Other Significant Events

Sale of Texas Monthly

On November 1, 2016, Emmis closed on its sale of Texas Monthly for gross proceeds of $25.0 million in cash to a subsidiary of Genesis Park, LP. The Company previously announced that it was exploring strategic alternatives for its publishing division, excluding Indianapolis Monthly. Emmis believes that its publishing portfolio has significant brand value and plans to use proceeds from the sale of its publishing properties to repay debt. Emmis received net proceeds of $23.5 million, consisting of the stated purchase price of $25.0 million, net of estimated purchase price adjustments totaling $0.7 million and disposition costs totaling $0.8 million. The $0.8 million of disposition costs primarily relate to Emmis' agreement to reimburse the buyer for severance costs pursuant to a predetermined schedule to the extent that the buyer terminates employees of Texas Monthly prior to February 28, 2017. This amount represents the Company's estimate of the probable amount of exposure under this agreement, which has been accrued and recorded as a reduction of the disposal gain. Additional severance amounts of up to $1.8 million could be incurred during the quarter ended February 28, 2017, if the buyer chooses to terminate additional employees. Any additional severance amounts will be recorded during the quarter ended February 28, 2017, as an adjustment to the disposal gain. Substantially all of the proceeds were used to repay term and revolving loan indebtedness under Emmis’ senior credit facility. Emmis recorded a $17.5 million gain on the sale of Texas Monthly. Texas Monthly had historically been included in our Publishing segment. The following table summarizes certain operating results of Texas Monthly 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 Texas Monthly is included in the magazine's results below. The Term Loan repayment is preliminary and may be adjusted for revisions to estimates and the Company's reinvestment of proceeds of the Texas Monthly transaction. See Note 4 for more discussion.



	Three months ended November 30,					Nine Months ended November 30,
	2015		2016			2015			2016
Net revenues	$	6,525	$	4,146		$	19,454		$	14,774
Station operating expenses, excluding depreciation and amortization expense	5,415		4,284			16,545			14,367
Depreciation and amortization	30		21			87			84
Operating income	1,080		(159		)	2,822			323
Interest expense	287		195			840			782
Other expense (income)	3		—			(361		)	(7		)
Income before income taxes	790		(354		)	2,343			(452		)

The following table presents unaudited pro forma consolidated financial information as if the closing of our disposition of Texas Monthly and the related $15.0 million mandatory debt repayment had occurred on March 1, 2015 (in thousands, except per share data):



	Three Months Ended November 30,				Nine Months Ended November 30,
	2015		2016		2015		2016
Net revenues	$	53,089	$	52,153	$	161,095	$	156,301
Station operating expenses, excluding depreciation and amortization	38,239		41,142		120,386		121,039
Consolidated net income	5,178		1,120		10,698		4,135
Net income attributable to the Company	4,758		539		9,124		3,658
Net income per share - basic	$	0.43	$	0.04	$	0.83	$	0.31
Net income per share - diluted	$	0.40	$	0.04	$	0.77	$	0.30

Sale of Terre Haute radio stations

On October 12, 2016, Emmis entered into agreements to sell its radio stations in Terre Haute, Indiana. Emmis previously announced that it was exploring strategic alternatives for its Terre Haute radio stations and WLIB-AM in New York. Emmis believes selling these non-core radio stations will help the company to continue to de-lever its balance sheet. Under one purchase agreement, Emmis will sell the assets of WTHI-FM and the intellectual property of WWVR-FM to Midwest Communications, Inc. for gross proceeds of $4.3, subject to working capital and other closing adjustments. Under another purchase agreement, Emmis will sell the assets of WFNF-AM, WFNB-FM, WWVR-FM (other than the intellectual property for that station) and an FM translator to DLC Media, Inc. for gross proceeds of $0.9 million, subject to working capital and other closing adjustments. The purchase agreements contain customary representations, warranties, covenants and indemnities. Because Midwest Communications is currently at the FCC ownership limits for FM radio stations in the Terre Haute market, Midwest contemporaneously entered into an agreement to sell one of its stations, WDKE-FM, to DLC Media. The closings under these three transactions are cross conditioned. The transactions are subject to FCC approval and other customary closing conditions, and are expected to close on January 30, 2017. The Terre Haute radio stations are included in our Radio segment. The following table summarizes certain operating results for the Terre Haute radio stations for all periods presented:



	Three months ended November 30,				Nine Months ended November 30,
	2015		2016		2015			2016
Net revenues	$	614	$	849	$	1,950		$	2,035
Station operating expenses, excluding depreciation and amortization expense	556		741		1,883			1,796
Depreciation and amortization	42		29		119			117
Operating income	16		79		(52		)	122

Emmis determined that the Terre Haute radio stations met the requirements for held for sale classification as of November 30, 2016. Noncurrent assets related to our Terre Haute radio stations as of February 29, 2016 and November 30, 2016 consisted of property and equipment and FCC Licenses as summarized in the following table. Terre Haute assets held for sale of $1.4 million as of November 30, 2016 are included in other current assets in the accompanying condensed consolidated balance sheets as the Company expects to close on the sale of the stations within the next twelve months. No reclassifications were made to classify Terre Haute assets as held for sale as of February 29, 2016.



	As of February 29, 2016	As of November 30, 2016
	(included in Property and equipment, net and Indefinite-lived intangibles)	(included in Other current assets)
Property and equipment, net	809	700
Indefinite-lived intangibles	721	721
Total Terre Haute assets held for sale	1,530	1,421

Nasdaq listing requirements

On July 26, 2016, the Nasdaq Stock Market LLC ("Nasdaq") informed the Company that the Company was in compliance with all applicable requirements for continued listing of its Class A common stock on Nasdaq. The Company requested and received a hearing before the Nasdaq Hearing Panel regarding the Nasdaq Listing Qualifications Staff's June 7, 2016, determination to delist the Company's Class A common stock due to the Company's non-compliance with the minimum bid price requirement. The Hearing Panel determined the Company had regained compliance with the minimum bid price requirement as a result of the one-for-four reverse stock split adopted July 8, 2016, and is otherwise compliant with all applicable Nasdaq listing criteria.

On March 17, 2016, Nasdaq filed with the United States Securities and Exchange Commission Form 25-NSE to formally delist the Company's Preferred Stock from the Nasdaq Global Select Market (formerly listed under the symbol "EMMSP"). The delisting occurred on March 28, 2016. Subsequently, the Company filed a Certification and Notice of Termination of Registration to cause the Preferred Stock to be deregistered under Section 12(g) of the Securities Exchange Act of 1934. Pursuant to the Company's articles of incorporation, each outstanding share of Preferred Stock was automatically converted on April 4, 2016, into the Company's Class A common stock at a ratio of 2.80 shares of Class A common stock for each share of Preferred Stock.

Digonex investment

On March 1, 2016, June 7, 2016, and September 1, 2016, Emmis contributed an additional $0.5 million to Digonex in the form of convertible debt. As of November 30, 2016. Emmis owns rights that are convertible into at least 79% of the common equity of Digonex.

Going private offer

On August 18, 2016, the Board of Directors of the Company received a letter from E Acquisition Corporation ("EAC"), an Indiana corporation owned by Jeffrey H. Smulyan, the Company’s Chairman of the Board, Chief Executive Officer and controlling shareholder, setting forth a non-binding proposal by which E Acquisition Corporation (the “Proposing Person”), would acquire all the outstanding shares of Class A Common Stock of the Company that are not owned by the Proposing Person at a cash purchase price of $4.10 per share (the “Proposal”). The Proposal contemplated that, following the closing of the proposed transaction, the Company’s shares would no longer be registered with the Securities and Exchange Commission and the Company would no longer be a reporting company or have any public shares traded on Nasdaq.

The Company’s Board of Directors formed a special committee of independent and disinterested directors (the “Special Committee”) to review and evaluate the Proposal. The members of the Special Committee were Susan Bayh and Peter Lund. On October 14, 2016, EAC delivered to the Special Committee a letter (the “Proposal Expiration Letter”) confirming that the offer had expired on October 14, 2016 and had not been extended.

The Special Committee engaged independent legal counsel and independent financial advisors to assist the Special Committee in the evaluation of the Proposal. Through November 30, 2016, the Company incurred $0.9 million of costs associated with the Proposal, which are included in corporate expenses, excluding depreciation and amortization expense in the accompanying condensed consolidated statements of operations. No further costs are expected to be incurred in connection with the going private offer as it has expired.