United States
Securities and Exchange Commission
Washington, D.C. 20549
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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, 2002
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
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(Full title of plan)
Saga Communications, Inc.
73 Kercheval Avenue
Grosse Pointe Farms, Michigan 48236
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(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
December 31, 2002 and 2001
Page
Report of Independent Auditors 3
Financial Statements:
Statements of Assets Available for Benefits - December 31, 2002
and 2001 4
Statements of Changes in Assets Available for Benefits -
Years ended December 31, 2002 and 2001 5
Notes to Financial Statements 6
Supplemental Schedule:
Schedule H line 4(i) - Schedule of Assets (Held At End of Year) 11
Other Information:
Signatures 13
Exhibit 23.1 - Consent of Independent Auditors 14
Exhibit 99.1 - Certification of Officers Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to section 906
of the Sarbanes-Oxley Act of 2002 15
2
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, 2002 and 2001 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 assets available for benefits of the Plan at December
31, 2002 and 2001 and the changes in its assets available for benefits for the
years then ended, in conformity with accounting principles generally accepted in
the United States.
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, 2002 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is 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, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/S/ Ernst & Young LLP
-----------------------------
Detroit, Michigan
May 30, 2003
3
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statements of Assets Available For Benefits
DECEMBER 31
2002 2001
------------------------------
ASSETS
Investments, at fair value:
Mutual funds $ 5,688,928 $ 6,137,039
Guaranteed Investment Fund 1,690,384 1,269,419
Saga Common Stock Fund 2,145,148 1,741,254
Participant loans 163,128 188,146
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9,687,588 9,335,858
Employer contributions receivable 209,740 196,691
------------------------------
Assets available for benefits $ 9,897,328 $ 9,532,549
==============================
See accompanying notes.
4
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Statements of Changes in Assets Available For Benefits
YEAR ENDED
DECEMBER 31
2002 2001
------------------------------
ADDITIONS
Participant contributions $ 1,433,826 $ 1,474,076
Employer contributions 209,740 196,691
Investment income:
Interest and dividends 89,483 97,696
Net appreciation/(depreciation) in fair
value of investments:
Mutual funds (1,127,823) (825,980)
Saga Common Stock Fund 275,597 487,056
------------------------------
Total additions 880,823 1,429,539
DEDUCTIONS
Benefit payments 516,044 743,407
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Net increase 364,779 686,132
Assets available for benefits:
Beginning of year 9,532,549 8,846,417
------------------------------
End of year $ 9,897,328 $ 9,532,549
==============================
See accompanying notes.
5
Saga Communications, Inc.
Employees' 401(k) Savings and Investment Plan
Notes to Financial Statements
Years ended December 31, 2002 and 2001
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 2002 and 2001 the
discretionary employer match was $209,740 and $196,691, 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.
6
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 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.
7
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 guaranteed 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 4.7% and 6% for 2002 and 2001, respectively. The
crediting interest rate for these investment contracts is reset semiannually by
the issuer but cannot be less than zero and was 4.8% and 5.95% at December 31,
2002 and 2001, 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.
8
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
2002 2001
---------- ----------
Guaranteed Investment Fund* $1,690,384 $1,269,419
Saga Common Stock Fund** 2,145,148 1,741,254
Vanguard Wellington Fund* 697,860 662,023
American Century Ultra Investors Fund* 832,316 1,052,158
Fidelity Contrafund Account* 1,524,774 1,606,545
S&P 500 Index Fund* 555,576 708,984
Fidelity Growth & Income Account* 499,233 512,318
* Fund is sponsored by Plan Trustee
** 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: 2002 2001
----------- -----------
Contributions $ 345,501 $ 329,788
Net appreciation in fair value 275,597 487,056
Benefit payments (99,098) (123,323)
Transfers out (118,106) (28,342)
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Net increase 403,894 665,179
Net assets available for benefits at beginning of year 1,741,254 1,076,075
----------- -----------
Net assets available for benefits at end of year $ 2,145,148 $ 1,741,254
=========== ===========
9
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.
10
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, 2002
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
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* Connecticut General Life Insurance Company Guaranteed Investment Fund $ 1,690,384
* Connecticut General Life Insurance Company S&P 500 Index Fund 555,576
* Connecticut General Life Insurance Company Artisan Partners Growth Fund 22,135
* Connecticut General Life Insurance Company Timesquare High Yield 54,392
* Connecticut General Life Insurance Company Fidelity Contrafund Account 1,524,774
* Connecticut General Life Insurance Company Fidelity Growth and Income Account 499,233
* Connecticut General Life Insurance Company Balanced I/ Wellington Management Fund 451,468
* Connecticut General Life Insurance Company American Century Ultra Investors Fund 832,316
* Connecticut General Life Insurance Company Vanguard Wellington Fund 697,860
* Connecticut General Life Insurance Company Credit Suisse Emerging Growth Fund 246,560
* Connecticut General Life Insurance Company Credit Suisse International Equity Fund 64,900
* Connecticut General Life Insurance Company Goldman Sachs Large Cap Growth Fund 94,907
* Connecticut General Life Insurance Company Janus Fund 278,673
* Connecticut General Life Insurance Company Janus Worldwide Fund 199,783
* Connecticut General Life Insurance Company TCW Small Cap Value Fund 30,607
Baron Mutual Funds Baron Asset Fund 135,744
** Saga Communications, Inc. Saga Common Stock Fund $ 1,434,059 2,145,148
* Participant loans receivable Interest rates 5.75% to 10.50% 163,128
-----------
Total investments $ 9,687,588
===========
* Party-in-interest.
** Party-in-interest, Nonparticipant directed fund
11
EXHIBIT INDEX
Exhibits
23.1 Consent of Ernst & Young LLP
99.1 Certification of Officers Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to section 906 of the Sarbanes-Oxley Act of 2002
12
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 20, 2003 /S/ Marcia K. Lobaito
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Marcia K. Lobaito
Plan Administrator
Date: June 20, 2003 /S/ Catherine Bobinski
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Catherine Bobinski
Vice President, Corporate Controller
and Chief Accounting Officer
13