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 $32.1 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 nine-month period ended November 30, 2018.

In connection with the sale of our St. Louis stations, the Company originally 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. During the three months ended November 30, 2018, the Company revised its estimate of cease-use costs related to our leased St. Louis office facility, which resulted in an additional charge of $0.2 million. 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-month and nine-month periods ended November 30, 2018.



	Three months ended			Nine months ended
	November 30, 2018			November 30, 2018
Restructuring charges and estimated lease cease-use costs, beginning balance	$	1,052		$	—
Restructuring charges and estimated lease cease-use costs- St. Louis radio stations sale	245			1,423
Payments, net of accretion	(103		)	(229		)
Restructuring charges and estimated lease cease-use costs unpaid and outstanding	$	1,194		$	1,194

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.



	For the three months ended November 30,					For the nine months ended November 30,
	2017		2018			2017		2018
Net revenues	$	6,218	$	(13	)	$	18,974	$	712
Station operating expenses (recoveries), excluding depreciation and amortization expense	4,797		(208		)	14,536		485
Depreciation and amortization	146		—			425		—
Loss (gain) on sale of assets, net of disposition costs	—		235			—		(32,418		)
Operating income	1,275		(40		)	4,013		32,645
Interest expense	844		—			2,478		592
Income (loss) before income taxes	431		(40		)	1,535		32,053

Unaudited pro forma summary information is presented below for the three-month and nine-month periods ended November 30, 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.



	For the three months ended November 30, (unaudited)					For the nine months ended November 30, (unaudited)
	2017			2018		2017			2018
Net revenues	$	29,126		$	30,335	$	91,571		$	89,672
Station operating expenses, excluding depreciation and amortization expense	23,004			24,144		71,378			70,978
Consolidated net income	437			1,113		1,720			2,502
Net (loss) income attributable to the Company	(274		)	276		(638		)	106
Net (loss) income per share - basic	$	(0.02	)	$	0.02	$	(0.05	)	$	0.01
Net (loss) income per share - diluted	$	(0.02	)	$	0.02	$	(0.05	)	$	0.01

Emmis retained ownership of two radio transmission towers in St. Louis subsequent to the sale of our radio stations on April 30, 2018. These towers were classified as held for sale and carried at the lower of their carrying amount or fair value less cost to sell. During the quarter ended August 31, 2018, Emmis determined that the carrying value of these assets exceeded their fair value less cost to sell. As such, the Company recorded a loss of $0.2 million to reduce the carrying value of these assets, which is included in station operating expenses excluding depreciation and amortization expense in the accompanying condensed consolidated statements of operations. This was considered a Level 3 measurement. The Company completed the sale of these radio transmission towers during the quarter ended November 30, 2018 for total net proceeds of $0.2 million, which approximated their carrying value.

TagStation and NextRadio

During the quarter ended November 30, 2018, we decided to dramatically reduce the scale of our operations in TagStation, LLC and NextRadio, LLC. In connection with this decision, we recognized $1.2 million of severance related to the termination of 35 employees and recognized $0.3 million of impairment related to property and equipment of these businesses, both of which are included in station operating expenses, excluding depreciation and amortization in the accompanying condensed consolidated statements of operations.