OTHER SIGNIFICANT TRANSACTIONS

Next Radio LLC - Sprint Agreement

On August 9, 2013, NextRadio LLC, a wholly-owned subsidiary of Emmis, entered into an agreement with Sprint whereby Sprint agreed to pre-load the Company's smartphone application, NextRadio, in a minimum of 30 million FM-enabled wireless devices on the Sprint wireless network over a three-year period. In return, NextRadio LLC agreed to pay Sprint $15 million per year in equal quarterly installments over the three year term and to share with Sprint certain revenue generated by the NextRadio application. Emmis has not guaranteed NextRadio LLC's performance under this agreement and Sprint does not have recourse to any Emmis related entity other than NextRadio LLC. Additionally, the agreement does not limit the ability of NextRadio LLC to place the NextRadio application on FM-enabled devices on other wireless networks. Through February 29, 2016, the NextRadio application had not generated a material amount of revenue.

Nearly all of the largest radio broadcasters and many smaller radio broadcasters expressed support for NextRadio LLC's agreement with Sprint. Accordingly, NextRadio LLC entered into a number of funding agreements with radio broadcasters and other participants in the radio industry to collect and remit cash to Sprint to fulfill the quarterly payment obligation. As part of some of these funding agreements, Emmis agreed to certain limitations on the operation of its NextRadio and TagStation businesses, including assurances of access to the NextRadio app and to TagStation (the cloud-based engine that provides data to the NextRadio application), and limitations on the sale of the businesses to potential competitors of the U.S. radio industry. Emmis also granted the U.S. radio industry (as defined in the funding agreements) a call option on substantially all of the assets used in the NextRadio and TagStation businesses in the United States. The call option may be exercised in August 2017 or August 2019 by paying Emmis a purchase price equal to the greater of (i) the appraised fair market value of the NextRadio and TagStation businesses, or (ii) two times Emmis' cumulative investments in the development of the businesses. If the call option is exercised, the businesses will continue to be subject to the operating limitations applicable today, and no radio operator will be permitted to own more than 30% of the NextRadio and TagStation businesses.

Emmis determined that NextRadio LLC is a variable interest entity (VIE) and that Emmis is the primary beneficiary because the Company has the power to direct substantially all of the activities of NextRadio LLC, and because the Company may absorb certain losses and receive certain benefits from the operations of the VIE. Emmis does not record any revenue or expense related to the amounts that are collected and remitted to Sprint except the portion of any payment to Sprint that was actually contributed to NextRadio LLC by Emmis. Emmis contributed approximately $1.1 million, $0.5 million and $0.4 million to NextRadio LLC during the years ended February 2014, 2015 and 2016, respectively. These amounts were recorded as station operating expenses, excluding depreciation and amortization expense.

As of February 28, 2015, the carrying value of assets within NextRadio LLC totaled $1.3 million, which represented cash collected by NextRadio LLC from other broadcasting companies and other companies in the radio industry. This cash is restricted because it must be remitted to Sprint. NextRadio LLC had $1.3 million of liabilities at February 28, 2015, which represented the obligation to remit cash received from radio industry participants to Sprint. NextRadio LLC remitted all cash collected from other broadcasting companies and other companies in the radio industry to Sprint as of February 29, 2016, and thus has no assets or liabilities as of that date.

LMA of 98.7FM in New York, NY and Related Financing Transaction

On April 26, 2012 Emmis entered into an LMA with a subsidiary of Disney Enterprises, Inc., pursuant to which the Disney subsidiary purchased the right to provide programming for 98.7FM in New York, NY until August 24, 2024. Emmis retains ownership and control of 98.7FM, including the related FCC license during the term of the LMA and receives an annual fee from the Disney subsidiary. The fee, initially $8.4 million annually, increases by 3.5% annually until the LMA's termination.

As discussed in Note 5, Emmis, through newly-created subsidiaries, issued $82.2 million of notes, which are nonrecourse to the rest of the Company's subsidiaries and are secured by the assets of the newly-created subsidiaries including the payments made in connection with the 98.7FM LMA. See Notes 1e and 5 for more discussion of the LMA payments and nonrecourse debt.

The following table summarizes Emmis' operating results of 98.7FM for all periods presented. Emmis programmed 98.7FM until the LMA commenced on April 26, 2012. 98.7FM is a part of our radio segment. Results of operations of 98.7FM for the years ended February 2014, 2015 and 2016 were as follows:



	For the year ended February 28 (29),
	2014		2015		2016
Net revenues	$	10,331	$	10,331	$	10,331
Station operating expenses, excluding depreciation and amortization expense	1,009		1,002		1,000
Impairment loss on intangible assets (Note 9)	—		9,462		1,766
Depreciation and amortization	—		—		21
Interest expense	3,416		3,238		3,042

Assets and liabilities of 98.7FM as of February 28 (29), 2015 and 2016 were as follows:



	As of February 28 (29),
	2015		2016
Current assets:
Restricted cash	$	1,467	$	1,464
Prepaid expenses	603		545
Total current assets	2,070		2,009
Noncurrent assets:
Property and equipment	—		253
Indefinite lived intangibles	51,063		49,297
Deposits and other	4,428		5,460
Total noncurrent assets	55,491		55,010
Total assets	$	57,561	$	57,019
Current liabilities:
Accounts payable and accrued expenses	$	22	$	14
Current maturities of long-term debt	4,990		5,453
Deferred revenue	753		779
Other current liabilities	241		223
Total current liabilities	6,006		6,469
Noncurrent liabilities:
Long-term debt, net of current portion	62,916		57,728
Other noncurrent liabilities	27		—
Total noncurrent liabilities	62,943		57,728
Total liabilities	$	68,949	$	64,197