10-Q

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, 2014

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  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

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

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of October 6, 2014, was:

38,807,873	Shares of Class A Common Stock, $.01 Par Value
4,569,464	Shares of Class B Common Stock, $.01 Par Value
—	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, 2013 and 2014	3
Condensed Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended August 31, 2013 and 2014	4
Condensed Consolidated Balance Sheets as of February 28, 2014 and August 31, 2014	5
Condensed Consolidated Statement of Changes in Equity for the six-month period ended August 31, 2014	7
Condensed Consolidated Statements of Cash Flows for the six-month periods ended August 31, 2013 and 2014	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
Item 4. Controls and Procedures	41
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	41
Item 6. Exhibits	42
Signatures	43

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PART I — FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended   August 31,						Six Months Ended   August 31,
	2013			2014			2013			2014
NET REVENUES	$	54,967		$	61,824		$	105,553		$	121,548
OPERATING EXPENSES:
Station operating expenses excluding LMA fees of $0, $383, $0 and $4,208, and depreciation and amortization expense of $665, $945, $1,321 and $1,672, respectively	41,938			46,293			79,650			89,219
Corporate expenses excluding depreciation and amortization expense of $548, $646, $1,068 and $1,272, respectively	5,070			3,341			9,470			8,231
LMA fees	—			383			—			4,208
Hungary license litigation and related expenses	1,043			192			1,295			284
Depreciation and amortization	1,213			1,591			2,389			2,944
Gain on contract settlement	—			(2,500		)	—			(2,500		)
Gain on disposal of assets	(1		)	—			(1		)	(3		)
Total operating expenses	49,263			49,300			92,803			102,383
OPERATING INCOME	5,704			12,524			12,750			19,165
OTHER EXPENSE:
Interest expense	(1,808		)	(4,878		)	(3,729		)	(6,478		)
Loss on debt extinguishment	—			(1,455		)	—			(1,455		)
Other income, net	33			168			40			179
Total other expense	(1,775		)	(6,165		)	(3,689		)	(7,754		)
INCOME BEFORE INCOME TAXES	3,929			6,359			9,061			11,411
PROVISION FOR INCOME TAXES	4			2,167			179			4,552
CONSOLIDATED NET INCOME	3,925			4,192			8,882			6,859
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,354			1,432			2,835			3,143
NET INCOME ATTRIBUTABLE TO THE COMPANY	2,571			2,760			6,047			3,716
GAIN ON EXTINGUISHMENT OF PREFERRED STOCK	76			—			325			—
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	2,647		$	2,760		$	6,372		$	3,716
NET INCOME PER SHARE - BASIC	$	0.06		$	0.06		$	0.15		$	0.09
NET INCOME PER SHARE - DILUTED	$	0.05		$	0.06		$	0.13		$	0.08
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	41,451			42,525			41,313			42,337
Diluted	46,937			47,544			46,361			47,479

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended   August 31,				Six Months Ended   August 31,
	2013		2014		2013			2014
CONSOLIDATED NET INCOME	$	3,925	$	4,192	$	8,882		$	6,859
OTHER COMPREHENSIVE INCOME, NET OF TAXES:
Change in value of derivative instrument and related income tax effects	4		90		48			99
Cumulative translation adjustment	22		—		(8		)	—
COMPREHENSIVE INCOME	3,951		4,282		8,922			6,958
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,335		1,432		2,816			3,143
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	2,616	$	2,850	$	6,106		$	3,815

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	February 28, 2014		August 31, 2014
			(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,304	$	6,398
Restricted cash	2,239		77,903
Accounts receivable, net	31,000		40,328
Prepaid expenses	8,582		8,946
Other current assets	6,887		9,439
Total current assets	54,012		143,014
PROPERTY AND EQUIPMENT, NET	32,231		35,167
INTANGIBLE ASSETS (Note 4):
Indefinite-lived intangibles	150,558		219,577
Goodwill	12,639		74,337
Other intangibles, net	262		8,950
Total intangible assets	163,459		302,864
OTHER ASSETS, NET	15,646		17,100
Total assets	$	265,348	$	498,145

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except share data)

	February 28, 2014			August 31, 2014
				(Unaudited)
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	8,958		$	8,476
Current maturities of long-term debt (Note 5)	12,541			5,687
Accrued salaries and commissions	8,552			6,976
Deferred revenue	11,506			11,525
Acquisition-related liability	—			79,525
Other current liabilities	7,693			6,719
Total current liabilities	49,250			118,908
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 5)	114,926			264,855
OTHER NONCURRENT LIABILITIES	8,021			7,792
DEFERRED INCOME TAXES	9,783			14,271
Total liabilities	181,980			405,826
COMMITMENTS AND CONTINGENCIES
EQUITY:
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 37,267,123 shares at February 28, 2014 and 38,678,464 shares at August 31, 2014	373			387
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,569,464 shares at February 28, 2014 and August 31, 2014	46			46
Series A non-cumulative convertible preferred stock, $.01 par value; $50.00 liquidation preference per share, aggregate liquidation preference and redemption amount of $46,450 at February 28, 2014 and August 31, 2014, respectively; authorized 2,875,000 shares; issued and outstanding 1,328,991 shares at February 28, 2014, which includes 400,000 shares in trust, and 928,991 shares at August 31, 2014	9			9
Additional paid-in capital	580,776			584,088
Accumulated deficit	(545,355		)	(541,639		)
Accumulated other comprehensive loss	(99		)	—
Total shareholders’ equity	35,750			42,891
NONCONTROLLING INTERESTS	47,618			49,428
Total equity	83,368			92,319
Total liabilities and equity	$	265,348		$	498,145

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

(In thousands, except share data)

	Class A Common Stock			Class B Common Stock			Series A Preferred Stock			Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at February 28, 2014	37,267,123	$	373	4,569,464	$	46	928,991	$	9	$	580,776	$	(545,355	)	$	(99	)	$	47,618		$	83,368
Net income												3,716						3,143			6,859
Issuance of Common Stock to employees and officers	188,717	2								968											970
Exercise of stock options	615,323	6								292											298
Payments of dividends and distributions to noncontrolling interests																		(2,530		)	(2,530		)
Distribution of 2012 Retention Trust Plan, net of taxes	607,301	6								2,052											2,058
Purchase of noncontrolling interest																		1,197			1,197
Change in value of derivative instrument															99						99
Balance, August 31, 2014	38,678,464	$	387	4,569,464	$	46	928,991	$	9	$	584,088	$	(541,639	)	$	—		$	49,428		$	92,319

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six Months Ended August 31,
	2013			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	8,882		$	6,859
Adjustments to reconcile consolidated net income to net cash provided by operating activities -
Depreciation and amortization	2,389			2,944
Amortization of deferred financing costs, including original issue discount	450			514
Noncash accretion of acquisition-related liability	—			1,031
Loss on debt extinguishment	—			1,455
Provision for bad debts	338			392
Provision for deferred income taxes	1,288			4,443
Noncash compensation	3,082			1,531
Gain on sale of assets	(1		)	(3		)
Other	(75		)	—
Changes in assets and liabilities -
Restricted cash	—			351
Accounts receivable	(6,880		)	(9,719		)
Prepaid expenses and other current assets	229			(2,831		)
Other assets	(1,167		)	(952		)
Accounts payable and accrued liabilities	266			(2,575		)
Deferred revenue	1,197			19
Income taxes	(322		)	(152		)
Other liabilities	294			462
Net cash used in operating activities — discontinued operations	(68		)	—
Net cash provided by operating activities	9,902			3,769
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,857		)	(1,675		)
Cash paid for acquisitions	—			(57,544		)
Change in acquisition-related restricted cash	—			(76,015		)
Cash paid for investments, net of distributions	(220		)	(33		)
Other	1			(182		)
Net cash used in investing activities — discontinued operations	(1,650		)	—
Net cash used in investing activities	(3,726		)	(135,449		)

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

(Dollars in thousands)

	Six Months Ended August 31,
	2013			2014
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(12,015		)	(66,720		)
Proceeds from long-term debt	6,000			210,000
Debt-related costs	(137		)	(6,844		)
Payments of dividends and distributions to noncontrolling interests	(1,816		)	(2,530		)
Proceeds from the exercise of stock options	126			292
Purchase of preferred stock	(107		)	—
Settlement of tax withholding obligations on stock issued to employees	(133		)	(1,424		)
Net cash (used in) provided by financing activities	(8,082		)	132,774
Effect of exchange rates on cash and cash equivalents	(8		)	—
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,914		)	1,094
CASH AND CASH EQUIVALENTS:
Beginning of period	8,735			5,304
End of period	$	6,821		$	6,398
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	3,285		$	2,395
(Refund from) cash paid for income taxes, net	(804		)	243
Noncash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives	1,307			4,444

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

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

August 31, 2014

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2014. 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, except as otherwise noted) necessary to present fairly the consolidated financial position of Emmis at August 31, 2014, and the results of its operations for the three-month and six-month periods ended August 31, 2013 and 2014, and cash flows for the six-month periods ended August 31, 2013 and 2014.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2014 that have had a material impact on our condensed consolidated financial statements and related notes.

Basic and Diluted Net Income Per Common Share

Basic net income per common share is computed by dividing net income attributable 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, 2013 and 2014 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”). The following table sets forth the calculation of basic and diluted net income per share:

	Three Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders from continuing operations	$	2,647		41,451	$	0.06	$	2,760	42,525	$	0.06
Impact of equity awards	—			3,217			—		2,753
Impact of conversion of preferred stock into common stock	(76		)	2,269			—		2,266
Diluted net income per common share:
Net income available to common shareholders from continuing operations	$	2,571		46,937	$	0.05	$	2,760	47,544	$	0.06

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	Six Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders	$	6,372		41,313	$	0.15	$	3,716	42,337	$	0.09
Impact of equity awards	—			2,770	—		—		2,876	—
Impact of conversion of preferred stock into common stock	(325		)	2,278	—		—		2,266	—
Diluted net income per common share:
Net income available to common shareholders	$	6,047		46,361	$	0.13	$	3,716	47,479	$	0.08

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended August 31,		Six Months Ended August 31,
	2013	2014	2013	2014
	(shares in 000’s )
Equity awards	1,929	1,730	1,980	1,385
Antidilutive common share equivalents	1,929	1,730	1,980	1,385

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the Federal Communications Commission ("FCC") licenses. Under the terms of these agreements, the acquiring company makes specified periodic payments to the holder of the FCC license in exchange for the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. The acquiring company records revenues and expenses associated with the portion of the station’s inventory of broadcast time it manages. Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On February 11, 2014, the Company entered into an LMA in connection with its agreement to purchase WBLS-FM and WLIB-AM in New York City from YMF Media New York LLC and YMF Media New York License LLC (collectively, "YMF"). The LMA, which commenced on March 1, 2014, gave Emmis the right to program and sell advertising for the two New York stations. Emmis paid YMF $1.3 million per month and reimbursed YMF for certain monthly expenses through the first closing of the acquisition, which occurred on June 10, 2014. After the first closing, the LMA continues in effect until the second closing at a reduced monthly fee of approximately $0.7 million. During the three-month and six-month periods ended ended August 31, 2014, Emmis recorded $0.4 million and $4.2 million of LMA fee expense. See Note 2 for more discussion of the Company's purchase of WBLS-FM and WLIB-AM from YMF.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis retains ownership and control of the Station, including the related FCC license during the term of the LMA and is scheduled to receive an annual fee until the LMA’s termination. LMA fee revenue is recorded on a straight-line basis over the term of the LMA as a component of net revenues in our accompanying condensed consolidated statements of operations.

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The following table summarizes certain operating results of 98.7FM for all periods presented. 98.7FM is a part of our radio segment.

	For the three months ended August 31,				For the six months ended August 31,
	2013		2014		2013		2014
	(amounts in 000's)
Net revenues	$	2,583	$	2,583	$	5,166	$	5,166
Station operating expenses, excluding depreciation and amortization expense	251		260		507		484
Interest expense	861		815		1,731		1,643

Assets and liabilities of 98.7FM as of February 28, 2014 and August 31, 2014 were as follows:

	As of February 28,		As of August 31,
	2014		2014
	(amounts in 000's)
Current assets:
Restricted cash	$	1,407	$	1,326
Prepaid expenses	614		630
Total current assets	2,021		1,956
Noncurrent assets:
Indefinite lived intangibles	60,525		60,525
Deferred debt issuance costs, net	2,759		2,626
Deposits and other	3,082		3,781
Total noncurrent assets	66,366		66,932
Total assets	$	68,387	$	68,888
Current liabilities:
Accounts payable and accrued expenses	$	56	$	26
Current maturities of long-term debt	4,541		4,762
Deferred revenue	728		753
Other current liabilities	256		248
Total current liabilities	5,581		5,789
Noncurrent liabilities:
Long-term debt, net of current portion	70,401		67,960
Other noncurrent liabilities	24		27
Total noncurrent liabilities	70,425		67,987
Total liabilities	$	76,006	$	73,776

Restricted Cash

The Company's restricted cash, included in current assets in the accompanying condensed consolidated balance sheets, totaled $2.2 million and $77.9 million as of February 28, 2014 and August 31, 2014, respectively.

As further discussed in Note 2, $76.0 million of the proceeds of the 2014 Credit Agreement will be used to fund the second closing of the Company's purchase of WBLS-FM and WLIB-AM. Because of the designated use for this cash, management has classified the $76.0 million as restricted as of August 31, 2014. If the second closing of the transaction does not occur on or before February 17, 2015, the $76.0 million will be used to repay 2014 Credit Agreement term loans.

The terms of our non-recourse notes and related agreements discussed in Note 5 restrict a portion of our cash on deposit for specific operating and financing purposes. Restricted cash related to the non-recourse notes and related agreements totaled $1.4 million and $1.3 million as of February 28, 2014 and August 31, 2014, respectively.

In connection with the Company's agreement with Sprint/United Management Company (“Sprint”), the Company collects cash from other participating companies in the radio industry and remits cash collected to Sprint. The entirety of cash collected

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but not yet remitted to Sprint classified as restricted cash as of February 28, 2014 and August 31, 2014 was $0.8 million and $0.6 million, respectively.

Recent Accounting Pronouncements

In June 2013, the FASB issued a new accounting standard that requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance was effective for the Company beginning March 1, 2014. The adoption of this guidance did not have any effect on the presentation of the Company’s condensed consolidated financial statements.

In April 2014, the FASB issued Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, to update the criteria for reporting discontinued operations and enhance related disclosures. Under the new guidance, only disposals that have a major effect through a strategic shift on an organization’s operations and financial results should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The guidance is effective for the Company as of March 1, 2015. The Company expects that this new guidance will reduce the number of transactions that will qualify for reporting discontinued operations.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. This guidance will be effective for the Company in the first quarter of its fiscal year ending February 28, 2018. The Company is currently evaluating the impact, if any, the adoption of this guidance will have on its financial position, results of operations or cash flows.

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to be consistent with the August 31, 2014 presentation. The reclassifications have no impact on net income previously reported.

Note 2. Business Combinations

WBLS-FM & WLIB-AM

On February 11, 2014, subsidiaries of Emmis entered into a Purchase and Sale Agreement with YMF, pursuant to which Emmis agreed to purchase the assets of New York radio stations WBLS-FM and WLIB-AM (collectively, the "Stations") for $131.0 million, subject to customary adjustments and prorations. The purchase of the Stations enhances the Company's scale in New York, the second largest market in the United States as measured by total radio revenues. Additionally, the Stations' adult urban and urban gospel formats complement the hip-hop format of our existing station in New York.

Upon approval of the transaction by the Federal Communications Commission, Emmis and YMF executed the first closing of the transaction on June 10, 2014, whereby YMF transferred the assets of the Stations to Emmis and Emmis paid YMF $55.0 million of cash and transferred to YMF Media New York a 49.9% ownership interest in the Emmis subsidiaries that own the Stations' assets. A second closing is scheduled to occur on or about February 15, 2015 and will involve the payment of the balance of the purchase price of $76.0 million to YMF in exchange for the transfer to Emmis of YMF Media New York's interest in the Emmis subsidiaries that own the Stations' assets.

On February 11, 2014, Emmis and YMF entered into an LMA for the Stations. On March 1, 2014, Emmis began providing programming and selling advertising for the Stations. Under the terms of the LMA, Emmis paid $1.275 million per month 75 days in arrears to YMF for the right to program the station and sell advertising. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the Stations on June 10, 2014. The ongoing, reduced monthly LMA fees were recognized as additional purchase price of the Stations on June 10, 2014.

Emmis gained control over the Stations effective with the first closing on June 10, 2014 and consolidated the Stations beginning on that date. YMF is entitled to the remaining purchase price of $76.0 million at the second closing and the $0.74 million monthly LMA fees until the second closing, but does not otherwise share in the income or loss of the Stations subsequent to the first closing.

On June 10, 2014, Emmis entered into a Credit Agreement, by and among the Company, Emmis Operating Company, a wholly owned subsidiary of the Company, the lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent (the "2014 Credit Agreement"). The 2014 Credit Agreement includes a senior secured term loan facility of $185.0 million and a senior secured revolving credit facility of $20.0 million. Pursuant to the 2014 Credit Agreement, the Company borrowed $185.0 million of the senior secured term loans on June 10, 2014; $109.0 million was

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disbursed to the Company and the remaining $76.0 million was funded into escrow. The proceeds from the term loan and additional funding from the revolving credit facility were used to fund the first closing of the acquisition described above, settle amounts due under the Company's former credit facility, and pay fees related to the issuance of the Credit Agreement. The $76.0 million of funds in escrow will be used to fund the second closing of the acquisition in February 2015. See Note 5 for more discussion of the 2014 Credit Agreement.

The following table summarizes the preliminary estimates of fair values of the identifiable assets acquired and liabilities assumed in the acquisition of the Stations as of June 10, 2014. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may result in adjustments to the preliminary values presented below.

Other current assets	$	37
Property and equipment	4,054
Indefinite-lived intangibles	69,019
Goodwill	58,945
Other intangibles	2,469
Other current liabilities	(512		)
Total purchase price, including assumed liabilities	$	134,012
Cash paid at first closing on June 10, 2014	$	55,000
Present value of second closing and LMA related liabilities	79,012
Total purchase price	$	134,012

Goodwill is calculated as the excess of the purchase price over the net assets acquired. Management attributes the goodwill recognized in the acquisition of the Stations to the power of the existing WBLS-FM and WLIB-AM brands in the New York marketplace as well as the synergies and growth opportunities expected through the combination of the adult urban and urban gospel stations with the Company's existing hip-hop station. The $58.9 million of goodwill recognized in the transaction is included in our radio segment and is deductible for tax purposes.

The indefinite-lived intangible assets are comprised entirely of the Stations' FCC licenses. FCC broadcasting licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, all of our FCC broadcasting licenses have been renewed at or after the end of their respective periods, and we expect that these FCC broadcasting licenses will continue to be renewed in the future. Our indefinite-lived intangibles are not amortized.

Other intangibles consist of a customer list intangible asset of $0.3 million and a syndicated programming intangible asset of $2.2 million. The customer list intangible asset is being amortized over 3 years and the syndicated programming intangible asset is being amortized over 7 years, which is the remaining term of the programming agreement, including renewals which are at the option of the Company.

The results of operations of the Stations are largely included in the Company's results of operations for the six-month period ended August 31, 2014 as the Company began providing programming and selling advertising of the Stations on March 1, 2014 pursuant to an LMA. Net revenues and station operating expenses, excluding LMA fees and depreciation and amortization expense, of the Stations were $13.6 million and $7.1 million for the period March 1, 2014 through August 31, 2014. LMA fees were $4.2 million for the same period.

We incurred acquisition costs related to the Stations totaling $0.3 million and $0.6 million for the three months and six months ended August 31, 2014, respectively. Acquisition costs included in station operating expenses, excluding LMA fees and depreciation and amortization expense, in the accompanying condensed consolidated statements of operations were $0.3 million and $0.4 million for the three months and six months ended August 31, 2014, respectively. Acquisition costs included in corporate expenses, excluding depreciation and amortization expense, in the accompanying condensed consolidated statements of operations were less than $0.1 million and $0.2 million for the three months and six months ended August 31, 2014, respectively. Including acquisition costs incurred during the year ended February 28, 2014 of $0.9 million, cumulative acquisition costs related to the Stations were $1.5 million.

In connection with the first closing, Emmis and YMF executed an amendment to their Asset Purchase Agreement dated April 5, 2012 relating to Emmis' sale of the intellectual property of WRKS-FM. The amendment, executed on June 10, 2014, fixed all future earn-out payments YMF owed to Emmis pursuant to the April 5, 2012 Asset Purchase Agreement based upon the parties' estimate of the earn-out payments that would otherwise be owed to Emmis under this pre-existing contractual relationship. Emmis recognized a gain on settlement of the contract of $2.5 million, which is included in gain on contract

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settlement in the accompanying condensed consolidated statements of operations. During the three months ended August 31, 2014, Emmis collected $0.5 million of the fixed earn-out payments from YMF. The remaining $2.0 million due from YMF is reflected in other current assets in the accompanying condensed consolidated balance sheets and is to be paid by YMF during the current fiscal year.

The following table presents unaudited pro forma consolidated financial information as if the closing of our acquisition of the Stations had occurred on March 1, 2013 (in thousands, except per share data):

	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2014		2013		2014
	(in 000’s, except per share data)
Net revenues	$	62,912	$	61,824	$	120,703	$	121,548
Net income attributable to common shareholders	$	4,089	$	2,615	$	8,992	$	4,974
Net income per common share attributable to common shareholders:
Basic	$	0.10	$	0.06	$	0.22	$	0.12
Diluted	$	0.09	$	0.06	$	0.19	$	0.10

As mentioned above and in Note 1, Emmis commenced an LMA on both WBLS-FM and WLIB-AM beginning on March 1, 2014. As Emmis programmed the stations and sold the related advertising, the majority of the results of operations for the two stations are included in Emmis' historical results for these 2014 periods. Certain adjustments were made for the three-month and six-month periods ended August 31, 2014 to reflect the elimination of the LMA fee and other purchase accounting adjustments. The pro forma financial information for the three-month and six-month periods ended August 31, 2013 has been prepared by combining our historical results and the historical results of WBLS-FM and WLIB-AM and further reflects the effect of purchase accounting adjustments. This pro forma information is not necessarily indicative of the results of operations that actually would have resulted had the acquisition of the two radio stations occurred on March 1, 2013, or that may result in the future.

Acquisition of a controlling interest in Digonex Technologies, Inc.

On June 16, 2014, Emmis invested $3.0 million in Digonex Technologies, Inc ("Digonex"), an Indiana corporation that provides dynamic pricing solutions to customers in various industries. Emmis believes that its acquisition of Digonex gives it entry into the growing dynamic pricing marketplace which can serve a diverse clientèle, and can possibly help Emmis with yields on its own advertising inventory and special events. Emmis’ initial investment of $3.0 million ($1.0 million in Digonex Preferred Stock and $2.0 million in the form of convertible debt) resulted in Emmis appointing a majority of the board of directors of Digonex and holding rights convertible into 51% of the fully diluted common equity of Digonex. In August 2014, subsequent to the consolidation of Digonex, Emmis contributed an additional $2.0 million to Digonex in the form of convertible debt, which resulted in Emmis owning rights that are convertible into at least 66% of the common equity of Digonex. As Emmis controlled the board of directors of Digonex as of its initial investment on June 16, 2014, Emmis began consolidating the results of Digonex as of that date.

Digonex reports on a calendar year ending December 31, which Emmis consolidates into its fiscal year ending February 28(29). Results of operations of Digonex for the period June 16, 2014 to June 30, 2014, which Emmis consolidates into its results of operations for the period ended August 31, 2014 were insignificant.

The following table summarizes the preliminary estimates of fair values of the identifiable assets acquired and liabilities assumed in the acquisition of Digonex as of June 16, 2014. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may

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result in adjustments to the preliminary values presented below.

Cash	$	456
Other current and noncurrent assets	10
Goodwill	2,752
Other intangibles	6,180
Accounts payable and accrued expenses	(462		)
Other current liabilities and noncurrent liabilities	(550		)
Long-term debt	(4,189		)
Noncontrolling interests	(1,197		)
Total purchase price, including assumed liabilities	3,000
Less: Cash acquired	(456		)
Total purchase price, net of cash acquired	$	2,544

The goodwill recognized in the acquisition of Digonex is attributable to the assembled workforce and existing business processes. The $2.8 million of goodwill recognized in the transaction is included in our corporate and emerging technologies segment and is not deductible for tax purposes.

Other intangibles consist of patents of $5.2 million, a customer list intangible asset of $0.7 million and trademarks of $0.3 million. The patents are being amortized over 7 years, the customer list intangible asset is being amortized over 3 years and the trademarks are being amortized over 15 years.

Note 3. Share Based Payments

The amounts recorded as share based compensation expense consist of stock option and restricted stock grants, common stock issued to employees and directors in lieu of cash payments, and Preferred Stock contributed to the 2012 Retention Plan.

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. Generally, these options either vest annually over 3 years (one-third each year for 3 years), or cliff vest at the end of 3 years. The Company issues new shares upon the exercise of stock options.

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 risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the six months ended August 31, 2013 and 2014:

	Six Months Ended August 31,
	2013	2014
Risk-Free Interest Rate:	0.6% - 1.3%	1.2% - 1.5%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.3	4.3
Expected Volatility:	108.9% - 115.9%	71.8% - 73.9%

The following table presents a summary of the Company’s stock options outstanding at August 31, 2014, and stock option activity during the six months ended August 31, 2014 (“Price” reflects the weighted average exercise price per share):

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	Options	Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	6,984,605	$	3.74
Granted	561,219	2.91
Exercised (1)	617,706	0.54
Forfeited	25,000	0.70
Expired	986,610	17.45
Outstanding, end of period	5,916,508	1.72		7.1	$	7,180
Exercisable, end of period	2,649,017	1.87		5.6	$	3,666

⁽¹⁾  Cash received from option exercises for the six months ended August 31, 2013 and 2014 was $0.1 million and $0.3 million, respectively. The Company recorded an income tax benefit relating to the options exercised during the six months ended August 31, 2014 of $0.1 million. The Company did not record an income tax benefit relating to the options exercised during the six months ended August 31, 2013.

The weighted average per share grant date fair value of options granted during the six months ended August 31, 2013 and 2014, was $1.36 and $1.64, respectively.

A summary of the Company’s nonvested options at August 31, 2014, and changes during the six months ended August 31, 2014, is presented below:

	Options	Weighted Average Grant Date Fair Value
Nonvested, beginning of period	3,325,481	$	0.98
Granted	561,219	1.64
Vested	594,209	0.96
Forfeited	25,000	0.57
Nonvested, end of period	3,267,491	1.10

There were 3.2 million shares available for future grants under the Company’s various equity plans at August 31, 2014. The vesting dates of outstanding options at August 31, 2014 range from November 2014 to March 2018, and expiration dates range from March 2015 to July 2024.

Restricted Stock Awards

The Company grants restricted stock awards to directors annually, and periodically grants restricted stock to employees in connection with employment agreements. Awards to directors are granted on the date of our annual meeting of shareholders and vest on the earlier of (i) the completion of the director’s 3-year term or (ii) the third anniversary of the date of grant. Restricted stock award grants are granted out of the Company’s 2012 Equity Compensation Plan. The Company may also award, out of the Company’s 2012 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares may be immediately lapsed on the grant date.

The following table presents a summary of the Company’s restricted stock grants outstanding at August 31, 2014, and restricted stock activity during the six months ended August 31, 2014 (“Price” reflects the weighted average share price at the date of grant):

	Awards	Price
Grants outstanding, beginning of period	590,544	$	1.79
Granted	1,221,213	3.33
Vested (restriction lapsed)	1,170,603	3.09
Grants outstanding, end of period	641,154	2.33

The total grant date fair value of shares vested during the six months ended August 31, 2013 and 2014, was $0.4 million and $3.6 million, respectively.

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Preferred Stock and the 2012 Retention Plan

On April 2, 2012, the shareholders of the Company approved the 2012 Retention Plan and Trust Agreement (the “Trust” or the “2012 Retention Plan”) at a special meeting of shareholders. The Company contributed 400,000 shares of its Preferred Stock to the Trust in connection with the approval of the 2012 Retention Plan. Awards granted under the 2012 Retention Plan entitled the participants to receive a distribution two years from the date of shareholder approval of the plan, provided the participant was an employee upon inception of the plan and remained an employee through the vesting date. The Trustee of the plan was Jeffrey H. Smulyan, our Chairman of the Board, President and Chief Executive Officer.

On March 5, 2014, the Board of Directors of the Company approved the exercise of the Company's repurchase option under the Voting and Transfer Restriction Agreement with the Trustee of the 2012 Retention Plan and Trust. Pursuant to the exercise of that option, the Company repurchased 400,000 shares of Preferred Stock from the trustee in exchange for 975,848 shares of the Company's Class A Common Stock. On April 2, 2014, 975,848 shares of Class A Common Stock were distributed to employees who met the vesting requirements of the plan. The Company recognized approximately $1.5 million and $0.4 million of compensation expense related to the 2012 Retention Plan during the six months ended August 31, 2013 and 2014, respectively. The issuance and vesting of these shares is reflected in the restricted stock table above.

Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company during the three and six months ended August 31, 2013 and 2014:

	Three Months Ended August 31,					Six Months Ended August 31,
	2013		2014			2013		2014
Station operating expenses	$	1,213	$	68		$	1,466	$	470
Corporate expenses	1,206		515			1,616		1,061
Stock-based compensation expense included in operating expenses	2,419		583			3,082		1,531
Tax benefit	—		(190		)	—		(521		)
Recognized stock-based compensation expense, net of tax	$	2,419	$	393		$	3,082	$	1,010

As of August 31, 2014, there was $2.8 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 1.8 years.

Note 4. Intangible Assets and Goodwill

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, 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 as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.6 million and $219.6 million as of February 28, 2014 and August 31, 2014, respectively. The increase in FCC licenses is attributable to the purchase of WBLS-FM and WLIB-AM as further discussed in Note 2. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, the Company will perform an interim impairment test. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market 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

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its unit of accounting commenced operations at the beginning of the valuation period. 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. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

Valuation of Goodwill

ASC Topic 350-20-35 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, unless indications of impairment exist during an interim period. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. 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. 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 has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

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.

The following table summarizes the Company's goodwill by segment as of February 28, 2014 and August 31, 2014. The increase to Radio goodwill is a result of the Company's acquisition of WBLS-FM and WLIB-AM. The increase to Corporate & Emerging Technologies goodwill is a result of the Company's acquisition of a controlling interest in Digonex. See Note 2 for more discussion of the Company's acquisitions.

	As of February 28,		As of August 31,
	2014		2014
Radio	$	4,603	$	63,549
Publishing	8,036		8,036
Corporate & Emerging Technologies	—		2,752
Total Goodwill	$	12,639	$	74,337

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of patents, customer lists, trademarks and a syndicated programming contract, 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 assets at February 28, 2014 and August

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31, 2014:

		As of February 28, 2014						As of August 31, 2014
		(in 000's)
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	12.6	$	810	$	548	$	262	$	1,240	$	514	$	726
Patents	7.0	—		—		—		5,180		31		5,149
Customer list	2.9	—		—		—		1,015		36		979
Programming agreement	7.1	—		—		—		2,154		58		2,096
TOTAL		$	810	$	548	$	262	$	9,589	$	639	$	8,950

Total amortization expense from definite-lived intangibles for the three-month and six-month periods ended August 31, 2013 was less than $0.1 million. Total amortization expense from definite-lived intangibles for the three-month and six-month periods ended August 31, 2014 was $0.1 million. 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),	Expected Amortization Expense
	(in 000's)
2015	920
2016	1,514
2017	1,514
2018	1,255
2019	1,076

Note 5. Long-term Debt

Long-term debt was comprised of the following at February 28, 2014 and August 31, 2014:

	February 28, 2014			August 31, 2014
2012 Credit Agreement debt :
Revolver	$	—		$	—
Term Loan	54,000			—
Total 2012 Credit Agreement debt	54,000			—
2014 Credit Agreement debt :
Revolver	—			14,500
Term Loan	—			185,000
Total 2014 Credit Agreement debt	—			199,500
98.7FM non-recourse debt	74,942			72,722
Digonex non-recourse debt (1)	—			4,201
Less: Current maturities	(12,541		)	(5,687		)
Less: Unamortized original issue discount of Credit Agreement debt	(1,475		)	(5,881		)
Total long-term debt	$	114,926		$	264,855

⁽¹⁾ The face value of Digonex non-recourse debt is $6.2 million

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2012 Credit Agreement

On December 28, 2012, Emmis Operating Company (“EOC”), a wholly owned subsidiary of Emmis, entered into a credit facility (the “2012 Credit Agreement”) to provide for total borrowings of up to $100 million, including (i) an $80 million term loan and (ii) a $20 million revolver, of which $5 million may be used for letters of credit. On June 10, 2014, Emmis entered into the 2014 Credit Agreement. In connection with the execution of the 2014 Credit Agreement, the 2012 Credit Agreement was terminated effective June 10, 2014, and all amounts outstanding under that agreement were paid in full. During the three months ended August 31, 2014, the Company recorded a loss on debt extinguishment of $1.5 million related to the termination of the 2012 Credit Agreement.

2014 Credit Agreement

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, EOC, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”), the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent.

The 2014 Credit Agreement includes a senior secured term loan facility (the “Term Loan”) of $185.0 million and a senior secured revolving credit facility of $20.0 million, and contains provisions for an uncommitted increase of up to $20.0 million principal amount (plus additional amounts so long as a pro forma total net senior secured leverage ratio condition is met) of the revolving credit facility and/or the Term Loan subject to the satisfaction of certain conditions. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. Pursuant to the 2014 Credit Agreement, the Borrower borrowed $185.0 million of the Term Loan on June 10, 2014; $109.0 million was disbursed to the Borrower (the “Initial Proceeds”) and the remaining $76.0 million was funded into escrow (the “Subsequent Acquisition Proceeds”).

The Initial Proceeds, coupled with $13.0 million of revolving credit facility borrowings, were used by the Borrower on June 10, 2014 to repay all amounts outstanding under the 2012 Credit Agreement, to make a $55.0 million initial payment associated with our acquisition of WBLS-FM and WLIB-AM, and to pay fees and expenses. The Subsequent Acquisition Proceeds are expected to be used to make the final $76.0 million payment related to the acquisition of WBLS-FM and WLIB-AM. If the Subsequent Acquisition Proceeds are not fully used by February 17, 2015, they will be used to repay the Term Loan.

The Term Loan is due not later than June 10, 2021 and amortizes in an amount equal to 1% per annum of the total principal amount outstanding, payable in quarterly installments commencing March 31, 2015, with the balance payable on the maturity date. The revolving credit facility expires not later than June 10, 2019. An unused commitment fee of 50 basis points per annum will be payable quarterly on the average unused amount of the revolving credit facility. The Term Loan and amounts borrowed under the revolving credit facility bear interest, at the Borrower’s option, at either (i) the Alternate Base Rate (as defined in the 2014 Credit Agreement) (but not less than 2.00%) plus 3.75% or (ii) the Adjusted LIBO Rate (as defined in the 2014 Credit Agreement) (but not less than 1.00%) plus 4.75%.

Approximately$1.0 million of transaction fees related to the 2014 Credit Agreement were capitalized and are being amortized over the life of the 2014 Credit Agreement. These deferred debt costs are included in other assets, net in the condensed consolidated balance sheets. The 2014 Credit Agreement is carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $6.1 million as of the issuance of the debt on June 10, 2014 and $5.9 million as of August 31, 2014, is being amortized as additional interest expense over the life of the 2014 Credit Agreement.

The obligations under the 2014 Credit Agreement are secured by a perfected first priority security interest in substantially all of the assets of the Company, the Borrower and the Subsidiary Guarantors.

We were in compliance with all financial and non-financial covenants as of August 31, 2014. Our Total Leverage Ratio and Interest Coverage Ratio (each as defined in the 2014 Credit Agreement) requirements and actual amounts as of August 31, 2014 were as follows:

	As of August 31, 2014
	Covenant Requirement	Actual Results
Maximum Total Leverage Ratio	5.25 : 1.00	4.20 : 1.00
Minimum Interest Coverage Ratio	2.00 : 1.00	2.61 : 1.00

98.7FM Non-recourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of non-recourse notes. Teachers Insurance and Annuity Association of America, through a participation agreement with Wells Fargo

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Bank Northwest, National Association, is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company and its subsidiaries, and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

Digonex Non-recourse Debt

Digonex non-recourse notes payable consist of notes payable issued by Digonex, which were recorded at fair value on June 16, 2014, the date that Emmis acquired a controlling interest in Digonex (see Note 2). The notes payable, some of which are secured by the assets of Digonex, are non-recourse to the rest of the Company and its subsidiaries. The notes payable mature on December 31, 2017 and accrue interest at 5.0% per annum. Interest is due at maturity. The face value of the notes payable is $6.2 million. The company is accreting the difference between this face value and the $4.2 million fair value of the notes payable recorded in the acquisition of its controlling interest of the business as interest expense over the remaining term of the notes payable.

Based on amounts outstanding at August 31, 2014, mandatory principal payments of long-term debt for the next five

years and thereafter are summarized below:

Year Ended	2014 Credit Agreement						Digonex		Total
February 28 (29),	Revolver		Term Loan		98.7FM Debt		Notes payable		Payments
2015	$	—	$	—	$	2,321	$	—	$	2,321
2016	—		1,850		4,990		—		6,840
2017	—		1,850		5,453		6,199		13,502
2018	—		1,850		6,039		—		7,889
2019	14,500		1,850		6,587		—		22,937
Thereafter	—		177,600		47,332		—		224,932
Total	$	14,500	$	185,000	$	72,722	$	6,199	$	278,421

Note 6. Liquidity

The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. As of the filing of this Form 10-Q, management believes the Company can meet its liquidity needs through the end of fiscal year 2015 with cash and cash equivalents on hand and projected cash flows from operations. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2015.

Note 7. Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage interest rate exposure with the following objectives:

• manage current and forecasted interest rate risk while maintaining optimal financial flexibility and solvency

• proactively manage the Company’s cost of capital to ensure the Company can effectively manage operations and execute its business strategy, thereby maintaining a competitive advantage and enhancing shareholder value

• comply with covenant requirements in the Company’s credit facility

Cash Flow Hedges of Interest Rate Risk

The Company utilizes interest rate derivatives to add stability to cash payments for interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Under the terms of its 2012 Credit Agreement, the Company was required to fix or cap the interest rate on at least 50% of its Term Loan exposure for a two-year period ending December 28, 2014. Under the terms of its 2014 Credit Agreement, no such requirement exists. See Note 5 for more discussion of our new credit facility.

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The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company’s interest rate derivatives are used to hedge the interest payment cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company did not record any hedge ineffectiveness in earnings during the three or six months ended August 31, 2013 and 2014. Amounts reported in accumulated other comprehensive loss related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During fiscal 2015, less than $0.1 million was reclassified as an increase to interest expense.

In February 2013, the Company entered into a two-year interest rate exchange agreement (a “Swap”), whereby the Company pays a fixed rate of 0.42% on $40 million of notional principal to Fifth Third Bank, and Fifth Third Bank pays to the Company a variable rate on the same amount of notional principal based on the one-month London Interbank Offered Rate (“LIBOR”). In connection with the Company's termination and repayment of its 2012 Credit Agreement on June 10, 2014, our interest rate exchange agreement was settled and terminated. Consequently, as of August 31, 2014, the Company had no interest rate exchange agreements outstanding.

The Company does not generally use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the balance sheet as of February 28, 2014 and August 31, 2014. The fair value of the derivative instrument was estimated by obtaining quotations from the financial institution that was the counterparty to the instrument. The fair value was an estimate of the net amount that the Company would have been required to pay on the applicable date, assuming the agreement was transferred to another party or canceled by the Company, as further adjusted by a credit adjustment required by ASC Topic 820, Fair Value Measurements and Disclosures, as discussed below. For the six months ended August 31, 2014, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments Liability Derivatives
	As of February 28, 2014			As of August 31, 2014
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in 000's)
Derivatives designated as hedging instruments:
Interest Rate Swap Agreement	Other Current Liabilities	94		Other Current Liabilities	—
Total derivatives designated as hedging instruments		$	94		$	—

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three and six months ended August 31, 2013 and 2014 (in 000's).

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	For the Three Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap
Agreement	$	(19	)	$	(72	)	Interest expense	$	(23	)	$	(25	)	N/A	$	—	$	—
Total	$	(19	)	$	(72	)		$	(23	)	$	(25	)		$	—	$	—
	For the Six Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap Agreement	$	3		$	(15	)	Interest expense	$	(45	)	$	(27	)	N/A	$	—	$	—
Total	$	3		$	(15	)		$	(45	)	$	(27	)		$	—	$	—

Credit-risk-related Contingent Features

The Company manages its counterparty risk by entering into derivative instruments with financial institutions where it believes the risk of credit loss resulting from nonperformance by the counterparty is low. As discussed above, the Company’s counterparty to the interest rate swap that was in effect from February 2013 to June 2014 was Fifth Third Bank.

In accordance with ASC Topic 820, the Company makes a Credit Value Adjustment (CVA) to adjust the valuation of a derivative to account for our own credit risk with respect to all derivative liability positions. The CVA is accounted for as a decrease to the derivative position with the corresponding increase or decrease reflected in other comprehensive income (loss) for derivatives designated as cash flow hedges. The CVA also accounts for nonperformance risk of our counterparties in the fair value measurement of all derivative asset positions, when appropriate. For each period presented, this CVA was immaterial to the fair value of our derivative instrument.

Note 8. Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2014 and August 31, 2014. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

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	As of August 31, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
	As of February 28, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
Share-based compensation arrangement	$	714	$	—	$	—	$	714
Interest rate swap agreement	—		94		—		94
Total liabilities measured at fair value on a recurring basis	$	714	$	94	$	—	$	808

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. The carrying value of our preferred stock investments is determined by using implied valuations of recent rounds of financing and by other corroborating evidence, including the application of various valuation methodologies including option-pricing and discounted cash flow based models. Our available for sale securities are included in other noncurrent assets in the accompanying condensed consolidated balance sheets.

Share-based compensation arrangement — Emmis’ 2012 Retention Plan and Trust discussed in Note 3 was recorded at fair value on a recurring basis. As the fair value of the 2012 Retention Plant and Trust was tied to quoted prices of Emmis stock, it was considered a level 1 measurement. The share-based compensation arrangement was settled during the three months ended May 31, 2014.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company paid a fixed rate and received a variable interest rate that was observable based upon a forward interest rate curve and was therefore considered a level 2 measurement. The interest rate swap agreement was settled during the three months ended August 31, 2014.

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the Six Months Ended August 31,
	2013		2014
	Available For Sale Securities		Available For Sale Securities
Beginning Balance	$	6,500	$	6,750
Purchases	250		—
Ending Balance	$	6,750	$	6,750

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Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 4, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 3 for more discussion).

Fair Value of Other Financial Instruments

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. Refer to Note 2 for the fair values of assets acquired and liabilities assumed in connection with the Company's acquisitions.

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents: The carrying amount of these assets approximates fair value because of the short maturity of these instruments.

- Contract settlement receivable: As discussed in Note 2, the Company settled a contract with YMF in June 2014. As of August 31, 2014, YMF owes Emmis $2.0 million, which is reflected in other current assets in the accompanying condensed consolidated balance sheets. Emmis expects to fully collect the receivable prior to February 28, 2015 and believes that the carrying amount of the receivable approximates its fair value given the short duration of the instrument and is considered a level 3 measurement.

- 2014 Credit Agreement debt: As of August 31, 2014, the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $200.7 million and $199.5 million, respectively. The Company's estimate of fair value was based on quoted prices of this instrument and is considered a Level 2 measurement.

- Other long-term debt: The Company’s 98.7FM non-recourse debt and Digonex non-recourse debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its other long-term debt approximates its fair value.

Note 9. Segment Information

The Company’s operations are aligned into three business segments: (i) Radio, (ii) Publishing and (iii) Corporate & Emerging Technologies. Emerging Technologies includes our TagStation, NextRadio and Digonex businesses. 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 exclusively in the United States. Beginning in the quarter ended August 31, 2014, the Company reports results of its Emerging Technologies activities with its Corporate activities. Results from Emerging Technologies were reclassified from the Radio segment in the prior periods presented below and are not material.

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, 2014, and in Note 1 to these condensed consolidated

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financial statements, are applied consistently across segments.

Three Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	47,598			14,113			113			$	61,824
Station operating expenses excluding LMA fees and depreciation and amortization expense	31,170			14,513			610			46,293
Corporate expenses excluding depreciation and amortization expense	—			—			3,341			3,341
LMA fees	383			—			—			383
Hungary license litigation and related expenses	192			—			—			192
Depreciation and amortization	839			61			691			1,591
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	—			—			—			—
Operating income (loss)	$	17,514		$	(461	)	$	(4,529	)	$	12,524

Three Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	41,237			13,708			22			$	54,967
Station operating expenses excluding depreciation and amortization expense	27,449			13,938			551			41,938
Corporate expenses excluding depreciation and amortization expense	—			—			5,070			5,070
Hungary license litigation and related expenses	1,043			—			—			1,043
Depreciation and amortization	604			61			548			1,213
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	12,142		$	(291	)	$	(6,147	)	$	5,704

Six Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	92,588			28,791			169			$	121,548
Station operating expenses excluding LMA fees and depreciation and amortization expense	58,530			29,453			1,236			89,219
Corporate expenses excluding depreciation and amortization expense	—			—			8,231			8,231
LMA fees	4,208			—			—			4,208
Hungary license litigation and related expenses	284			—			—			284
Depreciation and amortization	1,509			118			1,317			2,944
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	(3		)	—			—			(3		)
Operating income (loss)	$	30,560		$	(780	)	$	(10,615	)	$	19,165

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Six Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	78,156			27,368			29			$	105,553
Station operating expenses excluding depreciation and amortization expense	50,193			28,739			718			79,650
Corporate expenses excluding depreciation and amortization expense	—			—			9,470			9,470
Hungary license litigation and related expenses	1,295			—			—			1,295
Depreciation and amortization	1,198			123			1,068			2,389
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	25,471		$	(1,494	)	$	(11,227	)	$	12,750

	As of February 28, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	210,161	$	21,809	$	33,378	$	265,348
	As of August 31, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	357,030	$	21,659	$	119,456	$	498,145

The increase in Radio segment assets primarily relates to the acquisition of WBLS-FM and WLIB-AM. The increase in Corporate and Emerging Technologies segment assets primarily relates to the restricted cash held for the second closing of our acquisition of WBLS-FM and WLIB-AM. See Note 2 for more discussion of our acquisitions.

Note 10. Regulatory, Legal and Other Matters

Emmis is a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied the plaintiffs' request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. On February 28, 2014, the U.S. District Court issued a ruling in favor of Emmis on all counts. In March 2014, the Plaintiffs filed with the U.S. Court of Appeals for the Seventh Circuit an appeal of the U.S. District Court's decision. Emmis is defending this lawsuit vigorously.

On July 7, 2014, individuals who had been seeking to overturn the FCC’s approval of the transfer of the broadcast licenses for WBLS-FM and WLIB-AM from entities associated with Inner City Broadcasting to YMF (the entities that

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subsequently sold the two stations to Emmis) filed with the U.S. Court of Appeals for the District of Columbia Circuit a Notice of Appeal of the FCC’s approval of the transfer. Based upon the facts alleged in the Notice of Appeal and the extensive precedent of courts not overturning FCC approvals of transfers of broadcast licenses except in exceedingly rare circumstances, Emmis believes the appeal is without merit.

Certain individuals and groups have challenged applications for renewal of the FCC licenses of certain of the Company’s stations and challenged the transfer from YMF to Emmis of the FCC licenses for WBLS-FM and WLIB-AM. These challenges are currently pending before the FCC. Emmis does not expect the challenges to result in the denial of any license renewals or the revocation of the WBLS-FM and WLIB-AM transfers.

Note 11. Income Taxes

The effective income tax rate was 40% for the six months ended August 31, 2014. Our effective tax rate was higher than our estimated annual effective tax rate of 34% as a discrete expense of $0.9 million was recorded during the period. This expense related to the effect of increasing our statutory rate by 1% on existing deferred tax liabilities due to changes in state tax laws and the effect of the WBLS-FM and WLIB-AM LMA and related acquisition on our income apportionments. This discrete expense is partially offset during the six months ended August 31, 2014 by a discrete benefit of $0.6 million related to the loss on debt extinguishment the Company recorded during the period.

The effective income tax rate was 2% for the six months ended August 31, 2013. During the six months ended August 31, 2013, the Company recorded a valuation allowance for its net deferred tax assets, including its net operating loss carryforwards.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words “expect,” “should,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

• general economic and business conditions;

• fluctuations in the demand for advertising and demand for different types of advertising media;

• our ability to service our outstanding debt;

• competition from new or different media and technologies;

• loss of key personnel;

• increased competition in our markets and the broadcasting industry;

• our ability to attract and secure programming, on-air talent, writers and photographers;

• inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;

• increases in the costs of programming, including on-air talent;

• new or changing regulations of the Federal Communications Commission or other governmental agencies;

• changes in radio audience measurement methodologies;

• war, terrorist acts or political instability; and other factors mentioned in other documents filed by the Company with the Securities and Exchange Commission.

For a more detailed discussion of these and other risk factors, see the Risk Factors section of our Annual Report on Form 10-K, for the year ended February 28, 2014.Emmis does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

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GENERAL

We are a diversified media company. We own and operate radio and publishing properties located in the United States. Our revenues are mostly affected by the advertising rates our entities charge, as advertising sales represent approximately 70% of our consolidated revenues. These rates are in large part based on our entities’ ability to attract audiences/subscribers in demographic groups targeted by their advertisers. The Nielsen Company generally measures radio station ratings in our domestic markets on a weekly basis using a passive digital system of measuring listening (the Portable People Meter^™). Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research and advertising and promotion to attract and retain audiences in each station’s chosen demographic target group.

Our revenues vary throughout the year. As is typical in the broadcasting industry, our revenues and operating income are usually lowest in our fourth fiscal quarter.

In addition to the sale of advertising time for cash, stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade.

The following table summarizes the sources of our revenues for the past three years. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations and magazines conduct in their local markets. The category “Other” includes, among other items, network revenues and barter.

	Three Months Ended August 31,								Six Months Ended August 31,
	2013		% of Total		2014		% of Total		2013		% of Total		2014		% of Total
	(Dollars in thousands)
Net revenues:
Local	$	27,265	49.6	%	$	32,156	52.0	%	$	56,102	53.2	%	$	67,309	55.4	%
National	8,360		15.2	%	8,525		13.8	%	16,214		15.4	%	17,556		14.4	%
Political	32		0.1	%	178		0.3	%	240		0.2	%	686		0.6	%
Publication Sales	1,536		2.8	%	1,523		2.5	%	3,100		2.9	%	3,035		2.5	%
Non Traditional	8,696		15.8	%	9,382		15.2	%	12,069		11.4	%	13,261		10.9	%
LMA Fees	2,657		4.8	%	2,583		4.2	%	5,240		5.0	%	5,166		4.3	%
Digital	2,944		5.4	%	3,657		5.9	%	5,687		5.4	%	6,813		5.6	%
Other	3,477		6.3	%	3,820		6.1	%	6,901		6.5	%	7,722		6.3	%
Total net revenues	$	54,967			$	61,824			$	105,553			$	121,548

As previously mentioned, we derive approximately 70% of our net revenues from advertising sales. Our radio stations derive a higher percentage of their advertising revenues from local sales than our publishing entities. In the three-month period ended August 31, 2014, local sales, excluding political revenues, represented approximately 83% and 64% of our advertising revenues for our radio and publishing divisions, respectively.

No customer represents more than 10% of our consolidated net revenues. Our top ten categories for radio represent approximately 61% and 62% of our radio division’s total advertising net revenues for the six-month periods ended August 31, 2013 and 2014, respectively. The automotive industry was the largest category for our radio division for the six-month periods ended August 31, 2013 and 2014, representing approximately 12% and 13% of our radio net revenues, respectively.

The majority of our expenses are fixed in nature, principally consisting of salaries and related employee benefit costs, office and tower rent, utilities, property and casualty insurance and programming-related expenses. However, approximately 20% of our expenses vary in connection with changes in revenues. These variable expenses primarily relate to sales commissions, music license fees and bad debt reserves. In addition, costs related to our marketing and promotions department are highly discretionary and incurred primarily to maintain and/or increase our audience and market share.

KNOWN TRENDS AND UNCERTAINTIES

Although advertising revenues have stabilized following the 2008 economic recession, radio revenue growth remains challenged. Management believes this is principally the result of two factors: (1) new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks, have gained advertising share against radio and other traditional media and created a proliferation of advertising inventory and (2) the fragmentation of

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the radio audience and time spent listening caused by satellite radio, internet radio, and digital audio sales has led some investors and advertisers to conclude that the effectiveness of radio advertising has diminished.

The Company and the radio industry have begun several initiatives to address these issues. The radio industry is working aggressively to increase the number of smartphones and other wireless devices that contain an enabled FM tuner. Most smartphones currently sold in the United States contain an FM tuner. However, most wireless carriers in the United States do not permit the FM tuner to receive the free over-the-air local radio stations it was designed to receive. Furthermore, in many countries outside the United States, enabled FM tuners are made available to smartphone consumers; consequently, radio listening increases. Activating FM as a feature on smartphones sold in the United States has the potential to increase radio listening and improve perception of the radio industry while offering network providers the benefits of a proven emergency notification system, reduced network congestion from audio streaming services, and a host of new revenue generating applications. Emmis is at the leading edge of this initiative and has developed TagStation^®, a cloud-based software platform that allows a broadcaster to manage album art, meta data and enhanced advertising on its various broadcasts, and NextRadio^®, a smartphone application that marries over-the-air FM radio broadcasts with visual and interactive features, as an industry solution to make the user experience of listening to free over-the-air radio broadcasts on their enabled smartphones a rich experience.

On August 9, 2013, NextRadio LLC, a wholly-owned subsidiary of Emmis, entered into an agreement with Sprint whereby Sprint agreed to pre-load the Company's NextRadio^® smartphone application in a minimum of 30 million FM-enabled wireless devices on the Sprint wireless network over a three-year period. In return, NextRadio LLC agreed to pay Sprint $15 million per year in equal quarterly installments over the three year term and to share with Sprint certain revenue generated by the NextRadio application. During the six months ended August 31, 2014, Emmis funded approximately $0.3 million of NextRadio's obligation to Sprint, which is included in station operating expenses in the accompanying condensed consolidated statements of operations. Emmis has not guaranteed NextRadio LLC's performance under this agreement and Sprint does not have recourse to any Emmis related entity other than NextRadio LLC. Additionally, the agreement does not limit the ability of NextRadio LLC to place the NextRadio application on FM-enabled devices on other wireless networks. Through August 31, 2014, the NextRadio application had not generated a material amount of revenue. The radio industry continues to work with other leading United States network providers, device manufacturers, regulators and legislators to cause FM tuners to be enabled in all smartphones.

Emmis granted the U.S. radio industry (as defined in the funding agreements) a call option on substantially all of the assets used in the NextRadio and TagStation businesses in the United States. The call option may be exercised in August 2017 or August 2019 by paying Emmis a purchase price equal to the greater of (i) the appraised fair market value of the NextRadio and TagStation businesses, or (ii) two times Emmis' cumulative investments in the development of the businesses. If the call option is exercised, the businesses will continue to be subject to the operating limitations applicable today, and no radio operator will be permitted to own more than 30% of the NextRadio and TagStation businesses.

The Company has also aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by becoming one of the fifteen largest streaming audio providers in the United States, developing highly interactive websites with content that engages our listeners, using SMS texting and deploying mobile applications, harnessing the power of digital video on our websites and YouTube channels, and delivering real-time traffic to navigation devices.

Along with the rest of the radio industry, the majority of our stations have deployed HD Radio^®. HD Radio^® offers listeners advantages over standard analog broadcasts, including improved sound quality and additional digital channels. In addition to offering secondary channels, the HD Radio^® spectrum allows broadcasters to transmit other forms of data. We are participating in a joint venture with other broadcasters to provide the bandwidth that a third party uses to transmit location-based data to hand-held and in-car navigation devices. The number of radio receivers incorporating HD Radio has increased in the past year, particularly in new automobiles. It is unclear what impact HD Radio^® will have on the markets in which we operate.

The results of our radio operations are heavily dependent on the results of our stations in the New York and Los Angeles markets. These markets account for approximately 50% of our radio net revenues. During the six months ended August 31, 2014, KPWR-FM in Los Angeles experienced revenue growth that was better than its overall market, but revenue growth for our New York cluster, which includes WQHT-FM, WBLS-FM and WLIB-AM, slightly lagged its overall market growth. Our addition of WBLS-FM and WLIB-AM under an LMA on March 1, 2014 in New York enhanced our ability to adapt to competitive environment shifts in that market, but our single station in the Los Angeles market has less ability to adapt. Furthermore, some of our competitors that operate larger station clusters in New York and Los Angeles are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates and may be able to realize operating efficiencies by programming multiple stations in these

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markets. On June 10, 2014 the Company completed the first closing of its acquisition of substantially all of the assets, business, properties and rights of WBLS-FM and WLIB-AM. See Note 2 to our condensed consolidated financial statements for more discussion.

As part of our business strategy, we continually evaluate potential acquisitions of radio stations, publishing properties and other businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. However, Emmis' 2014 Credit Agreement substantially limits our ability to make acquisitions. We also regularly review our portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially lead to materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below.

Revenue Recognition

Broadcasting revenue is recognized as advertisements are aired. Publication revenue is recognized in the month of delivery of the publication. Both broadcasting revenue and publication revenue recognition is subject to meeting certain conditions such as persuasive evidence that an arrangement exists and collection is reasonably assured. These criteria are generally met at the time the advertisement is aired for broadcasting revenue and upon delivery of the publication for publication revenue. Advertising revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues. LMA fee revenue is recognized on a straight-line basis over the term of the LMA.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is recorded based on management’s judgment of the collectability of receivables. When assessing the collectability of receivables, management considers, among other things, historical loss experience and existing economic conditions.

FCC Licenses and Goodwill

We have made acquisitions in the past for which a significant amount of the purchase price was allocated to FCC licenses and goodwill assets. As of August 31, 2014, we have recorded approximately $293.9 million in goodwill and FCC licenses, which represents approximately 59% of our total assets.

In the case of our U.S. radio stations, we would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, all of our FCC licenses have been renewed at the end of their respective periods, and we expect that all FCC licenses will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles.

We do not amortize goodwill or other indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by Accounting Standards Codification (“ASC”) Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster.

We complete our annual impairment tests on December 1 of each year and perform additional interim impairment testing whenever triggering events suggest such testing is warranted.

Valuation of Indefinite-lived Broadcasting Licenses

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market 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 commenced operations at the beginning of the valuation period. 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

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analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control.

Valuation of Goodwill

ASC Topic 350 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, unless indications of impairment exist during an interim period. 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. 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 or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

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.

Deferred Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company’s financial statements or income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the consolidated statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities as recorded for financial reporting purposes and amounts recorded for income tax purposes. After determining the total amount of deferred tax assets, the Company determines whether it is more likely than not that some portion of the deferred tax assets will not be realized. If the Company determines that a deferred tax asset is not likely to be realized, a valuation allowance will be established against that asset to record it at its expected realizable value.

Estimate of Effective Tax Rates

We estimate the effective tax rates and associated liabilities or assets for each legal entity within Emmis. These estimates are based upon our interpretation of United States and local tax laws as they apply to our legal entities and our overall tax structure. Audits by local tax jurisdictions, including the United States Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded. We utilize advisors in the various tax jurisdictions to evaluate our position and to assist in our calculation of our tax expense and related assets and liabilities.

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Results of Operations for the Three-month and Six-Month Periods Ended August 31, 2014, Compared to August 31, 2013

Net revenues:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014		$ Change		% Change		2013		2014		$ Change		% Change
	(As reported, amounts in thousands)
Net revenues:
Radio	$	41,237	$	47,598	$	6,361	15.4	%	$	78,156	$	92,588	$	14,432	18.5	%
Publishing	13,708		14,113		405		3.0	%	27,368		28,791		1,423		5.2	%
Emerging Technologies	22		113		91		413.6	%	29		169		140		482.8	%
Total net revenues	$	54,967	$	61,824	$	6,857	12.5	%	$	105,553	$	121,548	$	15,995	15.2	%

Radio net revenues increased during the three-month and six-month periods ended August 31, 2014 mostly due to the commencement of our LMA of WBLS-FM and WLIB-AM in New York on March 1, 2014. Revenues of WBLS-FM and WLIB-AM for the three months and six months ended August 31, 2014 were $6.3 million and $13.6 million, respectively. Excluding revenues of WBLS-FM and WLIB-AM, radio net revenues for the three months and six months ended August 31, 2014 would have increased $0.1 million or 0.1%, and $0.9 million or 1.1%, respectively.

We typically monitor the performance of our domestic stations against the aggregate performance of the markets in which we operate based on reports for the periods prepared by Miller Kaplan Arase LLP ("Miller Kaplan"), an independent public accounting firm used by the radio industry to compile revenue information. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter and syndication arrangements. Miller Kaplan reported gross revenues for our domestic radio markets decreased 5.3% for the six-month period ended August 31, 2014 as compared to the same period of the prior year. Our gross revenues, as reported to Miller Kaplan and including WBLS-FM and WLIB-AM in both the current and prior year, decreased 0.1% for the six-month period ended August 31, 2014 as compared to the same period of the prior year. For the six-month period ended August 31, 2014, our gross revenues exceeded the market average in all of our markets except New York. Miller Kaplan does not report gross revenue market data for our Terre Haute market. Excluding WBLS-FM and WLIB-AM, for the six-month period ended August 31, 2014, as compared to the same period of the prior year, our average rate per minute for our domestic radio stations was up 1.3%, and our minutes sold were down 1.1%.

Publishing net revenues increased during the three-month and six-month periods ended August 31, 2014 as our investments in our sales teams have helped us accelerate revenue growth at our magazines. In addition, we have increased the number of custom publications (e.g., college alumni magazines, tourism guides, etc.) that we produce.

Emerging technologies primarily relates to licensing fees of our TagStation software. TagStation supplements radio broadcasts with visual content (e.g., album art, artist information, etc.) and enhanced ads for display on HD Radio dashboards, HD Radio devices, and the NextRadio application. The increase for the three months and six months ended August 31, 2014 is due to additional stations that have licensed the TagStation software.

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Station operating expenses excluding LMA fees and depreciation and amortization expense:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014		$ Change		% Change		2013		2014		$ Change		% Change
	(As reported, amounts in thousands)
Station operating expenses excluding LMA fees and depreciation and amortization expense:
Radio	$	27,449	$	31,170	$	3,721	13.6	%	$	50,193	$	58,530	$	8,337	16.6	%
Publishing	13,938		14,513		575		4.1	%	28,739		29,453		714		2.5	%
Emerging Technologies	551		610		59		10.7	%	718		1,236		518		72.1	%
Total station operating expenses excluding LMA fees and depreciation and amortization expense	$	41,938	$	46,293	$	4,355	10.4	%	$	79,650	$	89,219	$	9,569	12.0	%

The increase in station operating expenses, excluding LMA fees and depreciation and amortization expense, for our radio division for the three months and six months ended August 31, 2014 was mostly due to the commencement of our LMA of WBLS-FM and WLIB-AM in New York on March 1, 2014. Station operating expenses, excluding LMA fees and depreciation and amortization expense, of WBLS-FM and WLIB-AM for the three months and six months ended ended August 31, 2014 were $3.6 million and $7.1 million, respectively. Excluding WBLS-FM and WLIB-AM, station operating expenses excluding LMA fees and depreciation and amortization expense for the three months and six months ended August 31, 2014 would have increased $0.1 million or 0.5% and $1.2 million or 2.5%. This increase in the six-month period is mostly due to higher music license fees as a credit recognized in the prior year related to an industry settlement was nonrecurring, as well as additional event-related promotional costs.

Station operating expenses excluding depreciation and amortization expense for publishing increased during the three months and six months ended August 31, 2014 mostly due to higher sales-related costs.

Station operating expenses excluding depreciation and amortization expense for emerging technologies increased during the three months and six months ended August 31, 2014 mostly due to additional development costs associated with enhancements to the NextRadio application.

Corporate expenses excluding depreciation and amortization expense:

	For the Three Months Ended August 31,									For the Six Months Ended August 31,
	2013		2014		$ Change			% Change		2013		2014		$ Change			% Change
	(As reported, amounts in thousands)
Corporate expenses excluding depreciation and amortization expense	$	5,070	$	3,341	$	(1,729	)	(34.1	)%	$	9,470	$	8,231	$	(1,239	)	(13.1	)%

Corporate expenses excluding depreciation and amortization expense decreased during the three months and six months ended August 31, 2014. The decrease is largely attributable to the decrease in noncash compensation expense associated with the 2012 Retention Plan. No additional noncash compensation expense is being recognized related to the 2012 Retention Plan subsequent to the distribution of shares from the plan to employees in April 2014. Additionally, costs associated with our ongoing Preferred Stock litigation decreased from prior year.

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LMA fees:

	For the Three Months Ended August 31,						For the Six Months Ended August 31,
	2013		2014		$ Change		2013		2014		$ Change
	(As reported, amounts in thousands)
LMA fees	$	—	$	383	$	383	$	—	$	4,208	$	4,208

On February 11, 2014, Emmis and YMF entered into an LMA for WBLS-FM and WLIB-AM in New York. As discussed in Note 1 to the accompanying condensed consolidated financial statements, on March 1, 2014, Emmis began providing programming and selling advertising for the two stations. Under the terms of the LMA, Emmis pays $1.275 million per month 75 days in arrears to YMF for the right to program the station and sell advertising. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the stations, which occurred in June 2014, and will cease effective with the second closing in February 2015. The ongoing, reduced monthly LMA fees were recognized as a liability as of the date of purchase of the stations. Accordingly, future payments of the reduced LMA fee will not impact our results of operations.

Hungary license litigation and related expenses:

	For the Three Months Ended August 31,									For the Six Months Ended August 31,
	2013		2014		$ Change			% Change		2013		2014		$ Change			% Change
	(As reported, amounts in thousands)
Hungary license litigation and related expenses	$	1,043	$	192	$	(851	)	(81.6	)%	$	1,295	$	284	$	(1,011	)	(78.1	)%

On October 28, 2009, the Hungarian National Radio and Television Board (ORTT) announced that it was awarding to another bidder the national radio license then held by our majority-owned subsidiary, Slager. Slager ceased broadcasting effective November 19, 2009. The Company believed that the awarding of the license to the other bidder was unlawful. In October 2011, Emmis filed for arbitration with the International Centre for Settlement of Investment Disputes (“ICSID”) seeking resolution of its claim. In April 2014, the ICSID arbitral tribunal ruled that ICSID did not have the jurisdiction to hear

the merits of Emmis' claim. Our ongoing expenses related to the Hungary license litigation will be minimal and we plan to sell or liquidate our legal entities in Hungary.

Depreciation and amortization:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014		$ Change		% Change		2013		2014		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	604	$	839	$	235	38.9	%	$	1,198	$	1,509	$	311		26.0	%
Publishing	61		61		—		—	%	123		118		(5		)	(4.1	)%
Corporate & Emerging Technologies	548		691		143		26.1	%	1,068		1,317		249			23.3	%
Total depreciation and amortization	$	1,213	$	1,591	$	378	31.2	%	$	2,389	$	2,944	$	555		23.2	%

The increase in depreciation and amortization for the three months and six months ended August 31, 2014 for our radio division is mostly due to the newly acquired tangible and intangible assets of WBLS-FM and WLIB-AM. The increase in Corporate & Emerging Technologies is mostly due to depreciation associated with new computer software and equipment, accelerated depreciation associated with software that the Company discontinued using during the three months ended August 31, 2014 and amortization of newly acquired intangibles of Digonex.

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Gain on contract settlement:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014			$ Change			2013		2014			$ Change
	(As reported, amounts in thousands)
Gain on contract settlement	$	—	$	(2,500	)	$	(2,500	)	$	—	$	(2,500	)	$	(2,500	)

Emmis and YMF Media executed an amendment to their Asset Purchase Agreement dated April 5, 2012 relating to Emmis' sale of the intellectual property of WRKS-FM by Emmis to YMF Media. The amendment, executed on June 10, 2014, fixed all future earn-out payments YMF Media owed to Emmis pursuant to the April 5, 2012 Asset Purchase Agreement based upon the parties' estimate of the earn-out payments that would otherwise be owed to Emmis under this pre-existing contractual relationship. Emmis recognized a gain on settlement of the contract of $2.5 million.

Operating income:

	For the Three Months Ended August 31,											For the Six Months Ended August 31,
	2013			2014			$ Change			% Change		2013			2014			$ Change		% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	12,142		$	17,514		$	5,372		44.2	%	$	25,471		$	30,560		$	5,089	20.0	%
Publishing	(291		)	(461		)	(170		)	58.4	%	(1,494		)	(780		)	714		(47.8	)%
Corporate & Emerging Technologies	(6,147		)	(4,529		)	1,618			26.3	%	(11,227		)	(10,615		)	612		5.5	%
Total operating income:	$	5,704		$	12,524		$	6,820		119.6	%	$	12,750		$	19,165		$	6,415	50.3	%

Radio operating income increased in the three months and six months ended August 31, 2014 principally due to additional operating income provided by the closing of our purchase of WBLS-FM and WLIB-AM and the gain on contract settlement as previously discussed. Although Emmis began programming and selling the related advertising of WBLS-FM and WLIB-AM on March 1, 2014 with the commencement of the LMA, most of the operating income generated by the stations through June 10, 2014 was negated by the monthly LMA fee paid to YMF Media. Subsequent to the first closing of the acquisition on June 10, 2014, the stations have positively contributed to operating income as LMA fees no longer impact station operating expenses.

Publishing operating loss decreased in the six months ended August 31, 2014 mostly due to higher net revenues from an increase in the number of custom publications we produced during the period. Publishing operating loss increased in the three months ended August 31, 2014 mostly due to weaker operating performance at one of our larger magazine titles.

Corporate and emerging technologies operating losses decreased during the three months and six months ended August 31, 2014 mostly due to lower noncash compensation expense and legal fees as discussed earlier.

Interest expense:

	For the Three Months Ended August 31,											For the Six Months Ended August 31,
	2013			2014			$ Change			% Change		2013			2014			$ Change			% Change
	(As reported, amounts in thousands)
Interest expense	$	(1,808	)	$	(4,878	)	$	(3,070	)	169.8	%	$	(3,729	)	$	(6,478	)	$	(2,749	)	73.7	%

The increase in interest expense is attributable to additional debt incurred to finance our $131.0 million acquisition of WBLS-FM and WLIB-AM and higher interest rates on amounts borrowed. The weighted-average interest rate of debt outstanding under our 2014 Credit Agreement was 5.7% at August 31, 2014. The weighted-average interest rate of debt outstanding under our 2012 Credit Agreement was 4.3% prior to its retirement on June 10, 2014.

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Loss on debt extinguishment:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014			$ Change			2013		2014			$ Change
	(As reported, amounts in thousands)
Loss on debt extinguishment	$	—	$	(1,455	)	$	(1,455	)	$	—	$	(1,455	)	$	(1,455	)

The loss on debt extinguishment relates to the write-off of unamortized deferred debt issuance costs and original issue discount related to our 2012 Credit Agreement that was retired on June 10, 2014.

Provision for income taxes:

	For the Three Months Ended August 31,							For the Six Months Ended August 31,
	2013		2014		$ Change		% Change	2013		2014		$ Change		% Change
	(As reported, amounts in thousands)
Provision for income taxes	$	4	$	2,167	$	2,163	N/M	$	179	$	4,552	$	4,373	2,443.0	%

During the three months and six months ended August 31, 2013, the Company was recording a valuation allowance for its net deferred tax assets, including its net operating loss carryforwards. Due to improved operating results, the Company determined that a valuation allowance was no longer appropriate, and reversed the valuation allowance as of February 28, 2014 on all net deferred tax assets except net operating loss carryforwards for states in which the Company no longer has a filing obligation.

Our effective income tax rate for the three months and six months ended August 31, 2014 was 34% and 40%, respectively. We estimate that our fiscal 2015 annual effective tax rate will be approximately 34%. Our effective tax rate for the six months ended August 31, 2014 was higher than our estimated annual effective tax rate as a discrete tax expense of $0.9 million was recorded during the period. This expense related to the effect of increasing our statutory rate by 1% on existing deferred tax liabilities due to changes in state tax laws and the effect of the WBLS-FM and WLIB-AM LMA and related acquisition on our income apportionments.

Consolidated net income:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014		$ Change		% Change		2013		2014		$ Change			% Change
	(As reported, amounts in thousands)
Consolidated net income	$	3,925	$	4,192	$	267	6.8	%	$	8,882	$	6,859	$	(2,023	)	(22.8	)%

Consolidated net income for the six months ended August 31, 2014 decreased mostly due to the change in our provision for income taxes previously discussed. Consolidated net income increased during the three months ended August 31, 2014 due to additional operating income provided by WBLS-FM and WLIB-AM coupled with the $2.5 million gain on contract settlement. These amounts are partially offset by higher interest expense, a loss on debt extinguishment, and a higher provision for income taxes during the three months ended August 31, 2014.

Gain on extinguishment of preferred stock:

	For the Three Months Ended August 31,								For the Six Months Ended August 31,
	2013		2014		$ Change			% Change	2013		2014		$ Change			% Change
	(As reported, amounts in thousands)
Gain on extinguishment of preferred stock	$	76	$	—	$	(76	)	N/A	$	325	$	—	$	(325	)	N/A

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During the three months ended August 31, 2013, the Company purchased 2,000 shares of its preferred stock for $12.00 per share. During the six months ended August 31, 2013, the Company purchased 8,650 shares of its preferred stock for an average price of $12.38 per share. Emmis recognized a gain on extinguishment of the preferred stock equal to the difference of the acquisition price and the liquidation preference of $50 per share.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operations and cash available through revolver borrowings under our Credit Agreement. Our primary uses of capital during the past few years have been, and are expected to continue to be, strategic acquisitions, capital expenditures, working capital, debt service requirements and the repayment of debt.

At August 31, 2014, we had cash and cash equivalents of $6.4 million and net working capital of $24.1 million. At February 28, 2014, we had cash and cash equivalents of $5.3 million and net working capital of $4.8 million. Cash and cash equivalents held at various European banking institutions at February 28, 2014 and August 31, 2014 was $1.2 million and $1.1 million, respectively.

In recent years, the Company has recorded significant impairment charges, mostly attributable to our FCC licenses. These impairment charges have had no impact on our liquidity or compliance with debt covenants.

Operating Activities

Cash provided by operating activities was $3.8 million and $9.9 million for the six months ended August 31, 2014 and 2013, respectively. The decrease in cash provided by operating activities is mostly due to higher interest costs and increased working capital needs as compared to prior year principally due to the commencement of the WBLS-FM and WLIB-AM LMA on March 1, 2014 and related acquisition on June 10, 2014.

Investing Activities

Cash used in investing activities was $135.4 million and $3.7 million for the six months ended August 31, 2014 and 2013, respectively. Cash used in investing activities increased as the company funded its acquisition of WBLS-FM and WLIB-AM and Digonex in the current year. We expect capital expenditures to be approximately $3.8 million in the current fiscal year, compared to $3.1 million in fiscal 2014. We expect that future requirements for capital expenditures will be limited to capital expenditures incurred during the ordinary course of business. We expect to fund future investing activities with cash generated from operating activities and borrowings under our 2014 Credit Agreement.

Financing Activities

Cash provided by financing activities was $132.8 million for the six months ended August 31, 2014. Cash used in financing activities was $8.1 million for the six months ended August 31, 2013. Cash provided by financing activities in the six months ended August 31, 2014 primarily relates to $143.3 million of net proceeds from long-term debt, most of which relates to our acquisition of WBLS-FM and WLIB-AM. Approximately $6.8 million of debt-related costs, $2.5 million of distributions paid to noncontrolling interests and $1.4 million of tax withholding settlements on stock issued to employees all partially offset cash provided from long-term debt.

Cash used in financing activities in the six months ended August 31, 2013 primarily relates to the net debt repayments of $6.0 million and $1.8 million used to pay distributions to noncontrolling interests.

As of August 31, 2014, Emmis had $199.5 million of borrowings under the 2014 Credit Agreement, $76.9 million ($72.7 million related to our 98.7FM LMA in New York and $4.2 million related to Digonex) of non-recourse debt and $46.4 million of Preferred Stock liquidation preference. Borrowings under the 2014 Credit Agreement bear interest, at our option, at a rate equal to the Eurodollar rate or an alternative Base Rate plus a margin. As of August 31, 2014, our weighted average borrowing rate under our 2014 Credit Agreement was approximately 5.7%. The non-recourse debt related to our 98.7FM LMA in New York bears interest at 4.1% per annum and the non-recourse debt related to Digonex bears interest at 5.0% per annum.

The debt service requirements of Emmis over the next twelve-month period are expected to be $0.9 million for mandatory repayment of term notes under our 2014 Credit Agreement (mandatory quarterly amortization of the term loans does not commence until April 1, 2015) and $7.7 million related to our 98.7FM non-recourse debt ($4.7 million of principal repayments and $3.0 million of interest payments). There are no debt service requirements of our Digonex non-recourse debt until the debt matures in December 2017. The Company expects that proceeds from the 98.7FM LMA will be sufficient to pay all debt service related to the 98.7FM non-recourse debt. All amounts outstanding under our 2014 Credit Agreement bear

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interest at variable rates, thus interest under our 2014 Credit Agreement is not included in the debt service requirements previously discussed.

At October 6, 2014, we had $5.0 million available for additional borrowing under our credit agreement. No letters of credit were outstanding. Availability under the credit agreement depends upon our continued compliance with certain operating covenants and financial ratios. Emmis was in compliance with these covenants as of August 31, 2014. As part of our business strategy, we continually evaluate potential acquisitions of radio stations, publishing properties and other businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. However, the 2014 Credit Agreement substantially limits our ability to make acquisitions. We also regularly review our portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so.

Intangibles

Approximately 61% of our total assets consisted of intangible assets, such as FCC broadcast licenses and goodwill, the value of which depends significantly upon the operational results of our businesses. In the case of our U.S. radio stations, we would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, all of our FCC licenses have been renewed at or after the end of their respective periods, and we expect that all FCC licenses will continue to be renewed in the future.

Regulatory, Legal and Other Matters

Emmis is a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the company, however, there are no legal proceedings pending against the company that we believe are likely to have a material adverse effect on the company.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied the plaintiffs' request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. On February 28, 2014, the U.S. District Court issued a ruling in favor of Emmis on all counts. In March 2014, the Plaintiffs filed with the U.S. Court of Appeals for the Seventh Circuit an appeal of the U.S. District Court's decision. Emmis is defending this lawsuit vigorously.

On July 7, 2014, individuals who had been seeking to overturn the FCC’s approval of the transfer of the broadcast licenses for WBLS-FM and WLIB-AM from entities associated with Inner City Broadcasting to YMF (the entities that subsequently sold the two stations to Emmis) filed with the U.S. Court of Appeals for the District of Columbia Circuit a Notice of Appeal of the FCC’s approval of the transfer. Based upon the facts alleged in the Notice of Appeal and the extensive precedent of courts not overturning FCC approvals of transfers of broadcast licenses except in exceedingly rare circumstances, Emmis believes the appeal is without merit.

Certain individuals and groups have challenged applications for renewal of the FCC licenses of certain of the Company’s stations and challenged the transfer from YMF to Emmis of the FCC licenses for WBLS-FM and WLIB-AM. These challenges are currently pending before the FCC. Emmis does not expect the challenges to result in the denial of any license renewals or the revocation of the WBLS-FM and WLIB-AM transfers.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

General

Market risk represents the risk of loss that may impact the financial position, results of operations or cash flows of Emmis due to adverse changes in financial and commodity market prices and rates. Emmis is exposed to market risk from changes in domestic and international interest rates (i.e. prime and LIBOR). To manage interest-rate exposure, Emmis periodically enters into interest-rate derivative agreements. Emmis does not use financial instruments for trading and is not a party to any leveraged derivatives.

Interest Rates

We are exposed to market risk from changes in interest rates on amounts borrowed under the 2014 Credit Agreement. If the borrowing rates were to increase 1% above the current rates as of August 31, 2014, our interest expense based on amounts outstanding at August 31, 2014 on (i) our term loans would increase $0.4 million on an annual basis as our Term Loan provides for a minimum LIBOR floor of 1.0%; and (ii) our revolver would increase by $0.1 million. Although not required by the 2014 Credit Agreement, we may seek to limit our exposure to interest rate volatility through the use of interest rate hedging instruments.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, the Company evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” (“Disclosure Controls”). This evaluation (the “Controls Evaluation”) was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

Based upon the Controls Evaluation, our CEO and CFO concluded that as of August 31, 2014 our Disclosure Controls are effective to provide reasonable assurance that information relating to Emmis Communications Corporation and Subsidiaries that is required to be disclosed by us in the reports that we file or submit, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the period covered by this quarterly report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

It should be noted that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

PART II — OTHER INFORMATION

Item 1.    Legal Proceedings

Refer to Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of various legal proceedings pending against the Company.

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Item 6.    Exhibits

(a) Exhibits.

The following exhibits are filed or incorporated by reference as a part of this report:

Exhibit		Filed Herewith	Incorporated by Reference
Number	Exhibit Description		Form	Period Ending	Exhibit	Filing Date
3.1	Second Amended and Restated Articles of Incorporation of Emmis Communications Corporation, as amended effective September 4, 2012		10-Q	8/31/2012	3.1	10/11/2012
3.2	Second Amended and Restated Bylaws of Emmis Communications Corporation		10-K	2/28/2013	3.2	5/8/2013
4.1	Form of stock certificate for Class A common stock		S-1		3.5	12/22/1993
10.1	Credit Agreement, dated as of June 10, 2014, by and among Emmis Communications Corporation, Emmis Operating Company, certain other subsidiaries of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent.		8-K		10.1	6/10/2014
31.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act	X
31.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act	X
32.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X

-42-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EMMIS COMMUNICATIONS CORPORATION
Date: October 9, 2014	By:	/s/ PATRICK M. WALSH
		Patrick M. Walsh
		Executive Vice President, Chief Financial Officer and Chief Operating Officer

-43-

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emmis Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 9, 2014
	/s/ JEFFREY H. SMULYAN
	Jeffrey H. Smulyan
	Chairman of the Board, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Patrick M. Walsh, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emmis Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 9, 2014
	/s/ PATRICK M. WALSH
	Patrick M. Walsh
	Executive Vice President, Chief Financial Officer and
	Chief Operating Officer

EX-32.2

Exhibit 32.1

SECTION 1350 CERTIFICATION

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the period ended August 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 9, 2014
	/s/ JEFFREY H. SMULYAN
	Jeffrey H. Smulyan
	Chairman of the Board, President and
	Chief Executive Officer

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the period ended August 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 9, 2014
	/s/ PATRICK M. WALSH
	Patrick M. Walsh
	Executive Vice President, Chief Financial Officer and
	Chief Operating Officer

XML

Business Combinations - Schedule of Pro Forma Information (Details) (WBLS-FM and WLIB-AM, USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
WBLS-FM and WLIB-AM
Business Acquisition
Net revenues	$ 61,824	$ 62,912	$ 121,548	$ 120,703
Net income attributable to common shareholders	$ 2,615	$ 4,089	$ 4,974	$ 8,992
Net income per common share attributable to common shareholders:
Basic	$ 0.06	$ 0.10	$ 0.12	$ 0.22
Diluted	$ 0.06	$ 0.09	$ 0.10	$ 0.19

XML

Derivative Instruments and Hedging Activities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended		1 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2014 Interest Rate Cap	Feb. 28, 2013 Fixed to Floating Interest Rate Swap	Feb. 28, 2014 Fixed to Floating Interest Rate Swap	Aug. 31, 2014 Maximum
Interest Rate Risk [Abstract]
Percentage of term loan portion required to fix interest rate swap		50.00%
Period which required to fix or cap interest rates	2 years
Increase in interest expense					$ 0.1
Interest rate swap term			2 years
Fixed rate payable on interest rate swap				0.42%
Interest Rate Swap Notional Principal Amount				$ 40

XML

Intangible Assets and Goodwill Finite-lived Intangibles (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2014	Feb. 28, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Trademarks, Gross	$ 9,589	$ 810
Finite-Lived Intangible Assets, Accumulated Amortization	639	548
Other intangibles, net	8,950	262
Trademarks
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining useful life	12 years 7 months
Finite-Lived Trademarks, Gross	1,240	810
Finite-Lived Intangible Assets, Accumulated Amortization	514	548
Other intangibles, net	726	262
Patents
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining useful life	7 years 0 months
Finite-Lived Trademarks, Gross	5,180	0
Finite-Lived Intangible Assets, Accumulated Amortization	31	0
Other intangibles, net	5,149	0
Customer-Related Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining useful life	2 years 11 months
Finite-Lived Trademarks, Gross	1,015	0
Finite-Lived Intangible Assets, Accumulated Amortization	36	0
Other intangibles, net	979	0
Contract-Based Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining useful life	7 years 1 month
Finite-Lived Trademarks, Gross	2,154	0
Finite-Lived Intangible Assets, Accumulated Amortization	58	0
Other intangibles, net	$ 2,096	$ 0

XML

Fair Values of Derivative Instruments (Detail) (Derivatives designated as hedging instruments, USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Derivatives, Fair Value [Line Items]
Liability Derivative Fair Value	$ 0	$ 94
Interest Rate Swap Agreements (Long-Term Portion)
Derivatives, Fair Value [Line Items]
Liability Derivative Fair Value	$ 0	$ 94

XML

Intangible Assets and Goodwill - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013	Feb. 28, 2014
Intangible Assets And Goodwill [Line Items]
Carrying amount of indefinite-lived intangibles	$ 219,577,000		$ 219,577,000		$ 150,558,000
Goodwill	74,337,000		74,337,000		12,639,000
Amortization of intangible assets	100,000	100,000	100,000	100,000
Radio
Intangible Assets And Goodwill [Line Items]
Goodwill	63,549,000		63,549,000		4,603,000
Publishing
Intangible Assets And Goodwill [Line Items]
Goodwill	$ 8,036,000		$ 8,036,000		$ 8,036,000

XML

Summary of Significant Accounting Policies Summary of Restricted Cash (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Cash and Cash Equivalents [Line Items]
Restricted cash	$ 77,903	$ 2,239
Nonrecourse Notes
Cash and Cash Equivalents [Line Items]
Restricted cash	1,300	1,400
Sprint/NextRadio Agreement
Cash and Cash Equivalents [Line Items]
Restricted cash	$ 600	$ 800

XML

Fair Value Measurements Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 6,750	$ 6,750
Total assets measured at fair value on a recurring basis	6,750	6,750
Deferred Compensation Share-based Arrangements, Liability, Current		714
Interest rate swap agreement		94
Total liabilities measured at fair value on a recurring basis		808
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities
Total assets measured at fair value on a recurring basis
Deferred Compensation Share-based Arrangements, Liability, Current		714
Interest rate swap agreement
Total liabilities measured at fair value on a recurring basis		714
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities
Total assets measured at fair value on a recurring basis
Deferred Compensation Share-based Arrangements, Liability, Current		0
Interest rate swap agreement		94
Total liabilities measured at fair value on a recurring basis		94
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	6,750	6,750
Total assets measured at fair value on a recurring basis	6,750	6,750
Deferred Compensation Share-based Arrangements, Liability, Current		0
Interest rate swap agreement
Total liabilities measured at fair value on a recurring basis

XML

Definite-lived Intangibles (Tables)

6 Months Ended

Aug. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

The following table presents the weighted-average useful life, gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at February 28, 2014 and August 31, 2014:

		As of February 28, 2014						As of August 31, 2014
		(in 000's)
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	12.6	$	810	$	548	$	262	$	1,240	$	514	$	726
Patents	7.0	—		—		—		5,180		31		5,149
Customer list	2.9	—		—		—		1,015		36		979
Programming agreement	7.1	—		—		—		2,154		58		2,096
TOTAL		$	810	$	548	$	262	$	9,589	$	639	$	8,950

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

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),	Expected Amortization Expense
	(in 000's)
2015	920
2016	1,514
2017	1,514
2018	1,255
2019	1,076

XML

Long-term Debt - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended									6 Months Ended					6 Months Ended		0 Months Ended			6 Months Ended		0 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013	Feb. 28, 2014	Aug. 31, 2014 98.7FM Non-recourse debt	Feb. 28, 2014 98.7FM Non-recourse debt	May 30, 2012 98.7FM Non-recourse debt	Aug. 31, 2014 Digonex Non-recourse debt	Jun. 16, 2014 Digonex Non-recourse debt	Feb. 28, 2014 Digonex Non-recourse debt	Aug. 31, 2014 Two Thousand Twelve Credit Agreement	Dec. 28, 2012 Two Thousand Twelve Credit Agreement	Dec. 28, 2012 Two Thousand Twelve Credit Agreement Term Loan	Dec. 28, 2012 Two Thousand Twelve Credit Agreement Revolver	Dec. 28, 2012 Two Thousand Twelve Credit Agreement Letter of Credit	Aug. 31, 2014 Two Thousand Fourteen Credit Agreement	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement Term Loan	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement Revolver	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement Letter of Credit	Aug. 31, 2014 Base Rate Two Thousand Fourteen Credit Agreement	Aug. 31, 2014 London Interbank Offered Rate (LIBOR) Two Thousand Fourteen Credit Agreement	Jun. 10, 2014 WBLS-FM and WLIB-AM
Debt Instrument
Maximum borrowing capacity													$ 100,000,000	$ 80,000,000	$ 20,000,000	$ 5,000,000			$ 185,000,000.0	$ 20,000,000.0	$ 5,000,000.0
Loss on termination of credit agreement	(1,455,000)	0	(1,455,000)	0								(1,455,000)
Provision for credit facility increase																		20,000,000
Face amount of debt								82,200,000		6,200,000									185,000,000
Proceeds from issuance of debt																			109,000,000
Long-term debt held in escrow																			76,000,000
Borrowings on revolving credit facility																		13,000,000
Cash paid at first closing																								55,000,000
Cash payable at second closing																								76,000,000
Percentage of principal due in quarterly installments																	1.00%
Commitment fee																	5000.00%
Minimum interest rate as a percentage																						2.00%	1.00%
Basis spread on interest rate																						3.75%	4.75%
Amortization of financing costs																	1,000,000
Unamortized discount on issuance of debt	5,881,000		5,881,000		1,475,000												5,900,000	6,100,000
Interest rate during period								4.10%		5.00%
Non-recourse debt						$ 72,722,000	$ 74,942,000		$ 4,201,000	$ 4,200,000	$ 0

XML

Share Based Payments Summary of Stock Options Outstanding and Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Aug. 31, 2014
Options
Outstanding, beginning of period	6,984,605
Granted	561,219
Exercised	617,706	[1]
Forfeited	25,000
Expired	986,610
Outstanding, end of period	5,916,508
Exercisable, end of period	2,649,017
Price
Outstanding, beginning of period	$ 3.74
Granted	$ 2.91
Exercised	$ 0.54	[1]
Forfeited	$ 0.70
Expired or exchanged	$ 17.45
Outstanding, end of period	$ 1.72
Exercisable, end of period	$ 1.87
Outstanding	7 years 1 month 15 days
Exercisable, end of period	5 years 7 months
Outstanding, end of period	$ 7,180
Exercisable, end of period	$ 3,666

[1] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjdmYTY5NmI3OTBlNjQwZWI4ZWU0YzMyOGM5NjMyNDc1fFRleHRTZWxlY3Rpb246NTREQjM4REFCRUQxQTdEQUE1NzU0OUJBMTUwQkU0QzAM}

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Business Combinations - Additional Information (Details) (USD $)	3 Months Ended		6 Months Ended			0 Months Ended		6 Months Ended			0 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	0 Months Ended		3 Months Ended	6 Months Ended		12 Months Ended	0 Months Ended					6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013	Feb. 28, 2014	Jun. 10, 2014 Contract-Based Intangible Assets	Jun. 10, 2014 Customer-Related Intangible Assets	Aug. 31, 2014 Patents	Aug. 31, 2014 Customer Lists	Aug. 31, 2014 Trademarks	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement Term Loan	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement Revolver	Aug. 31, 2014 Station operating expense	Aug. 31, 2014 Station operating expense	Aug. 31, 2014 Corporate expenses	Aug. 31, 2014 Corporate expenses	Feb. 11, 2014 YMF	Jun. 10, 2014 WBLS-FM and WLIB-AM	Aug. 31, 2014 WBLS-FM and WLIB-AM	Aug. 31, 2014 WBLS-FM and WLIB-AM	Aug. 31, 2013 WBLS-FM and WLIB-AM	Feb. 28, 2014 WBLS-FM and WLIB-AM	Jun. 16, 2014 Digonex	Aug. 31, 2014 Digonex	Jun. 16, 2014 Digonex Patents	Jun. 16, 2014 Digonex Customer Lists	Jun. 16, 2014 Digonex Trademarks	Aug. 31, 2014 Scenario, Forecast
Business Acquisition
Total consideration transferred																		$ 131,000,000					$ 3,000,000
Cash paid at first closing																		55,000,000
Ownership interest																		49.90%
Cash payable at second closing																		76,000,000
LMA monthly expense																	1,275,000
LMA monthly expense future reduction																	740,000
Maximum borrowing capacity											185,000,000.0	20,000,000.0
Face amount of debt											185,000,000
Proceeds from issuance of debt											109,000,000
Long-term debt held in escrow											76,000,000
Goodwill expected to be tax deductible																		58,945,000
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual																				13,600,000	7,100,000
Acquisition costs													300,000	400,000	100,000	200,000			300,000	600,000		900,000
Licensing agreement fees																				4,200,000	4,200,000
Cumulative acquisition costs	1,500,000		1,500,000
Gain recognized on contract settlement	2,500,000	0	2,500,000	0
Earn-out payments			500,000																									2,000,000
Convertible preferred stock																							1,000,000
Convertible debt																							2,000,000	2,000,000
Holding rights convertible into common equity (percentage)																							51.00%
Total holding rights convertible into common equity (percentage)																							66.00%
Goodwill	74,337,000		74,337,000		12,639,000																		2,752,000
Other intangibles						$ 300,000	$ 2,200,000											$ 2,469,000					$ 6,180,000		$ 5,200,000	$ 700,000	$ 300,000
Amortization period of other intangibles						3 years	7 years	7 years	3 years	15 years

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Long-term Debt - Schedule of Maximum Leverage Ratio (Detail) (Two Thousand Fourteen Credit Agreement)	Aug. 31, 2014
Covenant Requirement
Line of Credit Facility
Maximum Total Leverage Ratio	5.25
Minimum Interest Coverage Ratio	2.0
Actual Results
Line of Credit Facility
Maximum Total Leverage Ratio	4.20
Minimum Interest Coverage Ratio	2.61

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Income Taxes Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Income Taxes [Abstract]
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent	1.00%
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount	$ (0.6)
Effective Income Tax Rate Reconciliation, Percent	40.00%	2.00%
Other Tax Expense (Benefit)	$ 0.9

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Intangible Assets and Goodwill Goodwill by Segment (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Goodwill	$ 74,337	$ 12,639
Radio
Goodwill	63,549	4,603
Publishing
Goodwill	8,036	8,036
Corporate and Emerging Technologies [Member]
Goodwill	$ 2,752	$ 0

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Summary of Significant Accounting Policies

6 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2014. 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, except as otherwise noted) necessary to present fairly the consolidated financial position of Emmis at August 31, 2014, and the results of its operations for the three-month and six-month periods ended August 31, 2013 and 2014, and cash flows for the six-month periods ended August 31, 2013 and 2014.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2014 that have had a material impact on our condensed consolidated financial statements and related notes.

Basic and Diluted Net Income Per Common Share

Basic net income per common share is computed by dividing net income attributable 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, 2013 and 2014 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”). The following table sets forth the calculation of basic and diluted net income per share:

	Three Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders from continuing operations	$	2,647		41,451	$	0.06	$	2,760	42,525	$	0.06
Impact of equity awards	—			3,217			—		2,753
Impact of conversion of preferred stock into common stock	(76		)	2,269			—		2,266
Diluted net income per common share:
Net income available to common shareholders from continuing operations	$	2,571		46,937	$	0.05	$	2,760	47,544	$	0.06

	Six Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders	$	6,372		41,313	$	0.15	$	3,716	42,337	$	0.09
Impact of equity awards	—			2,770	—		—		2,876	—
Impact of conversion of preferred stock into common stock	(325		)	2,278	—		—		2,266	—
Diluted net income per common share:
Net income available to common shareholders	$	6,047		46,361	$	0.13	$	3,716	47,479	$	0.08

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended August 31,		Six Months Ended August 31,
	2013	2014	2013	2014
	(shares in 000’s )
Equity awards	1,929	1,730	1,980	1,385
Antidilutive common share equivalents	1,929	1,730	1,980	1,385

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the Federal Communications Commission ("FCC") licenses. Under the terms of these agreements, the acquiring company makes specified periodic payments to the holder of the FCC license in exchange for the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. The acquiring company records revenues and expenses associated with the portion of the station’s inventory of broadcast time it manages. Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On February 11, 2014, the Company entered into an LMA in connection with its agreement to purchase WBLS-FM and WLIB-AM in New York City from YMF Media New York LLC and YMF Media New York License LLC (collectively, "YMF"). The LMA, which commenced on March 1, 2014, gave Emmis the right to program and sell advertising for the two New York stations. Emmis paid YMF $1.3 million per month and reimbursed YMF for certain monthly expenses through the first closing of the acquisition, which occurred on June 10, 2014. After the first closing, the LMA continues in effect until the second closing at a reduced monthly fee of approximately $0.7 million. During the three-month and six-month periods ended ended August 31, 2014, Emmis recorded $0.4 million and $4.2 million of LMA fee expense. See Note 2 for more discussion of the Company's purchase of WBLS-FM and WLIB-AM from YMF.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis retains ownership and control of the Station, including the related FCC license during the term of the LMA and is scheduled to receive an annual fee until the LMA’s termination. LMA fee revenue is recorded on a straight-line basis over the term of the LMA as a component of net revenues in our accompanying condensed consolidated statements of operations.

The following table summarizes certain operating results of 98.7FM for all periods presented. 98.7FM is a part of our radio segment.

	For the three months ended August 31,				For the six months ended August 31,
	2013		2014		2013		2014
	(amounts in 000's)
Net revenues	$	2,583	$	2,583	$	5,166	$	5,166
Station operating expenses, excluding depreciation and amortization expense	251		260		507		484
Interest expense	861		815		1,731		1,643

Assets and liabilities of 98.7FM as of February 28, 2014 and August 31, 2014 were as follows:

	As of February 28,		As of August 31,
	2014		2014
	(amounts in 000's)
Current assets:
Restricted cash	$	1,407	$	1,326
Prepaid expenses	614		630
Total current assets	2,021		1,956
Noncurrent assets:
Indefinite lived intangibles	60,525		60,525
Deferred debt issuance costs, net	2,759		2,626
Deposits and other	3,082		3,781
Total noncurrent assets	66,366		66,932
Total assets	$	68,387	$	68,888
Current liabilities:
Accounts payable and accrued expenses	$	56	$	26
Current maturities of long-term debt	4,541		4,762
Deferred revenue	728		753
Other current liabilities	256		248
Total current liabilities	5,581		5,789
Noncurrent liabilities:
Long-term debt, net of current portion	70,401		67,960
Other noncurrent liabilities	24		27
Total noncurrent liabilities	70,425		67,987
Total liabilities	$	76,006	$	73,776

Restricted Cash

The Company's restricted cash, included in current assets in the accompanying condensed consolidated balance sheets, totaled $2.2 million and $77.9 million as of February 28, 2014 and August 31, 2014, respectively.

As further discussed in Note 2, $76.0 million of the proceeds of the 2014 Credit Agreement will be used to fund the second closing of the Company's purchase of WBLS-FM and WLIB-AM. Because of the designated use for this cash, management has classified the $76.0 million as restricted as of August 31, 2014. If the second closing of the transaction does not occur on or before February 17, 2015, the $76.0 million will be used to repay 2014 Credit Agreement term loans.

The terms of our non-recourse notes and related agreements discussed in Note 5 restrict a portion of our cash on deposit for specific operating and financing purposes. Restricted cash related to the non-recourse notes and related agreements totaled $1.4 million and $1.3 million as of February 28, 2014 and August 31, 2014, respectively.

In connection with the Company's agreement with Sprint/United Management Company (“Sprint”), the Company collects cash from other participating companies in the radio industry and remits cash collected to Sprint. The entirety of cash collected but not yet remitted to Sprint classified as restricted cash as of February 28, 2014 and August 31, 2014 was $0.8 million and $0.6 million, respectively.

Recent Accounting Pronouncements

In June 2013, the FASB issued a new accounting standard that requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance was effective for the Company beginning March 1, 2014. The adoption of this guidance did not have any effect on the presentation of the Company’s condensed consolidated financial statements.

In April 2014, the FASB issued Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, to update the criteria for reporting discontinued operations and enhance related disclosures. Under the new guidance, only disposals that have a major effect through a strategic shift on an organization’s operations and financial results should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The guidance is effective for the Company as of March 1, 2015. The Company expects that this new guidance will reduce the number of transactions that will qualify for reporting discontinued operations.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. This guidance will be effective for the Company in the first quarter of its fiscal year ending February 28, 2018. The Company is currently evaluating the impact, if any, the adoption of this guidance will have on its financial position, results of operations or cash flows.

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to be consistent with the August 31, 2014 presentation. The reclassifications have no impact on net income previously reported.

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Share Based Payments Summary of Nonvested Options and Changes (Detail) (USD $)	6 Months Ended
	Aug. 31, 2014
Options
Nonvested, beginning of period	3,325,481
Granted	561,219
Vested	594,209
Forfeited	25,000
Nonvested, end of period	3,267,491
Weighted Average Grant Date Fair Value
Nonvested, beginning of period	$ 0.98
Granted	$ 1.64
Vested	$ 0.96
Forfeited	$ 0.57
Nonvested, end of period	$ 1.10

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Segment Information (Tables)

6 Months Ended

Aug. 31, 2014

Segment Reporting [Abstract]

Results of Operations of Business Segments

Three Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	47,598			14,113			113			$	61,824
Station operating expenses excluding LMA fees and depreciation and amortization expense	31,170			14,513			610			46,293
Corporate expenses excluding depreciation and amortization expense	—			—			3,341			3,341
LMA fees	383			—			—			383
Hungary license litigation and related expenses	192			—			—			192
Depreciation and amortization	839			61			691			1,591
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	—			—			—			—
Operating income (loss)	$	17,514		$	(461	)	$	(4,529	)	$	12,524

Three Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	41,237			13,708			22			$	54,967
Station operating expenses excluding depreciation and amortization expense	27,449			13,938			551			41,938
Corporate expenses excluding depreciation and amortization expense	—			—			5,070			5,070
Hungary license litigation and related expenses	1,043			—			—			1,043
Depreciation and amortization	604			61			548			1,213
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	12,142		$	(291	)	$	(6,147	)	$	5,704

Six Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	92,588			28,791			169			$	121,548
Station operating expenses excluding LMA fees and depreciation and amortization expense	58,530			29,453			1,236			89,219
Corporate expenses excluding depreciation and amortization expense	—			—			8,231			8,231
LMA fees	4,208			—			—			4,208
Hungary license litigation and related expenses	284			—			—			284
Depreciation and amortization	1,509			118			1,317			2,944
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	(3		)	—			—			(3		)
Operating income (loss)	$	30,560		$	(780	)	$	(10,615	)	$	19,165

Six Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	78,156			27,368			29			$	105,553
Station operating expenses excluding depreciation and amortization expense	50,193			28,739			718			79,650
Corporate expenses excluding depreciation and amortization expense	—			—			9,470			9,470
Hungary license litigation and related expenses	1,295			—			—			1,295
Depreciation and amortization	1,198			123			1,068			2,389
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	25,471		$	(1,494	)	$	(11,227	)	$	12,750

	As of February 28, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	210,161	$	21,809	$	33,378	$	265,348
	As of August 31, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	357,030	$	21,659	$	119,456	$	498,145

The increase in Radio segment assets primarily relates to the acquisition of WBLS-FM and WLIB-AM. The increase in Corporate and Emerging Technologies segment assets primarily relates to the restricted cash held for the second closing of our acquisition of WBLS-FM and WLIB-AM. See Note 2 for more discussion of our acquisitions.

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Fair Value Measurements (Tables)

6 Months Ended

Aug. 31, 2014

Fair Value Disclosures [Abstract]

Assets and Liabilities Accounted for at Fair Value on Recurring Basis

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

	As of August 31, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
	As of February 28, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
Share-based compensation arrangement	$	714	$	—	$	—	$	714
Interest rate swap agreement	—		94		—		94
Total liabilities measured at fair value on a recurring basis	$	714	$	94	$	—	$	808

Reconciliation of Beginning and Ending Balances for Fair Value Measurements using Significant Unobservable Inputs

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the Six Months Ended August 31,
	2013		2014
	Available For Sale Securities		Available For Sale Securities
Beginning Balance	$	6,500	$	6,750
Purchases	250		—
Ending Balance	$	6,750	$	6,750

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Effect of Derivative Financial Instruments on Consolidated Statement of Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI on derivative (effective portion)	$ (72)	$ (19)	$ (15)	$ 3
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(25)	(23)	(27)	(45)
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Interest Rate Swap Agreements
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI on derivative (effective portion)	(72)	(19)	(15)	3
Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Interest expense		Interest expense
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	$ (25)	$ (23)	$ (27)	$ (45)
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	N/A		N/A

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Share Based Payments Summary of Restricted Stock Grants Outstanding and Activity (Detail) (Restricted Stock, USD $)	6 Months Ended
	Aug. 31, 2014
Restricted Stock
Awards
Grants outstanding, beginning of year	590,544
Granted	1,221,213
Vested (restriction lapsed)	1,170,603
Grants outstanding, end of year	641,154
Price
Grants outstanding, beginning of year	$ 1.79
Granted	$ 3.33
Vested (restriction lapsed)	$ 3.09
Grants outstanding, end of year	$ 2.33

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Summary of Significant Accounting Policies Calculation of Basic and Diluted Net Income Per Share from Continuing Operations (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Basic net (loss) income per common share:
Net (loss) income available to common shareholders from continuing operations	$ 2,760	$ 2,647	$ 3,716	$ 6,372
Impact of equity awards
Impact of conversion of preferred stock into common stock	0	(76)	0	(325)
Diluted net (loss) income per common share:
Net income available to common shareholders from continuing operations	$ 2,760	$ 2,571	$ 3,716	$ 6,047
Basic shares:
Basic weighted average common shares outstanding (in shares)	42,525	41,451	42,337	41,313
Impact of equity awards (in shares)	2,753	3,217	2,876	2,770
Impact of conversion of preferred stock into common stock (in shares)	2,266	2,269	2,266	2,278
Diluted shares:
Diluted weighted average common shares outstanding (in shares)	47,544	46,937	47,479	46,361
Basic net income per common share:
Net income available to common shareholders from continuing operations, per basic shares (in dollars per share)	$ 0.06	$ 0.06	$ 0.09	$ 0.15
Impact of equity awards (in dollars per share)
Impact of conversion of preferred stock into common stock (in dollars per share)
Diluted net income per common share:
Net income available to common shareholders from continuing operations, per dilutive shares (in dollars per share)	$ 0.06	$ 0.05	$ 0.08	$ 0.13

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Summary of Significant Accounting Policies Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock (Details) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive common share equivalents (in shares)	1,730	1,929	1,385	1,980
Stock options and restricted stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive common share equivalents (in shares)	1,730	1,929	1,385	1,980

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$ 6,859	$ 8,882
Adjustments to reconcile consolidated net income to net cash provided by operating activities -
Depreciation and amortization	2,944	2,389
Amortization of Financing Costs and Discounts	514	450
Noncash Accretion Of Debt Instruments	1,031	0
Loss on termination of credit agreement	1,455	0
Provision for bad debts	392	338
(Benefit) provision for deferred income taxes	4,443	1,288
Noncash compensation	1,531	3,082
Gain on sale of assets	(3)	(1)
Other	0	(75)
Changes in assets and liabilities -
Increase (Decrease) in Restricted Cash for Operating Activities	(351)	0
Accounts receivable	(9,719)	(6,880)
Prepaid expenses and other current assets	(2,831)	229
Other assets	(952)	(1,167)
Accounts payable and accrued liabilities	(2,575)	266
Deferred revenue	19	1,197
Income taxes	(152)	(322)
Other liabilities	462	294
Net cash used in operating activities — discontinued operations	0	(68)
Net cash (used in) provided by operating activities	3,769	9,902
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,675)	(1,857)
Payments to Acquire Businesses, Net of Cash Acquired	(57,544)	0
Increase (Decrease) in Restricted Cash	(76,015)	0
Cash paid for investments, net of distributions	(33)	(220)
Payments for (Proceeds from) Other Investing Activities	(182)	1
Net cash used in investing activities — discontinued operations	0	(1,650)
Net cash used in investing activities	(135,449)	(3,726)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(66,720)	(12,015)
Proceeds from long-term debt	210,000	6,000
Debt-related costs	(6,844)	(137)
Payments of dividends and distributions to noncontrolling interests	(2,530)	(1,816)
Proceeds from the exercise of stock options	292	126
Purchase of preferred stock	0	(107)
Settlement of tax withholding obligations on stock issued to employees	(1,424)	(133)
Net cash (used in) provided by financing activities	132,774	(8,082)
Effect of exchange rates on cash and cash equivalents	0	(8)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1,094	(1,914)
CASH AND CASH EQUIVALENTS:
Beginning of period	5,304
End of period	6,398
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	2,395	3,285
Cash paid (refund from) income taxes, net	243	(804)
Noncash financing transactions -
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives	$ 4,444	$ 1,307

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Summary of Significant Accounting Policies Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock (Parenthetical) (Details) (Series A preferred stock)	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Series A preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Series A convertible preferred stock, dividend rate	6.25%	6.25%

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Share Based Payments Assumptions used to Calculate Fair Value of Options on Date of Grant (Detail)	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Dividend Yield:	0.00%	0.00%
Expected Life (Years):	4 years 4 months 0 days	4 years 3 months 12 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate:	1.20%	0.60%
Expected Volatility:	71.80%	108.90%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-Free Interest Rate:	1.50%	1.30%
Expected Volatility:	73.90%	115.90%

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Long-term Debt - Schedule of Maturities of Long-term Debt (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014
Debt Instrument
2015	$ 2,321
2016	6,840
2017	13,502
2018	7,889
2019	22,937
Thereafter	224,932
Total long-term debt	278,421
98.7FM Non-recourse debt | Two Thousand Fourteen Credit Agreement
Debt Instrument
2015	2,321
2016	4,990
2017	5,453
2018	6,039
2019	6,587
Thereafter	47,332
Total long-term debt	72,722
Digonex Non-recourse debt
Debt Instrument
2015	0
2016	0
2017	6,199
2018	0
2019	0
Thereafter	0
Total long-term debt	6,199
Revolver | Two Thousand Fourteen Credit Agreement
Debt Instrument
2015	0
2016	0
2017	0
2018	0
2019	14,500
Thereafter	0
Total long-term debt	14,500
Term Loan | Two Thousand Fourteen Credit Agreement
Debt Instrument
2015	0
2016	1,850
2017	1,850
2018	1,850
2019	1,850
Thereafter	177,600
Total long-term debt	$ 185,000

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
NET REVENUES	$ 61,824	$ 54,967	$ 121,548	$ 105,553
OPERATING EXPENSES:
Station operating expenses excluding LMA fees of $0, $383, $0 and $4,208, and depreciation and amortization expense of $665, $945, $1,321 and $1,672, respectively	46,293	41,938	89,219	79,650
Corporate expenses excluding depreciation and amortization expense of $548, $646, $1,068 and $1,272, respectively	3,341	5,070	8,231	9,470
LMA fee expense	383	0	4,208	0
Hungary license litigation and related expenses	192	1,043	284	1,295
Depreciation and amortization	1,591	1,213	2,944	2,389
Gain recognized on contract settlement	(2,500)	0	(2,500)	0
Gain on sale of assets	0	(1)	(3)	(1)
Total operating expenses	49,300	49,263	102,383	92,803
OPERATING INCOME	12,524	5,704	19,165	12,750
OTHER EXPENSE:
Interest expense	(4,878)	(1,808)	(6,478)	(3,729)
Loss on termination of credit agreement	(1,455)	0	(1,455)	0
Other income, net	168	33	179	40
Total other expense	(6,165)	(1,775)	(7,754)	(3,689)
(LOSS) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS	6,359	3,929	11,411	9,061
(BENEFIT) PROVISION FOR INCOME TAXES	2,167	4	4,552	179
CONSOLIDATED NET INCOME	4,192	3,925	6,859	8,882
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,432	1,354	3,143	2,835
NET INCOME ATTRIBUTABLE TO THE COMPANY	2,760	2,571	3,716	6,047
GAIN ON EXTINGUISHMENT OF PREFERRED STOCK	0	76	0	325
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	2,760	2,647	3,716	6,372
Amounts attributable to common shareholders for basic and diluted earnings per share:
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	2,760	2,647	3,716	6,372
Amounts attributable to common shareholders for diluted earnings per share:
Continuing operations	$ 2,760	$ 2,571	$ 3,716	$ 6,047
Basic net (loss) income per share attributable to common shareholders:
Continuing operations	$ 0.06	$ 0.06	$ 0.09	$ 0.15
Net income per share attributable to common shareholders	$ 0.06	$ 0.06	$ 0.09	$ 0.15
Basic weighted average common shares outstanding	42,525	41,451	42,337	41,313
Diluted net (loss) income per share attributable to common shareholders:
Continuing operations	$ 0.06	$ 0.05	$ 0.08	$ 0.13
Net income per share attributable to common shareholders	$ 0.06	$ 0.05	$ 0.08	$ 0.13
Diluted weighted average common shares outstanding	47,544	46,937	47,479	46,361

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Share Based Payments Stock-Based Compensation Expense and Related Tax Benefits Recognized (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 583	$ 2,419	$ 1,531	$ 3,082
Tax benefit	(190)	0	(521)	0
Recognized stock-based compensation expense, net of tax	393	2,419	1,010	3,082
Station operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	68	1,213	470	1,466
Corporate expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 515	$ 1,206	$ 1,061	$ 1,616

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Class A Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	170,000,000	170,000,000
Common stock, shares issued	38,678,464	37,267,123
Common stock, shares outstanding	38,678,464	37,267,123
Class B Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	4,569,464	4,569,464
Common stock, shares outstanding	4,569,464	4,569,464
Series A preferred stock
Series A non-cumulative convertible preferred stock, par value	$ 0.01	$ 0.01
Series A non-cumulative convertible preferred stock, liquidation preference	$ 50.00	$ 50.00
Series A non-cumulative convertible preferred stock, aggregate liquidation preference and redemption amount	$ 46,450	$ 46,450
Series A non-cumulative convertible preferred stock, shares authorized	2,875,000	2,875,000
Series A non-cumulative convertible preferred stock, shares issued	928,991	1,328,991
Series A non-cumulative convertible preferred stock, shares outstanding	928,991	1,328,991
Shares in trust
Series A non-cumulative convertible preferred stock, shares in trust	0	400,000

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Fair Value Measurements Fair Value Measurements Additional Information (Details) (USD $) In Millions, unless otherwise specified	Aug. 31, 2014
Fair Value Measurements Additional Detail [Abstract]
Long-term Debt, Fair Value	$ 200.7
Total Credit Agreement debt	$ 199.5

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Summary of Significant Accounting Policies Operating Results of Local Programming and Marketing Agreement Fees (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Segment Reporting Information [Line Items]
Net revenues	$ 61,824	$ 54,967	$ 121,548	$ 105,553
Station operating expenses, excluding depreciation and amortization expense	46,293	41,938	89,219	79,650
Interest expense	4,878	1,808	6,478	3,729
98.7 FM
Segment Reporting Information [Line Items]
Net revenues	2,583	2,583	5,166	5,166
Station operating expenses, excluding depreciation and amortization expense	260	251	484	507
Interest expense	$ 815	$ 861	$ 1,643	$ 1,731

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Business Combinations (Tables)

0 Months Ended

6 Months Ended

0 Months Ended

Jun. 10, 2014

WBLS-FM and WLIB-AM

Aug. 31, 2014

WBLS-FM and WLIB-AM

Jun. 16, 2014

Digonex

Business Acquisition

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimates of fair values of the identifiable assets acquired and liabilities assumed in the acquisition of the Stations as of June 10, 2014. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may result in adjustments to the preliminary values presented below.

Other current assets	$	37
Property and equipment	4,054
Indefinite-lived intangibles	69,019
Goodwill	58,945
Other intangibles	2,469
Other current liabilities	(512		)
Total purchase price, including assumed liabilities	$	134,012
Cash paid at first closing on June 10, 2014	$	55,000
Present value of second closing and LMA related liabilities	79,012
Total purchase price	$	134,012

The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may result in adjustments to the preliminary values presented below.

Cash	$	456
Other current and noncurrent assets	10
Goodwill	2,752
Other intangibles	6,180
Accounts payable and accrued expenses	(462		)
Other current liabilities and noncurrent liabilities	(550		)
Long-term debt	(4,189		)
Noncontrolling interests	(1,197		)
Total purchase price, including assumed liabilities	3,000
Less: Cash acquired	(456		)
Total purchase price, net of cash acquired	$	2,544

Schedule of Pro Forma Information

The following table presents unaudited pro forma consolidated financial information as if the closing of our acquisition of the Stations had occurred on March 1, 2013 (in thousands, except per share data):

	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2014		2013		2014
	(in 000’s, except per share data)
Net revenues	$	62,912	$	61,824	$	120,703	$	121,548
Net income attributable to common shareholders	$	4,089	$	2,615	$	8,992	$	4,974
Net income per common share attributable to common shareholders:
Basic	$	0.10	$	0.06	$	0.22	$	0.12
Diluted	$	0.09	$	0.06	$	0.19	$	0.10

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Summary of Significant Accounting Policies Assets and Liabilities of Local Programming and Marketing Agreement Fees (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
Segment Reporting Information [Line Items]
Prepaid expenses	$ 8,946	$ 8,582
Total current assets	143,014	54,012
Indefinite-lived intangibles	219,577	150,558
Total assets	498,145	265,348
Other current liabilities	6,719	7,693
Total current liabilities	118,908	49,250
Long-term Debt, net of current portion	264,855	114,926
Other noncurrent liabilities	7,792	8,021
Total liabilities	405,826	181,980
98.7 FM
Segment Reporting Information [Line Items]
Restricted cash	1,326	1,407
Prepaid expenses	630	614
Total current assets	1,956	2,021
Indefinite-lived intangibles	60,525	60,525
Deferred debt issuance costs, net	2,626	2,759
Deposits and other	3,781	3,082
Total noncurrent assets	66,932	66,366
Total assets	68,888	68,387
Accounts payable and accrued expenses	26	56
current maturities of long-term debt	4,762	4,541
Deferred revenue	753	728
Other current liabilities	248	256
Total current liabilities	5,789	5,581
Long-term Debt, net of current portion	67,960	70,401
Other noncurrent liabilities	27	24
Total noncurrent liabilities	67,987	70,425
Total liabilities	$ 73,776	$ 76,006

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Goodwill by Segment (Tables)

6 Months Ended

Aug. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

The following table summarizes the Company's goodwill by segment as of February 28, 2014 and August 31, 2014. The increase to Radio goodwill is a result of the Company's acquisition of WBLS-FM and WLIB-AM. The increase to Corporate & Emerging Technologies goodwill is a result of the Company's acquisition of a controlling interest in Digonex. See Note 2 for more discussion of the Company's acquisitions.

	As of February 28,		As of August 31,
	2014		2014
Radio	$	4,603	$	63,549
Publishing	8,036		8,036
Corporate & Emerging Technologies	—		2,752
Total Goodwill	$	12,639	$	74,337

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (USD $) In Thousands, except Share data	Total USD ($)		Class A Common Stock USD ($)	Class B Common Stock USD ($)	Series A preferred stock USD ($)	Additional Paid-in Capital USD ($)	Preferred Class A [Member]	Accumulated Deficit USD ($)	Accumulated Other Comprehensive Loss USD ($)	Noncontrolling Interests USD ($)
Beginning Balance at Feb. 28, 2014	$ 83,368		$ 373	$ 46	$ 9	$ 580,776		$ (545,355)	$ (99)	$ 47,618
Beginning Balance (In shares) at Feb. 28, 2014			37,267,123	4,569,464	928,991
Net income	6,859							3,716		3,143
Issuance of Common Stock to employees and officers	970		2			968
Issuance of Common Stock to employees and officers (In shares)			188,717
Exercise of stock options	298		6			292
Exercise of stock options (In shares)	617,706	[1]	615,323
Payments of dividends and distributions to noncontrolling interests	(2,530)									(2,530)
Stock Issued During Period, Shares, Employee Benefit Plan							607,301
Stock Issued During Period, Value, Employee Benefit Plan	2,058		6			2,052
Noncontrolling Interest, Increase from Business Combination	1,197									1,197
Change in value of derivative instrument	99								99
Cumulative translation adjustment	0
Ending Balance at Aug. 31, 2014	$ 92,319		$ 387	$ 46	$ 9	$ 584,088		$ (541,639)	$ 0	$ 49,428
Ending Balance (In Shares) at Aug. 31, 2014			38,678,464	4,569,464	928,991

[1] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjdmYTY5NmI3OTBlNjQwZWI4ZWU0YzMyOGM5NjMyNDc1fFRleHRTZWxlY3Rpb246NTREQjM4REFCRUQxQTdEQUE1NzU0OUJBMTUwQkU0QzAM}

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Depreciation and amortization expense excluded from station operating expenses	$ 945	$ 665	$ 1,672	$ 1,321
Depreciation and amortization expenses excluded from corporate expenses	$ 646	$ 548	$ 1,272	$ 1,068

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Segment Information

6 Months Ended

Aug. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s operations are aligned into three business segments: (i) Radio, (ii) Publishing and (iii) Corporate & Emerging Technologies. Emerging Technologies includes our TagStation, NextRadio and Digonex businesses. 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 exclusively in the United States. Beginning in the quarter ended August 31, 2014, the Company reports results of its Emerging Technologies activities with its Corporate activities. Results from Emerging Technologies were reclassified from the Radio segment in the prior periods presented below and are not material.

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, 2014, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	47,598			14,113			113			$	61,824
Station operating expenses excluding LMA fees and depreciation and amortization expense	31,170			14,513			610			46,293
Corporate expenses excluding depreciation and amortization expense	—			—			3,341			3,341
LMA fees	383			—			—			383
Hungary license litigation and related expenses	192			—			—			192
Depreciation and amortization	839			61			691			1,591
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	—			—			—			—
Operating income (loss)	$	17,514		$	(461	)	$	(4,529	)	$	12,524

Three Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	41,237			13,708			22			$	54,967
Station operating expenses excluding depreciation and amortization expense	27,449			13,938			551			41,938
Corporate expenses excluding depreciation and amortization expense	—			—			5,070			5,070
Hungary license litigation and related expenses	1,043			—			—			1,043
Depreciation and amortization	604			61			548			1,213
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	12,142		$	(291	)	$	(6,147	)	$	5,704

Six Months Ended August 31, 2014	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	92,588			28,791			169			$	121,548
Station operating expenses excluding LMA fees and depreciation and amortization expense	58,530			29,453			1,236			89,219
Corporate expenses excluding depreciation and amortization expense	—			—			8,231			8,231
LMA fees	4,208			—			—			4,208
Hungary license litigation and related expenses	284			—			—			284
Depreciation and amortization	1,509			118			1,317			2,944
Gain on contract settlement	(2,500		)	—			—			(2,500		)
Gain on sale of fixed assets	(3		)	—			—			(3		)
Operating income (loss)	$	30,560		$	(780	)	$	(10,615	)	$	19,165

Six Months Ended August 31, 2013	Radio			Publishing			Corporate & Emerging Technologies			Consolidated
Net revenues	78,156			27,368			29			$	105,553
Station operating expenses excluding depreciation and amortization expense	50,193			28,739			718			79,650
Corporate expenses excluding depreciation and amortization expense	—			—			9,470			9,470
Hungary license litigation and related expenses	1,295			—			—			1,295
Depreciation and amortization	1,198			123			1,068			2,389
Gain on sale of fixed assets	(1		)	—			—			(1		)
Operating income (loss)	$	25,471		$	(1,494	)	$	(11,227	)	$	12,750

	As of February 28, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	210,161	$	21,809	$	33,378	$	265,348
	As of August 31, 2014
	Radio		Publishing		Corporate & Emerging Technologies		Consolidated
Total assets	$	357,030	$	21,659	$	119,456	$	498,145

The increase in Radio segment assets primarily relates to the acquisition of WBLS-FM and WLIB-AM. The increase in Corporate and Emerging Technologies segment assets primarily relates to the restricted cash held for the second closing of our acquisition of WBLS-FM and WLIB-AM. See Note 2 for more discussion of our acquisitions.

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Document and Entity Information	6 Months Ended
	Aug. 31, 2014	Oct. 06, 2014 Class A Common Stock	Oct. 06, 2014 Class B Common Stock	Oct. 06, 2014 Class C Common Stock
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	EMMS
Entity Registrant Name	EMMIS COMMUNICATIONS CORP
Entity Central Index Key	0000783005
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		38,807,873	4,569,464	0

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Regulatory, Legal and Other Matters

6 Months Ended

Aug. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Regulatory, Legal and Other Matters

Regulatory, Legal and Other Matters

Emmis is a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

Emmis and certain of its officers and directors were named as defendants in a lawsuit filed April 16, 2012 by certain holders of Preferred Stock (the “Lock-Up Group”) in the United States District Court for the Southern District of Indiana entitled Corre Opportunities Fund, LP, et al. v. Emmis Communications Corporation, et al. The plaintiffs alleged, among other things, that Emmis and the other defendants violated various provisions of the federal securities laws and breached fiduciary duties in connection with Emmis’ entry into total return swap agreements and voting agreements with certain holders of Emmis Preferred Stock, as well as by issuing shares of Preferred Stock to Emmis’ 2012 Retention Plan and Trust (the “Trust”) and entering into a voting agreement with the trustee of the Trust. The plaintiffs also alleged that Emmis violated certain provisions of Indiana corporate law by directing the voting of the shares of Preferred Stock subject to the total return swap agreements (the “Swap Shares”) and the shares of Preferred Stock held by the Trust (the “Trust Shares”) in favor of certain amendments to Emmis’ Articles of Incorporation.

Emmis filed an answer denying the material allegations of the complaint, and filed a counterclaim seeking a declaratory judgment that Emmis could legally direct the voting of the Swap Shares and the Trust Shares in favor of the proposed amendments.

On August 31, 2012, the U.S. District Court denied the plaintiffs' request for a preliminary injunction. Plaintiffs subsequently filed an amended complaint seeking monetary damages and dismissing all claims against the individual officer and director defendants. On February 28, 2014, the U.S. District Court issued a ruling in favor of Emmis on all counts. In March 2014, the Plaintiffs filed with the U.S. Court of Appeals for the Seventh Circuit an appeal of the U.S. District Court's decision. Emmis is defending this lawsuit vigorously.

On July 7, 2014, individuals who had been seeking to overturn the FCC’s approval of the transfer of the broadcast licenses for WBLS-FM and WLIB-AM from entities associated with Inner City Broadcasting to YMF (the entities that subsequently sold the two stations to Emmis) filed with the U.S. Court of Appeals for the District of Columbia Circuit a Notice of Appeal of the FCC’s approval of the transfer. Based upon the facts alleged in the Notice of Appeal and the extensive precedent of courts not overturning FCC approvals of transfers of broadcast licenses except in exceedingly rare circumstances, Emmis believes the appeal is without merit.

Certain individuals and groups have challenged applications for renewal of the FCC licenses of certain of the Company’s stations and challenged the transfer from YMF to Emmis of the FCC licenses for WBLS-FM and WLIB-AM. These challenges are currently pending before the FCC. Emmis does not expect the challenges to result in the denial of any license renewals or the revocation of the WBLS-FM and WLIB-AM transfers.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
CONSOLIDATED NET INCOME	$ 4,192	$ 3,925	$ 6,859	$ 8,882
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXES:
Change in value of derivative instrument and related income tax effects	90	4	99	48
Cumulative translation adjustment	0	22	0	(8)
COMPREHENSIVE INCOME	4,282	3,951	6,958	8,922
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	1,432	1,335	3,143	2,816
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$ 2,850	$ 2,616	$ 3,815	$ 6,106

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Intangible Assets and Goodwill

6 Months Ended

Aug. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, 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 as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.6 million and $219.6 million as of February 28, 2014 and August 31, 2014, respectively. The increase in FCC licenses is attributable to the purchase of WBLS-FM and WLIB-AM as further discussed in Note 2. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, the Company will perform an interim impairment test. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market 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 commenced operations at the beginning of the valuation period. 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. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

Valuation of Goodwill

ASC Topic 350-20-35 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, unless indications of impairment exist during an interim period. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. 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. 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 has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

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.

The following table summarizes the Company's goodwill by segment as of February 28, 2014 and August 31, 2014. The increase to Radio goodwill is a result of the Company's acquisition of WBLS-FM and WLIB-AM. The increase to Corporate & Emerging Technologies goodwill is a result of the Company's acquisition of a controlling interest in Digonex. See Note 2 for more discussion of the Company's acquisitions.

	As of February 28,		As of August 31,
	2014		2014
Radio	$	4,603	$	63,549
Publishing	8,036		8,036
Corporate & Emerging Technologies	—		2,752
Total Goodwill	$	12,639	$	74,337

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of patents, customer lists, trademarks and a syndicated programming contract, 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 assets at February 28, 2014 and August 31, 2014:

		As of February 28, 2014						As of August 31, 2014
		(in 000's)
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	12.6	$	810	$	548	$	262	$	1,240	$	514	$	726
Patents	7.0	—		—		—		5,180		31		5,149
Customer list	2.9	—		—		—		1,015		36		979
Programming agreement	7.1	—		—		—		2,154		58		2,096
TOTAL		$	810	$	548	$	262	$	9,589	$	639	$	8,950

Total amortization expense from definite-lived intangibles for the three-month and six-month periods ended August 31, 2013 was less than $0.1 million. Total amortization expense from definite-lived intangibles for the three-month and six-month periods ended August 31, 2014 was $0.1 million. 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),	Expected Amortization Expense
	(in 000's)
2015	920
2016	1,514
2017	1,514
2018	1,255
2019	1,076

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Share Based Payments

6 Months Ended

Aug. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share Based Payments

Share Based Payments

The amounts recorded as share based compensation expense consist of stock option and restricted stock grants, common stock issued to employees and directors in lieu of cash payments, and Preferred Stock contributed to the 2012 Retention Plan.

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. Generally, these options either vest annually over 3 years (one-third each year for 3 years), or cliff vest at the end of 3 years. The Company issues new shares upon the exercise of stock options.

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 risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the six months ended August 31, 2013 and 2014:

	Six Months Ended August 31,
	2013	2014
Risk-Free Interest Rate:	0.6% - 1.3%	1.2% - 1.5%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.3	4.3
Expected Volatility:	108.9% - 115.9%	71.8% - 73.9%

The following table presents a summary of the Company’s stock options outstanding at August 31, 2014, and stock option activity during the six months ended August 31, 2014 (“Price” reflects the weighted average exercise price per share):

	Options	Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	6,984,605	$	3.74
Granted	561,219	2.91
Exercised (1)	617,706	0.54
Forfeited	25,000	0.70
Expired	986,610	17.45
Outstanding, end of period	5,916,508	1.72		7.1	$	7,180
Exercisable, end of period	2,649,017	1.87		5.6	$	3,666

⁽¹⁾  Cash received from option exercises for the six months ended August 31, 2013 and 2014 was $0.1 million and $0.3 million, respectively. The Company recorded an income tax benefit relating to the options exercised during the six months ended August 31, 2014 of $0.1 million. The Company did not record an income tax benefit relating to the options exercised during the six months ended August 31, 2013.

The weighted average per share grant date fair value of options granted during the six months ended August 31, 2013 and 2014, was $1.36 and $1.64, respectively.

A summary of the Company’s nonvested options at August 31, 2014, and changes during the six months ended August 31, 2014, is presented below:

	Options	Weighted Average Grant Date Fair Value
Nonvested, beginning of period	3,325,481	$	0.98
Granted	561,219	1.64
Vested	594,209	0.96
Forfeited	25,000	0.57
Nonvested, end of period	3,267,491	1.10

There were 3.2 million shares available for future grants under the Company’s various equity plans at August 31, 2014. The vesting dates of outstanding options at August 31, 2014 range from November 2014 to March 2018, and expiration dates range from March 2015 to July 2024.

Restricted Stock Awards

The Company grants restricted stock awards to directors annually, and periodically grants restricted stock to employees in connection with employment agreements. Awards to directors are granted on the date of our annual meeting of shareholders and vest on the earlier of (i) the completion of the director’s 3-year term or (ii) the third anniversary of the date of grant. Restricted stock award grants are granted out of the Company’s 2012 Equity Compensation Plan. The Company may also award, out of the Company’s 2012 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares may be immediately lapsed on the grant date.

The following table presents a summary of the Company’s restricted stock grants outstanding at August 31, 2014, and restricted stock activity during the six months ended August 31, 2014 (“Price” reflects the weighted average share price at the date of grant):

	Awards	Price
Grants outstanding, beginning of period	590,544	$	1.79
Granted	1,221,213	3.33
Vested (restriction lapsed)	1,170,603	3.09
Grants outstanding, end of period	641,154	2.33

The total grant date fair value of shares vested during the six months ended August 31, 2013 and 2014, was $0.4 million and $3.6 million, respectively.

Preferred Stock and the 2012 Retention Plan

On April 2, 2012, the shareholders of the Company approved the 2012 Retention Plan and Trust Agreement (the “Trust” or the “2012 Retention Plan”) at a special meeting of shareholders. The Company contributed 400,000 shares of its Preferred Stock to the Trust in connection with the approval of the 2012 Retention Plan. Awards granted under the 2012 Retention Plan entitled the participants to receive a distribution two years from the date of shareholder approval of the plan, provided the participant was an employee upon inception of the plan and remained an employee through the vesting date. The Trustee of the plan was Jeffrey H. Smulyan, our Chairman of the Board, President and Chief Executive Officer.

On March 5, 2014, the Board of Directors of the Company approved the exercise of the Company's repurchase option under the Voting and Transfer Restriction Agreement with the Trustee of the 2012 Retention Plan and Trust. Pursuant to the exercise of that option, the Company repurchased 400,000 shares of Preferred Stock from the trustee in exchange for 975,848 shares of the Company's Class A Common Stock. On April 2, 2014, 975,848 shares of Class A Common Stock were distributed to employees who met the vesting requirements of the plan. The Company recognized approximately $1.5 million and $0.4 million of compensation expense related to the 2012 Retention Plan during the six months ended August 31, 2013 and 2014, respectively. The issuance and vesting of these shares is reflected in the restricted stock table above.

Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company during the three and six months ended August 31, 2013 and 2014:

	Three Months Ended August 31,					Six Months Ended August 31,
	2013		2014			2013		2014
Station operating expenses	$	1,213	$	68		$	1,466	$	470
Corporate expenses	1,206		515			1,616		1,061
Stock-based compensation expense included in operating expenses	2,419		583			3,082		1,531
Tax benefit	—		(190		)	—		(521		)
Recognized stock-based compensation expense, net of tax	$	2,419	$	393		$	3,082	$	1,010

As of August 31, 2014, there was $2.8 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 1.8 years.

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Share Based Payments (Tables)

6 Months Ended

Aug. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Assumptions used to Calculate Fair Value of Options on Date 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, 2013 and 2014:

	Six Months Ended August 31,
	2013	2014
Risk-Free Interest Rate:	0.6% - 1.3%	1.2% - 1.5%
Expected Dividend Yield:	0%	0%
Expected Life (Years):	4.3	4.3
Expected Volatility:	108.9% - 115.9%	71.8% - 73.9%

Summary of Stock Options Outstanding and Activity

The following table presents a summary of the Company’s stock options outstanding at August 31, 2014, and stock option activity during the six months ended August 31, 2014 (“Price” reflects the weighted average exercise price per share):

	Options	Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	6,984,605	$	3.74
Granted	561,219	2.91
Exercised (1)	617,706	0.54
Forfeited	25,000	0.70
Expired	986,610	17.45
Outstanding, end of period	5,916,508	1.72		7.1	$	7,180
Exercisable, end of period	2,649,017	1.87		5.6	$	3,666

⁽¹⁾ 

Summary of Nonvested Options and Changes

A summary of the Company’s nonvested options at August 31, 2014, and changes during the six months ended August 31, 2014, is presented below:

	Options	Weighted Average Grant Date Fair Value
Nonvested, beginning of period	3,325,481	$	0.98
Granted	561,219	1.64
Vested	594,209	0.96
Forfeited	25,000	0.57
Nonvested, end of period	3,267,491	1.10

Summary of Restricted Stock Grants Outstanding and Activity

The following table presents a summary of the Company’s restricted stock grants outstanding at August 31, 2014, and restricted stock activity during the six months ended August 31, 2014 (“Price” reflects the weighted average share price at the date of grant):

	Awards	Price
Grants outstanding, beginning of period	590,544	$	1.79
Granted	1,221,213	3.33
Vested (restriction lapsed)	1,170,603	3.09
Grants outstanding, end of period	641,154	2.33

Stock-Based Compensation Expense and Related Tax Benefits Recognized

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company during the three and six months ended August 31, 2013 and 2014:

	Three Months Ended August 31,					Six Months Ended August 31,
	2013		2014			2013		2014
Station operating expenses	$	1,213	$	68		$	1,466	$	470
Corporate expenses	1,206		515			1,616		1,061
Stock-based compensation expense included in operating expenses	2,419		583			3,082		1,531
Tax benefit	—		(190		)	—		(521		)
Recognized stock-based compensation expense, net of tax	$	2,419	$	393		$	3,082	$	1,010

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Income Taxes

6 Months Ended

Aug. 31, 2014

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The effective income tax rate was 40% for the six months ended August 31, 2014. Our effective tax rate was higher than our estimated annual effective tax rate of 34% as a discrete expense of $0.9 million was recorded during the period. This expense related to the effect of increasing our statutory rate by 1% on existing deferred tax liabilities due to changes in state tax laws and the effect of the WBLS-FM and WLIB-AM LMA and related acquisition on our income apportionments. This discrete expense is partially offset during the six months ended August 31, 2014 by a discrete benefit of $0.6 million related to the loss on debt extinguishment the Company recorded during the period.

The effective income tax rate was 2% for the six months ended August 31, 2013. During the six months ended August 31, 2013, the Company recorded a valuation allowance for its net deferred tax assets, including its net operating loss carryforwards.

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Derivative Instruments and Hedging Activities

6 Months Ended

Aug. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage interest rate exposure with the following objectives:

• manage current and forecasted interest rate risk while maintaining optimal financial flexibility and solvency

• proactively manage the Company’s cost of capital to ensure the Company can effectively manage operations and execute its business strategy, thereby maintaining a competitive advantage and enhancing shareholder value

• comply with covenant requirements in the Company’s credit facility

Cash Flow Hedges of Interest Rate Risk

The Company utilizes interest rate derivatives to add stability to cash payments for interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Under the terms of its 2012 Credit Agreement, the Company was required to fix or cap the interest rate on at least 50% of its Term Loan exposure for a two-year period ending December 28, 2014. Under the terms of its 2014 Credit Agreement, no such requirement exists. See Note 5 for more discussion of our new credit facility.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company’s interest rate derivatives are used to hedge the interest payment cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The Company did not record any hedge ineffectiveness in earnings during the three or six months ended August 31, 2013 and 2014. Amounts reported in accumulated other comprehensive loss related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During fiscal 2015, less than $0.1 million was reclassified as an increase to interest expense.

In February 2013, the Company entered into a two-year interest rate exchange agreement (a “Swap”), whereby the Company pays a fixed rate of 0.42% on $40 million of notional principal to Fifth Third Bank, and Fifth Third Bank pays to the Company a variable rate on the same amount of notional principal based on the one-month London Interbank Offered Rate (“LIBOR”). In connection with the Company's termination and repayment of its 2012 Credit Agreement on June 10, 2014, our interest rate exchange agreement was settled and terminated. Consequently, as of August 31, 2014, the Company had no interest rate exchange agreements outstanding.

The Company does not generally use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the balance sheet as of February 28, 2014 and August 31, 2014. The fair value of the derivative instrument was estimated by obtaining quotations from the financial institution that was the counterparty to the instrument. The fair value was an estimate of the net amount that the Company would have been required to pay on the applicable date, assuming the agreement was transferred to another party or canceled by the Company, as further adjusted by a credit adjustment required by ASC Topic 820, Fair Value Measurements and Disclosures, as discussed below. For the six months ended August 31, 2014, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments Liability Derivatives
	As of February 28, 2014			As of August 31, 2014
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in 000's)
Derivatives designated as hedging instruments:
Interest Rate Swap Agreement	Other Current Liabilities	94		Other Current Liabilities	—
Total derivatives designated as hedging instruments		$	94		$	—

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three and six months ended August 31, 2013 and 2014 (in 000's).

	For the Three Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap
Agreement	$	(19	)	$	(72	)	Interest expense	$	(23	)	$	(25	)	N/A	$	—	$	—
Total	$	(19	)	$	(72	)		$	(23	)	$	(25	)		$	—	$	—
	For the Six Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap Agreement	$	3		$	(15	)	Interest expense	$	(45	)	$	(27	)	N/A	$	—	$	—
Total	$	3		$	(15	)		$	(45	)	$	(27	)		$	—	$	—

Credit-risk-related Contingent Features

The Company manages its counterparty risk by entering into derivative instruments with financial institutions where it believes the risk of credit loss resulting from nonperformance by the counterparty is low. As discussed above, the Company’s counterparty to the interest rate swap that was in effect from February 2013 to June 2014 was Fifth Third Bank.

In accordance with ASC Topic 820, the Company makes a Credit Value Adjustment (CVA) to adjust the valuation of a derivative to account for our own credit risk with respect to all derivative liability positions. The CVA is accounted for as a decrease to the derivative position with the corresponding increase or decrease reflected in other comprehensive income (loss) for derivatives designated as cash flow hedges. The CVA also accounts for nonperformance risk of our counterparties in the fair value measurement of all derivative asset positions, when appropriate. For each period presented, this CVA was immaterial to the fair value of our derivative instrument.

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Segment Information Results of Operations of Business Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013	Feb. 28, 2014
Segment Reporting Information [Line Items]
Net revenues	$ 61,824	$ 54,967	$ 121,548	$ 105,553
Station operating expenses, excluding depreciation and amortization expense	46,293	41,938	89,219	79,650
Corporate expenses excluding depreciation and amortization expense	3,341	5,070	8,231	9,470
LMA fee expense	383	0	4,208	0
Hungary license litigation and related expenses	192	1,043	284	1,295
Depreciation and amortization	1,591	1,213	2,944	2,389
Gain recognized on contract settlement	(2,500)	0	(2,500)	0
Gain on sale of fixed assets	0	(1)	(3)	(1)
OPERATING INCOME	12,524	5,704	19,165	12,750
Total Assets	498,145		498,145		265,348
Radio
Segment Reporting Information [Line Items]
Net revenues	47,598	41,237	92,588	78,156
Station operating expenses, excluding depreciation and amortization expense	31,170	27,449	58,530	50,193
Corporate expenses excluding depreciation and amortization expense	0	0	0	0
LMA fee expense	383		4,208
Hungary license litigation and related expenses	192	1,043	284	1,295
Depreciation and amortization	839	604	1,509	1,198
Gain recognized on contract settlement	(2,500)		(2,500)
Gain on sale of fixed assets	0	1	(3)	(1)
OPERATING INCOME	17,514	12,142	30,560	25,471
Total Assets	357,030		357,030		210,161
Publishing
Segment Reporting Information [Line Items]
Net revenues	14,113	13,708	28,791	27,368
Station operating expenses, excluding depreciation and amortization expense	14,513	13,938	29,453	28,739
Corporate expenses excluding depreciation and amortization expense	0	0	0	0
LMA fee expense	0		0
Hungary license litigation and related expenses	0	0	0	0
Depreciation and amortization	61	61	118	123
Gain recognized on contract settlement	0		0
Gain on sale of fixed assets	0	0	0	0
OPERATING INCOME	(461)	(291)	(780)	(1,494)
Total Assets	21,659		21,659		21,809
Corporate
Segment Reporting Information [Line Items]
Net revenues	113	22	169	29
Station operating expenses, excluding depreciation and amortization expense	610	551	1,236	718
Corporate expenses excluding depreciation and amortization expense	3,341	5,070	8,231	9,470
LMA fee expense	0		0
Hungary license litigation and related expenses	0	0	0	0
Depreciation and amortization	691	548	1,317	1,068
Gain recognized on contract settlement	0		0
Gain on sale of fixed assets	0	0	0	0
OPERATING INCOME	(4,529)	(6,147)	(10,615)	(11,227)
Total Assets	$ 119,456		$ 119,456		$ 33,378

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Long-term Debt

6 Months Ended

Aug. 31, 2014

Debt Disclosure [Abstract]

Long-term Debt

Long-term Debt

Long-term debt was comprised of the following at February 28, 2014 and August 31, 2014:

	February 28, 2014			August 31, 2014
2012 Credit Agreement debt :
Revolver	$	—		$	—
Term Loan	54,000			—
Total 2012 Credit Agreement debt	54,000			—
2014 Credit Agreement debt :
Revolver	—			14,500
Term Loan	—			185,000
Total 2014 Credit Agreement debt	—			199,500
98.7FM non-recourse debt	74,942			72,722
Digonex non-recourse debt (1)	—			4,201
Less: Current maturities	(12,541		)	(5,687		)
Less: Unamortized original issue discount of Credit Agreement debt	(1,475		)	(5,881		)
Total long-term debt	$	114,926		$	264,855

⁽¹⁾ The face value of Digonex non-recourse debt is $6.2 million

2012 Credit Agreement

On December 28, 2012, Emmis Operating Company (“EOC”), a wholly owned subsidiary of Emmis, entered into a credit facility (the “2012 Credit Agreement”) to provide for total borrowings of up to $100 million, including (i) an $80 million term loan and (ii) a $20 million revolver, of which $5 million may be used for letters of credit. On June 10, 2014, Emmis entered into the 2014 Credit Agreement. In connection with the execution of the 2014 Credit Agreement, the 2012 Credit Agreement was terminated effective June 10, 2014, and all amounts outstanding under that agreement were paid in full. During the three months ended August 31, 2014, the Company recorded a loss on debt extinguishment of $1.5 million related to the termination of the 2012 Credit Agreement.

2014 Credit Agreement

On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, EOC, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”), the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent.

The 2014 Credit Agreement includes a senior secured term loan facility (the “Term Loan”) of $185.0 million and a senior secured revolving credit facility of $20.0 million, and contains provisions for an uncommitted increase of up to $20.0 million principal amount (plus additional amounts so long as a pro forma total net senior secured leverage ratio condition is met) of the revolving credit facility and/or the Term Loan subject to the satisfaction of certain conditions. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. Pursuant to the 2014 Credit Agreement, the Borrower borrowed $185.0 million of the Term Loan on June 10, 2014; $109.0 million was disbursed to the Borrower (the “Initial Proceeds”) and the remaining $76.0 million was funded into escrow (the “Subsequent Acquisition Proceeds”).

The Initial Proceeds, coupled with $13.0 million of revolving credit facility borrowings, were used by the Borrower on June 10, 2014 to repay all amounts outstanding under the 2012 Credit Agreement, to make a $55.0 million initial payment associated with our acquisition of WBLS-FM and WLIB-AM, and to pay fees and expenses. The Subsequent Acquisition Proceeds are expected to be used to make the final $76.0 million payment related to the acquisition of WBLS-FM and WLIB-AM. If the Subsequent Acquisition Proceeds are not fully used by February 17, 2015, they will be used to repay the Term Loan.

The Term Loan is due not later than June 10, 2021 and amortizes in an amount equal to 1% per annum of the total principal amount outstanding, payable in quarterly installments commencing March 31, 2015, with the balance payable on the maturity date. The revolving credit facility expires not later than June 10, 2019. An unused commitment fee of 50 basis points per annum will be payable quarterly on the average unused amount of the revolving credit facility. The Term Loan and amounts borrowed under the revolving credit facility bear interest, at the Borrower’s option, at either (i) the Alternate Base Rate (as defined in the 2014 Credit Agreement) (but not less than 2.00%) plus 3.75% or (ii) the Adjusted LIBO Rate (as defined in the 2014 Credit Agreement) (but not less than 1.00%) plus 4.75%.

Approximately$1.0 million of transaction fees related to the 2014 Credit Agreement were capitalized and are being amortized over the life of the 2014 Credit Agreement. These deferred debt costs are included in other assets, net in the condensed consolidated balance sheets. The 2014 Credit Agreement is carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $6.1 million as of the issuance of the debt on June 10, 2014 and $5.9 million as of August 31, 2014, is being amortized as additional interest expense over the life of the 2014 Credit Agreement.

The obligations under the 2014 Credit Agreement are secured by a perfected first priority security interest in substantially all of the assets of the Company, the Borrower and the Subsidiary Guarantors.

We were in compliance with all financial and non-financial covenants as of August 31, 2014. Our Total Leverage Ratio and Interest Coverage Ratio (each as defined in the 2014 Credit Agreement) requirements and actual amounts as of August 31, 2014 were as follows:

	As of August 31, 2014
	Covenant Requirement	Actual Results
Maximum Total Leverage Ratio	5.25 : 1.00	4.20 : 1.00
Minimum Interest Coverage Ratio	2.00 : 1.00	2.61 : 1.00

98.7FM Non-recourse Debt

On May 30, 2012, the Company, through wholly-owned, newly-created subsidiaries, issued $82.2 million of non-recourse notes. Teachers Insurance and Annuity Association of America, through a participation agreement with Wells Fargo Bank Northwest, National Association, is entitled to receive payments made on the notes. The notes are obligations only of the newly-created subsidiaries, are non-recourse to the rest of the Company and its subsidiaries, and are secured by the assets of the newly-created subsidiaries, including the payments made to the newly-created subsidiary related to the 98.7FM LMA, which are guaranteed by Disney Enterprises, Inc. The notes bear interest at 4.1%.

Digonex Non-recourse Debt

Digonex non-recourse notes payable consist of notes payable issued by Digonex, which were recorded at fair value on June 16, 2014, the date that Emmis acquired a controlling interest in Digonex (see Note 2). The notes payable, some of which are secured by the assets of Digonex, are non-recourse to the rest of the Company and its subsidiaries. The notes payable mature on December 31, 2017 and accrue interest at 5.0% per annum. Interest is due at maturity. The face value of the notes payable is $6.2 million. The company is accreting the difference between this face value and the $4.2 million fair value of the notes payable recorded in the acquisition of its controlling interest of the business as interest expense over the remaining term of the notes payable.

Based on amounts outstanding at August 31, 2014, mandatory principal payments of long-term debt for the next five

years and thereafter are summarized below:

Year Ended	2014 Credit Agreement						Digonex		Total
February 28 (29),	Revolver		Term Loan		98.7FM Debt		Notes payable		Payments
2015	$	—	$	—	$	2,321	$	—	$	2,321
2016	—		1,850		4,990		—		6,840
2017	—		1,850		5,453		6,199		13,502
2018	—		1,850		6,039		—		7,889
2019	14,500		1,850		6,587		—		22,937
Thereafter	—		177,600		47,332		—		224,932
Total	$	14,500	$	185,000	$	72,722	$	6,199	$	278,421

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Liquidity

6 Months Ended

Aug. 31, 2014

Debt Disclosure [Abstract]

Liquidity

Liquidity

The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. As of the filing of this Form 10-Q, management believes the Company can meet its liquidity needs through the end of fiscal year 2015 with cash and cash equivalents on hand and projected cash flows from operations. Based on these projections, management also believes the Company will be in compliance with its debt covenants through the end of fiscal year 2015.

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Fair Value Measurements

6 Months Ended

Aug. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2014 and August 31, 2014. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

	As of August 31, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
	As of February 28, 2014
	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(in 000's)
Available for sale securities	$	—	$	—	$	6,750	$	6,750
Total assets measured at fair value on a recurring basis	$	—	$	—	$	6,750	$	6,750
Share-based compensation arrangement	$	714	$	—	$	—	$	714
Interest rate swap agreement	—		94		—		94
Total liabilities measured at fair value on a recurring basis	$	714	$	94	$	—	$	808

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. The carrying value of our preferred stock investments is determined by using implied valuations of recent rounds of financing and by other corroborating evidence, including the application of various valuation methodologies including option-pricing and discounted cash flow based models. Our available for sale securities are included in other noncurrent assets in the accompanying condensed consolidated balance sheets.

Share-based compensation arrangement — Emmis’ 2012 Retention Plan and Trust discussed in Note 3 was recorded at fair value on a recurring basis. As the fair value of the 2012 Retention Plant and Trust was tied to quoted prices of Emmis stock, it was considered a level 1 measurement. The share-based compensation arrangement was settled during the three months ended May 31, 2014.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company paid a fixed rate and received a variable interest rate that was observable based upon a forward interest rate curve and was therefore considered a level 2 measurement. The interest rate swap agreement was settled during the three months ended August 31, 2014.

The following table shows a reconciliation of the beginning and ending balances for fair value measurements using significant unobservable inputs:

	For the Six Months Ended August 31,
	2013		2014
	Available For Sale Securities		Available For Sale Securities
Beginning Balance	$	6,500	$	6,750
Purchases	250		—
Ending Balance	$	6,750	$	6,750

Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 4, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 3 for more discussion).

Fair Value of Other Financial Instruments

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. Refer to Note 2 for the fair values of assets acquired and liabilities assumed in connection with the Company's acquisitions.

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents: The carrying amount of these assets approximates fair value because of the short maturity of these instruments.

- Contract settlement receivable: As discussed in Note 2, the Company settled a contract with YMF in June 2014. As of August 31, 2014, YMF owes Emmis $2.0 million, which is reflected in other current assets in the accompanying condensed consolidated balance sheets. Emmis expects to fully collect the receivable prior to February 28, 2015 and believes that the carrying amount of the receivable approximates its fair value given the short duration of the instrument and is considered a level 3 measurement.

- 2014 Credit Agreement debt: As of August 31, 2014, the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $200.7 million and $199.5 million, respectively. The Company's estimate of fair value was based on quoted prices of this instrument and is considered a Level 2 measurement.

- Other long-term debt: The Company’s 98.7FM non-recourse debt and Digonex non-recourse debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its other long-term debt approximates its fair value.

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Summary of Significant Accounting Policies Local Programming and Marketing Agreement Fees (Parenthetical) (Details) (USD $)	0 Months Ended	3 Months Ended		6 Months Ended
	Feb. 11, 2014 Station	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013
Principal Transaction Revenue [Line Items]
Number Of Stations To Be Purchased	2
LMA fee expense		$ 383,000	$ 0	$ 4,208,000	$ 0
YMF
Principal Transaction Revenue [Line Items]
LMA monthly expense	1,275,000
LMA monthly expense future reduction	$ 740,000

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Long-term Debt - Schedule of Long-term Debt Instruments (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014	Aug. 31, 2014 98.7FM Non-recourse debt	Feb. 28, 2014 98.7FM Non-recourse debt	Aug. 31, 2014 Digonex Non-recourse debt	Jun. 16, 2014 Digonex Non-recourse debt	Feb. 28, 2014 Digonex Non-recourse debt	Aug. 31, 2014 Two Thousand Twelve Credit Agreement	Feb. 28, 2014 Two Thousand Twelve Credit Agreement	Aug. 31, 2014 Two Thousand Fourteen Credit Agreement	Jun. 10, 2014 Two Thousand Fourteen Credit Agreement	Feb. 28, 2014 Two Thousand Fourteen Credit Agreement	Aug. 31, 2014 Revolver Two Thousand Twelve Credit Agreement	Feb. 28, 2014 Revolver Two Thousand Twelve Credit Agreement	Aug. 31, 2014 Revolver Two Thousand Fourteen Credit Agreement	Feb. 28, 2014 Revolver Two Thousand Fourteen Credit Agreement	Aug. 31, 2014 Term Loan Two Thousand Twelve Credit Agreement	Feb. 28, 2014 Term Loan Two Thousand Twelve Credit Agreement	Aug. 31, 2014 Term Loan Two Thousand Fourteen Credit Agreement	Feb. 28, 2014 Term Loan Two Thousand Fourteen Credit Agreement
Debt Instrument
Total Credit Agreement debt	$ 199,500							$ 0	$ 54,000	$ 199,500		$ 0	$ 0	$ 0	$ 14,500	$ 0	$ 0	$ 54,000	$ 185,000	$ 0
Non-recourse debt			72,722	74,942	4,201	4,200	0
Less: Current maturities	5,687	12,541
Less: Unamortized original issue discount of Credit Agreement debt	5,881	1,475								5,900	6,100
Total long-term debt	$ 264,855	$ 114,926

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Calculation of Basic and Diluted Net (loss) Income Per Share from Continuing Operations

The following table sets forth the calculation of basic and diluted net income per share:

	Three Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders from continuing operations	$	2,647		41,451	$	0.06	$	2,760	42,525	$	0.06
Impact of equity awards	—			3,217			—		2,753
Impact of conversion of preferred stock into common stock	(76		)	2,269			—		2,266
Diluted net income per common share:
Net income available to common shareholders from continuing operations	$	2,571		46,937	$	0.05	$	2,760	47,544	$	0.06

	Six Months Ended
	August 31, 2013						August 31, 2014
	Net Income			Shares	Net Income Per Share		Net Income		Shares	Net Income Per Share
	(amounts in 000’s, except per share data)
Basic net income per common share:
Net income available to common shareholders	$	6,372		41,313	$	0.15	$	3,716	42,337	$	0.09
Impact of equity awards	—			2,770	—		—		2,876	—
Impact of conversion of preferred stock into common stock	(325		)	2,278	—		—		2,266	—
Diluted net income per common share:
Net income available to common shareholders	$	6,047		46,361	$	0.13	$	3,716	47,479	$	0.08

Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock would be Antidilutive

Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:

	Three Months Ended August 31,		Six Months Ended August 31,
	2013	2014	2013	2014
	(shares in 000’s )
Equity awards	1,929	1,730	1,980	1,385
Antidilutive common share equivalents	1,929	1,730	1,980	1,385

Schedule Of Operating Results From Local Programming and Marketing Agreements

The following table summarizes certain operating results of 98.7FM for all periods presented. 98.7FM is a part of our radio segment.

	For the three months ended August 31,				For the six months ended August 31,
	2013		2014		2013		2014
	(amounts in 000's)
Net revenues	$	2,583	$	2,583	$	5,166	$	5,166
Station operating expenses, excluding depreciation and amortization expense	251		260		507		484
Interest expense	861		815		1,731		1,643

Schedule Of Assets And Liabilities Of Local Programming and Marketing Agreements

Assets and liabilities of 98.7FM as of February 28, 2014 and August 31, 2014 were as follows:

	As of February 28,		As of August 31,
	2014		2014
	(amounts in 000's)
Current assets:
Restricted cash	$	1,407	$	1,326
Prepaid expenses	614		630
Total current assets	2,021		1,956
Noncurrent assets:
Indefinite lived intangibles	60,525		60,525
Deferred debt issuance costs, net	2,759		2,626
Deposits and other	3,082		3,781
Total noncurrent assets	66,366		66,932
Total assets	$	68,387	$	68,888
Current liabilities:
Accounts payable and accrued expenses	$	56	$	26
Current maturities of long-term debt	4,541		4,762
Deferred revenue	728		753
Other current liabilities	256		248
Total current liabilities	5,581		5,789
Noncurrent liabilities:
Long-term debt, net of current portion	70,401		67,960
Other noncurrent liabilities	24		27
Total noncurrent liabilities	70,425		67,987
Total liabilities	$	76,006	$	73,776

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Long-term Debt (Tables)

6 Months Ended

Aug. 31, 2014

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt was comprised of the following at February 28, 2014 and August 31, 2014:

	February 28, 2014			August 31, 2014
2012 Credit Agreement debt :
Revolver	$	—		$	—
Term Loan	54,000			—
Total 2012 Credit Agreement debt	54,000			—
2014 Credit Agreement debt :
Revolver	—			14,500
Term Loan	—			185,000
Total 2014 Credit Agreement debt	—			199,500
98.7FM non-recourse debt	74,942			72,722
Digonex non-recourse debt (1)	—			4,201
Less: Current maturities	(12,541		)	(5,687		)
Less: Unamortized original issue discount of Credit Agreement debt	(1,475		)	(5,881		)
Total long-term debt	$	114,926		$	264,855

Schedule Of Maximum Leverage Ratio

Our Total Leverage Ratio and Interest Coverage Ratio (each as defined in the 2014 Credit Agreement) requirements and actual amounts as of August 31, 2014 were as follows:

	As of August 31, 2014
	Covenant Requirement	Actual Results
Maximum Total Leverage Ratio	5.25 : 1.00	4.20 : 1.00
Minimum Interest Coverage Ratio	2.00 : 1.00	2.61 : 1.00

Schedule of Maturities of Long-term Debt

Based on amounts outstanding at August 31, 2014, mandatory principal payments of long-term debt for the next five

years and thereafter are summarized below:

Year Ended	2014 Credit Agreement						Digonex		Total
February 28 (29),	Revolver		Term Loan		98.7FM Debt		Notes payable		Payments
2015	$	—	$	—	$	2,321	$	—	$	2,321
2016	—		1,850		4,990		—		6,840
2017	—		1,850		5,453		6,199		13,502
2018	—		1,850		6,039		—		7,889
2019	14,500		1,850		6,587		—		22,937
Thereafter	—		177,600		47,332		—		224,932
Total	$	14,500	$	185,000	$	72,722	$	6,199	$	278,421

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Intangible Assets and Goodwill Expected Amortization of Finite-lived Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014
Expected Amortization of Finite-lived Intangible Assets [Abstract]
2015	$ 920
2016	1,514
2017	1,514
2018	1,255
2019	$ 1,076

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Share Based Payments - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		0 Months Ended	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014	Aug. 31, 2013	Apr. 02, 2012 2012 Retention Plan	Aug. 31, 2014 2012 Retention Plan	Aug. 31, 2013 2012 Retention Plan	Aug. 31, 2014 Minimum	Aug. 31, 2013 Minimum	Aug. 31, 2014 Maximum	Aug. 31, 2013 Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from Stock Options Exercised			$ 300,000	$ 100,000
Employee Service Share-based Compensation, Tax Benefit Realized from Exercise of Stock Options			100,000	0.00
Risk-Free Interest Rate:								1.20%	0.60%	1.50%	1.30%
Stock options granted, term			10 years
Stock options vesting period			3 years
Annual percentage over three years			33.33%
Stock options weighted average grant date fair value			$ 1.64	$ 1.36
Shares available for future grants	3,200,000		3,200,000
Vesting dates of outstanding options								2014-11		2018-03
Expiration dates of options								2015-03		2024-07
Restricted stock awards requisite service period			3 years		2 years
Grant date fair value of shares vested			3,600,000	400,000
Preferred stock contributed by company					400,000
Compensation expenses	583,000	2,419,000	1,531,000	3,082,000		400,000	1,500,000
Unrecognized compensation cost	$ 2,800,000		$ 2,800,000
Compensation cost of weighted average period			1 year 9 months 0 days

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2014	Feb. 28, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 6,398	$ 5,304
Restricted cash	77,903	2,239
Accounts receivable, net	40,328	31,000
Prepaid expenses	8,946	8,582
Other current assets	9,439	6,887
Total current assets	143,014	54,012
PROPERTY AND EQUIPMENT, NET	35,167	32,231
INTANGIBLE ASSETS (Note 3):
Indefinite-lived intangibles	219,577	150,558
Goodwill	74,337	12,639
Other intangibles, net	8,950	262
Total intangible assets	302,864	163,459
OTHER ASSETS, NET	17,100	15,646
Total assets	498,145	265,348
CURRENT LIABILITIES:
Accounts payable and accrued expenses	8,476	8,958
Less: Current maturities	5,687	12,541
Accrued salaries and commissions	6,976	8,552
Deferred revenue	11,525	11,506
Present value of second closing and LMA related liabilities	79,525	0
Other current liabilities	6,719	7,693
Total current liabilities	118,908	49,250
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 4)	264,855	114,926
OTHER NONCURRENT LIABILITIES	7,792	8,021
DEFERRED INCOME TAXES	14,271	9,783
Total liabilities	405,826	181,980
COMMITMENTS AND CONTINGENCIES
EQUITY:
Additional paid-in capital	584,088	580,776
Accumulated deficit	(541,639)	(545,355)
Accumulated other comprehensive loss	0	(99)
Total shareholders' deficit	42,891	35,750
NONCONTROLLING INTERESTS	49,428	47,618
Total equity	92,319	83,368
Total liabilities and equity	498,145	265,348
Class A common stock, $.01 par value; authorized 170,000,000 shares; issued and outstanding 37,267,123 shares at February 28, 2014 and 38,678,464 shares at August 31, 2014
EQUITY:
Common Stock	387	373
Class B common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding 4,569,464 shares at February 28, 2014 and August 31, 2014
EQUITY:
Common Stock	46	46
Series A preferred stock
EQUITY:
Series A non-cumulative convertible preferred stock, $.01 par value; $50.00 liquidation preference per share, aggregate liquidation preference and redemption amount of $46,450 at February 28, 2014 and August 31, 2014, respectively; authorized 2,875,000 shares; issued and outstanding 1,328,991 shares at February 28, 2014, which includes 400,000 shares in trust, and 928,991 shares at August 31, 2014	$ 9	$ 9

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Business Combinations

6 Months Ended

Aug. 31, 2014

Business Combinations [Abstract]

Business Combination Disclosure

Business Combinations

WBLS-FM & WLIB-AM

On February 11, 2014, subsidiaries of Emmis entered into a Purchase and Sale Agreement with YMF, pursuant to which Emmis agreed to purchase the assets of New York radio stations WBLS-FM and WLIB-AM (collectively, the "Stations") for $131.0 million, subject to customary adjustments and prorations. The purchase of the Stations enhances the Company's scale in New York, the second largest market in the United States as measured by total radio revenues. Additionally, the Stations' adult urban and urban gospel formats complement the hip-hop format of our existing station in New York.

Upon approval of the transaction by the Federal Communications Commission, Emmis and YMF executed the first closing of the transaction on June 10, 2014, whereby YMF transferred the assets of the Stations to Emmis and Emmis paid YMF $55.0 million of cash and transferred to YMF Media New York a 49.9% ownership interest in the Emmis subsidiaries that own the Stations' assets. A second closing is scheduled to occur on or about February 15, 2015 and will involve the payment of the balance of the purchase price of $76.0 million to YMF in exchange for the transfer to Emmis of YMF Media New York's interest in the Emmis subsidiaries that own the Stations' assets.

On February 11, 2014, Emmis and YMF entered into an LMA for the Stations. On March 1, 2014, Emmis began providing programming and selling advertising for the Stations. Under the terms of the LMA, Emmis paid $1.275 million per month 75 days in arrears to YMF for the right to program the station and sell advertising. The monthly LMA fee decreased to approximately $0.74 million after the first closing of the purchase of the Stations on June 10, 2014. The ongoing, reduced monthly LMA fees were recognized as additional purchase price of the Stations on June 10, 2014.

Emmis gained control over the Stations effective with the first closing on June 10, 2014 and consolidated the Stations beginning on that date. YMF is entitled to the remaining purchase price of $76.0 million at the second closing and the $0.74 million monthly LMA fees until the second closing, but does not otherwise share in the income or loss of the Stations subsequent to the first closing.

On June 10, 2014, Emmis entered into a Credit Agreement, by and among the Company, Emmis Operating Company, a wholly owned subsidiary of the Company, the lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and Fifth Third Bank, as syndication agent (the "2014 Credit Agreement"). The 2014 Credit Agreement includes a senior secured term loan facility of $185.0 million and a senior secured revolving credit facility of $20.0 million. Pursuant to the 2014 Credit Agreement, the Company borrowed $185.0 million of the senior secured term loans on June 10, 2014; $109.0 million was disbursed to the Company and the remaining $76.0 million was funded into escrow. The proceeds from the term loan and additional funding from the revolving credit facility were used to fund the first closing of the acquisition described above, settle amounts due under the Company's former credit facility, and pay fees related to the issuance of the Credit Agreement. The $76.0 million of funds in escrow will be used to fund the second closing of the acquisition in February 2015. See Note 5 for more discussion of the 2014 Credit Agreement.

The following table summarizes the preliminary estimates of fair values of the identifiable assets acquired and liabilities assumed in the acquisition of the Stations as of June 10, 2014. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may result in adjustments to the preliminary values presented below.

Other current assets	$	37
Property and equipment	4,054
Indefinite-lived intangibles	69,019
Goodwill	58,945
Other intangibles	2,469
Other current liabilities	(512		)
Total purchase price, including assumed liabilities	$	134,012
Cash paid at first closing on June 10, 2014	$	55,000
Present value of second closing and LMA related liabilities	79,012
Total purchase price	$	134,012

Goodwill is calculated as the excess of the purchase price over the net assets acquired. Management attributes the goodwill recognized in the acquisition of the Stations to the power of the existing WBLS-FM and WLIB-AM brands in the New York marketplace as well as the synergies and growth opportunities expected through the combination of the adult urban and urban gospel stations with the Company's existing hip-hop station. The $58.9 million of goodwill recognized in the transaction is included in our radio segment and is deductible for tax purposes.

The indefinite-lived intangible assets are comprised entirely of the Stations' FCC licenses. FCC broadcasting licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, all of our FCC broadcasting licenses have been renewed at or after the end of their respective periods, and we expect that these FCC broadcasting licenses will continue to be renewed in the future. Our indefinite-lived intangibles are not amortized.

Other intangibles consist of a customer list intangible asset of $0.3 million and a syndicated programming intangible asset of $2.2 million. The customer list intangible asset is being amortized over 3 years and the syndicated programming intangible asset is being amortized over 7 years, which is the remaining term of the programming agreement, including renewals which are at the option of the Company.

The results of operations of the Stations are largely included in the Company's results of operations for the six-month period ended August 31, 2014 as the Company began providing programming and selling advertising of the Stations on March 1, 2014 pursuant to an LMA. Net revenues and station operating expenses, excluding LMA fees and depreciation and amortization expense, of the Stations were $13.6 million and $7.1 million for the period March 1, 2014 through August 31, 2014. LMA fees were $4.2 million for the same period.

We incurred acquisition costs related to the Stations totaling $0.3 million and $0.6 million for the three months and six months ended August 31, 2014, respectively. Acquisition costs included in station operating expenses, excluding LMA fees and depreciation and amortization expense, in the accompanying condensed consolidated statements of operations were $0.3 million and $0.4 million for the three months and six months ended August 31, 2014, respectively. Acquisition costs included in corporate expenses, excluding depreciation and amortization expense, in the accompanying condensed consolidated statements of operations were less than $0.1 million and $0.2 million for the three months and six months ended August 31, 2014, respectively. Including acquisition costs incurred during the year ended February 28, 2014 of $0.9 million, cumulative acquisition costs related to the Stations were $1.5 million.

In connection with the first closing, Emmis and YMF executed an amendment to their Asset Purchase Agreement dated April 5, 2012 relating to Emmis' sale of the intellectual property of WRKS-FM. The amendment, executed on June 10, 2014, fixed all future earn-out payments YMF owed to Emmis pursuant to the April 5, 2012 Asset Purchase Agreement based upon the parties' estimate of the earn-out payments that would otherwise be owed to Emmis under this pre-existing contractual relationship. Emmis recognized a gain on settlement of the contract of $2.5 million, which is included in gain on contract settlement in the accompanying condensed consolidated statements of operations. During the three months ended August 31, 2014, Emmis collected $0.5 million of the fixed earn-out payments from YMF. The remaining $2.0 million due from YMF is reflected in other current assets in the accompanying condensed consolidated balance sheets and is to be paid by YMF during the current fiscal year.

The following table presents unaudited pro forma consolidated financial information as if the closing of our acquisition of the Stations had occurred on March 1, 2013 (in thousands, except per share data):

	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2014		2013		2014
	(in 000’s, except per share data)
Net revenues	$	62,912	$	61,824	$	120,703	$	121,548
Net income attributable to common shareholders	$	4,089	$	2,615	$	8,992	$	4,974
Net income per common share attributable to common shareholders:
Basic	$	0.10	$	0.06	$	0.22	$	0.12
Diluted	$	0.09	$	0.06	$	0.19	$	0.10

As mentioned above and in Note 1, Emmis commenced an LMA on both WBLS-FM and WLIB-AM beginning on March 1, 2014. As Emmis programmed the stations and sold the related advertising, the majority of the results of operations for the two stations are included in Emmis' historical results for these 2014 periods. Certain adjustments were made for the three-month and six-month periods ended August 31, 2014 to reflect the elimination of the LMA fee and other purchase accounting adjustments. The pro forma financial information for the three-month and six-month periods ended August 31, 2013 has been prepared by combining our historical results and the historical results of WBLS-FM and WLIB-AM and further reflects the effect of purchase accounting adjustments. This pro forma information is not necessarily indicative of the results of operations that actually would have resulted had the acquisition of the two radio stations occurred on March 1, 2013, or that may result in the future.

Acquisition of a controlling interest in Digonex Technologies, Inc.

On June 16, 2014, Emmis invested $3.0 million in Digonex Technologies, Inc ("Digonex"), an Indiana corporation that provides dynamic pricing solutions to customers in various industries. Emmis believes that its acquisition of Digonex gives it entry into the growing dynamic pricing marketplace which can serve a diverse clientèle, and can possibly help Emmis with yields on its own advertising inventory and special events. Emmis’ initial investment of $3.0 million ($1.0 million in Digonex Preferred Stock and $2.0 million in the form of convertible debt) resulted in Emmis appointing a majority of the board of directors of Digonex and holding rights convertible into 51% of the fully diluted common equity of Digonex. In August 2014, subsequent to the consolidation of Digonex, Emmis contributed an additional $2.0 million to Digonex in the form of convertible debt, which resulted in Emmis owning rights that are convertible into at least 66% of the common equity of Digonex. As Emmis controlled the board of directors of Digonex as of its initial investment on June 16, 2014, Emmis began consolidating the results of Digonex as of that date.

Digonex reports on a calendar year ending December 31, which Emmis consolidates into its fiscal year ending February 28(29). Results of operations of Digonex for the period June 16, 2014 to June 30, 2014, which Emmis consolidates into its results of operations for the period ended August 31, 2014 were insignificant.

The following table summarizes the preliminary estimates of fair values of the identifiable assets acquired and liabilities assumed in the acquisition of Digonex as of June 16, 2014. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions until management's appraisals and estimates are finalized, which may result in adjustments to the preliminary values presented below.

Cash	$	456
Other current and noncurrent assets	10
Goodwill	2,752
Other intangibles	6,180
Accounts payable and accrued expenses	(462		)
Other current liabilities and noncurrent liabilities	(550		)
Long-term debt	(4,189		)
Noncontrolling interests	(1,197		)
Total purchase price, including assumed liabilities	3,000
Less: Cash acquired	(456		)
Total purchase price, net of cash acquired	$	2,544

The goodwill recognized in the acquisition of Digonex is attributable to the assembled workforce and existing business processes. The $2.8 million of goodwill recognized in the transaction is included in our corporate and emerging technologies segment and is not deductible for tax purposes.

Other intangibles consist of patents of $5.2 million, a customer list intangible asset of $0.7 million and trademarks of $0.3 million. The patents are being amortized over 7 years, the customer list intangible asset is being amortized over 3 years and the trademarks are being amortized over 15 years.

XML

Fair Value Measurements Reconciliation of Beginning and Ending Balances for Fair Value Measurements using Significant Unobservable Inputs (Detail) (Available For Sale Securities, USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Nov. 30, 2012	Feb. 29, 2012
Available For Sale Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 6,750		$ 6,750	$ 6,500
Purchases	0	250
Ending Balance	$ 6,750		$ 6,750	$ 6,500

XML

Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Aug. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instrument

For the six months ended August 31, 2014, this credit adjustment was immaterial.

	Tabular Disclosure of Fair Values of Derivative Instruments Liability Derivatives
	As of February 28, 2014			As of August 31, 2014
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in 000's)
Derivatives designated as hedging instruments:
Interest Rate Swap Agreement	Other Current Liabilities	94		Other Current Liabilities	—
Total derivatives designated as hedging instruments		$	94		$	—

Derivative Financial Instrument Effect on Consolidated Statement of Operations

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three and six months ended August 31, 2013 and 2014 (in 000's).

	For the Three Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap
Agreement	$	(19	)	$	(72	)	Interest expense	$	(23	)	$	(25	)	N/A	$	—	$	—
Total	$	(19	)	$	(72	)		$	(23	)	$	(25	)		$	—	$	—
	For the Six Months Ended August 31,
Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013			2014				2013			2014				2013		2014
Interest Rate Swap Agreement	$	3		$	(15	)	Interest expense	$	(45	)	$	(27	)	N/A	$	—	$	—
Total	$	3		$	(15	)		$	(45	)	$	(27	)		$	—	$	—

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Business Combinations - Schedule of Recognized Assets Acquired and Liabilities Assumed (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended			0 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Feb. 28, 2014	Jun. 16, 2014 Digonex	Jun. 10, 2014 WBLS-FM and WLIB-AM
Business Acquisition
Cash				$ 456
Other current assets					37
Property and equipment					4,054
Indefinite-lived intangibles					69,019
Goodwill expected to be tax deductible					58,945
Goodwill	74,337		12,639	2,752
Other intangibles				6,180	2,469
Other current liabilities				(550)	(512)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets				3,000	134,012
Cash paid at first closing on June 10, 2014					55,000
Present value of second closing and LMA related liabilities	79,525		0		79,012
Prepaid Expense				10
Accounts payable and accrued expenses				(462)
Long-term debt				(4,189)
Noncontrolling interests				(1,197)
Less: Cash acquired				(456)
Total purchase price, net of cash acquired	$ 57,544	$ 0		$ 2,544

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Preparation of Interim Financial Statements

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), the condensed consolidated interim financial statements included herein have been prepared, without audit, by Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “our,” “us,” “we,” “Emmis” or the “Company”). As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, Emmis believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report for Emmis filed on Form 10-K for the year ended February 28, 2014. 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, except as otherwise noted) necessary to present fairly the consolidated financial position of Emmis at August 31, 2014, and the results of its operations for the three-month and six-month periods ended August 31, 2013 and 2014, and cash flows for the six-month periods ended August 31, 2013 and 2014.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2014 that have had a material impact on our condensed consolidated financial statements and related notes.

Basic and Diluted Net (Loss) Income Per Common Share

Basic and Diluted Net Income Per Common Share

Basic net income per common share is computed by dividing net income attributable 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, 2013 and 2014 consisted of stock options, restricted stock awards and the 6.25% Series A convertible preferred stock (the “Preferred Stock”).

Local Programming and Marketing Agreement Fees

Local Programming and Marketing Agreement Fees

The Company from time to time enters into local programming and marketing agreements (“LMAs”) in connection with acquisitions or dispositions of radio stations, typically pending regulatory approval of transfer of the Federal Communications Commission ("FCC") licenses. Under the terms of these agreements, the acquiring company makes specified periodic payments to the holder of the FCC license in exchange for the right to program and sell advertising for a specified portion of the station’s inventory of broadcast time. The acquiring company records revenues and expenses associated with the portion of the station’s inventory of broadcast time it manages. Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

On February 11, 2014, the Company entered into an LMA in connection with its agreement to purchase WBLS-FM and WLIB-AM in New York City from YMF Media New York LLC and YMF Media New York License LLC (collectively, "YMF"). The LMA, which commenced on March 1, 2014, gave Emmis the right to program and sell advertising for the two New York stations. Emmis paid YMF $1.3 million per month and reimbursed YMF for certain monthly expenses through the first closing of the acquisition, which occurred on June 10, 2014. After the first closing, the LMA continues in effect until the second closing at a reduced monthly fee of approximately $0.7 million. During the three-month and six-month periods ended ended August 31, 2014, Emmis recorded $0.4 million and $4.2 million of LMA fee expense. See Note 2 for more discussion of the Company's purchase of WBLS-FM and WLIB-AM from YMF.

On April 26, 2012, Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc. for 98.7FM in New York (formerly WRKS-FM and now WEPN-FM, hereinafter referred to as “98.7FM”). The LMA for this station started on April 30, 2012 and will continue until August 31, 2024. Emmis retains ownership and control of the Station, including the related FCC license during the term of the LMA and is scheduled to receive an annual fee until the LMA’s termination. LMA fee revenue is recorded on a straight-line basis over the term of the LMA

Restricted Cash

Restricted Cash

The Company's restricted cash, included in current assets in the accompanying condensed consolidated balance sheets, totaled $2.2 million and $77.9 million as of February 28, 2014 and August 31, 2014, respectively.

As further discussed in Note 2, $76.0 million of the proceeds of the 2014 Credit Agreement will be used to fund the second closing of the Company's purchase of WBLS-FM and WLIB-AM. Because of the designated use for this cash, management has classified the $76.0 million as restricted as of August 31, 2014. If the second closing of the transaction does not occur on or before February 17, 2015, the $76.0 million will be used to repay 2014 Credit Agreement term loans.

The terms of our non-recourse notes and related agreements discussed in Note 5 restrict a portion of our cash on deposit for specific operating and financing purposes. Restricted cash related to the non-recourse notes and related agreements totaled $1.4 million and $1.3 million as of February 28, 2014 and August 31, 2014, respectively.

In connection with the Company's agreement with Sprint/United Management Company (“Sprint”), the Company collects cash from other participating companies in the radio industry and remits cash collected to Sprint. The entirety of cash collected but not yet remitted to Sprint classified as restricted cash as of February 28, 2014 and August 31, 2014 was $0.8 million and $0.6 million, respectively.

Valuation of Indefinite-lived Broadcasting Licenses

Valuation of Indefinite-lived Broadcasting Licenses

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, 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 as discussed below.

The carrying amounts of the Company’s FCC licenses were $150.6 million and $219.6 million as of February 28, 2014 and August 31, 2014, respectively. The increase in FCC licenses is attributable to the purchase of WBLS-FM and WLIB-AM as further discussed in Note 2. Pursuant to Emmis’ accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA by another broadcaster. The Company generally performs its annual impairment test of indefinite-lived intangibles as of December 1 of each year. When indicators of impairment are present, the Company will perform an interim impairment test. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. These impairment tests may result in impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market 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 commenced operations at the beginning of the valuation period. 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. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

Valuation of Goodwill

Valuation of Goodwill

ASC Topic 350-20-35 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, unless indications of impairment exist during an interim period. During the quarter ended August 31, 2014, no new or additional impairment indicators emerged; hence, no interim impairment testing was warranted. 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. 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 has been based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and recent market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

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.

Definite-lived intangibles

Definite-lived intangibles

The Company’s definite-lived intangible assets consist of patents, customer lists, trademarks and a syndicated programming contract, 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.

Fair Value Measurements and Disclosure

Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 4, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 3 for more discussion).

Fair Value of Other Financial Instruments

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. Refer to Note 2 for the fair values of assets acquired and liabilities assumed in connection with the Company's acquisitions.

The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. The use of different market assumptions may have a material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of financial instruments:

- Cash and cash equivalents: The carrying amount of these assets approximates fair value because of the short maturity of these instruments.

- Contract settlement receivable: As discussed in Note 2, the Company settled a contract with YMF in June 2014. As of August 31, 2014, YMF owes Emmis $2.0 million, which is reflected in other current assets in the accompanying condensed consolidated balance sheets. Emmis expects to fully collect the receivable prior to February 28, 2015 and believes that the carrying amount of the receivable approximates its fair value given the short duration of the instrument and is considered a level 3 measurement.

- 2014 Credit Agreement debt: As of August 31, 2014, the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $200.7 million and $199.5 million, respectively. The Company's estimate of fair value was based on quoted prices of this instrument and is considered a Level 2 measurement.

- Other long-term debt: The Company’s 98.7FM non-recourse debt and Digonex non-recourse debt is not actively traded and is considered a level 3 measurement. The Company believes the current carrying value of its other long-term debt approximates its fair value.

Available for sale securities — Emmis’ available for sale securities are investments in preferred stock of companies that are not traded in active markets. The investments are recorded at fair value, which is generally estimated using significant unobservable market parameters, resulting in a level 3 categorization. The carrying value of our preferred stock investments is determined by using implied valuations of recent rounds of financing and by other corroborating evidence, including the application of various valuation methodologies including option-pricing and discounted cash flow based models. Our available for sale securities are included in other noncurrent assets in the accompanying condensed consolidated balance sheets.

Share-based compensation arrangement — Emmis’ 2012 Retention Plan and Trust discussed in Note 3 was recorded at fair value on a recurring basis. As the fair value of the 2012 Retention Plant and Trust was tied to quoted prices of Emmis stock, it was considered a level 1 measurement. The share-based compensation arrangement was settled during the three months ended May 31, 2014.

Interest rate swap agreement — Emmis’ derivative financial instruments consisted solely of an interest rate cash flow hedge in which the Company paid a fixed rate and received a variable interest rate that was observable based upon a forward interest rate curve and was therefore considered a level 2 measurement.

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Recurring Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2014 and August 31, 2014. The financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

New Accounting Pronouncements

Recent Accounting Pronouncements

In June 2013, the FASB issued a new accounting standard that requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance was effective for the Company beginning March 1, 2014. The adoption of this guidance did not have any effect on the presentation of the Company’s condensed consolidated financial statements.

In April 2014, the FASB issued Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, to update the criteria for reporting discontinued operations and enhance related disclosures. Under the new guidance, only disposals that have a major effect through a strategic shift on an organization’s operations and financial results should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The guidance is effective for the Company as of March 1, 2015. The Company expects that this new guidance will reduce the number of transactions that will qualify for reporting discontinued operations.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. This guidance will be effective for the Company in the first quarter of its fiscal year ending February 28, 2018. The Company is currently evaluating the impact, if any, the adoption of this guidance will have on its financial position, results of operations or cash flows.

Reclassifications

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to be consistent with the August 31, 2014 presentation. The reclassifications have no impact on net income previously reported.