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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2003

EMMIS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its
charter)
    
    EMMIS OPERATING COMPANY
(Exact name of registrant as specified in its
charter)INDIANA
(State of incorporation or organization)
    
    INDIANA
(State of incorporation or organization)0-23264
(Commission file number)
    
    333-62172-13
(Commission file number)35-1542018
(I.R.S. Employer
Identification No.)
    
    35-2141064
(I.R.S. Employer
Identification No.)ONE EMMIS PLAZA
40 MONUMENT CIRCLE
SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)
    
    ONE EMMIS PLAZA
40 MONUMENT CIRCLE
SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)(317) 266-0100
(Registrants Telephone Number,
Including Area Code)
    
    (317) 266-0100
(Registrants Telephone Number,
Including Area Code)


NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X      No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 126-2 of the Act).

Yes X      No

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The number of shares outstanding of each of Emmis Communications
Corporations classes of common stock, as of January 2, 2004, was:

50,322,901
    
    Shares of Class A Common Stock, $.01 Par Value5,030,002
    
    Shares of Class B Common Stock, $.01 Par Value0
    
    Shares of Class C Common Stock, $.01 Par Value


Emmis Operating Company had 1,000 shares of common stock outstanding as of
January 2, 2004 and all of these shares are owned by Emmis Communications
Corporation.

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|                                                   |                                                                                               |                                                      |                                                             |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------------------------- |  |  |  |  | 
|INDEPENDENT ACCOUNTANTS REVIEW REPORT            
|PART I  FINANCIAL INFORMATION                    
|                                                   | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                   |                                                                                               | EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES   
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS            
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED BALANCE SHEETS                      
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS            
|                                                   |                                                                                               | EMMIS OPERATING COMPANY AND SUBSIDIARIES            
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS            
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED BALANCE SHEETS                      
|                                                   |                                                                                               |                                                      | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS            
|                                                   |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                   | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION                       
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|1st Amendment to Amended & Restated Agreement     
|1st Amendment to Amended & Restated Regulations   
|Letter re: unaudited interim financial information
|Certification of Principal Executive Officer      
|Certification of Principal Financial Officer      
|Certification of Principal Executive Officer      
|Certification of Principal Financial Officer      
|Certification of Principal Executive Officer      
|Certification of Principal Financial Officer      
|Certification of Principal Executive Officer      
|Certification of Principal Financial Officer      



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INDEX

PageINDEPENDENT ACCOUNTANTS REVIEW REPORT
    
    
    4PART I   FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    5Emmis Communications Corporation and Subsidiaries:Condensed Consolidated Statements of Operations for the three
and nine months ended November 30, 2002 and 2003
    
    
    5Condensed Consolidated Balance Sheets
as of February 28, 2003 and November 30, 2003
    
    
    7Condensed Consolidated Statements of Cash Flows
for the nine months ended November 30, 2002 and 2003
    
    
    9Emmis Operating Company and Subsidiaries:Condensed Consolidated Statements of Operations for the three
and nine months ended November 30, 2002 and 2003
    
    
    11Condensed Consolidated Balance Sheets
as of February 28, 2003 and November 30, 2003
    
    
    12Condensed Consolidated Statements of Cash Flows
for the nine months ended November 30, 2002 and 2003
    
    
    14Notes to Condensed Consolidated Financial Statements
    
    
    16Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    37Item 3. Quantitative and Qualitative Disclosures
about Market Risk
    
    
    49Item 4. Controls and Procedures
    
    
    50PART II   OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K
    
    
    52Signatures
    
    
    54


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INDEPENDENT ACCOUNTANTS REVIEW REPORT

The Board of Directors and Shareholders
Emmis Communications Corporation and subsidiaries

We have reviewed the accompanying condensed consolidated balance sheet of Emmis
Communications Corporation and subsidiaries as of November 30, 2003, and the
related condensed consolidated statements of operations and cash flows for the
three and nine-month periods ended November 30, 2003 and 2002. We have also
reviewed the accompanying condensed consolidated balance sheet of Emmis
Operating Company (a wholly owned subsidiary of Emmis Communications
Corporation) and subsidiaries as of November 30, 2003, and the related
condensed consolidated statements of operations and cash flows for the three
and nine-month periods ended November 30, 2003 and 2002. These financial
statements are the responsibility of the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Emmis
Communications Corporation and subsidiaries as of February 28, 2003, and the
related consolidated statements of operations, changes in shareholders equity
and cash flows for the year then ended. We have also audited, in accordance
with auditing standards generally accepted in the United States, the
consolidated balance sheet of Emmis Operating Company and subsidiaries as of
February 28, 2003, and the related consolidated statements of operations,
changes in shareholders equity and cash flows for the year then ended. In our
report dated April 11, 2003, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheets of Emmis
Communications Corporation and subsidiaries and Emmis Operating Company and
subsidiaries as of February 28, 2003, is fairly stated, in all material
respects, in relation to the consolidated balance sheets from which it has been
derived.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
January 5, 2004

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PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)
(In thousands, except per share data)


Three Months Ended
    
    Nine Months EndedNovember 30,
    
    November 30,2002
    
    2003
    
    2002
    
    2003GROSS REVENUES
    
    $
    179,064
    
    
    $
    184,123
    
    
    $
    501,270
    
    
    $
    526,892LESS: AGENCY COMMISSIONS
    
    
    23,520
    
    
    
    24,078
    
    
    
    65,698
    
    
    
    68,777NET REVENUES
    
    
    155,544
    
    
    
    160,045
    
    
    
    435,572
    
    
    
    458,115OPERATING EXPENSES:Station operating expenses, excluding noncash compensation
    
    
    87,781
    
    
    
    94,685
    
    
    
    260,076
    
    
    
    279,965Corporate expenses, excluding noncash compensation
    
    
    5,571
    
    
    
    6,066
    
    
    
    15,750
    
    
    
    17,690Noncash compensation
    
    
    6,470
    
    
    
    5,585
    
    
    
    17,600
    
    
    
    18,056Depreciation and amortization
    
    
    10,738
    
    
    
    11,769
    
    
    
    32,090
    
    
    
    34,728Total operating expenses
    
    
    110,560
    
    
    
    118,105
    
    
    
    325,516
    
    
    
    350,439OPERATING INCOME
    
    
    44,984
    
    
    
    41,940
    
    
    
    110,056
    
    
    
    107,676OTHER INCOME (EXPENSE):Interest expense
    
    
    (24,468
    )
    
    
    (20,919
    )
    
    
    (80,611
    )
    
    
    (64,863
    )Gain (loss) from unconsolidated affiliates
    
    
    (128
    )
    
    
    11
    
    
    
    (4,208
    )
    
    
    (328
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (13,506
    )
    
    
    Gain (loss) on sale of assets
    
    
    (33
    )
    
    
    (95
    )
    
    
    8,900
    
    
    
    862Minority interest expense
    
    
    (110
    )
    
    
    (1,352
    )
    
    
    (14
    )
    
    
    (2,141
    )Other income (expense), net
    
    
    (275
    )
    
    
    (517
    )
    
    
    886
    
    
    
    (232
    )Total other income (expense)
    
    
    (25,014
    )
    
    
    (22,872
    )
    
    
    (88,553
    )
    
    
    (66,702
    )INCOME BEFORE INCOME TAXES AND
ACCOUNTING CHANGE
    
    
    19,970
    
    
    
    19,068
    
    
    
    21,503
    
    
    
    40,974PROVISION FOR INCOME TAXES
    
    
    9,156
    
    
    
    7,752
    
    
    
    13,419
    
    
    
    17,302INCOME BEFORE ACCOUNTING CHANGE
    
    
    10,814
    
    
    
    11,316
    
    
    
    8,084
    
    
    
    23,672CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
NET OF TAXES OF $102,600 IN 2002
    
    
    
    
    
    
    
    
    
    
    (167,400
    )
    
    
    NET INCOME (LOSS)
    
    
    10,814
    
    
    
    11,316
    
    
    
    (159,316
    )
    
    
    23,672PREFERRED STOCK DIVIDENDS
    
    
    2,246
    
    
    
    2,246
    
    
    
    6,738
    
    
    
    6,738NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
    
    $
    8,568
    
    
    $
    9,070
    
    
    $
    (166,054
    )
    
    $
    16,934


See independent accountants review report and accompanying notes.

In the three months ended November 30, 2002 and 2003, $4.9 million and
$4.4 million, respectively of our noncash compensation was attributable to our
stations, while $1.6 million and $1.2 million, respectively was attributable to
corporate. In the nine months ended November 30, 2002 and 2003, $14.3 million
and $14.4 million, respectively of our noncash compensation was attributable to
our stations, while $3.3 million and $3.7 million, respectively was attributable to corporate.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited)
(In thousands, except per share data)

Three Months Ended
    
    Nine Months EndedNovember 30,
    
    November 30,2002
    
    2003
    
    2002
    
    2003Basic net income (loss) available to common shareholders:Before accounting change
    
    $
    0.16
    
    
    $
    0.17
    
    
    $
    0.03
    
    
    $
    0.31Cumulative effect of accounting change, net of tax
    
    
    
    
    
    
    
    
    
    
    (3.16
    )
    
    
    Net income (loss) available to common shareholders
    
    $
    0.16
    
    
    $
    0.17
    
    
    $
    (3.13
    )
    
    $
    0.31Basic weighted average common shares outstanding
    
    
    53,358
    
    
    
    54,895
    
    
    
    53,019
    
    
    
    54,470Diluted net income (loss) available to common shareholders:Before accounting change
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.02
    
    
    $
    0.31Cumulative effect of accounting change, net of tax
    
    
    
    
    
    
    
    
    
    
    (3.14
    )
    
    
    Net income (loss) available to common shareholders
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    (3.12
    )
    
    $
    0.31Diluted weighted average common shares outstanding
    
    
    53,507
    
    
    
    55,252
    
    
    
    53,280
    
    
    
    54,780


See independent accountants review report and accompanying notes.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

February 28,
    
    November 30,2003
    
    2003(Note 1)
    
    (Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    16,079
    
    
    $
    12,624Accounts receivable, net
    
    
    102,345
    
    
    
    123,184Prepaid expenses
    
    
    15,596
    
    
    
    17,315Other
    
    
    25,661
    
    
    
    26,290Total current assets
    
    
    159,681
    
    
    
    179,413PROPERTY AND EQUIPMENT, NET
    
    
    223,430
    
    
    
    216,088INTANGIBLE ASSETS (Note 2):Indefinite-lived intangibles
    
    
    1,508,886
    
    
    
    1,620,159Goodwill
    
    
    138,986
    
    
    
    162,842Other intangibles, net
    
    
    28,861
    
    
    
    41,217Total intangible assets
    
    
    1,676,733
    
    
    
    1,824,218OTHER ASSETS, NET
    
    
    56,569
    
    
    
    58,677Total assets
    
    $
    2,116,413
    
    
    
    $2,278,396


See independent accountants review report and accompanying notes.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except share data)

February 28,
    
    November 30,2003
    
    2003(Note 1)
    
    (Unaudited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    39,526
    
    
    $
    34,764Current maturities of long-term debt
    
    
    14,912
    
    
    
    40,660Current portion of TV program rights payable
    
    
    27,424
    
    
    
    30,587Accrued salaries and commissions
    
    
    14,247
    
    
    
    9,584Accrued interest
    
    
    11,641
    
    
    
    5,857Deferred revenue
    
    
    15,805
    
    
    
    14,193Other
    
    
    8,102
    
    
    
    8,270Total current liabilities
    
    
    131,657
    
    
    
    143,915LONG-TERM DEBT, NET OF CURRENT MATURITIES
    
    
    1,194,789
    
    
    
    1,241,029OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES
    
    
    13,087
    
    
    
    9,837TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION
    
    
    32,044
    
    
    
    29,749MINORITY INTEREST
    
    
    721
    
    
    
    48,252OTHER NONCURRENT LIABILITIES
    
    
    17,065
    
    
    
    12,761DEFERRED INCOME TAXES
    
    
    22,345
    
    
    
    39,031Total liabilities
    
    
    1,411,708
    
    
    
    1,524,574COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Series A cumulative convertible preferred stock, $0.01 par value;
$50.00 liquidation value; authorized 10,000,000 shares; issued and
outstanding 2,875,000 shares at February 28, 2003 and November 30, 2003
    
    
    29
    
    
    
    29Class A common stock, $.01 par value; authorized 170,000,000 shares;
issued and outstanding 48,874,017 shares at February 28, 2003
and 50,210,632 shares at November 30, 2003
    
    
    489
    
    
    
    502Class B common stock, $.01 par value; authorized 30,000,000 shares;
issued and outstanding 5,011,348 shares at February 28, 2003
and 5,030,002 shares at November 30, 2003
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    990,770
    
    
    
    1,018,350Accumulated deficit
    
    
    (269,274
    )
    
    
    (252,340
    )Accumulated other comprehensive loss
    
    
    (17,359
    )
    
    
    (12,769
    )Total shareholders equity
    
    
    704,705
    
    
    
    753,822Total liabilities and shareholders equity
    
    $
    2,116,413
    
    
    $
    2,278,396


See independent accountants review report and accompanying notes.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

Nine Months Ended November 30,2002
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (159,316
    )
    
    $
    23,672Adjustments to reconcile net income (loss) to net cash
provided by operating activities -Cumulative effect of accounting change
    
    
    167,400
    
    
    
    Depreciation and amortization
    
    
    50,020
    
    
    
    55,242Accretion of interest on senior discount notes,
including amortization of related debt costs
    
    
    19,789
    
    
    
    19,690Provision for bad debts
    
    
    3,189
    
    
    
    2,611Provision for deferred income taxes
    
    
    13,419
    
    
    
    17,302Noncash compensation
    
    
    17,600
    
    
    
    18,056Loss on debt extinguishment
    
    
    13,506
    
    
    
    Gain on sale of assets
    
    
    (8,900
    )
    
    
    (862
    )Other
    
    
    (7,098
    )
    
    
    2,430Changes in assets and liabilities -Accounts receivable
    
    
    (22,060
    )
    
    
    (19,450
    )Prepaid expenses and other current assets
    
    
    (6,400
    )
    
    
    (3,219
    )Other assets
    
    
    6,281
    
    
    
    2,022Accounts payable and accrued liabilities
    
    
    (7,542
    )
    
    
    (13,840
    )Deferred revenue
    
    
    (402
    )
    
    
    (1,658
    )Other liabilities
    
    
    (22,981
    )
    
    
    (28,626
    )Net cash provided by operating activities
    
    
    56,505
    
    
    
    73,370CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (21,035
    )
    
    
    (17,718
    )Disposals of property and equipment
    
    
    
    
    
    
    640Cash paid for acquisitions
    
    
    
    
    
    
    (118,134
    )Proceeds from sale of assets, net
    
    
    135,500
    
    
    
    3,650Deposits and other
    
    
    (1,087
    )
    
    
    (1,735
    )Net cash provided by (used in) investing activities
    
    
    113,378
    
    
    
    (133,297
    )


See independent accountants review report and accompanying notes.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(Dollars in thousands)

Nine Months Ended November 30,2002
    
    2003CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long-term debt
    
    
    (291,525
    )
    
    
    (70,112
    )Proceeds from long-term debt
    
    
    13,000
    
    
    
    128,000Proceeds from issuance of the Companys Class A common
stock, net of transaction costs
    
    
    120,239
    
    
    
    Proceeds from exercise of stock options
    
    
    6,466
    
    
    
    6,612Preferred stock dividends paid
    
    
    (6,738
    )
    
    
    (6,738
    )Premium paid to redeem senior discount notes
    
    
    (6,678
    )
    
    
    Purchase of the Companys Class A common stock
    
    
    
    
    
    
    (644
    )Debt related costs
    
    
    (2,754
    )
    
    
    (646
    )Net cash provided by (used in) financing activities
    
    
    (167,990
    )
    
    
    56,472INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    1,893
    
    
    
    (3,455
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    6,362
    
    
    
    16,079End of period
    
    $
    8,255
    
    
    $
    12,624SUPPLEMENTAL DISCLOSURES:Cash paid for -Interest
    
    $
    55,371
    
    
    $
    49,555Income taxes
    
    
    630
    
    
    
    924Non-cash financing transactions-Value of stock issued to employees under stock compensation
program and to satisfy accrued incentives
    
    
    18,420
    
    
    
    20,005ACQUISITION OF WBPG-TV:Fair value of assets acquired
    
    
    
    
    
    $
    11,854Cash paid
    
    
    
    
    
    
    11,656Liabilities recorded
    
    
    
    
    
    $
    198ACQUISITION OF AUSTIN RADIO:Fair value of assets acquired
    
    
    
    
    
    $
    154,867Cash paid
    
    
    
    
    
    
    106,478Liabilities recorded
    
    
    
    
    
    $
    48,389


See independent accountants review report and accompanying notes.

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EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands)

Three Months Ended
    
    Nine Months EndedNovember 30,
    
    November 30,2002
    
    2003
    
    2002
    
    2003GROSS REVENUES
    
    $
    179,064
    
    
    $
    184,123
    
    
    $
    501,270
    
    
    $
    526,892LESS: AGENCY COMMISSIONS
    
    
    23,520
    
    
    
    24,078
    
    
    
    65,698
    
    
    
    68,777NET REVENUES
    
    
    155,544
    
    
    
    160,045
    
    
    
    435,572
    
    
    
    458,115OPERATING EXPENSES:Station operating expenses, excluding noncash compensation
    
    
    87,781
    
    
    
    94,685
    
    
    
    260,076
    
    
    
    279,965Corporate expenses, excluding noncash compensation
    
    
    5,571
    
    
    
    6,066
    
    
    
    15,750
    
    
    
    17,690Noncash compensation
    
    
    6,470
    
    
    
    5,585
    
    
    
    17,600
    
    
    
    18,056Depreciation and amortization
    
    
    10,738
    
    
    
    11,769
    
    
    
    32,090
    
    
    
    34,728Total operating expenses
    
    
    110,560
    
    
    
    118,105
    
    
    
    325,516
    
    
    
    350,439OPERATING INCOME
    
    
    44,984
    
    
    
    41,940
    
    
    
    110,056
    
    
    
    107,676OTHER INCOME (EXPENSE):Interest expense
    
    
    (18,589
    )
    
    
    (14,280
    )
    
    
    (60,847
    )
    
    
    (45,173
    )Gain (loss) from unconsolidated affiliates
    
    
    (128
    )
    
    
    11
    
    
    
    (4,208
    )
    
    
    (328
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (4,444
    )
    
    
    Gain (loss) on sale of assets
    
    
    (33
    )
    
    
    (95
    )
    
    
    8,900
    
    
    
    862Minority interest expense
    
    
    (110
    )
    
    
    (1,352
    )
    
    
    (14
    )
    
    
    (2,141
    )Other income (expense), net
    
    
    (277
    )
    
    
    (516
    )
    
    
    886
    
    
    
    (231
    )Total other income (expense)
    
    
    (19,137
    )
    
    
    (16,232
    )
    
    
    (59,727
    )
    
    
    (47,011
    )INCOME BEFORE INCOME TAXES
AND ACCOUNTING CHANGE
    
    
    25,847
    
    
    
    25,708
    
    
    
    50,329
    
    
    
    60,665PROVISION FOR INCOME TAXES
    
    
    11,075
    
    
    
    10,095
    
    
    
    20,680
    
    
    
    24,252INCOME BEFORE ACCOUNTING CHANGE
    
    
    14,772
    
    
    
    15,613
    
    
    
    29,649
    
    
    
    36,413CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF TAXES OF $102,600 IN 2002
    
    
    
    
    
    
    
    
    
    
    (167,400
    )
    
    
    NET INCOME (LOSS)
    
    $
    14,772
    
    
    $
    15,613
    
    
    $
    (137,751
    )
    
    $
    36,413


See independent accountants review report and accompanying notes.

In the three months ended November 30, 2002 and 2003, $4.9 million and
$4.4 million, respectively of our noncash compensation was attributable to our
stations, while $1.6 million and $1.2 million, respectively was attributable to
corporate. In the nine months ended November 30, 2002 and 2003, $14.3 million
and $14.4 million, respectively of our noncash compensation was attributable to
our stations, while $3.3 million and $3.7 million, respectively was
attributable to corporate.

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EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)

February 28,
    
    November 30,2003
    
    2003(Note 1)
    
    (Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    16,079
    
    
    $
    12,624Accounts receivable, net
    
    
    102,345
    
    
    
    123,184Prepaid expenses
    
    
    15,596
    
    
    
    17,315Other
    
    
    25,661
    
    
    
    26,290Total current assets
    
    
    159,681
    
    
    
    179,413PROPERTY AND EQUIPMENT, NET
    
    
    223,430
    
    
    
    216,088INTANGIBLE ASSETS (NOTE 2):Indefinite-lived intangibles
    
    
    1,508,886
    
    
    
    1,620,159Goodwill
    
    
    138,986
    
    
    
    162,842Other intangibles, net
    
    
    28,861
    
    
    
    41,217Total intangible assets
    
    
    1,676,733
    
    
    
    1,824,218OTHER ASSETS, NET
    
    
    49,040
    
    
    
    51,859Total assets
    
    $
    2,108,884
    
    
    $
    2,271,578


See independent accountants review report and accompanying notes.

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EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in thousands, except share data)

February 28,
    
    November 30,2003
    
    2003(Note 1)
    
    (Unaudited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    39,526
    
    
    $
    34,764Current maturities of long-term debt
    
    
    14,912
    
    
    
    40,660Current portion of TV program rights payable
    
    
    27,424
    
    
    
    30,587Accrued salaries and commissions
    
    
    14,247
    
    
    
    9,584Accrued interest
    
    
    11,641
    
    
    
    5,857Deferred revenue
    
    
    15,805
    
    
    
    14,193Other
    
    
    6,979
    
    
    
    7,147Total current liabilities
    
    
    130,534
    
    
    
    142,792LONG-TERM DEBT, NET OF CURRENT MATURITIES
    
    
    996,945
    
    
    
    1,024,204OTHER LONG-TERM DEBT, NET OF CURRENT MATURITIES
    
    
    13,087
    
    
    
    9,837TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION
    
    
    32,044
    
    
    
    29,749MINORITY INTEREST
    
    
    721
    
    
    
    48,252OTHER NONCURRENT LIABILITIES
    
    
    17,065
    
    
    
    12,761DEFERRED INCOME TAXES
    
    
    40,070
    
    
    
    63,706Total liabilities
    
    
    1,230,466
    
    
    
    1,331,301COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Common stock, no par value; authorized , issued and outstanding
1,000 shares at February 28, 2003 and November 30, 2003
    
    
    1,027,221
    
    
    
    1,027,221Additional paid-in capital
    
    
    95,582
    
    
    
    123,176Accumulated deficit
    
    
    (227,026
    )
    
    
    (197,351
    )Accumulated other comprehensive loss
    
    
    (17,359
    )
    
    
    (12,769
    )Total shareholders equity
    
    
    878,418
    
    
    
    940,277Total liabilities and shareholders equity
    
    $
    2,108,884
    
    
    $
    2,271,578


See independent accountants review report and accompanying notes.

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EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

Nine Months Ended November 30,2002
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (137,751
    )
    
    $
    36,413Adjustments to reconcile net income (loss) to net cash
provided by operating activities -Cumulative effect of accounting change
    
    
    167,400
    
    
    
    Depreciation and amortization
    
    
    50,020
    
    
    
    55,242Provision for bad debts
    
    
    3,189
    
    
    
    2,611Provision for deferred income taxes
    
    
    20,680
    
    
    
    24,252Noncash compensation
    
    
    17,600
    
    
    
    18,056Loss on debt extinguishment
    
    
    4,444
    
    
    
    Gain on sale of assets
    
    
    (8,900
    )
    
    
    (862
    )Other
    
    
    (8,122
    )
    
    
    810Changes in assets and liabilities -Accounts receivable
    
    
    (22,060
    )
    
    
    (19,450
    )Prepaid expenses and other current assets
    
    
    (6,400
    )
    
    
    (3,219
    )Other assets
    
    
    6,304
    
    
    
    2,021Accounts payable and accrued liabilities
    
    
    (7,542
    )
    
    
    (13,840
    )Deferred revenue
    
    
    (402
    )
    
    
    (1,658
    )Other liabilities
    
    
    (22,981
    )
    
    
    (28,627
    )Net cash provided by operating activities
    
    
    55,479
    
    
    
    71,749CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (21,035
    )
    
    
    (17,718
    )Disposals of property and equipment
    
    
    
    
    
    
    640Cash paid for acquisitions
    
    
    
    
    
    
    (118,134
    )Proceeds from sale of assets, net
    
    
    135,500
    
    
    
    3,650Deposits and other
    
    
    (1,087
    )
    
    
    (1,735
    )Net cash provided by (used in) investing activities
    
    
    113,378
    
    
    
    (133,297
    )


See independent accountants review report and accompanying notes.

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EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(Dollars in thousands)

Nine Months Ended November 30,2002
    
    2003CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long-term debt
    
    
    (238,102
    )
    
    
    (70,112
    )Proceeds from long-term debt
    
    
    13,000
    
    
    
    128,000Distributions to parent
    
    
    (6,738
    )
    
    
    (6,738
    )Contributions from parent and other
    
    
    67,630
    
    
    
    7,589Debt related costs
    
    
    (2,754
    )
    
    
    (646
    )Net cash provided by (used in) financing activities
    
    
    (166,964
    )
    
    
    58,093INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    1,893
    
    
    
    (3,455
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    6,362
    
    
    
    16,079End of period
    
    $
    8,255
    
    
    $
    12,624SUPPLEMENTAL DISCLOSURES:Cash paid for -Interest
    
    $
    55,371
    
    
    $
    49,555Income taxes
    
    
    630
    
    
    
    924Non-cash financing transactions-Contribution of parents stock issued to employees under
stock compensation program and to satisfy accrued incentives
    
    
    18,420
    
    
    
    20,005ACQUISITION OF WBPG-TV:Fair value of assets acquired
    
    
    
    
    
    $
    11,854Cash paid
    
    
    
    
    
    
    11,656Liabilities recorded
    
    
    
    
    
    $
    198ACQUISITION OF AUSTIN RADIO:Fair value of assets acquired
    
    
    
    
    
    $
    154,867Cash paid
    
    
    
    
    
    
    106,478Liabilities recorded
    
    
    
    
    
    $
    48,389


See independent accountants review report and accompanying notes.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
AND EMMIS OPERATING COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)
November 30, 2003

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Preparation of Interim Financial Statements

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the condensed consolidated interim financial statements included
herein have been prepared, without audit, by Emmis Communications Corporation
(ECC) and its subsidiaries (collectively, our, us, Emmis or the
Company) and by Emmis Operating Company and its subsidiaries (collectively
EOC). Unless otherwise noted, all disclosures contained in the Notes to
Condensed Consolidated Financial Statements in this Form 10-Q apply to Emmis
and EOC. As permitted under the applicable rules and regulations of the
Securities and Exchange Commission, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States 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 and EOC filed on
Form 10-K for the year ended February 28, 2003. 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 and EOC, respectively, the accompanying condensed
consolidated interim financial statements contain all material adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the consolidated financial position of Emmis and EOC at November 30, 2003 and
the results of their operations for the three and nine months ended November
30, 2002 and 2003 and their cash flows for the nine months ended November 30,
2002 and 2003.

Stock-Based Compensation

The Company accounts for its stock-based award plans in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations, under which compensation expense is
recorded to the extent that the market price on the grant date of the
underlying stock exceeds the exercise price. The required unaudited pro forma
net income and pro forma earnings per share as if the stock-based awards had
been accounted for using the provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, are as follows:

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Three Months Ended November 30,
    
    Nine Months Ended November 30,2002
    
    2003
    
    2002
    
    2003(Unaudited)
    
    (Unaudited)Net Income (Loss) Available to Common Shareholders:As Reported
    
    $
    8,568
    
    
    $
    9,070
    
    
    $
    (166,054
    )
    
    $
    16,934Plus:
    
    Reported stock-based employeecompensation costs, net of tax
    
    
    4,011
    
    
    
    3,463
    
    
    
    10,912
    
    
    
    11,195Less:
    
    Stock-based employee compensationcosts, net of tax, if fair value method hadbeen applied to all awards
    
    
    5,637
    
    
    
    5,885
    
    
    
    15,789
    
    
    
    18,792Pro Forma
    
    $
    6,942
    
    
    $
    6,648
    
    
    $
    (170,931
    )
    
    $
    9,337Basic EPS:As Reported
    
    $
    0.16
    
    
    $
    0.17
    
    
    $
    (3.13
    )
    
    $
    0.31Pro Forma
    
    $
    0.13
    
    
    $
    0.12
    
    
    $
    (3.22
    )
    
    $
    0.17Diluted EPS:As Reported
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    (3.13
    )
    
    $
    0.31Pro Forma
    
    $
    0.13
    
    
    $
    0.12
    
    
    $
    (3.22
    )
    
    $
    0.17


The fair value for these options was estimated at the date of grant using
a Black-Scholes option-pricing model with the following weighted average
assumptions for options vesting in 2002 and 2003:

Three Months Ended November 30,
    
    Nine Months Ended November 30,2002
    
    2003
    
    2002
    
    2003Risk-Free Interest Rate:
    
    3.6%  5.4%
    
    
    3.6%  5.4%
    
    
    
    3.6%  5.4%
    
    
    3.6%  5.4%Expected Dividend Yield:
    
    0%
    
    
    0%
    
    
    
    0%
    
    
    0%Expected Life (Years):
    
    8.3  8.6
    
    
    8.3  8.6
    
    
    
    8.3  8.6
    
    
    8.3  8.6Expected Volatility:
    
    57.7%  58.4%
    
    
    57.7%  58.4%
    
    
    
    57.7%  58.4%
    
    
    57.7%  58.4%


Advertising Costs

The Company defers the costs of major advertising campaigns for which
future benefits are demonstrated. These costs are amortized over the shorter
of the estimated period benefited (generally six months) or the remainder of
the fiscal year. The Company had $2.2 million and $1.0 million of these costs
deferred as of November 30, 2002 and 2003, respectively.

Basic and Diluted Net Income Per Common Share

Emmis

Basic net income per common share is computed by dividing net income
available 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 November 30, 2002 and 2003 consisted of stock options
and the 6.25% Series A cumulative convertible preferred stock. The 6.25%
Series A cumulative convertible preferred stock was excluded from the
calculation of diluted net income per common share for the three and nine
months ended November 30, 2002 and 2003 as the effect of its conversion to
common stock of 3.7 million shares would be antidilutive.

EOC

Because EOC is a wholly-owned subsidiary of Emmis, disclosure of earnings
per share for EOC is not required.

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Cost Method Investments

Each quarter, the Company assesses impairment on its cost method
investments. During the quarter ended August 31, 2003, Emmis reduced the
carrying value of one of its cost method investments from $1.0 million to zero
as the decline in the value of the investment, as determined by management, was
deemed to be other than temporary. This expense is reflected in other income
(expense), net in the accompanying condensed consolidated statements of
operations.

Recent Accounting Pronouncements

On March 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No.
13, and Technical Corrections(SFAS No. 145). SFAS No. 145 rescinds SFAS No.
4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of
that Statement, and SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS No. 145 also rescinds SFAS No. 44, Accounting
for Leases, to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS No. 145 also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. This pronouncement
requires gains and losses related to debt transactions to be classified in
income from continuing operations. Although we did not have any gains or
losses from debt transactions in the current year, ECC had recorded an
extraordinary loss of $11.1 million, net of tax, in the nine months ended
November 30, 2002, and EOC had recorded an extraordinary loss of $2.9 million,
net of tax, in the nine months ended November 30, 2002, in connection with debt
extinguishments. Accordingly, we retroactively reclassified the losses of
$13.5 million for ECC and $4.4 million for EOC and the related income tax
effects to include them in income from continuing operations.

On March 1, 2003, the Company adopted Financial Accounting Standards Board
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others(FIN 45).
FIN 45 applies to contracts or indemnification agreements that contingently
require the guarantor to make payments to the guaranteed party based on changes
in an underlying obligation that is related to an asset, liability, or an
equity security of the guaranteed party. FIN 45s disclosure requirements were
effective for financial statements of interim or annual periods ending after
December 15, 2002. FIN 45s initial recognition and initial measurement
provisions were applicable on a prospective basis to guarantees issued or
modified after December 31, 2002, irrespective of the guarantors fiscal
year-end. The Company adopted the disclosure requirements of FIN 45 for its
fiscal 2003 annual report. Adoption of the initial recognition and initial
measurement requirements of FIN 45 did not materially impact the Companys
financial position, results of operations or applicable disclosures.

On January 1, 2003, the Financial Accounting Standards Board issued
Financial Accounting Standards Board Interpretation No. 46, Consolidation of
Variable Interest Entities(FIN 46). FIN 46 addresses consolidation of
business enterprises of variable interest entities. FIN 46 is effective
immediately for all variable interest entities created after January 31, 2003
and for the first fiscal year or interim period ending after March 15, 2004 for
variable interest entities in which an enterprise holds a variable interest
that it acquired before February 1, 2003. The Company has not acquired any
variable interest entities subsequent to January 31, 2003 and has no interests
in structures that are commonly referred to as special-purpose entities. The
Company will therefore adopt FIN 46 for its interim report for its quarter
ending May 31, 2004. The Company is currently evaluating the impact, if any,
of this pronouncement on its future consolidated results of operations and
consolidated balance sheets.

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In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity(SFAS No.
150). SFAS No. 150 requires financial instruments within its scope to be
classified as a liability (or an asset in some circumstances). Many of these
instruments were previously classified as equity. The provisions of SFAS 150
regarding limited life subsidiaries have been deferred indefinitely. These
provisions applied to one of our subsidiaries. The settlement value of the
minority partners interest in our subsidiary was not material at November 30,
2003. Subsequent to the balance sheet date, we sold our interest in the
subsidiary.

Note 2. Intangible Assets and Goodwill

Indefinite-lived Intangibles

Under the guidance in Statement of Financial Accounting Standards No. 142
(Statement No. 142), the Companys FCC licenses are considered
indefinite-lived intangibles. These assets are not subject to amortization,
but are tested for impairment at least annually. As of November 30, 2003 and
February 28, 2003, the carrying amounts of the Companys FCC licenses were
$1,620.2 million and $1,508.9 million, respectively. The increase is
attributable to the acquisitions discussed in Note 3.

Upon adoption of Statement No. 142, the Company tested these
indefinite-lived intangible assets for impairment as of March 1, 2002 by
comparing their fair value to their carrying value at that date. The Company
recognized impairment on its FCC licenses of approximately $145.0 million, net
of $88.8 million in tax benefit, which is recorded as a component of the
cumulative effect of accounting change during the three months ended May 31,
2002. Approximately $14.8 million of the charge, net of tax, related to our
radio segment and $130.2 million of the charge, net of tax, related to our
television segment. The fair value of our FCC licenses used to calculate the
impairment charge was determined by management, using an enterprise valuation
approach. Enterprise value was determined by applying an estimated market
multiple to the station operating income generated by each reporting unit.
Market multiples were determined based on information available regarding
publicly traded peer companies, recently completed or contemplated transactions
within the industry, and reporting units competitive position in their
respective markets. Appropriate allocation was made to the tangible assets with
the residual amount representing the estimated fair value of our indefinite
lived intangible assets and goodwill. To the extent the carrying amount of the
indefinite-lived intangible exceeded its fair value, the difference was
recorded in the statement of operations, as described above. In the case of
radio, the Company determined the reporting unit to be all of our stations in a
local market, and in the case of television and publishing, the Company
determined the reporting unit to be each individual station or magazine.
Throughout our fiscal year ended February 2002, unfavorable economic conditions
persisted in the industries in which the Company engages. These conditions
caused customers to reduce the amount of advertising dollars spent on the
Companys media inventory as compared to prior periods, adversely impacting the
cash flow projections used to determine the fair value of each reporting unit
and public trading multiples of media stocks, resulting in the write-off of a
portion of the carrying amount of our FCC licenses. The required impairment
tests may result in future periodic write-downs, but the annual impairment test
for fiscal 2003, completed in the fourth quarter, did not result in any further
write-downs.

Goodwill

Statement No. 142 requires the Company to test goodwill for impairment at
least annually using a two-step process. The first step is a screen for
potential impairment, while the second step measures the amount of impairment.
Upon adoption, the Company completed the two-step impairment test as of March
1, 2002. As a result of this test, the Company recognized impairment of
approximately $22.4 million, net of

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$13.8 million in
tax benefit, as a component of the cumulative effect of an accounting
change during the three months ended May 31, 2002. Approximately $18.5 million
of the charge, net of tax, related to our television segment and $3.9 million
of the charge, net of tax, related to our publishing segment. Consistent with
the Companys approach to determining the fair value of our FCC licenses, the
enterprise valuation approach was used to determine the fair value of each of
the Companys reporting units, and a portion of the carrying value of our
goodwill was written-off due to reductions in cash flow and public trading
multiples of media stocks resulting from the unfavorable economic conditions
that reduced advertising expenditures throughout our fiscal 2002. As of
November 30, 2003 and February 28, 2003, the carrying amount of the Companys
goodwill was $162.8 million and $139.0 million, respectively. The increase is
attributable to the acquisitions discussed in Note 3. The required impairment
tests may result in future periodic write-downs, but the annual impairment test
for fiscal 2003, completed in the fourth quarter, did not result in any further
write-downs.

Definite-lived intangibles

The Companys definite-lived intangible assets consist primarily of
foreign broadcasting licenses, subscription lists, lease rights, customer lists
and non-compete agreements, all of which are amortized over the period of time
the assets are expected to contribute directly or indirectly to the Companys
future cash flows. The following table presents the gross carrying amount and
accumulated amortization for each major class of definite-lived intangible
asset at February 28, 2003 and November 30, 2003:

February 28, 2003
    
    November 30, 2003Gross
    
    
    
    
    
    Net
    
    Gross
    
    
    
    
    
    NetCarrying
    
    Accumulated
    
    Carrying
    
    Carrying
    
    Accumulated
    
    CarryingAmount
    
    Amortization
    
    Amount
    
    Amount
    
    Amortization
    
    AmountForeign Broadcasting Licenses
    
    $
    23,178
    
    
    $
    10,993
    
    
    $
    12,185
    
    
    $
    23,948
    
    
    $
    12,365
    
    
    $
    11,583Subscription Lists
    
    
    12,189
    
    
    
    12,176
    
    
    
    13
    
    
    
    12,189
    
    
    
    12,176
    
    
    
    13Lease Rights
    
    
    11,502
    
    
    
    695
    
    
    
    10,807
    
    
    
    12,190
    
    
    
    955
    
    
    
    11,235Customer Lists
    
    
    7,371
    
    
    
    4,336
    
    
    
    3,035
    
    
    
    22,219
    
    
    
    7,340
    
    
    
    14,879Non-Compete Agreements
    
    
    5,738
    
    
    
    5,601
    
    
    
    137
    
    
    
    5,738
    
    
    
    5,631
    
    
    
    107Other
    
    
    4,211
    
    
    
    1,527
    
    
    
    2,684
    
    
    
    5,549
    
    
    
    2,149
    
    
    
    3,400TOTAL
    
    $
    64,189
    
    
    $
    35,328
    
    
    $
    28,861
    
    
    $
    81,833
    
    
    $
    40,616
    
    
    $
    41,217


Total amortization expense from definite-lived intangibles for the three
months ended November 30, 2002 and 2003 was $1.8 million and $2.0 million,
respectively. Total amortization expense from definite-lived intangibles for
the nine months ended November 30, 2002 and 2003 was $5.3 million and $5.1
million, respectively. The following table presents the Companys estimate of
amortization expense for each of the five succeeding fiscal years for
definite-lived intangibles recorded on our books as of November 30 , 2003:

Fiscal Year Ended February 28 (29),2004
    
    $
    7,2872005
    
    
    6,1032006
    
    
    5,6622007
    
    
    5,4592008
    
    
    5,251


As acquisitions and/or dispositions occur in the future, amortization
expense will vary from the above table.

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Note 3. Significant Events

WBPG-TV Acquisition

Effective March 1, 2003, the Company acquired substantially all of the
assets of television station WBPG-TV in Mobile, AL  Pensacola, FL from Pegasus
Communications Corporation for a cash purchase price of approximately $11.7
million, including transaction costs of $0.2 million. This acquisition will
allow the Company to achieve duopoly efficiencies in the market, such as lower
programming acquisition costs and consolidation of general and administrative
functions, since Emmis already owns the Fox-affiliated television station in
the market, WALA. The acquisition was financed through borrowings under the
credit facility and was accounted for as a purchase. The Company recorded $0.2
million of goodwill, all of which is deductible for income tax purposes.

For this transaction, the aggregate purchase price, including transaction
costs of $0.2 million, was allocated as follows based upon a preliminary
appraisal. Material changes to the purchase price allocation are not expected.

Asset Description
    
    Amount
    
    Asset LivesAccounts Receivable
    
    $
    154
    
    
    Less than one yearPrepaids
    
    
    35
    
    
    Less than one yearBroadcasting equipment
    
    
    2,458
    
    
    
    5 to 7 yearsOffice equipment
    
    
    97
    
    
    
    5 to 7 yearsVehicles
    
    
    42
    
    
    
    5 to 7 yearsTotal tangible assets
    
    
    2,597Customer list
    
    
    229
    
    
    3 yearsAffiliation agreement
    
    
    559
    
    
    3.5 yearsFCC license (Indefinite-lived intangible)
    
    
    7,971
    
    
    Non-amortizingGoodwill
    
    
    150
    
    
    Non-amortizingTotal intangible assets
    
    
    8,909Programming acquired
    
    
    159Less: Programming liabilities assumed
    
    
    (198
    )Total purchase price
    
    $
    11,656


Sale of Mira Mobile

Effective June 5, 2003, Emmis sold its mobile television production
company, Mira Mobile Television, to Shooters Production Services, Inc. for $3.9
million in cash, plus payments for working capital. Emmis received $3.3
million of the purchase price at closing and received a promissory note due
October 31, 2005 for the remaining $0.6 million. Emmis had acquired this
business in connection with the Lee acquisition in October 2000. The book
value of the long-lived assets as of May 31, 2003 was $3.1 million and the
operating performance of Mira Mobile was not material to the Company. Emmis
recorded a gain on the sale of these assets of approximately $0.9 million in
the accompanying condensed consolidated statements of operations.

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Credit Facility Amendment

On June 6, 2003, EOC amended its credit facility to allow for the
acquisition of the controlling interest in the Austin partnership, as described
below. Specifically, the amendment increased the amount of Investments (as
defined in the credit facility) that EOC could make to allow for the investment
in the partnership. In addition to permitting the Austin acquisition, the
amendment provided additional room under certain financial covenants. More
specifically, required decreases in senior leverage and total leverage ratios
were delayed from November 30, 2003 to June 1, 2004.

Austin Radio Acquisition

On July 1, 2003, Emmis effectively acquired a controlling interest of
50.1% in a partnership that owns six radio stations in the Austin, Texas
metropolitan area for a cash purchase price of approximately $106.5 million,
including transaction costs of $1.0 million. These six stations are KLBJ-AM,
KLBJ-FM, KDHT-FM, (formerly KXMG-FM), KROX-FM, KGSR-FM and KEYI-FM. This
acquisition allowed Emmis to diversify its radio portfolio and participate in
another large, high-growth radio market. The acquisition was financed through
borrowings under the credit facility and was accounted for as a purchase. The
Company recorded $23.7 million of goodwill, all of which is deductible for
income tax purposes. In addition, Emmis has the option, but not the
obligation, to purchase its 49.9% partners entire interest in the partnership
after a period of approximately five years based on an 18-multiple of trailing
12-month cash flow.

For this transaction, the aggregate purchase price, including transaction
costs of $1.0 million, was allocated as follows based upon a preliminary
appraisal. Material changes to the purchase price allocation are not expected.

Asset Description
    
    Amount
    
    Asset LivesAccounts receivable
    
    $
    4,893
    
    
    Less than one yearOther current assets
    
    
    85
    
    
    Less than one yearLand and buildings
    
    
    757
    
    
    31.5 years for buildingsBroadcasting equipment
    
    
    4,031
    
    
    
    5 to 7 yearsOffice equipment
    
    
    568
    
    
    
    5 to 7 yearsVehicles
    
    
    117
    
    
    
    5 to 7 yearsOther
    
    
    176
    
    
    VariousTotal tangible assets
    
    
    5,649Customer list
    
    
    14,619
    
    
    5 yearsTalent contract
    
    
    456
    
    
    3.5 yearsLease rights
    
    
    389
    
    
    
    5 to 9 yearsAffiliation agreement
    
    
    189
    
    
    15 yearsFCC license (Indefinite-lived intangible)
    
    
    103,291
    
    
    Non-amortizingGoodwill
    
    
    23,684
    
    
    Non-amortizingTotal intangible assets
    
    
    142,628Investment and other long-term assets
    
    
    1,612Less: minority interest
    
    
    (47,894
    )Less: current liabilities
    
    
    (495
    )Total purchase price
    
    $
    106,478


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Note 4. Pro Forma Financial Information

Emmis

Unaudited pro forma summary information is presented below for the three
and nine months ended November 30, 2002 and 2003, assuming the following events
all had occurred on the first day of the pro forma periods presented below:
(a) the acquisition (and related borrowings) of (i) a controlling interest of
50.1% in a partnership that owns six radio stations in the Austin, Texas
metropolitan area in July 2003 and (ii) WBPG-TV in March 2003 and (b) the
disposition (and related debt repayment) of (i) KALC-FM and KXPK-FM in May 2002
and (ii) Mira Mobile, a mobile television production company, in June 2003.

Preparation of the pro forma summary information was based upon
assumptions deemed appropriate by the Companys management. The pro forma
summary information presented below is not necessarily indicative of the
results that actually would have occurred if the transactions indicated above
had been consummated at the beginning of the periods presented, and is not
intended to be a projection of future results.

Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2002
    
    2003
    
    2002
    
    2003(Pro Forma)
    
    (Historical)
    
    
    (Pro Forma)(In thousands, except per share data)Net revenues
    
    $
    161,161
    
    
    $
    160,045
    
    
    $
    450,918
    
    
    $
    465,835Net income before accounting change
    
    $
    10,908
    
    
    $
    11,316
    
    
    $
    8,837
    
    
    $
    24,545Net income available to common
shareholders before accounting
change
    
    $
    8,662
    
    
    $
    9,070
    
    
    $
    2,099
    
    
    $
    17,807Net income per share available to
common shareholders before accounting
change:Basic
    
    $
    0.16
    
    
    $
    0.17
    
    
    $
    0.04
    
    
    $
    0.33Diluted
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.04
    
    
    $
    0.33Weighted average shares outstanding:Basic
    
    
    53,358
    
    
    
    54,895
    
    
    
    53,019
    
    
    
    54,470Diluted
    
    
    53,507
    
    
    
    55,252
    
    
    
    53,280
    
    
    
    54,780


The pro forma results exclude approximately $0.9 million of costs recorded
by the seller directly attributable to the Austin acquisition in the nine
months ended November 30, 2003.

EOC

Unaudited pro forma summary information is presented below for the three
and nine months ended November 30, 2002 and 2003, assuming the following events
all had occurred on the first day of

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the pro forma periods presented below:
(a) the acquisition (and related borrowings) of (i) a controlling interest of
50.1% in a partnership that owns six radio stations in the Austin, Texas
metropolitan area in July 2003 and (ii) WBPG-TV in March 2003 and (b) the
disposition (and related debt repayment) of (i)
KALC-FM and KXPK-FM in May 2002 and (ii) Mira Mobile, a mobile television
production company, in June 2003.

Preparation of the pro forma summary information was based upon
assumptions deemed appropriate by the Companys management. The pro forma
summary information presented below is not necessarily indicative of the
results that actually would have occurred if the transactions indicated above
had been consummated at the beginning of the periods presented, and is not
intended to be a projection of future results.

Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2002
    
    2003
    
    2002
    
    2003(Pro Forma)
    
    (Historical)
    
    
    
    (Pro Forma)(In thousands, except per share data)Net revenues
    
    $
    161,161
    
    
    $
    160,045
    
    
    $
    450,918
    
    
    $
    465,835Net income before accounting change
    
    $
    14,866
    
    
    $
    15,613
    
    
    $
    30,402
    
    
    $
    37,286


The pro forma results exclude approximately $0.9 million of costs recorded
by the seller directly attributable to the Austin acquisition in the nine
months ended November 30, 2003.

Note 5. Comprehensive Income (Loss)

Emmis

Comprehensive income (loss) was comprised of the following for the three
and nine month periods ended November 30, 2002 and 2003:

Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2002
    
    2003
    
    2002
    
    2003Net income (loss)
    
    $
    10,814
    
    
    $
    11,316
    
    
    $
    (159,316
    )
    
    $
    23,672Translation adjustment
    
    
    397
    
    
    
    880
    
    
    
    (8,122
    )
    
    
    2,503Change in fair value of derivative
instruments, net of associated tax benefit
    
    
    1,447
    
    
    
    212
    
    
    
    1,414
    
    
    
    2,087Total comprehensive income (loss)
    
    $
    12,658
    
    
    $
    12,408
    
    
    $
    (166,024
    )
    
    $
    28,262


The majority of the adverse translation adjustment for the nine months ended
November 30, 2002 relates to the foreign currency devaluation in Argentina,
where we have a 75% ownership interest in two radio stations.

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EOC

Comprehensive income (loss) was comprised of the following for the three
and nine month periods ended November 30, 2002 and 2003:

Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2002
    
    2003
    
    2002
    
    2003Net income (loss)
    
    $
    14,772
    
    
    $
    15,613
    
    
    $
    (137,751
    )
    
    $
    36,413Translation adjustment
    
    
    397
    
    
    
    880
    
    
    
    (8,122
    )
    
    
    2,503Change in fair value of derivative
instruments, net of associated tax benefit
    
    
    1,447
    
    
    
    212
    
    
    
    1,414
    
    
    
    2,087Total comprehensive income (loss)
    
    $
    16,616
    
    
    $
    16,705
    
    
    $
    (144,459
    )
    
    $
    41,003


The majority of the adverse translation adjustment for the nine months ended
November 30, 2002 relates to the foreign currency devaluation in Argentina,
where we have a 75% ownership interest in two radio stations.

Note 6. Segment Information

The Companys operations are aligned into three business segments: Radio,
Television, and Publishing and Other. These business segments are consistent
with the Companys management of these businesses and its financial reporting
structure. Corporate represents expenses not allocated to reportable segments.
Noncash compensation expense for fiscal 2003 attributable to our stations,
previously included in Corporate, has been reclassified to the appropriate
business segment for all periods presented.

The Companys segments operate primarily in the United States with one
radio station located in Hungary, two radio stations located in Argentina (see
Note 9), and immaterial operations in Belgium. Total revenues of the radio
station in Hungary for the three months ended November 30, 2002 and 2003 were
$2.0 million and $2.4 million, respectively, and $6.4 million and $7.7 million
for the nine months ended November 30, 2002 and 2003, respectively. The
carrying value of long lived assets of this radio station as of November 30,
2002 and 2003 was $5.7 million and $9.0 million, respectively. Total revenues
of our two radio stations in Buenos Aires, Argentina for the three months ended
November 30, 2002 and 2003 were $0.7 million and $1.3 million, respectively.
Total revenues of our two radio stations in Buenos Aires, Argentina for the
nine months ended November 30, 2002 and 2003 were $1.6 million and $3.2
million, respectively. The carrying value of long lived assets of these radio
stations as of November 30, 2002 and 2003 was $4.4 million and $5.2 million,
respectively.

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, 2003 and in Note 1 to these condensed
consolidated financial statements, are applied consistently across segments.

Unless otherwise noted, all information pertaining to segments applies to
Emmis and EOC.

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Three Months Ended
    
    
    
    
    
    
    
    
    
    PublishingNovember 30, 2003
    
    Radio
    
    Television
    
    and Other
    
    Corporate
    
    Consolidated(Unaudited)Net revenues
    
    $
    75,528
    
    
    $
    63,182
    
    
    $
    21,335
    
    
    $
    
    
    
    $
    160,045Station operating expenses,
excluding noncash compensation
    
    
    40,775
    
    
    
    37,656
    
    
    
    16,254
    
    
    
    
    
    
    
    94,685Corporate expenes, excluding
noncash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,066
    
    
    
    6,066Noncash compensation
    
    
    1,660
    
    
    
    1,985
    
    
    
    706
    
    
    
    1,234
    
    
    
    5,585Depreciation and amortization
    
    
    2,591
    
    
    
    7,469
    
    
    
    202
    
    
    
    1,507
    
    
    
    11,769Operating income (loss)
    
    $
    30,502
    
    
    $
    16,072
    
    
    $
    4,173
    
    
    $
    (8,807
    )
    
    $
    41,940Total assets
    
    $
    1,057,322
    
    
    $
    1,063,606
    
    
    $
    82,578
    
    
    $
    74,890
    
    
    $
    2,278,396


With respect to EOC, the above information would be identical, except
corporate total assets would be $68,072 and consolidated total assets would
be $2,271,578.

Three Months Ended
    
    
    
    
    
    
    
    
    
    PublishingNovember 30, 2002
    
    Radio
    
    Television
    
    and Other
    
    Corporate
    
    Consolidated(Unaudited)Net revenues
    
    $
    65,710
    
    
    $
    69,910
    
    
    $
    19,924
    
    
    $
    
    
    
    $
    155,544Station operating expenses,
excluding noncash compensation
    
    
    34,285
    
    
    
    37,752
    
    
    
    15,744
    
    
    
    
    
    
    
    87,781Corporate expenes, excluding
noncash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,571
    
    
    
    5,571Noncash compensation
    
    
    2,086
    
    
    
    2,029
    
    
    
    709
    
    
    
    1,646
    
    
    
    6,470Depreciation and amortization
    
    
    1,989
    
    
    
    7,141
    
    
    
    448
    
    
    
    1,160
    
    
    
    10,738Operating income (loss)
    
    $
    27,350
    
    
    $
    22,988
    
    
    $
    3,023
    
    
    $
    (8,377
    )
    
    $
    44,984Total assets
    
    $
    897,797
    
    
    $
    1,060,321
    
    
    $
    81,385
    
    
    $
    95,274
    
    
    $
    2,134,777


With respect to EOC, the above information would be identical, except
corporate total assets would be $87,513 and consolidated total assets would
be $2,127,016.

Nine Months Ended
    
    
    
    
    
    
    
    
    
    PublishingNovember 30, 2003
    
    Radio
    
    Television
    
    and Other
    
    Corporate
    
    Consolidated(Unaudited)Net revenues
    
    $
    221,284
    
    
    $
    179,532
    
    
    $
    57,299
    
    
    $
    
    
    
    $
    458,115Station operating expenses,
excluding noncash compensation
    
    
    119,465
    
    
    
    111,685
    
    
    
    48,815
    
    
    
    
    
    
    
    279,965Corporate expenes, excluding
noncash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,690
    
    
    
    17,690Noncash compensation
    
    
    6,010
    
    
    
    6,119
    
    
    
    2,185
    
    
    
    3,742
    
    
    
    18,056Depreciation and amortization
    
    
    6,979
    
    
    
    22,588
    
    
    
    640
    
    
    
    4,521
    
    
    
    34,728Operating income (loss)
    
    $
    88,830
    
    
    $
    39,140
    
    
    $
    5,659
    
    
    $
    (25,953
    )
    
    $
    107,676Total assets
    
    $
    1,057,322
    
    
    $
    1,063,606
    
    
    $
    82,578
    
    
    $
    74,890
    
    
    $
    2,278,396


With respect to EOC, the above information would be identical, except
corporate total assets would be $68,072 and consolidated total assets would
be $2,271,578.

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Nine Months Ended
    
    
    
    
    
    
    
    
    
    PublishingNovember 30, 2002
    
    Radio
    
    Television
    
    and Other
    
    Corporate
    
    Consolidated(Unaudited)Net revenues
    
    $
    198,324
    
    
    $
    182,493
    
    
    $
    54,755
    
    
    $
    
    
    
    $
    435,572Station operating expenses,
excluding noncash compensation
    
    
    103,793
    
    
    
    109,816
    
    
    
    46,467
    
    
    
    
    
    
    
    260,076Corporate expenes, excluding
noncash compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,750
    
    
    
    15,750Noncash compensation
    
    
    7,225
    
    
    
    5,235
    
    
    
    1,858
    
    
    
    3,282
    
    
    
    17,600Depreciation and amortization
    
    
    6,012
    
    
    
    21,120
    
    
    
    1,497
    
    
    
    3,461
    
    
    
    32,090Operating income (loss)
    
    $
    81,294
    
    
    $
    46,322
    
    
    $
    4,933
    
    
    $
    (22,493
    )
    
    $
    110,056Total assets
    
    $
    897,797
    
    
    $
    1,060,321
    
    
    $
    81,385
    
    
    $
    95,274
    
    
    $
    2,134,777


With respect to EOC, the above information would be identical, except
corporate total assets would be $87,513 and consolidated total assets would
be $2,127,016.

Note 7. Financial Information for Subsidiary Guarantors and Subsidiary Non-Guarantors of Emmis Operating Company

The 8 1/8% senior subordinated notes of EOC are fully and unconditionally
guaranteed, jointly and severally, by certain direct and indirect subsidiaries
of EOC (the Subsidiary Guarantors). As of February 28, 2003, subsidiaries
holding EOCs interest in its radio stations in Hungary and Argentina, as well
as certain other subsidiaries (such as those conducting joint ventures with
third parties), did not guarantee the senior subordinated notes (the
Subsidiary Non-Guarantors). As of November 30, 2003, Subsidiary
Non-Guarantors included EOCs interest in its radio stations in Austin, Texas,
Hungary and Argentina, as well as certain other subsidiaries (such as those
conducting joint ventures with third parties). The claims of creditors of the
Subsidiary Non-Guarantors have priority over the rights of EOC to receive
dividends or distributions from such subsidiaries.

Presented below is condensed consolidating financial information for the
EOC Parent Company Only, the Subsidiary Guarantors and the Subsidiary
Non-Guarantors as of February 28, 2003 and November 30, 2003 and for the three
and nine months ended November 30, 2002 and 2003. EOC uses the equity method
in its Parent Company Only information with respect to investments in
subsidiaries.

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Emmis Operating Company
Condensed Consolidating Balance Sheet
As of November 30, 2003
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedCURRENT ASSETS:Cash and cash equivalents
    
    $
    320
    
    
    $
    8,583
    
    
    $
    3,721
    
    
    $
    
    
    
    $
    12,624Accounts receivable, net
    
    
    
    
    
    
    113,941
    
    
    
    9,243
    
    
    
    
    
    
    
    123,184Prepaid expenses
    
    
    1,000
    
    
    
    16,019
    
    
    
    296
    
    
    
    
    
    
    
    17,315Other
    
    
    1,237
    
    
    
    24,991
    
    
    
    298
    
    
    
    (236
    )
    
    
    26,290Total current assets
    
    
    2,557
    
    
    
    163,534
    
    
    
    13,558
    
    
    
    (236
    )
    
    
    179,413Property and equipment, net
    
    
    33,858
    
    
    
    175,143
    
    
    
    7,087
    
    
    
    
    
    
    
    216,088Intangible assets, net
    
    
    1,084
    
    
    
    1,669,715
    
    
    
    153,419
    
    
    
    
    
    
    
    1,824,218Investment in affiliates
    
    
    2,017,733
    
    
    
    
    
    
    
    
    
    
    
    (2,017,733
    )
    
    
    Other assets, net
    
    
    41,888
    
    
    
    18,744
    
    
    
    2,338
    
    
    
    (11,111
    )
    
    
    51,859Total assets
    
    $
    2,097,120
    
    
    $
    2,027,136
    
    
    $
    176,402
    
    
    $
    (2,029,080
    )
    
    $
    2,271,578CURRENT LIABILITIES:Accounts payable
    
    $
    10,583
    
    
    $
    20,064
    
    
    $
    5,025
    
    
    $
    (908
    )
    
    $
    34,764Current maturities of other long-term debt
    
    
    40,616
    
    
    
    
    
    
    
    400
    
    
    
    (356
    )
    
    
    40,660Current portion of TV program rights payable
    
    
    
    
    
    
    30,587
    
    
    
    
    
    
    
    
    
    
    
    30,587Accrued salaries and commissions
    
    
    1,045
    
    
    
    8,213
    
    
    
    326
    
    
    
    
    
    
    
    9,584Accrued interest
    
    
    5,857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,857Deferred revenue
    
    
    
    
    
    
    14,193
    
    
    
    
    
    
    
    
    
    
    
    14,193Other
    
    
    2,417
    
    
    
    4,194
    
    
    
    536
    
    
    
    
    
    
    
    7,147Total current liabilities
    
    
    60,518
    
    
    
    77,251
    
    
    
    6,287
    
    
    
    (1,264
    )
    
    
    142,792Long-term debt, net of current maturities
    
    
    1,024,204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,024,204Other long-term debt, net of current
maturities
    
    
    41
    
    
    
    108
    
    
    
    19,771
    
    
    
    (10,083
    )
    
    
    9,837TV program rights payable, net of current
portion
    
    
    
    
    
    
    29,749
    
    
    
    
    
    
    
    
    
    
    
    29,749Other noncurrent liabilities
    
    
    8,374
    
    
    
    4,380
    
    
    
    7
    
    
    
    
    
    
    
    12,761Minority interest
    
    
    
    
    
    
    
    
    
    
    48,252
    
    
    
    
    
    
    
    48,252Deferred income taxes
    
    
    63,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,706Total liabilities
    
    
    1,156,843
    
    
    
    111,488
    
    
    
    74,317
    
    
    
    (11,347
    )
    
    
    1,331,301SHAREHOLDERS EQUITY:Common stock
    
    $
    1,027,221
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,027,221Additional paid-in capital
    
    
    123,176
    
    
    
    
    
    
    
    4,393
    
    
    
    (4,393
    )
    
    
    123,176Subsidiary investment
    
    
    
    
    
    
    1,511,003
    
    
    
    132,029
    
    
    
    (1,643,032
    )
    
    
    Retained earnings/(accumulated deficit)
    
    
    (12,769
    )
    
    
    
    
    
    
    (14,689
    )
    
    
    14,689
    
    
    
    (12,769
    )Accumulated other comprehensive loss
    
    
    (197,351
    )
    
    
    404,645
    
    
    
    (19,648
    )
    
    
    (384,997
    )
    
    
    (197,351
    )Total shareholders equity
    
    $
    940,277
    
    
    $
    1,915,648
    
    
    $
    102,085
    
    
    $
    (2,017,733
    )
    
    $
    940,277Total liabilities and shareholders equity
    
    $
    2,097,120
    
    
    $
    2,027,136
    
    
    $
    176,402
    
    
    $
    (2,029,080
    )
    
    $
    2,271,578


-28-



---



##### Table of Contents



Emmis Operating Company
Condensed Consolidating Balance Sheet
As of February 28, 2003
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedCURRENT ASSETS:Cash and cash equivalents
    
    $
    3,885
    
    
    $
    5,844
    
    
    $
    6,350
    
    
    $
    
    
    
    $
    16,079Accounts receivable, net
    
    
    
    
    
    
    98,799
    
    
    
    3,546
    
    
    
    
    
    
    
    102,345Prepaid expenses
    
    
    2,016
    
    
    
    13,462
    
    
    
    118
    
    
    
    
    
    
    
    15,596Other
    
    
    222
    
    
    
    23,249
    
    
    
    2,190
    
    
    
    
    
    
    
    25,661Total current assets
    
    
    6,123
    
    
    
    141,354
    
    
    
    12,204
    
    
    
    
    
    
    
    159,681Property and equipment, net
    
    
    35,874
    
    
    
    186,004
    
    
    
    1,552
    
    
    
    
    
    
    
    223,430Intangible assets, net
    
    
    3,035
    
    
    
    1,661,513
    
    
    
    12,185
    
    
    
    
    
    
    
    1,676,733Investment in affiliates
    
    
    1,874,882
    
    
    
    
    
    
    
    
    
    
    
    (1,874,882
    )
    
    
    Other assets, net
    
    
    52,373
    
    
    
    13,916
    
    
    
    926
    
    
    
    (18,175
    )
    
    
    49,040Total assets
    
    $
    1,972,287
    
    
    $
    2,002,787
    
    
    $
    26,867
    
    
    $
    (1,893,057
    )
    
    $
    2,108,884CURRENT LIABILITIES:Accounts payable
    
    $
    13,161
    
    
    $
    18,530
    
    
    $
    7,835
    
    
    $
    
    
    
    $
    39,526Current maturities of other long-term debt
    
    
    9,976
    
    
    
    
    
    
    
    7,151
    
    
    
    (2,215
    )
    
    
    14,912Current portion of TV program rights payable
    
    
    
    
    
    
    27,424
    
    
    
    
    
    
    
    
    
    
    
    27,424Accrued salaries and commissions
    
    
    3,326
    
    
    
    10,746
    
    
    
    175
    
    
    
    
    
    
    
    14,247Accrued interest
    
    
    13,844
    
    
    
    
    
    
    
    
    
    
    
    (2,203
    )
    
    
    11,641Deferred revenue
    
    
    
    
    
    
    15,805
    
    
    
    
    
    
    
    
    
    
    
    15,805Other
    
    
    3,339
    
    
    
    3,640
    
    
    
    
    
    
    
    
    
    
    
    6,979Total current liabilities
    
    
    43,646
    
    
    
    76,145
    
    
    
    15,161
    
    
    
    (4,418
    )
    
    
    130,534Long-term debt, net of current maturities
    
    
    996,945
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    996,945Other long-term debt, net of current maturities
    
    
    41
    
    
    
    2,412
    
    
    
    24,391
    
    
    
    (13,757
    )
    
    
    13,087TV program rights payable, net of current portion
    
    
    
    
    
    
    32,044
    
    
    
    
    
    
    
    
    
    
    
    32,044Minority interest
    
    
    
    
    
    
    
    
    
    
    721
    
    
    
    
    
    
    
    721Other noncurrent liabilities
    
    
    13,167
    
    
    
    3,898
    
    
    
    
    
    
    
    
    
    
    
    17,065Deferred income taxes
    
    
    40,070
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,070Total liabilities
    
    
    1,093,869
    
    
    
    114,499
    
    
    
    40,273
    
    
    
    (18,175
    )
    
    
    1,230,466SHAREHOLDERS EQUITY:Common stock
    
    $
    1,027,221
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,027,221Additional paid-in capital
    
    
    95,582
    
    
    
    
    
    
    
    4,393
    
    
    
    (4,393
    )
    
    
    95,582Subsidiary investment
    
    
    
    
    
    
    1,564,173
    
    
    
    20,249
    
    
    
    (1,584,422
    )
    
    
    Retained earnings/(accumulated deficit)
    
    
    (227,026
    )
    
    
    324,115
    
    
    
    (23,068
    )
    
    
    (301,047
    )
    
    
    (227,026
    )Accumulated other comprehensive loss
    
    
    (17,359
    )
    
    
    
    
    
    
    (14,980
    )
    
    
    14,980
    
    
    
    (17,359
    )Total shareholders equity
    
    $
    878,418
    
    
    $
    1,888,288
    
    
    $
    (13,406
    )
    
    $
    (1,874,882
    )
    
    $
    878,418Total liabilities and shareholders equity
    
    $
    1,972,287
    
    
    $
    2,002,787
    
    
    $
    26,867
    
    
    $
    (1,893,057
    )
    
    $
    2,108,884


-29-



---



##### Table of Contents



Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Three Months Ended November 30, 2003
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedNet revenues
    
    $
    230
    
    
    $
    149,481
    
    
    $
    10,334
    
    
    $
    
    
    
    $
    160,045Operating expenses:Station operating expenses,
excluding noncash compensation
    
    
    144
    
    
    
    87,836
    
    
    
    6,705
    
    
    
    
    
    
    
    94,685Corporate expenses, excluding
noncash compensation
    
    
    6,066
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,066Noncash compensation
    
    
    1,234
    
    
    
    4,351
    
    
    
    
    
    
    
    
    
    
    
    5,585Depreciation and amortization
    
    
    1,507
    
    
    
    9,020
    
    
    
    1,242
    
    
    
    
    
    
    
    11,769Total operating expenses
    
    
    8,951
    
    
    
    101,207
    
    
    
    7,947
    
    
    
    
    
    
    
    118,105Operating income (loss)
    
    
    (8,721
    )
    
    
    48,274
    
    
    
    2,387
    
    
    
    
    
    
    
    41,940Other income (expense)Interest expense
    
    
    (14,139
    )
    
    
    (40
    )
    
    
    (71
    )
    
    
    (30
    )
    
    
    (14,280
    )Loss from unconsolidated affiliates
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Loss on sale of assets
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    (95
    )Minority interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,352
    )
    
    
    (1,352
    )Other income (expense), net
    
    
    (14
    )
    
    
    10
    
    
    
    328
    
    
    
    (840
    )
    
    
    (516
    )Total other income (expense)
    
    
    (14,142
    )
    
    
    (125
    )
    
    
    257
    
    
    
    (2,222
    )
    
    
    (16,232
    )Income (loss) before income taxes and
accounting change
    
    
    (22,863
    )
    
    
    48,149
    
    
    
    2,644
    
    
    
    (2,222
    )
    
    
    25,708Provision (benefit) for income taxes
    
    
    (8,969
    )
    
    
    18,297
    
    
    
    767
    
    
    
    
    
    
    
    10,095(13,894
    )
    
    
    29,852
    
    
    
    1,877
    
    
    
    (2,222
    )
    
    
    15,613Equity in earnings (loss) of subsidiaries
    
    
    29,507
    
    
    
    
    
    
    
    
    
    
    
    (29,507
    )
    
    
    Net income (loss)
    
    $
    15,613
    
    
    $
    29,852
    
    
    $
    1,877
    
    
    $
    (31,729
    )
    
    $
    15,613


-30-



---



##### Table of Contents



Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Three Months Ended November 30, 2002
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedNet revenues
    
    $
    67
    
    
    $
    152,829
    
    
    $
    2,648
    
    
    $
    
    
    
    $
    155,544Operating expenses:Station operating expenses,
excluding noncash compensation
    
    
    (25
    )
    
    
    85,401
    
    
    
    2,405
    
    
    
    
    
    
    
    87,781Corporate expenses, excluding
noncash compensation
    
    
    5,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,571Noncash compensation
    
    
    1,646
    
    
    
    4,824
    
    
    
    
    
    
    
    
    
    
    
    6,470Depreciation and amortization
    
    
    1,160
    
    
    
    8,843
    
    
    
    735
    
    
    
    
    
    
    
    10,738Total operating expenses
    
    
    8,352
    
    
    
    99,068
    
    
    
    3,140
    
    
    
    
    
    
    
    110,560Operating income (loss)
    
    
    (8,285
    )
    
    
    53,761
    
    
    
    (492
    )
    
    
    
    
    
    
    44,984Other income (expense)Interest expense
    
    
    (18,337
    )
    
    
    (203
    )
    
    
    (210
    )
    
    
    161
    
    
    
    (18,589
    )Loss from unconsolidated affiliates
    
    
    (3,702
    )
    
    
    3,574
    
    
    
    
    
    
    
    
    
    
    
    (128
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest income (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense), net
    
    
    198
    
    
    
    214
    
    
    
    (561
    )
    
    
    (271
    )
    
    
    (420
    )Total other income (expense)
    
    
    (21,841
    )
    
    
    3,585
    
    
    
    (771
    )
    
    
    (110
    )
    
    
    (19,137
    )Income (loss) before income taxes,
extraordinary loss and accounting change
    
    
    (30,126
    )
    
    
    57,346
    
    
    
    (1,263
    )
    
    
    (110
    )
    
    
    25,847Provision (benefit) for income taxes
    
    
    (10,716
    )
    
    
    21,791
    
    
    
    
    
    
    
    
    
    
    
    11,075Income (loss) before extraordinary loss
and accounting change
    
    
    (19,410
    )
    
    
    35,555
    
    
    
    (1,263
    )
    
    
    (110
    )
    
    
    14,772Equity in earnings (loss) of subsidiaries
    
    
    34,182
    
    
    
    
    
    
    
    
    
    
    
    (34,182
    )
    
    
    Net income (loss)
    
    $
    14,772
    
    
    $
    35,555
    
    
    $
    (1,263
    )
    
    $
    (34,292
    )
    
    $
    14,772


-31-



---



##### Table of Contents



Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Nine Months Ended November 30, 2003
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedNet revenues
    
    $
    699
    
    
    $
    435,453
    
    
    $
    21,963
    
    
    $
    
    
    
    $
    458,115Operating expenses:Station operating expenses,
excluding noncash compensation
    
    
    488
    
    
    
    264,578
    
    
    
    14,899
    
    
    
    
    
    
    
    279,965Corporate expenses, excluding
noncash compensation
    
    
    17,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,690Noncash compensation
    
    
    3,742
    
    
    
    14,314
    
    
    
    
    
    
    
    
    
    
    
    18,056Depreciation and amortization
    
    
    4,521
    
    
    
    27,449
    
    
    
    2,758
    
    
    
    
    
    
    
    34,728Total operating expenses
    
    
    26,441
    
    
    
    306,341
    
    
    
    17,657
    
    
    
    
    
    
    
    350,439Operating income (loss)
    
    
    (25,742
    )
    
    
    129,112
    
    
    
    4,306
    
    
    
    
    
    
    
    107,676Other income (expense)Interest expense
    
    
    (44,584
    )
    
    
    (117
    )
    
    
    (1,099
    )
    
    
    627
    
    
    
    (45,173
    )Loss from unconsolidated affiliates
    
    
    (328
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (328
    )Gain on sale of assets
    
    
    
    
    
    
    862
    
    
    
    
    
    
    
    
    
    
    
    862Minority interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,141
    )
    
    
    (2,141
    )Other income (expense), net
    
    
    (919
    )
    
    
    30
    
    
    
    1,498
    
    
    
    (840
    )
    
    
    (231
    )Total other income (expense)
    
    
    (45,831
    )
    
    
    775
    
    
    
    399
    
    
    
    (2,354
    )
    
    
    (47,011
    )Income (loss) before income taxes and
accounting change
    
    
    (71,573
    )
    
    
    129,887
    
    
    
    4,705
    
    
    
    (2,354
    )
    
    
    60,665Provision (benefit) for income taxes
    
    
    (26,390
    )
    
    
    49,357
    
    
    
    1,285
    
    
    
    
    
    
    
    24,252(45,183
    )
    
    
    80,530
    
    
    
    3,420
    
    
    
    (2,354
    )
    
    
    36,413Equity in earnings (loss) of subsidiaries
    
    
    81,596
    
    
    
    
    
    
    
    
    
    
    
    (81,596
    )
    
    
    Net income (loss)
    
    $
    36,413
    
    
    $
    80,530
    
    
    $
    3,420
    
    
    $
    (83,950
    )
    
    $
    36,413


-32-



---



##### Table of Contents



Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Nine Months Ended November 30, 2002
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedNet revenues
    
    $
    523
    
    
    $
    427,052
    
    
    $
    7,997
    
    
    $
    
    
    
    $
    435,572Operating expenses:Station operating expenses,
excluding noncash compensation
    
    
    347
    
    
    
    252,396
    
    
    
    7,333
    
    
    
    
    
    
    
    260,076Corporate expenses, excluding
noncash compensation
    
    
    15,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,750Noncash compensation
    
    
    3,282
    
    
    
    14,318
    
    
    
    
    
    
    
    
    
    
    
    17,600Depreciation and amortization
    
    
    3,461
    
    
    
    26,473
    
    
    
    2,156
    
    
    
    
    
    
    
    32,090Total operating expenses
    
    
    22,840
    
    
    
    293,187
    
    
    
    9,489
    
    
    
    
    
    
    
    325,516Operating income (loss)
    
    
    (22,317
    )
    
    
    133,865
    
    
    
    (1,492
    )
    
    
    
    
    
    
    110,056Other income (expense)Other income (expense)
Interest expense
    
    
    (59,720
    )
    
    
    (656
    )
    
    
    (983
    )
    
    
    512
    
    
    
    (60,847
    )Loss from unconsolidated affiliates
    
    
    (3,702
    )
    
    
    (506
    )
    
    
    
    
    
    
    
    
    
    
    (4,208
    )Loss on debt extinguishment
    
    
    (4,444
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,444
    )Gain on sale of assets
    
    
    
    
    
    
    8,900
    
    
    
    
    
    
    
    
    
    
    
    8,900Minority interest income (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (14
    )Other income (expense), net
    
    
    837
    
    
    
    626
    
    
    
    (65
    )
    
    
    (512
    )
    
    
    886Total other income (expense)
    
    
    (67,029
    )
    
    
    8,364
    
    
    
    (1,048
    )
    
    
    (14
    )
    
    
    (59,727
    )Income (loss) before income taxes,
extraordinary loss and accounting change
    
    
    (89,346
    )
    
    
    142,229
    
    
    
    (2,540
    )
    
    
    (14
    )
    
    
    50,329Provision (benefit) for income taxes
    
    
    (33,367
    )
    
    
    54,047
    
    
    
    
    
    
    
    
    
    
    
    20,680Income (loss) before extraordinary loss
and accounting change
    
    
    (55,979
    )
    
    
    88,182
    
    
    
    (2,540
    )
    
    
    (14
    )
    
    
    29,649Cumulative effect of accounting change,
net of tax
    
    
    (167,400
    )
    
    
    (167,400
    )
    
    
    
    
    
    
    167,400
    
    
    
    (167,400
    )Equity in earnings (loss) of subsidiaries
    
    
    85,628
    
    
    
    
    
    
    
    
    
    
    
    (85,628
    )
    
    
    Net income (loss)
    
    $
    (137,751
    )
    
    $
    (79,218
    )
    
    $
    (2,540
    )
    
    $
    81,758
    
    
    $
    (137,751
    )


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Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended November 30, 2003
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    36,413
    
    
    $
    80,530
    
    
    $
    3,420
    
    
    $
    (83,950
    )
    
    $
    36,413Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities -Depreciation and amortization
    
    
    7,283
    
    
    
    45,201
    
    
    
    2,758
    
    
    
    
    
    
    
    55,242Provision for bad debts
    
    
    
    
    
    
    2,611
    
    
    
    
    
    
    
    
    
    
    
    2,611Provision for deferred income taxes
    
    
    (26,390
    )
    
    
    49,357
    
    
    
    1,285
    
    
    
    
    
    
    
    24,252Noncash compensation
    
    
    3,742
    
    
    
    14,314
    
    
    
    
    
    
    
    
    
    
    
    18,056Gain on sale of assets
    
    
    
    
    
    
    (862
    )
    
    
    
    
    
    
    
    
    
    
    (862
    )Equity in earnings of subsidiaries
    
    
    (81,596
    )
    
    
    
    
    
    
    
    
    
    
    81,596
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (1,544
    )
    
    
    2,354
    
    
    
    810Changes in assets and liabilities -
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    
    
    
    
    (18,646
    )
    
    
    (804
    )
    
    
    
    
    
    
    (19,450
    )Prepaid expenses and other current assets
    
    
    1
    
    
    
    (2,691
    )
    
    
    (529
    )
    
    
    
    
    
    
    (3,219
    )Other assets
    
    
    13,453
    
    
    
    (11,632
    )
    
    
    200
    
    
    
    
    
    
    
    2,021Accounts payable and accrued liabilities
    
    
    (10,091
    )
    
    
    (1,884
    )
    
    
    (1,865
    )
    
    
    
    
    
    
    (13,840
    )Deferred liabilities
    
    
    
    
    
    
    (1,612
    )
    
    
    (46
    )
    
    
    
    
    
    
    (1,658
    )Other liabilities
    
    
    (509
    )
    
    
    (26,454
    )
    
    
    (1,664
    )
    
    
    
    
    
    
    (28,627
    )Net cash provided (used) by operating activities
    
    
    (57,694
    )
    
    
    128,232
    
    
    
    1,211
    
    
    
    
    
    
    
    71,749CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (2,505
    )
    
    
    (14,932
    )
    
    
    (281
    )
    
    
    
    
    
    
    (17,718
    )Disposals of property and equipment
    
    
    
    
    
    
    640
    
    
    
    
    
    
    
    
    
    
    
    640Cash paid for acquisitions
    
    
    
    
    
    
    (11,656
    )
    
    
    (106,478
    )
    
    
    
    
    
    
    (118,134
    )Proceeds from sale of assets, net
    
    
    
    
    
    
    3,650
    
    
    
    
    
    
    
    
    
    
    
    3,650Deposits and other
    
    
    (1,735
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,735
    )Net cash used by investing activities
    
    
    (4,240
    )
    
    
    (22,298
    )
    
    
    (106,759
    )
    
    
    
    
    
    
    (133,297
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long-term debt
    
    
    (70,112
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,112
    )Proceeds from long-term debt
    
    
    128,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,000Intercompany and ECC
    
    
    1,127
    
    
    
    (103,195
    )
    
    
    102,919
    
    
    
    
    
    
    
    851Debt related costs
    
    
    (646
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (646
    )Net cash provided (used) by financing activities
    
    
    58,369
    
    
    
    (103,195
    )
    
    
    102,919
    
    
    
    
    
    
    
    58,093DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (3,565
    )
    
    
    2,739
    
    
    
    (2,629
    )
    
    
    
    
    
    
    (3,455
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    3,885
    
    
    
    5,844
    
    
    
    6,350
    
    
    
    
    
    
    
    16,079End of period
    
    $
    320
    
    
    $
    8,583
    
    
    $
    3,721
    
    
    $
    
    
    
    $
    12,624


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Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended November 30, 2002
(Unaudited)

EliminationsParent
    
    
    
    
    
    Subsidiary
    
    andCompany
    
    Subsidiary
    
    Non-
    
    ConsolidatingOnly
    
    Guarantors
    
    Guarantors
    
    Entries
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (137,751
    )
    
    $
    (79,218
    )
    
    $
    (2,540
    )
    
    $
    81,758
    
    
    $
    (137,751
    )Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities -Cumulative effect of accounting change
    
    
    167,400
    
    
    
    167,400
    
    
    
    
    
    
    
    (167,400
    )
    
    
    167,400Depreciation and amortization
    
    
    5,863
    
    
    
    42,000
    
    
    
    2,157
    
    
    
    
    
    
    
    50,020Provision for bad debts
    
    
    
    
    
    
    3,189
    
    
    
    
    
    
    
    
    
    
    
    3,189Provision for deferred income taxes
    
    
    20,680
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,680Noncash compensation
    
    
    3,282
    
    
    
    14,318
    
    
    
    
    
    
    
    
    
    
    
    17,600Loss on debt extinguishment
    
    
    4,444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,444Gain on sale of assets
    
    
    
    
    
    
    (8,900
    )
    
    
    
    
    
    
    
    
    
    
    (8,900
    )Equity in earnings of subsidiaries
    
    
    (85,628
    )
    
    
    
    
    
    
    
    
    
    
    85,628
    
    
    
    Other
    
    
    (14
    )
    
    
    
    
    
    
    (8,122
    )
    
    
    14
    
    
    
    (8,122
    )Changes in assets and liabilities -Accounts receivable
    
    
    
    
    
    
    (22,799
    )
    
    
    739
    
    
    
    
    
    
    
    (22,060
    )Prepaid expenses and other current assets
    
    
    (873
    )
    
    
    (5,589
    )
    
    
    62
    
    
    
    
    
    
    
    (6,400
    )Other assets
    
    
    2,353
    
    
    
    3,685
    
    
    
    266
    
    
    
    
    
    
    
    6,304Accounts payable and accrued liabilities
    
    
    (7,293
    )
    
    
    (2,228
    )
    
    
    1,979
    
    
    
    
    
    
    
    (7,542
    )Deferred liabilities
    
    
    
    
    
    
    (402
    )
    
    
    
    
    
    
    
    
    
    
    (402
    )Other liabilities
    
    
    (2,726
    )
    
    
    (16,039
    )
    
    
    (4,216
    )
    
    
    
    
    
    
    (22,981
    )Net cash provided (used) by investing activities
    
    
    (30,263
    )
    
    
    95,417
    
    
    
    (9,675
    )
    
    
    
    
    
    
    55,479CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (2,488
    )
    
    
    (19,483
    )
    
    
    936
    
    
    
    
    
    
    
    (21,035
    )Proceeds from sale of assets
    
    
    
    
    
    
    135,500
    
    
    
    
    
    
    
    
    
    
    
    135,500Other
    
    
    (1,087
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,087
    )Net cash provided (used) by investing activities
    
    
    (3,575
    )
    
    
    116,017
    
    
    
    936
    
    
    
    
    
    
    
    113,378CASH FLOWS FROM FINANCING ACTIVITIES:Payments on long-term debt
    
    
    (238,102
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238,102
    )Proceeds from long-term debt
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,000Intercompany
    
    
    262,804
    
    
    
    (211,414
    )
    
    
    9,502
    
    
    
    
    
    
    
    60,892Debt related costs
    
    
    (2,754
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,754
    )Net cash provided (used) by investing activities
    
    
    34,948
    
    
    
    (211,414
    )
    
    
    9,502
    
    
    
    
    
    
    
    (166,964
    )INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,110
    
    
    
    20
    
    
    
    763
    
    
    
    
    
    
    
    1,893CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    
    
    
    
    4,970
    
    
    
    1,392
    
    
    
    
    
    
    
    6,362End of period
    
    $
    1,110
    
    
    $
    4,990
    
    
    $
    2,155
    
    
    $
    
    
    
    $
    8,255


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Note 8. Regulatory, International and Other Matters

We acquired KGMB-TV in Honolulu, Hawaii as part of the Lee acquisition in
October 2000. Because we also own KHON-TV in Honolulu and both stations are
rated among the top four television stations in the Honolulu market, we have
been operating KGMB-TV under various temporary waivers to the FCCs ownership
rules. While the FCC has adopted new local television ownership rules which
continue to prohibit the ownership of two top-rated television stations in a
single market, the implementation of the new rules has been challenged in
Federal court and the court has issued an indefinite stay. The stay has
prevented the new rules from becoming effective. In addition, Emmis has filed
its own petition in the same Federal court challenging the legality of the
Commissions rule that prohibits one company from owning two stations that are
rated in the top four in a single market. We cannot predict when or how the
court will rule on our petition, or when or how the FCC will rule on our most
recent waiver request. In the meantime, we continue to operate both of our
stations in Honolulu.

FCC regulations require most commercial television stations in the United
States to be broadcasting in digital format. Fourteen of our sixteen
television stations (excluding satellite stations) are currently broadcasting
in digital format. One station, WVUE, is not broadcasting in digital format
and received a formal admonishment from the FCC in November 2003. While WVUE
could be issued a monetary fine if it has not commenced digital broadcasting by
May 2004, we expect to meet this deadline. The other station that is not
broadcasting in digital format, WBPG, is not subject to the usual digital
conversion deadlines because it has not yet been assigned a second channel for
digital broadcasting. We believe the FCC will assign WBPG a second digital
channel and require the station to convert to digital broadcasting shortly
before the conclusion of the digital broadcasting transition period in December
2006. In addition, four of our nine satellite stations are not currently
broadcasting in digital format. However, we currently have extension requests
pending with the FCC and we believe that the continued grant of extensions is
appropriate because the delays are largely due to conditions beyond our
control. Nonetheless, no assurances can be given that further extensions will
be granted. Based upon the FCCs treatment of various broadcasters whose
extension requests have been denied, we believe that the FCC will first issue a
formal admonishment to any broadcaster whose extension request is denied and
then issue a monetary fine if the station has not commenced digital
broadcasting within six months of the date of the FCCs admonishment.
Thereafter, the FCC could cause the broadcaster to forfeit the stations
digital broadcasting license. We have no reason to believe this will happen to
any Emmis station.

During the quarter ended August 31, 2003, Emmis acquired the rights to
provide all the programming and sell all the advertising on radio stations in
five cities in the Flanders region of Belgium from a third party for
approximately $1 million. Future consideration payable to the seller for these
rights is approximately $2 million, payable in euros over six years. The
broadcast licenses for these stations were renewed for a period of nine years
in December 2003 (see Note 9).

During the quarter ended August 31, 2003, the partners in our Hungarian
subsidiary, including Emmis, agreed to forgive certain indebtedness and accrued
interest owed to the partners by the subsidiary. The activity relating to
Emmis eliminates in consolidation. The forgiveness of debt by our minority
partners was accounted for as a capital transaction. Since the accrued
interest was charged to expense by the Hungarian subsidiary, reversal of the
portion of accrued interest attributable to the minority partners of $1.3
million was credited to income and is reflected in other income (expense), net
in the accompanying condensed consolidated statements of operations.

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

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Note 9. Subsequent Events

On December 19, 2003, the Flemish Government awarded licenses to operate
nine FM radio stations in the Flanders region of Belgium to several
not-for-profit entities that have granted Emmis the exclusive right to provide
the programming and sell the advertising on the stations. Five of these
licenses are for the stations that Emmis began programming in August 2003 (see
Note 8) and the remaining four are for new stations that Emmis will program
when they go on the air in the next few months. The licenses are for an
initial term of nine years and do not require the payment of any license fees
to the Flemish Government.

On December 23, 2003, Emmis agreed to sell its controlling interest in
Votionis, S.A. (Votionis), which owns and operates two radio stations in
Buenos Aires, Argentina, to its minority partners for $7 million in cash. The
sale is subject to Argentine regulatory approvals and is expected to close
during the first half of calendar 2004. Emmis acquired its interest in
Votionis in November 1999. In October 2003, we exercised our right to purchase
the equity interests of our minority partners. During negotiations with our
minority partners, we instead elected to sell our controlling interest. Emmis
expects to record a loss from discontinued operations of approximately $11
million in its fiscal quarter ended February 29, 2004. The Argentine peso
substantially devalued relative to the U.S. dollar early in 2002. The loss is
entirely attributable to the devaluation of the peso. Votionis has been
included in the radio reporting segment.




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

Note: Certain statements included in this report or in the financial
statements contained herein which are not statements of historical fact,
including but not limited to those identified with the words expect, will
or look are intended to be, and are, by this Note, identified as
forward-looking statements, as defined in the Securities and Exchange Act of
1934, as amended, and involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of the
Company to be materially different from any future result, performance or
achievement expressed or implied by such forward-looking statement. Such
factors include, among others, general economic and business conditions;
fluctuations in the demand for advertising and demand for different types of
advertising media; our ability to service our outstanding debt; increased
competition in our markets and the broadcasting industry; our ability to
attract and secure programming, on-air talent, writers and photographers;
inability to obtain necessary approvals for purchase or sale transactions or to
complete the transactions for other reasons generally beyond our control;
increases in the costs of programming, including on-air talent; inability to
grow through suitable acquisitions, including desired radio acquisitions; new
or changing regulations of the Federal Communications Commission or other
governmental agencies; competition from new or different technologies; war,
terrorist acts or political instability; and other factors mentioned in other
documents filed by the Company with the Securities and Exchange Commission.
Emmis does not undertake any obligation to publicly update or revise any
forward-looking statements because of new information, future events or
otherwise.

GENERAL

The following discussion pertains to Emmis Communications Corporation
(ECC) and its subsidiaries (collectively, Emmis or the Company) and to
Emmis Operating Company and its subsidiaries (collectively EOC). Unless
otherwise noted, all disclosures contained in the Managements Discussion and
Analysis of Financial Condition and Results of Operation in the Form 10-Q apply
to Emmis and EOC.

We are a diversified media company with radio broadcasting, television
broadcasting and magazine publishing operations. We operate the sixth largest
publicly traded radio portfolio in the United States

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based on total listeners. We operate twenty-three FM radio stations and
four AM radio stations in the United States that serve the nations three
largest radio markets of New York City, Los Angeles and Chicago, as well as
Austin, Phoenix, St. Louis, Indianapolis and Terre Haute, Indiana. The sixteen
television stations we operate serve geographically diverse mid-sized markets
in the U.S. as well as the large markets of Portland and Orlando and have a
variety of television network affiliations, including five with CBS, five with
FOX, three with NBC, one with ABC and two with WB.

In addition to our domestic broadcasting properties, we operate a news
information radio network in Indiana, publish Texas Monthly, Los Angeles,
Atlanta, Indianapolis Monthly, Cincinnati, and Country Samplerand related
magazines, have a 59.5% interest in a national radio station in Hungary and own
75% of one FM and one AM radio station in Buenos Aires, Argentina and most
recently are commencing operations in the Flanders region of Belgium. We also
engage in various businesses ancillary to our broadcasting business, such as
consulting and broadcast tower leasing. On December 23, 2003, Emmis entered
into an agreement to sell its two radio stations in Argentina.

The Companys revenues are affected primarily by the advertising rates its
entities charge. These rates are in large part based on the entities ability
to attract audiences/subscribers in demographic groups targeted by their
advertisers. Broadcast entities ratings are measured principally four times a
year by Arbitron Radio Market Reports for radio stations and by A.C. Nielsen
Company for television stations. Because audience ratings in a stations local
market are critical to the stations financial success, the Companys strategy
is to use market research and advertising and promotion to attract and retain
audiences in each stations chosen demographic target group.

In addition to the sale of advertising time for cash, stations typically
exchange advertising time for goods or services which can be used by the
station in its business operations. The Company generally confines the use of
such trade transactions to promotional items or services for which the Company
would otherwise have paid cash. In addition, it is the Companys general policy
not to pre-empt advertising spots paid in cash with advertising spots paid in
trade.

CRITICAL ACCOUNTING POLICIES

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

Impairment of Goodwill and Indefinite-lived Intangibles

The annual impairment tests for goodwill and indefinite-lived intangibles
under SFAS No. 142 require us to make certain assumptions in determining fair
value, including assumptions about the cash flow growth rates of our
businesses. Additionally, the fair values are significantly impacted by
macro-economic factors, including market multiples at the time the impairment
tests are performed. Accordingly, we may incur additional impairment charges
in future periods under SFAS No. 142 to the extent we do not achieve our
expected cash flow growth rates, or to the extent that market values decrease.

Allocations for Purchased Assets

We typically engage an independent appraisal firm to value assets acquired
in a material acquisition. We use the appraisal report to allocate the
purchase price of the acquisition. To the extent that purchased assets are not
allocated appropriately, depreciation and amortization expense could be
materially different.

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Allowance for Doubtful Accounts

Our allowance for doubtful accounts requires us to estimate losses
resulting from our customers inability to make payments. We specifically
review historical write-off activity by market, large customer concentrations,
and changes in our customer payment patterns when evaluating the adequacy of
the allowance for doubtful accounts. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to
make payments, then additional allowances might be required.

Results of Operations for the Three and Nine Months Ended November 30, 2003 and 2002

Pro forma reconciliation:

Since March 1, 2002, we have sold two radio stations in Denver,Colorado,
acquired a 50.1% controlling interest in six radio stations in Austin, Texas,
purchased one television station in Mobile, Alabama and sold a television
production company (see Note 4 to the accompanying condensed consolidated
financial statements). Our pro forma results are presented as if all the
transactions had taken place on March 1, 2002. The following table reconciles
actual results to pro forma results.

Three Months ended
    
    Nine Months endedNovember 30,
    
    November 30,2002
    
    2003
    
    2002
    
    2003Total net revenues:Reported total net revenues
    
    $
    155,544
    
    
    $
    160,045
    
    
    $
    435,572
    
    
    $
    458,115Plus: net revenues from assets acquired
    
    
    6,283
    
    
    
    
    
    
    
    19,103
    
    
    
    8,860Less: net revenues from assets disposed
    
    
    (666
    )
    
    
    
    
    
    
    (3,757
    )
    
    
    (1,140
    )Pro forma total net revenues
    
    $
    161,161
    
    
    $
    160,045
    
    
    $
    450,918
    
    
    $
    465,835Total station operating expenses, excluding
noncash compensation:Reported total station operating expenses,
excluding noncash compensation
    
    $
    87,781
    
    
    $
    94,685
    
    
    $
    260,076
    
    
    $
    279,965Plus: station operating expenses, excluding
noncash compensation from assets acquired
    
    
    4,203
    
    
    
    
    
    
    
    12,202
    
    
    
    5,182Less: station operating expenses, excluding
noncash compensation from assets disposed
    
    
    (526
    )
    
    
    
    
    
    
    (2,427
    )
    
    
    (944
    )Pro forma total station operating expenses,
excluding noncash compensation
    
    $
    91,458
    
    
    $
    94,685
    
    
    $
    269,851
    
    
    $
    284,203


Net revenues:

Radio net revenues for the three and nine months ended November 30, 2003
increased $9.8 million, or 14.9% and $23.0 million, or 11.6%, respectively. On
a pro forma basis (assuming the Austin radio stations had been purchased on
March 1, 2002 and the Denver radio stations had been sold on March 1, 2002),
radio net revenues for the three and nine months ended November 30, 2003 would
have increased $3.9 million, or
5.5% and $14.7 million, or 6.8%, respectively. We monitor the performance of
our stations against the aggregate performance of the markets in which we
operate. On a pro forma basis, for the three and nine months ended November
30, 2003, net revenues of our domestic radio stations were up 4.1% and 5.7%,

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respectively, whereas net revenues in the domestic radio markets in which we
operate were up only 3.0% and 3.1%, respectively, based on reports for the
periods prepared by Miller, Kaplan, Arase & Co., LLP. We believe we were able
to outperform the markets in which we operate due to our commitment to training
and developing local sales forces and higher ratings, resulting, in part, from
increased promotional spending in prior quarters. The higher ratings allowed
us to charge higher rates for the advertisements we sold in the current period
versus the same period in the prior year. Our advertising inventory sellout
decreased slightly year over year.

Television net revenues for the three and nine months ended November 30,
2003 decreased $6.7 million, or 9.6% and $3.0 million, or 1.6%, respectively.
On a pro forma basis (assuming the purchase of WBPG-TV and sale of Mira Mobile
Television had occurred on March 1, 2002), television net revenues for the
three and nine months ended November 30, 2003 would have decreased $6.4
million, or 9.3% and $2.3 million, or 1.3%, respectively. The decrease in
television net revenues for the three and nine months ended November 30, 2003
is due to the substantial reduction in net political revenues because there
were very few elections in 2003. Net political advertising revenues for the
three and nine months ended November 30, 2002 were approximately $13.0 million
and $17.3 million, respectively. Net political advertising revenues for the
three and nine months ended November 30, 2003 were approximately $1.8 million
and $3.2 million, respectively. Despite this decrease in net political
revenues, ratings improvements and our commitment to training and developing
local sales forces has enabled us to increase our share of local advertising
revenues.

Publishing revenues for the three and nine months ended November 30, 2003
increased $1.4 million, or 7.1% and $2.5 million, or 4.6%, respectively. The
national advertising environment continues to be challenging for our publishing
division. However, our magazines have been able to overcome shortfalls in
national advertising revenues by producing more custom publications and by
increasing special advertiser sections in our magazines.

On a consolidated basis, total net revenues for the three and nine months
ended November 30, 2003 increased $4.5 million, or 2.9%, and $22.5 million, or
5.2%, respectively due to the effect of the items described above.

Station operating expenses, excluding noncash compensation:

Radio station operating expenses, excluding noncash compensation, for the
three and nine months ended November 30, 2003 increased $6.5 million, or 18.9%
and $15.7 million, or 15.1%, respectively. On a pro forma basis (assuming the
Austin radio stations had been purchased on March 1, 2002 and the Denver radio
stations had been sold on March 1, 2002), radio station operating expenses,
excluding noncash compensation, for the three and nine months ended November
30, 2003 would have increased $2.9 million, or 7.8% and $11.3 million, or 9.9%,
respectively. The increase relates to higher sales-related costs, higher
insurance and health-related costs and higher programming costs.

Television station operating expenses, excluding noncash compensation, for
the three months ended November 30, 2003 decreased $0.1 million, or 0.3%, and
increased $1.9 million, or 1.7% for the nine months ended November 30, 2003.
On a pro forma basis (assuming the purchase of WBPG-TV and sale of Mira Mobile
Television had occurred on March 1, 2002), television station operating
expenses, excluding noncash compensation, for the three and nine months ended
November 30, 2003 would have decreased $0.2 million, or 0.6% and increased $0.8
million, or 0.7%, respectively. Higher programming costs and higher insurance
and health-related costs were generally offset by lower sales-related costs.

Publishing operating expenses, excluding noncash compensation, for the
three and nine months ended November 30, 2003 increased $0.5 million, or 3.2%,
and $2.3 million, or 5.1%, respectively. As previously

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discussed, our
publishing division has replaced lost national advertising revenues with
revenues from custom publications and special advertiser sections, which are
more expensive to produce due principally to higher editorial and production
costs. Our publishing division also experienced higher insurance and
health-related costs.

On a consolidated basis, total station operating expenses, excluding
noncash compensation, for the three and nine months ended November 30, 2003
increased $6.9 million, or 7.9% and $19.9 million, or 7.6%, respectively, due
to the effect of the items described above.

Noncash compensation expenses:

Noncash compensation expenses for the three and nine months ended November
30, 2003 were $5.6 million and $18.1 million, respectively, compared to $6.5
million and $17.6 million for the same period of the prior year, a decrease of
$0.9 million or 13.7% for the three months ended November 30, 2003, and an
increase of $0.5 million or 2.6% for the nine months ended November 30, 2003.
The following table summarizes the noncash compensation expense by segment:

Three Months
    
    Nine MonthsEnded November 30,
    
    Ended November 30,2002
    
    2003
    
    2002
    
    2003Radio
    
    $
    2,086
    
    
    $
    1,660
    
    
    $
    7,225
    
    
    $
    6,010Television
    
    
    2,029
    
    
    
    1,985
    
    
    
    5,235
    
    
    
    6,119Publishing
    
    
    709
    
    
    
    706
    
    
    
    1,858
    
    
    
    2,185Corporate
    
    
    1,646
    
    
    
    1,234
    
    
    
    3,282
    
    
    
    3,742Total noncash compensation
    
    $
    6,470
    
    
    $
    5,585
    
    
    $
    17,600
    
    
    $
    18,056


Noncash compensation includes compensation expense associated with
restricted common stock issued under employment agreements, common stock issued
to employees at our discretion, Company matches in our 401(k) plans, and common
stock issued to employees pursuant to our stock compensation program. Our
stock compensation program resulted in noncash compensation expense of
approximately $5.1 million and $4.6 million for the three months ended November
30, 2002 and 2003, respectively, and $13.3 million and $12.9 million for the
nine months ended November 30, 2002 and 2003, respectively. Effective March 1,
2003, Emmis elected to double its 401(k) match to $2 thousand per employee,
with one-half of the contribution made in Emmis stock. The increased 401(k)
match was made instead of making a contribution to the Companys profit sharing
plan. This resulted in approximately $0.1 million and $1.4 million of
additional noncash compensation expense in the three and nine months ended
November 30, 2003, respectively, over the same periods in the prior year. The
remaining decrease in the three months ended November 30, 2003 is primarily
attributable to lower accruals for bonuses to be paid in stock.

Corporate expenses, excluding noncash compensation:

Corporate expenses, excluding noncash compensation, for the three and nine
months ended November
30, 2003 were $6.1 million and $17.7 million, respectively, compared to $5.6
million and $15.8 million for the same periods of the prior year, an increase
of $0.5 million or 8.9% and $1.9 million or 12.3%. These costs increased due
to higher insurance and health care costs, professional fees associated with
evaluating new business opportunities, merit increases, funding for training
and diversity initiatives, and higher corporate governance costs.

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Depreciation and amortization:

Radio depreciation and amortization expense for the three months ended
November 30, 2003 was $2.6 million compared to $2.0 million for the same period
of the prior year, an increase of $0.6 million or 30.3%. Radio depreciation
and amortization expense for the nine months ended November 30, 2003 was $7.0
million compared to $6.0 million for the same period of the prior year, an
increase of $1.0 million or 16.1%. Substantially all of the increase in radio
depreciation and amortization is attributable to our Austin radio acquisition,
which closed on July 1, 2003.

Television depreciation and amortization expense for the three months
ended November 30, 2003 was $7.5 million compared to $7.1 million for the same
period of the prior year, an increase of $0.4 million or 4.6%. Television
depreciation and amortization expense for the nine months ended November 30,
2003 was $22.6 million compared to $21.1 million for the same period of the
prior year, an increase of $1.5 million or 7.0%. The increase was mainly
attributable to depreciation of digital equipment upgrades.

Publishing depreciation and amortization expense for the three months
ended November, 2003 was $0.2 million compared to $0.4 million for the same
period of the prior year, a decrease of $0.2 million or 54.9%. Publishing
depreciation and amortization expense for the nine months ended November 30,
2003 was $0.6 million compared to $1.5 million for the same period of the prior
year, a decrease of $0.9 million or 57.2%. The decrease was mainly
attributable to certain definite-lived intangible assets becoming fully
amortized during fiscal 2003.

Corporate depreciation and amortization expense for the three months ended
November 30, 2003 was $1.5 million compared to $1.2 million for the same period
of the prior year, an increase of $0.3 million or 29.9%. Corporate
depreciation and amortization expense for the nine months ended November 30,
2003 was $4.5 million compared to $3.5 million for the same period of the prior
year, an increase of $1.0 million or 30.6%. The increase was mainly
attributable to higher depreciation expense related to computer equipment and
software purchases over the past twelve months.

On a consolidated basis, total depreciation and amortization expense for
the three months ended November 30, 2003 was $11.8 million compared to $10.7
million for the same period of the prior year, an increase of $1.1 million or
9.6%, due to the effect of the items described above. On a consolidated basis,
total depreciation and amortization expense for the nine months ended November
30, 2003 was $34.7 million compared to $32.1 million for the same period of the
prior year, an increase of $2.6 million or 8.2%, due to the effect of the items
described above.

Operating income:

Radio operating income for the three months ended November 30, 2003 was
$30.5 million compared to $27.4 million for the same period of the prior year,
an increase of $3.1 million or 11.5%. Radio operating income for the nine
months ended November 30, 2003 was $88.8 million compared to $81.3 million for
the same period of the prior year, an increase of $7.5 million or 9.3%. This
increase is attributable to higher net revenues, partially offset by higher
station operating expenses and depreciation and amortization expense, as
discussed above.

Television operating income for the three months ended November 30, 2003
was $16.1 million compared to $23.0 million for the same period of the prior
year, a decrease of $6.9 million or 30.1%. Television operating income for the
nine months ended November 30, 2003 was $39.1 million compared to $46.3 million
for the same period of the prior year, a decrease of $7.2 million or 15.5%.
This decrease was

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driven by higher noncash compensation expense, higher depreciation and
amortization expense, and the reduction in political net revenues, as discussed
above.

Publishing operating income for the three months ended November 30, 2003
was $4.2 million compared to $3.0 million for the same period of the prior
year, an increase of $1.2 million or 38.0%. Publishing operating income for
the nine months ended November 30, 2003 was $5.7 million compared to $4.9
million for the same period of the prior year, an increase of $0.8 million, or
14.7%. The increase was driven by higher net revenues and lower depreciation
and amortization, partially offset by higher station operating expenses, as
discussed above.

On a consolidated basis, total operating income for the three months ended
November 30, 2003 was $41.9 million compared to $45.0 million for the same
period of the prior year, a decrease of $3.0 million or 6.8%. On a
consolidated basis, total operating income for the nine months ended November
30, 2003 was $107.7 million compared to $110.1 million for the same period of
the prior year, a decrease of $2.4 million or 2.2%. This decrease principally
related to the changes in radio, television and publishing operating income and
higher corporate expenses and higher noncash compensation expense, as discussed
above.

Interest expense:

With respect to Emmis, interest expense for the three months ended
November 30, 2003 was $20.9 million compared to $24.5 million for the same
period of the prior year, a decrease of $3.6 million or 14.5%. Emmis interest
expense for the nine months ended November 30, 2003 was $64.9 million compared
to $80.6 million for the same period of the prior year, a decrease of $15.7
million or 19.5%. This decrease is attributable to a decrease in the interest
rates we pay on amounts outstanding under our credit facility, which is
variable rate debt, and repayments of amounts outstanding under our credit
facility and our senior discount notes. The decreased interest rates reflect
both a decrease in the base interest rate for our credit facility due to a
lower overall interest rate environment, and a decrease in the margin applied
to the base rate resulting from the June 2002 credit facility amendment. A
portion of the decrease in interest expense is attributable to the expiration
of interest rate swap agreements originally entered into in fiscal 2001. These
swaps, which began expiring in February 2003, had an original aggregate
notional amount of $350.0 million and fixed LIBOR at a weighted-average 4.76%.
As of November 30, 2003, we had one remaining outstanding swap contract
totaling $40.0 million, which fixed LIBOR at a weighted-average 5.13%. This
remaining contract expires in February 2004. In the quarter ended May 31,
2002, we repaid amounts outstanding under our credit facility with the proceeds
of our Denver radio asset sales in May 2002 and a portion of the proceeds from
our equity offering in April 2002, with the remaining portion being used to
reduce amounts outstanding under our senior discount notes in the quarter ended
August 31, 2002. We reduced our total debt outstanding by $270.6 million
during the year ended February 28, 2003.

With respect to EOC, interest expense for the three months ended November
30, 2003 was $14.3 million compared to $18.6 million for the same period of the
prior year, a decrease of $4.3 million or 23.2%. EOC interest expense for EOC
for the nine months ended November 30, 2003 was $45.2 million compared to $60.9
million for the same period of the prior year, a decrease of $15.7 million or
25.8%. This decrease is also primarily attributable to a decrease in the
interest rates we pay on amounts outstanding under our credit facility, and
repayments of amounts outstanding under our credit facility. The difference
between interest expense for Emmis and EOC is due to interest expense
associated with the senior discount notes, for which ECC is the obligor, and
thus it is excluded from the results of operations of EOC.

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Income before income taxes and accounting change:

With respect to Emmis, income before income taxes and accounting change
for the three months ended November 30, 2003 was $19.1 million compared to
$20.0 million for the same period in the prior year, a decrease of $0.9
million, or 4.5%. Emmis income before income taxes and accounting change for
the nine months ended November 30, 2003 was $41.0 million compared to $21.5
million for the same period in the prior year, an increase of $19.5 million, or
90.6%. The decrease in the three months ended November 30, 2003 is mainly
attributable to lower operating income, partially offset by lower interest
expense, as discussed above. The increase in the nine months ended November
30, 2003 is mainly attributable to a reduction in interest expense as a result
of the factors described above, partially offset by the gain on sale of our
Denver radio assets of $8.9 million, loss on debt extinguishment of $13.5
million and loss from unconsolidated affiliates of $4.2 million, all included
in the prior year.

With respect to EOC, income before income taxes and accounting change for
the three months ended November 30, 2003 was $25.7 million compared to $25.8
million for the same period in the prior year, a decrease of $0.1 million, or
0.5%. EOC income before income taxes and accounting change for the nine months
ended November 30, 2003 was $60.7 million compared to $50.3 million for the
same period in the prior year, an increase of $10.4 million, or 20.5%. The
increase in the nine months ended November 30, 2003 is mainly attributable to a
reduction in interest expense as a result of the factors described above,
partially offset by the gain on sale of our Denver radio assets of $8.9
million, loss on debt extinguishment of $4.4 million and loss from
unconsolidated affiliates of $4.2 million, all included in the prior year.

Net income (loss):

With respect to Emmis, net income was $11.3 million and $23.7 million for
the three and nine months ended November 30, 2003, respectively, compared to
$10.8 million and a net loss of $159.3 million for the respective periods in
the prior year. The increase in net income is mainly attributable to (1) the
inclusion in the prior year of a $167.4 million impairment charge, net of a
deferred tax benefit, under the cumulative effect of accounting change as an
accumulated transition adjustment attributable to the adoption on March 1, 2002
of SFAS No. 142, Goodwill and Other Intangible Assets, and (2) a reduction in
interest expense as a result of the factors described above, partially offset
by the gain on sale of our Denver radio assets of $8.9 million, loss on debt
extinguishment of $13.5 million and loss from unconsolidated affiliates of $4.2
million, all included in the prior year, all net of tax.

With respect to EOC, net income was $15.6 million and $36.4 million for
the three and nine months ended November 30, 2003, respectively, compared to
$14.8 million and a net loss of $137.8 million for the respective periods in
the prior year. The increase in net income is mainly attributable to (1) the
inclusion in the prior year of a $167.4 million impairment charge, net of a
deferred tax benefit, under the cumulative effect of accounting change as an
accumulated transition adjustment attributable to the adoption on March 1, 2002
of SFAS No. 142, Goodwill and Other Intangible Assets, and (2) a reduction in
interest expense as a result of the factors described above, partially offset
by the gain on sale of our Denver radio assets of $8.9 million, loss on debt
extinguishment of $4.4 million and loss from unconsolidated affiliates of $4.2
million, all included in the prior year, all net of tax.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operations and cash
available through revolver borrowings under our credit facility. Our primary
uses of capital have been historically, and are expected to continue to be,
funding acquisitions, capital expenditures, working capital and debt service
and, in the case of ECC, preferred stock dividend requirements. Since we
manage cash on a consolidated basis, any cash needs

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of
a particular segment or operating entity are met by intercompany
transactions. See Investing Activities below for a discussion of specific
segment needs.

At November 30, 2003, we had cash and cash equivalents of $12.6 million
and net working capital for Emmis and EOC of $35.5 million and $36.6 million,
respectively. At February 28, 2003, we had cash and cash equivalents of $16.1
million and net working capital for Emmis and EOC of $28.0 million and $29.1
million, respectively. The increase in net working capital primarily relates
to higher receivables due to the seasonality of the business, and lower accrued
salaries and commissions since year-end bonuses that were accrued as of
February 28, 2003 were paid shortly after year-end.

Effective January 1, 2004, we curtailed our stock compensation program by
eliminating mandatory participation for employees making less than $52,000 per
year. For calendar 2004, this change will result in an $8 million decrease in
the Companys non-cash compensation expense and a corresponding increase in the
Companys cash operating expense. In all other respects, the 2004 stock
compensation program remains comparable to the stock compensation programs in
effect for each of the last two calendar years.

Operating Activities

With respect to Emmis, net cash flows provided by operating activities
were $73.4 million for the nine months ended November 30, 2003 compared to
$56.5 million for the same period of the prior. With respect to EOC, net cash
flows provided by operating activities were $71.7 million for the nine months
ended November 30, 2003 compared to $55.5 million for the same period of the
prior year. The increase in cash flows provided by operating activities for
the nine months ended November 30, 2003 as compared to the same period in the
prior year is due to our increase in net revenues less station operating
expenses and corporate expenses, partially offset by the payment of fiscal 2003
year-end bonuses. Cash flows provided by operating activities are historically
the highest in our third and fourth fiscal quarters as a significant portion of
our accounts receivable collections is derived from revenues recognized in our
second and third fiscal quarters, which are our highest revenue quarters.

Investing Activities

Cash flows used in investing activities for both Emmis and EOC were $133.3
million for the nine months ended November 30, 2003 compared to cash provided
by investing activities of $113.4 million in the same period of the prior year.
This decrease is primarily attributable to our purchase of a controlling
interest in six radio stations in Austin as well as a television station in
Mobile in the nine months ended November 30, 2003 as opposed to our sale of two
radio stations in Denver in the nine months ended November 30, 2003, partially
offset by a reduction in capital expenditures in the nine months ended November
30, 2003 over the same period in the prior year. Investment activities include
capital expenditures and business acquisitions and dispositions.

As discussed in Note 3 to the accompanying condensed consolidated
financial statements, effective March 1, 2003, Emmis acquired substantially all
of the assets of television station WBPG-TV in Mobile, AL  Pensacola, FL from
Pegasus Communications Corporation for a cash purchase price of approximately
$11.7 million, including transaction costs of $0.2 million. The acquisition
was financed through borrowings under the credit facility and was accounted for
as a purchase.

As discussed in Note 3 to the accompanying condensed consolidated
financial statements, on July 1, 2003, Emmis effectively acquired, for a
purchase price of $106.5 million, a controlling interest of 50.1% in a
partnership that owns six radio stations in the Austin, Texas metropolitan
area. These six stations are KLBJ-AM, KLBJ-FM, KDHT-FM (formerly KXMG-FM),
KROX-FM, KGSR-FM and KEYI-FM. The acquisition

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was financed through borrowings under our credit facility and was
accounted for as a purchase. In addition, Emmis has the option, but not the
obligation, to purchase our 49.9% partners entire interest in the partnership
after a period of approximately five years based on an 18-multiple of trailing
12-month cash flow.

Capital expenditures primarily relate to leasehold improvements to various
office and studio facilities, broadcast equipment purchases, tower upgrades and
computer equipment replacements. In the nine month periods ended November 30,
2003 and 2002, we had capital expenditures of $17.7 million and $21.0 million,
respectively. We anticipate that future requirements for capital expenditures
will include capital expenditures incurred during the ordinary course of
business, including approximately $6 million in fiscal 2004 for the conversion
to digital television. Although we expect that substantially all of our
stations will broadcast a digital signal by the end of our fiscal 2004, we will
incur approximately $8 million of additional costs, after fiscal 2004, to
upgrade the digital signals of three of our local stations and four of our
satellite stations. We expect to fund such capital expenditures with cash
generated from operating activities and borrowings under our credit facility.

Financing Activities

Cash flows provided by financing activities for Emmis and EOC were $56.5
million and $58.1 million for the nine months ended November 30, 2003. Cash
flows used in financing activities for Emmis and EOC were $168.0 million and
$167.0 million, respectively, for the same period of the prior year. Proceeds
from long-term debt of $128.0 million in fiscal 2004 were used to finance the
acquisitions of WBPG-TV and the Austin radio stations, as discussed above in
Investing Activities. Payments on long-term debt of $70.1 million in fiscal
2004 were generated from cash flows from operations.

In April 2002, ECC completed the sale of 4.6 million shares of its Class A
common stock at $26.80 per share resulting in total proceeds of $123.3 million.
The net proceeds of $120.2 million were contributed to EOC and 50% of the net
proceeds were used in April 2002 to repay outstanding borrowings under our
credit facility. The remainder was invested, and in July 2002 distributed to
ECC to redeem approximately 22.6% of ECCs $370.0 million, face value, senior
discount notes. As indicated in Investing Activities above, net proceeds of
$135.5 million from the sale of two radio stations in Denver were also used to
repay outstanding indebtedness under the credit facility during the six months
ended August 31, 2002.

As of November 30, 2003, EOC had $1,064.8 million of long-term corporate
indebtedness outstanding under its credit facility ($764.8 million) and senior
subordinated notes ($300.0 million), and an additional $9.8 million of other
indebtedness. As of November 30, 2003, total indebtedness outstanding for
Emmis included all of EOCs indebtedness as well as $216.8 million of senior
discount notes. Emmis also had $143.8 million of convertible preferred stock
outstanding. All outstanding amounts under our credit facility bear interest,
at our option, at a rate equal to the Eurodollar rate or an alternative Base
Rate plus a margin. As of November 30, 2003, our weighted average borrowing
rate under our credit facility was approximately 3.61% and our overall weighted
average borrowing rate, after taking into account amounts outstanding under our
senior subordinated notes and senior discount notes, was approximately 6.17%.
The overall weighted average borrowing rate for EOC, which would exclude the
senior discount notes, was approximately 4.88%.

The debt service requirements of EOC over the next twelve month period
(net of interest under our credit facility) are expected to be $65.0 million.
This amount is comprised of $24.4 million for interest under our senior
subordinated notes and $40.6 million for repayment of term notes under our
credit facility. Although interest will be paid under the credit facility at
least every three months, the amount of interest is not presently determinable
given that the credit facility bears interest at variable rates. ECC has no
additional debt service requirements in the next twelve-month period since
interest on its senior discount notes accretes

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into the principal balance of
the notes until March 2006. However, ECC has preferred stock dividend
requirements
of $9.0 million for the next twelve-month period. The terms of ECCs preferred
stock provide for a quarterly dividend payment of $.78125 per share on each
January 15, April 15, July 15 and October 15.

At January 2, 2004 we had $160.0 million available under our credit
facility, less $2.5 million in outstanding letters of credit. As part of our
business strategy, we continually evaluate potential acquisitions of radio and
television stations, as well as publishing properties. If we elect to take
advantage of future acquisition opportunities, we may incur additional debt or
issue additional equity or debt securities, depending on market conditions and
other factors. In connection with the acquisition of a controlling interest in
six radio stations in Austin effective July 1, 2003, Emmis has the option, but
not the obligation, to purchase our 49.9% partners entire interest in the
Austin partnership after a period of approximately five years based on an
18-multiple of trailing 12-month cash flow.

Emmis has explored the possibility of separating its radio and television
businesses into two publicly traded companies. Emmis continues to monitor the
operating environment and evaluate the possibility of effecting a separation.
Emmis would like to effect the separation in connection with a significant
acquisition of either radio or television properties. However, a potential
separation is not dependent upon the occurrence of such an event.

Intangibles

At November 30, 2003, approximately 80% of our total assets consisted of
intangible assets, such as FCC broadcast licenses, goodwill, subscription lists
and similar assets, the value of which depends significantly upon the
operational results of our businesses. In the case of our radio and television
stations, we would not be able to operate the properties without the related
FCC license for each property. FCC licenses are renewed every eight years;
consequently, we continually monitor our stations compliance with the various
regulatory requirements. Historically, all of our FCC licenses have been
renewed at the end of their respective periods, and we expect that all FCC
licenses will continue to be renewed in the future.

New Accounting Pronouncements

On March 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No.
13, and Technical Corrections(SFAS No. 145). SFAS No. 145 rescinds SFAS No.
4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of
that Statement, and SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS No. 145 also rescinds SFAS No. 44, Accounting
for Leases, to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS No. 145 also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. This pronouncement
requires gains and losses related to debt transactions to be classified in
income from continuing operations. Although we did not have any gains or
losses from debt transactions in the current year, ECC had recorded an
extraordinary loss of $11.1 million, net of tax, in the nine months ended
November 30, 2002, and EOC had recorded an extraordinary loss of $2.9 million,
net of tax, in the nine months ended November 30, 2002, in connection with debt
extinguishments. Accordingly, we retroactively reclassified the losses of
$13.5 million for ECC and $4.4 million for EOC and the related income tax
effects to include them in income from continuing operations.

On March 1, 2003, the Company adopted Financial Accounting Standards Board
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of

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Indebtedness of Others(FIN 45).
FIN 45 applies to contracts or indemnification agreements that contingently
require the guarantor to make payments to the guaranteed party based on changes
in an underlying
obligation that is related to an asset, liability, or an equity security
of the guaranteed party. FIN 45s disclosure requirements were effective for
financial statements of interim or annual periods ending after December 15,
2002. FIN 45s initial recognition and initial measurement provisions were
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantors fiscal year-end. The
Company adopted the disclosure requirements of FIN 45 for its fiscal 2003
annual report. Adoption of the initial recognition and initial measurement
requirements of FIN 45 did not materially impact the Companys financial
position, results of operations or applicable disclosures.

On January 1, 2003, the Financial Accounting Standards Board issued
Financial Accounting Standards Board Interpretation No. 46, Consolidation of
Variable Interest Entities(FIN 46). FIN 46 addresses consolidation of
business enterprises of variable interest entities. FIN 46 is effective
immediately for all variable interest entities created after January 31, 2003
and for the first fiscal year or interim period ending after March 15, 2004 for
variable interest entities in which an enterprise holds a variable interest
that it acquired before February 1, 2003. The Company has not acquired any
variable interest entities subsequent to January 31, 2003 and has no interests
in structures that are commonly referred to as special-purpose entities. The
Company will therefore adopt FIN 46 for its interim report for its quarter
ending May 31, 2004. The Company is currently evaluating the impact, if any,
of this pronouncement on its future consolidated results of operations and
consolidated balance sheets.

In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity(SFAS No.
150). SFAS No. 150 requires financial instruments within its scope to be
classified as a liability (or an asset in some circumstances). Many of these
instruments were previously classified as equity. The provisions of SFAS 150
regarding limited life subsidiaries have been deferred indefinitely. These
provisions applied to one of our subsidiaries. The settlement value of the
minority partners interest in our subsidiary was not material at November 30,
2003. Subsequent to the balance sheet date, we sold our interest in the
subsidiary.

Regulatory, International and Other Matters

We acquired KGMB-TV in Honolulu, Hawaii as part of the Lee acquisition in
October 2000. Because we also own KHON-TV in Honolulu and both stations are
rated among the top four television stations in the Honolulu market, we have
been operating KGMB-TV under various temporary waivers to the FCCs ownership
rules. While the FCC has adopted new local television ownership rules which
continue to prohibit the ownership of two top-rated television stations in a
single market, the implementation of the new rules has been challenged in
Federal court and the court has issued an indefinite stay. The stay has
prevented the new rules from becoming effective. In addition, Emmis has filed
its own petition in the same Federal court challenging the legality of the
Commissions rule that prohibits one company from owning two stations that are
rated in the top four in a single market. We cannot predict when or how the
court will rule on our petition, or when or how the FCC will rule on our most
recent waiver request. In the meantime, we continue to operate both of our
stations in Honolulu.

FCC regulations require most commercial television stations in the United
States to be broadcasting in digital format. Fourteen of our sixteen
television stations (excluding satellite stations) are currently broadcasting
in digital format. One station, WVUE, is not broadcasting in digital format
and received a formal admonishment from the FCC in November 2003. While WVUE
could be issued a monetary fine if it has not commenced digital broadcasting by
May 2004, we expect to meet this deadline. The other station that

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is not
broadcasting in digital format, WBPG, is not subject to the usual digital
conversion deadlines because it has
not yet been assigned a second channel for digital broadcasting. We
believe the FCC will assign WBPG a second digital channel and require the
station to convert to digital broadcasting shortly before the conclusion of the
digital broadcasting transition period in December 2006. In addition, four of
our nine satellite stations are not currently broadcasting in digital format.
However, we currently have extension requests pending with the FCC and we
believe that the continued grant of extensions is appropriate because the
delays are largely due to conditions beyond our control. Nonetheless, no
assurances can be given that further extensions will be granted. Based upon
the FCCs treatment of various broadcasters whose extension requests have been
denied, we believe that the FCC will first issue a formal admonishment to any
broadcaster whose extension request is denied and then issue a monetary fine if
the station has not commenced digital broadcasting within six months of the
date of the FCCs admonishment. Thereafter, the FCC could cause the
broadcaster to forfeit the stations digital broadcasting license. We have no
reason to believe this will happen to any Emmis station.

During the quarter ended August 31, 2003, the partners in our Hungarian
subsidiary, including Emmis, agreed to forgive certain indebtedness and accrued
interest owed to the partners by the subsidiary. The activity relating to
Emmis eliminates in consolidation. The forgiveness of debt by our minority
partners was accounted for as a capital transaction. Since the accrued
interest was charged to expense by the Hungarian subsidiary, reversal of the
portion of accrued interest attributable to the minority partners of $1.3
million was credited to income and is reflected in other income (expense), net
in the accompanying condensed consolidated statements of operations.

On December 19, 2003, the Flemish Government awarded licenses to operate
nine FM radio stations in the Flanders region of Belgium to several
not-for-profit entities that have granted Emmis the exclusive right to provide
the programming and sell the advertising on the stations. Five of these
licenses are for the stations that Emmis began programming in August 2003 (see
Note 8 to the accompanying condensed consolidated financial statements) and the
remaining four are for new stations that Emmis will program when they go on the
air in the next few months. The licenses are for an initial term of nine years
and do not require the payment of any license fees to the Flemish Government.

On December 23, 2003, Emmis agreed to sell its controlling interest in
Votionis, S.A. (Votionis), which owns and operates two radio stations in
Buenos Aires, Argentina, to its minority partners for $7 million in cash. The
sale is subject to Argentine regulatory approvals and is expected to close
during the first half of calendar 2004. Emmis acquired its interest in
Votionis in November 1999. In October 2003, we exercised our right to purchase
the equity interests of our minority partners. During negotiations with our
minority partners, we instead elected to sell our controlling interest. Emmis
expects to record a loss from discontinued operations of approximately $11
million in its fiscal quarter ended February 29, 2004. The Argentine peso
substantially devalued relative to the U.S. dollar early in 2002. The loss is
entirely attributable to the devaluation of the peso. Votionis has been
included in the radio reporting segment.

Quantitative and Qualitative Disclosures About Market Risk

Management monitors and evaluates changes in market conditions on a
regular basis. Based upon the most recent review, management has determined
that there have been no material developments affecting market risk since the
filing of the Companys Annual Report on Form 10-K for the year ended February 28, 2003.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Discussion regarding these items is included in managements discussion
and analysis of financial condition and results of operations.

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Item 4. Controls and Procedures

Quarterly Evaluation of the Companies Disclosure Controls

As of the end of the fiscal quarter covered by this Quarterly Report on
Form 10-Q, the Company evaluated the effectiveness of the design and operation
of its disclosure controls and procedures (Disclosure Controls). This
evaluation (the Controls Evaluation) was performed under the supervision and
with the participation of management, including our Chief Executive Officer
(CEO) and Chief Financial Officer (CFO).

CEO and CFO Certifications

There are two separate forms of Certifications of the CEO and the CFO for
each of Emmis Communications Corporation and Subsidiaries and Emmis Operating
Company and Subsidiaries filed as exhibits to this Quarterly Report. The first
form of Certification (the Rule 13a-14 Certification) is required in accord
with Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act).
This Controls and Procedures section of the Quarterly Report includes the
information concerning the Controls Evaluation required by Rule 13a-15 under
the Exchange Act and referred to in the Rule 13a-14 Certifications, and it
should be read in conjunction with the Rule 13a-14 Certifications for a more
complete understanding of the topics presented.

Disclosure Controls

Disclosure Controls are procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act, such as this
Quarterly Report, is recorded, processed, summarized and reported within the
time periods specified in the U.S. Securities and Exchange Commissions (the
SEC) rules and forms. Disclosure Controls are also designed to ensure that
such information is accumulated and communicated to our management, including
the CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure.

Limitations on the Effectiveness of Controls

The Companys management, including the CEO and CFO, does not expect that our
Disclosure Controls will prevent all error. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute,
assurance that the control systems objectives will be met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues within the
Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, controls may
become inadequate because of changes in conditions or deterioration in the
degree of compliance with policies or procedures. Because of the inherent
limitations in a cost-effective control system, misstatements due to error may
occur and not be detected.

Scope of the Controls Evaluation

The evaluation of our Disclosure Controls included a review of the controls
objectives and design, the Companys implementation of the controls and the
effect of the controls on the information generated for use in this Quarterly
Report. In the course of the Controls Evaluation, we sought to identify data
errors, controls

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problems or acts of fraud and confirm that appropriate
corrective actions, including process improvements,
were being undertaken. This type of evaluation is performed on a quarterly
basis so that the conclusions of management, including the CEO and CFO,
concerning controls effectiveness can be reported in our Quarterly Reports on
Form 10-Q and Annual Report on Form 10-K. The overall goals of these various
evaluation activities are to monitor our Disclosure Controls and to modify them
as necessary. Our intent is to maintain the Disclosure Controls as dynamic
systems that change as conditions warrant.

Among other matters, we sought in our evaluation to determine whether there
were any significant deficiencies or material weaknesses in the Companys
internal controls, and whether the Company had identified any acts of fraud
involving personnel with a significant role in the Companys internal controls.
This information was important both for the Controls Evaluation generally, and
because items 4 and 5 in the Rule 13a-14 Certifications of the CEO and CFO
require that the CEO and CFO disclose that information to our Boards Audit
Committee and our independent auditors, and report on related matters in this
section of the Quarterly Report. In professional auditing literature,
significant deficiencies are referred to as reportable conditions, which
are control issues that could have a significant adverse effect on the ability
to record, process, summarize and report financial data in the financial
statements. Auditing literature defines material weakness as a particularly
serious reportable condition where the internal control does not reduce to a
relatively low level the risk that misstatements caused by error or fraud may
occur in amounts that would be material in relation to the financial statements
and the risk that such misstatements would not be detected within a timely
period by employees in the normal course of performing their assigned
functions. We also sought to deal with other controls matters in the Controls
Evaluation, and in each case if a problem was identified, we considered what
revision, improvement and/or correction to make in accordance with our ongoing
procedures.

During the most recent fiscal quarter, there has been no change in internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial
reporting.

Conclusion

Based upon the Controls Evaluation, our CEO and CFO have concluded that,
subject to the limitations noted above, our Disclosure Controls are effective
to ensure that material information relating to Emmis Communications
Corporation and Subsidiaries and Emmis Operating Company and Subsidiaries is
made known to management, including the CEO and CFO, particularly during the
period when our periodic reports are being prepared.

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PART II  OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

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

3.1
    
    Second Amended and Restated Articles of
Incorporation of Emmis Communications Corporation,
incorporated by reference from Exhibit 3.1 to the Companys
Form 10-K/A for the year ended February 29, 2000, and an
amendment thereto relating to certain 12.5% Senior Preferred
Stock incorporated by reference from Exhibit 3.1 to the
Companys current report on Form 8-K filed December 13, 2001.3.2
    
    Amended and Restated Bylaws of Emmis
Communications Corporation, incorporated by reference from
Exhibit 3.2 to the Companys Form 10-Q for the quarter ended
November 30, 2002.3.3
    
    Articles of Incorporation of Emmis Operating
Company, incorporated by reference from Exhibit 3.4 to the
Companys Form S-3/A (File No. 333-62172) filed on June 21,
2001.3.4
    
    Bylaws of Emmis Operating Company, incorporated
by reference from Exhibit 3.5 to the Companys Form S-3/A
(File No. 333-62172) filed on June 21, 2001.10.1
    
    First Amendment to Amended and Restated Agreement
of Limited Partnership of Emmis Austin Radio Broadcasting
Company, L.P.10.2
    
    First Amendment to Amended and Restated
Regulations of Radio Austin Management, L.L.C.15
    
    Letter re: unaudited interim financial
information.31.1
    
    Certification of Principal Executive Officer of
Emmis Communications Corporation pursuant to Rule 13a-14(a)
under the Exchange Act.31.2
    
    Certification of Principal Financial Officer of
Emmis Communications Corporation pursuant to Rule 13a-14(a)
under the Exchange Act.31.3
    
    Certification of Principal Executive Officer of
Emmis Operating Company pursuant to Rule 13a-14(a) under the
Exchange Act.31.4
    
    Certification of Principal Financial Officer of
Emmis Operating Company pursuant to Rule 13a-14(a) under the
Exchange Act.32.1
    
    Certification of Principal Executive Officer of
Emmis Communications Corporation pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Principal Financial Officer of
Emmis Communications Corporation pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.


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32.3
    
    Certification of Principal Executive Officer of
Emmis Operating Company pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32.4
    
    Certification of Principal Financial Officer of
Emmis Operating Company pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.


(b) Reports on Form 8-K

On September 30, 2003, the Company included on Form 8-K its press
release announcing its financial results for the three and nine months
ended August 31, 2002 and 2003.

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SIGNATURES

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

EMMIS COMMUNICATIONS CORPORATIONDate: January 14, 2004
    
    By: /s/ WALTER Z. BERGER
Walter Z. Berger
Executive Vice President (Authorized
Corporate Officer), Chief Financial
Officer and Treasurer


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SIGNATURES

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

EMMIS OPERATING COMPANYDate: January 14, 2004
    
    By: /s/ WALTER Z. BERGER
Walter Z. Berger
Executive Vice President (Authorized
Corporate Officer), Chief Financial
Officer and Treasurer


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