138,399
Investment income:
Interest 56,732
Realized and unrealized
appreciation in fair value 119,883 54,201 252,527 336,168 158,665
Loan principal and interest payments 10,306 3,104 1,649 16,013 16,292 3,038
New loans (13,290) (14,876) (3,903) (16,010) (26,975) (19,086)
-------- -------- -------- ---------- ---------- --------
Total additions 172,745 398,361 133,748 418,946 508,394 236,069
Deductions--employee withdrawals (81,926) (21,279) (17,334) (87,507) (107,629) (90,925)
-------- -------- -------- ---------- ---------- --------
Net additions before transfers 90,819 377,082 116,414 331,439 400,765 145,144
Net transfers among funds (70,039) (3,447) (16,206) 2,907 8,012 25,664
-------- -------- -------- ---------- ---------- --------
Net additions/deductions after transfers 20,780 373,635 100,208 334,346 408,777 170,808
Assets available for plan benefits:
Beginning of year 943,796 471,844 419,207 686,523 1,026,489 527,187
-------- -------- -------- ---------- ---------- --------
End of year $964,576 $845,479 $519,415 $1,020,869 $1,435,266 $697,995
======== ======== ======== ========== ========== ========
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------
FIDELITY
GROWTH WARBURG- WARBURG- CIGNA
AND INVESCO PINCUS PINCUS PUTNAM HIGH
INCOME TOTAL EMERGING INTERNATIONAL STOCK YIELD
PORTFOLIO RETURN GROWTH GROWTH GROWTH BOND
FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $78,824 $61,458 $64,181 $17,296 $4,907 $2,080
Employer contributions
Investment income:
Interest
Realized and unrealized
appreciation in fair value 58,292 58,015 11,222 2,412 1,252 23
Loan principal and interest payments 5,044 3,627 1,475 278 27
New loans (6,634) (11,219) (3,618) (977)
-------- -------- -------- ------- ------- ------
Total additions 135,526 111,881 73,260 19,009 6,186 2,103
Deductions--employee withdrawals (10,733) (48,373) (21,547) (3,094)
-------- -------- -------- ------- ------- ------
Net additions before transfers 124,793 63,508 51,713 15,915 6,186 2,103
Net transfers among funds 22,311 (4,476) 10,818 (37,399) 8,961 678
-------- -------- -------- ------- ------- ------
Net additions/deductions after transfers 147,104 59,032 62,531 (21,484) 15,147 2,781
Assets available for plan benefits:
Beginning of year 157,905 421,726 128,644 90,058
-------- -------- -------- ------- ------- ------
End of year $305,009 $480,758 $191,175 $68,574 $15,147 $2,781
======== ======== ======== ======= ======= ======
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------
JANUS
WORLD BARON
JANUS WIDE ASSET LOAN
FUND FUND FUND FUND TOTAL
------- ------- ------ -------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $4,986 $7,479 $987 ($2,089) $1,035,535
Employer contributions 138,399
Investment income:
Interest 10,332 67,064
Realized and unrealized
appreciation in fair value 5,844 1,147 809 1,060,460
Loan principal and interest payments 117 461 (61,431) 0
New loans 116,588 0
------- ------- ------ -------- ----------
Total additions 10,947 9,087 1,796 63,400 2,301,458
Deductions--employee withdrawals (23,314) (513,661)
------- ------- ------ -------- ----------
Net additions before transfers 10,947 9,087 1,796 40,086 1,787,797
Net transfers among funds 32,323 14,770 5,123 0
------- ------- ------ -------- ----------
Net additions/deductions after transfers 43,270 23,857 6,919 40,086 1,787,797
Assets available for plan benefits:
Beginning of year 127,629 5,001,008
------- ------- ------ -------- ----------
End of year $43,270 $23,857 $6,919 $167,715 $6,788,805
======= ======= ====== ======== ==========
</TABLE>
See accompanying notes.
6
<PAGE> 7
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statement of Changes in Assets Available For
Plan Benefits, with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------------
TWENTIETH
SAGA CENTURY CIGNA
GUARANTEED COMMON VANGUARD ULTRA FIDELITY STOCK
INVESTMENT STOCK WELLINGTON INVESTORS INVESTMENTS INDEX
FUND FUND FUND FUND CONTRAFUND FUND
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $124,352 $117,144 $ 95,751 $174,843 $ 196,058 $ 89,787
Investment income:
Interest 58,008
Realized and unrealized
appreciation/(depreciation)
in fair value 110,979 72,061 112,195 182,002 112,922
-------- -------- -------- -------- ---------- --------
58,008 110,979 72,061 112,195 182,002 112,922
Loan principal and interest payments 11,688 3,647 1,941 6,386 9,931 2,462
New loans (14,936) (3,981) (6,779) (32,931) (33,641) (9)
-------- -------- -------- -------- ---------- --------
Total additions 179,112 227,789 162,974 260,493 354,350 205,162
Deductions--employee withdrawals (58,236) (37,769) (6,889) (33,314) (52,127) (21,986)
-------- -------- -------- -------- ---------- --------
Net additions before transfers 120,876 190,020 156,085 227,179 302,223 183,176
Net transfers among funds (72,390) (611) (17,216) (2) (7,528) 29,608
-------- -------- -------- -------- ---------- --------
Net additions after transfers 48,486 189,409 138,869 227,177 294,695 212,784
Assets available for plan benefits:
Beginning of year 895,310 282,435 280,338 459,346 731,794 314,403
-------- -------- -------- -------- ---------- --------
End of year $943,796 $471,844 $419,207 $686,523 $1,026,489 $527,187
======== ======== ======== ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------------------
FIDELITY
GROWTH WARBURG- WARBURG-
AND INVESCO PINCUS PINCUS
INCOME TOTAL EMERGING INTERNATIONAL
PORTFOLIO RETURN GROWTH EQUITY LOAN
FUND FUND FUND FUND FUND TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 69,386 $ 61,071 $ 52,107 $ 33,507 $1,014,006
Investment income:
Interest $ 6,846 64,854
Realized and unrealized
appreciation/(depreciation)
in fair value 22,606 81,962 14,416 (7,214) 701,929
--------- -------- -------- -------- -------- ---------
22,606 81,962 14,416 (7,214) 6,846 766,783
Loan principal and interest payments 1,954 3,935 51 (41,995) 0
New loans (2,641) (6,539) (2,616) 104,073 0
--------- -------- -------- -------- -------- ---------
Total additions 91,305 140,429 63,958 26,293 68,924 1,780,789
Deductions--employee withdrawals (7,685) (25,825) (12,460) (5,416) (28,278) (289,985)
--------- -------- -------- -------- -------- ---------
Net additions before transfers 83,620 114,604 51,498 20,877 40,646 1,490,804
Net transfers among funds 30,772 214 25,788 11,365 0
--------- -------- -------- -------- -------- ---------
Net additions after transfers 114,392 114,818 77,286 32,242 40,646 1,490,804
Assets available for plan benefits:
Beginning of year 43,513 306,908 51,358 57,816 86,983 3,510,204
--------- -------- -------- -------- -------- ---------
End of year $ 157,905 $421,726 $128,644 $90,058 $127,629 $5,001,008
========= ======== ======== ======== ======== ==========
</TABLE>
See accompanying notes.
7
<PAGE> 8
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statement of Changes in Assets Available
For Plan Benefits, with Fund Information
Year ended December 31, 1996
<TABLE>
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------------------------
TWENTIETH
SAGA CENTURY CIGNA
GUARANTEED COMMON VANGUARD ULTRA FIDELITY STOCK
INVESTMENT STOCK WELLINGTON INVESTORS INVESTMENTS INDEX
FUND FUND FUND FUND CONTRAFUND FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $133,974 $ 74,753 $78,499 $138,338 $179,330 $68,047
Investment income:
Interest 49,054 -- -- -- -- --
Realized and unrealized
appreciation (depreciation)
in fair value 78,158 36,908 55,757 123,563 61,718
-------- ------- -------- -------- -------- --------
49,054 78,158 36,908 55,757 123,563 61,718
Loan principal and interest payments 11,799 2,479 3,609 4,206 6,863 1,811
New loans (3,106) (6,472) (2,035) (6,934) (9,890) (1,556)
-------- -------- -------- -------- -------- --------
Total additions 191,721 148,918 116,981 191,367 299,866 130,020
Deductions--employee withdrawals (100,057) (31,041) (14,275) (65,955) (83,296) (19,099)
-------- -------- -------- -------- -------- --------
Net additions before transfers 91,664 117,877 102,706 125,412 216,570 110,921
Net transfers among funds 81,626 10,738 (4,483) 1,830 277,824 203,482
-------- -------- -------- -------- -------- -------
Net additions after transfers 173,290 128,615 98,223 127,242 494,394 314,403
Assets available for plan benefits:
Beginning of year 722,020 153,820 182,115 332,104 237,400 --
-------- -------- -------- -------- -------- --------
End of year $895,310 $282,435 $280,338 $459,346 $731,794 $314,403
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
FIDELITY
GROWTH WARBURG- WARBURG-
AND INVESCO PINCUS PINCUS KEMPER KEMPER
INCOME TOTAL EMERGING INTERNATIONAL U.S. TOTAL
PORTFOLIO RETURN GROWTH EQUITY MORTGAGE RETURN
FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employee contributions $32,248 $57,228 $31,937 $11,499 -- --
Investment income:
Interest -- -- -- -- -- --
Realized and unrealized
appreciation (depreciation)
in fair value 2,953 35,930 2,504 1,191 $244 $735
------- -------- ------- ------- -------- ---------
2,953 35,930 2,504 1,191 244 735
Loan principal and interest payments 191 4,053 15 -- -- --
New loans - (5,168) (6) -- -- --
------- -------- ------- ------- -------- ---------
Total additions 35,392 92,043 34,450 12,690 244 735
Deductions--employee withdrawals (381) (48,872) -- (364) (3,394) (5,538)
------- -------- ------- ------- -------- ---------
Net additions before transfers 35,011 43,171 34,450 12,326 (3,150) (4,803)
Net transfers among funds 8,502 263,737 16,908 45,490 (59,277) (304,394)
------- -------- ------- ------- -------- ---------
Net additions after transfers 43,513 306,908 51,358 57,816 (62,427) (309,197)
Assets available for plan benefits:
Beginning of year -- -- -- -- 62,427 309,197
------- -------- ------- ------- -------- ---------
End of year $43,513 $306,908 $51,358 $57,816 $ -- $ --
======= ======== ======= ======= ======== =========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------
KEMPER VANGUARD
GROWTH INDEX
PORTFOLIO 500 LOAN CONTRIBUTION
FUND FUND FUND RECEIVABLE TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions -- -- -- $(21,590) $ 784,263
Investment income:
Interest -- -- $ 6,253 -- 55,307
Realized and unrealized
appreciation (depreciation)
in fair value $ (2,608) $ 2,016 -- -- 399,069
-------- --------- ------- -------- ----------
(2,608) 2,016 6,253 -- 454,376
Loan principal and interest payments -- -- 35,026) -- --
New loans -- -- 35,167 -- --
-------- --------- ------- -------- ----------
Total additions (2,608) 2,016 6,394 (21,590) 1,238,639
Deductions--employee withdrawals (14,129) (1,173) (9,676) -- (397,250)
-------- --------- ------- -------- ----------
Net additions before transfers (16,737) 843 (3,282) (21,590) 841,389
Net transfers among funds (291,568) (250,415) -- --
-------- --------- ------- -------- ----------
Net additions after transfers (308,305) (249,572) (3,282) (21,590) 841,389
Beginning of year 308,305 249,572 90,265 21,590 2,668,815
End of year -------- --------- ------- -------- ----------
$ -- $ -- $86,983 $ -- $3,510,204
======== ========= ======= ======== ==========
</TABLE>
Assets available for plan benefits:
8
<PAGE> 9
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Notes to Financial Statements
December 31, 1998
1. DESCRIPTION OF PLAN
The following brief description of Saga Communications, Inc. (the "Company")
Employees' 401(k) Savings and Investment Plan (the "Plan") is provided for
general information purposes only. Participants should refer to the summary plan
description for more complete information.
GENERAL
The Plan is a defined contribution profit sharing plan established as of April
1, 1988 and amended July 1, 1993 to provide additional investment options, and
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).
Plan assets are held and investment transactions are executed by Connecticut
General Life Insurance Company (the "Trustee").
CONTRIBUTIONS
Contributions to employees' accounts are effected through voluntary reductions
in their compensation. Such reductions are, in turn, paid to the Plan by the
Company. Annual contributions for each participant are subject to the
participation and discrimination standards of Internal Revenue Code Section
401(k)(3).
ALLOCATIONS
Contributions to the Plan are allocated to participants' individual accounts on
the date of receipt by the Trustee.
Interest earned on the Guaranteed Investment Fund is credited to each
participant's account daily.
The account balance for mutual fund accounts are adjusted daily after the
Trustee has computed income/loss on the fund. Such income/loss is credited or
debited to each participant's account in the ratio which each such investment
bears to the aggregate trust investment in the fund on the valuation date.
9
<PAGE> 10
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
DISTRIBUTION
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.
VESTING
A participant's account balance is fully vested and nonforfeitable.
PLAN TERMINATION
Although the Company intends to continue the Plan indefinitely, it has reserved
the right to amend or terminate the Plan at any time. If the Plan were to be
terminated, the amount in each participant's account would remain fully vested
as of the date of termination of the Plan. Plan funds would continue to be
invested and would continue to be held in the custody of the Plan's Trustee if
the Company maintained a successor Plan. The Plan's Trustee would pay the
balance of each participant's Plan account in a lump sum at the earlier of age
59-1/2, disability, death or when employment with the Company is terminated.
If no successor plan is maintained by the Company, each participant shall
receive a total distribution of his account balance.
ADMINISTRATIVE EXPENSES
Administrative expenses of the Plan are presently paid by the Company.
10
<PAGE> 11
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
The Plan's Guaranteed Investment Fund is fully benefit responsive and as such is
stated at contract value as determined by Connecticut General Life Insurance
Company. Contract value represents contributions, plus interest at the contract
rate, less funds used to pay benefits. Interest rate resets are determined
semi-annually based on market, and were 6.25%, 6.35% and 6.25% at December 31,
1998, 1997 and 1996, respectively. The average yield was 5.96%, 6.31% and 5.89%
for the years ended December 31, 1998, 1997 and 1996, respectively. There are no
restrictions on withdrawals or transfers from the fund. Investment in the common
stock of Saga Communications is reported at fair value based on the market price
as of the Plan's year-end. The fair values of mutual fund investments are based
on net asset values as of the last business day of the plan year. The difference
between cost and fair value is reflected in the statement of changes in net
assets available for plan benefits as realized and unrealized appreciation or
depreciation of investments.
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.
3. 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. The Plan has been restated in its entirety subsequent to
the issuance of the determination 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.
11
<PAGE> 12
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
4. YEAR 2000 ISSUE (UNAUDITED)
The Company has determined that it will be necessary to take certain steps in
order to ensure that the Plan's information systems are prepared to handle year
2000 dates. The Company is taking a two phase approach. The first phase
addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Company anticipates substantially completing
this phase of the project during the third quarter of 1999. Costs associated
with modifying software and equipment are not estimated to be significant and
will be paid by the Company.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be year 2000 compliant by early 1999. If modification of data
processing systems of either the Plan, the Company, or its service providers are
not completed timely, the year 2000 problem could have a material impact on the
operations of the Plan. Plan management has not developed a contingency plan,
because they are confident that all systems will be year 2000 ready.
12
<PAGE> 13
SUPPLEMENTAL SCHEDULES
13
<PAGE> 14
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Employer ID # 38-2683519
Plan # 001
Item 27(a)--Schedule of Assets Held For Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
IDENTITY DESCRIPTION OF INVESTMENT INCLUDING
OF ISSUE, BORROWER MATURITY DATE, RATE OF INTEREST, CURRENT
LESSOR OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* Connecticut General Life
Insurance Company Guaranteed Investment Fund--16,967 units,
6.25% annual interest $961,135 $961,135
* Connecticut General
Life Insurance Company Cigna Stock Index Fund--10,655 shares 421,965 695,195
* Connecticut General Life
Insurance Company Cigna High Yield Bond Fund--279 shares 2,568 2,591
Fidelity Investments Fidelity Investments Contrafund--17,569 shares 867,444 1,430,119
Fidelity Investments Fidelity Growth and Income Portfolio
Fund--4,945 shares 224,085 302,379
Invesco Mutual Funds Invesco Total Return Fund--12,173 shares 333,556 479,049
Twentieth Century Mutual Funds Twentieth Century Ultra Investments
Fund--18,950 shares 649,624 1,016,388
The Vanguard Group of
Investment Companies Vanguard Wellington Fund--12,191 shares 376,864 517,436
Warburg-Pincus Mutual Funds Warburg-Pincus Emerging Growth
Fund--3,907 shares 166,265 189,565
Warburg-Pincus Mutual Funds Warburg-Pincus International Equity
Fund--2,904 shares 69,723 68,147
Putnam Mutual Funds Putnam Stock Growth Fund--1,076 shares 13,557 14,809
Janus Mutual Funds Janus Fund--913 shares 37,053 42,896
Janus Mutual Funds Janus Worldwide Fund--431 shares 22,294 23,442
Baron Mutual Funds Baron Asset Fund--135 shares 5,991 6,799
* Saga Communications, Inc. Saga Common Stock Fund--34,296 shares 432,691 703,066
* Participant loans receivable Interest rates 8.0% to 10.0% 169,804 169,804
---------- ----------
Total investments $4,754,619 $6,622,820
========== ==========
</TABLE>
*Party-in-interest.
14
<PAGE> 15
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Employer ID # 38-2683519
Plan # 001
Item 27(a)--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
EXPENSE CURRENT VALUE
DESCRIPTION OF ASSET (INCLUDING INCURRED OF ASSET ON
INTEREST RATE AND MATURITY IN PURCHASE SELLING LEASE WITH COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED CASE OF A LOAN) PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category iii) A series of
transactions involving
securities of the same
issue, which when
aggregated, involve an
amount in excess of 5%
of the current value of
plan assets:
Fidelity Investments Fidelity Investments
Contrafund
Purchases $218,964 $218,964 $218,964
Sales $154,670 105,459 154,670 $49,211
Twentieth Century
Mutual Funds Twentieth Century Ultra
Investments
Fund
Purchases 199,102 199,102 199,102
Sales 124,979 88,785 124,979 36,194
*Connecticut General
Life Insurance
Company Guaranteed Investment Fund
Purchases 137,720 137,720 137,720
Sales 177,113 177,113 177,113 0
Cigna Stock Index Fund
Purchases 142,383 142,383 142,383
Sales 134,972 88,990 134,972 45,982
</TABLE>
* party-in-interest.
There were no category i), ii) or iv) reportable transactions.
15
<PAGE> 16
EXHIBIT INDEX
Exhibits
23(a) Consent of Ernst & Young LLP
16
<PAGE> 17
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 25, 1999 /s/ Marcia K. Lobaito
-----------------------------------
Marcia K. Lobaito
Plan Administrator
17
<PAGE> 1
Exhibit 23(a)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) effective September 14, 1998 (Registration File No. 333-63321) pertaining
to the Saga Communications, Inc. Employees 401(k) Savings and Investment Plan,
and in the related Prospectus, of our report dated May 14, 1999 with respect to
the financial statements and schedules 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, 1998.
/s/ Ernst & Young LLP
-----------------------------------
Ernst & Young LLP
Detroit, Michigan
June 24, 1999
18
