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

For the quarterly period ended August 31, 2006

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 þ      Accelerated filer o      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 October 2, 2006, was:

32,376,944		Shares of Class A Common Stock, $.01 Par Value
4,929,881		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, 2005 and 2006		3
Condensed Consolidated Balance Sheets as of February 28, 2006 and August 31, 2006		5
Condensed Consolidated Statements of Cash Flows for the six-month periods ended August 31, 2005 and 2006		7
Notes to Condensed Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 3. Quantitative and Qualitative Disclosures about Market Risk		50
Item 4. Controls and Procedures		50
PART II — OTHER INFORMATION
Item 6. Exhibits		51
Signatures		52

PART I – FINANCIAL INFORMATION

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

		Three Months Ended								Six Months Ended
		August 31,								August 31,
		2005				2006				2005				2006
NET REVENUES		$	104,654			$	99,909			$	197,035			$	189,696
OPERATING EXPENSES:
Station operating expenses			64,877				66,383				125,608				130,019
Corporate expenses			7,958				8,292				16,561				15,179
Depreciation and amortization			4,257				3,223				8,053				6,498
(Gain) loss on disposal of assets			(8	)			3				45				3
Total operating expenses			77,084				77,901				150,267				151,699
OPERATING INCOME			27,570				22,008				46,768				37,997
OTHER INCOME (EXPENSE):
Interest expense			(18,341	)			(11,554	)			(28,586	)			(24,116	)
Loss on debt extinguishment			—				(537	)			—				(3,380	)
Other income (expense), net			190				442				163				785
Total other income (expense)			(18,151	)			(11,649	)			(28,423	)			(26,711	)
INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND DISCONTINUED OPERATIONS			9,419				10,359				18,345				11,286
PROVISION FOR INCOME TAXES			4,159				4,533				8,047				4,558
MINORITY INTEREST EXPENSE, NET OF TAX			1,634				1,551				2,419				2,722
NET INCOME FROM CONTINUING OPERATIONS			3,626				4,275				7,879				4,006
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX			4,804				108,007				10,929				116,930
NET INCOME			8,430				112,282				18,808				120,936
PREFERRED STOCK DIVIDENDS			2,246				2,246				4,492				4,492
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	6,184			$	110,036			$	14,316			$	116,444

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,
		2005				2006				2005				2006
Basic net income (loss) available to common shareholders:
Continuing operations		$	0.03			$	0.05			$	0.07			$	(0.01	)
Discontinued operations, net of tax			0.12				2.90				0.22				3.14
Net income (loss) available to common shareholders		$	0.15			$	2.95			$	0.29			$	3.13
Basic weighted average common shares outstanding			40,893				37,242				48,769				37,184
Diluted net income (loss) available to common shareholders:
Continuing operations		$	0.03			$	0.05			$	0.07			$	(0.01	)
Discontinued operations, net of tax			0.12				2.90				0.22				3.14
Net income (loss) available to common shareholders		$	0.15			$	2.95			$	0.29			$	3.13
Diluted weighted average common shares outstanding			41,434				37,346				49,266				37,184

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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

		February 28,				August 31,
		2006				2006
		(Note 1)				(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	140,822			$	194,690
Accounts receivable, net			65,374				75,195
Prepaid expenses			16,605				16,554
Other			10,172				3,865
Current assets — discontinued operations			22,233				13,863
Total current assets			255,206				304,167
PROPERTY AND EQUIPMENT, NET			64,561				61,328
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles			819,338				819,338
Goodwill			77,413				77,413
Other intangibles, net			20,174				18,232
Total intangible assets			916,925				914,983
OTHER ASSETS, NET			45,093				41,956
NONCURRENT ASSETS — DISCONTINUED OPERATIONS			230,916				87,179
Total assets		$	1,512,701			$	1,409,613

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,				August 31,
		2006				2006
		(Note 1)				(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable		$	25,258			$	17,992
Current maturities of long-term debt			129,175				382,748
Accrued salaries and commissions			11,857				8,395
Accrued interest			9,561				8,145
Deferred revenue			13,581				13,104
Income taxes			53				5,515
Other			5,987				4,550
Current liabilities — discontinued operations			26,431				10,056
Total current liabilities			221,903				450,505
LONG-TERM DEBT, NET OF CURRENT MATURITIES			664,424				143,250
OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES			3,520				3,334
OTHER NONCURRENT LIABILITIES			3,296				27,944
MINORITY INTEREST			48,465				50,180
DEFERRED INCOME TAXES			127,228				177,241
NONCURRENT LIABILITIES — DISCONTINUED OPERATIONS			28,386				18,842
Total liabilities			1,097,222				871,296
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, 2006 AND AUGUST 31, 2006			143,750				143,750
SHAREHOLDERS’ EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 32,164,397 shares at February 28, 2006 and 32,346,416 shares at August 31, 2006			322				323
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,879,774 shares at February 28, 2006 and 4,929,881 shares at August 31, 2006			49				49
Additional paid-in capital			513,879				520,065
Accumulated deficit			(240,567	)			(124,123	)
Accumulated other comprehensive loss			(1,954	)			(1,747	)
Total shareholders’ equity			271,729				394,567
Total liabilities and shareholders’ equity		$	1,512,701			$	1,409,613

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

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

		Six Months Ended August 31,
		2005				2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	18,808			$	120,936
Adjustments to reconcile net income to net cash
provided by operating activities —
Discontinued operations			(10,929	)			(116,930	)
Depreciation and amortization			9,154				7,265
Accretion of interest on senior discount notes and amortization of related debt costs			81				8
Minority interest expense			2,419				2,722
Provision for bad debts			1,435				1,447
Provision for deferred income taxes			8,014				(26,013	)
Noncash compensation			5,522				4,531
Loss on debt extinguishment			—				3,380
Other			45				3
Changes in assets and liabilities —
Accounts receivable			(18,340	)			(11,356	)
Prepaid expenses and other current assets			1,982				1,794
Other assets			1,002				(1,276	)
Accounts payable and accrued liabilities			6,377				(10,444	)
Deferred revenue			307				(477	)
Income taxes			—				29,997
Other liabilities			(2,908	)			(3,607	)
Net cash provided by operating activities — discontinued operations			25,566				11,467
Net cash provided by operating activities			48,535				13,447
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(5,189	)			(1,157	)
Cash paid for acquisitions			(12,563	)			—
Deposits and other			(60	)			302
Net cash provided by (used in) investing activities — discontinued operations			(6,453	)			314,050
Net cash provided by (used in) investing activities			(24,265	)			313,195

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,
		2005				2006
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt			(87,875	)			(282,088	)
Proceeds from long-term debt			485,000				14,500
Premiums paid to redeem outstanding debt obligations			—				(88	)
Purchases of the Company’s Class A Common Stock			(396,737	)			—
Proceeds from exercise of stock options and employee stock purchases			2,925				150
Preferred stock dividends paid			(4,492	)			(4,492	)
Settlement of tax withholding obligations on stock issued to employees			(1,105	)			(716	)
Debt related costs			(10,531	)			—
Other			—				23
Net cash used in financing activities			(12,815	)			(272,711	)
Effect of exchange rate on cash and cash equivalents			(732	)			(63	)
INCREASE IN CASH AND CASH EQUIVALENTS			10,723				53,868
CASH AND CASH EQUIVALENTS:
Beginning of period			16,054				140,822
End of period		$	26,777			$	194,690
SUPPLEMENTAL DISCLOSURES:
Cash paid for —
Interest		$	34,268			$	24,757
Income taxes			33				574
Noncash financing transactions —
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives			9,747				5,643
ACQUISITION OF D.EXPRES (SLOVAKIA):
Fair value of assets acquired		$	16,208
Cash paid			12,563
Liabilities recorded		$	3,645

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, 2006

(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, the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “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, 2006. 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, 2006 and the results of its operations for the three-month and six-month periods ended August 31, 2005 and 2006 and its cash flows for the six-month periods ended August 31, 2005 and 2006.

Accounting Pronouncement

     On September 8, 2006, the Financial Accounting Standards Board issued FASB Staff Position AUG AIR-1, Accounting For Planned Major Maintenance Activities, that eliminates the acceptability of the accrue-in-advance method of accounting for planned major maintenance activities. This staff position is effective for the Company as of March 1, 2007 and requires retrospective restatement of prior period results. Early adoption of this pronouncement is precluded for the Company. The Company has been accruing for planned major maintenance activities associated with a leased airplane under the accrue-in-advance method. The Company is currently evaluating this FASB Staff Position and its effect on the Company’s financial position, results of operations and cash flows.

     On July 13, 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, Accounting For Uncertainty In Income Taxes [FIN No. 48], that provides guidance on the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions that a company has taken or expects to take on a tax return. Under FIN No. 48, financial statements should reflect expected future tax consequences of such positions presuming the taxing authorities have full knowledge of the position and all relevant facts. The interpretation also revises the disclosure requirements and is effective for the Company as of March 1, 2007. The Company is currently evaluating FIN No. 48 and its effect on the Company’s financial position, results of operations and cash flows.

     On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment [“SFAS No. 123R”]. SFAS No. 123R requires companies to measure all employee stock-based compensation awards, including employee stock options, using a fair-value method and to record such expense in their consolidated financial statements. In addition, the adoption of SFAS No. 123R requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. The Company adopted Statement No. 123R on March 1, 2006. See Note 2 for further discussion.

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 $0.4 million and $0.3 million of these costs as of August 31, 2005 and 2006, respectively.

Basic and Diluted Net Income Per Common Share

     Basic net income per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income 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, 2005 and 2006 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 per common share for the three-month and six-month periods ended August 31, 2005 and August 31, 2006 as the effect of its conversion to 4.8 million shares would be antidilutive in all periods. Stock options were excluded from diluted net income per common share for the six-months ended August 31, 2006 as the effect of their conversion would be antidilutive to the net loss from continuing operations.

Reclassifications

     Certain reclassifications have been made to the prior years’ financial statements to be consistent with the August 31, 2006 presentation. The reclassifications have no impact on net income previously reported.

Discontinued Operations

Summary of Discontinued Operations Activity:

		Three Months Ended August 31,								Six Months Ended August 31,
		2005				2006				2005				2006
Income (loss) from operations:
KKFR-FM		$	1,361			$	(384	)		$	2,300			$	537
Television			6,620				3,873				16,318				11,382
WRDA-FM			(280	)			—				(536	)			—
Phoenix			440				—				440				—
Total			8,141				3,489				18,522				11,919
Less: Provision for income taxes			3,337				1,439				7,593				5,089
Income from operations, net of tax			4,804				2,050				10,929				6,830
Gain on sale of discontinued operations:
KKFR-FM			—				19,117				—				19,117
Television			—				160,760				—				160,760
WRDA-FM			—				—				—				7,022
Total			—				179,877				—				186,899
Less: Provision for income taxes			—				73,920				—				76,799
Gain on sale of discontinued operations, net of tax			—				105,957				—				110,100
Income from discontinued operations, net of tax		$	4,804			$	108,007			$	10,929			$	116,930

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, AZ 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 August 31,								Six Months Ended August 31,
		2005				2006				2005				2006
Net revenues		$	2,898			$	1,109			$	5,344			$	3,746
Station operating expenses			1,460				1,492				2,876				3,045
Depreciation and amortization			67				—				141				42
Income (loss) before taxes			1,361				(384	)			2,300				537
Provision (benefit) for income taxes			558				(157	)			943				220

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

		February 28, 2006
Current assets:
Accounts receivable, net		$	1,746
Prepaid expenses			269
Other			67
Total current assets			2,082
Noncurrent assets:
Property and equipment, net			1,785
Intangibles, net			55,671
Total noncurrent assets			57,456
Total assets		$	59,538
Current liabilities		$	398
Noncurrent liabilities			45
Total liabilities		$	443

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 lower its debt, coupled with the Company’s view that, in order to be successful in the long term, television stations need to be aligned with a company that is larger and more singularly focused on the challenges of American television, including digital video recorders and the industry’s relationship with cable and satellite providers. As of August 31, 2006, the Company has sold fourteen of its sixteen television stations. The Company expects to enter into agreements to sell its remaining two television stations in the next three to twelve months. The Company concluded its television assets were held for sale in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“Statement 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. 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,
		2005				2006				2005				2006
Net revenues		$	60,253			$	15,742			$	126,825			$	31,682
Station operating expenses			40,458				11,635				82,758				21,874
Depreciation and amortization			4,852				—				12,319				—
(Gain) loss on disposal of assets			617				3				644				(2,035	)
Interest expense			7,470				—				14,255				—
Income before taxes			6,620				3,873				16,318				11,382
Provision for income taxes			2,714				1,596				6,690				4,869

     Net assets related to our television division are classified as discontinued operations in the

accompanying condensed consolidated balance sheets as follows:

		February 28, 2006				August 31, 2006
Current assets:
Accounts receivable, net		$	10,130			$	11,302
Current portion of TV program rights			7,988				324
Prepaid expenses			275				607
Other			1,690				652
Total current assets			20,083				12,885
Noncurrent assets:
Property and equipment, net			27,477				23,944
Intangibles, net			124,369				61,035
Other noncurrent assets			8,622				2,201
Total noncurrent assets			160,468				87,180
Total assets		$	180,551			$	100,065
Current liabilities:
Accounts payable and accrued expenses		$	3,360			$	5,243
Current portion of TV program rights			12,731				3,137
Accrued salaries and commissions			1,076				1,243
Deferred revenue			7,454				111
Other			1,412				276
Total current liabilities			26,033				10,010
Noncurrent liabilities:
TV program rights payable, net of current portion			9,845				1,676
Other noncurrent liabilities			18,496				17,166
Total noncurrent liabilities			28,341				18,842
Total liabilities		$	54,374			$	28,852

     As of August 31, 2005, certain debt was required to be repaid as a result of the disposition of the Company’s television assets. The Company allocated interest expense of $7.5 million and $14.3 million associated with this portion of debt to the television operations for the three months and six months ended August 31, 2005, respectively, in accordance with Emerging Issues Task Force Issue 87-24 “Allocation of Interest to Discontinued Operations,” as modified. As no debt is required to be repaid as a result of the disposition of the remainder of the Company’s television assets as of August 31, 2006, no interest was allocated to television operations for the three-month and six-month periods ended August 31, 2006.

     Our television station in New Orleans, Louisiana, WVUE, was significantly affected by Hurricane Katrina and the subsequent flooding. The flooding of New Orleans caused extensive property damage at WVUE. Emmis spent approximately $3.7 million on capital expenditures related to flooding restoration projects during the six-months ended August 31, 2006 and expects to spend an additional $5.0 million in the next six months to complete the restoration. During the six-months ended August 31, 2006, the Company received $5.1 million of insurance proceeds, the majority of which were advanced proceeds from the Company’s private insurer. These proceeds are in addition to the $1.0 million Federal flood insurance proceeds received in the prior year. In connection with the receipt of the insurance proceeds, the Company removed the carrying value of all damaged or destroyed property and recorded a $2.0 million gain on disposal of these assets which is reflected in income from discontinued operations in the accompanying condensed consolidated statements of operations. Additionally, the Company recorded a reserve against WVUE accounts receivable due to the impact of the flooding on the local economy in the quarter-ended August 31, 2005.

WVUE continues to monitor the financial health of its customers and adjusts its allowance for doubtful accounts on a monthly basis. As of August 31, 2006, WVUE’s reserve for doubtful accounts was approximately $0.4 million, which represents 11% of its total outstanding accounts receivable. WVUE did not broadcast its signal for an extended period of time as a result of Katrina and the general disruption of the local economy will negatively affect ongoing advertising revenue. The Company maintains business interruption insurance and expects to be reimbursed for lost net income as a result of Katrina. Emmis has not accrued for business interruption insurance proceeds. Business interruption insurance proceeds will only be recognized upon receipt.

WRDA-FM:

     On May 5, 2006, Emmis completed its sale of radio station WRDA-FM in St. Louis, MO to Radio One, Inc. and received $20.2 million of net cash proceeds. 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. The assets and liabilities of WRDA-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. WRDA-FM had historically been included in the radio segment. The following table summarizes certain operating results for WRDA-FM for all periods presented:

		Three Months Ended				Six Months Ended
		August 31, 2005				August 31, 2005
Net revenues		$	340			$	715
Station operating expenses			593				1,188
Depreciation and amortization			22				45
Loss before taxes			(280	)			(536	)
Benefit for income taxes			(115	)			(220	)

     The assets related to WRDA-FM are classified as discontinued operations in the accompanying condensed consolidated balance sheets as follows:

		February 28, 2006
Current assets:
Other		$	68
Total current assets			68
Noncurrent assets:
Intangibles, net			12,992
Total noncurrent assets			12,992
Total assets		$	13,060

Phoenix

     On January 14, 2005, Emmis completed its exchange with Bonneville International Corporation (“Bonneville”) whereby Emmis swapped three of its radio stations in Phoenix (KTAR-AM, KMVP-AM and KKLT-FM) for Bonneville’s WLUP-FM located in Chicago and $74.8 million in cash, including payments for working capital items. The results of operations of the three radio stations in Phoenix have been classified as discontinued operations in the accompanying condensed consolidated financial statements. These three radio stations had historically been included in the radio reporting segment. The following table summarizes certain operating results for the three Phoenix stations for all periods presented:

		Three Months Ended				Six Months Ended
		August 31, 2005				August 31, 2005
Net revenues		$	—			$	—
Station operating expenses, excluding noncash compensation			(440	)			(440	)
Noncash compensation			—				—
Depreciation and amortization			—				—
Pre-tax income			440				440
Provision for income taxes			180				180

Note 2. Share Based Payments

     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 ten 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 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 Statement No. 123R, on March 1, 2006, using the modified-prospective-transition method. The fair value of the options is estimated using a Black-Scholes option-pricing model at the date of grant and expensed on a straight-line basis over the vesting period. Prior to adoption of Statement No. 123R, the Company accounted for share based payments under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related Interpretations, as permitted by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“Statement No. 123”). The Company did not recognize employee compensation cost related to its stock option grants in its consolidated statements of operations for the three years ended February 28, 2006 (prior to adoption of Statement No. 123R), as all options vesting during those three years had an exercise price equal to the market value of the underlying common stock on the date of grant.

     The amounts recorded as share based payments prior to adopting Statement No. 123R primarily related to the expense associated with 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 common stock issued to employees in exchange for cash compensation pursuant to our stock compensation program. Under the modified-prospective-transition method, compensation cost recognized beginning in our fiscal year ending February 28, 2007 includes the above items and (a) compensation cost for all share-based payments granted on or after March 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of Statement No. 123R and (b) compensation cost associated with our employee stock purchase plan, which qualified as a noncompensatory plan under APB 25. Results for prior periods have not been restated. The Company accelerated the vesting of substantially all outstanding option awards that would have otherwise vested in fiscal 2007 and beyond. Consequently, the Company has an immaterial amount of share-based payment expense associated with stock options granted prior to March 1, 2006 that vest on or after March 1, 2006.

     As a result of adopting Statement No. 123R, the Company’s income before income taxes, minority

interest and discontinued operations for the three-month and six-month periods ended August 31, 2006, was $0.4 million and $0.8 million lower, respectively, than if it had continued to account for share-based compensation under APB 25. The Company’s net income for the three-month and six-month periods ended August 31, 2006, was $0.2 million and $0.5 million lower, respectively, than if it had continued to account for share-based compensation under APB 25. Basic and diluted loss per share from continuing operations available to common shareholders for the three month and six-month periods ended August 31, 2006 was $0.01 lower than if the Company had continued to account for share based compensation under APB 25. The impact of adopting Statement No. 123R in the current year was minimized by the Company accelerating the vesting of substantially all unvested options in the fourth quarter of fiscal 2006. The Company accelerated the vesting of the unvested stock options to avoid recognizing the expense in future financial statements after the adoption of SFAS No. 123R.

     Prior to the adoption of Statement No. 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the consolidated statements of cash flows. Statement No. 123R requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. The Company did not record any excess tax benefits in the three-month or six-month periods ended August 31, 2006.

     The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of Statement No. 123R to options granted under the Company’s stock option plans in all periods presented.

		Three Months				Six Months
		Ended August 31,				Ended August 31,
		2005				2005
		(Unaudited)				(Unaudited)
Net Income Available to Common Shareholders:
As Reported		$	6,184			$	14,316
Plus: Reported stock-based employee compensation costs, net of tax			1,590				3,478
Less: Stock-based employee compensation costs, net of tax, if fair value method had been applied to all awards			3,399				7,096
Pro Forma		$	4,375			$	10,698
Basic EPS:
As Reported		$	0.15			$	0.29
Pro Forma		$	0.11			$	0.22
Diluted EPS:
As Reported		$	0.15			$	0.29
Pro Forma		$	0.11			$	0.22

     The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model. 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. Prior to the adoption of Statement No. 123R, the Company recognized forfeitures as they occurred in its Statement No. 123 pro forma disclosures. Beginning March 1, 2006, 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 is based on the midpoint between the vesting date and the end of the contractual term. The risk free 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, 2005 and 2006:

		Six Months Ended August 31,
		2005				2006
Risk-Free Interest Rate:			4.1	%			4.7	%
Expected Dividend Yield:			0	%			0	%
Expected Life (Years):			6.0				6.0
Expected Volatility:			60.8	%			58.3	%

The following table presents a summary of the Company’s stock options outstanding at, and stock option activity during, the six months ended August 31, 2006 (“Price” reflects the weighted average exercise price per share):

										Weighted Average				Aggregate
										Remaining				Intrinsic
		Options				Price				Contractual Term				Value
Outstanding, beginning of year			5,615,888			$	25.07
Granted			477,434				16.34
Exercised (1)			2,728				16.41
Forfeited			8,363				16.34
Expired			823,035				23.30
Outstanding, August 31			5,259,196				24.57				5.7			$	—
Exercisable, August 31			4,790,125				25.37				5.3			$	—
Weighted average fair value per option granted		$	9.64

The weighted average grant date fair value of options granted during the six months ended August 31, 2005 and 2006 was $11.20 and $9.64, respectively. The total intrinsic value of options exercised during the six months ended August 31, 2005 and 2006 was $0.5 million and $0 million, respectively.

A summary of the Company’s nonvested options at February 28, 2006, and changes during the six months ended August 31, 2006, is presented below:

						Weighted Average
						Grant Date
		Options				Fair Value
Nonvested, beginning of year			598,274			$	16.49
Granted			477,434				9.64
Vested			598,274				16.49
Forfeited			8,363				9.64
Nonvested, August 31			469,071				9.64

There were 7.6 million shares available for future grants under the various option plans at August 31, 2006. The vesting date of outstanding options is March 1, 2009, and expiration dates range from November 2006 to March 2016 at exercise prices and average contractual lives as follows:

		Outstanding				Weighted Average								Exercisable
		as of				Remaining				Weighted Average				as of				Weighted Average
Range of Exercise Prices		8/31/06				Contractual Life				Exercise Price				8/31/06				Exercise Price
$ .01 - $5.00			—				—			$	—				—			$	—
5.01 - 10.00			—				—				—				—				—
10.01 - 15.00			—				—				—				—				—
15.01 - 20.00			1,704,682				7.5				17.25				1,235,611				17.60
20.01 - 25.00			169,081				5.3				21.95				169,081				21.95
25.01 - 30.00			3,049,486				5.0				27.61				3,049,486				27.61
30.01 - 35.00			—				—				—				—				—
35.01 - 40.00			335,947				3.5				35.41				335,947				35.41
			5,259,196				5.7				24.57				4,790,125				25.37

Restricted Stock Awards

The Company began granting restricted stock awards to employees and directors of the Company in lieu of 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 Incentive Plan, stock to settle certain bonuses 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, 2006 and restricted stock activity during the six months ended August 31, 2006 (“Price” reflects the weighted average share price at the date of grant):

		Awards				Price
Grants outstanding, beginning of year			262,154			$	18.80
Granted			358,436				15.40
Vested (restriction lapsed)			213,953				14.98
Forfeited			14,857				17.67
Grants outstanding, August 31			391,780				17.79

The total fair value of shares vested during the six months ended August 31, 2005 and 2006 was $6.1 million and $3.1 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-month and six-month periods ended August 31, 2005 and 2006:

		Three Months								Six Months
		Ended August 31,								Ended August 31,
		2005				2006				2005				2006
Station operating expenses		$	1,041			$	844			$	2,562			$	1,966
Corporate expenses			1,475				1,215				2,960				2,565
Stock-based compensation expense included in operating expenses			2,516				2,059				5,522				4,531
Tax benefit			(1,032	)			(844	)			(2,264	)			(1,858	)
Recognized stock-based compensation expense, net of tax		$	1,484			$	1,215			$	3,258			$	2,673

As of August 31, 2006, there was $6.5 million of unrecognized compensation cost related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 2.4 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” (“Statement No. 142”), the Company’s 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, 2006 and August 31, 2006, respectively. This amount is entirely attributable to our radio division.

     Since its adoption of EITF Topic D-108 on December 1, 2004, the Company has used 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 future periodic write-downs.

     Goodwill

     Statement 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. 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 in the statement of operations.

     As of February 28, 2006 and August 31, 2006, the carrying amount of the Company’s goodwill was $77.4 million. As of February 28, 2006 and August 31, 2006, approximately $25.2 million and $52.2 million of our goodwill was attributable to our radio and publishing divisions, respectively. The required annual impairment tests may result in future periodic write-downs.

     Definite-lived intangibles

     The Company’s definite-lived intangible assets consist primarily of foreign broadcasting licenses, favorable office leases, customer lists and non-compete agreements, 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, 2006 and August 31, 2006:

						February 28, 2006												August 31, 2006
		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				$	34,975			$	16,043			$	18,932			$	35,007			$	17,694			$	17,313
Favorable Office Leases		6.4					688				286				402				688				340				348
Customer Lists		1.0					4,765				4,549				216				4,765				4,734				31
Non-Compete Agreements		1.3					5,738				5,717				21				5,738				5,735				3
Other		24.6					1,357				754				603				1,357				820				537
TOTAL						$	47,523			$	27,349			$	20,174			$	47,555			$	29,323			$	18,232

     Total amortization expense from definite-lived intangibles for the three-month periods ended August 31, 2005 and 2006 was $1.0 million in both periods. Total amortization expense from definite-lived intangibles for the six-month periods ended August 31, 2005 and 2006 was $1.7 million and $1.9 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),
2007		$	3,765
2008			3,453
2009			3,417
2010			3,277
2011			1,960

Note 4. Significant Events

     On March 9, 2006, Emmis redeemed at par the remaining $120.0 million outstanding of its senior floating rate notes. In connection with this debt extinguishment, Emmis recorded a loss of approximately $2.6 million in its quarter ended May 31, 2006 related to the write-off of unamortized deferred debt costs.

     On March 15, 2006, Emmis redeemed at 106.25% of par the remaining $1.4 million outstanding of its 12.5% senior discount notes. In connection with this debt extinguishment, Emmis recorded a loss of approximately $0.1 million in its quarter ended May 31, 2006 related to the premium paid and the write-off of unamortized deferred debt costs.

     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 used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of approximately $4.1 million, net of tax, in its quarter ended May 31, 2006, which is included in discontinued operations in the accompanying condensed consolidated statement of operations.

     On May 8, 2006, Emmis announced that ECC Acquisition, Inc., an Indiana corporation wholly owned by Jeffrey H. Smulyan, the Chairman, Chief Executive Officer and controlling shareholder of the Company, had made a non-binding proposal to acquire the outstanding publicly held shares of Emmis for $15.25 per share in cash. The proposal stated that the purchaser intended to invite certain other members of the Company’s management to join the purchaser to participate in the transaction. In the proposal, Mr. Smulyan also made clear that, in his capacity as a shareholder of the Company, his interest in the proposed transaction was to purchase shares of the Company not owned by him and that he would not agree to any other transaction involving the Company or his shares of the Company. In response to the proposal, the Board of Directors of Emmis formed a special committee of three independent directors, namely, Peter A. Lund, Frank V. Sica and Lawrence B. Sorrel, to consider the proposal. The special committee selected its own independent financial and legal advisors and appointed Mr. Sica to serve as its chairman. Mr. Smulyan and other directors of Emmis that are members of management did not participate in the evaluation of the proposal. On August 4, 2006, the Company received a letter from ECC Acquisition, Inc. withdrawing the proposal. Subsequently, Mr. Smulyan and his advisors at various times discussed with directors who served on the special committee and/or their advisors the withdrawn proposal and whether Mr. Smulyan or ECC Acquisition, Inc. would make a similar going private proposal. Those discussions included exploration by Mr. Smulyan of the directors’ views of a potential reinstitution of the proposal at a price of $16.80 per share in cash. Those discussions were discontinued on or around August 31, 2006 without a new offer being made. The special committee is no longer active, but a consolidated lawsuit filed in Marion County (Indiana) Superior Court on behalf of Emmis shareholders seeking injunctive relief and damages in connection with the offer, as well as class action status, remains on file with the Court. The Company believes the withdrawal of the proposal makes the lawsuit moot.

     On July 7, 2006, Emmis closed on its sale of WBPG-TV in Mobile, AL – Pensacola, FL to LIN Television Corporation for $3.0 million in cash. LIN Television Corporation had been operating WBPG-TV under a Local Programming and Marketing Agreement since November 30, 2005. Emmis used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of approximately $1.1 million, net of tax, in its quarter ended August 31, 2006, which is included in discontinued operations in the accompanying condensed consolidated statement of operations.

     On July 11, 2006, Emmis closed on its sale of 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. Emmis used the proceeds to repay outstanding debt obligations. In connection with the sale, Emmis recorded a gain on sale of $11.5 million, net of tax, in its quarter ended August 31, 2006, which is included in discontinued operations in the accompanying condensed consolidated statement of operations.

     On August 31, 2006, Emmis closed on its sale of WKCF-TV in Orlando to Hearst-Argyle Television Inc. for $217.5 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 $93.3 million, net of tax, in its quarter ended August 31, 2006, which is included in discontinued operations in the accompanying condensed consolidated statement of operations.

Note 5. Pro Forma Financial Information

     Unaudited pro forma summary information is presented below for the three-month and six-month periods ended August 31, 2005 assuming the acquisition of (i) D.EXPRES in Slovakia in March 2005 and (ii) Radio FM Plus in Bulgaria in November 2005 had occurred on the first day of the pro forma period presented below. Unaudited historical information is presented below for the three-month and six-month periods ended August 31, 2006.

     Preparation of the pro forma summary information was based upon assumptions deemed appropriate by the Company’s management. The pro forma summary information presented below is not necessarily indicative of the results that actually would have occurred if the transactions 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 August 31,								Six Months Ended August 31,
		2005				2006				2005				2006
		(Pro Forma)				(Historical)				(Pro Forma)				(Historical)
Net revenues		$	105,134			$	99,909			$	198,787			$	189,696
Net income from continuing operations		$	3,560			$	4,275			$	7,155			$	4,006
Net income (loss) available to common shareholders from continuing operations		$	1,314			$	2,029			$	2,663			$	(486	)
Net income (loss) per share available to common shareholders from continuing operations:
Basic		$	0.03			$	0.05			$	0.05			$	(0.01	)
Diluted		$	0.03			$	0.05			$	0.05			$	(0.01	)
Weighted average shares outstanding:
Basic			40,893				37,242				48,769				37,184
Diluted			41,434				37,346				49,266				37,184

Note 6. Comprehensive Income

     Comprehensive income (loss) was comprised of the following for the three-month and six-month periods ended August 31, 2005 and 2006:

		Three Months								Six Months
		Ended August 31,								Ended August 31,
		2005				2006				2005				2006
Net income		$	8,430			$	112,282			$	18,808			$	120,936
Translation adjustment			(1,154	)			(265	)			(2,446	)			207
Total comprehensive income		$	7,276			$	112,017			$	16,362			$	121,143

Note 7. 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 represents expense not allocated to reportable segments.

     The Company’s segments operate primarily in the United States with one radio station located in Hungary, a network of radio stations located in Belgium and national radio networks in 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 August 31,								Six Months Ended August 31,								As of August 31,
		2005				2006				2005				2006				2005				2006
Hungary		$	5,554			$	5,488			$	9,502			$	9,321			$	6,350			$	5,229
Belgium			263				392				421				567				3,550				3,143
Slovakia			2,494				2,934				2,933				4,979				11,984				11,505
Bulgaria			N/A				477				N/A				844				N/A				4,383

     In the quarter ended August 31, 2005, Emmis concluded its television assets were held for sale in accordance with Statement No. 144. Emmis sold KKFR-FM in Phoenix, AZ in July 2006 and WRDA-FM in St. Louis, MO 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, 2006 and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months Ended						Publishing
August 31, 2006		Radio				and Other				Corporate				Consolidated
		(Unaudited)
Net revenues		$	79,132			$	20,777			$	—			$	99,909
Station operating expenses			47,830				18,553				—				66,383
Corporate expenses			—				—				8,292				8,292
Depreciation and amortization			2,393				168				662				3,223
Loss on disposal of assets			3				—				—				3
Operating income (loss)		$	28,906			$	2,056			$	(8,954	)		$	22,008
Assets — continuing operations		$	997,689			$	78,053			$	232,828			$	1,308,570
Assets — discontinued operations			979				—				100,064				101,043
Total assets		$	998,668			$	78,053			$	332,892			$	1,409,613

Three Months Ended						Publishing
August 31, 2005		Radio				and Other				Corporate				Consolidated
		(Unaudited)
Net revenues		$	83,860			$	20,794			$	—			$	104,654
Station operating expenses			45,472				19,405				—				64,877
Corporate expenses			—				—				7,958				7,958
Depreciation and amortization			2,464				175				1,618				4,257
(Gain) loss on disposal of assets			(8	)			—				—				(8	)
Operating income (loss)		$	35,932			$	1,214			$	(9,576	)		$	27,570
Assets — continuing operations		$	1,028,919			$	85,883			$	128,995			$	1,243,797
Assets — discontinued operations			74,950				—				518,339				593,289
Total assets		$	1,103,869			$	85,883			$	647,334			$	1,837,086

Six Months Ended						Publishing
August 31, 2006		Radio				and Other				Corporate				Consolidated
		(Unaudited)
Net revenues		$	147,926			$	41,770			$	—			$	189,696
Station operating expenses			91,581				38,438				—				130,019
Corporate expenses			—				—				15,179				15,179
Depreciation and amortization			4,827				330				1,341				6,498
(Gain) loss on disposal of assets			3				—				—				3
Operating income (loss)		$	51,515			$	3,002			$	(16,520	)		$	37,997
Assets — continuing operations		$	997,689			$	78,053			$	232,828			$	1,308,570
Assets — discontinued operations			979				—				100,064				101,043
Total assets		$	998,668			$	78,053			$	332,892			$	1,409,613