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, or a non accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o       Accelerated filer þ       Non-accelerated filer 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 January 2, 2008, was:

	30,606,255			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 nine-month periods ended November 30, 2006 and 2007			3
Condensed Consolidated Balance Sheets as of February 28, 2007, and November 30, 2007			5
Condensed Consolidated Statements of Cash Flows for the nine-month periods ended November 30, 2006 and 2007			7
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosures about Market Risk			44
Item 4. Controls and Procedures			44
PART II — OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45
Item 6. Exhibits			46
Signatures			47
Statement Re: Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Section 1350 Certification of Principal Executive Officer
Section 1350 Certification of Principal Financial Officer

PART I — FINANCIAL INFORMATION

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Unaudited)

(In thousands, except per share data)

		Three Months Ended November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
		(As Adjusted								(As Adjusted
		See Note 1)								See Note 1)
NET REVENUES		$	91,205			$	91,713			$	280,901			$	275,375
OPERATING EXPENSES:
Station operating expenses			61,854				66,131				191,873				201,984
Noncash contract termination fee			—				15,252				—				15,252
Corporate expenses			8,339				4,872				23,308				16,921
Depreciation and amortization			3,417				3,702				9,915				10,801
(Gain) Loss on disposal of assets			2				(198	)			5				(104	)
Total operating expenses			73,612				89,759				225,101				244,854
OPERATING INCOME			17,593				1,954				55,800				30,521
OTHER EXPENSE:
Interest expense			(9,505	)			(8,692	)			(33,621	)			(26,678	)
Loss on debt extinguishment			(10,023	)			—				(13,403	)			—
Other income, net			1,885				217				2,670				442
Total other expense			(17,643	)			(8,475	)			(44,354	)			(26,236	)
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY
INTEREST AND DISCONTINUED OPERATIONS			(50	)			(6,521	)			11,446				4,285
PROVISION (BENEFIT) FOR INCOME TAXES			504				(2,237	)			5,148				3,126
MINORITY INTEREST EXPENSE, NET OF TAX			654				1,253				3,376				3,774
INCOME (LOSS) FROM CONTINUING OPERATIONS			(1,208	)			(5,537	)			2,922				(2,615	)
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX			4,400				5,641				121,330				17,086
NET INCOME (LOSS)			3,192				104				124,252				14,471
PREFERRED STOCK DIVIDENDS			2,246				2,246				6,738				6,738
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$	946			$	(2,142	)		$	117,514			$	7,733

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 November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
		(As Adjusted								(As Adjusted
		See Note 1)								See Note 1)
Basic net income (loss) per share available to common shareholders:
Continuing operations		$	(0.09	)		$	(0.22	)		$	(0.10	)		$	(0.25	)
Discontinued operations, net of tax			0.12				0.16				3.26				0.46
Net income (loss) available to common shareholders		$	0.03			$	(0.06	)		$	3.16			$	0.21
Basic weighted average common shares outstanding			37,290				35,558				37,214				36,885
Diluted net income (loss) per share available to common shareholders:
Continuing operations		$	(0.09	)		$	(0.22	)		$	(0.10	)		$	(0.25	)
Discontinued operations, net of tax			0.12				0.16				3.26				0.46
Net income (loss) available to common shareholders		$	0.03				(0.06	)		$	3.16			$	0.21
Diluted weighted average common shares outstanding			37,290				35,558				37,214				36,885
Cash dividends declared per common share		$	4.00			$	—			$	4.00			$	—

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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(In thousands, except share data)

		February 28,				November 30,
		2007				2007
		(Note 1)				(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	20,747			$	25,392
Accounts receivable, net			62,403				72,574
Prepaid expenses			15,292				17,849
Other			6,137				7,307
Current assets — discontinued operations			14,430				14,631
Total current assets			119,009				137,753
PROPERTY AND EQUIPMENT, NET			61,488				58,341
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles			819,338				819,338
Goodwill			77,620				80,465
Other intangibles, net			19,560				21,240
Total intangible assets			916,518				921,043
OTHER ASSETS, NET			34,890				17,371
NONCURRENT ASSETS — DISCONTINUED OPERATIONS			75,999				40,952
Total assets		$	1,207,904			$	1,175,460

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)

		February 28,				November 30,
		2007				2007
		(Note 1)				(Unaudited)
		(As Adjusted,
		See Note 1)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	17,350			$	16,978
Current maturities of long-term debt			4,595				5,621
Accrued salaries and commissions			9,991				7,207
Accrued interest			265				5,811
Deferred revenue			14,894				15,778
Other			4,519				6,105
Current liabilities — discontinued operations			6,926				3,968
Total current liabilities			58,540				61,468
LONG-TERM DEBT, NET OF CURRENT MATURITIES			494,587				444,384
OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES			2,745				2,974
OTHER NONCURRENT LIABILITIES			29,517				21,786
MINORITY INTEREST			50,780				53,217
DEFERRED INCOME TAXES			171,349				183,253
NONCURRENT LIABILITIES — DISCONTINUED OPERATIONS			18,591				1,273
Total liabilities			826,109				768,355
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 28, 2007 AND NOVEMBER 30, 2007			143,750				143,750
SHAREHOLDERS’ EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 32,488,863 shares at February 28, 2007 and 30,540,998 shares at November 30, 2007			325				305
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,930,267 shares at February 28, 2007 and 4,956,305 shares at November 30, 2007			49				50
Additional paid-in capital			522,655				515,078
Accumulated deficit			(285,300	)			(252,387	)
Accumulated other comprehensive income			316				309
Total shareholders’ equity			238,045				263,355
Total liabilities and shareholders’ equity		$	1,207,904			$	1,175,460

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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Unaudited)

(Dollars in thousands)

		Nine Months Ended November 30,
		2006				2007
		(As Adjusted,
		See Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	124,252			$	14,471
Adjustments to reconcile net income to net cash provided by operating activities -
Discontinued operations			(121,330	)			(17,086	)
Depreciation and amortization			10,941				11,273
Minority interest expense			3,376				3,774
Provision for bad debts			1,837				1,276
Provision (benefit) for deferred income taxes			(639	)			2,080
Noncash compensation			6,484				5,545
Noncash contract termination fee			—				15,252
Loss on debt extinguishment			13,403				—
Other			13				(461	)
Changes in assets and liabilities -
Accounts receivable			(11,163	)			(10,188	)
Prepaid expenses and other current assets			1,120				(2,547	)
Other assets			(3,855	)			2,204
Accounts payable and accrued liabilities			(18,412	)			2,494
Deferred revenue			(89	)			688
Other liabilities			(6,439	)			(5,730	)
Net cash provided by operating activities — discontinued operations			13,330				9,495
Net cash provided by operating activities			12,829				32,540
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(2,306	)			(3,902	)
Acquisition of Orange Coast Magazine, net of cash acquired			—				(6,515	)
Deposits and other			(426	)			(470	)
Net cash provided by investing activities — discontinued operations			318,748				51,679
Net cash provided by investing activities			316,016				40,792

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)

		Nine Months Ended November 30,
		2006				2007
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt			(1,011,970	)			(90,207	)
Proceeds from long-term debt			719,500				41,000
Purchase of Class A Common Stock			—				(13,864	)
Proceeds from exercise of stock options and employee stock purchases			223				61
Preferred stock dividends paid			(6,738	)			(6,738	)
Special cash dividends paid			(150,180	)			—
Tax benefit of dividend on unvested restricted stock			667				—
Settlement of tax withholding obligations on stock issued to employees			(721	)			(611	)
Debt issuance costs			(4,548	)			—
Other			(65	)			—
Net cash used in financing activities			(453,832	)			(70,359	)
Effect of exchange rates on cash and cash equivalents			228				1,672
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(124,759	)			4,645
CASH AND CASH EQUIVALENTS:
Beginning of period			140,822				20,747
End of period		$	16,063			$	25,392
SUPPLEMENTAL DISCLOSURES:
Cash paid for -
Interest		$	39,323			$	20,776
Income taxes			5,988				2,508
Noncash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives			9,073				6,819
ACQUISITION OF ORANGE COAST MAGAZINE
Fair value of assets acquired						$	7,904
Purchase price withheld (see Note 5)							(335	)
Cash paid							(6,515	)
Liabilities recorded						$	1,054

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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(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 Securities and Exchange Commission, certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. generally accepted accounting principles 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 28, 2007. 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 November 30, 2007, the results of its operations for the three-month and nine-month periods ended November 30, 2006, and 2007 and the cash flows for the nine-month periods ended November 30, 2006, and 2007.

Accounting Pronouncements

     In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS No. 160”), which is an amendment of Accounting Research Bulletin No. 51.  This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  This statement changes the way the consolidated income statement is presented, thus requiring consolidated net income to be reported at amounts that include the amounts attributable to both parent and the noncontrolling interest.  This statement is effective for the Company on March 1, 2009.  The Company does not expect the adoption of SFAS No. 160 to have a material effect on the Company’s financial position, results of operations or cash flows.

     In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS No. 141”).  This statement replaces Statement of Financial Accounting Standards No. 141, Business Combinations. This statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement.

This statement applies prospectively to business combinations for which the acquisition date is on or after March 1, 2009. The Company is currently assessing the impact of the statement.

     On June 27, 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 Statement of Financial Accounting Standards No. 123R, Share-Based Payment (“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.  This guidance is effective for the Company on March 1, 2008.  The Company does not expect the adoption of EITF No. 06-11 to have a material 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 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 159 no later than March 1, 2008. The Company is currently evaluating SFAS No. 159 and its effect, if any, on the Company’s financial position, results of operations and 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. We will adopt SFAS No. 157 no later than March 1, 2008, except for any portion of the Statement that is deferred pursuant to a recently proposed FASB Staff Position. The Company is currently evaluating SFAS No. 157 and its effect, if any, on the Company’s financial position, results of operations and cash flows.

     In September 2006, the FASB issued FASB Staff Position No. AUG AIR-1, Accounting for Planned Major Maintenance Activities (“FSP”), which amends certain provisions in the AICPA Industry Audit Guide, Audits of Airlines, and APB Opinion No. 28, Interim Financial Reporting. The FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities and requires the use of the direct expensing method, built-in overhaul method, or deferral method. The FSP is effective for fiscal years beginning after December 15, 2006.

     The Company adopted the FSP on March 1, 2007, and began using the deferral method to account for major maintenance activities related to its leased airplane. Under this method, actual costs of the major maintenance activities are capitalized as incurred and amortized to corporate expenses until the next overhaul date. Prior to the adoption of this standard, the Company accrued for such overhaul costs in advance and recorded the charge to corporate expenses. As a result of the adoption of the FSP, the Company has eliminated the effect of the accrue-in-advance method on all previous periods. The cumulative effect of the adoption of the FSP on prior periods was to decrease the accumulated deficit by $0.8 million as of March 1, 2006. The restatement increased

earnings per share attributable to net income available to common shareholders by $0.01 for the three months and nine months ended November 30, 2006. The following tables illustrate the retrospective changes made in Emmis’ previously reported financial position as of February 28, 2007, our results from operations for the three months and nine months ended November 30, 2006 and cash flows for the nine months ended November 30, 2006:

Condensed Consolidated Balance Sheets
As of February 28, 2007

		As Previously
		Reported				FSP Adjustment				As Adjusted
Accounts payable		$	18,791			$	(1,441	)		$	17,350
Deferred income taxes			170,758				591				171,349
Accumulated deficit			(286,150	)			850				(285,300	)

Condensed Consolidated Statements of Operations
For the three months ended November 30, 2006

		As Previously
		Reported				FSP Adjustment				As Adjusted
Corporate expenses			8,444				(105	)			8,339
Provision for income taxes			461				43				504
Loss from continuing operations			(1,270	)			62				(1,208	)

Condensed Consolidated Statements of Operations
For the nine months ended November 30, 2006

		As Previously
		Reported				FSP Adjustment				As Adjusted
Corporate expenses			23,623				(315	)			23,308
Provision for income taxes			5,019				129				5,148
Income from continuing operations			2,736				186				2,922

Condensed Consolidated Statements of Cash Flows
For the nine months ended November 30, 2006

		As Previously
		Reported				FSP Adjustment				As Adjusted
Net income			124,066				186				124,252
Benefit for deferred income taxes			(768	)			129				(639	)
Change in accounts payable and accrued liabilities			(18,097	)			(315	)			(18,412	)

     Effective March 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company’s policy is to record interest and penalties related to uncertain tax positions in income tax expense. The Company did not record any interest or penalties related to uncertain tax positions during the nine months ended November 30, 2007.

     The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various international jurisdictions. The Company has a number of federal and state income tax years still open for examination as a result of net operating loss carryforwards. Accordingly, the Company is subject to examination for both U.S. federal and certain state tax return purposes for the years ending February 28, 2002 to present.

     The adoption of FIN 48 resulted in a decrease of $25.2 million to the March 1, 2007, balance of accumulated deficit, a decrease of $24.9 million in other noncurrent liabilities and a decrease of $0.3 million in deferred income taxes. Upon the adoption of FIN 48 on March 1, 2007, the estimated value of the Company’s uncertain tax positions was approximately $0.7 million, $0.4 million of which was included in deferred income taxes and $0.3 million of which was included in other noncurrent liabilities. As of November 30, 2007, the estimated value of the Company’s uncertain tax positions is approximately $0.6 million, $0.4 million of which is included in deferred income taxes, $0.1 million of which is included in other current liabilities and $0.1 million of which is included in other noncurrent liabilities in the accompanying condensed consolidated balance sheet as of November 30, 2007. If the Company’s positions are sustained by the taxing authorities in favor of the Company and it is more likely than not that the Company will realize the tax benefits, then approximately $0.6 million would reduce the Company’s provision for income taxes. The Company does not expect any significant change in the amount of unrecognized tax benefits over the next 12 months.

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 $0.7 million of these costs as of November 30, 2006. No major advertising campaign costs were deferred as of November 30, 2007.

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 November 30, 2006 and 2007, 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 nine-month periods ended November 30, 2006 and 2007, as the effect of its conversion to 7.0 million shares, respectively, would be antidilutive. Stock options were excluded from diluted net income (loss) per common share for the three-month periods ended November 30, 2006 and 2007, as the effect of their conversion to 0.1 million shares and 0.3 million shares, respectively, would be antidilutive to the net loss available to common shareholders from continuing operations. Stock options were excluded from diluted net income (loss) per common share for the nine-month periods ended November 30, 2006 and 2007, as the effect of their conversion to 0.1 million shares and 0.3 million shares, respectively, would be antidilutive to the net loss available to common shareholders from continuing operations.

Reclassifications

     Certain reclassifications have been made to the prior year’s financial statements to be consistent with the November 30, 2007, presentation. The reclassifications have no impact on net income previously reported.

Discontinued Operations

     Summary of Discontinued Operations Activity:

		Three Months Ended November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
Income (loss) from operations:
KKFR-FM		$	(104	)		$	—			$	433			$	—
Television			6,678				10,249				18,060				12,036
Total			6,574				10,249				18,493				12,036
Less: Provision for income taxes			2,043				4,303				7,132				5,040
Income from operations, net of tax			4,531				5,946				11,361				6,996
Gain (loss) on sale of discontinued operations:
KKFR-FM			(247	)			—				18,870				—
Television			—				—				160,760				18,237
WRDA-FM			30				—				7,052				—
Total			(217	)			—				186,682				18,237
Less: Provision (benefit) for income taxes			(86	)			305				76,713				8,147
Gain (loss) on sale of discontinued operations, net of tax			(131	)			(305	)			109,969				10,090
Income from discontinued operations, net of tax		$	4,400			$	5,641			$	121,330			$	17,086

A discussion of each component of discontinued operations follows.

KKFR-FM

     On July 11, 2006, Emmis completed its sale of radio station KKFR-FM in Phoenix to Bonneville International Corporation for $77.5 million in cash and also sold certain tangible assets to Riviera Broadcast Group LLC for $0.1 million in cash. The assets and liabilities of KKFR-FM have been classified as held for sale and its results of operations and cash flows for all periods presented have been reflected as discontinued operations in the accompanying condensed consolidated financial statements. KKFR-FM had historically been included in the radio segment. The following table summarizes certain operating results for KKFR-FM for all periods presented:

		Three Months Ended November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
Net revenues		$	—			$	—			$	3,746			$	—
Station operating expenses			104				—				3,149				—
Depreciation and amortization			—				—				42				—
Income (loss) before taxes			(104	)			—				433				—
Provision (benefit) for income taxes			(43	)			—				177				—

     Liabilities related to KKFR-FM are classified as discontinued operations in the accompanying condensed consolidated balance sheets as follows:

		February 28, 2007				November 30, 2007
Current liabilities		$	177			$	—
Noncurrent liabilities			—				—
Total liabilities		$	177			$	—

Television Division

     On May 10, 2005, Emmis announced that it had engaged advisors to assist in evaluating strategic alternatives for its television assets. 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. As of November 30, 2007, the Company has sold fifteen of its sixteen television stations. 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 $10.1 million, net of tax of $8.1 million. This leaves WVUE-TV in New Orleans as the Company’s sole television asset (See Note 5 for more discussion of the sale of KGMB-TV). The Company expects to enter into an agreement to sell WVUE-TV in the next three to 12 months. The Company concluded its television assets were held for sale in accordance with SFAS No. 144, and accordingly, the results of operations of the television division have been classified as discontinued operations in the accompanying consolidated financial statements for all periods presented. The television division had historically been presented as a separate reporting segment of Emmis. The following table summarizes certain operating results for the television division for all periods presented:

		Three Months Ended November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
Net revenues		$	8,790			$	5,729			$	40,472			$	17,823
Station operating expenses			7,246				(49	)			29,120				10,108
Gain on disposal of assets			(5,752	)			(4,471	)			(7,787	)			(4,471	)
Income before taxes			6,678				10,249				18,060				12,036
Provision for income taxes			2,086				4,303				6,955				5,040

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

		February 28, 2007				November 30, 2007
Current assets:
Accounts receivable, net		$	6,322			$	4,141
Current portion of TV program rights			1,860				2,096
Prepaid expenses			406				162
Other			5,842				8,232
Total current assets			14,430				14,631
Noncurrent assets:
Property and equipment, net			27,358				20,399
Intangibles, net			46,934				19,544
Other noncurrent assets			1,707				1,009
Total noncurrent assets			75,999				40,952
Total assets		$	90,429			$	55,583
Current liabilities:
Accounts payable and accrued expenses		$	2,660			$	592
Current portion of TV program rights			2,642				2,747
Accrued salaries and commissions			1,173				444
Deferred revenue			84				90
Other			190				95
Total current liabilities			6,749				3,968
Noncurrent liabilities:
TV program rights payable, net of current portion			1,489				1,027
Other noncurrent liabilities			17,102				246
Total noncurrent liabilities			18,591				1,273
Total liabilities		$	25,340			$	5,241

     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 television assets.

     In August 2005, our television station in New Orleans, WVUE-TV, was significantly affected by Hurricane Katrina and the subsequent flooding. During the three months ended November 30, 2007, the Company recognized a gain of $2.1 million, net of tax, relative to its Katrina business interruption insurance claim. Additionally, in the three months ended November 30, 2007 the Company recognized a gain on disposal of assets of $2.7 million, net of tax, relative to its Katrina property insurance claim. Business interruption proceeds and the gain on disposal of assets are classified as income from discontinued operations in the accompanying condensed consolidated statements of income. Business interruption proceeds and the gain on disposal of assets are classified as a reduction of operating expenses and as a gain on disposal of assets in the summary of television operations above. Our business-interruption claim and property claim negotiations with our insurance carrier continue, but the extent to which Emmis will receive additional proceeds related to our claim is unclear.

WRDA-FM:

     On May 5, 2006, Emmis closed on its sale of WRDA-FM in St. Louis to Radio One, Inc. for $20.0 million in cash. Emmis had tried various formats with the station over the past several years, but did not achieve an acceptable operating performance with any of the formats. After the most recent format change failed to meet expectations, Emmis elected to divest the station. Emmis recorded a $4.1 million gain on sale of WRDA-FM, net of tax of $2.9 million. The gain on sale of WRDA-FM is included in discontinued operations, net of tax.

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 expected term has historically been based on the midpoint between the vesting date and the end of the contractual term. The Company expects to use historical data to determine the expected term of options beginning with its March 2008 grant. 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 nine months ended November 30, 2006, and 2007:

		Nine Months Ended November 30,
		2006				2007
Risk-Free Interest Rate:			4.7	%			4.5	%
Expected Dividend Yield:			0	%			0	%
Expected Life (Years):			6.0				6.0
Expected Volatility:			58.2	%			47.5	%

The following table presents a summary of the Company’s stock options outstanding at November 30, 2007, and stock option activity during the nine months ended November 30, 2007 (“Price” reflects the weighted average exercise price per share):

										Weighted Average				Aggregate
										Remaining				Intrinsic
		Options				Price				Contractual Term				Value
Outstanding, beginning of period			7,403,726			$	16.80
Granted			675,905				8.24
Exercised (1)			—				—
Forfeited			39,256				9.32
Expired			388,899				16.65
Outstanding, end of period			7,651,476				16.09
Exercisable, end of period			6,520,889				17.25				4.4			$	—
Weighted average fair value per option granted		$	4.24

The weighted average grant date fair value of options granted during the nine months ended November 30, 2006 and 2007, was $6.55 and $4.24, respectively. The total intrinsic value of options exercised during the nine months ended November 30, 2006 and 2007, was $0.

A summary of the Company’s nonvested options at November 30, 2007, and changes during the nine months ended November 30, 2007, is presented below:

						Weighted Average
						Grant Date
		Options				Fair Value
Nonvested, beginning of period			722,045			$	6.44
Granted			675,905				4.24
Vested			228,107				6.55
Forfeited			39,256				5.11
Nonvested, end of period			1,130,587				5.15

There were 3.8 million shares available for future grants under the various option plans at November 30, 2007. The vesting date of outstanding options range from February 2008 to July 2010, and expiration dates range from October 2009 to July 2017.

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 November 30, 2007, and restricted stock activity during the nine months ended November 30, 2007 (“Price” reflects the weighted average share price at the date of grant):

		Awards				Price
Grants outstanding, beginning of period			413,255			$	17.12
Granted			529,485				8.67
Vested (restriction lapsed)			266,193				12.08
Forfeited			39,859				10.89
Grants outstanding, end of period			636,688				12.59

The total fair value of shares vested during the nine months ended November 30, 2006 and 2007 was $3.3 million and $3.2 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 nine months ended November 30, 2006 and 2007:

		Three Months								Nine Months
		Ended November 30,								Ended November 30,
		2006				2007				2006				2007
Station operating expenses		$	803			$	576			$	2,769			$	2,329
Corporate expenses			1,150				1,112				3,715				3,216
Stock-based compensation expense included in operating expenses			1,953				1,688				6,484				5,545
Tax benefit			(801	)			(692	)			(2,658	)			(2,273	)
Recognized stock-based compensation expense, net of tax		$	1,152			$	996			$	3,826			$	3,272

As of November 30, 2007, there was $6.6 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 1.5 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 $819.3 million as of February 28, 2007, and November 30, 2007. 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 28, 2007, and November 30, 2007, the carrying amount of the Company’s goodwill was $77.6 million and $80.5 million, respectively. As of February 28, 2007, approximately $25.4 million and $52.2 million of our goodwill was attributable to our radio and publishing divisions, respectively. As of November 30, 2007, approximately $25.4 million and $55.1 million of our goodwill was attributable to our radio and publishing divisions, respectively. The increase in publishing goodwill during the nine months ended November 30, 2007, is entirely attributable to our purchase of Orange Coast Magazine as discussed in Note 5 below. 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, favorable office leases and trademarks, 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 28, 2007 and November 30, 2007:

						February 28, 2007												November 30, 2007
		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			7.4			$	38,306			$	19,430			$	18,876			$	38,881			$	22,404			$	16,477
Favorable Office Leases			6.4				688				394				294				688				474				214
Trademarks			19.6				782				392				390				3,682				475				3,207
Advertising Base			4.0				—				—				—				1,162				97				1,065
Noncompete and Other			3.0				—				—				—				312				35				277
TOTAL						$	39,776			$	20,216			$	19,560			$	44,725			$	23,485			$	21,240

     Total amortization expense from definite-lived intangibles for the three-month periods ended November 30, 2006 and 2007 was $1.0 million and $1.2 million, respectively. Total amortization expense from definite-lived intangibles for the nine-month periods ended November 30, 2006 and 2007 was $2.9 million and $3.2 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),
2008		$	4,388
2009			4,859
2010			4,686
2011			2,957
2012			2,744

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 a syndicate of banks, and the banks pay to the Company a variable rate on the same amount of notional principal based on the three-month London Interbank Offered Rate (“LIBOR”). The counterparties to this agreement are global financial institutions. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreement. 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 Swap identified above to be a liability of $3.5 million as of November 30, 2007. The fair value of the Swap is estimated by obtaining a quotation from a financial institution that is one of the counterparties to the Company’s Swap agreement. The fair value is an estimate of the net amount that the Company would be required to pay on November 30, 2007, if the agreements were transferred to other parties or cancelled by the Company.

Note 5. Significant Events

Katz Representation Agreement

     On October 1, 2007, Emmis terminated its existing national sales representation agreement with Interep National Radio Sales, Inc. (“Interep”) and entered into a new agreement with Katz Communications, Inc. (“Katz”) extending through March 2018. Emmis’ existing contract with Interep extended through September 2011. Emmis, Interep and Katz entered into a tri-party termination and mutual release agreement under which Interep agreed to release Emmis from its future contractual obligations in exchange for a one-time payment of $15.3 million, which was paid by Katz on behalf of Emmis as an inducement for Emmis to enter into the new long-term contract with Katz. Emmis measured and recognized the charge associated with terminating the Interep contract as of the effective termination date, which is reflected as a noncash contract termination fee in the accompanying condensed consolidated statement of operations. The liability established as a result of the termination represents an incentive received from Katz that will be accounted for as a termination obligation. The resulting obligation will be recognized as a reduction of our national agency commission expense over the term of the agreement with Katz. The current portion of this liability is included in other current liabilities and the long-term portion of this liability is included in other noncurrent liabilities in the accompanying condensed consolidated balance sheet.

     As part of the new agreement, Katz has guaranteed a minimum amount of national sales for Emmis’ fiscal years ended February 2008 and 2009. If Katz does not deliver the guaranteed minimum sales amount for either of these years, Katz pays the shortfall to Emmis. Emmis will accrue for such shortfalls, if any, at the time they become probable of receipt as a reduction to national agency commission expense in the year of the shortfall. As of November 30, 2007, Emmis did not accrue for any shortfall for fiscal 2008 as a shortfall was not considered probable.

Proceeds from SJL Broadcast LLC Note Receivable

     In connection with its January 2006 sale of KHON-TV in Honolulu to SJL Broadcast Group LLC (“SJL”), Emmis and SJL executed a $6.0 million note secured by SJL’s interest in certain property in Honolulu. The terms of the note required SJL to pay the note in full if SJL sold its interest in the property that secured the note. On November 1, 2007, SJL sold the property and repaid the $6.0 million note. The cash receipt is included in net cash provided by investing activities - discontinued operations in the accompanying condensed consolidated statements of cash flows.

Purchase of Orange Coast Kommunications, Inc.

     On July 25, 2007, Emmis completed its acquisition of Orange Coast Kommunications, Inc., publisher of Orange Coast Magazine, for $6.9 million in cash including acquisition costs of $0.2 million. Approximately $0.3 million of the purchase price was withheld and will be paid to the seller nine months from the date of purchase, subject to certain conditions. This $0.3 million is classified as accounts payable in the accompanying condensed consolidated balance sheets. Orange Coast Magazine fits Emmis’ niche of publishing quality city and regional magazines. Orange Coast Magazine serves the affluent area of Orange County, CA, and may also provide synergies with our other California-based publications, Los Angeles magazine and Tu Ciudad Los Angeles. The acquisition was financed through borrowings under the senior credit facility. The operating results of Orange Coast Magazine from July 25, 2007, through November 30, 2007, are included in the accompanying condensed consolidated financial statements. The preliminary purchase price allocation is as follows:

Asset Description		Amount			Asset Lives
Accounts receivable		$	570		Less than one year
Other current assets			73		Less than one year
Furniture and fixtures			20		5 years
Goodwill			2,845		Indefinite
Trademark			2,922		15 years
Advertiser list			1,162		4 years
Other definite lived intangibles			312		3 years
Other current liabilities			(564	)
Deferred income taxes			(490	)
Total purchase price		$	6,850

Sale of KHON-TV

     On June 4, 2007, Emmis closed on its sale of KGMB-TV in Honolulu to HITV Operating Co, Inc. for $40.0 million in cash. Emmis used a portion of the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $10.1 million, net of tax, which is included in discontinued operations in the accompanying condensed consolidated statement of operations.

Sale of KMTV-TV

     On March 27, 2007, the Company completed its sale of KMTV-TV in Omaha to Journal Communications, Inc. and received $10.0 million in cash. KMTV-TV had been operated by Journal Communications, Inc. under a local programming and marketing agreement since December 5, 2005.

Note 6. Pro Forma Financial Information

     Unaudited pro forma financial information is presented below for the three-month and nine-month periods ended November 30, 2006 and 2007 assuming the acquisition of Orange Coast Kommunications, Inc. (see Note 5) 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 Ended November 30,								Nine Months Ended November 30,
		2006				2007				2006				2007
		(Pro Forma)				(Historical)				(Pro Forma)				(Pro Forma)
Net revenues		$	92,647			$	91,713			$	284,883			$	278,149
Net income (loss) from continuing operations		$	(1,311	)		$	(5,537	)		$	2,465			$	(2,945	)
Net loss available to common shareholders from continuing operations		$	(3,557	)		$	(7,783	)		$	(4,273	)		$	(9,683	)
Net loss per share available to common shareholders from continuing operations:
Basic		$	(0.10	)		$	(0.22	)		$	(0.11	)		$	(0.26	)
Diluted		$	(0.10	)		$	(0.22	)		$	(0.11	)		$	(0.26	)
Weighted average shares outstanding:
Basic			37,290				35,558				37,214				36,885
Diluted			37,290				35,558				37,214				36,885

Note 7. Comprehensive Income

     Comprehensive income was comprised of the following for the three-month and nine-month periods ended November 30, 2006 and 2007:

		Three Months								Nine Months
		Ended November 30,								Ended November 30,
		2006				2007				2006				2007
Net income (loss)		$	3,192			$	104			$	124,252			$	14,471
Change in fair value of derivative			—				(2,034	)			—				(2,087	)
Translation adjustment			445				1,179				653				2,079
Total comprehensive income (loss)		$	3,637			$	(751	)		$	124,905			$	14,463

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.

     During the three months ended November 30, 2007, the Company repurchased 0.4 million shares for $2.7 million (average price of $6.48 per share). The Company repurchased 2.2 million shares for $13.9 million (average price of $6.23 per share) during the period August 8, 2007 through November 30, 2007.

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 Company’s segments operate primarily in the United States, but we also operate radio stations located in Belgium, Hungary, Slovakia and Bulgaria. 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 November 30,								Nine Months Ended November 30,								As of November 30,
		2006				2007				2006				2007				2006				2007
Belgium		$	459			$	602			$	1,026			$	1,292			$	3,629			$	3,368
Hungary			3,549				4,252				12,870				14,326				5,051				4,597
Slovakia			2,417				3,160				7,396				9,591				11,229				10,619
Bulgaria			459				941				1,303				2,627				5,133				6,225

     In the quarter ended August 31, 2005, Emmis concluded its television division assets were held for sale in accordance with SFAS No. 144. Emmis sold KKFR-FM in Phoenix in July 2006 and WRDA-FM in St. Louis in May 2006. Accordingly, the results of operations of the television division, KKFR-FM and WRDA-FM have been classified as discontinued operations in the accompanying condensed consolidated financial statements (see Note 1) and excluded from the segment disclosures below.

     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 28, 2007, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months Ended						Publishing
November 30, 2006 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	66,704			$	24,501			$	—			$	91,205
Station operating expenses			41,665				20,189				—				61,854
Corporate expenses			—				—				8,339				8,339
Depreciation and amortization			2,568				192				657				3,417
Loss on disposal of assets			1				1				—				2
Operating income (loss)		$	22,470			$	4,119			$	(8,996	)		$	17,593
Assets — continuing operations		$	996,787			$	80,916			$	49,080			$	1,126,783
Assets — discontinued operations			27				—				98,003				98,030
Total assets		$	996,814			$	80,916			$	147,083			$	1,224,813

Three Months Ended						Publishing
November 30, 2007 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	64,564			$	27,149			$	—			$	91,713
Station operating expenses			44,057				22,074				—				66,131
Noncash contract termination fee			15,252				—				—				15,252
Corporate expenses			—				—				4,872				4,872
Depreciation and amortization			2,764				321				617				3,702
Gain on disposal of assets			(198	)			—				—				(198	)
Operating income (loss)		$	2,689			$	4,754			$	(5,489	)		$	1,954
Assets — continuing operations		$	989,217			$	88,588			$	42,072			$	1,119,877
Assets — discontinued operations			—				—				55,583				55,583
Total assets		$	989,217			$	88,588			$	97,655			$	1,175,460

Nine Months Ended						Publishing
November 30, 2006 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	214,630			$	66,271			$	—			$	280,901
Station operating expenses			133,246				58,627				—				191,873
Corporate expenses			—				—				23,308				23,308
Depreciation and amortization			7,395				522				1,998				9,915
Loss on disposal of assets			4				1				—				5
Operating income (loss)		$	73,985			$	7,121			$	(25,306	)		$	55,800
Assets — continuing operations		$	996,787			$	80,916			$	49,080			$	1,126,783
Assets — discontinued operations			27				—				98,003				98,030
Total assets		$	996,814			$	80,916			$	147,083			$	1,224,813

Nine Months Ended						Publishing
November 30, 2007 (unaudited)		Radio				and Other				Corporate				Consolidated
Net revenues		$	203,980			$	71,395			$	—			$	275,375
Station operating expenses			140,417				61,567				—				201,984
Noncash contract termination fee			15,252												15,252
Corporate expenses			—				—				16,921				16,921
Depreciation and amortization			8,194				716				1,891				10,801
Gain on sale of assets			(104	)			—				—				(104	)
Operating income (loss)		$	40,221			$	9,112			$	(18,812	)		$	30,521
Assets — continuing operations		$	989,217			$	88,588			$	42,072			$	1,119,877
Assets — discontinued operations			—				—				55,583				55,583
Total assets		$	989,217			$	88,588			$	97,655			$	1,175,460