UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

EMMIS COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

INDIANA
(State of incorporation or organization)

0-23264
(Commission file number)

35-1542018
(I.R.S. Employer Identification No.)

ONE EMMIS PLAZA
40 MONUMENT CIRCLE, SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)

(317) 266-0100
(Registrant’s Telephone Number,
Including Area Code)

NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No þ

     The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of October 3, 2008, was:

31,415,259		Shares of Class A Common Stock, $.01 Par Value
4,956,305		Shares of Class B Common Stock, $.01 Par Value
0		Shares of Class C Common Stock, $.01 Par Value

 

 

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Consolidated Statements of Operations for the three-month and six-month periods ended August 31, 2007 and 2008			3
Condensed Consolidated Balance Sheets as of February 29, 2008 and August 31, 2008			5
Condensed Consolidated Statements of Cash Flows for the six-month periods ended August 31, 2007 and 2008			7
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures about Market Risk			40
Item 4. Controls and Procedures			40
PART II — OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 4. Submission of Matters to a Vote of Security Holders			41
Item 5. Other Information			42
Item 6. Exhibits			43
Signatures			44
EXHIBIT 10.1
EXHIBIT 12
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

PART I — FINANCIAL INFORMATION

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Unaudited)

(In thousands, except per share data)

		Three Months Ended								Six Months Ended
		August 31,								August 31,
		2007				2008				2007				2008
NET REVENUES		$	95,704			$	94,227			$	182,149			$	180,250
OPERATING EXPENSES:
Station operating expenses excluding depreciation and amortization expense of $2,990, $3,474, $5,802 and $6,878, respectively			69,673				68,373				134,371				131,635
Corporate expenses excluding depreciation and amortization expense of $639, $577, $1,274 and $1,108, respectively			5,211				4,661				10,919				10,294
Depreciation and amortization			3,629				4,051				7,076				7,986
Loss on disposal of assets			94				22				94				15
Total operating expenses			78,607				77,107				152,460				149,930
OPERATING INCOME			17,097				17,120				29,689				30,320
OTHER EXPENSE:
Interest expense			(8,654	)			(6,564	)			(17,986	)			(13,621	)
Other income (expense), net			289				(1,224	)			225				(1,374	)
Total other expense			(8,365	)			(7,788	)			(17,761	)			(14,995	)
INCOME BEFORE INCOME TAXES, MINORITY
INTEREST AND DISCONTINUED OPERATIONS			8,732				9,332				11,928				15,325
PROVISION FOR INCOME TAXES			3,625				4,579				5,823				8,498
MINORITY INTEREST EXPENSE, NET OF TAX			1,328				1,918				2,521				3,325
INCOME FROM CONTINUING OPERATIONS			3,779				2,835				3,584				3,502
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX			10,277				647				10,783				1,176
NET INCOME			14,056				3,482				14,367				4,678
PREFERRED STOCK DIVIDENDS			2,246				2,246				4,492				4,492
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	11,810			$	1,236			$	9,875			$	186

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited)
(In thousands, except per share data)

		Three Months Ended								Six Months Ended
		August 31,								August 31,
		2007				2008				2007				2008
Basic net income (loss) per share available to common shareholders:
Continuing operations		$	0.04			$	0.02			$	(0.02	)		$	(0.03	)
Discontinued operations, net of tax			0.27				0.01				0.28				0.04
Net income available to common shareholders		$	0.31			$	0.03			$	0.26			$	0.01
Basic weighted average common shares outstanding			37,546				36,313				37,536				36,220
Diluted net income (loss) per share available to common shareholders:
Continuing operations		$	0.04			$	0.02			$	(0.02	)		$	(0.03	)
Discontinued operations, net of tax			0.27				0.01				0.28				0.04
Net income available to common shareholders		$	0.31			$	0.03			$	0.26			$	0.01
Diluted weighted average common shares outstanding			37,821				36,547				37,536				36,220

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(In thousands, except share data)

						August 31,
		February 29,				2008
		2008				(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	19,498			$	67,513
Accounts receivable, net			61,887				69,295
Prepaid expenses			17,010				20,621
Other current assets			8,976				7,060
Current assets — discontinued operations			7,169				2,429
Total current assets			114,540				166,918
PROPERTY AND EQUIPMENT, NET			58,945				57,507
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles			801,270				801,270
Goodwill			81,304				81,347
Other intangibles, net			26,010				24,108
Total intangible assets			908,584				906,725
OTHER ASSETS, NET			16,599				15,914
NONCURRENT ASSETS — DISCONTINUED OPERATIONS			41,072				17
Total assets		$	1,139,740			$	1,147,081

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except share data)

						August 31,
		February 29,				2008
		2008				(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	15,714			$	16,274
Current maturities of long-term debt			5,628				5,747
Accrued salaries and commissions			7,047				7,193
Accrued interest			5,478				4,174
Deferred revenue			17,610				18,093
Other current liabilities			6,849				6,381
Current liabilities — discontinued operations			3,441				753
Total current liabilities			61,767				58,615
LONG-TERM DEBT, NET OF CURRENT MATURITIES			434,306				432,138
OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES			1,896				2,334
OTHER NONCURRENT LIABILITIES			26,219				22,080
MINORITY INTEREST			53,758				53,540
DEFERRED INCOME TAXES			173,255				180,996
NONCURRENT LIABILITIES — DISCONTINUED OPERATIONS			1,161				—
Total liabilities			752,362				749,703
COMMITMENTS AND CONTINGENCIES
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK, $0.01 PAR VALUE; $50.00 LIQUIDATION PREFERENCE; AUTHORIZED 10,000,000 SHARES; ISSUED AND OUTSTANDING 2,875,000 SHARES AT FEBRUARY 29, 2008 AND AUGUST 31, 2008			143,750				143,750
SHAREHOLDERS’ EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 30,607,644 shares at February 29, 2008 and 31,386,089 shares at August 31, 2008			306				314
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,956,305 shares at February 29, 2008 and August 31, 2008, respectively			50				50
Additional paid-in capital			515,341				518,949
Accumulated deficit			(270,454	)			(270,267	)
Accumulated other comprehensive income (loss)			(1,615	)			4,582
Total shareholders’ equity			243,628				253,628
Total liabilities and shareholders’ equity		$	1,139,740			$	1,147,081

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Unaudited)

(Dollars in thousands)

		Six Months Ended August 31,
		2007				2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	14,367			$	4,678
Adjustments to reconcile net income to net cash provided by operating activities -
Discontinued operations			(10,783	)			(1,176	)
Depreciation and amortization			7,391				8,301
Minority interest expense			2,521				3,325
Provision for bad debts			1,000				1,174
Provision for deferred income taxes			3,321				7,960
Noncash compensation			3,845				3,779
Loss on disposal of assets			94				15
Changes in assets and liabilities -
Accounts receivable			(12,297	)			(7,240	)
Prepaid expenses and other current assets			(1,069	)			(1,455	)
Other assets			744				1,842
Accounts payable and accrued liabilities			977				(338	)
Deferred revenue			(136	)			483
Other liabilities			(469	)			(3,171	)
Net cash provided by operating activities — discontinued operations			7,155				3,785
Net cash provided by operating activities			16,661				21,962
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(2,886	)			(2,633	)
Cash paid for acquisitions			(6,439	)			—
Other			(784	)			(241	)
Net cash provided by investing activities — discontinued operations			45,927				38,917
Net cash provided by investing activities			35,818				36,043

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(Dollars in thousands)

		Six Months Ended August 31,
		2007				2008
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt			(66,105	)			(8,191	)
Proceeds from long-term debt			30,000				6,000
Purchase of Class A Common Stock			(11,177	)			—
Proceeds from exercise of stock options and employee stock purchases			61				—
Payments of dividends and distributions to minority interest shareholders			(2,160	)			(4,910	)
Payments of preferred stock dividends			(4,492	)			(4,492	)
Settlement of tax withholding obligations on stock issued to employees			(605	)			(544	)
Other			—				(138	)
Net cash used in financing activities			(54,478	)			(12,275	)
Effect of exchange rates on cash and cash equivalents			615				2,285
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(1,384	)			48,015
CASH AND CASH EQUIVALENTS:
Beginning of period			20,747				19,498
End of period		$	19,363			$	67,513
SUPPLEMENTAL DISCLOSURES:
Cash paid for -
Interest		$	12,022			$	14,596
Income taxes, net of refunds			2,334				2,004
Noncash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives			5,125				3,746
ACQUISITION OF ORANGE COAST MAGAZINE
Fair value of assets acquired		$	7,762
Purchase price withheld			(335	)
Cash paid			(6,439	)
Liabilities recorded		$	988

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)
August 31, 2008

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

          Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 29, 2008. The Company’s results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

          In the opinion of Emmis, the accompanying condensed consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of Emmis at August 31, 2008, and the results of its operations for the three-month and six-month periods ended August 31, 2007 and 2008 and cash flows for the six-month periods ended August 31, 2007 and 2008.

Accounting Pronouncements

          In March 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS No. 161), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, operations, and cash flows. SFAS No. 161 is effective for us beginning December 1, 2008. We are currently assessing the potential impact that adoption of SFAS No. 161 may have on our financial statements.

          In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity.  SFAS No. 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests, with all other requirements applied prospectively.  SFAS No. 160 is effective for us beginning March 1, 2009.  As of February 29, 2008, and August 31, 2008, minority interests characterized as liabilities in the accompanying consolidated balance sheets were $53,758 and $53,540, respectively. These amounts will be recharacterized as noncontrolling interests and classified as a component of shareholders’ equity when SFAS No. 160 is adopted on March 1, 2009.

          In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R (as revised), Business Combinations (SFAS No. 141R), which will significantly change how business combinations are accounted for through the use of fair values in financial reporting and will impact financial statements both on the acquisition date and in subsequent periods. Some of the changes, such as the accounting for contingent consideration, will introduce more volatility into earnings, and could impact our acquisition strategy.  SFAS No. 141R, which is effective for us as of March 1, 2009, will apply to all business combinations that will close on or after March 1, 2009.

           In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on accounting for income tax benefits of dividends on share-based payment awards. Certain stock-based compensation arrangements contain provisions that entitle an employee to receive dividends or dividend equivalents on the unvested portion of the awards. Under the provisions of SFAS No. 123R, such dividend features are factored into the value of the award at the grant date, and to the extent that an award is expected to vest, the dividends are charged to retained earnings. For income tax purposes, however, such dividend payments are generally considered additional compensation expense when they are paid to employees and, therefore, are generally deductible by the employer on a current basis for tax purposes. Under EITF No. 06-11, a realized tax benefit from dividends or dividend equivalents that is charged to retained earnings and paid to employees for equity-classified nonvested equity shares, nonvested equity share units, and outstanding share options should be recognized as an increase to additional paid-in-capital. Those tax benefits are considered windfall tax benefits under SFAS No. 123R.  EITF No. 06-11 was adopted by the Company on March 1, 2008 and did not have any effect on the Company’s financial position, results of operations or cash flows.

          In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159), which permits companies to choose to measure certain financial instruments and other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 was adopted by the Company on March 1, 2008. We have not elected to measure any financial assets or financial liabilities at fair value which were not previously required to be measured at fair value. The adoption of SFAS No. 159 did not have any effect on the Company’s financial position, results of operations or cash flows.

          In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), which provides guidance for using fair value to measure assets and liabilities. The standard also responds to investors’ requests for more information about: (1) the extent to which companies measure assets and liabilities at fair value; (2) the information used to measure fair value; and (3) the effect that fair value measurements have on earnings. SFAS No. 157 will apply whenever another standard requires (or permits) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value to any new circumstances. SFAS No. 157 was adopted by the Company on March 1, 2008, though FASB Staff Position No. 157-2, Effective Date of SFAS No. 157, defers the effective date of SFAS No. 157 for most nonfinancial assets and nonfinancial liabilities to the Company’s fiscal year beginning March 1, 2009. The adoption of SFAS No. 157 did not have any effect on the Company’s financial position, results of operations or cash flows. For further discussion, see Note 5, Fair Value Measurements.

Advertising Costs

          The Company defers the costs of major advertising campaigns for which future benefits are demonstrated. These costs are amortized over the shorter of the estimated period benefited (generally six months) or the remainder of the fiscal year. The Company had deferred $0.6 million and $0.2 million of these costs as of August 31, 2007 and 2008, respectively.

Basic and Diluted Net Income (Loss) Per Common Share

          Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at August 31, 2007 and 2008, consisted of stock options and the 6.25% Series A cumulative convertible preferred stock. The 6.25% Series A cumulative convertible preferred stock was excluded from the calculation of diluted net income (loss) per common share for the three-month and six-month periods ended August 31, 2007 and 2008, as the effect of its conversion to 7.0 million shares of our common stock would be antidilutive. Stock options were excluded from the calculation of diluted net income (loss) per common share for the six-month periods ended August 31, 2007 and 2008, as the effect of their conversion to 0.2 million shares of our common stock in both periods would be antidilutive to the net income available to common shareholders from continuing operations.

Discontinued Operations

Summary of Discontinued Operations Activity:

		Three Months Ended August 31,								Six Months Ended August 31,
		2007				2008				2007				2008
Income (loss) from operations:
Television		$	392			$	3,510			$	1,787			$	5,016
Tu Ciudad Los Angeles			(602	)			(1,328	)			(1,122	)			(1,883	)
Total			(210	)			2,182				665				3,133
Less: Provision (benefit) for income taxes			(92	)			968				277				1,390
Income (loss) from operations, net of tax			(118	)			1,214				388				1,743
Gain (loss) on sale of discontinued operations:
Television			18,237				(994	)			18,237				(994	)
Total			18,237				(994	)			18,237				(994	)
Less: Provision (benefit) for income taxes			7,842				(427	)			7,842				(427	)
Gain (loss) on sale of discontinued operations, net of tax			10,395				(567	)			10,395				(567	)
Income from discontinued operations, net of tax		$	10,277			$	647			$	10,783			$	1,176

A discussion of each component of discontinued operations follows.

Discontinued Operations – Television Division

          On July 18, 2008, Emmis completed the sale of its sole remaining television station, WVUE-TV in New Orleans, LA, to Louisiana Media Company LLC for $41.0 million in cash. The Company recognized a loss on the sale of WVUE-TV of $0.6 million, net of tax benefits of $0.4 million, which is included in income from discontinued operations in the accompanying statements of operations. In connection with the sale, the Company paid discretionary bonuses to the employees of WVUE totaling $0.8 million, which is included in the calculation of the loss on sale. The sale of WVUE-TV completes the sale of our television division which began on May 10, 2005, when Emmis announced that it had engaged advisors to assist in evaluating strategic alternatives for its television assets. As previously disclosed, the Compensation Committee of the Board of Directors may evaluate a discretionary bonus to executive officers and certain other employees integral to the sale of the television division now that all sixteen of the Company’s television stations have been sold. However, the Compensation Committee has not addressed this issue to date. On June 4, 2007, the Company closed on its sale of KGMB-TV in Honolulu

to HITV Operating Co., Inc. for $40.0 million in cash and recorded a gain on sale of $10.4 million, net of tax of $7.8 million.

          The decision to explore strategic alternatives for the Company’s television assets stemmed from the Company’s desire to reduce its debt, coupled with the Company’s view that its television stations needed to be aligned with a company with more significant financial resources and a singular focus on the challenges of American television, including the growth of digital video recorders and the industry’s relationship with cable and satellite providers. The Company concluded its television assets were held for sale in accordance with SFAS No. 144 and the results of operations of the television division have been classified as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented. The television division had historically been presented as a separate reporting segment of Emmis.

          In August 2005, WVUE-TV was significantly affected by Hurricane Katrina and the subsequent flooding. During the three months ended August 31, 2008, the Company received $3.1 million as final settlement of all Katrina-related insurance claims. The insurance proceeds are classified as a reduction of station operating expenses in the summary of television operations presented below and as an increase to income from discontinued operations in the accompanying statements of operations.

          The following table summarizes certain operating results for the television division for all periods presented:

		Three months ended August 31,								Six months ended August 31,
		2007				2008				2007				2008
Net revenues		$	4,149			$	2,392			$	12,094			$	7,364
Station operating expenses			3,757				(1,113	)			10,157				2,356
Gain on disposal of assets			—				5				—				8
Income before taxes			392				3,510				1,787				5,016
Provision for income taxes			162				1,509				737				2,159

          Assets and liabilities related to our television division are classified as discontinued operations in the accompanying condensed consolidated balance sheets as follows:

		February 29, 2008				August 31, 2008
Current assets:
Accounts receivable, net		$	4,579			$	1,830
Current portion of TV program rights			1,551				—
Prepaid expenses			239				—
Other			173				476
Total current assets			6,542				2,306
Noncurrent assets:
Property and equipment, net			20,447				—
Intangibles, net			19,544				—
Other noncurrent assets			894				—
Total noncurrent assets			40,885				—
Total assets		$	47,427			$	2,306
Current liabilities:
Accounts payable and accrued expenses		$	487			$	595
Current portion of TV program rights			2,196				—
Accrued salaries and commissions			397				—
Deferred revenue			14				—
Other			113				—
Total current liabilities			3,207				595
Noncurrent liabilities:
TV program rights payable, net of current portion			912				—
Other noncurrent liabilities			222				—
Total noncurrent liabilities			1,134				—
Total liabilities		$	4,341			$	595

          In accordance with Emerging Issues Task Force Issue 87-24 “Allocation of Interest to Discontinued Operations,” as modified, the Company did not allocate any interest expense for the periods presented to the television division, as no debt would be required to be repaid as a result of the disposition of the Company’s remaining television asset.

Discontinued Operations – Tu Ciudad Los Angeles

          On July 10, 2008, Emmis announced that it had indefinitely suspended publication of Tu Ciudad Los Angeles because the magazine’s financial performance did not meet the Company’s expectations. Operating expenses for the three-month period ended August 31, 2008 of $1.2 million include all shut-down related costs and are included in income from discontinued operations in the accompanying statements of operations. Tu Ciudad Los Angeles had historically been included in the publishing division. The following table summarizes certain operating results for Tu Ciudad Los Angeles for all periods presented:

		Three months ended August 31,								Six months ended August 31,
		2007				2008				2007				2008
Net revenues		$	695			$	(6	)		$	1,513			$	818
Station operating expenses			1,285				1,233				2,612				2,599
Depreciation and amortization			12				10				23				22
Loss on disposal of assets			—				79				—				80
Loss before taxes			602				1,328				1,122				1,883
Benefit for income taxes			254				541				460				769

          Assets and liabilities related to Tu Ciudad Los Angeles are classified as discontinued operations in the accompanying condensed consolidated balance sheets as follows:

		February 29, 2008				August 31, 2008
Current assets:
Accounts receivable, net		$	414			$	49
Prepaid expenses			205				68
Other			8				6
Total current assets			627				123
Noncurrent assets:
Property and equipment, net			169				—
Other noncurrent assets			18				17
Total noncurrent assets			187				17
Total assets		$	814			$	140
Current liabilities:
Accounts payable and accrued expenses		$	88			$	155
Accrued salaries and commissions			41				—
Deferred revenue			87				—
Other			18				3
Total current liabilities			234				158
Noncurrent liabilities:
Other noncurrent liabilities			27				—
Total noncurrent liabilities			27				—
Total liabilities		$	261			$	158

Reclassifications

          Certain reclassifications have been made to the prior year’s financial statements to be consistent with the August 31, 2008 presentation. The reclassifications have no impact on net income previously reported.

Note 2. Share Based Payments

Stock Option Awards

          The Company has granted options to purchase its common stock to employees and directors of the

Company under various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company. All options granted since March 1, 2000, vest annually over three years (one-third each year for three years). The Company issues new shares upon the exercise of stock options.

          The Company adopted the fair value recognition provisions of SFAS No. 123R on March 1, 2006, using the modified-prospective-transition method. The amounts recorded as share based compensation expense under SFAS No. 123R primarily relate to restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches of common stock in our 401(k) plans, and annual stock option and restricted stock grants.

          The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The Company includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of awards. The Company uses the simplified method to estimate the expected term for all options granted. Although the Company has granted options for many years, the historical exercise activity of our options was impacted by the way the Company processed the equitable adjustment of our November 2006 special dividend. Consequently, the Company believes that reliable data regarding exercise behavior only exists for the period subsequent to November 2006, which is insufficient experience upon which to estimate the expected term. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the six months ended August 31, 2007 and 2008:

		Six Months Ended August 31,
		2007				2008
Risk-Free Interest Rate:			4.5	%			2.8	%
Expected Dividend Yield:			0	%			0	%
Expected Life (Years):			6.0				6.0
Expected Volatility:			47.5	%			48.8	%

     The following table presents a summary of the Company’s stock options outstanding at August 31, 2008, and stock option activity during the six months ended August 31, 2008 (“Price” reflects the weighted average exercise price per share):

										Weighted Average				Aggregate
										Remaining				Intrinsic
		Options				Price				Contractual Term				Value
Outstanding, beginning of period			7,600,063			$	16.08
Granted			657,839				2.88
Exercised (1)			—				—
Forfeited			13,360				5.45
Expired			54,234				17.06
Outstanding, end of period			8,190,308				15.04
Exercisable, end of period			6,864,499				16.76				3.9			$	—

     The weighted average grant date fair value of options granted during the six months ended August 31, 2007 and 2008, was $4.24 and $1.42, respectively. The total intrinsic value of options exercised during the six months ended August 31, 2007 and 2008, was $0 and $0, respectively.

     A summary of the Company’s nonvested options at August 31, 2008, and changes during the six months ended August 31, 2008, is presented below:

						Weighted Average
						Grant Date
		Options				Fair Value
Nonvested, beginning of period			1,114,164			$	5.16
Granted			657,839				1.42
Vested			432,834				5.41
Forfeited			13,360				2.82
Nonvested, end of period			1,325,809				3.25

     There were 2.8 million shares available for future grants under the various option plans at August 31, 2008. The vesting date of outstanding options at August 31, 2008 range from September 2008 to July 2011, and expiration dates range from October 2009 to July 2018.

Restricted Stock Awards

     The Company began granting restricted stock awards to employees and directors of the Company in lieu of certain stock option grants in 2005. These awards generally vest at the end of the second or third year after grant and are forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company prior to vesting. The restricted stock awards were granted out of the Company’s 2004 Equity Incentive Plan. The Company also awards, out of the Company’s 2004 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares are immediately lapsed on the grant date.

     The following table presents a summary of the Company’s restricted stock grants outstanding at August 31, 2008, and restricted stock activity during the six months ended August 31, 2008 (“Price” reflects the weighted average share price at the date of grant):

		Awards				Price
Grants outstanding, beginning of period			626,049			$	12.62
Granted			870,572				3.08
Vested (restriction lapsed)			803,530				7.15
Forfeited			26,295				5.64
Grants outstanding, end of period			666,796				7.04

     The total grant date fair value of shares vested during the six months ended August 31, 2007 and 2008 was $3.0 million and $5.7 million, respectively.

Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company in the three months and six months ended August 31, 2007 and 2008:

		Three Months								Six Months
		Ended August 31,								Ended August 31,
		2007				2008				2007				2008
Station operating expenses		$	475			$	557			$	1,741			$	1,610
Corporate expenses			1,002				613				2,104				2,169
Stock-based compensation expense included in operating expenses			1,477				1,170				3,845				3,779
Tax benefit			(606	)			(480	)			(1,576	)			(1,549	)
Recognized stock-based compensation expense, net of tax		$	871			$	690			$	2,269			$	2,230

          As of August 31, 2008, there was $5.0 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 1.3 years.

Note 3. Intangible Assets and Goodwill

          Indefinite-lived Intangibles

          Under the guidance in Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), the Company’s Federal Communications Commission (“FCC”) licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but are tested for impairment at least annually. The carrying amounts of the Company’s FCC licenses were $801.3 million as of February 29, 2008 and August 31, 2008. This amount is entirely attributable to our radio division.

          The Company uses a direct-method valuation approach known as the greenfield income valuation method when it performs its annual impairment tests. Under this method, the Company projects the cash flows that would be generated by each of its units of accounting if the unit of accounting were commencing operations in each of its markets at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting was beginning operations. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. For its radio stations, the Company has determined the unit of accounting to be all of its stations in a local market. The required annual impairment tests may result in impairment charges in future periods.

          Goodwill

          SFAS No. 142 requires the Company to test goodwill for impairment at least annually using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. The Company conducts the two-step impairment test on December 1 of each fiscal year. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station

operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. The multiple applied to each reporting unit is then adjusted up or down from this benchmark based upon characteristics of the reporting unit’s specific market, such as market size, market growth rate, and recently completed or announced transactions within the market. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units is based on recently completed transactions within the city and regional magazine industry.

          This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations.

          As of February 29, 2008 and August 31, 2008, the carrying amount of the Company’s goodwill was $81.3 million. As of February 29, 2008 and August 31, 2008, approximately $26.2 million and $55.1 million of our goodwill was attributable to our radio and publishing divisions, respectively. The required annual impairment tests may result in impairment charges in future periods.

          Definite-lived intangibles

          The Company’s definite-lived intangible assets consist primarily of foreign broadcasting licenses, trademarks and customer list, all of which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The following table presents the weighted-average useful life, gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at February 29, 2008 and August 31, 2008:

						February 29, 2008												August 31, 2008
		Weighted Average				Gross								Net				Gross								Net
		Useful Life				Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		(in years)				Amount				Amortization				Amount				Amount				Amortization				Amount
Foreign Broadcasting Licenses			6.9			$	43,475			$	22,052			$	21,423			$	44,617			$	24,745			$	19,872
Trademarks			19.6				3,687				531				3,156				3,687				643				3,044
Customer List			4.0				1,162				169				993				1,162				315				847
Favorable Office Leases			6.4				688				501				187				688				542				146
Noncompete and Other			3.0				312				61				251				312				113				199
TOTAL						$	49,324			$	23,314			$	26,010			$	50,466			$	26,358			$	24,108

          Total amortization expense from definite-lived intangibles for the three-month periods ended August 31, 2007 and 2008, was $1.0 million and $1.5 million, respectively. Total amortization expense from definite-lived intangibles for the six-month periods ended August 31, 2007 and 2008, was $2.0 million and $3.0 million, respectively. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles:

YEAR ENDED FEBRUARY 28 (29),
2009		$	6,336
2010			6,271
2011			4,295
2012			4,078
2013			3,953

Note 4. Derivative Instruments and Hedging Activities

          Under the terms of its senior credit facility, the Company is required to fix or cap the interest rate on at least 30% of its debt outstanding (as defined in the credit facility) for a period of at least three years. In March 2007, the Company fulfilled this requirement by entering into a three-year interest rate exchange agreement (“Swap”), whereby the Company pays a fixed rate of 4.795% on $165 million of notional principal to Bank of America, and Bank of America pays to the Company a variable rate on the same amount of notional principal based on the three-month London Interbank Offered Rate (“LIBOR”). In March 2008, the Company entered into an additional three-year Swap, whereby the Company pays a fixed rate of 2.964% on $100 million of notional principal to Deutsche Bank, and Deutsche Bank pays to the Company a variable rate on the same amount of notional principal based on the three-month LIBOR. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company considers this risk to be low.

          Under the provisions of Statement of Financial Accounting Standards No. 133, as amended and interpreted (“SFAS No. 133”), the Company recognizes at fair value all derivatives, whether designated as hedging relationships or not, in the balance sheet as either an asset or liability. The accounting for changes in the fair value of a derivative, including certain derivative instruments embedded in other contracts, depends on the intended use of the derivative and the resulting designation. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item are recognized in the statement of operations. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the statement of operations when the hedged item affects net income. If a derivative does not qualify as a hedge, it is marked to fair value through the statement of operations. Any fees associated with these derivatives are amortized over their term. Under these derivatives, the differentials to be received or paid are recognized as an adjustment to interest expense over the life of the contract. Gains and losses on termination of these instruments are recognized as interest expense when terminated.

          SFAS No. 133 defines requirements for designation and documentation of hedging relationships, as well as on-going effectiveness assessments, in order to use hedge accounting under this standard. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes relating all derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company’s derivative activities, all of which are for purposes other than trading, are initiated within the guidelines of corporate risk-management policies. The Company formally assesses, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. If a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting.

          The Company estimates the fair value of the $165 million notional Swap and the $100 million notional Swap identified above to be a liability of $4.3 million and an asset of $1.2 million, respectively, as of August 31, 2008. The fair values of the Swaps are estimated by obtaining quotations from the financial institutions that are counterparties to the Company’s Swap agreements. The fair value is an estimate of the net amount that the Company would be required to pay (in the case of the $165 million notional Swap) or would receive (in the case of the $100 million notional Swap) on August 31, 2008, if the agreements were transferred to other parties or cancelled by the Company.

Note 5. Fair Value Measurements

     As discussed in Note 1, in September 2006, the FASB issued SFAS No. 157 and in February 2007, issued SFAS No. 159. Both standards address aspects of the expanding application of fair value accounting. Effective

March 1, 2008, we adopted SFAS No. 157 and SFAS No. 159. Pursuant to the provisions of FSP No. 157-2, we have decided to defer adoption of SFAS No. 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. There was no adjustment to accumulated deficit as a result of our adoption of SFAS No. 157. SFAS No. 159 permits an entity to measure certain financial assets and financial liabilities at fair value that were not previously required to be measured at fair value. We have not elected to measure any financial assets or financial liabilities at fair value that were not previously required to be measured at fair value.

     SFAS No. 157 provides for the following:

	-		Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework for measuring fair value;
	-		Establishes a three-level hierarchy for fair value measurements based upon the observability of inputs to the valuation of an asset or liability as of the measurement date;
	-		Requires consideration of our nonperformance risk when valuing liabilities; and
	-		Expands disclosures about instruments measured at fair value.

     SFAS No. 157 also establishes a three-level valuation hierarchy for fair value measurements. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs create the following fair value hierarchy:

	-		Level 1 — Quoted prices for identical instruments in active markets;
	-		Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; and
	-		Level 3 — Instruments whose significant inputs are unobservable.

     The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of August 31, 2008. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

		As of August 31, 2008
		Level 1				Level 2				Level 3
		Quoted Prices
		in Active				Significant
		Markets for				Other				Significant
		Identical Assets				Observable				Unobservable
		or Liabilities				Inputs				Inputs				Total
Cash equivalents		$	—			$	44,199			$	—			$	44,199
Interest rate cash flow hedge			—				1,241				—				1,241
Total assets measured at fair value on a recurring basis		$	—			$	45,440			$	—			$	45,440
Interest rate cash flow hedge			—				4,309				—				4,309
Total liabilities measured at fair value on a recurring basis		$	—			$	4,309			$	—			$	4,309

Cash Equivalents — A majority of Emmis’ domestic cash equivalents are invested in an institutional money market fund. The fund is not publicly traded, but third-party quotes for the fund are available and is therefore considered a Level 2 input. Derivative Instruments — Emmis’ derivative financial instruments consist solely of interest rate cash flow hedges in which the Company pays a fixed rate and receives a variable interest rate that is observable based upon a forward interest rate curve and is therefore considered a Level 2 input.

Available for sale securities —During the three months ended August 31, 2008, Emmis determined that its available for sale securities, consisting entirely of an investment in preferred stock and warrants of a company that specializes in the development and distribution of mobile and on-line games, was impaired and the impairment was other-than-temporary and recorded an impairment loss of $1.3 million, which is included in other expenses in the accompanying statements of operations.

     As of August 31, 2008, Emmis had no financial assets or liabilities whose fair value was measured using significant unobservable inputs. The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

		Available
		For Sale
		Securities
Balance as of February 29, 2008		$	1,000
Purchases			250
Other than temporary impairment loss			(1,250	)
Balance as of August 31, 2008		$	—

Note 6. Pro Forma Financial Information

          Unaudited pro forma summary information is presented below for the three-month and six-month periods ended August 31, 2007, assuming the acquisition (and related net borrowings) of Orange Coast Kommunications, Inc. (publisher of Orange Coast) and Infopress & Company OOD (operator of Inforadio, a Bulgarian national radio network) had occurred on the first day of the pro forma periods presented below.

          Preparation of the pro forma financial information was based upon assumptions deemed appropriate by the Company’s management. The pro forma financial information presented below is not necessarily indicative of the results that actually would have occurred if the transaction indicated above had been consummated at the

beginning of the periods presented, and is not intended to be a projection of future results.

		Three months				Six months
		Ended August 31,				Ended August 31,
		2007				2007
		(Pro Forma)				(Pro Forma)
Net revenues		$	96,995			$	185,216
Net income from continuing operations		$	3,049			$	2,343
Net income (loss) available to common shareholders from continuing operations		$	803			$	(2,149	)
Net income (loss) per share available to common shareholders from continuing operations:
Basic		$	0.02			$	(0.06	)
Diluted		$	0.02			$	(0.06	)
Weighted average shares outstanding:
Basic			37,546				37,536
Diluted			37,821				37,536

Note 7. Comprehensive Income

          Comprehensive income was comprised of the following for the three-month and six-month periods ended August 31, 2007 and 2008:

		Three Months								Six Months
		Ended August 31,								Ended August 31,
		2007				2008				2007				2008
Net income		$	14,056			$	3,482			$	14,367			$	4,678
Change in fair value of derivatives			(1,112	)			(393	)			(52	)			2,662
Translation adjustment			54				1,135				900				3,536
Total comprehensive income		$	12,998			$	4,224			$	15,215			$	10,876

Note 8. Shareholders’ Equity

          On August 8, 2007, Emmis’ Board of Directors authorized a share repurchase program pursuant to which Emmis is authorized to purchase up to an aggregate value of $50 million of its outstanding Class A common stock within the parameters of SEC Rule 10b-18. Common stock repurchase transactions may occur from time to time at our discretion, either on the open market or in privately negotiated purchases, subject to prevailing market conditions and other considerations. On May 22, 2008, Emmis’ Board of Directors revised the share repurchase program to allow for the repurchase of both Class A common stock and Series A cumulative convertible preferred stock.

          Since August 8, 2007, the Company has repurchased 2.2 million Class A common shares for $13.9 million (average price of $6.23 per share). During the six months ended August 31, 2007, the Company repurchased 1.8 million Class A common shares for $11.2 million (an average price of $6.17 per share). The Company did not make any share repurchases during the six months ended August 31, 2008.

Note 9. Segment Information

          The Company’s operations are aligned into two business segments: (i) Radio and (ii) Publishing and Other. These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate expenses are not allocated to reportable segments. The results of operations of our television division and Tu Ciudad Los Angeles have been classified as discontinued operations and have been excluded from the segment disclosures below. See Note 1 for more discussion of our discontinued operations.

          The Company’s segments operate primarily in the United States, but we also operate radio stations located in Hungary, Slovakia, Bulgaria and Belgium. The following table summarizes the net revenues and long-lived assets of our international properties included in our condensed consolidated financial statements.

		Net Revenues								Net Revenues								Long-lived Assets
		Three Months Ended August 31,								Six Months Ended August 31,								As of August 31,
		2007				2008				2007				2008				2007				2008
Hungary		$	5,545			$	7,778			$	10,074			$	12,013			$	4,885			$	3,928
Slovakia			3,730				5,289				6,431				8,863				10,832				10,628
Bulgaria			943				1,273				1,686				2,189				3,356				14,892
Belgium			437				535				690				1,149				3,356				534

          The accounting policies as described in the summary of significant accounting policies included in the Company’s Annual Report filed on Form 10-K for the year ended February 29, 2008, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months Ended						Publishing
August 31, 2007 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	74,416			$	21,288			$	—			$	95,704
Station operating expenses, excluding depreciation and amortization			51,152				18,521				—				69,673
Corporate expenses, excluding depreciation and amortization			—				—				5,211				5,211
Depreciation and amortization			2,779				211				639				3,629
Loss on disposal of assets			94				—				—				94
Operating income (loss)		$	20,391			$	2,556			$	(5,850	)		$	17,097
Assets — continuing operations		$	992,001			$	84,155			$	44,188			$	1,120,344
Assets — discontinued operations			—				986				44,928				45,914
Total assets		$	992,001			$	85,141			$	89,116			$	1,166,258

Three Months Ended						Publishing
August 31, 2008 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	73,278			$	20,949			$	—			$	94,227
Station operating expenses, excluding depreciation and amortization			48,882				19,491				—				68,373
Corporate expenses, excluding depreciation and amortization			—				—				4,661				4,661
Depreciation and amortization			3,177				297				577				4,051
Loss on disposal of assets			14				8				—				22
Operating income (loss)		$	21,205			$	1,153			$	(5,238	)		$	17,120
Assets — continuing operations		$	978,051			$	86,250			$	80,334			$	1,144,635
Assets — discontinued operations			—				140				2,306				2,446
Total assets		$	978,051			$	86,390			$	82,640			$	1,147,081

Six Months Ended						Publishing
August 31, 2007 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	139,416			$	42,733			$	—			$	182,149
Station operating expenses, excluding depreciation and amortization			97,490				36,881				—				134,371
Corporate expenses, excluding depreciation and amortization			—				—				10,919				10,919
Depreciation and amortization			5,430				372				1,274				7,076
Loss on disposal of assets			94				—				—				94
Operating income (loss)		$	36,402			$	5,480			$	(12,193	)		$	29,689
Assets — continuing operations		$	992,001			$	84,155			$	44,188			$	1,120,344
Assets — discontinued operations			—				986				44,928				45,914
Total assets		$	992,001			$	85,141			$	89,116			$	1,166,258

Six Months Ended						Publishing
August 31, 2008 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	137,469			$	42,781			$	—			$	180,250
Station operating expenses, excluding depreciation and amortization			92,040				39,595				—				131,635
Corporate expenses, excluding depreciation and amortization			—				—				10,294				10,294
Depreciation and amortization			6,281				597				1,108				7,986
Loss on disposal of assets			5				10				—				15
Operating income (loss)		$	39,143			$	2,579			$	(11,402	)		$	30,320
Assets — continuing operations		$	978,051			$	86,250			$	80,334			$	1,144,635
Assets — discontinued operations			—				140				2,306				2,446
Total assets		$	978,051			$	86,390			$	82,640			$	1,147,081