Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ý | ||
Emerging Growth Company | ¨ |
11,691,177 | Shares of Class A Common Stock, $.01 Par Value | ||
1,242,366 | Shares of Class B Common Stock, $.01 Par Value | ||
— | Shares of Class C Common Stock, $.01 Par Value |
Page | |
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
NET REVENUES | $ | 40,164 | $ | 28,006 | |||
OPERATING EXPENSES: | |||||||
Station operating expenses excluding depreciation and amortization expense of $794 and $600, respectively | 31,230 | 21,531 | |||||
Corporate expenses excluding depreciation and amortization expense of $184 and $199, respectively | 2,743 | 2,508 | |||||
Depreciation and amortization | 978 | 799 | |||||
Gain on sale of assets, net of disposition costs | — | (32,067 | ) | ||||
Total operating expenses | 34,951 | (7,229 | ) | ||||
OPERATING INCOME | 5,213 | 35,235 | |||||
OTHER EXPENSE: | |||||||
Interest expense | (4,666 | ) | (2,641 | ) | |||
Loss on debt extinguishment | — | (771 | ) | ||||
Other income, net | 3 | 16 | |||||
Total other expense | (4,663 | ) | (3,396 | ) | |||
INCOME BEFORE INCOME TAXES | 550 | 31,839 | |||||
(BENEFIT) PROVISION FOR INCOME TAXES | (22 | ) | 7,600 | ||||
CONSOLIDATED NET INCOME | 572 | 24,239 | |||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 839 | 754 | |||||
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY | $ | (267 | ) | $ | 23,485 | ||
NET (LOSS) INCOME PER SHARE - BASIC | $ | (0.02 | ) | $ | 1.88 | ||
NET (LOSS) INCOME PER SHARE - DILUTED | $ | (0.02 | ) | $ | 1.75 | ||
WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||||
Basic | 12,257 | 12,483 | |||||
Diluted | 12,257 | 13,411 |
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
CONSOLIDATED NET INCOME | $ | 572 | $ | 24,239 | |||
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 839 | 754 | |||||
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (267 | ) | $ | 23,485 |
February 28, 2018 | May 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 4,107 | $ | 10,456 | |||
Restricted cash | 2,008 | 1,120 | |||||
Accounts receivable, net | 20,594 | 17,378 | |||||
Prepaid expenses | 3,234 | 5,165 | |||||
Assets held for sale | 26,170 | 370 | |||||
Other current assets | 3,680 | 1,463 | |||||
Total current assets | 59,793 | 35,952 | |||||
PROPERTY AND EQUIPMENT, NET | 26,601 | 25,523 | |||||
INTANGIBLE ASSETS (NOTE 3): | |||||||
Indefinite-lived intangibles | 170,890 | 170,890 | |||||
Goodwill | 4,338 | 4,338 | |||||
Other intangibles, net | 1,053 | 980 | |||||
Total intangible assets | 176,281 | 176,208 | |||||
OTHER ASSETS, NET | 8,469 | 8,492 | |||||
Total assets | $ | 271,144 | $ | 246,175 |
February 28, 2018 | May 31, 2018 | ||||||
(Unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable and accrued expenses | $ | 6,394 | $ | 4,272 | |||
Current maturities of long-term debt | 16,037 | 34,724 | |||||
Accrued salaries and commissions | 3,541 | 2,198 | |||||
Deferred revenue | 4,030 | 4,992 | |||||
Other current liabilities | 2,695 | 11,569 | |||||
Total current liabilities | 32,697 | 57,755 | |||||
LONG-TERM DEBT, NET OF CURRENT MATURITIES AND UNAMORTIZED DISCOUNT (NOTE 4) | 122,849 | 53,385 | |||||
OTHER NONCURRENT LIABILITIES | 5,932 | 6,522 | |||||
DEFERRED INCOME TAXES | 31,403 | 27,222 | |||||
Total liabilities | 192,881 | 144,884 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
EQUITY: | |||||||
Class A common stock, $.01 par value; authorized 42,500,000 shares; issued and outstanding 11,649,440 shares at February 28, 2018 and 11,691,177 shares at May 31, 2018 | 116 | 117 | |||||
Class B common stock, $.01 par value; authorized 7,500,000 shares; issued and outstanding 1,142,366 shares at February 28, 2018 and 1,242,366 at May 31, 2018 | 11 | 12 | |||||
Additional paid-in capital | 594,708 | 595,216 | |||||
Accumulated deficit | (547,252 | ) | (523,767 | ) | |||
Total shareholders’ equity | 47,583 | 71,578 | |||||
NONCONTROLLING INTERESTS | 30,680 | 29,713 | |||||
Total equity | 78,263 | 101,291 | |||||
Total liabilities and equity | $ | 271,144 | $ | 246,175 |
Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance, February 28, 2018 | 11,649,440 | $ | 116 | 1,142,366 | $ | 11 | $ | 594,708 | $ | (547,252 | ) | $ | 30,680 | $ | 78,263 | ||||||||||||||
Net income | 23,485 | 754 | 24,239 | ||||||||||||||||||||||||||
Issuance of common stock to employees and officers | (4,097 | ) | — | 100,000 | 1 | 389 | 390 | ||||||||||||||||||||||
Exercise of stock options | 45,834 | 1 | 119 | 120 | |||||||||||||||||||||||||
Distributions to noncontrolling interests | (1,721 | ) | (1,721 | ) | |||||||||||||||||||||||||
Balance, May 31, 2018 | 11,691,177 | $ | 117 | 1,242,366 | $ | 12 | $ | 595,216 | $ | (523,767 | ) | $ | 29,713 | $ | 101,291 |
EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) | |||||||
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Consolidated net income | $ | 572 | $ | 24,239 | |||
Adjustments to reconcile consolidated net income to net cash used in operating activities - | |||||||
Gain on sale of assets, net of disposition costs | — | (32,067 | ) | ||||
Depreciation and amortization | 978 | 799 | |||||
Amortization of debt discount | 651 | 465 | |||||
Noncash accretion of debt | 185 | 21 | |||||
Loss on debt extinguishment | — | 771 | |||||
Provision for bad debts | 92 | 698 | |||||
Provision for deferred income taxes | (25 | ) | (4,181 | ) | |||
Noncash compensation | 689 | 463 | |||||
Changes in assets and liabilities - | |||||||
Accounts receivable | (1,350 | ) | 2,518 | ||||
Prepaid expenses and other current assets | (1,746 | ) | (387 | ) | |||
Other assets | (131 | ) | (22 | ) | |||
Accounts payable and accrued liabilities | (10,581 | ) | (5,146 | ) | |||
Deferred revenue | 1,253 | 1,534 | |||||
Income taxes | (115 | ) | 9,245 | ||||
Other liabilities | (743 | ) | 239 | ||||
Net cash used in operating activities | (10,271 | ) | (811 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (397 | ) | (20 | ) | |||
Proceeds from the sale of assets | — | 60,000 | |||||
Net cash (used in) provided by investing activities | (397 | ) | 59,980 |
EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) | |||||||
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Payments on long-term debt | (4,484 | ) | (54,533 | ) | |||
Proceeds from long-term debt | 8,690 | 2,500 | |||||
Debt-related costs | (1,636 | ) | — | ||||
Distributions to noncontrolling interests | (1,072 | ) | (1,721 | ) | |||
Proceeds from the exercise of stock options | 55 | 119 | |||||
Settlement of tax withholding obligations on stock issued to employees | (57 | ) | (73 | ) | |||
Net cash provided by (used in) financing activities | 1,496 | (53,708 | ) | ||||
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (9,172 | ) | 5,461 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||
Beginning of period | 13,672 | 6,115 | |||||
End of period | $ | 4,500 | $ | 11,576 | |||
SUPPLEMENTAL DISCLOSURES: | |||||||
Cash paid for interest | $ | 3,399 | $ | 2,043 | |||
Cash paid for income taxes, net | 153 | 369 | |||||
Noncash financing transactions- | |||||||
Stock issued to employees and directors | 688 | 463 |
For the three months ended | |||||||||||||||||||||
May 31, 2017 | May 31, 2018 | ||||||||||||||||||||
Net Loss | Shares | Net Loss Per Share | Net Income | Shares | Net Income Per Share | ||||||||||||||||
(amounts in 000’s, except per share data) | |||||||||||||||||||||
Basic net (loss) income per common share: | |||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (267 | ) | 12,257 | $ | (0.02 | ) | $ | 23,485 | 12,483 | $ | 1.88 | |||||||||
Impact of equity awards | — | — | — | — | 928 | — | |||||||||||||||
Diluted net (loss) income per common share: | |||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (267 | ) | 12,257 | $ | (0.02 | ) | $ | 23,485 | 13,411 | $ | 1.75 |
For the three months ended May 31, | |||||
2017 | 2018 | ||||
(shares in 000’s ) | |||||
Equity awards | 2,498 | 849 | |||
Antidilutive common share equivalents | 2,498 | 849 |
For the three months ended May 31, | |||||||
2017 | 2018 | ||||||
Net revenues | $ | 2,583 | $ | 2,583 | |||
Station operating expenses, excluding depreciation and amortization expense | 293 | 297 | |||||
Interest expense | 672 | 609 |
As of February 28, | As of May 31, | ||||||
2018 | 2018 | ||||||
Current assets: | |||||||
Restricted cash | $ | 1,358 | $ | 1,120 | |||
Prepaid expenses | 448 | 436 | |||||
Other current assets | 31 | 68 | |||||
Total current assets | 1,837 | 1,624 | |||||
Noncurrent assets: | |||||||
Property and equipment, net | 208 | 203 | |||||
Indefinite lived intangibles | 46,390 | 46,390 | |||||
Deposits and other | 6,543 | 6,556 | |||||
Total noncurrent assets | 53,141 | 53,149 | |||||
Total assets | $ | 54,978 | $ | 54,773 | |||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 18 | $ | 15 | |||
Current maturities of long-term debt | 6,587 | 6,724 | |||||
Deferred revenue | 835 | 864 | |||||
Other current liabilities | 184 | 179 | |||||
Total current liabilities | 7,624 | 7,782 | |||||
Noncurrent liabilities: | |||||||
Long-term debt, net of current portion and unamortized debt discount | 45,632 | 43,980 | |||||
Total noncurrent liabilities | 45,632 | 43,980 | |||||
Total liabilities | $ | 53,256 | $ | 51,762 |
As of February 28, | As of May 31, | ||||||
2018 | 2018 | ||||||
Cash and cash equivalents | $ | 4,107 | $ | 10,456 | |||
Restricted cash: | |||||||
98.7FM LMA restricted cash | 1,358 | 1,120 | |||||
Cash held in escrow from sale of magazines restricted cash | 650 | — | |||||
Total cash, cash equivalents and restricted cash | $ | 6,115 | $ | 11,576 |
Austin radio partnership | Digonex | Total noncontrolling interests | ||||||||||
Balance, February 28, 2017 | $ | 46,830 | $ | (13,909 | ) | $ | 32,921 | |||||
Net income (loss) | 1,598 | (759 | ) | 839 | ||||||||
Distributions to noncontrolling interests | (1,072 | ) | — | (1,072 | ) | |||||||
Balance, May 31, 2017 | $ | 47,356 | $ | (14,668 | ) | $ | 32,688 | |||||
Balance, February 28, 2018 | $ | 47,424 | $ | (16,744 | ) | $ | 30,680 | |||||
Net income (loss) | 1,372 | (618 | ) | 754 | ||||||||
Distributions to noncontrolling interests | (1,721 | ) | (1,721 | ) | ||||||||
Balance, May 31, 2018 | $ | 47,075 | $ | (17,362 | ) | $ | 29,713 |
Three Months Ended May 31, | |||
2017 | 2018 | ||
Risk-Free Interest Rate: | 1.9% | 2.6% | |
Expected Dividend Yield: | 0% | 0% | |
Expected Life (Years): | 4.4 | 4.8 | |
Expected Volatility: | 52.9% - 53.1% | 53.2% |
Options | Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
Outstanding, beginning of period | 2,691,329 | $ | 4.66 | |||||||||
Granted | 84,000 | 4.16 | ||||||||||
Exercised | 45,834 | 2.60 | ||||||||||
Forfeited | — | — | ||||||||||
Expired | 27,850 | 9.76 | ||||||||||
Outstanding, end of period | 2,701,645 | 4.63 | 6.4 | $ | 4,786 | |||||||
Exercisable, end of period | 2,140,277 | 5.05 | 5.8 | $ | 3,440 |
Options | Weighted Average Grant Date Fair Value | |||||
Nonvested, beginning of period | 691,114 | $ | 2.10 | |||
Granted | 84,000 | 2.03 | ||||
Vested | 213,746 | 3.91 | ||||
Forfeited | — | — | ||||
Nonvested, end of period | 561,368 | 1.40 |
Awards | Price | |||||
Grants outstanding, beginning of period | 353,394 | $ | 3.05 | |||
Granted | 123,514 | 4.43 | ||||
Vested (restriction lapsed) | 36,015 | 4.42 | ||||
Grants outstanding, end of period | 440,893 | 3.32 |
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
Station operating expenses | $ | 149 | $ | 71 | |||
Corporate expenses | 540 | 392 | |||||
Stock-based compensation expense included in operating expenses | $ | 689 | $ | 463 |
As of February 28, 2018 | As of May 31, 2018 | |||||||||||||||
(in 000's, except years) | ||||||||||||||||
Weighted Average Remaining Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
Programming agreement | 3.3 | 2,154 | 1,101 | 1,053 | 2,154 | 1,174 | 980 |
Year ended February 28 (29), | Expected Amortization Expense | |||
Remainder of 2019 | $ | 221 | ||
2020 | 294 | |||
2021 | 294 | |||
2022 | 171 | |||
Total | $ | 980 |
February 28, 2018 | May 31, 2018 | ||||||
2014 Credit Agreement debt : | |||||||
Revolver | $ | 9,000 | $ | — | |||
Term Loan | 69,451 | 28,000 | |||||
Total 2014 Credit Agreement debt | 78,451 | 28,000 | |||||
98.7FM non-recourse debt | 53,919 | 52,337 | |||||
Other non-recourse debt (1) | 9,992 | 10,012 | |||||
Less: Current maturities | (16,037 | ) | (34,724 | ) | |||
Less: Unamortized original issue discount | (3,476 | ) | (2,240 | ) | |||
Total long-term debt | $ | 122,849 | $ | 53,385 |
As of May 31, 2018 | |||||||
Covenant Requirement | Actual Results | ||||||
Minimum EBITDA Amount | $ | 8.4 | million | $ | 10.8 | million | |
Interest Coverage Ratio | 1.60 : 1.00 | 2.60 : 1.00 |
2014 Credit Agreement | 98.7FM Non-recourse Debt | Other Non-recourse Debt | ||||||||||||||||||
Year ended February 28 (29), | Revolver | Term Loan | Total Payments | |||||||||||||||||
Remainder of 2019 | $ | — | $ | — | $ | 5,005 | $ | — | $ | 5,005 | ||||||||||
2020 | — | 28,000 | 7,150 | — | 35,150 | |||||||||||||||
2021 | — | — | 7,755 | — | 7,755 | |||||||||||||||
2022 | — | — | 8,394 | 6,239 | 14,633 | |||||||||||||||
2023 | — | — | 9,069 | 4,000 | 13,069 | |||||||||||||||
Thereafter | — | — | 14,964 | — | 14,964 | |||||||||||||||
Total | $ | — | $ | 28,000 | $ | 52,337 | $ | 10,239 | $ | 90,576 |
As of May 31, 2018 | |||||||||||||||
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 | $ | — | $ | — | $ | 800 | $ | 800 | |||||||
Total assets measured at fair value on a recurring basis | $ | — | $ | — | $ | 800 | $ | 800 | |||||||
As of February 28, 2018 | |||||||||||||||
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 | $ | — | $ | — | $ | 800 | $ | 800 | |||||||
Total assets measured at fair value on a recurring basis | $ | — | $ | — | $ | 800 | $ | 800 |
Three Months Ended May 31, | |||||||
2017 | 2018 | ||||||
Revenue by Source: | |||||||
Advertising | $ | 28,957 | $ | 18,775 | |||
Circulation | 110 | 102 | |||||
Nontraditional | 2,488 | 1,968 | |||||
LMA Fees | 2,583 | 3,302 | |||||
Digital | 3,028 | 1,200 | |||||
Other | 2,998 | 2,659 | |||||
Total net revenues | $ | 40,164 | $ | 28,006 |
Three Months Ended May 31, 2018 | Radio | Publishing | Corporate & Emerging Technologies | Consolidated | |||||||||||
Net revenues | $ | 26,384 | $ | 1,273 | $ | 349 | $ | 28,006 | |||||||
Station operating expenses excluding depreciation and amortization expense | 17,693 | 1,199 | 2,639 | 21,531 | |||||||||||
Corporate expenses excluding depreciation and amortization expense | — | — | 2,508 | 2,508 | |||||||||||
Depreciation and amortization | 570 | 5 | 224 | 799 | |||||||||||
(Gain) loss on sale of assets, net of disposition costs | (32,398 | ) | 331 | — | (32,067 | ) | |||||||||
Operating income (loss) | $ | 40,519 | $ | (262 | ) | $ | (5,022 | ) | $ | 35,235 | |||||
Three Months Ended May 31, 2017 | Radio | Publishing | Corporate & Emerging Technologies | Consolidated | |||||||||||
Net revenues | $ | 38,706 | $ | 1,144 | $ | 314 | $ | 40,164 | |||||||
Station operating expenses excluding depreciation and amortization expense | 26,134 | 1,355 | 3,741 | 31,230 | |||||||||||
Corporate expenses excluding depreciation and amortization expense | — | — | 2,743 | 2,743 | |||||||||||
Depreciation and amortization | 768 | 5 | 205 | 978 | |||||||||||
Operating income (loss) | $ | 11,804 | $ | (216 | ) | $ | (6,375 | ) | $ | 5,213 |
Total Assets | Radio | Publishing | Corporate & Emerging Technologies | Consolidated | |||||||||||
As of February 28, 2018 | $ | 249,044 | $ | 1,293 | $ | 20,807 | $ | 271,144 | |||||||
As of May 31, 2018 | $ | 220,343 | $ | 593 | $ | 25,239 | $ | 246,175 |
Three months ended May 31, | |||
2018 | |||
Restructuring charges and estimated lease cease-use costs, beginning balance | $ | — | |
Restructuring charges and estimated lease cease-use costs- St. Louis radio stations sale | 1,178 | ||
Payments | (47 | ) | |
Restructuring charges and estimated lease cease-use costs unpaid and outstanding | 1,131 |
For the three months ended May 31, | |||||||
2017 | 2018 | ||||||
Net revenues | $ | 6,488 | $ | 725 | |||
Station operating expenses, excluding depreciation and amortization expense | 4,897 | 1,003 | |||||
Depreciation and amortization | 139 | — | |||||
Gain on sale of assets, net of disposition costs | — | (32,398 | ) | ||||
Operating income | 1,452 | 32,120 | |||||
Interest expense | 784 | 592 | |||||
Income before income taxes | 668 | 31,528 |
For the three months ended May 31, (unaudited) | |||||||
2017 | 2018 | ||||||
Net revenues | $ | 28,262 | $ | 27,281 | |||
Station operating expenses, excluding depreciation and amortization expense | 21,941 | 20,528 | |||||
Consolidated net income | 254 | 469 | |||||
Net loss attributable to the Company | (585 | ) | (285 | ) | |||
Net loss per share - basic | $ | (0.05 | ) | $ | (0.02 | ) | |
Net loss per share - diluted | $ | (0.05 | ) | $ | (0.02 | ) |
As of February 28, 2018 | As of May 31, 2018 | |||
Property and equipment, net | 1,340 | 370 | ||
Indefinite-lived intangibles | 24,758 | — | ||
Other intangibles, net | 72 | — |
• | increased competition in our markets and the broadcasting industry, including our competitors changing the format of a station they operate to more directly compete with a station we operate in the same market; |
• | 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; |
Three Months Ended May 31, | |||||||||||||
2017 | % of Total | 2018 | % of Total | ||||||||||
Net revenues: | |||||||||||||
Local | $ | 24,220 | 60.3 | % | $ | 16,076 | 57.4 | % | |||||
National | 4,608 | 11.5 | % | 2,497 | 8.9 | % | |||||||
Political | 129 | 0.3 | % | 202 | 0.7 | % | |||||||
Publication Sales | 110 | 0.3 | % | 102 | 0.4 | % | |||||||
Non Traditional | 2,488 | 6.2 | % | 1,968 | 7.0 | % | |||||||
LMA Fees | 2,583 | 6.4 | % | 3,302 | 11.8 | % | |||||||
Digital | 3,028 | 7.5 | % | 1,200 | 4.3 | % | |||||||
Other | 2,998 | 7.5 | % | 2,659 | 9.5 | % | |||||||
Total net revenues | $ | 40,164 | $ | 28,006 |
For the three months ended May 31, (unaudited) | |||||||
2017 | 2018 | ||||||
Net revenues | $ | 28,262 | $ | 27,281 | |||
Station operating expenses, excluding depreciation and amortization expense | 21,941 | 20,528 | |||||
Consolidated net income | 254 | 469 | |||||
Net loss attributable to the Company | (585 | ) | (285 | ) | |||
Net loss per share - basic | $ | (0.05 | ) | $ | (0.02 | ) | |
Net loss per share - diluted | $ | (0.05 | ) | $ | (0.02 | ) |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Net revenues: | ||||||||||||||
Radio | $ | 38,706 | $ | 26,384 | $ | (12,322 | ) | (31.8 | )% | |||||
Publishing | 1,144 | 1,273 | 129 | 11.3 | % | |||||||||
Emerging Technologies | 314 | 349 | 35 | 11.1 | % | |||||||||
Total net revenues | $ | 40,164 | $ | 28,006 | $ | (12,158 | ) | (30.3 | )% |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Station operating expenses excluding depreciation and amortization expense: | ||||||||||||||
Radio | $ | 26,134 | $ | 17,693 | $ | (8,441 | ) | (32.3 | )% | |||||
Publishing | 1,355 | 1,199 | (156 | ) | (11.5 | )% | ||||||||
Emerging Technologies | 3,741 | 2,639 | (1,102 | ) | (29.5 | )% | ||||||||
Total station operating expenses excluding depreciation and amortization expense | $ | 31,230 | $ | 21,531 | $ | (9,699 | ) | (31.1 | )% |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Corporate expenses excluding depreciation and amortization expense | $ | 2,743 | $ | 2,508 | $ | (235 | ) | (8.6 | )% |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Depreciation and amortization: | ||||||||||||||
Radio | $ | 768 | $ | 570 | $ | (198 | ) | (25.8 | )% | |||||
Publishing | 5 | 5 | — | — | % | |||||||||
Corporate & Emerging Technologies | 205 | 224 | 19 | 9.3 | % | |||||||||
Total depreciation and amortization | $ | 978 | $ | 799 | $ | (179 | ) | (18.3 | )% |
For the Three Months Ended May 31, | |||||||||||||
2017 | 2018 | $ Change | % Change | ||||||||||
(As reported, amounts in thousands) | |||||||||||||
(Gain) loss on sale of assets, net of disposition costs: | |||||||||||||
Radio | $ | — | (32,398 | ) | $ | (32,398 | ) | N/A | |||||
Publishing | — | 331 | 331 | N/A | |||||||||
Total (gain) loss on sale of assets, net of disposition costs | $ | — | $ | (32,067 | ) | $ | (32,067 | ) | N/A |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Operating income: | ||||||||||||||
Radio | $ | 11,804 | $ | 40,519 | $ | 28,715 | 243.3 | % | ||||||
Publishing | (216 | ) | (262 | ) | (46 | ) | (21.3 | )% | ||||||
Corporate & Emerging Technologies | (6,375 | ) | (5,022 | ) | 1,353 | 21.2 | % | |||||||
Total operating income: | $ | 5,213 | $ | 35,235 | $ | 30,022 | 575.9 | % |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Interest expense | $ | (4,666 | ) | $ | (2,641 | ) | $ | 2,025 | (43.4 | )% |
For the Three Months Ended May 31, | |||||||||||||
2017 | 2018 | $ Change | % Change | ||||||||||
(As reported, amounts in thousands) | |||||||||||||
Loss on debt extinguishment | $ | — | $ | (771 | ) | $ | (771 | ) | N/A |
For the Three Months Ended May 31, | |||||||||||||
2017 | 2018 | $ Change | % Change | ||||||||||
(As reported, amounts in thousands) | |||||||||||||
Provision for income taxes | $ | (22 | ) | $ | 7,600 | $ | 7,622 | N/M |
For the Three Months Ended May 31, | ||||||||||||||
2017 | 2018 | $ Change | % Change | |||||||||||
(As reported, amounts in thousands) | ||||||||||||||
Consolidated net income | $ | 572 | $ | 24,239 | $ | 23,667 | 4,137.6 | % |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in 000’s) | ||||||||||
Class A Common Stock | ||||||||||||||
March 1, 2018 - March 31, 2018 | 4,230 | $ | 4.22 | — | $ | — | ||||||||
April 1, 2018 - April 30, 2018 | — | $ | — | — | $ | — | ||||||||
May 1, 2018 - May 31, 2018 | 10,261 | $ | 5.35 | — | $ | — | ||||||||
14,491 | — |
(a) | Exhibits. |
Exhibit | Filed Herewith | Incorporated by Reference | ||||||||
Number | Exhibit Description | Form | Period Ending | Exhibit | Filing Date | |||||
8-K | 3.1 | 7/7/2016 | ||||||||
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 | ||||||
8-K | 10.1 | 3/2/2018 | ||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
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 |
EMMIS COMMUNICATIONS CORPORATION | ||
Date: July 12, 2018 | By: | /s/ RYAN A. HORNADAY |
Ryan A. Hornaday | ||
Executive Vice President, Chief Financial Officer and Treasurer |
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: July 12, 2018 | |
/s/ JEFFREY H. SMULYAN | |
Jeffrey H. Smulyan | |
Chairman of the Board and | |
Chief Executive Officer |
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: July 12, 2018 | |
/s/ RYAN A. HORNADAY | |
Ryan A. Hornaday | |
Executive Vice President, Chief Financial Officer and | |
Treasurer |
(1) | the Quarterly Report of the Company on Form 10-Q for the period ended May 31, 2018, 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: July 12, 2018 | |
/s/ JEFFREY H. SMULYAN | |
Jeffrey H. Smulyan | |
Chairman of the Board and | |
Chief Executive Officer |
(1) | the Quarterly Report of the Company on Form 10-Q for the period ended May 31, 2018, 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: July 12, 2018 | |
/s/ RYAN A. HORNADAY | |
Ryan A. Hornaday | |
Executive Vice President, Chief Financial Officer and | |
Treasurer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
May 31, 2018 |
Jul. 05, 2018 |
|
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 31, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EMMS | |
Entity Registrant Name | EMMIS COMMUNICATIONS CORP | |
Entity Central Index Key | 0000783005 | |
Current Fiscal Year End Date | --02-28 | |
Entity Filer Category | Smaller Reporting Company | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 11,691,177 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1,242,366 | |
Class C Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Depreciation and amortization expense excluded from station operating expenses | $ 600 | $ 794 |
Depreciation and amortization expenses excluded from corporate expenses | $ 199 | $ 184 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
CONSOLIDATED NET INCOME | $ 24,239 | $ 572 |
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXES: | ||
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 754 | 839 |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 23,485 | $ (267) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Class A Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 42,500,000 | 42,500,000 |
Common stock, shares issued | 11,691,177 | 11,649,440 |
Common stock, shares outstanding | 11,691,177 | 11,649,440 |
Class B Common Stock | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 7,500,000 | 7,500,000 |
Common stock, shares issued | 1,242,366 | 1,142,366 |
Common stock, shares outstanding | 1,242,366 | 1,142,366 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 3 months ended May 31, 2018 - USD ($) $ in Thousands |
Total |
Additional Paid-in Capital |
Accumulated Deficit |
Noncontrolling Interests |
Class B Common Stock
Common Stock
|
Class A Common Stock
Common Stock
|
|||
---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Feb. 28, 2018 | $ 78,263 | $ 594,708 | $ (547,252) | $ 30,680 | $ 11 | $ 116 | |||
Beginning Balance (in shares) at Feb. 28, 2018 | 1,142,366 | 11,649,440 | |||||||
Net income | 24,239 | 23,485 | 754 | ||||||
Issuance of common stock to employees and officers | 390 | 389 | $ 1 | $ 0 | |||||
Issuance of common stock to employees and officers (in shares) | 100,000 | (4,097) | |||||||
Exercise of stock options | 120 | 119 | $ 1 | ||||||
Distributions to noncontrolling interests | (1,721) | (1,721) | |||||||
Ending Balance at May. 31, 2018 | $ 101,291 | $ 595,216 | $ (523,767) | $ 29,713 | $ 12 | $ 117 | |||
Ending Balance (in shares) at May. 31, 2018 | 1,242,366 | 11,691,177 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 45,834 | [1] | 45,834 | ||||||
|
Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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, 2018. 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 May 31, 2018, the results of its operations and cash flows for the three-month periods ended May 31, 2017 and 2018. 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, 2018 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 net (loss) income per common share is computed by dividing net (loss) 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 May 31, 2017 and 2018 consisted of stock options and restricted stock awards. The following table sets forth the calculation of basic and diluted net (loss) income per share:
Shares excluded from the calculation as the effect of their conversion into shares of our common stock would be antidilutive were as follows:
Local Programming and Marketing Agreement Fees The Company from time to time enters into local programming and marketing agreements (“LMAs”), often pending regulatory approval of transfer of the Federal Communications Commission ("FCC") licenses in connection with acquisitions or dispositions of radio stations. 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 April 30, 2018, Emmis closed on the sale of substantially all of its radio station assets in St. Louis. The St. Louis stations were operated pursuant to LMAs from March 1, 2018 through April 30, 2018. The buyers of the stations paid LMA fees totaling $0.7 million during the period, which was recognized as a component of net revenues in the accompanying condensed consolidated statements of operations for the three-month period ending May 31, 2018. 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. Net revenues for 98.7FM are solely related to LMA fees. 98.7FM is a part of our radio segment.
Assets and liabilities of 98.7FM as of February 28, 2018 and May 31, 2018 were as follows:
Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the same amounts shown in the condensed consolidated statements of cash flows.
As of May 31, 2018, restricted cash relates to cash on deposit in trust accounts related to our 98.7FM LMA in New York City that services long-term debt. During the three months ended May 31, 2018, Emmis settled its dispute with Hour Media related to Hour's purchase of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine. Cash was released from escrow in May 2018 and is no longer classified as restricted. See Note 9 for more discussion. Noncontrolling Interests The Company follows Accounting Standards Codification paragraph 810-10-65-1 to report the noncontrolling interests related to our Austin radio partnership and Digonex Technologies Inc., a dynamic pricing business (hereinafter "Digonex"). We have a 50.1% controlling interest in our Austin radio partnership. We do not own any of the common equity of Digonex, but we consolidate the entity because we control its board of directors via rights granted in convertible preferred stock and convertible debt that we own. As of May 31, 2018, Emmis owns rights that are convertible into approximately 83% of Digonex's common equity. Noncontrolling interests represent the noncontrolling interest holders' proportionate share of the equity of the Austin radio partnership and Digonex. Noncontrolling interests are adjusted for the noncontrolling interest holders' proportionate share of the earnings or losses of the applicable entity. The noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance. Below is a summary of the noncontrolling interest activity for the three months ended May 31, 2017 and 2018:
Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU was issued to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU was issued to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance will be effective for the Company as of March 1, 2019. A modified retrospective transition method is required. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles used to recognize revenue for all entities. The FASB deferred implementation of this guidance by one year with the issuance of Accounting Standards Update 2015-14. The Company adopted the new guidance on March 1, 2018, using the modified retrospective method, with no impact on its consolidated financial statements. The cumulative effect of initially applying the new guidance had no impact on the opening balance of retained earnings as of March 1, 2018. The comparative information has not been restated and continues to be reported under the accounting guidance in effect for that period. The Company does not expect the new guidance will have a material impact on its consolidated financial statements in future periods. See Note 7 for more discussion. |
Share Based Payments |
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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 grants, restricted stock grants, and common stock issued to employees and directors in lieu of cash payments. Stock Option Awards The Company has granted options to purchase its common stock to employees and directors of the Company under various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company. 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 three months ended May 31, 2017 and 2018:
The following table presents a summary of the Company’s stock options outstanding at May 31, 2018, and stock option activity during the three months ended May 31, 2018 (“Price” reflects the weighted average exercise price per share; "Aggregate Intrinsic Value" dollars in thousands):
Cash received from option exercises for the three months ended May 31, 2017 and 2018 was $0.1 million and $0.1 million, respectively. The Company did not record an income tax benefit relating to the options exercised during the three months ended May 31, 2017 or 2018. The weighted average per share grant date fair value of options granted during the three months ended May 31, 2017 and 2018, was $1.15 and $2.03, respectively. A summary of the Company’s nonvested options at May 31, 2018, and changes during the three months ended May 31, 2018, is presented below:
There were 2.2 million shares available for future grants under the Company’s various equity plans (1.9 million shares under the 2017 Equity Compensation Plan and 0.3 million shares under other plans) at May 31, 2018, not including shares that may become available for future grants upon forfeiture, lapse or surrender for taxes. The vesting dates of outstanding options at May 31, 2018 range from July 2018 to March 2021, and expiration dates range from July 2018 to March 2028. 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 2017 Equity Compensation Plan. The Company may also award, out of the Company’s 2017 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 May 31, 2018, and restricted stock activity during the three months ended May 31, 2018 (“Price” reflects the weighted average share price at the date of grant):
The total grant date fair value of shares vested during the three months ended May 31, 2017 and 2018, was $0.1 million and $0.2 million, respectively. Recognized Non-Cash Compensation Expense The following table summarizes stock-based compensation expense recognized by the Company during the three months ended May 31, 2017 and 2018. The Company did not recognize any tax benefits related to stock-based compensation during the periods presented below.
As of May 31, 2018, there was $1.2 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 1.7 years. |
Intangible Assets and Goodwill |
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Intangible Assets and Goodwill | Intangible Assets and Goodwill Valuation of Indefinite-lived Broadcasting Licenses In accordance with Accounting Standards Codification ("ASC") Topic 350, Intangibles—Goodwill and Other, the Company’s FCC licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but are tested for impairment at least annually as discussed below. Excluding amounts classified as held for sale, the carrying amounts of the Company’s FCC licenses were $170.9 million as of February 28, 2018 and May 31, 2018. 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 with 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 three months ended May 31, 2018, 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 The carrying amounts of the Company's goodwill, all of which were attributable to our radio division, were $4.3 million as of February 28, 2018 and May 31, 2018. ASC Topic 350-20-35 requires the Company to test goodwill for impairment at least annually. The Company conducts its 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 generally uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units, with radio stations grouped by market. 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. Management believes this methodology for valuing radio 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 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. If the carrying value of a reporting unit's goodwill exceeds its fair value, the Company recognizes an impairment charge equal to the difference in the statement of operations. Definite-lived intangibles The following table presents the weighted-average useful life at May 31, 2018, and the gross carrying amount and accumulated amortization for our sole definite-lived intangible asset at February 28, 2018 and May 31, 2018:
In accordance with Accounting Standards Codification paragraph 360-10, the Company performs an analysis to (i) determine if indicators of impairment of a long-lived asset are present, (ii) test the long-lived asset for recoverability by comparing undiscounted cash flows of the long-lived asset to its carrying value and (iii) measure any potential impairment by comparing the long-lived asset's fair value to its current carrying value. Total amortization expense from definite-lived intangibles for the three-month periods ended May 31, 2017 and 2018 was $0.1 million. The following table presents the Company's estimate of future amortization expense for definite-lived intangibles:
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Long-term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term Debt Long-term debt was comprised of the following at February 28, 2018 and May 31, 2018:
(1) The face value of other non-recourse debt was $10.2 million at February 28, 2018 and May 31, 2018 2014 Credit Agreement On June 10, 2014, Emmis entered into the 2014 Credit Agreement, by and among the Company, Emmis Operating Company, as borrower (the “Borrower”), certain other subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”) and the lenders party thereto. Capitalized terms in this section not defined elsewhere in this 10-K are defined in the 2014 Credit Agreement and related amendments. The 2014 Credit Agreement consists of remaining balances of a term loan ($69.5 million and $28.0 million as of February 28, 2018 and May 31, 2018, respectively) and a revolving credit facility with a maximum commitment of $20.0 million. Outstanding revolver borrowings as of February 28, 2018 were $9.0 million. No revolver borrowings were outstanding as of May 31, 2018. The revolving credit facility includes a sub-facility for the issuance of up to $5.0 million of letters of credit. No letters of credit were outstanding during the periods presented in the accompanying condensed consolidated financial statements. The term loan is due not later than April 18, 2019 and the revolving credit facility expires on August 31, 2018. The Company is not required to make scheduled principal payments under the term loan or revolving credit facility prior to these dates. Amounts outstanding under the 2014 Credit Agreement bear interest, at the Company’s option, at either (i) the Alternate Base Rate (but not less than 2.00%) plus 6.00% or (ii) the Adjusted LIBO Rate plus 7.00%. The Company pays an unused commitment fee of 75 basis points per annum on the average unused amount of the revolving credit facility. If the Company has not refinanced the 2014 Credit Agreement by July 18, 2018, any principal payments on the term loans thereafter must be accompanied by a fee to the lenders equal to 2% of the amount being repaid. In addition, on each ninety day anniversary after July 18, 2018, such fee increases by an additional 0.5% and the interest rate on amounts outstanding increases by 0.5%. The weighted average borrowing rate of amounts outstanding related to the 2014 Credit Agreement was 8.7% and 9.0% at February 28, 2018 and May 31, 2018, respectively. Our 2014 Credit Agreement debt is carried net of an unamortized original issue discount of $0.6 million as of May 31, 2018. The original issue discount is being amortized as additional interest expense over the life of the 2014 Credit Agreement. The 2014 Credit Agreement requires mandatory prepayments for, among other things, proceeds from the sale of assets, insurance proceeds and Consolidated Excess Cash Flow (as defined in the 2014 Credit Agreement). The 2014 Credit Agreement requires the Company to comply with certain financial and non-financial covenants. These covenants include a Minimum EBITDA Amount covenant through May 31, 2018. Subsequent to the quarter ending May 31, 2018, the Company is required to comply with a Total Leverage Ratio covenant of 4.00:1.00. Additionally, the Company is required to meet a minimum Interest Coverage Ratio of at least 1.60:1.00 while the revolving credit facility is outstanding. 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 May 31, 2018. Our Minimum EBITDA Amount and Interest Coverage Ratio (each as defined in the 2014 Credit Agreement and related amendments) requirements and actual amounts as of May 31, 2018 were as follows:
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%. The 98.7FM non-recourse notes are carried on our condensed consolidated balance sheets net of an original issue discount. The original issue discount, which was $1.7 million and $1.6 million as of February 28, 2018 and May 31, 2018, respectively, is being amortized as additional interest expense over the life of the notes. Other 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. 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. During the quarter ended August 31, 2017, Digonex noteholders agreed to extend the maturity date of the notes from December 31, 2017 to December 31, 2020. The notes accrue interest at 5.0% per annum with interest 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 original $3.6 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. NextRadio, LLC has issued $4.0 million of notes payable. As of May 31, 2018, the notes accrue interest at 6.0% with interest due quarterly beginning in August 2018. The notes mature on December 23, 2021 and are to be repaid through revenues generated by enhanced advertisement revenues earned by NextRadio, LLC. If any portion of the notes remains unpaid at maturity, the lender has the option to exchange the notes for senior preferred equity of NextRadio, LLC's parent entity, TagStation, LLC. These notes are obligations of NextRadio, LLC and TagStation, LLC and are non-recourse to the rest of Emmis' subsidiaries. Based on amounts outstanding at May 31, 2018, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:
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Liquidity and Going Concern |
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Debt Disclosure [Abstract] | |
Liquidity and Going Concern | Liquidity and Going Concern Pursuant to ASC Topic 205-40, Going Concern, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period. In evaluating the Company’s ability to continue as a going concern for this reporting period, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date the financial statements were issued (July 12, 2018). Management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt obligations due on or before July 12, 2019. The Company’s revolver expires on August 31, 2018 and its term loan is due no later than April 18, 2019. As of May 31, 2018, the Company has no outstanding revolver borrowings, $28.0 million outstanding under its term loan, and has approximately $10 million of cash on hand. The Company believes it can fund its operational needs once its revolver expires on August 31, 2018 with its cash on hand and cash generated from operations, but will not be able to repay its term loan by April 18, 2019 absent other actions. Management is currently exploring a number of options that would allow the Company to repay its term loan by April 18, 2019. Management believes that it is probable that it will refinance its remaining term loan under the 2014 Credit Agreement prior to April 18, 2019. The Company has successfully refinanced its credit agreement debt many times in the past. Recent asset sales and associated term loan repayments have significantly reduced the Company’s leverage ratio, which management believes has enhanced its ability to refinance the debt. Management is also exploring several alternatives that would further reduce our term loan obligations and enhance our ability to refinance, including the sale of WLIB-AM in New York City and other assets. Management’s intention and belief that the credit agreement debt will be refinanced prior to April 18, 2019 assumes, among other things, that the Company will continue to be successful in implementing its business strategy and that there will be no material adverse developments in its business, liquidity or capital requirements. If one or more of these factors do not occur as expected, it could cause a default under the Company’s credit agreement. |
Revenue |
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Revenue | Revenue The Company generates revenue from the sale of services and products including, but not limited to: (i) on-air commercial broadcast time, (ii) magazine-related display advertising, (iii) magazine circulation and newsstand revenues, (iv) non-traditional revenues including event-related revenues and event sponsorship revenues, (v) revenues generated from LMAs and (vi) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising On-air broadcast revenue and magazine display revenue are recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. Payments received by advertisers before the performance obligation is satisfied are recorded as deferred revenue in the condensed consolidated balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date. Circulation Circulation revenue includes revenues for Indianapolis Monthly purchased by readers or distributors. Single copy newsstand sales are recognized when the monthly magazine is distributed, net of provisions for related returns. Circulation revenue from digital and home delivery subscriptions are recognized over the subscription period as the performance obligations are delivered. Nontraditional Nontraditional revenues principally consist of ticket sales and sponsorship of events our stations and magazine conduct in their local markets. These revenues are recognized when our performance obligations are fulfilled, which generally coincides with when the related event occurs. LMA Fees LMA fee revenue relates to fees that the Company collects from third parties in exchange for the right to program and sell advertising for a specified portion of a radio station's inventory of broadcast time. These revenues are generally recognized ratably over the duration that the third party programs the radio station. Digital Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video sponsorships) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered. Disaggregation of revenue The following table presents the Company's revenues disaggregated by revenue source:
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Fair Value Measurements |
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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, 2018 and May 31, 2018. 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.
Available for sale securities — Emmis’ available for sale securities are comprised of preferred stock of a private company that is not traded in active markets and is included in other assets, net in the accompanying condensed consolidated balance sheets. The investment is recorded at fair value, which was generally estimated using significant unobservable market parameters, resulting in a Level 3 categorization. The carrying value of our preferred stock investment was determined by using implied valuations of recent rounds of financing and by other corroborating evidence, which may include the application of various valuation methodologies including option-pricing and discounted cash flow based models. 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 3, 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. 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. - 2014 Credit Agreement debt: As of May 31, 2018, the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $27.4 million and $28.0 million, respectively. The Company's estimate of fair value was based on non-exchange 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 other 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. |
Segment Information |
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Segment Information | Segment Information The Company’s operations have historically been 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. 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, 2018, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.
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Regulatory, Legal and Other Matters |
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May 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Regulatory, Legal and Other Matters | Regulatory, Legal and Other Matters Emmis is a party to various other 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. During the quarter ended August 31, 2017, Emmis filed suit against Hour Media Group, LLC ("Hour") for breach of the asset purchase agreement related to the February 28, 2017 sale of Los Angeles Magazine, Atlanta Magazine, Cincinnati Magazine and Orange Coast Magazine. Hour filed a counterclaim against Emmis alleging that Emmis engaged in a series of actions that constitute a breach of the asset purchase agreement. The parties agreed to settle this dispute in May 2018. As part of the mutual settlement, all claims and counterclaims were dismissed with Emmis and Hour receiving $0.45 million and $0.2 million of the cash held in escrow, respectively. The Company recognized a loss of $0.2 million related to this settlement during the three months ended May 31, 2018 which is included in gain on sale of assets, net of disposition costs in the accompanying condensed consolidated financial statements. Emmis filed suit against Illinois National Insurance Company (“INIC”) in 2015 related to INIC’s decision to not cover Emmis’ defense costs under Emmis’ directors and officers insurance policy in a lawsuit related to the Company’s preferred stock in which Emmis was the defendant (the “Prior Litigation”). On March 21, 2018, Emmis was granted summary judgment entitling it to coverage of its defense costs in the Prior Litigation, but the amount Emmis should recover has not yet been determined and all final decisions by the U.S. District Court are subject to appeal. A trial on damages is currently scheduled for the fall of 2018. Emmis incurred approximately $4.1 million of costs defending the Prior Litigation, subject to a $1.0 million deductible. Emmis is seeking to recover these costs plus applicable accrued interest less the applicable deductible from INIC. However, Emmis cannot reasonably estimate the amount or timing of such recovery. |
Income Taxes |
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May 31, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | Income Taxes Our effective income tax rate was (4)% and 24% for the three-month periods ended May 31, 2017 and 2018, respectively. The Company estimates its effective tax rate for the year, which incorporates the reversal of a portion of the valuation allowance, and applies that rate to pre-tax income for the applicable period. This methodology is primarily responsible for the difference between the effective rate and statutory rate, particularly in the prior year, which included the sale of KPWR in Los Angeles and the related reversal of a significant portion of our valuation allowance. Our current year rate is also impacted by the reduction in the Federal Statutory rate from 35% to 21% upon passage of the Tax Cuts and Jobs Act (the "Tax Act"). Any further technical corrections or other forms of guidance addressing the Tax Act, as well as regulatory or governmental actions, could result in adjustments to our accounting for the effects of the Tax Act. |
Significant Events |
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Other Significant Events | Other Significant Events Sale of St. Louis radio stations On April 30, 2018, Emmis closed on its sale of substantially all of the assets of its radio stations in St. Louis in two separate transactions. In one transaction, Emmis sold the assets of KSHE-FM and KPNT-FM to affiliates of Hubbard Radio. In the other transaction, Emmis sold the assets of KFTK-FM and KNOU-FM to affiliates of Entercom Communications Corp. At closing, Emmis received aggregate gross proceeds of $60.0 million. After deducting estimated taxes payable and transaction-related expenses, net proceeds totaled approximately $40.5 million and were used to repay term loan indebtedness under Emmis’ senior credit facility. The taxes payable as a result of the transactions are not required to be remitted to the applicable taxing authority until May 2019, so we repaid amounts outstanding under our revolver and we plan to hold excess cash on our balance sheet to enhance our liquidity position until we remit the taxes in May 2019. Emmis recorded a $32.4 million gain on the sale of its St. Louis radio stations. The St. Louis radio stations were operated pursuant to LMAs from March 1, 2018 through the closing of the transactions. Entercom and Hubbard paid LMA fees to Emmis totaling $0.7 million during the period. These fees are included in our results of operations as net revenues for the three-month period ended May 31, 2018. In connection with the sale of our St. Louis stations, the Company recorded $1.2 million of restructuring charges related to the involuntary termination of employees and estimated cease-use costs related to our leased St. Louis office facility, net of estimated sublease rentals. These charges are included in the gain on sale of assets, net of disposition costs in the accompanying condensed consolidated financial statements. The table below summarizes the activity related to our restructuring charge for the three months ended May 31, 2018.
The St. Louis radio stations had historically been included in our Radio segment. This disposal did not qualify for reporting as a discontinued operation as it did not represent a strategic shift for the Company as described in Accounting Standards Codification 205-20-45-1C. The following table summarizes certain operating results of the our St. Louis radio stations for all periods presented. Pursuant to Accounting Standards Codification 205-20-45-6, interest expense associated with the required term loan repayment associated with the sale of the St. Louis radio stations is included in the stations’ results below.
Unaudited pro forma summary information is presented below for the three-month periods ended May 31, 2017 and 2018, assuming the August 1, 2017 sale of KPWR-FM, the April 30, 2018 sale of our St. Louis radio stations and the related mandatory debt repayments of these sales had occurred on the first day of the pro forma periods presented below. See Note 7 of our 10-K for the year ending February 28, 2018 for more discussion of the sale of KPWR-FM.
Emmis retained ownership of two radio transmission towers in St. Louis subsequent to the sale of our radio stations and expects to sell these towers within twelve months. These towers are classified as held for sale as of May 31, 2018. The Company measures assets held for sale at the lower of their carrying amount or fair value less cost to sell. The Company determined that the fair value of these assets was more than their current carrying value by utilizing offers from third parties. This is considered a Level 3 measurement. The carrying amounts of major classes of assets classified as held for sale related to our St. Louis radio stations as of February 28, 2018 and May 31, 2018 were as follows:
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Summary of Significant Accounting Policies (Policies) |
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May 31, 2018 | |
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, 2018. 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 May 31, 2018, the results of its operations and cash flows for the three-month periods ended May 31, 2017 and 2018. 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, 2018 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 (Loss) Income Per Common Share Basic net (loss) income per common share is computed by dividing net (loss) 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 May 31, 2017 and 2018 consisted of stock options and restricted stock awards. |
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”), often pending regulatory approval of transfer of the Federal Communications Commission ("FCC") licenses in connection with acquisitions or dispositions of radio stations. 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 April 30, 2018, Emmis closed on the sale of substantially all of its radio station assets in St. Louis. The St. Louis stations were operated pursuant to LMAs from March 1, 2018 through April 30, 2018. The buyers of the stations paid LMA fees totaling $0.7 million during the period, which was recognized as a component of net revenues in the accompanying condensed consolidated statements of operations for the three-month period ending May 31, 2018. 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. |
Restricted Cash | Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the same amounts shown in the condensed consolidated statements of cash flows. |
Valuation of Indefinite-lived Broadcasting Licenses | Valuation of Indefinite-lived Broadcasting Licenses In accordance with Accounting Standards Codification ("ASC") Topic 350, Intangibles—Goodwill and Other, the Company’s FCC licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but are tested for impairment at least annually as discussed below. Excluding amounts classified as held for sale, the carrying amounts of the Company’s FCC licenses were $170.9 million as of February 28, 2018 and May 31, 2018. 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 with 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 three months ended May 31, 2018, 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 The carrying amounts of the Company's goodwill, all of which were attributable to our radio division, were $4.3 million as of February 28, 2018 and May 31, 2018. ASC Topic 350-20-35 requires the Company to test goodwill for impairment at least annually. The Company conducts its 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 generally uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units, with radio stations grouped by market. 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. Management believes this methodology for valuing radio 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 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. If the carrying value of a reporting unit's goodwill exceeds its fair value, the Company recognizes an impairment charge equal to the difference in the statement of operations. |
Definite-lived intangibles | Definite-lived intangibles |
Fair Value Measurements and Disclosure | 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, 2018 and May 31, 2018. 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. Available for sale securities — Emmis’ available for sale securities are comprised of preferred stock of a private company that is not traded in active markets and is included in other assets, net in the accompanying condensed consolidated balance sheets. The investment is recorded at fair value, which was generally estimated using significant unobservable market parameters, resulting in a Level 3 categorization. The carrying value of our preferred stock investment was determined by using implied valuations of recent rounds of financing and by other corroborating evidence, which may include the application of various valuation methodologies including option-pricing and discounted cash flow based models. 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 3, 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. 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. - 2014 Credit Agreement debt: As of May 31, 2018, the fair value and carrying value, excluding original issue discount, of the Company's 2014 Credit Agreement debt was $27.4 million and $28.0 million, respectively. The Company's estimate of fair value was based on non-exchange 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 other 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. |
New Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU was issued to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU was issued to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted this guidance on March 1, 2018 with no material impact on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance will be effective for the Company as of March 1, 2019. A modified retrospective transition method is required. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles used to recognize revenue for all entities. The FASB deferred implementation of this guidance by one year with the issuance of Accounting Standards Update 2015-14. The Company adopted the new guidance on March 1, 2018, using the modified retrospective method, with no impact on its consolidated financial statements. The cumulative effect of initially applying the new guidance had no impact on the opening balance of retained earnings as of March 1, 2018. The comparative information has not been restated and continues to be reported under the accounting guidance in effect for that period. The Company does not expect the new guidance will have a material impact on its consolidated financial statements in future periods. See Note 7 for more discussion. |
Revenue Recognition | The Company generates revenue from the sale of services and products including, but not limited to: (i) on-air commercial broadcast time, (ii) magazine-related display advertising, (iii) magazine circulation and newsstand revenues, (iv) non-traditional revenues including event-related revenues and event sponsorship revenues, (v) revenues generated from LMAs and (vi) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising On-air broadcast revenue and magazine display revenue are recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. Payments received by advertisers before the performance obligation is satisfied are recorded as deferred revenue in the condensed consolidated balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date. Circulation Circulation revenue includes revenues for Indianapolis Monthly purchased by readers or distributors. Single copy newsstand sales are recognized when the monthly magazine is distributed, net of provisions for related returns. Circulation revenue from digital and home delivery subscriptions are recognized over the subscription period as the performance obligations are delivered. Nontraditional Nontraditional revenues principally consist of ticket sales and sponsorship of events our stations and magazine conduct in their local markets. These revenues are recognized when our performance obligations are fulfilled, which generally coincides with when the related event occurs. LMA Fees LMA fee revenue relates to fees that the Company collects from third parties in exchange for the right to program and sell advertising for a specified portion of a radio station's inventory of broadcast time. These revenues are generally recognized ratably over the duration that the third party programs the radio station. Digital Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video sponsorships) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered. The Company generates revenue from the sale of services and products including, but not limited to: (i) on-air commercial broadcast time, (ii) magazine-related display advertising, (iii) magazine circulation and newsstand revenues, (iv) non-traditional revenues including event-related revenues and event sponsorship revenues, (v) revenues generated from LMAs and (vi) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising On-air broadcast revenue and magazine display revenue are recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. Payments received by advertisers before the performance obligation is satisfied are recorded as deferred revenue in the condensed consolidated balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date. Circulation Circulation revenue includes revenues for Indianapolis Monthly purchased by readers or distributors. Single copy newsstand sales are recognized when the monthly magazine is distributed, net of provisions for related returns. Circulation revenue from digital and home delivery subscriptions are recognized over the subscription period as the performance obligations are delivered. Nontraditional Nontraditional revenues principally consist of ticket sales and sponsorship of events our stations and magazine conduct in their local markets. These revenues are recognized when our performance obligations are fulfilled, which generally coincides with when the related event occurs. LMA Fees LMA fee revenue relates to fees that the Company collects from third parties in exchange for the right to program and sell advertising for a specified portion of a radio station's inventory of broadcast time. These revenues are generally recognized ratably over the duration that the third party programs the radio station. Digital Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video sponsorships) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered. |
Summary of Significant Accounting Policies (Tables) |
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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 (loss) income per share:
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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:
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Schedule Of Operating Results From Local Programming and Marketing Agreements | The following table summarizes certain operating results of 98.7FM for all periods presented. Net revenues for 98.7FM are solely related to LMA fees. 98.7FM is a part of our radio segment.
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Schedule Of Assets And Liabilities Of Local Programming and Marketing Agreements | Assets and liabilities of 98.7FM as of February 28, 2018 and May 31, 2018 were as follows:
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Restrictions on Cash and Cash Equivalents |
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Noncontrolling Interest | Below is a summary of the noncontrolling interest activity for the three months ended May 31, 2017 and 2018:
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Share Based Payments (Tables) |
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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 three months ended May 31, 2017 and 2018:
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Summary of Stock Options Outstanding and Activity | The following table presents a summary of the Company’s stock options outstanding at May 31, 2018, and stock option activity during the three months ended May 31, 2018 (“Price” reflects the weighted average exercise price per share; "Aggregate Intrinsic Value" dollars in thousands):
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Summary of Nonvested Options and Changes | A summary of the Company’s nonvested options at May 31, 2018, and changes during the three months ended May 31, 2018, is presented below:
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Summary of Restricted Stock Grants Outstanding and Activity | The following table presents a summary of the Company’s restricted stock grants outstanding at May 31, 2018, and restricted stock activity during the three months ended May 31, 2018 (“Price” reflects the weighted average share price at the date of grant):
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Stock-Based Compensation Expense and Related Tax Benefits Recognized | The following table summarizes stock-based compensation expense recognized by the Company during the three months ended May 31, 2017 and 2018. The Company did not recognize any tax benefits related to stock-based compensation during the periods presented below.
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Definite-lived Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The following table presents the weighted-average useful life at May 31, 2018, and the gross carrying amount and accumulated amortization for our sole definite-lived intangible asset at February 28, 2018 and May 31, 2018:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table presents the Company's estimate of future amortization expense for definite-lived intangibles:
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Long-term Debt (Tables) |
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Schedule of Long-term Debt Instruments | Long-term debt was comprised of the following at February 28, 2018 and May 31, 2018:
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Schedule Of Financial Covenants |
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Schedule of Maturities of Long-term Debt | Based on amounts outstanding at May 31, 2018, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:
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Revenue (Tables) |
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Disaggregation of Revenue | The following table presents the Company's revenues disaggregated by revenue source:
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Fair Value Measurements (Tables) |
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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.
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Reconciliation of Beginning and Ending Balances for Fair Value Measurements using Significant Unobservable Inputs |
Segment Information (Tables) |
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations of Business Segments |
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Significant Events (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The table below summarizes the activity related to our restructuring charge for the three months ended May 31, 2018.
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Business Disposition, Pro Forma Results |
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Disclosure of Long Lived Assets Held-for-sale | The carrying amounts of major classes of assets classified as held for sale related to our St. Louis radio stations as of February 28, 2018 and May 31, 2018 were as follows:
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St Louis [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations of Disposal Groups |
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Summary of Significant Accounting Policies Reverse Stock Split (Details) |
Jul. 08, 2016 |
---|---|
Reverse Stock Split [Abstract] | |
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.25 |
Summary of Significant Accounting Policies Calculation of Basic and Diluted Net Income Per Share from Continuing Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Basic net income (loss) per common share: | ||
Net income (loss) available to common shareholders | $ 23,485 | $ (267) |
Basic shares: | ||
Basic weighted average common shares outstanding (in shares) | 12,483 | 12,257 |
Impact of equity awards (in shares) | 928 | |
Diluted shares: | ||
Diluted weighted average common shares outstanding (in shares) | 13,411 | 12,257 |
Basic net income (loss) per common share: | ||
Net income available to common shareholders from continuing operations, per basic shares (in dollars per share) | $ 1.88 | $ (0.02) |
Diluted net income (loss) per common share: | ||
Net income available to common shareholders from continuing operations, per dilutive shares (in dollars per share) | $ 1.75 | $ (0.02) |
Summary of Significant Accounting Policies Shares Excluded from Calculation as Effect of Conversion into Shares of Common Stock (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common share equivalents | 849 | 2,498 |
Equity awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common share equivalents | 849 | 2,498 |
Summary of Significant Accounting Policies Summary of Restricted Cash (Details) - USD ($) $ in Thousands |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Cash and cash equivalents | $ 10,456 | $ 4,107 |
Restricted Cash | 11,576 | 6,115 |
98.7FM LMA restricted cash [Member] | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted Cash | 1,120 | 1,358 |
Cash held in escrow [Member] | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted Cash | $ 0 | $ 650 |
Summary of Significant Accounting Policies Operating Results of Local Programming and Marketing Agreement Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Segment Reporting Information [Line Items] | ||
Net revenues | $ 28,006 | $ 40,164 |
Station operating expenses excluding LMA fees and depreciation and amortization expense | 21,531 | 31,230 |
Interest expense | 2,641 | 4,666 |
98.7 FM | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 2,583 | 2,583 |
Station operating expenses excluding LMA fees and depreciation and amortization expense | 297 | 293 |
Interest expense | $ 609 | $ 672 |
Summary of Significant Accounting Policies Restricted Cash (Details) - USD ($) $ in Thousands |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted Cash | $ 11,576 | $ 6,115 |
Cash held in escrow [Member] | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted Cash | 0 | 650 |
98.7FM LMA restricted cash [Member] | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted Cash | $ 1,120 | $ 1,358 |
Summary of Significant Accounting Policies Noncontrolling Interests (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Noncontrolling Interest [Line Items] | ||
Beginning balance | $ 30,680 | $ 32,921 |
Net income (loss) | (754) | (839) |
Distributions to noncontrolling interests | (1,721) | (1,072) |
Ending balance | 29,713 | 32,688 |
Austin Radio Partnership [Member] | ||
Noncontrolling Interest [Line Items] | ||
Beginning balance | 47,424 | 46,830 |
Net income (loss) | (1,372) | 1,598 |
Distributions to noncontrolling interests | (1,721) | (1,072) |
Ending balance | 47,075 | 47,356 |
Digonex [Member] | ||
Noncontrolling Interest [Line Items] | ||
Beginning balance | (16,744) | (13,909) |
Net income (loss) | 618 | 759 |
Distributions to noncontrolling interests | 0 | |
Ending balance | $ (17,362) | $ (14,668) |
Summary of Significant Accounting Policies Additional Information (Details) $ in Millions |
3 Months Ended |
---|---|
May 31, 2018
USD ($)
| |
Noncontrolling Interest [Line Items] | |
Local programming and marketing agreement fee | $ 0.7 |
Austin Radio Partnership [Member] | |
Noncontrolling Interest [Line Items] | |
Percentage Of Controlling Interest | 50.10% |
Digonex [Member] | |
Noncontrolling Interest [Line Items] | |
Percentage Of Controlling Interest | 83.00% |
Share Based Payments Assumptions used to Calculate Fair Value of Options on Date of Grant (Details) |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-Free Interest Rate: | 2.60% | 1.90% |
Expected Dividend Yield: | 0.00% | 0.00% |
Expected Life (Years): | 4 years 10 months | 4 years 5 months |
Expected Volatility: | 53.20% | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility: | 52.90% | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility: | 53.10% |
Share Based Payments Summary of Stock Options Outstanding and Activity (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
May 31, 2018
USD ($)
$ / shares
shares
| ||||
Options | ||||
Outstanding, beginning of period | shares | 2,691,329 | |||
Granted | shares | 84,000 | |||
Exercised | shares | 2,140,277 | |||
Expired | shares | 27,850 | |||
Outstanding, end of period | shares | 2,701,645 | |||
Price | ||||
Outstanding, beginning of period | $ 4.66 | |||
Granted | 4.16 | |||
Expired or exchanged | 9.76 | |||
Outstanding, end of period | 4.63 | |||
Exercisable, end of period | $ 5.05 | |||
Outstanding | 6 years 5 months | |||
Exercised | $ 2.60 | [1] | ||
Forfeited | $ 0.00 | |||
Exercisable, end of period | 5 years 9 months | |||
Outstanding, end of period | $ | $ 4,786 | |||
Exercisable, end of period | $ | $ 3,440 | |||
|
Share Based Payments Summary of Nonvested Options and Changes (Details) |
3 Months Ended |
---|---|
May 31, 2018
$ / shares
shares
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share Based Compensation Share Based Payment Awards Option Forfeited In Period Weighted Average Grant Date Fair Value | $ 0.00 |
Options | |
Nonvested, beginning of period | shares | 691,114 |
Granted | shares | 84,000 |
Vested | shares | 213,746 |
Nonvested, end of period | shares | 561,368 |
Weighted Average Grant Date Fair Value | |
Nonvested, beginning of period | $ 2.10 |
Granted | 2.03 |
Vested | 3.91 |
Nonvested, end of period | $ 1.40 |
Share Based Payments Summary of Restricted Stock Grants Outstanding and Activity (Details) - Restricted Stock |
3 Months Ended |
---|---|
May 31, 2018
$ / shares
shares
| |
Awards | |
Grants outstanding, beginning of period | shares | 353,394 |
Granted | shares | 123,514 |
Vested (restriction lapsed) | shares | 36,015 |
Grants outstanding, end of period | shares | 440,893 |
Price | |
Grants outstanding, beginning of period | $ / shares | $ 3.05 |
Granted | $ / shares | 4.43 |
Vested (restriction lapsed) | $ / shares | 4.42 |
Grants outstanding, end of period | $ / shares | $ 3.32 |
Share Based Payments Stock-Based Compensation Expense and Related Tax Benefits Recognized (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 463 | $ 689 |
Station operating expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | 71 | 149 |
Corporate expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 392 | $ 540 |
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
Feb. 28, 2018 |
|
Intangible Assets And Goodwill [Line Items] | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 170,890 | $ 170,890 | |
Goodwill | 4,338 | $ 4,338 | |
Amortization of Intangible Assets | $ 100 | $ 100 |
Intangible Assets and Goodwill Definite-lived Intangibles (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
Feb. 28, 2018 |
|
Definite-Lived Intangible Assets [Line Items] | ||
Net Carrying Amount | $ 980 | $ 1,053 |
Contract-Based Intangible Assets | ||
Definite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 3 years 4 months | |
Gross Carrying Amount | $ 2,154 | 2,154 |
Accumulated Amortization | 1,174 | 1,101 |
Net Carrying Amount | $ 980 | $ 1,053 |
Intangible Assets and Goodwill Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 100 | $ 100 |
Estimate of amortization expense related to intangible assets: | ||
Remainder of 2019 | 221 | |
2019 | 294 | |
2020 | 294 | |
2021 | $ 171 |
Long-term Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Debt Instrument | ||
Less: Current maturities | $ 34,724 | $ 16,037 |
Less: Unamortized original issue discount | 2,240 | 3,476 |
Total long-term debt | 53,385 | 122,849 |
98.7FM Non-recourse debt | ||
Debt Instrument | ||
Non-recourse debt | 52,337 | 53,919 |
Other non-recourse debt | ||
Debt Instrument | ||
Non-recourse debt | 9,992 | |
Non-recourse debt | ||
Debt Instrument | ||
Non-recourse debt | 10,012 | |
Two Thousand Fourteen Credit Agreement | ||
Debt Instrument | ||
Total Credit Agreement debt | 28,000 | 78,451 |
Less: Unamortized original issue discount | 600 | |
Revolver | Two Thousand Fourteen Credit Agreement | ||
Debt Instrument | ||
Total Credit Agreement debt | 0 | 9,000 |
Term Loan | Two Thousand Fourteen Credit Agreement | ||
Debt Instrument | ||
Total Credit Agreement debt | $ 28,000 | $ 69,451 |
Long-term Debt - Schedule of Maximum Leverage Ratio (Details) - Two Thousand Fourteen Credit Agreement $ in Millions |
3 Months Ended |
---|---|
May 31, 2018
USD ($)
| |
Covenant Requirement | |
Line of Credit Facility | |
Consolidated EBITDA | $ 8.4 |
Interest Coverage Ratio | 1.6 |
Actual Results | |
Line of Credit Facility | |
Consolidated EBITDA | $ 10.8 |
Interest Coverage Ratio | 2.60 |
Long-term Debt - Schedule of Maturities of Long-term Debt (Details) $ in Thousands |
May 31, 2018
USD ($)
|
---|---|
Debt Instrument | |
2015 | $ 5,005 |
2016 | 35,150 |
2017 | 7,755 |
2018 | 14,633 |
2019 | 13,069 |
Thereafter | 14,964 |
Total long-term debt | 90,576 |
98.7FM Non-recourse debt | |
Debt Instrument | |
2015 | 5,005 |
2016 | 7,150 |
2017 | 7,755 |
2018 | 8,394 |
2019 | 9,069 |
Thereafter | 14,964 |
Total long-term debt | 52,337 |
Digonex Non-recourse debt | |
Debt Instrument | |
2015 | 0 |
2016 | 0 |
2017 | 0 |
2018 | 6,239 |
2019 | 4,000 |
Thereafter | 0 |
Total long-term debt | 10,239 |
Revolver | Two Thousand Fourteen Credit Agreement | |
Debt Instrument | |
2015 | 0 |
2016 | 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
Thereafter | 0 |
Total long-term debt | 0 |
Term Loan | Two Thousand Fourteen Credit Agreement | |
Debt Instrument | |
2015 | 0 |
2016 | 28,000 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
Thereafter | 0 |
Total long-term debt | $ 28,000 |
Liquidity and Going Concern Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
Feb. 28, 2018 |
|
Other Commitments [Line Items] | |||
Cash and cash equivalents | $ 10,456 | $ 4,107 | |
Payments to Acquire Property, Plant, and Equipment | 20 | $ 397 | |
Current maturities of long-term debt | 34,724 | 16,037 | |
Two Thousand Fourteen Credit Agreement | |||
Other Commitments [Line Items] | |||
Total Credit Agreement debt | 28,000 | 78,451 | |
Two Thousand Fourteen Credit Agreement | Revolver | |||
Other Commitments [Line Items] | |||
Total Credit Agreement debt | 0 | 9,000 | |
Two Thousand Fourteen Credit Agreement | Term Loan | |||
Other Commitments [Line Items] | |||
Total Credit Agreement debt | $ 28,000 | $ 69,451 |
Disaggregation of Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 28,006 | $ 40,164 |
Advertising [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 18,775 | 28,957 |
Circulation | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 102 | 110 |
Nontraditional | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 1,968 | 2,488 |
LMA Fees | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 3,302 | 2,583 |
Digital | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 1,200 | 3,028 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 2,659 | $ 2,998 |
Fair Value Measurements Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | $ 800 | $ 800 |
Total assets measured at fair value on a recurring basis | 800 | 800 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available for sale securities | 800 | 800 |
Total assets measured at fair value on a recurring basis | $ 800 | $ 800 |
Fair Value Measurements Additional Information (Details) $ in Millions |
May 31, 2018
USD ($)
|
---|---|
Fair Value Measurements Additional Detail [Abstract] | |
Long-term Debt, Fair Value | $ 27.4 |
Regulatory, Legal and Other Matters Regulatory, Legal and Other Matters (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
May 31, 2018 |
May 31, 2017 |
Feb. 28, 2018 |
|
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Proceeds from Legal Settlements | $ 450 | ||
Payments for Legal Settlements | 200 | ||
Gain on sale of assets, net of disposition costs | 32,067 | $ 0 | |
Restricted Cash | 11,576 | $ 6,115 | |
Hour Magazines [Member] | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Gain on sale of assets, net of disposition costs | $ (200) | ||
INIC Suit [Member] | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Litigation Expense | 4,100 | ||
Insurance deductible | $ 1,000 |
Income Taxes Additional Information (Details) |
3 Months Ended | |
---|---|---|
May 31, 2018
Rate
|
May 31, 2017
Rate
|
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate | 24.00% | (4.00%) |
Federal statutory tax rate | 21.00% | 35.00% |
Significant Events Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2018 |
May 31, 2018 |
May 31, 2017 |
|
Business Acquisition [Line Items] | |||
Gain on sale of assets, net of disposition costs | $ 32,067 | $ 0 | |
Local programming and marketing agreement fee | 700 | ||
Restructuring Charges | 1,200 | ||
St Louis [Member] | |||
Business Acquisition [Line Items] | |||
Gross Proceeds from Divestiture of Business | $ 60,000 | ||
Net Proceeds from Divestiture of Businesses | 40,500 | ||
Gain on sale of assets, net of disposition costs | $ (32,400) | (32,398) | $ 0 |
Local programming and marketing agreement fee | 700 | ||
Restructuring Charges | $ 1,200 |
Significant Events Proforma Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2018 |
May 31, 2017 |
|
Business Acquisition [Line Items] | ||
Pro Forma Net revenue | $ 27,281 | $ 28,262 |
Pro Forma Station operating expenses, excluding depreciation and amortization expense | 20,528 | 21,941 |
Pro Forma Consolidated net income | 469 | 254 |
Pro Forma Net income attributable to the Company | $ (285) | $ (585) |
Pro Forma Net income per share, basic | $ (0.02) | $ (0.05) |
Pro Forma Net income per share, diluted | $ (0.02) | $ (0.05) |
Significant Events Restrucuring Reserve (Details) $ in Thousands |
3 Months Ended |
---|---|
May 31, 2018
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges and lease abandonment costs, beginning balance | $ 0 |
Restructuring chanrges and lease abandonment costs - St. Louis radio station sale | 1,200 |
Payments | (47) |
Restructuring charges and lease abandonment costs unpaid and outstanding | $ 1,131 |
Significant Events Assets held for sale (Details) - USD ($) $ in Thousands |
May 31, 2018 |
Feb. 28, 2018 |
---|---|---|
Long Lived Assets Held-for-sale [Line Items] | ||
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment | $ 370 | $ 1,340 |
Disposal Group, indefinite-lived intangibles | 0 | 24,758 |
Disposal Group, other intangibles | $ 0 | $ 72 |
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