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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934 for the Fiscal Year Ended February 28, 2003

[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the Transition Period from _________ to _________.

EMMIS COMMUNICATIONS CORPORATION EMMIS OPERATING COMPANY
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)

INDIANA INDIANA
(State of incorporation or organization)(State of incorporation or organization)

0-23264 333-62172-13
(Commission file number) (Commission file number)

35-1542018 35-2141064
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)

ONE EMMIS PLAZA ONE EMMIS PLAZA
40 MONUMENT CIRCLE 40 MONUMENT CIRCLE
SUITE 700 SUITE 700
INDIANAPOLIS, INDIANA 46204 INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)(Address of principal executive offices)

(317) 266-0100 (317) 266-0100
(REGISTRANT'S TELEPHONE NUMBER, (REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE) INCLUDING AREA CODE)


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Class A common
stock, $.01 par value; 6.25% Series A Cumulative Convertible Preferred Stock,
$.01 par value.

Indicate by check mark whether the registrant (1) has filed all documents
and 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 [ ].

The aggregate market value of the voting stock held by non-affiliates of
the registrant, as of August 31, 2002, the Registrant's most recently-completed
second fiscal quarter, was approximately $738,955,000.

The number of shares outstanding of each of the registrant's classes of
common stock, as of April 25, 2003, was:

49,134,869 Class A Common Shares, $.01 par value
5,030,002 Class B Common Shares, $.01 par value
0 Class C Common Shares, $.01 par value

Emmis Operating Company has 1,000 shares of common stock outstanding as of
April 30, 2003, and all of these shares are owned by Emmis Communications
Corporation.





DOCUMENTS INCORPORATED BY REFERENCE

Documents Form 10-K Reference
--------- -------------------

Proxy Statement for 2003 Annual Meeting Part III

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's Knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]







EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
AND EMMIS OPERATING COMPANY AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

Page

PART I ..................................................................... 4
Item 1. Business........................................................ 4
Item 2. Properties......................................................18
Item 3. Legal Proceedings...............................................21
Item 4. Submission of Matters to a Vote of Security Holders.............21

PART II .....................................................................21
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.............................................21
Item 6. Selected Financial Data.........................................22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation..............................25
Item 7A. Quantitative and Qualitative Disclosures About Market Risk......40
Item 8. Financial Statements and Supplementary Data....................42
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure..........................93
Item 10. Directors and Executive Officers of the Registrant .............93

PART III
Item 11. Executive Compensation..........................................94
Item 12. Security Ownership of Certain Beneficial Owners,
and Management, and Related Stockholder Matters.................94
Item 13. Certain Relationships and Related Transactions..................94
Item 14. Controls and Procedures.........................................94

PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. 96.................................................96
Signatures ...................................................99






PART I


ITEM 1. BUSINESS.

GENERAL

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 based on total listeners.
We operate eighteen FM radio stations and three 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 Phoenix, St. Louis, Indianapolis and Terre
Haute, Indiana. In addition, we expect to close on our purchase of a controlling
interest in six stations in Austin, Texas during the second quarter of our
fiscal 2004. 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.

Our strategy is to selectively acquire underdeveloped media properties in
desirable markets and then to create value by developing those properties to
increase their cash flow. We find such underdeveloped properties attractive
because they offer greater potential for revenue and cash flow growth than
mature properties. We have been successful in acquiring these types of media
properties and improving their ratings, revenues and cash flow with our
marketing focus and innovative programming expertise. We have created
top-performing radio stations which rank, in terms of primary demographic target
audience share, among the top ten stations in the New York City, Los Angeles and
Chicago radio markets according to the Fall 2002 Arbitron Survey. We believe
that our strong large-market radio presence and diversity of station formats
makes us attractive to a diverse base of radio advertisers and reduces our
dependence on any one economic sector or specific advertiser. Since acquisition,
we have generally improved the margins of our television stations and we believe
there is further room for margin improvement.

In addition to our domestic broadcasting properties, we operate news and
agriculture information radio networks in Indiana, publish Texas Monthly, Los
Angeles, Atlanta, Indianapolis Monthly, Cincinnati, and Country Sampler and
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. We
also engage in various businesses ancillary to our broadcasting business, such
as consulting and broadcast tower leasing.

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"). EOC became a
wholly owned subsidiary of ECC in connection with the Company's reorganization
(see Note 1c. to our consolidated financial statements) on June 22, 2001. Unless
otherwise noted, all disclosures contained in this Form 10-K apply to Emmis and
EOC.

BUSINESS STRATEGY

We are committed to maintaining our leadership position in broadcasting,
enhancing the performance of our broadcast and publishing properties, and
distinguishing ourselves through the quality of our operations. Our strategy is
to maximize shareholder value by focusing on the following principles:

DEVELOP INNOVATIVE PROGRAMMING. We believe that knowledge of local markets
and innovative programming developed to target specific demographic groups are
the most important determinants of individual radio and television station
success. We conduct extensive market research to identify underserved segments
of the markets we serve or to assure that we are meeting the needs of our target
audience. Utilizing the research results, we concentrate on providing a focused
programming format carefully tailored to the demographics of our markets and our
audiences' preferences.

EMPHASIZE FOCUSED SALES AND MARKETING STRATEGY. We design our local and
national sales efforts based on advertiser demand and our programming compared
to the competitive formats within each market. We provide our sales force with
extensive training and the technology for sophisticated inventory management
techniques, which provide frequent price adjustments based on regional and
market conditions. Furthermore, additional company resources have been allocated
to locate, hire, train and retain top sales people. Under the Emmis Sales
Assault Plan (ESAP), a company-wide initiative geared toward attracting and
developing sales leaders in the radio, television and magazine industries, we
have added nearly 200 sales people to our workforce in the last two years, which
was incremental to hirings in the normal course of business.






DEVELOP STRONG LOCAL STATION IDENTITIES FOR OUR TELEVISION STATIONS. We
strive to create television stations with a strong local "brand" within the
station's market, allowing viewers and advertisers to identify with the station
while building the station's franchise value. We believe that aggressive
promotion and strong local station management, strategies which we have found
successful in our radio operations, are critical to the creation of strong local
television stations as well. Additionally, we believe that the production and
broadcasting of local news and events programming can be an important link to
the community and an aid to the station's efforts to expand its viewership.
Local news and events programming can provide access to advertising sources
targeted specifically to the local or regional community. We believe that strong
local news generates high viewership and results in higher ratings both for
programs preceding and following the news.

PURSUE STRATEGIC ACQUISITIONS AND CREATE CASH FLOW GROWTH BY ENHANCING
STATION PERFORMANCE. We have built our portfolio by selectively acquiring
underdeveloped media properties in desirable markets at reasonable purchase
prices where our experienced management team has been able to enhance value. We
intend to pursue acquisitions of radio stations, where we believe we can
increase operating income, in our current markets. We will also consider
acquisitions of individual radio stations or groups of radio stations in new
markets where we expect we can achieve a leadership position. We believe that
continued consolidation in the radio broadcasting industry will create
attractive acquisition opportunities as the number of potential buyers for radio
assets declines due to government regulations on the number of stations a
company can own in one market. We believe that attractive acquisition
opportunities are also increasingly available in the television broadcasting
industry. We intend to evaluate acquisitions of magazine publishing properties
and international broadcasting properties that present opportunities to
capitalize on our management expertise to enhance cash flow at attractive
purchase price multiples with minimal capital requirements.

ENCOURAGE A PERFORMANCE BASED, ENTREPRENEURIAL MANAGEMENT APPROACH. We
believe that broadcasting is primarily a local business and that much of its
success is the result of the efforts of regional and local management and staff.
We have attracted and retained an experienced team of broadcast professionals
who understand the viewing and listening preferences, demographics and
competitive opportunities of their particular market. Our decentralized approach
to station management gives local management oversight of station spending,
long-range planning and resource allocation at their individual stations, and
rewards all employees based on those stations' performance. In addition, we
encourage our managers and employees to own a stake in the company, and over 95%
of all full-time employees have an equity ownership position in Emmis. We
believe that our performance based, entrepreneurial management approach has
created a distinctive corporate culture, making Emmis a highly desirable
employer in the broadcasting industry and significantly enhancing our ability to
attract and retain experienced and highly motivated employees and management.





RADIO STATIONS

In the following table, "Market Rank by Revenue" is the ranking of the
market revenue size of the principal radio market served by the station among
all radio markets in the United States. Market revenue and ranking figures are
from Duncan's Radio Market Guide (2002 ed.). We own a 40% equity interest in the
publisher of Duncan's Radio Market Guide. "Ranking in Primary Demographic
Target" is the ranking of the station among all radio stations in its market
based on the Fall 2002 Arbitron Survey. A "t" indicates the station tied with
another station for the stated ranking. "Station Audience Share" represents a
percentage generally computed by dividing the average number of persons over age
12 listening to a particular station during specified time periods by the
average number of such persons for all stations in the market area as determined
by Arbitron.



RANKING IN
MARKET PRIMARY PRIMARY STATION
STATION AND RANK BY DEMOGRAPHIC DEMOGRAPHIC AUDIENCE
MARKET REVENUE FORMAT TARGET AGES TARGET SHARE
------ ------- ------ ----------- ------ -----

Los Angeles, CA 1
KPWR-FM Hip-Hop/R&B 12-24 1 5.4
KZLA-FM Country 25-54 21 1.9

New York, NY 2
WQHT-FM Hip-Hop 12-24 1 4.8
WQCD-FM Smooth Jazz 25-54 7 3.7
WRKS-FM Classic Soul / Today's R&B 25-54 3 4.1

Chicago, IL 3
WKQX-FM Alternative Rock 18-34 6 2.4

Phoenix, AZ 14
KTAR-AM News/Talk/Sports 35-64 5 4.9
KKFR-FM Rythmic CHR 18-34 4 3.8
KKLT-FM Adult Contemporary 25-54 6t 3.6
KMVP-AM Sports 25-54 21t 0.8

St. Louis, MO 18
KSHE-FM Album Oriented Rock 25-54 1 5.5
KPNT-FM Alternative Rock 18-34 2 3.7
KIHT-FM Classic Hits 25-54 3 4.1
WMLL-FM 80's and 90's 18-34 11 2.8
KFTK-FM Talk 25-54 18 1.6

Indianapolis, IN 31
WIBC-AM News/Talk/Sports 35-64 5 7.4
WYXB-FM Soft Adult Contemporary 25-54 4 5.0
WNOU-FM CHR 18-34 5 5.3
WENS-FM Hot Adult Contemporary 25-54 11 2.8

Austin, TX 34
KLBJ-AM News/Talk 25-54 3 6.8
KLBJ-FM Album Oriented Rock 25-54 4 4.5
KXMG-FM CHR 18-34 6 3.2
KGSR-FM Adult Alternative 25-54 5 4.1
KROX-FM Alternative Rock 18-34 3 4.0
KEYI-FM Oldies 25-54 9 3.4

Terre Haute, IN 171
WTHI-FM Country 25-54 1 23.3
WWVR-FM Classic Rock 25-54 3 12.5




In addition to our other domestic radio broadcasting operations, we own and
operate two radio networks. Network Indiana provides news and other programming
to nearly 70 affiliated radio stations in Indiana. AgriAmerica Network provides
farm news, weather information and market analysis to radio stations across
Indiana.

We also 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.

We expect to close on our purchase of a controlling interest in six
stations in Austin, Texas during the second quarter of our fiscal 2004.





TELEVISION STATIONS

In the following table, "DMA Rank" is estimated by the A.C. Nielsen Company
("Nielsen") as of January 2002. Rankings are based on the relative size of a
station's market among the 210 generally recognized Designated Market Areas
("DMAs"), as defined by Nielsen. "Number of Stations in Market" represents the
number of television stations ("Reportable Stations") designated by Nielsen as
"local" to the DMA, excluding public television stations and stations which do
not meet minimum Nielsen reporting standards (i.e., a weekly cumulative audience
of less than 2.5%) for reporting in the Sunday through Saturday, 9:00 a.m. to
midnight time period. "Station Rank" reflects the station's rank relative to
other Reportable Stations based upon the DMA rating as reported by Nielsen from
9:00 a.m. to midnight, Sunday through Saturday during November 2002. "Station
Audience Share" reflects an estimate of the share of DMA households viewing
television received by a local commercial station in comparison to other local
commercial stations in the market as measured from 9:00 a.m. to midnight, Sunday
through Saturday.



NUMBER OF STATION
TELEVISION METROPOLITAN DMA AFFILIATION/ STATIONS STATION AUDIENCE AFFILIATION
STATION AREA SERVED RANK CHANNEL IN MARKET RANK SHARE EXPIRATION
-------- ------------ ----- -------- ---------- ----- ------ ----------

WKCF-TV Orlando, FL 20 WB/18 6 4 7 December 31, 2009
KOIN-TV Portland, OR 23 CBS/6 7 1t 13 September 18, 2006
WVUE-TV New Orleans, LA 42 Fox/8 7 3 9 March 5, 2006
KRQE-TV Albuquerque, NM 49 CBS/13 7 1t 11 September 18, 2006
WSAZ-TV Huntington, WV/
Charleston, WV 61 NBC/3 4 1 22 January 1, 2009
WALA-TV Mobile, AL/
Pensacola, FL 63 Fox/10 6 4 10 August 24, 2006
WBPG-TV (1) Mobile, AL/
Pensacola, FL 63 WB/55 6 6 NM August 31, 2006
KSNW-TV Wichita, KS 66 NBC/3 4 2 14 January 1, 2009
WLUK-TV Green Bay, WI 69 Fox/11 6 3 13 November 1, 2005
WFTX-TV Fort Myers, FL 70 Fox/36 6 3t 8 N/A
KGMB-TV (2) Honolulu, HI 71 CBS/9 5 1 13 September 18, 2006
KHON-TV (2) Honolulu, HI 71 Fox/2 5 2 12 August 2, 2006
KGUN-TV Tucson, AZ 73 ABC/9 7 1t 14 February 6, 2005
KMTV-TV Omaha, NE 74 CBS/3 5 3 14 September 18, 2006
KSNT-TV Topeka, KS 138 NBC/27 4 2 15 January 1, 2009
WTHI-TV Terre Haute, IN 146 CBS/10 3 1 23 December 31, 2005



(1) We purchased this station on March 1, 2003

(2) We are currently operating KGMB-TV under a temporary waiver issued by the
FCC. We may be required to sell one of these stations. See Management's
Discussion and Analysis of Financial Condition and Results of Operations
for further discussion.

Emmis also owns and operates nine satellite stations that primarily
re-broadcast the signal of certain of our local stations. A local station and
its satellite station are considered one station for FCC and multiple ownership
purposes, provided that the stations are in the same market.

Each of our television stations is affiliated with CBS, NBC, ABC, Fox or WB
(each a "Network") pursuant to a written network affiliation agreement, except
WFTX in Ft. Myers, FL, which is affiliated with Fox pursuant to an oral
affiliation agreement. Each affiliation agreement provides the affiliated
television station with the right to rebroadcast all programs transmitted by the
Network with which the television station is affiliated. In return, the Network
has the right to sell a substantial portion of the advertising time during such
broadcasts.

The long established Networks (ABC, CBS and NBC) have historically paid the
affiliated station to broadcast the Network's programming. This Network
compensation payment used to vary depending on the time of day that a station
broadcasts the network programming. Typically, prime-time programming generated
the highest hourly network compensation payments. In the recent years, however,
ABC, CBS and NBC have begun to eliminate or sharply reduce compensation payments
to stations for clearance of Network programming. In some cases, Networks have
undertaken to cut compensation when a station is to be sold and the affiliation
agreement is to be assigned or transferred, or when an old affiliation agreement
has expired. The more recently established Networks (Fox and WB) generally pay
little or no cash compensation for the clearance of network programming. They
tend, however, to offer the affiliated station more advertising availability for
local sale within Network programming than do the long established networks. In
the years ended February 2001, 2002 and 2003, we received approximately $2.5
million, $4.6 million and $3.3 million in network compensation payments, which
represented less than 1% of our total net revenues in each year.





PUBLISHING OPERATIONS

We publish the following magazines through our publishing division:

Monthly
Paid
Circulation
Regional Magazines:
Texas Monthly 303,000
Los Angeles 158,000
Atlanta 68,000
Indianapolis Monthly 43,000
Cincinnati Magazine 28,000

Specialty Magazines*:
Country Sampler 391,000
Country Sampler Decorating Ideas 185,000
Country Sampler Decorating with Paint 119,000
Country Marketplace 160,000

* Our specialty magazines are circulated bimonthly.

INTERNET AND NEW TECHNOLOGIES

We believe that the development and explosive growth of the Internet
present not only a challenge, but an opportunity for broadcasters and
publishers. The primary challenge is increased competition for the time and
attention of our listeners, viewers and readers. The opportunity is to further
enhance the relationships we already have with our listeners, viewers and
readers by expanding products and services offered by our stations and
magazines. For that reason, we have individuals at each of our properties
dedicated to website maintenance and generating revenues from the property's
website.

We believe that there are opportunities to improve and expand our
television operations utilizing new technologies such as those that capitalize
on the digital spectrum and the Internet. Along with several other major
television broadcasters and local stations, we have invested in iBlast Networks,
the nation's largest network for over-the-air distribution of digital content,
applications and services.

COMMUNITY INVOLVEMENT

We believe that to be successful, we must be integrally involved in the
communities we serve. To that end, each of our stations participates in many
community programs, fundraisers and activities that benefit a wide variety of
organizations. Charitable organizations that have been the beneficiaries of our
marathons, walkathons, dance-a-thons, concerts, fairs and festivals include,
among others, United Way's September 11th Fund, The March of Dimes, American
Cancer Society, Riley Children's Hospital and research foundations seeking cures
for ALS, cystic fibrosis, leukemia and AIDS and helping to fight drug abuse. In
addition to our planned activities, our stations and magazines take leadership
roles in community responses to natural disasters, such as commercial-free news
broadcasts covering the events of September 11th and the war in Iraq. The
National Association of Broadcasters Education Foundation honored us with the
Hubbard Award, honoring a broadcaster "for extraordinary involvement in serving
the community." Emmis was only the second broadcaster to receive this
prestigious honor.

INDUSTRY INVOLVEMENT

We have an active leadership role in a wide range of industry
organizations. Our senior managers have served in various capacities with
industry associations, including as directors of the National Association of
Broadcasters, the Television Operators Caucus, the Radio Advertising Bureau, the
Radio Futures Committee, the Arbitron Advisory Council, and as founding members
of the Radio Operators Caucus. Our chief executive has been honored with the
National Association of Broadcasters' "National Radio Award" and as Radio Ink's
"Radio Executive of the Year." At various times we have been voted Most
Respected Broadcaster in polls of radio industry chief executive officers and
managers and our management and on-air personalities have won numerous
prestigious industry awards.





COMPETITION

Radio and television broadcasting stations compete with the other
broadcasting stations in their respective market areas, as well as with other
advertising media such as newspapers, magazines, outdoor advertising, transit
advertising, the Internet and direct mail marketing. Cable systems generally do
not compete with local stations for programming, although various national cable
networks from time to time have acquired programs that otherwise would have been
offered to local television stations. Competition within the broadcasting
industry occurs primarily in individual market areas, so that a station in one
market (e.g., New York) does not generally compete with stations in other
markets (e.g., Chicago). In each of our markets, our stations face competition
from other stations with substantial financial resources, including stations
targeting the same demographic groups. In addition to management experience,
factors which are material to competitive position include the station's rank in
its market in terms of the number of listeners or viewers, authorized power,
assigned frequency, audience characteristics, local program acceptance and the
number and characteristics of other stations in the market area. We attempt to
improve our competitive position with programming and promotional campaigns
aimed at the demographic groups targeted by our stations, and through sales
efforts designed to attract advertisers that have done little or no broadcast
advertising by emphasizing the effectiveness of radio and television advertising
in increasing the advertisers' revenues. Changes in the policies and rules of
the FCC permit increased joint ownership and joint operation of local stations.
Those stations taking advantage of these joint arrangements (including our New
York, Los Angeles, Phoenix, St. Louis, Indianapolis and Terre Haute clusters)
may in certain circumstances have lower operating costs and may be able to offer
advertisers more attractive rates and services. Although we believe that each of
our stations can compete effectively in its market, there can be no assurance
that any of our stations will be able to maintain or increase its current
audience ratings or advertising revenue market share.

Although the broadcasting industry is highly competitive, barriers to entry
exist. The operation of a broadcasting station in the United States requires a
license from the FCC. Also, the number of stations that can operate in a given
market is limited by the availability of the frequencies that the FCC will
license in that market, as well as by the FCC's multiple ownership rules
regulating the number of stations that may be owned and controlled by a single
entity and cross ownership rules which limit the types of media properties in
any given market that can be owned by the same person.

The broadcasting industry historically has grown in terms of total revenues
despite the introduction of new technology for the delivery of entertainment and
information, such as cable television, the Internet, satellite television, audio
tapes and compact discs. We believe that radio's portability in particular makes
it less vulnerable than other media to competition from new methods of
distribution or other technological advances. There can be no assurance,
however, that the development or introduction in the future of any new media
technology will not have an adverse effect on the radio or television
broadcasting industry.

ADVERTISING SALES

Our stations and magazines derive their advertising revenue from local and
regional advertising in the marketplaces in which they operate, as well as from
the sale of national advertising. Local and most regional sales are made by a
station's or magazine's sales staff. National sales are made by firms
specializing in such sales which are compensated on a commission-only basis. We
believe that the volume of national advertising revenue tends to adjust to
shifts in a station's audience share position more rapidly than does the volume
of local and regional advertising revenue. During the year ended February 28,
2003, approximately 27% of our total net revenues were derived from national
sales and 73% were derived from local and regional sales. For the year ended
February 28, 2003, our radio stations derived a higher percentage of their
revenues from local and regional sales (80%) than our television (67%) and
publishing entities (77%).

EMPLOYEES

As of February 28, 2003 Emmis had approximately 2,400 full-time employees
and approximately 680 part-time employees. We have approximately 280 employees
at various radio and television stations represented by unions. We consider
relations with our employees to be good.





INTERNET ADDRESS AND INTERNET ACCESS TO SEC REPORTS

Our Internet address is www.emmis.com. You may obtain through our Internet
website, free of charge, copies of our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and any amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act. These reports will be available the same day we electronically file such
material with, or furnish such material to, the SEC. We have been making such
reports available on the same day as they are filed during the period covered by
this report.

FEDERAL REGULATION OF BROADCASTING

Television and radio broadcasting are subject to the jurisdiction of the
Federal Communications Commission (the "FCC") under the Communications Act of
1934, as amended (in part by the Telecommunications Act of 1996 (the "1996
Act")) (the "Communications Act"). Television or radio broadcasting is
prohibited except in accordance with a license issued by the FCC upon a finding
that the public interest, convenience and necessity would be served by the grant
of such license. The FCC has the power to revoke licenses for, among other
things, false statements made in applications or willful or repeated violations
of the Communications Act or of FCC rules. In general, the Communications Act
provides that the FCC shall allocate broadcast licenses for television and radio
stations in such a manner as will provide a fair, efficient and equitable
distribution of service throughout the United States. The FCC determines the
operating frequency, location and power of stations; regulates the equipment
used by stations; and regulates numerous other areas of television and radio
broadcasting pursuant to rules, regulations and policies adopted under authority
of the Communications Act. The Communications Act, among other things, prohibits
the assignment of a broadcast license or the transfer of control of an entity
holding such a license without the prior approval of the FCC. Under the
Communications Act, the FCC also regulates certain aspects of the operation of
cable television systems and other electronic media that compete with broadcast
stations.

The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Reference
should be made to the Communications Act as well as FCC rules, public notices
and rulings for further information concerning the nature and extent of federal
regulation of radio and television stations. Other legislation has been
introduced from time to time which would amend the Communications Act in various
respects, and the FCC from time to time considers new regulations or amendments
to its existing regulations. We cannot predict whether any such legislation will
be enacted or new or amended FCC regulations will be adopted or what their
effect would be on Emmis.

LICENSE RENEWAL. Radio and television stations operate pursuant to
broadcast licenses that are ordinarily granted by the FCC for maximum terms of
eight years and are subject to renewal upon application to the FCC. Our licenses
currently have the following expiration dates, until renewed:



WENS(FM) (Indianapolis) August 1, 2004
WIBC(AM) (Indianapolis) August 1, 2004
WNOU(FM) (Indianapolis) August 1, 2004
WYXB(FM) (Indianapolis) August 1, 2004
WTHI-FM (Terre Haute) August 1, 2004
WWVR(FM) (Terre Haute) August 1, 2004
WSAZ-TV (Huntington) October 1, 2004
WKQX(FM) (Chicago) December 1, 2004
WMLL(FM) (St. Louis) December 1, 2004
KSHE(FM) (St. Louis) February 1, 2005
WFTX-TV (Fort Myers) February 1, 2005
WKCF(TV) (Orlando) February 1, 2005
KFTK(FM) (St. Louis) February 1, 2005
KIHT(FM) (St. Louis) February 1, 2005
KPNT(FM) (St. Louis) February 1, 2005
WALA-TV (Mobile) April 1, 2005
WBPG(TV) (Mobile) April 1, 2005
WVUE(TV) (New Orleans) June 1, 2005
WTHI-TV (Terre Haute) August 1, 2005



KKLT(FM) (Phoenix) October 1, 2005
KKFR(FM) (Phoenix) October 1, 2005
KTAR(AM) (Phoenix) October 1, 2005
KMVP(AM) (Phoenix) October 1, 2005
KPWR(FM) (Los Angeles) December 1, 2005
WLUK-TV (Green Bay) December 1, 2005
KZLA-FM (Los Angeles) December 1, 2005
KREZ-TV (Durango) April 1, 2006
WQHT(FM) (New York) June 1, 2006
WQCD(FM) (New York) June 1, 2006
WRKS(FM) (New York) June 1, 2006
KSNW(TV) (Wichita) June 1, 2006
KMTV(TV) (Omaha) June 1, 2006
KSNT(TV) (Topeka) June 1, 2006
KSNG(TV) (Garden City) June 1, 2006
KSNC(TV) (Great Bend) June 1, 2006
KSNK(TV) (McCook-Oberlin) June 1, 2006
KRQE(TV) (Albuquerque) October 1, 2006
KGUN(TV) (Tucson) October 1, 2006
KBIM-TV (Roswell) October 1, 2006
KHON-TV (Honolulu) February 1, 2007
KAII-TV (Maui) February 1, 2007
KHAW-TV (Hawaii) February 1, 2007
KOIN(TV) (Portland) February 1, 2007
KGMB(TV) (Honolulu) February 1, 2007
KGMD-TV (Hawaii) February 1, 2007
KGMV(TV) (Maui) February 1, 2007


Emmis also has filed applications with the FCC to acquire controlling
interests in six additional radio stations. The FCC licenses for these stations,
which are located in the Austin, Texas, market, will expire on August 1, 2005.

Under the Communications Act, at the time an application is filed for
renewal of a station license, parties in interest, as well as members of the
public, may apprise the FCC of the service the station has provided during the
preceding license term and urge the denial of the application. If such a
petition to deny presents information from which the FCC concludes (or if the
FCC concludes on its own motion) that there is a "substantial and material"
question as to whether grant of the renewal application would be in the public
interest under applicable rules and policy, the FCC may conduct a hearing on
specified issues to determine whether the renewal application should be granted.
The Communications Act provides for the grant of a renewal application upon a
finding by the FCC that the licensee:

o has served the public interest, convenience and necessity;

o has committed no serious violations of the Communications Act or the
FCC rules; and

o has committed no other violations of the Communications Act or the FCC
rules which would constitute a pattern of abuse.

If the FCC cannot make such a finding, it may deny the renewal application,
and only then may the FCC consider competing applications for the same
frequency. In a vast majority of cases, the FCC renews a broadcast license even
when petitions to deny have been filed against the renewal application.

REVIEW OF OWNERSHIP RESTRICTIONS. The 1996 Act requires the FCC to review
all of its broadcast ownership rules every two years in a so-called "biennial
review proceeding" and to repeal or modify any of its rules that are no longer
"necessary in the public interest." The 2002 biennial review proceeding was
initiated by the Commission in September 2002; the FCC anticipates that it will
issue a decision in the proceeding in the spring of 2003. Each of the radio and
television ownership restrictions detailed below is under consideration in this
proceeding.


RADIO OWNERSHIP: Under FCC rules, with limited exceptions, the number of radio
stations that may be owned by one entity in a given radio market is dependent
upon the number of commercial radio stations in that market:

o if the market has 45 or more commercial radio stations, one entity may
own up to eight stations, not more than five of which may be in the
same service (AM or FM);

o if the market has between 30 and 44 commercial radio stations, one
entity may own up to seven stations, not more than four of which may
be in the same service;

o if the market has between 15 and 29 commercial radio stations, a
single entity may own up to six stations, not more than four of which
may be in the same service; and

o if the market has fourteen or fewer commercial radio stations, one
entity may own up to five stations, not more than three of which may
be in the same service, except that one entity may not own more than
fifty percent of the stations in the market.

Each of the markets in which our radio stations are located has at least 15
commercial radio stations.

The FCC has been aggressive in examining issues of market concentration
when considering radio station acquisitions, even where the numerical limits
described above are not violated. In some instances, the FCC has delayed its
approval of proposed radio station purchases because of market concentration
concerns, and in several recent cases, the FCC has ordered evidentiary hearings
to determine whether a proposed transaction would result in excessive
concentration. Additionally, in December 2000, the FCC launched a proceeding to
examine possible revisions to the manner in which the agency counts stations and
defines a radio "market" for purposes of determining compliance with the local
radio multiple ownership restrictions. In November 2001, the FCC subsumed this
proceeding into a more comprehensive proceeding to review all aspects of the
agency's local radio multiple ownership rules, including, among other things,
whether it may or should modify its local radio multiple ownership rules to
address concerns of undue market concentration. The FCC has also requested
comment on future regulatory treatment of radio time brokerage agreements (also
known as "local marketing agreements" or "LMA's") and radio joint sales
agreements. That proceeding, in turn, has been incorporated into the
Commission's currently pending biennial review proceeding.

TELEVISION OWNERSHIP: Pursuant to the 1996 Act, the FCC substantially
revised its local television ownership rules (including its television "duopoly"
rule and radio/television cross-ownership rule) in an August 1999 decision, as
modified by a January 2001 reconsideration order. The FCC's revised television
duopoly rule permits an entity to own two or more television stations in
separate Designated Market Areas ("DMAs"). The rule also permits an entity to
own two or more television stations in the same DMA if:

o the coverage areas of the stations do not overlap, or

o at least eight, independently-owned and -operated full-power
non-commercial and commercial operating stations (known as "voices")
will remain in the market post-merger, and one of the two
commonly-owned stations is not among the top four television stations
in the market (based on audience share ratings).

The Commission will consider permanent waivers of its television duopoly
rule where one of the stations is:

o a "failed station," i.e., off-air for more than four months, or
involved in an involuntary bankruptcy proceeding;

o a "failing station," i.e., having a low audience share and financially
struggling; or

o an unbuilt facility, where the permittee has made substantial progress
towards constructing the facility.

The television duopoly rule was appealed to the United States Court of
Appeals for the District of Columbia Circuit ("D.C. Circuit"). In April 2002,
the D.C. Circuit issued a decision remanding the rule to the FCC for further
consideration. The court found that the FCC had not justified excluding media
other than television stations as "voices" to be counted for purposes of
determining compliance with the rule. The court-ordered remand has been
incorporated into the FCC's 2002 biennial review proceeding.

Our acquisition of the Lee Enterprises stations required a waiver of the
television duopoly rule because the signals of KHON-TV and KGMB-TV (one of the
Lee Enterprises stations) overlap, the stations serve the same market, and both
stations are rated among the top four in that market. In approving the
acquisition, the FCC granted a temporary waiver of the rule, ordering that an
application for divestiture of either KHON-TV or KGMB-TV (plus associated
"satellite" stations) be filed on or before April 1, 2001; that deadline was
subsequently extended at our request to April 1, 2002. In February 2002, we



filed a request for a further extension to April 1, 2003, which was opposed by a
Honolulu broadcaster. In response to our further extension request, the FCC
required us to file additional information concerning our divestiture efforts.
Pending its review of the information we submitted, the FCC granted us an
interim extension of our waiver until July 1, 2002. To date, the Commission has
not taken any additional action with respect to our further extension request.
In addition, in May 2002, we filed a request for interim relief with the
Commission, asking that the divestiture requirement be stayed pending the
outcome of the 2002 biennial review. That request was apposed by the same
Honolulu broadcaster who opposed the February extension request, as well as by
two local public interest groups. In September 2002, we supplemented the request
for interim relief with additional information. The request remains pending, and
we cannot predict whether it will be granted.

The FCC's revised radio/television cross-ownership rule generally permits
the common ownership of the following combinations in the same market, to the
extent permitted under the FCC's television duopoly rule:

o up to two commercial television stations and six commercial radio
stations or one commercial television station and seven commercial
radio stations in a market where at least 20 independent media voices
will remain post-merger;

o up to two commercial television stations and four commercial radio
stations in a market where at least 10 independent media voices will
remain post-merger; and

o two commercial television stations and one commercial radio station in
a market regardless of the number of independent media voices that
will remain post-merger.

For purposes of this rule, the FCC counts as "voices" commercial and
non-commercial broadcast television and radio stations as well as some daily
newspapers and cable operators. The Commission will consider permanent waivers
of its revised radio/television cross-ownership rule only if one of the stations
is a "failed station."

The 1996 Act required the FCC to relax its restriction on the number of
television stations that a single entity may own nationwide. Specifically, the
rule was adjusted to restrict ownership to stations reaching, in the aggregate,
no more than 35 percent of the total national audience. In its 1998 biennial
review decision, the FCC decided to retain the 35 percent limit, rejecting
requests to further relax the ownership cap. In response, certain TV group
owners filed comments with the FCC and/or appeals in the D.C. Circuit seeking
elimination, or at least relaxation, of this limit. In February 2002, the D.C.
Circuit issued a decision requiring the FCC to initiate further proceedings to
justify its decision to retain the 35 percent cap. In the same decision, the
court also vacated the FCC's rule prohibiting common ownership of a television
station and a cable television system in the same market; that rule subsequently
was repealed by the FCC. As a result of the court's decision, in early April
2002, the FCC granted Viacom/CBS a stay of the May 2002 deadline that the FCC
had set for the network to divest certain of its television stations in order to
come into compliance with the 35 percent cap; the stay will remain in effect
until one year after the FCC completes review of the national cap as required by
the court's decision. Fox has obtained a similar stay.

Current FCC rules also prohibit common ownership of a daily newspaper and a
radio or television station in the same market. In September 2001, the FCC
initiated a proceeding requesting comment on whether to eliminate, or at least
relax, this restriction. That proceeding subsequently was rolled into the 2002
biennial review proceeding.

We cannot predict the ultimate outcome of the proceedings described above,
future biennial reviews or other agency or legislative initiatives or the
impact, if any, that they will have on our business.

ALIEN OWNERSHIP. Under the Communications Act, no FCC license may be held
by a corporation if more than one-fifth of its capital stock is owned or voted
by aliens or their representatives, a foreign government or representative
thereof, or an entity organized under the laws of a foreign country
(collectively, "Non-U.S. Persons"). Furthermore, the Communications Act provides
that no FCC license may be granted to an entity directly or indirectly
controlled by another entity of which more than one-fourth of its capital stock
is owned or voted by Non-U.S. Persons if the FCC finds that the public interest
will be served by the denial of such license. The FCC staff has interpreted this
provision to require an affirmative public interest finding to permit the grant
or holding of a license, and such a finding has been made only in limited
circumstances. The foregoing restrictions on alien ownership apply in modified
form to other types of business organizations, including partnerships and
limited liability companies. Our Second Amended and Restated Articles of
Incorporation and Amended and Restated Code of By-Laws authorize the Board of
Directors to prohibit such restricted alien ownership, voting or transfer of
capital stock as would cause Emmis to violate the Communications Act or FCC
regulations.

ATTRIBUTION OF OWNERSHIP INTERESTS. In applying its ownership rules, the
FCC has developed specific criteria in order to determine whether a certain
ownership interest or other relationship with a Commission licensee is
significant enough to be "attributable" or "cognizable" under its rules.



Specifically, among other relationships, certain stockholders, officers, and
directors of a broadcasting company are deemed to have an attributable interest
in the licenses held by that company, such that there would be a violation of
the Commission's rules where the broadcasting company and such a stockholder,
officer, or director together hold attributable interests in more than the
permitted number of stations or a prohibited combination of outlets in the same
market. The FCC's regulations generally deem the following relationships and
interests to be attributable for purposes of its ownership restrictions:

o all officer and director positions in a licensee or its (in)direct
parent(s);

o voting stock interests of at least five percent (or twenty percent, if
the holder is a passive institutional investor, i.e., a mutual fund, ,
insurance company, or bank);

o any equity interest in a limited partnership or limited liability
company where the limited partner or member is "materially involved"
in the media-related activities of the LP or LLC and has not been
"insulated" from such activities pursuant to specific FCC criteria;

o equity and/or debt interests which, in the aggregate, exceed 33
percent of the total asset value of a station or other media entity
(the "equity/debt plus policy"), if the interest holder supplies more
than 15 percent of the station's total weekly programming (usually
pursuant to a time brokerage, local marketing or network affiliation
agreement) or is a same-market media entity (i.e., broadcast company
or newspaper).

To assess whether a voting stock interest in a direct or indirect
parent corporation of a broadcast licensee is attributable, the FCC uses a
"multiplier" analysis in which non-controlling voting stock interests are
deemed proportionally reduced at each non-controlling link in a
multi-corporation ownership chain.

In a January 2001 order, the FCC eliminated its "single majority
shareholder exemption" for purposes of the broadcast attribution rules. The
exemption had provided that, in cases where one person or entity (such as
Jeffrey H. Smulyan in the case of Emmis) held more than 50 percent of the
combined voting power of the common stock of a broadcasting company, a
minority shareholder of the company generally would not be deemed to hold
an attributable interest in the company. Although the FCC eliminated the
single majority shareholder exemption, it grandfathered minority interests
in broadcasting companies with single majority shareholders where the
interests were acquired prior to December 14, 2000, the adoption date of
the FCC's order. The FCC's decision to eliminate the single majority
shareholder exemption was called into question by a March 2001 federal
court decision, which reversed and remanded the FCC's decision to eliminate
the corresponding exemption for purposes of the cable television
attribution rules. In light of that decision, the Commission initiated a
proceeding to review the single majority shareholder exemption in both the
cable and broadcast contexts. The FCC also issued an order suspending
enforcement of the elimination of the exemption until a decision is reached
in its review proceeding, which remains pending. Accordingly, the single
majority shareholder exemption remains in force.

Should the FCC ultimately eliminate the exemption, any minority interests
in Emmis of at least five percent that were acquired on or after December 14,
2000 will not be exempt from attribution, despite Mr. Smulyan's majority
interest. Moreover, in the event that Mr. Smulyan no longer holds more than 50
percent of the voting power, the interests of grandfathered minority
shareholders which had theretofore been considered nonattributable would become
attributable, such that any other media interests held by these shareholders
would be combined with Emmis' media interests for purposes of determining
compliance with FCC ownership rules. Mr. Smulyan's level of voting control could
decrease to or below 50 percent as a result of transfers of common stock
pursuant to agreement, exercise of options to acquire common stock, or
conversion of the Class B Common Stock into Class A Common Stock. In the event
of noncompliance with the FCC's attribution rules, steps required to achieve
compliance could include divestitures by either the shareholder or Emmis, as the
situation dictates. Further, an attributable interest of any shareholder
(including grandfathered minority interests) in another broadcast station or
other media entity in a market where Emmis owns or seeks to acquire a station is
subject to review by the FCC under its "equity/debt plus policy," and could
result in Emmis being unable to obtain one or more FCC authorizations needed to
conduct its broadcast business or FCC consents necessary for future
acquisitions. Conversely, Emmis' media interests could operate to restrict other
media investments by shareholders having or acquiring an interest in Emmis.

ASSIGNMENTS AND TRANSFERS OF CONTROL. The Communications Act prohibits the
assignment of a broadcast license or the transfer of control of a broadcast
licensee without the prior approval of the FCC. In determining whether to grant
such approval, the FCC considers a number of factors, including compliance with
the various rules limiting common ownership of media properties, the "character"
of the licensee and those persons holding attributable interests therein, and
compliance with the Communications Act's limitations on alien ownership as well
as other statutory and regulatory requirements. When evaluating an assignment or
transfer of control application, the FCC is prohibited from considering whether
the public interest might be served by an assignment of the broadcast license or
transfer of control of the licensee to a party other than the assignee or
transferee specified in the application.


PROGRAMMING AND OPERATION. The Communications Act requires broadcasters to
serve the "public interest." Since the late 1970s, the FCC gradually has relaxed
or eliminated many of the more formalized procedures it had developed to promote
the broadcast of certain types of programming responsive to the needs of a
station's community of license. However, licensees continue to be required to
present programming that is responsive to community problems, needs and
interests and to maintain certain records demonstrating such responsiveness.
Federal law prohibits the broadcast of obscene material and regulates the
broadcast of indecent material, which is subject to enforcement action by the
FCC. Complaints from listeners concerning a station's programming often will be
considered by the FCC when it evaluates the licensee's renewal applications,
although such complaints may be filed by concerned parties and considered by the
FCC at any time. Stations also must pay regulatory and application fees and
follow various rules promulgated under the Communications Act that regulate,
among other things, political advertising, sponsorship identification, contest
and lottery advertisements, and technical operations, including limits on radio
frequency radiation.

In 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"). Certain provisions of this law,
such as signal carriage and retransmission consent, have a direct effect on
television broadcasting.

In April 1997, the FCC adopted rules that require television broadcasters
to provide digital television ("DTV") to consumers. The FCC also adopted a table
of allotments for DTV, which assigns eligible broadcasters a second channel on
which to provide DTV service. The FCC's DTV allotment plan is based on the use
of a "core" DTV spectrum between channels 2-51. Although the Communications Act
mandates that each television station return one of its two channels to the FCC
by the end of 2006, the Balanced Budget Act of 1997 may effectively extend the
transition deadline in some markets by allowing broadcasters to keep both their
analog and digital licenses until at least 85 percent of television households
in their respective markets can receive a digital signal. Local zoning laws and
the lack of qualified tall-tower builders to construct the facilities necessary
for DTV operations, among other factors, including the pace of DTV production
and sales, may cause delays in the DTV transition. The FCC has announced that it
will review the progress of DTV every two years and make adjustments to the 2006
target date, if necessary. The FCC is also considering cable operators'
obligations to carry the digital signals of broadcast television stations,
including the obligations that should exist during the DTV transition period,
when broadcasters' analog and digital signals will be operating simultaneously.

Television broadcasters are allowed to use their DTV channels according to
their best business judgment, provided that they continue to offer at least one
free programming service that is at least comparable to today's analog service.
Digital services and programming can include multiple standard definition
program channels, data transfer, subscription video, interactive materials, and
audio signals (so-called "ancillary" services). The FCC has imposed a fee of
five percent of the annual gross revenues for television broadcasters' use of
the DTV spectrum to offer ancillary services. The form and amount of these fees
may have a significant effect on the profitability of such services.
Broadcasters will not be required to air "high definition" programming.
Beginning April 1, 2003, broadcasters operating in digital mode were required to
simulcast at least 50 percent of their analog programming on the digital
channel. Affiliates of ABC, CBS, NBC and Fox in the top 10 television markets
were required to be on the air with a digital signal by May 1, 1999, and
affiliates of those networks in markets 11-30, including KOIN-TV, were required
to be on the air with a digital signal by November 1, 1999; KOIN-TV complied
with this deadline. The remaining commercial stations, including all other
television stations owned by Emmis, were required to file DTV construction
permit applications by November 1, 1999, and were required to be on the air with
a digital signal by May 1, 2002, absent an extension on a station-by-station
basis. All Emmis' stations met the November 1, 1999 application deadline.
Stations WALA, WKCF, and WFTX met the May 1, 2002 on-air deadline, and all other
stations subsequently initiated DTV service prior to their extended deadlines,
except WVUE(TV), KGUN(TV), KSNK(TV), and the Hawaii stations. KSNK(TV) and the
Hawaii stations have obtained further extensions, and extension requests are
pending for WVUE(TV) and KGUN(TV). Additionally, all of the Emmis stations filed
timely applications to "maximize" (expand the coverage of) the DTV facilities to
ensure the DTV coverage is equal to or better than the coverage of our analog
channels.

WBPG is not subject to the usual DTV deadlines because it was not issued a
second channel for DTV operation; rather, WBPG will be required to convert to
DTV operation by the conclusion of the DTV transition period. Further, since
Channel 55, on which WBPG operates, is to be reallocated by the FCC for other
use at the end of the DTV transition period, the FCC will assign the station to
a different channel at that time unless it has already changed its channel.

In January 2001, the FCC issued a further order on DTV transition issues,
setting a number of deadlines for commercial broadcasters. The order required
commercial stations with both analog and digital channel assignments within the
DTV core spectrum (channels 2-51) to elect by the end of December 2003 the
channel they will use for broadcasting after the transition is complete.
Similarly, the FCC decided in the order that, by the end of December 2004,
commercial broadcasters not replicating their existing analog service areas will
lose interference protection in those portions of their existing service areas



not covered by their digital signals. The order further held that, by the end of
December 2004, commercial broadcasters must provide a stronger digital signal to
their communities of license than was previously required.

In November 2001, the FCC issued a reconsideration order on DTV transition
issues, which modified many of the rules established in January 2001.
Specifically, the reconsideration order temporarily defers the FCC's previously
established deadlines for broadcasters to: (1) choose their permanent
post-transition DTV channel; (2) provide a DTV signal that replicates their
analog service area; and (3) build maximized DTV facilities. The order also
permits broadcasters to request special temporary authority to construct initial
minimal DTV facilities (i.e., facilities that only cover their cities of
license) while retaining interference protection for their allotted and
maximized facilities. In addition, the order allows commercial stations subject
to the May 1, 2002 construction deadline (i.e., stations not in the top 30
markets) to initially broadcast a digital signal during prime time hours only.

In April 2002 the FCC Chairman challenged the broadcast, cable, satellite,
and consumer electronics industries to take certain voluntary actions designed
to speed the DTV transition. Although members of the broadcast, cable, and
satellite industries were quick to make commitments to comply with Chairman
Powell's proposals, the consumer electronics industry was reluctant to embrace
the plan. Consequently, the Commission found it necessary to formally mandate a
phased-in DTV tuner requirement. As a result, all new television sets 13 inches
and larger and all TV interface devices (VCRs, etc.) must include the capability
of tuning and decoding over-the-air digital signals by 2007.

In January 2003, the FCC launched its second periodic review of its DTV
rules and proposed new deadlines for stations to choose their post-transition
digital channels, to replicate their analog service areas and maximize their
digital facilities in order to maintain protection of their allotted and/or
expanded service areas. The Commission proposed July 1, 2005 as the date for
affiliates of ABC, NBC, CBS and Fox in the top 100 markets to build out their
full facilities or lose protection for the "unused" areas. This deadline would
apply to all the Emmis television stations except WTHI, KSNT and WKCF. All other
stations, including WTHI, KSNT and WKCF, would be required to build out their
full facilities by July 1, 2006 under the Commission's proposal. The FCC
proposed May 1, 2005 as the deadline for choosing a permanent DTV channel. The
FCC also will decide in the proceeding how to evaluate when the transition to
digital television has been achieved and, accordingly, when broadcasters will be
required to operate exclusively in digital mode and turn in the channel not used
for digital broadcasting. Under current law, that date is set at December 31,
2006 or the date by which 85 percent of the television households in a
licensee's market are capable of receiving the signals of DTV stations.

Another area of concern for the DTV transition is the technical standards
needed to ensure that digital television sets can connect to cable systems. At
the request of the FCC, the cable and consumer electronics industries entered
into a Memorandum of Understanding ("MOU") setting forth an agreement on a cable
compatibility standard. The Commission put the MOU out for public comment in
January of 2003.

The FCC has authorized the provision of video programming directly to home
subscribers through high-powered direct broadcast satellites ("DBS"). DBS
systems currently are capable of broadcasting over 500 channels of digital
television service directly to subscribers' equipment with 18-inch receiving
dishes and decoders. At this time, several entities provide DBS service to
consumers throughout the country. In order to protect network-affiliated
broadcast stations from the effects of satellite importation of non-local
network signals into their markets, DBS operators are permitted to deliver
distant network signals only to unserved households in so-called "white areas"
(i.e., locations too distant from a local network affiliate to receive a
sufficiently strong "over-the-air" signal). In addition, in November 1999,
Congress enacted the Satellite Home Viewer Improvement Act ("SHVIA"), which
authorizes DBS companies to provide local television signals to their
subscribers pursuant to a retransmission consent agreement with the station. In
March 2000, the FCC adopted regulations governing the statutory requirements for
"good faith" negotiations and non-exclusive agreements in retransmission consent
contracts between broadcasters (and all multichannel video program
distributors). Broadcasters are required to negotiate non-exclusive
retransmission consent agreements in good faith until January 1, 2006; however,
the law explicitly provides that broadcasters may enter into agreements with
competing DBS carriers on different terms.

Moreover, effective January 1, 2002, local television stations became
entitled to "must-carry" rights on a DBS system if the system is providing any
local television station(s) to its subscribers. In such markets, stations now
can choose whether to demand carriage on a DBS system by electing must-carry
status or to negotiate with the DBS operator for specific carriage terms by
electing retransmission consent status. SHVIA also "grandfathered" delivery of
the signals of television stations via DBS to certain subscribers who may have
been receiving such signals in violation of prior law. In November 2000, the FCC
adopted rules to implement SHVIA provisions regarding "local-into-local"
satellite service, must-carry election cycle rules and related policies for
satellite carriage of broadcast signals. Under the new FCC rules, a broadcast
television station must affirmatively elect must-carry status to require a DBS



operator to carry its station; the first elections were due by July 1, 2001. In
response to a challenge to certain provisions of SHVIA, a panel of the U.S.
Court of Appeals for the Fourth Circuit upheld the requirement that DBS
operators carry the signal of all local television stations in markets where
they elect to carry any local signals. The court also upheld an FCC rule that
permits DBS operators to offer all local television stations on a single tier or
on an a la carte basis. The rule allows consumers to choose between the two
options. In response to broadcasters' first elections, DBS operators issued a
large number of carriage denial letters, prompting the FCC to issue an order in
September 2001 clarifying the DBS mandatory carriage rules. In particular, the
FCC emphasized that a satellite carrier must have a "reasonable basis" for
rejecting a broadcast station's carriage request.

There are FCC rules and policies, and rules and policies of other federal
agencies, that regulate matters such as the use of auctions to resolve mutually
exclusive application requests, network-affiliate relations, the ability of
stations to obtain exclusive rights to air syndicated programming, cable
systems' carriage of syndicated and network programming on distant stations,
political advertising practices, application procedures and other areas
affecting the business or operations of broadcast stations.

Failure to observe FCC rules and policies can result in the imposition of
various sanctions, including monetary fines, the grant of "short" (less than the
maximum term) license renewals or, for particularly egregious violations, the
denial of a license renewal application or the revocation of a license.

ADDITIONAL DEVELOPMENTS AND PROPOSED CHANGES. The Commission has adopted
rules implementing a new low power FM ("LPFM") service. The FCC has begun
accepting applications for LPFM stations and has granted some of those
applications. We cannot predict whether any LPFM stations will interfere with
the coverage of our radio stations.

The FCC has also authorized two companies to launch and operate satellite
digital audio radio service ("SDARS") systems. Both companies--Sirius Satellite
Radio, Inc. and XM Radio--are now providing nationwide service. Currently, the
FCC is considering a proposal to permit SDARS to be supplemented by terrestrial
"repeating" transmitters designed to fill "gaps" in satellite coverage. We
cannot predict the impact of SDARS on our radio stations' listenership.

In October 2002, the FCC issued an order selecting a technical standard for
terrestrial digital audio broadcasting ("DAB"). The in-band, on-channel ("IBOC")
technology chosen by the agency allows AM and FM radio broadcasters to introduce
digital operations and permits existing stations to operate on their current
frequencies in either full analog mode, full digital mode, or a combination of
both (at reduced power).

In January 2001, the D.C. Circuit concluded that the FCC's Equal Employment
Opportunity ("EEO") regulations were unconstitutional. The FCC adopted new EEO
rules in November 2002, which went into effect in March 2003.

Congress and the FCC have under consideration, and may in the future
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, affect the operation, ownership
and profitability of our broadcast stations, result in the loss of audience
share and advertising revenues for our broadcast stations and/or affect our
ability to acquire additional broadcast stations or finance such acquisitions.
Such matters include, but are not limited to:

o proposals to impose spectrum use or other fees on FCC licensees;


o proposals to repeal or modify some or all of the FCC's multiple
ownership rules and/or policies;

o proposals to change rules relating to political broadcasting;

o technical and frequency allocation matters;

o AM stereo broadcasting;

o proposals to permit expanded use of FM translator stations;

o proposals to restrict or prohibit the advertising of beer, wine and
other alcoholic beverages;

o proposals to tighten safety guidelines relating to radio frequency
radiation exposure;

o proposals permitting FM stations to accept formerly impermissible
interference;

o proposals to reinstate holding periods for licenses;

o changes to broadcast technical requirements, including those relative
to the implementation of SDARS and DAB;

o proposals to limit the tax deductibility of advertising expenses by
advertisers.

We cannot predict whether any proposed changes will be adopted, what other
matters might be considered in the future, or what impact, if any, the
implementation of any of these proposals or changes might have on our business.


The foregoing is only a brief summary of certain provisions of the
Communications Act and of specific FCC regulations. Reference should be made to
the Communications Act as well as FCC regulations, public notices and rulings
for further information concerning the nature and extent of federal regulation
of broadcast stations.


GEOGRAPHIC FINANCIAL INFORMATION

The Company's segments operate primarily in the United States with one
national radio station located in Hungary and two radio stations located in
Argentina. The following tables summarize relevant financial information by
geographic area:

For the year ended February 28,
Net Revenues: 2001 2002 2003
---- ---- ----
(In Thousands)
Domestic $ 458,767 $ 523,124 $ 550,553
International 14,578 16,698 11,810
------ ------ ------
Total $ 473,345 $ 539,822 $ 562,363
========= ========= =========


As of February 28,
Noncurrent Assets: 2001 2002 2003
---- ---- ----
(In Thousands)
Domestic $ 2,263,796 $ 2,229,680 $ 1,942,069
International 27,970 16,867 14,663
------ ------ ------
Total $ 2,291,766 $ 2,246,547 $ 1,956,732
=========== =========== ===========


With respect to EOC, the above information would be identical, except
domestic noncurrent assets would be $2,218,750 and $1,934,540 and total
noncurrent assets would be $2,235,617 and $1,949,203 as of February 28, 2002 and
2003, respectively.

ITEM 2. PROPERTIES.

The following table sets forth information as of February 28, 2003 with
respect to offices, studios and broadcast towers of stations and magazines
currently owned by Emmis. Management believes that the properties are in good
condition and are suitable for Emmis' operations.








EXPIRATION
YEAR PLACED OWNED OR DATE
PROPERTY IN SERVICE LEASED OF LEASE
-------- ---------- ------ --------

Corporate and Publishing Headquarters/ 1998 Owned --
WENS-FM/ WIBC-AM/WNOU-FM/
WYXB-FM/ Indianapolis Monthly
One Emmis Plaza
40 Monument Circle
Indianapolis, Indiana
WENS-FM Tower 1985 Owned --
WNOU-FM Tower 1979 Owned --
WIBC-AM Tower 1966 Owned --
WYXB-FM Tower 2003 Owned --

WMLL-FM/KFTK-FM/KIHT-FM/KPNT-FM/KSHE-FM 1998 Leased December 2007
800 St. Louis Union Station
St. Louis, Missouri
WMLL-FM Tower 1984 Owned --
KFTX-FM Tower 1987 Leased August 2009 with option to March 2023
KIHT-FM Tower 1995 Leased September 2005 with two 5-year options
KPNT-FM Tower 1987 Owned --
KSHE-FM Tower 1985 Leased April 2009

KPWR-FM 1988 Leased October 2017
KZLA-FM 2002 Leased October 2017
2600 West Olive
Burbank, California
KPWR-FM Tower 1993 Leased Month-to-Month
KZLA-FM tower 1991 Leased December 2004







EXPIRATION
YEAR PLACED OWNED OR DATE
PROPERTY IN SERVICE LEASED OF LEASE
-------- ---------- ------ --------

WQHT-FM/WRKS-FM/WQCD-FM 1996 Leased January 2013
395 Hudson Street, 7th Floor
New York, New York
WQHT-FM Tower 1984 Leased January 2010
WRKS-FM Tower 1984 Leased November 2005
WQCD-FM Tower 1984 Leased February 2007

WKQX-FM 2000 Leased December 2015 with 5 year option
230 Merchandise Mart Plaza
Chicago, Illinois
WKQX-FM Tower 1975 Leased September 2009

Atlanta Magazine Office 1997 Leased July 20031
1330 Peachtree Street, N.E.
Atlanta, Georgia

Cincinnati Magazine 1996 Leased November 2006
One Centennial Plaza
Cincinnati, OH

Texas Monthly 1989 Leased August 2009
701 Brazos, Suite 1600
Austin, TX

KHON-TV 1999 Owned --
88 Piikoi Street
Honolulu, HI
KHON-TV Tower 1978 Leased December 2008 with 10 year option

WALA-TV 2002 Owned --
WBPG-TV 2003 Owned --
1501 Satchel Paige Dr.
Mobile, AL
WALA-TV Tower 1962 Owned --
WBPG-TV Tower 2001 Leased July 2010

WFTX-TV 1987 Owned --
621 Pine Island Road
Cape Coral, FL
WFTX-TV Tower 1985 Owned --

WLUK-TV 1966 Owned --
787 Lombardi Avenue
Green Bay, WI
WLUK-TV Tower 1961 Owned --

WTHI-TV/FM/WWVR-FM 1954 Owned --
918 Ohio Street
Terre Haute, IN
WTHI-TV Tower 1965 Owned --
WTHI-FM Tower 1954 Owned --
WWVR-FM Tower 1966 Owned --

WVUE-TV 1972 Owned --
1025 South Jefferson Davis Highway
New Orleans, LA
WVUE-TV Tower 1963 Owned --

WKCF-TV 1998 Owned --
31 Skyline Drive
Lake Mary, FL
WKCF-TV Tower 2001 Leased April 2016

Los Angeles Magazine 2000 Leased November 2010
5900 Wilshire Blvd., Suite 1000
Los Angeles, CA 90036

Country Sampler 1988 Owned --
707 Kautz Road
St. Charles, IL 60174

1New location and 10 year lease beginning August 1, 2003.






EXPIRATION
YEAR PLACED OWNED OR DATE
PROPERTY IN SERVICE LEASED OF LEASE
-------- ---------- ------ --------

RDS/Co-Opportunities 1989 Leased December 2003
324 Campus Lane, Suite B
Suisun, CA 94585

Emmis West (Corporate) 1999 Leased January 2004
15821 Ventura Blvd., #685
Encino, CA 91436

Slager Radio 1998 Leased December 2004
Szabadsag Ut 117 (Atronyx Bldg. B)
H-2040 Budaors, Hungary
Slager Tower 1998 Leased November 2004

KOIN-TV 1984 Leased June 2083 with 99 year option
222 S.W. Columbia St.
Portland, OR 97221
KOIN-TV Tower 1953 Owned --

KSNT-TV 1967 Owned --
6835 N.W. U.S. Hwy 24
Topeka, KS 66618
KSNT-TV Tower 1967 Owned --

WSAZ-TV 1971 Owned --
645 5th Avenue
Huntington, WV 25701
WSAZ-TV Tower 1954 Owned --

KGMB-TV 1952 Owned --
1534 Kapiolani Blvd.
Honolulu, HI 96814
KGMB-TV Tower 1962 Owned --

KMTV-TV 1978 Owned --
10714 Mockingbird Dr.
Omaha, NE 68127
KMTV-TV Tower 1967 Owned --

KGUN-TV 1990 Owned --
7280 E. Rosewood
Tucson, AZ 85710
KGUN-TV Tower 1956 Leased July 2016

KRQE-TV 1953 Owned --
13 Broadcast Plaza S.W.
Albuquerque, NM 87104
KRQE-TV Tower 1959 Owned --

KTAR-AM/KMVP-AM/KKLT-FM/KKFR-FM 1994 Owned --
5300 N. Central Ave.
Phoenix, AZ 85012
KTAR-AM Tower 1958 Owned --
KMVP-AM Tower 1996 Leased December 2008
KKLT-FM Tower 1990 Owned --
KKFR-FM Tower 1998 Leased April 20032

KSNW-TV 1955 Owned --
833 N. Main St.
Wichita, KS 67203
KSNW-TV Tower 1955 Owned --

Argentina 1996 Owned --
Uriarte 1899 (1414) Capital Federal
Buenos Aires, Argentina
Argentina Tower - AM 1996 Owned --
Argentina Tower - FM 1996 Owned --



2 Verbal agreement to lease on month-to-month basis through end of calendar year
2003






ITEM 3. LEGAL PROCEEDINGS.

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 likely to have a material
adverse effect on the Company.

In December 2002, Emmis reached an agreement with the Hungarian
broadcasting authority, the National Radio and Television Board (ORTT), that
resolved pending legal issues and extended the national license for Slager, its
subsidiary in Hungary, through 2009. Slager agreed to pay the fees due under the
original broadcast contract in installments through November 2004, the date the
contract was set to expire. The license has been extended an additional five
years with payment terms more reflective of the current Hungarian advertising
environment


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.


PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Emmis' Class A common stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System under the symbol EMMS. There is no established
public trading market for Emmis' Class B common stock or Class C common stock or
for the common stock of EOC.

The following table sets forth the high and low sale prices of the Class A
common stock for the periods indicated. No dividends were paid during any such
periods.

QUARTER ENDED HIGH LOW
- ------------- ---- ---
May 2001 $33.95 $20.06
August 2001 33.65 23.32
November 2001 24.95 12.27
February 2002 27.37 15.85

May 2002 31.85 26.15
August 2002 30.15 11.65
November 2002 24.05 14.25
February 2003 24.86 17.82


At April 25, 2003 there were 4,222 record holders of the Class A common
stock, and there was one record holder of the Class B common stock. As of April
25, 2003, there was one record holder of the EOC common stock.

Emmis intends to retain future earnings for use in its business and does
not anticipate paying any dividends on shares of its common stock in the
foreseeable future.

Equity Compensation Plan Information

The following table gives information about our common stock that may be
issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of February 28, 2003. These plans include
the 1994 Equity Incentive Plan, the 1995 Equity Incentive Plan, the Non-Employee
Director Stock Option Plan, the 1997 Equity Incentive Plan, the 1999 Equity
Incentive Plan, the 2001 Equity Incentive Plan, the 2002 Equity Compensation
Plan and the Employee Stock Purchase Plan. Our shareholders have approved all of
these plans.





Number of Securities
Number of Securities to Weighted-Average Remaining Available for Future
be Issued Upon Exercise Exercise Price of Issuance under Equity
of Outstanding Options, Outstanding Options, Compensation Plans (Excluding
Warrants and Rights Warrants and Rights Securities Reflected in Column (a))
Plan Category (a) (b) (c)
------------------------- --------------------- --------------------------------------

Equity Compensation Plans
Approved by Security Holders 5,933,692 (1) $ 26.53 (1) 4,933,846 (2)
Equity Compensation Plans
Not Approved by Security Holders -- -- --
Total 5,933,692 (1) $ 26.53 (1) 4,933,846 (2)


-----------------

(1) Includes 674,213 shares estimated to be issuable in 2004 to employees in
lieu of current salary pursuant to contract rights under our stock
compensation program. See Note 1h to our Consolidated Financial Statements.
The exact number and price of shares to be issued depends upon actual
compensation during the period prior to issuance and changes in our share
price and cannot be determined at this time. Thus, the weighted averages in
Column B do not reflect these shares. The amount in Column A excludes
obligations under employment contracts to issue bonus shares in the future.

(2) Includes 338,846 shares currently available under the initial authorization
for the Employee Stock Purchase Plan. The number of shares reserved for
issuance under this plan is automatically increased on the first day of
each fiscal year by the lesser of 0.5% of the common shares outstanding on
the last day of the immediately preceding fiscal year or a lesser amount
determined by our board of directors. On March 4, 2003, options were
granted to employees for an additional 1,095,310 shares.


ITEM 6. SELECTED FINANCIAL DATA

Emmis Communications Corporation
FINANCIAL HIGHLIGHTS



YEAR ENDED FEBRUARY 28 (29),
----------------------------
(Dollars in thousands, except share data)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
OPERATING DATA:

Net revenues $232,836 $325,265 $473,345 $539,822 $562,363
Station operating expenses, excluding
noncash compensation 143,348 199,818 299,132 354,157 349,251
Corporate expenses, excluding
noncash compensation 11,904 15,430 17,601 20,283 21,359
Time brokerage fees 2,220 - 7,344 479 -
Depreciation and amortization (1) 28,314 44,161 74,018 100,258 43,370
Non-cash compensation 4,269 7,357 5,400 9,095 22,528
Restructuring fees - - 2,057 768 -
Impairment loss and other (2) - 896 2,000 10,672 -
Operating income 42,781 57,603 65,793 44,110 125,855
Interest expense 35,650 51,986 72,444 129,100 103,835
Other income (loss), net (3) 1,914 3,247 38,037 (3,657) 5,294

Income (loss) before income taxes, extraordinary item
and cumulative effect of accounting change 9,045 8,864 31,386 (88,647) 27,314
Income (loss) before extraordinary item
and cumulative effect of accounting change 2,845 1,989 13,736 (63,024) 14,049
Net income (loss) (4) 1,248 (33) 13,736 (64,108) (164,468)
Net income (loss) available to
common shareholders 1,248 (3,177) 4,752 (73,092) (173,452)

Net income (loss) per share available
to common shareholders:
Basic:
Before accounting change and extraordinary loss $ 0.10 $ (0.03) $ 0.10 $ (1.52) $ 0.10
Extraordinary loss, net of tax (0.06) (0.06) - (0.02) (0.21)
Cumulative effect of accounting change, net of tax - - - - (3.16)
------ ------- ------ ------- ------
Net income (loss) available to common
shareholders $ 0.04 $ (0.09) $ 0.10 $ (1.54) $ (3.27)
====== ======= ====== ======= =======

Diluted:
Before accounting change and extraordinary loss $ 0.10 $ (0.03) $ 0.10 $ (1.52) $ 0.10
Extraordinary loss, net of tax (0.06) (0.06) - (0.02) (0.21)
Cumulative effect of accounting change, net of tax - - - - (3.16)
----- ----- ----- -----
Net income (loss) available to common
shareholders $ 0.04 $ (0.09) $ 0.10 $ (1.54) $ (3.27)
====== ======= ====== ======= =======

Weighted average common shares outstanding (5):
Basic 28,906 36,156 46,869 47,334 53,014
Diluted 29,696 36,156 47,940 47,334 53,014







FEBRUARY 28 (29),
--------------------------------------------------------------------
(Dollars in thousands)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
BALANCE SHEET DATA:

Cash $ 6,117 $ 17,370 $ 59,899 $ 6,362 $ 16,079
Working capital (6) 1,249 28,274 97,885 19,828 28,024
Net intangible assets 802,307 1,033,970 1,852,259 1,953,331 1,676,733
Total assets 1,014,831 1,327,306 2,506,872 2,510,069 2,116,413
Long-term credit facility, senior subordinated
debt and senior discount notes (7) 577,000 300,000 1,380,000 1,343,507 1,194,789
Shareholders' equity 235,549 776,367 807,471 735,557 704,705





YEAR ENDED FEBRUARY 28 (29),
---------------------------------------------------------------
(Dollars in thousands)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
OTHER DATA:
Cash flows from (used in):

Operating activities $ 35,121 $ 26,360 $ 97,730 $ 69,377 $ 95,149
Investing activities (541,470) (271,946) (1,110,755) (175,105) 106,301
Financing activities 506,681 256,839 1,055,554 52,191 (191,733)
Capital expenditures 37,383 29,316 26,225 30,135 30,549
Cash paid for taxes 1,580 9,589 550 1,281 887



(1) We ceased amortization of our goodwill and FCC licenses in fiscal 2003 in
connection with our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets." Included in depreciation and amortization expense for
fiscal 1999, 2000, 2001 and 2002 is amortization expense of $16.9 million,
$28.4 million, $39.5 million and $58.2 million, respectively, related to
amortization of our goodwill and FCC licenses.

(2) Year ended February 28, 2002 includes a $9.1 million asset impairment
charge and a $1.6 million charge related to the early termination of
certain TV contracts.

(3) See Management's Discussion and Analysis of Financial Condition and Results
of Operation for a description of the components of other income in the
year ended February 28, 2001.

(4) Year ended February 28, 2003 includes a charge of $167.4 million, net of
tax, to reflect the cumulative effect of an accounting change in connection
with our adoption of SFAS No. 142, "Goodwill and Other Intangible Assets."

(5) In February 2000, Emmis effected a 2 for 1 stock split of the outstanding
shares of common stock. Accordingly, all data shown has been retroactively
adjusted to reflect the stock split.

(6) February 28, 2002 excludes assets held for sale of $123.4 million and
credit facility debt to be repaid with proceeds of assets held for sale of
$135.0 million.

(7) February 28, 2002 balance excludes $135.0 million of credit facility debt
to be repaid with proceeds of assets held for sale.






Emmis Operating Company
FINANCIAL HIGHLIGHTS



YEAR ENDED FEBRUARY 28 (29),
----------------------------
(Dollars in thousands, except share data)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
OPERATING DATA:

Net revenues $ 232,836 $ 325,265 $ 473,345 $ 539,822 $ 562,363
Station operating expenses,
excluding noncash compensation 143,348 199,818 299,132 354,157 349,251
Corporate expenses,
excluding noncash compensation 11,904 15,430 17,601 20,283 21,359
Time brokerage fees 2,220 - 7,344 479 -
Depreciation and amortization (1) 28,314 44,161 74,018 100,258 43,370
Non-cash compensation 4,269 7,357 5,400 9,095 22,528
Restructuring fees - - 2,057 768 -
Impairment loss and other (2) - 896 2,000 10,672 -
Operating income 42,781 57,603 65,793 44,110 125,855
Interest expense 35,650 51,986 72,444 104,102 78,058
Other income (loss), net (3) 1,914 3,247 38,037 (4,643) 5,293

Income (loss) before income taxes, extraordinary items
and cumulative effect of accounting change 9,045 8,864 31,386 (64,635) 53,090
Income (loss) before extraordinary item
and cumulative effect of accounting change 2,845 1,989 13,736 (46,802) 30,724
Net income (loss) (4) 1,248 (33) 13,736 (47,886) (139,565)

FEBRUARY 28 (29),
-----------------
(Dollars in thousands)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
BALANCE SHEET DATA:
Cash $ 6,117 $ 17,370 $ 59,899 $ 6,362 $ 16,079
Working capital (5) 1,249 28,274 97,885 20,951 29,147
Net intangible assets 802,307 1,033,970 1,852,259 1,953,331 1,676,733
Total assets 1,014,831 1,327,306 2,506,872 2,499,139 2,108,884
Long-term credit facility and
senior subordinated debt (6) 577,000 300,000 1,380,000 1,117,000 996,945
Shareholder's equity 235,549 776,367 807,471 944,467 878,418

YEAR ENDED FEBRUARY 28 (29),
----------------------------
(Dollars in thousands)
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
OTHER DATA:
Cash flows from (used in):
Operating activities $ 35,121 $ 23,471 $ 86,871 $ 67,393 $ 94,189
Investing activities (541,470) (271,946) (1,110,755) (175,105) 106,301
Financing activities 506,681 259,728 1,066,413 54,175 (190,773)
Capital expenditures 37,383 29,316 26,225 30,135 30,549
Cash paid for taxes 1,580 9,589 550 1,281 887





(1) We ceased amortization of our goodwill and FCC licenses in fiscal 2003 in
connection with our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets." Included in depreciation and amortization expense for
fiscal 1999, 2000, 2001 and 2002 is amortization expense of $16.9 million,
$28.4 million, $39.5 million and $58.2 million, respectively, related to
amortization of our goodwill and FCC licenses.

(2) Year ended February 28, 2002 includes a $9.1 million asset impairment
charge and a $1.6 million charge related to the early termination of
certain TV contracts.

(3) See Management's Discussion and Analysis of Financial Condition and Results
of Operation for a description of the components of other income in the
year ended February 28, 2001.

(4) Year ended February 28, 2003 includes a charge of $167.4 million, net of
tax, to reflect the cumulative effect of an accounting change in connection
with our adoption of SFAS No. 142, "Goodwill and Other Intangible Assets."

(5) February 28, 2002 excludes assets held for sale of $123.4 million and
credit facility debt to be repaid with proceeds of assets held for sale of
$135.0 million.

(6) February 28, 2002 balance excludes $135.0 million of credit facility debt
to be repaid with proceeds of assets held for sale.






ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.

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"). EOC became a
wholly owned subsidiary of ECC in connection with the Company's reorganization
(see Note 1c. to our consolidated financial statements) on June 22, 2001. Unless
otherwise noted, all disclosures contained in the Management's Discussion and
Analysis of Financial Condition and Results of Operation in the Form 10-K apply
to Emmis and EOC.

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 for in cash with advertising spots paid for in
trade.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are defined as those that encompass
significant judgments and uncertainties, and potentially derive 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.

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 may be required.






ACQUISITIONS, DISPOSITIONS AND INVESTMENTS

Emmis has agreed to acquire, for a purchase price of $105.2 million, a
controlling interest of 50.1% in LBJS Broadcasting Company, L.P. LBJS owns radio
stations KLBJ-AM, KLBJ-FM, KXMG-FM, KROX-FM and KGSR-FM, all in the Austin,
Texas metropolitan area. The remaining 49.9% interest in LBJS will be held by
Sinclair Telecable, Inc. which will contribute to LBJS a sixth Austin radio
station, KEYI-FM. We expect this acquisition to close in the second quarter of
our fiscal 2004. We will finance the acquisition through borrowings under the
credit facility and the acquisition will be accounted for as a purchase. In
addition, Emmis will have the option, but not the obligation, to purchase
Sinclair's entire interest in LBJS after a period of approximately five years
based on an 18-multiple of trailing 12-month cash flow.

Effective March 1, 2003, Emmis completed its acquisition of substantially
all of the assets of television station WBPG-TV in Mobile, AL-Pensacola, FL from
Pegasus Communications Corporation for $11.5 million. We financed the
acquisition through borrowings under the credit facility and the acquisition was
accounted for as a purchase. This acquisition will allow us to achieve duopoly
efficiencies in the market, such as lower programming acquisition costs and
consolidation of general and administrative functions, since we already own a
television station in the market.

During the three year period ended February 28, 2003, we acquired and
retained six radio stations, eight television stations and one magazine
publication for an aggregate cash purchase price of $1.1 billion. A recap of the
transactions completed is summarized hereafter. These transactions impact the
comparability of operating results year over year.

Effective May 1, 2002 Emmis completed the sale of substantially all of the
assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for
$88.0 million. Emmis had purchased KALC-FM on January 17, 2001, from Salem
Communications Corporation for $98.8 million in cash plus a commitment fee of
$1.2 million and transaction related costs of $0.9 million. On February 12,
2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and
Entercom began operating KALC-FM under a time brokerage agreement on March 16,
2002. Proceeds were used to repay amounts outstanding under our credit facility.
The assets of KALC-FM are reflected as held for sale in the accompanying
consolidated balance sheet as of February 28, 2002. Since the agreed-upon sales
price for this station was less than its carrying amount as of February 28,
2002, we recognized an impairment loss of $9.1 million in fiscal 2002.
Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in
connection with the sale. Both of these losses are reflected in the accompanying
consolidated statements of operations. The $87.7 million of credit facility debt
repaid with the net proceeds of the sale is reflected as a current liability in
the accompanying consolidated balance sheet as of February 28, 2002.

Effective May 1, 2002 Emmis completed the sale of substantially all of the
assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation
for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000, from AMFM,
Inc. for an allocated purchase price of $35.0 million in cash plus liabilities
recorded of $1.2 million and transaction related costs of $0.4 million. Emmis
entered into a definitive agreement to sell KXPK-FM to Entravision on February
12, 2002. Proceeds were used to repay amounts outstanding under our credit
facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.
The assets of KXPK-FM are reflected as held for sale in the accompanying
consolidated balance sheet as of February 28, 2002. The $47.3 million of credit
facility debt repaid with the net proceeds of the sale is reflected as a current
liability in the accompanying consolidated balance sheet as of February 28,
2002.

On March 28, 2001, Emmis completed its acquisition of substantially all of
the assets of radio stations KTAR-AM, KMVP-AM and KKLT-FM in Phoenix, Arizona
from Hearst-Argyle Television, Inc. for $160.0 million in cash, plus transaction
related costs of $0.7 million. The Company financed the acquisition through a
$20.0 million advance payment borrowed under the credit facility in June 2000
and the remainder with borrowings under the credit facility and proceeds from
ECC's March 2001 senior discount notes offering. The acquisition was accounted
for as a purchase. Emmis began programming and selling advertising on the radio
stations on August 1, 2000 under a time brokerage agreement. The total purchase
price was allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

On January 15, 2001, Emmis entered into an agreement to sell WTLC-AM and
the intellectual property of WTLC-FM (both located in Indianapolis, Indiana) to
Radio One, Inc., for $8.0 million. The FM sale occurred on February 15, 2001 and
the AM sale occurred on April 25, 2001. Emmis retained the FCC license at 105.7
and reformatted the station as WYXB-FM.


On October 6, 2000, Emmis acquired certain assets of radio stations WIL-FM,
WRTH-AM, WVRV-FM, KPNT-FM, KXOK-FM (reformatted as KFTK-FM) and KIHT-FM in St.
Louis, Missouri from Sinclair Broadcast Group, Inc. for $220.0 million in cash,
plus transaction related costs of $10.9 million (the "Sinclair Acquisition").
The agreement also included the settlement of outstanding lawsuits by and
between Emmis and Sinclair. The settlement resulted in no gain or loss by either
party. This acquisition was financed through borrowings under Emmis' credit
facility and was accounted for as a purchase. The total purchase price was
allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

On October 6, 2000, Emmis acquired certain assets of KZLA-FM (the "KZLA
Acquisition") in Los Angeles, California from Bonneville International
Corporation in exchange for radio stations WIL-FM, WRTH-AM and WVRV-FM, which
Emmis acquired from Sinclair, as well as radio station WKKX-FM which Emmis
already owned (all in the St. Louis, Missouri market). Since the fair value of
WKKX exceeded the book value of the station at the date of the exchange, Emmis
recorded a gain on exchange of assets of $22.0 million. The fair value of
WKKX-FM was determined by an independent appraiser. In connection therewith,
tangible assets were valued using either replacement cost or current market
value, depending on the asset being valued. Intangible assets with an
identifiable revenue stream were valued using discounted cash flows. Intangible
assets not producing a readily identifiable income stream were valued using
residual fair market value. This gain is included in other income, net in the
accompanying consolidated statements of operations. From August 1, 2000 through
the date of acquisition, Emmis operated KZLA-FM under a time brokerage
agreement. The exchange was accounted for as a purchase. The total purchase
price of $185.0 million was allocated to property and equipment and broadcast
licenses based on an appraisal. Broadcast licenses are included in intangible
assets in the accompanying consolidated balance sheets and, effective March 1,
2002, are no longer amortized in the consolidated statements of operations in
accordance with SFAS No. 142.

Effective October 1, 2000 (closed October 2, 2000), Emmis purchased eight
network-affiliated and seven satellite television stations from Lee Enterprises,
Inc. for $559.5 million in cash, the payment of $21.3 million for working
capital and transaction related costs of $2.2 million (the "Lee Acquisition").
In connection with the acquisition, Emmis recorded $31.3 million of deferred tax
liabilities and $17.5 million in contract liabilities. Also, Emmis recorded a
severance related liability of $1.8 million, of which $1.3 million remains
outstanding as of February 28, 2003. This transaction was financed through
borrowings under Emmis' credit facility and was accounted for as a purchase. The
Lee Acquisition consisted of the following stations:

- - KOIN-TV (CBS) in Portland, Oregon

- - KRQE-TV (CBS) in Albuquerque, New Mexico (including satellite stations
KBIM-TV, Roswell, New Mexico and KREZ-TV, Durango, Colorado-Farmington, New
Mexico)

- - WSAZ-TV (NBC) in Charleston-Huntington, West Virginia

- - KSNW-TV (NBC) in Wichita, Kansas (including satellite stations KSNG-TV,
Garden City, Kansas, KSNC-TV, Great Bend, Kansas and KSNK-TV, Oberlin,
Kansas-McCook, Nebraska)

- - KGMB-TV (CBS) in Honolulu, Hawaii (including satellite stations KGMD-TV,
Hilo, Hawaii and KGMV-TV, Wailuku, Hawaii)

- - KGUN-TV (ABC) in Tucson, Arizona

- - KMTV-TV (CBS) in Omaha, Nebraska and

- - KSNT-TV (NBC) in Topeka, Kansas.

The total purchase price was allocated to property and equipment,
television program rights, working capital related items and broadcast licenses
based on an appraisal. Broadcast licenses are included in intangible assets in
the accompanying consolidated balance sheets and, effective March 1, 2002, are
no longer amortized in the consolidated statements of operations in accordance
with SFAS No. 142.

Because we already own KHON-TV in Honolulu, and both KHON and KGMB were
rated among the top four television stations in the Honolulu market, FCC
regulations prohibited us from owning both stations. However, we received a
temporary waiver from the FCC that has allowed us to operate both stations (and
their related "satellite" stations). As a result of recent regulatory
developments, we have requested a stay of divestiture until the FCC completes
its biennial review. We are currently awaiting the FCC's decision. No assurances
can be given that the FCC will grant us the stay of divestiture and we may need
to sell one of the two stations in Hawaii.


On August 24, 2000, Emmis acquired the assets of radio station KKFR-FM in
Phoenix, Arizona from AMFM, Inc. for an allocated $72.0 million in cash, plus
transaction related costs of $0.5 million (the "AMFM Acquisition"). Emmis
financed the acquisition through borrowings under its credit facility. The
acquisition was accounted for as a purchase. The total purchase price was
allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

In May, 2000, Emmis made an offer to purchase the stock of a company that
owns and operates WALR-FM in Atlanta, Georgia. Because an affiliate of Cox
Radio, Inc. held a right of first refusal to purchase WALR-FM, Emmis' offer was
made on the condition that Emmis would receive a $17.0 million break-up fee if
WALR-FM was sold pursuant to the right of first refusal. In June, 2000, the Cox
affiliate submitted an offer to purchase WALR-FM under the right of first
refusal and an application to transfer the station's FCC licenses was filed with
the FCC. Emmis received the break-up fee upon the closing of the sale of WALR-FM
under the right of first refusal on August 31, 2000, which is included in other
income in the accompanying consolidated statements of operations.

On March 3, 2000, Emmis acquired all of the outstanding capital stock of
Los Angeles Magazine Holding Company, Inc. for approximately $36.8 million in
cash plus liabilities recorded of $2.7 million (the "Los Angeles Magazine
Acquisition"). Los Angeles Magazine Holding Company, Inc., through a
wholly-owned subsidiary, owns and operates Los Angeles, a city magazine. The
acquisition was accounted for as a purchase and was financed through additional
borrowings under its credit facility. The excess of the purchase price over the
estimated fair value of identifiable assets was $36.0 million, which is included
in intangible assets in the accompanying consolidated balance sheets and,
effective March 1, 2002, is no longer amortized in the consolidated statements
of operations in accordance with SFAS No. 142.


RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2003 COMPARED TO YEAR ENDED FEBRUARY 28, 2002

Pro forma reconciliation:

During fiscal 2003, we sold two radio stations in Denver (see Note 6 in the
accompanying Notes to Consolidated Financial Statements). The following table
reconciles actual results to pro forma results.

Year ended February 28,
2003 2002
---- ----

Reported net revenues $ 562,363 $ 539,822

Less: Net revenues from radio
assets disposed (1,238) (11,968)
------ -------

Pro forma net revenues $ 561,125 $ 527,854
========= =========

Reported station operating expenses,
excluding noncash compensation $ 349,251 $ 354,157

Less: Station operating expenses,
excluding noncash compensation from
radio assets disposed (708) (8,649)
---- ------

Pro forma station operating expenses,
excluding noncash compensation $ 348,543 $ 345,508
========= =========

For further disclosure of segment results, see Note 11 to the accompanying
consolidated financial statements.






Net revenues:

Radio net revenues for the year ended February 28, 2003 decreased $7.3
million, or 2.8%. On a pro forma basis (assuming the Denver radio asset sales
had occurred on March 1, 2001), radio net revenues for the year ended February
28, 2003 would have increased $3.5 million, or 1.4%. Radio net revenues were
negatively impacted by the devaluation of the peso in Argentina, as
international radio net revenues for the year ended February 28, 2003 decreased
$4.9 million, or 29.3%. Domestic radio net revenues were negatively impacted by
a format change by one of our competitors in the New York market. The negative
impact in our New York market, which represents approximately 30% of our radio
net revenues, was offset by improved performance in our other radio markets,
especially Los Angeles and Phoenix.

Television net revenues for the year ended February 28, 2003 increased
$28.2 million, or 13.7%. This increase is due to our television stations selling
a higher percentage of their inventory and charging higher rates due to ratings
improvements, coupled with approximately $17.5 million of political advertising
net revenues in the year ended February 28, 2003.

Publishing revenues for the year ended February 28, 2003 increased $1.6
million, or 2.2%. Publishing revenues were essentially flat for the year, as our
publishing business has not seen the same level of recovery in advertisement
spending that, in general, our radio and television businesses have experienced.

On a consolidated basis, net revenues for the year ended February 28, 2003
increased $22.5 million, or 4.2% due to the effect of the items described above.
On a pro forma basis, net revenues for the year ended February 28, 2003
increased $33.2 million, or 6.3% due to the effect of the items described above.

Station operating expenses, excluding noncash compensation:

Radio station operating expenses, excluding noncash compensation, decreased
$10.7 million, or 7.2% for the year ended February 28, 2003. On a pro forma
basis (assuming the Denver radio asset sales had occurred on March 1, 2001),
radio station operating expenses, excluding noncash compensation, for the year
ended February 28, 2003 would have decreased $2.7 million, or 1.9%. Increases in
promotional spending for our radio stations were offset by the implementation of
our stock compensation program in December 2001, whereby the salaries of our
full-time employees were generally reduced by 10% and supplemented with a
corresponding stock grant that is reflected in noncash compensation expense.

Television station operating expenses, excluding noncash compensation, for
the year ended February 28, 2003 increased $7.7 million, or 5.5%. This increase
is due to higher programming, promotion and sales-related costs, partially
offset by the impact of our stock compensation program.

Publishing operating expenses, excluding noncash compensation, decreased
$1.9 million, or 3.0% for the year ended February 28, 2003 due to cost control
measures and our stock compensation program.

On a consolidated basis, station operating expenses, excluding noncash
compensation, for the year ended February 28, 2003 decreased $4.9 million, or
1.4%, due to the effect of the items described above. On a pro forma basis,
station operating expenses, excluding noncash compensation, for the year ended
February 28, 2003 increased $3.0 million, or 0.9%, due to the effect of the
items described above.

Noncash compensation expenses:

Noncash compensation expenses for the year ended February 28, 2003 were
$22.5 million compared to $9.1 million for the same period of the prior year, an
increase of $13.4 million or 147.7%. In fiscal 2003, $10.2 million, $6.5
million, $2.3 million and $3.5 million was attributable to our radio,
television, publishing and corporate divisions, respectively. In fiscal 2002,
$5.5 million, $2.4 million, $0.4 million and $0.8 million was attributable to
our radio, television, publishing and corporate divisions, respectively. Noncash
compensation includes compensation expense associated with restricted common
stock issued under employment agreements, common stock issued to employees at
our discretion, and common stock issued to employees pursuant to our stock
compensation program. Our stock compensation program resulted in noncash
compensation expense of approximately $16.5 million for the year ended February
28, 2003. Our stock compensation program began December 2001; therefore, only
$3.1 million of expense was included in noncash compensation expense in the year
ended February 28, 2002.






Corporate expenses, excluding noncash compensation:

Corporate expenses, excluding noncash compensation, for the year ended
February 28, 2003 were $21.4 million compared to $20.3 million for the same
period of the prior year, an increase of $1.1 million or 5.3%. These costs
increased due to higher professional fees associated with financing and other
transactions, and higher health care costs, partially offset by lower cash
compensation due to our stock compensation program.

Depreciation and amortization:

Radio depreciation and amortization expense for the year ended February 28,
2003 was $8.1 million compared to $33.5 million for the same period of the prior
year, a decrease of $25.4 million or 75.7%. The decrease was mainly attributable
to our adoption on March 1, 2002 of SFAS No. 142, "Goodwill and Other Intangible
Assets." Adoption of this accounting standard had the impact of eliminating our
amortization expense for goodwill and FCC licenses. For comparison purposes, for
the year ended February 28, 2002, we recorded radio amortization expense for
goodwill and FCC licenses of $24.8 million.

Television depreciation and amortization expense for the year ended
February 28, 2003 was $28.5 million compared to $53.5 million for the same
period of the prior year, a decrease of $25.0 million or 46.8%. The decrease was
also mainly attributable to our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets." For comparison purposes, for the year ended February 28,
2002, we recorded television amortization expense for goodwill and FCC licenses
of $28.0 million.

Publishing depreciation and amortization expense for the year ended
February 28, 2003 was $1.9 million compared to $8.5 million for the same period
of the prior year, a decrease of $6.6 million or 77.4%. The decrease was also
mainly attributable to our adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets." For comparison purposes, for the year ended February 28,
2002, we recorded publishing amortization expense for goodwill of $5.4 million.

On a consolidated basis, depreciation and amortization expense for the year
ended February 28, 2003 was $43.4 million compared to $100.3 million for the
same period of the prior year, a decrease of $56.9 million or 56.7%. The
decrease was also mainly attributable to our adoption of SFAS No. 142, "Goodwill
and Other Intangible Assets." For comparison purposes, for the year ended
February 28, 2002, we recorded amortization expense for goodwill and FCC
licenses of $58.2 million.

Operating income:

Radio operating income for the year ended February 28, 2003 was $98.1
million compared to $64.5 million for the same period of the prior year, an
increase of $33.6 million or 52.3%. This increase is attributable to our
adoption of SFAS No. 142, "Goodwill and Other Intangible Assets." Adoption of
this accounting standard had the impact of eliminating our radio amortization
expense for goodwill and FCC licenses, which totaled $24.8 million in the year
ended February 28, 2002. The prior year radio operating income included a $9.1
million impairment loss related to the sale of a radio station.

Television operating income for the year ended February 28, 2003 was $51.7
million compared to $8.7 million for the same period of the prior year, an
increase of $43.0 million or 492.1%. This increase was driven by higher
revenues, as previously described, and our adoption of SFAS No. 142, "Goodwill
and Other Intangible Assets." Adoption of this accounting standard had the
impact of eliminating our television amortization expense for goodwill and FCC
licenses, which totaled $28.0 million in the year ended February 28, 2003.

Publishing operating income for the year ended February 28, 2003 was $5.7
million compared to a loss of $2.5 million for the same period of the prior
year. The increase was primarily attributable to our adoption of SFAS No. 142,
"Goodwill and Other Intangible Assets." Adoption of this accounting standard had
the impact of eliminating our publishing amortization expense for goodwill,
which totaled $5.4 million in the year ended February 28, 2002.

On a consolidated basis, operating income for the year ended February 28,
2003 was $125.9 million compared to $44.1 million for the same period of the
prior year, an increase of $81.8 million or 185.3%. This increase resulted from
better operating performance at our stations, especially our television
stations, and our adoption of SFAS No. 142, "Goodwill and Other Intangible
Assets," each as described above. Adoption of this accounting standard had the
impact of eliminating our amortization expense for goodwill and FCC licenses,
which totaled $58.2 million in the year ended February 28, 2002.






Interest expense:

With respect to Emmis, interest expense for the year ended February 28,
2003 was $103.8 million compared to $129.1 million for the same period of the
prior year, a decrease of $25.3 million or 19.6%. 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 reflected 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. 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 year
ended February 28, 2003 was $78.1 million compared to $104.1 million for the
same period of the prior year, a decrease of $26.0 million or 25.0%. 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.

Income (loss) before income taxes, extraordinary loss and accounting change:

With respect to Emmis, income before income taxes, extraordinary loss and
accounting change increased to $27.3 million for the year ended February 28,
2003 from a loss before income taxes, extraordinary loss and accounting change
of $88.6 million for the same period of the prior year. The increase in the
income before income taxes, extraordinary loss and accounting change for the
year ended February 28, 2003 is mainly attributable to: (1) better operating
results at our stations, (2) the elimination of our amortization expense for
goodwill and broadcasting licenses of $58.2 million, (3) a reduction in interest
expense as a result of the factors described above under interest expense, and
(4) the gain on sale of our Denver radio assets of $8.9 million. The prior year
loss before income taxes, extraordinary loss and accounting change included a
$9.1 million impairment loss related to the sale of a radio station. With
respect to EOC, income before income taxes, extraordinary loss and accounting
change increased to $53.1 million for the year ended February 28, 2003 from a
loss before income taxes, extraordinary loss and accounting change of $64.6
million for the same period of the prior year. The increase in the income before
income taxes, extraordinary loss and accounting change is mainly attributable
to: (1) better operating results at our stations, (2) the elimination of our
amortization expense for goodwill and broadcasting licenses of $58.2 million,
(3) a reduction in interest expense as a result of the factors described above
under interest expense, and (4) the gain on sale of our Denver radio assets of
$8.9 million. The prior year loss before income taxes, extraordinary loss and
accounting change included a $9.1 million impairment loss related to the sale of
a radio station.

Net loss:

With respect to Emmis, net loss was $164.5 million for the year ended
February 28, 2003 compared to a loss of $64.1 million for the same period of the
prior year. The increase in net loss is mainly attributable to (1) 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." (2) a $11.1 million extraordinary loss, net of a deferred tax benefit,
relating to the premium paid on the redemption of our discount notes and the
write-off of deferred debt fees associated with debt repaid during the year, and
(3) better operating results, the elimination of amortization expense, the gain
on asset sales and the reduction in interest expense, all described above, and
all net of taxes. With respect to EOC, net loss was $139.6 million for the year
ended February 28, 2003 compared to a net loss of $47.9 million for the same
period of the prior year. The increase in net loss is mainly attributable to (1)
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;" (2) a $2.9 million extraordinary loss, net of a
deferred tax benefit, relating to the write-off of deferred debt fees associated
with debt repaid during the year, and (3) better operating results, the
elimination of amortization expense, the gain on asset sales and the reduction
in interest expense, all described above, and all net of taxes.






RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2002 COMPARED TO YEAR ENDED FEBRUARY 28, 2001

Pro forma reconciliation:

During fiscal 2001, we acquired numerous radio and television stations (see
Note 6 in the accompanying Notes to Consolidated Financial Statements). The
following table reconciles actual results to pro forma results:


Year ended February 28,
2002 2001
---- ----

Reported net revenues $539,822 $473,345

Plus: Net revenues from
radio and television assets
acquired during fiscal 2001 - 101,338
-------- --------

Pro forma net revenues $539,822 $574,683
======== ========

Reported station operating expenses,
excluding noncash compensation $354,157 $299,132

Plus: Station operating expenses,
excluding noncash compensation from
radio and television assets acquired
during fiscal 2001 - 63,973
-------- --------

Pro forma station operating expenses,
excluding noncash compensation $354,157 $363,105
======== ========

For further disclosure of segment results, see Note 11 to the accompanying
consolidated financial statements.

Net revenues:

Radio net revenues for the year ended February 28, 2002 increased $19.9
million, or 8.2%. On a pro forma basis (after giving effect to all acquisitions
consummated since March 1, 2000), radio net revenues for the year ended February
28, 2002 would have decreased $10.4 million, or 3.8%. Radio net revenues were
negatively impacted by a softening U.S. economy resulting in an overall decrease
in advertising sales and the events of September 11th. Our New York radio market
suffered the biggest decline in our radio group primarily attributable to its
proximity to the terrorist attacks. Our largest markets of Los Angeles, New York
and Chicago generally declined more than our Phoenix, St. Louis, Indianapolis
and Terre Haute markets as national advertising represents a higher percentage
of revenues in the largest markets and fell more rapidly than local advertising.

Television net revenues for the year ended February 28, 2002 increased
$49.5 million, or 31.6%. On a pro forma basis (after giving effect to all
acquisitions consummated since March 1, 2000), television net revenues for the
year ended February 28, 2002 would have decreased $21.6 million, or 9.5%. The
decline in television net revenues is attributable to a softening U.S. economy
coupled with the absence of political television advertisements in the year
ended February 28, 2002. The decrease was partially offset by a $3.7 million
increase in net revenues primarily attributable to our television division
earning a performance guaranty when our national sales rep agency did not
achieve certain performance targets in the second quarter.


Publishing net revenues for the year ended February 28, 2002 decreased $2.9
million, or 4.0%. These results are the same on a pro forma basis. Publishing
net revenues were also adversely affected by a softening U.S. economy resulting
in an overall decrease in print advertisement sales.

On a consolidated basis, net revenues for the year ended February 28, 2002
increased $66.5 million, or 14.0%. On a pro forma basis (after giving effect to
all acquisitions consummated since March 1, 2000), consolidated net revenues for
the year ended February 28, 2002 would have decreased $34.9 million, or 6.1% due
to the effect of the items described above.

Station operating expenses, excluding noncash compensation:

Radio station operating expenses, excluding noncash compensation, increased
$13.0 million, or 9.6%. On a pro forma basis (after giving effect to all
acquisitions consummated since March 1, 2000), radio operating expenses,
excluding noncash compensation for the year ended February 28, 2002 would have
decreased $4.9 million, or 3.2%. This pro forma decrease is primarily due to
decreased promotional spending, partially offset by sales personnel increases.
Also, in the quarter ended February 28, 2002, we implemented a 10% wage cut
which was supplemented with a corresponding 10% Emmis stock award.

Television station operating expenses, excluding noncash compensation,
increased $42.8 million, or 43.9%. On a pro forma basis (after giving effect to
all acquisitions consummated since March 1, 2000), television operating
expenses, excluding noncash compensation for the year ended February 28, 2002
would have decreased $3.2 million, or 2.3%. This pro forma decrease is due to
the elimination of certain operational positions, partially offset by sales
personnel increases. Also, in the quarter ended February 28, 2002, we
implemented a 10% wage cut which was supplemented with a corresponding 10% Emmis
stock award.

Publishing operating expenses, excluding noncash compensation, decreased
$0.8 million, or 1.3%. This decrease is primarily attributable to lower
production and sales related costs resulting from lower overall sales. Also, in
the quarter ended February 28, 2002, we implemented a 10% wage cut which was
supplemented with a corresponding 10% Emmis stock award.

On a consolidated basis, station operating expenses, excluding noncash
compensation, for the year ended February 28, 2002 increased $55.0 million, or
18.4%. On a pro forma basis (after giving effect to all acquisitions consummated
since March 1, 2000), consolidated station operating expenses, excluding noncash
compensation for the year ended February 28, 2002 would have decreased $8.9
million, or 2.5% due to the effect of the items described above. The wage cut
supplemented with a corresponding Emmis stock award described above reduced cash
operating expenses by approximately $3.1 million for the year ended February 28,
2002.

Noncash compensation expenses:

Non-cash compensation expense for the year ended February 28, 2002 was $9.1
million compared to $5.4 million for the same period of the prior year, an
increase of $3.7 million or 68.4%. In fiscal 2002, $5.5 million, $2.4 million,
$0.4 million and $0.8 million was attributable to our radio, television,
publishing and corporate divisions, respectively. In fiscal 2001, $3.7 million,
$0.5 million, $0.2 million and $1.0 million was attributable to our radio,
television, publishing and corporate divisions, respectively. Non-cash
compensation includes compensation expense associated with stock options
granted, restricted common stock issued under employment agreements, common
stock contributed to the Company's Profit Sharing Plan and common stock issued
to employees at our discretion. This increase was due to the payment of certain
employee incentives with our common stock and stock issued to supplement the 10%
wage reduction discussed above.

Corporate expenses, excluding noncash compensation:

Corporate expenses for the year ended February 28, 2002 were $20.3 million
compared to $17.6 million for the same period of the prior year, an increase of
$2.7 million or 15.2%. This increase is due to an increase in the number of
corporate employees in all departments as a result of our recent growth and
training investments we have made in our personnel.

Depreciation and amortization:

Radio depreciation and amortization expense for the year ended February 28,
2002 was $33.5 million compared to $21.5 million for the same period of the
prior year, an increase of $12.0 million or 56.1%. Television depreciation and
amortization expense for the year ended February 28, 2002 was $53.5 million
compared to $33.6 million for the same period of the prior year, an increase of
$19.9 million or 59.4%. Substantially all of the increase in depreciation and



amortization for our radio and television divisions is due to acquisitions
consummated since March 1, 2000. Publishing depreciation and amortization for
the year ended February 28, 2002 was $8.5 million compared to $14.9 million for
the same period of the prior year, a decrease of $6.4 million, or 43.3%. Certain
intangible assets became fully amortized in fiscal 2001 and were not included in
amortization expense in fiscal 2002. On a consolidated basis, depreciation and
amortization expense for the year ended February 28, 2002 was $100.3 million
compared to $74.0 million for the same period of the prior year, an increase of
$26.3 million or 35.5% due to the effect of the items described above.

Operating income:

Radio operating income for the year ended February 28, 2002 was $64.5
million compared to $71.7 million for the same period of the prior year, a
decrease of $7.2 million or 10.1%. This decrease is due to the change in net
revenues and expenses described above as well as an impairment loss of $9.1
million related to the sale of KALC-FM to Entercom Communications Corporation,
effective May 1, 2002. In the year ended February 28, 2001, the Company recorded
an impairment loss of $2.0 million related to the sale of WTLC-AM to Radio One,
Inc.

Television operating income for the year ended February 28, 2002 was $8.7
million compared to $25.4 million for the same period of the prior year, a
decrease of $16.7 million or 65.6%. This decrease is due to the items described
above as well as a $1.6 million charge recorded in fiscal 2002 related to the
early termination of certain television contracts.

Publishing operating loss for the year ended February 28, 2002 was $2.5
million compared to $6.6 million for the same period of the prior year, a
decrease of $4.1 million or 62.8%. This improvement resulted from lower
depreciation and amortization expense, as discussed above, partially offset by
the change in net revenues and expenses, as discussed above.

On a consolidated basis, operating income for the year ended February 28,
2002 was $44.1 million compared to $65.8 million for the same period of the
prior year, a decrease of $21.7 million or 33.0%. This decrease is due to the
decline in profitability at each of our divisions, as described above, and
higher depreciation and amortization expense from recently acquired stations,
partially offset by the operating performance of those stations.

Interest expense:

With respect to Emmis, interest expense was $129.1 million for the year
ended February 28, 2002 compared to $72.4 million for the same period of the
prior year, an increase of $56.7 million or 78.2%. This increase reflects higher
outstanding debt due to acquisitions consummated since March 1, 2000, all of
which were financed with debt (including our 12.5% senior discount notes issued
March 2001), partially offset by lower interest rates on our floating rate
senior bank debt.

With respect to EOC, interest expense was $104.1 million for the year ended
February 28, 2002 compared to $72.4 million for the same period of the prior
year, an increase of $31.7 million or 43.7%. This increase reflects higher
outstanding debt due to acquisitions consummated since March 1, 2000, partially
offset by lower interest rates on our floating rate senior debt. 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 operations of EOC.

Income (loss) before income taxes, extraordinary loss and accounting change:

With respect to Emmis, loss before income taxes and extraordinary loss for
the year ended February 28, 2002 was $88.6 million compared to income of $31.4
million for the same period of the prior year. This decrease is mainly
attributable to: (1) lower operating income, as discussed above, higher interest
expense, as discussed above, and the decrease in other income as the prior
year's other income included a $22.0 million gain on exchange of assets, offset
by valuation adjustments on certain investments and a $17.0 million break-up fee
received in connection with the sale of WALR-FM in Atlanta, Georgia to Cox
Radio, Inc., net of related expenses. With respect to EOC, loss before income
taxes and extraordinary loss was $64.6 million compared to income of $31.4
million for the same period of the prior year. This decrease is mainly
attributable to: (1) lower operating income, as discussed above, higher interest
expense, as discussed above, and the decrease in other income as the prior
year's other income included a $22.0 million gain on exchange of assets, offset
by valuation adjustments on certain investments and a $17.0 million break-up fee
received in connection with the sale of WALR-FM in Atlanta, Georgia to Cox
Radio, Inc., net of related expenses.


Net loss:

With respect to Emmis, net loss was $64.1 million for the year ended
February 28, 2002 compared to net income of $13.7 million for the same period of
the prior year. The decrease in net income is mainly attributable to lower
operating income and higher interest expense, each described above, and each net
of taxes. During the year ended February 28, 2002, EOC repaid $128.0 million of
indebtedness under its credit facility, which permanently reduced amounts
available thereunder. As a result of the early payoff of the indebtedness, the
Company recorded an extraordinary loss of approximately $1.1 million, net of
taxes, related to unamortized deferred debt costs. With respect to EOC, net loss
was $47.9 million for the year ended February 28, 2002 compared to net income of
$13.7 million for the same period of the prior year. The decrease in net income
is mainly attributable to lower operating income and higher interest expense,
each described above, and each net of taxes. During the year ended February 28,
2002, EOC repaid $128.0 million of indebtedness under its credit facility, which
permanently reduced amounts available thereunder. As a result of the early
payoff of the indebtedness, the Company recorded an extraordinary loss of
approximately $1.1 million, net of taxes, related to unamortized deferred debt
costs.

LIQUIDITY AND CAPITAL RESOURCES

OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

Other than lease commitments, legal contingencies incurred in the normal
course of business, agreements for future barter and program rights not yet
available for broadcast at February 28, 2003, and employment contracts for key
employees, all of which are disclosed in Note 9 to the consolidated financial
statements, the Company does not have any off-balance sheet financings or
liabilities. The Company does not have any majority-owned subsidiaries that are
not included in the consolidated financial statements, nor does the Company have
any interests in or relationships with any "special-purpose entities" that are
not reflected in the consolidated financial statements or disclosed in the Notes
to Consolidated Financial Statements.

SUMMARY DISCLOSURES ABOUT CONTRACTUAL CASH OBLIGATIONS

The following table reflects a summary of our contractual cash obligations as of
February 28, 2003:




PAYMENTS DUE BY PERIOD
(AMOUNTS IN THOUSANDS)
Less than 1 to 3 4 to 5 After 5
Contractual Cash Obligations: Total 1 Year Years Years Years
- ----------------------------- ----- ------ ----- ----- -----


Long-term debt (1) $ 1,311,219 $ 14,912 $ 88,759 $ 93,738 $ 1,113,810
Operating leases 66,101 9,494 15,311 11,692 29,604
TV program rights payable (2) 59,468 27,424 22,513 7,695 1,836
Future TV program rights payable (2) 57,279 10,877 32,963 11,252 2,187
Radio broadcast agreements 5,994 1,640 2,369 1,905 80
Employment agreements 49,771 25,743 19,959 2,689 1,380
------ ------ ------ ----- -----

Total Contractual Cash Obligations $ 1,549,832 $ 90,090 $ 181,874 $ 128,971 $ 1,148,897
=========== ======== ========= ========= ===========


(1) ECC's senior discount notes accrete to a face value of $286.3 million in
March 2006 and become due in March 2011. As of February 28, 2003, the
carrying value of the senior discount notes was $197.8 million. With
respect to EOC, the above table would be the same except ECC's senior
discount notes would be excluded.

(2) TV program rights payable represents payments to be made to various program
syndicators and distributors in accordance with current contracts for the
rights to broadcast programs. Future TV program rights payable represents
commitments for program rights not available for broadcast as of February
28, 2003.

We expect to fund these payments primarily with cash flows from operations, but
we may also issue additional debt or equity or sell assets.





SOURCES OF LIQUIDITY

Our primary sources of liquidity are cash provided by operations and cash
available through revolving loan 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 of a particular segment or
operating entity are met by intercompany transactions. See Investing Activities
below for discussion of specific segment needs.

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. At February 28, 2002, we had cash and cash equivalents of $6.4
million and net working capital for Emmis and EOC of $19.8 million and $21.0
million, respectively, excluding assets held for sale and associated
liabilities. The increase in net working capital primarily relates to the
increase in cash and accounts receivable increasing more than the increase in
current liabilities.

Operating Activities

With respect to Emmis, net cash flows provided by operating activities were
$95.1 million for the year ended February 28, 2003 compared to $69.4 million for
the same period of the prior year. With respect to EOC, net cash flows provided
by operating activities were $94.2 million for the year ended February 28, 2003
compared to net cash flows provided by operating activities of $67.4 million for
the same period of the prior year. The increase in cash flows provided by
operating activities for the year ended February 28, 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 driven by cash
savings generated by our stock compensation program. We experienced a
significant increase in cash flows provided by operating activities in our third
fiscal quarter of the current year. The third quarter of the prior year
reflected the immediate impacts of the events of September 11, 2001. 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 provided by investing activities were $106.3 million for the
year ended February 28, 2003 compared to cash used in investing of $175.1
million in the same period of the prior year. This increase is primarily
attributable to our sales of radio stations in the year ended February 28, 2003
as opposed to our purchase of radio stations in the year ended February 28,
2002. Investment activities include capital expenditures and business
acquisitions and dispositions.

As discussed in results of operations above and in Note 6 to the
accompanying condensed consolidated financial statements, Emmis sold radio
stations KALC-FM and KXPK-FM in Denver, Colorado for $135.5 million in cash in
the quarter ended May 31, 2002. The net cash proceeds of $135.5 million were
used to repay outstanding borrowings under the credit facility. As disclosed in
the supplemental disclosures to the statements of cash flows, Emmis acquired
radio stations KKLT-FM, KTAR-AM and KMVP-AM, in Phoenix, Arizona, in the quarter
ended May 31, 2001 for cash of $140.7 million. The Company financed the
acquisition through a $20.0 million advance payment borrowed under the credit
facility in June 2000 and the remainder with borrowings under the credit
facility and proceeds from ECC's March 2001 senior discount notes offering.
Emmis began programming and selling advertising on the radio stations on August
1, 2000 under a time brokerage agreement.

Capital expenditures primarily relate to leasehold improvements to various
office and studio facilities, broadcast equipment purchases, tower upgrades and
computer equipment replacements. In the years ended February 28, 2001, 2002 and
2003, we had capital expenditures of $26.2 million, $30.1 million, and $30.5
million, respectively. These capital expenditures primarily relate to the WALA
operating facility project, leasehold improvements to various office and studio
facilities, broadcast equipment purchases, tower upgrades and costs associated
with our conversion to digital television. We anticipate that future
requirements for capital expenditures will include capital expenditures incurred
during the ordinary course of business, including approximately $6.5 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 six 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 used in financing activities for Emmis and EOC were $191.7
million and $190.8 million, respectively, for the year ended February 28, 2003.
Cash flows provided by financing activities for Emmis and EOC were $52.2 million
and $54.2 million, respectively, for the same period of the prior year.

As discussed in Note 2 to the accompanying condensed consolidated financial
statements, 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 (see discussion below). 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 year ended February 28, 2003.

On March 27, 2001, ECC received $202.6 million of proceeds from the
issuance of $370.0 million face value, 12 1/2% senior discount notes due 2011.
The net proceeds of $190.6 million, less $93.0 million held in escrow at ECC,
were distributed to EOC and used to fund the acquisition of the Phoenix radio
stations discussed in Investing Activities above. In June 2001, upon completion
of the Company's reorganization to form EOC and make ECC a holding company, the
proceeds held in escrow were released and used to reduce outstanding borrowings
under the credit facility.

As of February 28, 2003, EOC had $1,006.9 million of corporate indebtedness
outstanding under our credit facility ($706.9 million) and senior subordinated
notes ($300.0 million), and other indebtedness ($18.0 million). As of February
28, 2003, total indebtedness outstanding for Emmis included all of EOC's
indebtedness as well as $197.8 million of ECC's senior discount notes. ECC also
had $143.8 million of our 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 February 28, 2003, our weighted average borrowing rate under our credit
facility, including the effects of interest rate swaps (see discussion in Item
7A. below), was approximately 4.7% and our overall weighted average borrowing
rate, after taking into account amounts outstanding under our senior
subordinated notes and senior discount notes, was approximately 6.8%. The
overall weighted average borrowing rate for EOC, which would exclude the senior
discount notes, was approximately 5.7%.

The debt service requirements of EOC over the next twelve month period (net
of interest under our credit facility) are expected to be $34.4 million. This
amount is comprised of $24.4 million for interest under our senior subordinated
notes and $10.0 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 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. While Emmis had sufficient liquidity to
declare and pay the dividends as they become due, it was not permitted to do so
for the April 15, 2002 payment because Emmis' leverage ratio under the senior
discount notes indenture exceeded 8:1 and its leverage ratio under the senior
subordinated notes indenture exceeded 7:1. ECC's board of directors set a record
date for the April 15, 2002 payment, but did not declare the dividend. Instead,
a wholly-owned, unrestricted subsidiary of EOC made a payment of $.78125 per
share to each preferred shareholder of record. This subsidiary was permitted
under the senior discount notes and senior subordinated notes indentures to make
the payment to the preferred shareholders. Currently, Emmis meets its leverage
ratio requirements under both the senior discount notes indenture and the senior
subordinated notes indenture. On July 2, 2002, ECC's board of directors declared
the April 15, 2002 dividend, as well as dividends payable October 15, 2001 and
January 15, 2002, and deemed the obligation to pay each dividend to have been
discharged by the subsidiary's prior payment. On April 5, 2003, ECC's board of
directors declared the April 15, 2003 dividend.

At April 3, 2003, we had $208.9 million available under our credit
facility, less $1.4 million in outstanding letters of credit. Emmis has agreed
to acquire, for a purchase price of $105.2 million, a controlling interest of
50.1% in LBJS Broadcasting Company, L.P. LBJS owns radio stations KLBJ-AM,
KLBJ-FM, KXMG-FM, KROX-FM and KGSR-FM, all in the Austin, Texas metropolitan
area. The remaining 49.9% interest in LBJS will be held by Sinclair Telecable,
Inc. which will contribute to LBJS a sixth Austin radio station, KEYI-FM. We
expect this acquisition to close in the second quarter of our fiscal 2004. 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 addition, Emmis will have the option, but not the
obligation, to purchase Sinclair's entire interest in LBJS 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. However, in the current operating
environment, Emmis does not intend to effectuate the separation absent a
significant acquisition of either radio or television properties.

INTANGIBLES

At February 28, 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 the activities of our stations for
compliance with all regulatory requirements. Historically, all of our licenses
have been renewed at the end of their respective eight-year periods, and we
expect that all FCC licenses will continue to be renewed in the future.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 addresses financial accounting and reporting for business combinations
and supersedes Accounting Principle Board ("APB") Opinion No. 16, "Business
Combinations" and SFAS No. 38, "Accounting for Preacquisition Contingencies of
Purchased Enterprises." SFAS No. 141 is effective for all business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interest method of
accounting for business combinations except for qualifying business combinations
that were initiated prior to July 1, 2001. SFAS No. 141 also changes the
criteria to recognize intangible assets apart from goodwill. The Company adopted
this Statement on July 1, 2001. The Company has historically used the purchase
method to account for all business combinations and the adoption of this
Statement did not have a material impact on the Company's financial position,
cash flows or results of operations.

In June 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible
Assets" that requires companies to cease amortizing goodwill and certain other
indefinite-lived intangible assets, including broadcast licenses. Under SFAS
142, goodwill and certain indefinite-lived intangibles will not be amortized
into results of operations, but instead the recorded value of certain
indefinite-lived intangibles will be tested for impairment at least annually
with impairment being measured as the excess of the asset's carrying amount over
its fair value. Intangible assets that have finite useful lives will continue to
be amortized over their useful lives and measured for impairment in accordance
with SFAS 121. In connection with the adoption of SFAS 142 effective March 1,
2002, we recorded an impairment loss of $167.4 million, net of tax, reflected as
the cumulative effect of an accounting change in the accompanying condensed
consolidated statements of operations. The adoption of this accounting standard
reduced our amortization of goodwill and intangibles by approximately $61.0
million in the year ended February 28, 2003. However, our future impairment
reviews may result in additional periodic write-downs.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" that applies to legal obligations associated with the
retirement of a tangible long-lived asset that results from the acquisition,
construction, or development and/or the normal operation of a long-lived asset.
Under this standard, guidance is provided on measuring and recording the
liability. Adoption of this Statement by the Company will be effective on March
1, 2003. The Company does not believe that the adoption of this Statement will
materially impact the Company's financial position, cash flows or results of
operations.

Effective March 1, 2002, the Company adopted SFAS No. 144 "Accounting for
the Impairment or Disposal of Long-Lived Assets" that addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
While SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," it removes
certain assets such as deferred tax assets, goodwill and intangible assets not
being amortized from its scope and retains the requirements of SFAS No. 121
regarding the recognition of impairment losses on other long-lived assets held
for use. SFAS No. 144 also supersedes the accounting and reporting provisions of
APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring events and Transactions" for the disposal of a segment of
a business. However, SFAS No. 144 retains the requirement in Opinion 30 to



report separately discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment,
or in a distribution to owners) or is classified as held for sale. Adoption of
this statement did not have a material impact on the Company's financial
position, cash flows or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of Statements No.
4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections". 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. Adoption of
this Statement by the Company will be effective on March 1, 2003. The effects of
this pronouncement will result in future gains and losses related to debt
transactions to be classified in income from continuing operations. In addition,
we are required to reclassify all of the extraordinary items related to debt
transactions recorded in prior periods, including those recorded in fiscal 2003,
to income from continuing operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 supersedes Emerging
Issues Task Force Issue No. 94-3. SFAS No. 146 requires that the liability for a
cost associated with an exit or disposal activity be recognized when the
liability is incurred, not at the date of an entity's commitment to an exit or
disposal plan. The provisions of SFAS No. 146 are effective for exit or disposal
activities initiated after December 31, 2002. The Company does not anticipate
that the adoption of SFAS No. 146 will have a material impact on its
consolidated financial position, results of operations or cash flows.

As of December 2002, we adopted SFAS No. 148, "Accounting for Stock-Based
Compensation-Transaction and Disclosure, an Amendment of SFAS No. 123." SFAS No.
148 revises the methods permitted by SFAS No. 123 of measuring compensation
expense for stock-based employee compensation plans. We use the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, as permitted
under SFAS No. 123. Therefore, this change did not have a material effect on our
financial statements. SFAS No. 148 requires us to disclose pro forma information
related to stock-based compensation, in accordance with SFAS No. 123, on a
quarterly basis in addition to the current annual basis disclosure. We will
report the pro forma information on an interim basis beginning with our May 31,
2003 Form 10-Q.

SEASONALITY

Our results of operations are usually subject to seasonal fluctuations,
which result in higher second and third quarter revenues and operating income.
For our radio operations, this seasonality is due to the younger demographic
composition of many of our stations. Advertisers increase spending during the
summer months to target these listeners. In addition, advertisers generally
increase spending across all of our segments during the months of October and
November, which are part of our third quarter, in anticipation of the holiday
season. Finally, particularly in our television operations, revenues from
political advertising tend to be higher in even numbered calendar years.

INFLATION

The impact of inflation on our operations has not been significant to date.
However, there can be no assurance that a high rate of inflation in the future
would not have an adverse effect on our operating results, particularly since
our senior bank debt is largely floating rate debt.

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. You
can identify these forward-looking statements by our use of words such as
"intend," "plan," "may," "will," "project," "estimate," "anticipate," "believe,"
"expect," "continue," "potential," "opportunity," and similar expressions,
whether in the negative or affirmative. We cannot guarantee that we actually
will achieve these plans, intentions or expectations. All statements regarding
our expected financial position, business and financing plans are
forward-looking statements.

Actual results or events could differ materially from the plans, intentions
and expectations disclosed in the forward-looking statements we make. We have
included important facts in various cautionary statements in this report that we



believe could cause our actual results to differ materially from forward-looking
statements that we make. These include, but are not limited to, the following:

o material adverse changes in economic conditions in the markets of our
company;

o the ability of our stations and magazines to attract and retain
advertisers;

o loss of key personnel

o the ability of our stations to attract quality programming and our
magazines to attract good editors, writers, and photographers;

o uncertainty as to the ability of our stations to increase or sustain
audience share for their programs and our magazines to increase or
sustain subscriber demand;

o competition from other media and the impact of significant competition
for advertising revenues from other media;

o future regulatory actions and conditions in the operating areas of our
company;

o the necessity for additional capital expenditures and whether our
programming and other expenses increase at a rate faster than
expected;

o financial community and rating agency perceptions of our business,
operations and financial condition and the industry in which we
operate;

o the effects of terrorist attacks, political instability, war and other
significant events;

o whether pending transactions, if any, are completed on the terms and
at the times set forth, if at all;

o other risks and uncertainties inherent in the radio and television
broadcasting and magazine publishing businesses.

The forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers or dispositions. We undertake no obligation to update or
revise any forward-looking statements because of new information, future events
or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

GENERAL

Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of Emmis due to adverse changes in
financial and commodity market prices and rates. Emmis is exposed to market risk
from changes in domestic and international interest rates (i.e. prime and LIBOR)
and foreign currency exchange rates. To manage interest rate exposure Emmis
periodically enters into interest rate derivative agreements. Emmis does not use
financial instruments for trading and is not a party to any leveraged
derivatives.

On June 15, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended in June of 2000 by SFAS No. 138,
"Accounting for Derivative Instruments and Hedging Activities." These
statements, which were effective for Emmis on March 1, 2001, establish
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts. These statements require
that every derivative instrument be recorded in the balance sheet as either an
asset or a liability measured at its fair value. Changes in the fair value of
derivatives are to be recorded each period in earnings or comprehensive income,
depending on whether the derivative is designated and effective as part of a
hedged transaction, and on the type of hedge transaction. Gains or losses on
derivative instruments reported in the other comprehensive income must be
reclassified as earnings in the period in which earnings are affected by the
underlying hedged item, and the ineffective portion of all hedges must be
recognized in earnings in the current period. These standards result in
additional volatility in reported assets, liabilities, earnings and other
comprehensive income.

SFAS No. 133 requires that as of the date of initial adoption the
difference between the fair value of the derivative instruments to be recorded
on the balance sheet and the previous carrying amount of those derivatives be
reported in net income or other comprehensive income, as appropriate, as the
cumulative effect of a change in accounting principle in accordance with APB 20
"Accounting Changes."

On March 1, 2001, Emmis recorded the effect of the adoption of SFAS No. 133
which resulted in an immaterial impact to the results of operations and the
financial position of Emmis.


SFAS No. 133 further requires that the fair value and effectiveness of each
hedging instrument must be measured quarterly. The result of each measurement
could result in fluctuations in reported assets, liabilities, other
comprehensive income and earnings as these changes in fair value and
effectiveness are recorded to the financial statements.

INTEREST RATES

At February 28, 2003, the entire outstanding balance under our credit
facility, approximately 47% of EOC's total outstanding debt (credit facility and
senior subordinated debt) and 40% of Emmis' total outstanding debt (EOC's debt
plus our senior discount notes), bears interest at variable rates. Emmis
currently hedges a portion of its outstanding debt with interest rate swap
arrangements that effectively set the credit facility's underlying base rate at
a weighted average rate of 4.76% on the three-month LIBOR for agreements in
place as of February 28, 2003. The credit facility requires EOC to have fixed
interest rates for a two year period on at least 50% of its total outstanding
debt, as defined (including the senior subordinated debt). After the first two
years, this ratio of fixed to floating rate debt must be maintained if EOC's
total leverage ratio, as defined, is greater than 6:1 at any quarter end. The
notional amount of the interest rate swap agreements at February 28, 2003
totaled $230.0 million, and the agreements expire at various dates beginning May
8, 2003 to February 8, 2004.

Based on amounts outstanding at February 28, 2003, if the interest rate on
our variable debt, including the effect of interest rate swaps, were to increase
by 1.0%, our annual interest expense would be higher by approximately $4.8
million.

FOREIGN CURRENCY

Emmis owns a 59.5% interest in a Hungarian subsidiary which is consolidated
in the accompanying financial statements. This subsidiary's operations are
measured in its local currency (forint). Emmis has a natural hedge since some of
the subsidiary's long-term obligations are denominated in Hungarian forints.
Emmis owns a 75% interest in an Argentinean subsidiary which is consolidated in
the accompanying financial statements. This subsidiary's operations are measured
in its local currency (peso), which until January 2002, was tied to the U.S.
dollar through the Argentine government's convertibility plan. In January 2002,
the Argentine government allowed the peso to devalue and trade against the U.S.
dollar independently. While Emmis management cannot predict the most likely
average or end-of-period peso to dollar, or forint to dollar, exchange rates for
calendar 2003, we believe any further devaluation of the forint or peso would
have an immaterial effect on our financial statements taken as a whole, as the
Hungarian and Argentine stations accounted for approximately 2% of Emmis' total
revenues and approximately 1% of Emmis' total assets as of, and for the year
ended, February 28, 2003.

At February 28, 2003, the Hungarian subsidiary had $1.3 million of U.S.
dollar denominated loans outstanding. No amounts were repaid under the loans
during fiscal 2003. The Argentinean subsidiary had no U.S. dollar denominated
loans outstanding during fiscal 2003 or at February 28, 2003.

Emmis maintains no derivative instruments to mitigate the exposure to
foreign currency translation and/or transaction risk. However, this does not
preclude the adoption of specific hedging strategies in the future.







ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----


GROSS REVENUES $ 552,800 $ 620,456 $ 646,157

LESS: AGENCY COMMISSIONS 79,455 80,634 83,794
------ ------ ------

NET REVENUES 473,345 539,822 562,363
OPERATING EXPENSES:
Station operating expenses, excluding
noncash compensation 299,132 354,157 349,251
Corporate expenses, excluding
noncash compensation 17,601 20,283 21,359
Time brokerage fees 7,344 479 -
Depreciation and amortization 74,018 100,258 43,370
Noncash compensation 5,400 9,095 22,528
Restructuring fees 2,057 768 -
Impairment loss and other 2,000 10,672 -
------- ------- -------
Total operating expenses 407,552 495,712 436,508
OPERATING INCOME 65,793 44,110 125,855
------ ------ -------

OTHER INCOME (EXPENSE):
Interest expense (72,444) (129,100) (103,835)
Gain on sale of assets - - 9,313
Gain (loss) in unconsolidated affiliates (1,360) (5,003) (4,544)
Other income, net 39,397 1,346 525
------ ----- ---
Total other income (expense) (34,407) (132,757) (98,541)

INCOME (LOSS) BEFORE INCOME TAXES
EXTRAORDINARY LOSS AND ACCOUNTING CHANGE 31,386 (88,647) 27,314
PROVISION (BENEFIT) FOR INCOME TAXES 17,650 (25,623) 13,265
------ ------- ------
INCOME(LOSS) BEFORE EXTRAORDINARY LOSS
AND ACCOUTNING CHANGE 13,736 (63,024) 14,049
EXTRAORDINARY LOSS, NET OF TAX
OF $664 IN 2002 AND $2,389 IN 2003 - (1,084) (11,117)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF TAX OF $102,600 - - (167,400)
------ ------- --------
NET INCOME (LOSS) 13,736 (64,108) (164,468)
PREFERRED STOCK DIVIDENDS 8,984 8,984 8,984
------ ------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS $ 4,752 $ (73,092) $ (173,452)
======= ========= ==========

BASIC NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS:
Before accounting change and extraordinary loss $ 0.10 $ (1.52) $ 0.10
Extraordinary item, net of tax - (0.02) (0.21)
Cumulative effect of accounting change, net of tax - - (3.16)
Net income (loss) available to common ------ ------- -------
shareholders $ 0.10 $ (1.54) $ (3.27)
====== ======= =======

DILUTED NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS:
Before accounting change and extraordinary loss $ 0.10 $ (1.52) $ 0.10
Extraordinary item, net of tax - (0.02) (0.21)
Cumulative effect of accounting change, net of tax - - (3.16)
Net income (loss) available to common ------ ------- -------
shareholders $ 0.10 $ (1.54) $ (3.27)
====== ======= =======



The accompanying notes to consolidated financial statements are an integral part
of these statements.

In the years ended February 28, 2001, 2002, and 2003, $4.4 million, $8.3
million, and $19.0 million respectively, of our noncash compensation was
attributable to our stations, while $1.0 million, $0.8 million, and $3.5 million
was attributable to corporate.





EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

FEBRUARY 28,
2002 2003
---- ----
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 6,362 $ 16,079
Accounts receivable, net of allowance for doubtful
accounts of $2,800 and $3,240, respectively 95,240 102,345
Current portion of TV program rights 9,837 11,309
Prepaid expenses 14,847 15,596
Other 13,820 14,352
Assets held for sale 123,416 -
------- -------
Total current assets 263,522 159,681
------- -------

PROPERTY AND EQUIPMENT:
Land and buildings 88,209 93,660
Leasehold improvements 12,341 14,591
Broadcasting equipment 151,496 172,489
Office equipment and automobiles 49,160 54,082
Construction in progress 16,735 7,111
------ -----
317,941 341,933
Less-Accumulated depreciation and amortization 86,802 118,503
------ -------
Total property and equipment, net 231,139 223,430
------- -------

INTANGIBLE ASSETS:
Indefinite lived intangibles 1,743,235 1,508,886
Goodwill 175,132 138,986
Other intangibles 63,677 64,189
------ ------
1,982,044 1,712,061
Less-Accumulated amortization 28,713 35,328
------ ------
Total intangible assets, net 1,953,331 1,676,733
--------- ---------

OTHER ASSETS:
Deferred debt issuance costs, net of accumulated
amortization of $12,227 and $11,482, repectively 37,745 29,260
TV program rights, net of current portion 8,818 10,416
Investments 12,315 9,261
Deposits and other 3,199 7,632
----- -----
Total other assets, net 62,077 56,569
------ ------

Total assets $ 2,510,069 $2,116,413
=========== ==========



The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.






EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



FEBRUARY 28,
------------
2002 2003
---- ----

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable $ 38,995 $ 39,526
Current maturities of long-term debt 7,933 14,912
Current portion of TV program rights payable 27,507 27,424
Accrued salaries and commissions 7,852 14,247
Accrued interest 14,068 11,641
Deferred revenue 16,392 15,805
Other 7,531 8,102
Credit facility debt to be repaid with proceeds
of assets held for sale 135,000 -
Liabilities associated with assets held for sale 63 -
------- -------
Total current liabilities 255,341 131,657

CREDIT FACILITY AND SENIOR SUBORDINATED
DEBT, NET OF CURRENT PORTION 1,117,000 996,945
SENIOR DISCOUNT NOTES 226,507 197,844
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION 6,949 13,087
TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION 40,551 32,044
OTHER NONCURRENT LIABILITIES 26,966 17,786
DEFERRED INCOME TAXES 101,198 22,345
------- -------
Total liabilities 1,774,512 1,411,708
--------- ---------

COMMITMENTS AND CONTINGENCIES (NOTE 9)

SHAREHOLDERS' EQUITY:

Series A cumulative convertible preferred stock, $0.01 par value;
$50.00 liquidation preference; authorized 10,000,000 shares;
issued and outstanding 2,875,000 shares in 2002 and 2003 29 29
Class A common stock, $0.01 par value; authorized 170,000,000
shares; issued and outstanding 42,761,299 shares and
48,874,017 shares in 2002 and 2003, respectively 428 489
Class B common stock, $0.01 par value; authorized 30,000,000
shares; issued and outstanding 5,250,127 shares and
5,011,348 shares in 2002 and 2003, respectively 53 50
Additional paid-in capital 843,254 990,770
Accumulated deficit (95,822) (269,274)
Accumulated other comprehensive income (12,385) (17,359)
--------- ---------
Total shareholders' equity 735,557 704,705
--------- ---------
Total liabilities and shareholders' equity $ 2,510,069 $ 2,116,413
=========== ===========



The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.






EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE YEARS ENDED FEBRUARY 28, 2003
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


Class A Class B Series A
Common Stock Common Stock Preferred Stock
------------ ------------ ---------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------

BALANCE, FEBRUARY 29, 2000 41,232,811 $ 412 4,738,582 $ 47 2,875,000 $ 29

Issuance of Class A Common Stock in
exchange for Class B Common Stock 17,875 - (17,875) - - -
Exercise of stock options and
related income tax benefits 482,991 5 509,689 5 - -
Issuance of Class A Common Stock
to profit sharing plan 47,281 1 - - - -
Issuance of Class A Common Stock to employees
and officers and related income tax benefits 82,688 1 - - - -
Sale of Class A common stock
to employees through ESPP 36,669 - - - - -
Preferred stock dividends paid
- - - - - -
Comprehensive Income:
Net income (loss) - - - - - -
Cumulative translation adjustment - - - - - -
Total comprehensive income - - - - - -
---------- --- --------- -- --------- --
BALANCE, FEBRUARY 28, 2001 41,900,315 419 5,230,396 52 2,875,000 29
---------- --- --------- -- --------- --

Issuance of Class A Common Stock in
exchange for Class B Common Stock - - - - - -
Exercise of stock options and
related income tax benefits 314,258 3 - - - -
Issuance of Class A Common Stock
to profit sharing plan - - - - - -
Issuance of Class A Common Stock to employees
and officers and related income tax benefits 520,579 6 19,731 1 - -
Sale of Class A Common Stock
to employees through ESPP 26,147 - - - - -
Preferred stock dividends paid - - - - - -

Comprehensive Income:
Net income (loss) - - - - - -
Cumulative translation adjustment - - - - - -
Net unrealized gain (loss) on hedged derivatives - - - - - -
Total comprehensive income - - - - - -
---------- --- --------- -- --------- --
BALANCE, FEBRUARY 28, 2002 42,761,299 428 5,250,127 53 2,875,000 29
---------- --- --------- -- --------- --

Issuance of Class A Common Stock in
exchange for Class B Common Stock 300,000 3 (300,000) (3) - -
Issuance of common stock to employees
and related income tax benefits 1,212,718 12 61,221 - - -
Sale of Class A Common Stock
via secondary offering 4,600,000 46 - - - -
Preferred stock dividends paid - - - - - -

Comprehensive Income:
Net income (loss) - - - - - -
Cumulative translation adjustment - - - - - -
Net unrealized gain (loss) on hedged derivatives - - - - - -
Total comprehensive income - - - - - -
---------- --- --------- -- --------- --
BALANCE FEBRUARY 28, 2003 48,874,017 $ 489 5,011,348 $ 50 2,875,000 $ 29
========== === ========= == ========= ==




The accompanying notes to consolidated financial statements are an integral part
of these statements.




EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (CONTINUED)
FOR THE THREE YEARS ENDED FEBRUARY 28, 2003
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)




Accumulated
Additional Other Total
Paid-in Accumulated Comprehensive Shareholders'
Capital Deficit Income Equity
------- ------- ------ ------

BALANCE, FEBRUARY 29, 2000 $ 804,820 $ (27,482) $ (1,459) $ 776,367

Issuance of Class A Common Stock in
exchange for Class B Common Stock - - - -
Exercise of stock options and
related income tax benefits 18,707 - - 18,717
Issuance of Class A Common Stock
to profit sharing plan 1,250 - - 1,251
Issuance of Class A Common Stock to employees
and officers and related income tax benefits 4,586 - - 4,587
Sale of Class A common stock
to employees through ESPP 936 - - 936
Preferred stock dividends paid - (8,984) - (8,984)

Comprehensive Income:
Net income (loss) - 13,736 -
Cumulative translation adjustment - - 861
Total comprehensive income - - - 14,597
--------- --------- ------ ---------
BALANCE, FEBRUARY 28, 2001 $ 830,299 $ (22,730) $ (598) $ 807,471
--------- --------- ------ ---------

Issuance of Class A Common Stock in
exchange for Class B Common Stock - - - -
Exercise of stock options and
related income tax benefits 3,610 - - 3,613
Issuance of Class A Common Stock
to profit sharing plan - - - -
Issuance of Class A Common Stock to employees
and officers and related income tax benefits 8,770 - - 8,777
Sale of Class A common stock
to employees through ESPP 575 - - 575
Preferred stock dividends paid - (8,984) - (8,984)

Comprehensive Income:
Net income (loss) - (64,108) -
Cumulative translation adjustment - - (6,303)
Net unrealized gain (loss) on hedged derivatives - - (5,484)
Total comprehensive income - - - (75,895)
--------- --------- ------ ---------
BALANCE, FEBRUARY 28, 2002 $ 843,254 $ (95,822) $ (12,385) $ 735,557
--------- --------- ------ ---------

Issuance of Class A Common Stock in
exchange for Class B Common Stock - - - -
Issuance of common stock to employees
and related income tax benefits 27,323 - - 27,335
Sale of Class A Common Stock
via secondary offering 120,193 - - 120,239
Preferred stock dividends paid - (8,984) - (8,984)

Comprehensive Income:
Net income (loss) - (164,468) -
Cumulative translation adjustment - - (8,079)
Net unrealized gain (loss) on hedged derivatives - - 3,105
Total comprehensive income - - - (169,442)
--------- --------- ------ ---------
BALANCE, FEBRUARY 28, 2003 $ 990,770 $ (269,274) $ (17,359) $ 704,705
========= ========== ========= =========


The accompanying notes to consolidated financial statements are an integral part
of these statements.





EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)



FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----
OPERATING ACTIVITIES:

Net income (loss) $ 13,736 $ (64,108) $ (164,468)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities -
Extraordinary item - 1,084 11,117
Cumulative effect of accounting change - - 167,400
Depreciation and amortization 94,454 124,335 68,193
Accretion of interest on senior discount note
including amortization of related debt costs - 24,998 25,777
Provision for bad debts 3,713 4,005 4,102
Provision (benefit) for deferred income taxes 15,810 (25,623) 13,265
Noncash compensation 5,400 9,095 22,528
Gain on sale of assets - - (9,313)
Gain on exchange of assets (22,000) - -
Impairment of asset - 9,063 -
Tax benefits of exercise of stock options 10,859 999 958
Other 1,464 (5,928) (8,079)
Changes in assets and liabilities -
Accounts receivable (9,316) (2,118) (11,207)
Prepaid expenses and other current assets (24,627) 5,127 (3,392)
Other assets 12,099 (5,953) (4,181)
Accounts payable and accrued liabilities 15,341 (2,709) 804
Deferred revenue 569 (963) (587)
Other liabilties (19,772) (1,927) (17,768)
------- ------ -------
Net cash provided by operating activities 97,730 69,377 95,149
------ ------ ------

INVESTING ACTIVITIES:
Purchases of property and equipment (26,225) (30,135) (30,549)
Disposal of property and equipment - 1,719 2,354
Cash paid for acquisitions (1,060,681) (140,746) -
Proceeds from sale of assets, net - - 135,500
Deposits on acquisitions and other (23,849) (5,943) (1,004)
------- ------ ------
Net cash provided by (used in) investing activities (1,110,755) (175,105) 106,301
---------- -------- -------

FINANCING ACTIVITIES:
Payments on long-term debt (1,051,549) (133,000) (313,525)
Proceeds from long-term debt 2,128,388 5,000 15,000
Proceeds from the issuance of the Company's
Class A Common Stock, net of transaction costs - - 120,239
Purchase of Class A Common Stock - - (1,937)
Proceeds from senior discount notes offering - 202,612
Premium paid to redeem senior discount notes - - (6,678)
Proceeds from exercise of stock options
and employee stock purchases 8,794 3,189 6,906
Payments for debt related costs (21,095) (16,626) (2,754)
Preferred stock dividends (8,984) (8,984) (8,984)
------ ------ ------
Net cash provided by (used in) financing activities 1,055,554 52,191 (191,733)
--------- ------ --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,529 (53,537) 9,717

CASH AND CASH EQUIVALENTS:
Beginning of period 17,370 59,899 6,362
------ ------ -----
End of period $ 59,899 $ 6,362 $ 16,079
======== ======= ========




The accompanying notes to consolidated financial statements are an integral part
of these statements.





EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest $ 58,362 $ 99,824 $ 77,090
Income taxes 550 1,281 887

ACQUISITION OF LOS ANGELES MAGAZINE:
Fair value of assets aquired $ 39,520
Cash paid 36,827
------
Liabilities recorded $ 2,693
=======

ACQUISITION OF KKFR-FM AND KXPK-FM:
Fair value of assets aquired $110,210
Cash paid 109,052
------
Liabilities recorded $ 1,158
=======

ACQUISITION OF TELEVISION PROPERTIES
FROM LEE ENTERPRISES, INC.:
Fair value of assets aquired $633,639
Cash paid 582,994
-------
Liabilities recorded $ 50,645
========

ACQUISITION OF KIHT-FM, KFTK-FM, KPNT-FM
WVRV-FM, WIL-FM, AND WRTH-AM:
Fair value of assets aquired $230,891
Cash paid 230,891
-------
Liabilities recorded $ -
=========


EXCHANGE OF ASSETS FOR KZLA-FM:
Fair value of assets aquired $185,000
Basis in assets echanged 163,000
Gain on exchange of assets 22,000
Cash paid -
-------
Liabilities recorded $ -
=========

ACQUISITION OF KALC-FM:
Fair value of assets aquired $100,917
Cash paid 100,917
-------
Liabilities recorded $ -
=========

ACQUISITION OF KKLT-FM, KTAR-AM, AND KMVP-AM:
Fair value of assets aquired $ 160,746
Cash paid, net of deposit 140,746
Deposit paid in June 2000 20,000
---- ------
Liabilities recorded $ -
=========


The accompanying notes to consolidated financial statements are an integral part
of these statements.





EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----

GROSS REVENUES $ 552,800 $ 620,456 $ 646,157

LESS: AGENCY COMMISSIONS 79,455 80,634 83,794
------ ------ ------

NET REVENUES 473,345 539,822 562,363
OPERATING EXPENSES:
Station operating expenses, excluding
noncash compensation 299,132 354,157 349,251
Corporate expenses, excluding
noncash compensation 17,601 20,283 21,359
Time brokerage fees 7,344 479 -
Depreciation and amortization 74,018 100,258 43,370
Noncash compensation 5,400 9,095 22,528
Restructuring fees 2,057 768 -
Impairment loss and other 2,000 10,672 -
------- ------- -------
Total operating expenses 407,552 495,712 436,508
OPERATING INCOME 65,793 44,110 125,855
------ ------ -------

OTHER INCOME (EXPENSE):
Interest expense (72,444) (104,102) (78,058)
Gain on sale of assets - - 9,313
Gain (loss) in unconsolidated affiliates (1,360) (5,003) (4,544)
Other income, net 39,397 360 524
------ --- ---
Total other income (expense) (34,407) (108,745) (72,765)
------- -------- -------

INCOME (LOSS) BEFORE INCOME TAXES
EXTRAORDINARY LOSS AND ACCOUNTING CHANGE 31,386 (64,635) 53,090
PROVISION (BENEFIT) FOR INCOME TAXES 17,650 (17,833) 22,366
------ ------- ------
INCOME(LOSS) BEFORE EXTRAORDINARY LOSS
AND ACCOUTNING CHANGE 13,736 (46,802) 30,724
EXTRAORDINARY LOSS, NET OF TAX
OF $664 IN 2002 AND $1,555 IN 2003 - (1,084) (2,889)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF TAX OF $102,600 - - (167,400)
-------- --------- ----------
NET INCOME (LOSS) $ 13,736 $ (47,886) $ (139,565)
======== ========= ==========



The accompanying notes to consolidated financial statements are an integral part
of these statements.

In the years ended February 28, 2001, 2002, and 2003, $4.4 million, $8.3
million, and $19.0 million respectively, of our noncash compensation was
attributable to our stations, while $1.0 million, $0.8 million, and $3.5 million
was attributable to corporate.







EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

FEBRUARY 28,
2002 2003
---- ----
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 6,362 $ 16,079
Accounts receivable, net of allowance for doubtful
accounts of $2,800 and $3,240, respectively 95,240 102,345
Current portion of TV program rights 9,837 11,309
Prepaid expenses 14,847 15,596
Other 13,820 14,352
Assets held for sale 123,416 -
------- -------
Total current assets 263,522 159,681
------- -------

PROPERTY AND EQUIPMENT:
Land and buildings 88,209 93,660
Leasehold improvements 12,341 14,591
Broadcasting equipment 151,496 172,489
Office equipment and automobiles 49,160 54,082
Construction in progress 16,735 7,111
------- -------
317,941 341,933
Less-Accumulated depreciation and amortization 86,802 118,503
------- -------
Total property and equipment, net 231,139 223,430
------- -------

INTANGIBLE ASSETS:
Indefinite lived intangibles 1,743,235 1,508,886
Goodwill 175,132 138,986
Other intangibles 63,677 64,189
------- -------
1,982,044 1,712,061
Less-Accumulated amortization 28,713 35,328
------- -------
Total intangible assets, net 1,953,331 1,676,733
--------- ---------

OTHER ASSETS:
Deferred debt issuance costs, net of accumulated
amortization of $11,122 and $9,704, repectively 26,815 21,731
TV program rights, net of current portion 8,818 10,416
Investments 12,315 9,261
Deposits and other 3,199 7,632
--------- ---------
Total other assets, net 51,147 49,040
--------- ---------

Total assets $ 2,499,139 $2,108,884
=========== ==========

The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.






EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


FEBRUARY 28,
2002 2003
---- ----
LIABILITIES AND SHAREHOLDER'S EQUITY

CURRENT LIABILITIES:

Accounts payable $ 38,995 $ 39,526
Current maturities of long-term debt 7,933 14,912
Current portion of TV program rights payable 27,507 27,424
Accrued salaries and commissions 7,852 14,247
Accrued interest 14,068 11,641
Deferred revenue 16,392 15,805
Other 6,408 6,979
Credit facility debt to be repaid with proceeds
of assets held for sale 135,000 -
Liabilities associated with assets held for sale 63 -
------- -------
Total current liabilities 254,218 130,534

CREDIT FACILITY AND SENIOR SUBORDINATED
DEBT, NET OF CURRENT PORTION 1,117,000 996,945
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION 6,949 13,087
TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION 40,551 32,044
OTHER NONCURRENT LIABILITIES 26,966 17,786
DEFERRED INCOME TAXES 108,988 40,070
------- -------
Total liabilities 1,554,672 1,230,466
--------- ---------

COMMITMENTS AND CONTINGENCIES (NOTE 9)

SHAREHOLDER'S EQUITY:

Common stock, no par value; authorized, issued and
outstanding 1,000 shares at February 28, 2002 and 2003 1,027,221 1,027,221
Additional paid-in capital 8,108 95,582
Accumulated deficit (78,477) (227,026)
Accumulated other comprehensive income (12,385) (17,359)
------- -------
Total shareholder's equity 944,467 878,418
------- -------

Total liabilities and shareholder's equity $ 2,499,139 $ 2,108,884
=========== ===========




The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.






EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE THREE-YEARS ENDED FEBRUARY 28, 2003
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


Common Stock
-------------------
Accumulated
Additional Other Total
Shares Paid-in Accumulated Comprehensive Shareholder's
Outstanding Amount Capital Deficit Income Equity
----------- ------ ------- ------- ------ ------

BALANCE, FEBRUARY 29, 2000 1000 $ 805,308 $ - $ (27,482) $ (1,459) $ 776,367

Distrubutions to parent - - - (8,984) - (8,984)
Contributions from parent - 25,491 - - - 25,491

Comprehensive Income:
Net income (loss) - - - 13,736 -
Cumulative translation adjustment - - - - 861
Total comprehensive income - - - - - 14,597
----- --------- ----- ------- ------- -------
BALANCE, FEBRUARY 28, 2001 1,000 830,799 - (22,730) (598) 807,471
----- --------- ----- ------- ------- -------

Accrued dividend at reorganization - - - 1,123 - 1,123
Distrubutions to parent - - - (8,984) - (8,984)
Contributions from parent - 196,422 8,108 - - 204,530

Comprehensive Income:
Net income (loss) - - - (47,886) -
Cumulative translation adjustment - - - - (6,303)
Net unrealized loss on hedged derivatives - - - - (5,484)
Total comprehensive income - - - - - (59,673)
----- --------- ----- ------- ------- -------
BALANCE, FEBRUARY 28, 2002 1,000 1,027,221 8,108 (78,477) (12,385) 944,467
----- --------- ----- ------- ------- -------

Distrubutions to parent - - - (8,984) - (8,984)
Contributions from parent - 87,474 - - 87,474

Comprehensive Income:
Net income (loss) - - - (139,565) -
Cumulative translation adjustment - - - - (8,079)
Net unrealized loss on hedged derivatives - - - - 3,105
Total comprehensive income - - - - - (144,539)
----- --------- ----- ------- ------- -------
BALANCE, FEBRUARY 28, 2003 1,000 $ 1,027,221 $ 95,582 $ (227,026) $ (17,359) $ 878,418
===== =========== ======== ========== ========= =========




The accompanying notes to consolidated financial statements are an integral part
of these statements.







EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)


FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----
OPERATING ACTIVITIES:

Net income (loss) $ 13,736 $ (47,886) $ (139,565)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities -
Extraordinary item - 1,084 2,889
Cumulative effect of accounting change - - 167,400
Depreciation and amortization 94,454 124,335 68,193
Provision for bad debts 3,713 4,005 4,102
Provision (benefit) for deferred income taxes 15,810 (17,833) 22,366
Noncash compensation 5,400 9,095 22,528
Gain on sale of assets - - (9,313)
Gain on exchange of assets (22,000) - -
Impairment of asset - 9,063 -
Other 1,464 (5,928) (8,079)
Changes in assets and liabilities -
Accounts receivable (9,316) (2,118) (11,207)
Prepaid expenses and other current assets (24,627) 5,127 (3,392)
Other assets 12,099 (5,952) (4,182)
Accounts payable and accrued liabilities 15,341 (2,709) 804
Deferred revenue 569 (963) (587)
Other liabilties (19,772) (1,927) (17,768)
------- ------ -------
Net cash provided by operating activities 86,871 67,393 94,189
------- ------ -------

INVESTING ACTIVITIES:
Purchases of property and equipment (26,225) (30,135) (30,549)
Disposal of property and equipment - 1,719 2,354
Cash paid for acquisitions (1,060,681) (140,746) -
Proceeds from sale of assets, net - - 135,500
Deposits on acquisitions and other (23,849) (5,943) (1,004)
------- ------ -------
Net cash provided by (used in) investing activities (1,110,755) (175,105) 106,301
---------- -------- -------

FINANCING ACTIVITIES:
Payments on long-term debt (1,051,549) (133,000) (260,101)
Proceeds from long-term debt 2,128,388 5,000 15,000
Distributions to parent (8,984) (8,984) (8,984)
Contributions from parent 19,653 195,753 66,066
Payments for debt related costs (21,095) (4,594) (2,754)
------- ------ -------
Net cash provided by (used in) financing activities 1,066,413 54,175 (190,773)
--------- ------ --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,529 (53,537) 9,717

CASH AND CASH EQUIVALENTS:
Beginning of period 17,370 59,899 6,362
------- ------ -------
End of period $ 59,899 $ 6,362 $ 16,079
======== ======= ========



The accompanying notes to consolidated financial statements are an integral part
of these statements.





EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED FEBRUARY 28,
2001 2002 2003
---- ---- ----
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest $ 58,362 $ 99,824 $ 77,090
Income taxes 550 1,281 887

ACQUISITION OF LOS ANGELES MAGAZINE:
Fair value of assets aquired $ 39,520
Cash paid 36,827
------
Liabilities recorded $ 2,693
=======

ACQUISITION OF KKFR-FM AND KXPK-FM:
Fair value of assets aquired $110,210
Cash paid 109,052
-------
Liabilities recorded $ 1,158
=======

ACQUISITION OF TELEVISION PROPERTIES
FROM LEE ENTERPRISES, INC.:
Fair value of assets aquired $633,639
Cash paid 582,994
-------
Liabilities recorded $ 50,645
=======

ACQUISITION OF KIHT-FM, KFTK-FM, KPNT-FM
WVRV-FM, WIL-FM, AND WRTH-AM:
Fair value of assets aquired $230,891
Cash paid 230,891
-------
Liabilities recorded $ -
=======

EXCHANGE OF ASSETS FOR KZLA-FM:
Fair value of assets aquired $185,000
Basis in assets echanged 163,000
Gain on exchange of assets 22,000
Cash paid -
-------
Liabilities recorded $ -
=======

ACQUISITION OF KALC-FM:
Fair value of assets aquired $100,917
Cash paid 100,917
-------
Liabilities recorded $ -
=======

ACQUISITION OF KKLT-FM, KTAR-AM, AND KMVP-AM:
Fair value of assets aquired $ 160,746
Cash paid, net of deposit 140,746
Deposit paid in June 2000 20,000
---- ------
Liabilities recorded $ -
=======


The accompanying notes to consolidated financial statements are an integral part
of these statements.






EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
AND EMMIS OPERATING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation

The following discussion pertains to Emmis Communications Corporation
("ECC") and its subsidiaries (collectively, "Emmis", the "Company", or "We") and
to Emmis Operating Company and its subsidiaries (collectively "EOC"). EOC became
a wholly owned subsidiary of ECC in connection with the Company's reorganization
(see Note 1c. below) on June 22, 2001. Unless otherwise noted, all disclosures
contained in these Notes to Consolidated Financial Statements apply to Emmis and
EOC. Emmis' foreign subsidiaries report on a fiscal year ending December 31,
which Emmis consolidates into its fiscal year ending February 28. All
significant intercompany balances and transactions have been eliminated.

b. Organization

Emmis Communications Corporation is a diversified media company with radio
broadcasting, television broadcasting and magazine publishing operations. Emmis
operates eighteen FM radio stations and three 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 Phoenix, St. Louis, Indianapolis and Terre
Haute, Indiana. The fifteen television stations Emmis operates 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 one with WB. Emmis Communications Corporation also publishes Texas
Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati, Country
Sampler, and Country Marketplace magazines, and has a 59.5% interest in a
national radio station in Hungary (Slager Radio), a 75% interest in one FM and
one AM radio station in Buenos Aires, Argentina (Votionis), and engages in
certain businesses ancillary to broadcasting, such as broadcast tower leasing.

c. Reorganization

On June 22, 2001, ECC transferred all of its assets and substantially all
of its liabilities, including its credit facility and its outstanding senior
subordinated notes, to EOC, a newly formed, wholly-owned subsidiary in exchange
for 1,000 shares of no par value common stock. As a result, effective June 22,
2001, EOC became the only direct subsidiary of ECC and ECC became a holding
company that conducts its business operations through EOC and its subsidiaries.
ECC remains the issuer of the Class A, Class B and Class C common stock and the
convertible preferred stock, and is the obligor of the senior discount notes.
However, EOC is the obligor of the senior subordinated notes and the borrower
under the credit facility. Pursuant to the terms of the senior subordinated
notes, EOC is required to file with the SEC periodic reports on Forms 10-Q, 10-K
and 8-K as if EOC were required to do so pursuant to SEC rules and regulations.
EOC's financial statements are presented herein for all periods required as if
EOC had existed at the beginning of the earliest period presented because the
corporate reorganization was accounted for as a reorganization of entities under
common control.

Substantially all of ECC's business is conducted through its subsidiaries.
The credit facility and senior subordinated notes indenture contain certain
provisions that may restrict the ability of ECC's subsidiaries to transfer funds
to ECC in the form of cash dividends, loans or advances. See the accompanying
financial statements of EOC and its subsidiaries for the net assets of the
restricted subsidiaries.

d. Revenue Recognition

Broadcasting revenue is recognized as advertisements are aired. Publication
revenue is recognized in the month of delivery of the publication.





e. Allowance for Doubtful Accounts

A provision for doubtful accounts is recorded based on management's
judgement of the collectibility of receivables. When assessing the
collectibility of receivables, management considers, among other things,
historical loss activity and existing economic conditions. The activity in the
allowance for doubtful accounts during the years ended February 2001, 2002 and
2003 was as follows:

Balance At Balance
Beginning At End
Of Year Provision Write-Offs Of Year
------- --------- ---------- -------
Year ended February 28, 2001 $ 1,924 $ 3,713 $ (3,435) $ 2,202
Year ended February 28, 2002 2,202 4,005 (3,407) 2,800
Year ended February 28, 2003 2,800 4,102 (3,662) 3,240


f. Television Programming

Emmis has agreements with distributors for the rights to television
programming over contract periods which generally run from one to five years.
Each contract is recorded as an asset and a liability at an amount equal to its
gross contractual commitment when the license period begins and the program is
available for its first showing. The portion of program contracts which become
payable within one year is reflected as a current liability in the accompanying
consolidated balance sheets.

The rights to program materials are reflected in the accompanying
consolidated balance sheets at the lower of unamortized cost or estimated net
realizable value. Estimated net realizable values are based upon management's
expectation of future advertising revenues, net of sales commissions, to be
generated by the program material. Amortization of program contract costs is
computed under either the straight-line method over the contract period or based
on usage, whichever yields the greater amortization for each program on a
monthly basis. Program contract costs that management expects to be amortized in
the succeeding year are classified as current assets. Program contract
liabilities are typically paid on a scheduled basis and are not affected by
adjustments for amortization or estimated net realizable value. Certain program
contracts provide for the exchange of advertising air time in lieu of cash
payments for the rights to such programming. These contracts are recorded as the
programs are aired at the estimated fair value of the advertising air time given
in exchange for the program rights.

g. Time Brokerage Fees

The Company generally enters into time brokerage agreements in connection
with acquisitions, pending regulatory approval of transfer of license assets.
Under the terms of these agreements, the Company makes specified periodic
payments to the owner-operator in exchange for the grant to the Company of the
right to program and sell advertising of a specified portion of the station's
inventory of broadcast time. The Company records revenues and expenses
associated with the portion of the station's inventory of broadcast time it
manages. Nevertheless, as the holder of the FCC license, the owner-operator
retains control and responsibility for the operation of the station, including
responsibility over all programming broadcast on the station.

Included in the accompanying consolidated statements of operations for the
years ended February 2001 and 2002 are time brokerage fees of $7.3 million and
$0.5 million, respectively.

h. Noncash Compensation

Noncash compensation includes compensation expense associated with stock
options granted, the issuance of restricted common stock, common stock
contributed to the Company's Profit Sharing Plan, and common stock issued to
employees at our discretion. The Company has adopted the disclosure-only
provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation."

In December 2001, Emmis instituted a 10% pay cut for substantially all of
its non-contract employees and also began a stock compensation program under its
2001 Equity Incentive Plan. All Emmis employees who were affected by the pay cut
were automatically eligible to participate in the stock compensation program and
all other employees are eligible to participate in the program by taking a
voluntary pay cut. Each participant in the program could elect to receive the
portion of their compensation that was cut in the form of payroll stock that was
issued every two weeks or in the form of restricted stock that vested and was
issued after the end of the award year in January 2003. The payroll stock was
awarded based on the fair market value of Emmis' Class A Common Stock on the



date it is issued. The restricted stock was awarded based on a discount off the
initial value of Emmis' Class A Common Stock. During the years ended February
2002 and 2003, the stock compensation program reduced cash compensation expense
by approximately $3.1 million and $16.5 million respectively, but noncash
compensation increased by the same amount. We issued approximately 0.7 million
shares during the first award year. The program has been extended through
December 2003, but no formal decisions have been made regarding its status
beyond December 2003.

i. Restructuring Fees

In fiscal 2001 and 2002, Emmis incurred restructuring fees of $2,057 and
$768, respectively. The fiscal 2001 restructuring fees reflect professional fees
associated with the evaluation of structural alternatives. The fiscal 2002
restructuring fees principally consists of severance and related costs
associated with centralizing certain technical functions of the television
division.

j. Cash and Cash Equivalents

Emmis considers time deposits, money market fund shares, and all highly
liquid debt instruments with original maturities of three months or less to be
cash equivalents.

k. Property and Equipment

Property and equipment are recorded at cost. Depreciation is generally
computed by the straight-line method over the estimated useful lives of the
related assets which are 31.5 years for buildings, not more than 32 years or the
life of the lease, whichever is lower for leasehold improvements, and 5 to 7
years for broadcasting equipment, office equipment and automobiles. Maintenance,
repairs and minor renewals are expensed; improvements are capitalized. On a
continuing basis, the Company reviews the carrying value of property and
equipment for impairment in accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." If events or changes in
circumstances were to indicate that an asset carrying value may not be
recoverable, a write-down of the asset would be recorded through a charge to
operations. Depreciation expense for the years ended February 2001, 2002, and
2003 was $22.1 million, $34.3 million, and $36.3 million, respectively.

l. Intangible Assets

Intangible assets are recorded at cost. The cost of the broadcast license
for Slager Radio is being amortized over the seven year initial term of the
license. The cost of the broadcast license for the two stations in Buenos Aires,
Argentina is being amortized over the twenty-three year term of the license.
Other definite-lived intangibles are amortized using the straight-line method
over varying periods, not in excess of 10 years. Effective March 1, 2002, we
ceased amortization of goodwill and FCC licenses in connection with our adoption
of SFAS No. 142, "Goodwill and Other Intangible Assets" (See Note 7). FCC
licenses are renewed every eight years for a nominal amount and historically all
of our FCC licenses have been renewed at the end of their respective eight-year
periods. Since we expect that all of our FCC licenses will continue to be
renewed in the future, we believe they have indefinite lives.

Subsequent to the acquisition of an intangible asset, Emmis evaluates
whether later events and circumstances indicate the remaining estimated useful
life of that asset may warrant revision or that the remaining carrying value of
such an asset may not be recoverable in accordance with SFAS No. 142, "Goodwill
and other Intangible Assets".

In fiscal 2001, the Company determined an intangible balance related to
WTLC-AM was impaired and as a result incurred a $2.0 million impairment charge
to record the intangible asset at its fair value. This impairment charge is
reflected in impairment loss and other in the accompanying consolidated
statements of operations. This station was sold in April 2001.

In fiscal 2002, the Company determined an intangible balance related to
KALC-FM was impaired and as a result incurred a $9.1 million impairment charge
to record the intangible asset at its fair value. This impairment charge is
reflected in impairment loss and other in the accompanying consolidated
statements of operations. This station was sold in May 2002.

m. Assets held for sale

Effective May 1, 2002 Emmis completed the sale of substantially all of the
assets of radio station KALC-FM in Denver, Colorado to Entercom Communications
Corporation for $88.0 million. Also effective May 1, 2002, Emmis completed the
sale of substantially all of the assets of radio station KXPK-FM in Denver,
Colorado to Entravision Communications Corporation for $47.5 million. The
proceeds from the sale of these stations were used to repay outstanding
obligations under the credit facility. As of February 28, 2002, the net carrying
amount of the assets held for sale was $123.4 million.


Combined revenues of the assets held for sale were approximately $11.9
million for the year ended February 2002. Combined operating expenses of the
assets held for sale were approximately $8.6 million for the year ended February
2002. Combined depreciation and amortization of the assets held for sale were
approximately $3.6 million for the year ended February 2002.

n. Advertising and Subscription Acquisition Costs

Advertising and subscription acquisition costs are expensed the first time
the advertising takes place, except for certain direct-response advertising
related to the identification of new magazine subscribers, the primary purpose
of which is to elicit sales from customers who can be shown to have responded
specifically to the advertising and that results in probable future economic
benefits. These direct-response advertising costs are capitalized as assets and
amortized over the estimated period of future benefit, ranging from six months
to two years subsequent to the promotional event. As of February 28, 2002 and
2003, we had approximately $1.2 million and $1.6 million, respectively, in
direct-response advertising costs capitalized as assets. On an interim basis,
the Company defers major advertising campaigns for which future benefits can be
demonstrated. These costs are amortized over the shorter of the period benefited
or the remainder of the fiscal year. Advertising expense for the years ended
February 2001, 2002 and 2003 was $23.9 million, $15.0 million and $19.5 million,
respectively.

o. Investments

Emmis has a 50% ownership interest (approximately $5,114 as of February 28,
2003 and 2002) in a partnership in which the sole asset is land on which a
transmission tower is located. The other owner has voting control of the
partnership. Emmis has a 25% ownership interest (approximately $2,060 and $2,627
as of February 28, 2003 and 2002, respectively) in a company that operates a
tower site in Portland, Oregon. Emmis has a 51% ownership interest
(approximately $175 and $740 as of February 28, 2003 and 2002, respectively) in
a company that operates crafting stores, but Emmis does not control the
operations of the entity. These investments are accounted for using the equity
method of accounting. Emmis owns less than 3% (approximately $970 as of February
28, 2003 and 2002) of an over-the-air digital content distributor. This
investment is accounted for using the cost method of accounting. During fiscal
2001, Emmis reduced the carrying value of its investment in BuyItNow.com from
$5.0 million to zero as the decline in the value of the investment was deemed to
be other than temporary. To determine the fair value of BuyItNow.com, we
analyzed the public equity values of its competitors. This expense is reflected
in other income in the accompanying consolidated statements of operations.

In fiscal 2003, the Company and other partners in the local media internet
venture (LMIV) agreed to dissolve the joint venture. Consequently, in addition
to recording our share of LMIV's losses for the year, the Company recorded a
$2.1 million charge to write off our investment in LMIV. This charge is
reflected in loss from unconsolidated affiliates in the accompanying
consolidated statements of operations.

p. Deferred Revenue and Barter Transactions

Deferred revenue includes deferred magazine subscription revenue and
deferred barter revenue. Magazine subscription revenue is recognized when the
publication is shipped. Barter transactions are recorded at the estimated fair
value of the product or service received. Broadcast revenue from barter
transactions is recognized when commercials are broadcast or publication is
delivered. The appropriate expense or asset is recognized when merchandise or
services are used or received. Barter revenues for the years ended February
2001, 2002, and 2003 were $12.0 million, $15.8 million, and $15.3 million,
respectively, and barter expenses were, $12.0 million, $15.2 million, and $16.1
million, respectively.

q. Foreign Currency Translation

The functional currency of Slager Radio is the Hungarian forint. Slager
Radio's balance sheet has been translated from forints to the U.S. dollar using
the current exchange rate in effect at the subsidiary's balance sheet date
(December 31). Slager Radio's results of operations have been translated using
an average exchange rate for the period. The translation adjustment resulting
from the conversion of Slager Radio's financial statements was ($861), ($754),
and $2,474 for the years ended February 2001, 2002, and 2003, respectively. This
adjustment is reflected in shareholders' equity in the accompanying consolidated
balance sheets.

The functional currency of the two stations in Argentina is the Argentinean
peso, which until January 2002 was tied to the U.S. dollar through the Argentine
government's convertibility plan. In January 2002, the Argentine government



allowed the peso to devalue and trade against the U.S. dollar independently.
These two stations' balance sheets have been translated from pesos to U.S.
dollars using the exchange rate in effect at the subsidiary's balance sheet
date. The results of operations have been translated using an average exchange
rate for the period. The translation adjustment resulting from the conversion of
their financial statements was $7,057 and $5,605 for the years ended February
2002 and 2003, respectively. This adjustment is reflected in shareholders'
equity in the accompanying consolidated balance sheets.

r. Earnings Per Share

Emmis

Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share", requires dual presentation of basic and diluted earnings per share
("EPS") on the face of the income statement for all entities with complex
capital structures. Basic EPS is computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding
for the period (46,869,050, 47,334,038 and 53,014,268 shares for the years ended
February 2001, 2002, and 2003, respectively). Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted. Potentially dilutive securities at February 2001,
2002, and 2003 consisted of stock options and the 6.25% Series A cumulative
convertible preferred stock. The conversion of the preferred stock is not
included in the calculation of diluted net income per common share for each of
the three years ended February 28, 2003 as the effect of these conversions would
be antidilutive. Additionally, the conversion of stock options is not included
in the calculation of diluted net income per common share for the years ended
February 28, 2002 and 2003 as the effect of their conversion would be
antidilutive. Weighted average common equivalent shares outstanding for the
period for purposes of computing diluted EPS are 47,940,265, 47,334,038 and
53,014,268 for the years ended February 2001, 2002, and 2003, respectively.
Excluded from the calculation of diluted net income per share are 3.7 million
weighted average shares that would result from the conversion of preferred
shares for the years ended February 2001, 2002, and 2003, respectively. In the
year ended February 28, 2001, approximately 0.7 million options were excluded
from the calculation of diluted net income per share as the effect of their
conversion would be antidilutive.

EOC

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

s. Estimates

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses in the financial statements and in
disclosures of contingent assets and liabilities. Actual results could differ
from those estimates.

t. Fair Value of Financial Instruments

The carrying amounts of cash, accounts receivable, and accounts payable
approximate fair value because of the short maturity of these financial
instruments. The carrying amounts of interest rate swaps are recorded at their
fair value of $4.3 million, as of February 28, 2003 and are included in other
noncurrent liabilities in the accompanying consolidated balance sheets. The
cumulative amount of change in fair value of interest rate swaps is $2.4
million, net of tax, and is recorded in accumulated other comprehensive income
in the accompanying consolidated balance sheets. Except for the senior
subordinated notes and senior discount notes, the carrying amounts of long-term
debt approximate fair value due to the variable interest rate on such debt. On
February 28, 2003 and 2002, the fair value of the senior subordinated notes was
approximately $308.8 million and $308.3 million, respectively, and the fair
value of the senior discount notes was approximately $234.6 million and $268.3
million, respectively. Fair value estimates are made at a specific point in
time, based on relevant market information about the financial instrument.

u. Derivative Financial Instruments

On March 1, 2001, Emmis adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 138, "Accounting for
Derivative Instruments and Hedging Activities." These statements establish
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts. These statements require
that every derivative instrument be recorded in the balance sheet as either an
asset or a liability measured at its fair value. Changes in the fair value of
derivatives are to be recorded each period in earnings or comprehensive income,
depending on whether the derivative is designated and effective as part of a
hedged transaction, and on the type of hedge transaction. Gains or losses on



derivative instruments reported in the other comprehensive income must be
reclassified as earnings in the period in which earnings are affected by the
underlying hedged item, and the ineffective portion of all hedges must be
recognized in earnings in the current period. These standards result in
additional volatility in reported assets, liabilities, earnings and other
comprehensive income. SFAS No. 133 further requires that the fair value and
effectiveness of each hedging instrument must be measured quarterly. The result
of each measurement could result in fluctuations in reported assets,
liabilities, other comprehensive income and earnings as these changes in fair
value and effectiveness are recorded to the financial statements.

SFAS No. 133 requires that as of the date of initial adoption the
difference between the fair value of the derivative instruments to be recorded
on the balance sheet and the previous carrying amount of those derivatives be
reported in net income or other comprehensive income, as appropriate, as the
cumulative effect of a change in accounting principle in accordance with APB 20
"Accounting Changes." On March 1, 2001, Emmis recorded the effect of the
adoption of SFAS No. 133 which resulted in an immaterial impact to the results
of operations and the financial position of Emmis. See footnote 4 for discussion
of the interest rate swap agreements in effect during fiscal 2002 and 2003 and
at February 28, 2003.

v. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations." SFAS No. 141 addresses financial accounting
and reporting for business combinations and supersedes Accounting Principle
Board ("APB") Opinion No. 16, "Business Combinations" and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises." SFAS No.
141 is effective for all business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interest method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. SFAS No. 141 also changes the criteria to recognize
intangible assets apart from goodwill. The Company adopted this Statement on
July 1, 2001. The Company has historically used the purchase method to account
for all business combinations and adoption of this Statement did not have a
material impact on the Company's financial position, cash flows or results of
operations.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." See Note 7 for a discussion of SFAS No. 142.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" that applies to legal obligations associated with the
retirement of a tangible long-lived asset that results from the acquisition,
construction, development and/or the normal operation of a long-lived asset.
Under this standard, guidance is provided on measuring and recording the
liability. Adoption of this Statement by the Company will be effective on March
1, 2003. The Company does not believe that the adoption of this Statement will
materially impact the Company's financial position, cash flows or results of
operations.

Effective March 1, 2002, the Company adopted SFAS No. 144 "Accounting for
the Impairment or Disposal of Long-Lived Assets" which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
While SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," it removes
certain assets such as deferred tax assets, goodwill and intangible assets not
being amortized from its scope and retains the requirements of SFAS No. 121
regarding the recognition of impairment losses on other long-lived assets held
for use. SFAS No. 144 also supersedes the accounting and reporting provisions of
APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring events and Transactions" for the disposal of a segment of
a business. However, SFAS No. 144 retains the requirement in Opinion No. 30 to
report separately discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment,
or in a distribution to owners) or is classified as held for sale. The adoption
of this statement did not have a material impact on the Company's financial
position, cash flows or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4,
44, and 64, Amendment of SFAS No. 13, and Technical Corrections". 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. Adoption of
this Statement by the Company will be effective on March 1, 2003. The effects of
this pronouncement will result in future gains and losses related to debt
transactions to be classified in income from continuing operations. In addition,
we are required to reclassify all of the extraordinary items related to debt
transactions recorded in prior periods, including those recorded in fiscal 2003,
to income from continuing operations.


In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 supersedes Emerging
Issues Task Force Issue No. 94-3. SFAS No. 146 requires that the liability for a
cost associated with an exit or disposal activity be recognized when the
liability is incurred, not at the date of an entity's commitment to an exit or
disposal plan. The provisions of SFAS No. 146 are effective for exit or disposal
activities initiated after December 31, 2002. The Company does not anticipate
that the adoption of SFAS No. 146 will have a material impact on its
consolidated financial position, results of operations or cash flows.

As of December 2002, we adopted SFAS No. 148, "Accounting for Stock-Based
Compensation-Transaction and Disclosure, an Amendment of SFAS No. 123." SFAS No.
148 revises the methods permitted by SFAS No. 123 of measuring compensation
expense for stock-based employee compensation plans. We use the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, as permitted
under SFAS No. 123. Therefore, this change did not have a material effect on our
financial statements. SFAS No. 148 requires us to disclose pro forma information
related to stock-based compensation, in accordance with SFAS No. 123, on a
quarterly basis in addition to the current annual basis disclosure. We will
report the pro forma information on an interim basis beginning with our May 31,
2003 Form 10-Q.

w. Pro Forma Information Related To Stock-Based Compensation

As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method prescribed by Accounting
Principles Board Option No. 25, "Accounting for Stock Issued to Employees," and
provides pro forma disclosures of net income and earnings per share as if the
fair value-based method prescribed by SFAS No. 123 had been applied in measuring
compensation expense.

Had compensation cost for the Company's 2001, 2002 and 2003 grants for
stock-based compensation plans been determined consistent with SFAS No. 123, the
Company's net income (loss) available to common shareholders for these years
would approximate the pro forma amounts below (in thousands, except per share
data):

Year Ended February 28,
2001 2002 2003
---- ---- ----
Net Income (Loss) Available to
Common Shareholders:
As Reported $ 4,752 $ (73,092) $ (173,452)
Pro Forma $ 113 $ (85,760) $ (179,695)

Basic EPS:
As Reported $ 0.10 $ (1.54) $ (3.27)
Pro Forma $ - $ (1.81) $ (3.39)

Diluted EPS:
As Reported $ 0.10 $ (1.54) $ (3.27)
Pro Forma $ - $ (1.81) $ (3.39)


Because the fair value method of accounting has not been applied to options
prior to March 1, 1995, the resulting pro forma compensation cost may not be
representative of that to be expected in future years. The fair value of each
option granted is estimated on the date of grant using the Black-Scholes option
pricing model utilizing the following weighted average assumptions:

Year Ended February 28,
2001 2002 2003
---- ---- ----
Risk-Free Interest Rate: 4.54% 5.41% 3.86%
Expected Dividend Yield: 0% 0% 0%
Expected Life (Years): 6.4 8.3 8.6
Expected Volatility: 56.79% 57.67% 58.00%






x. Reclassifications

Certain reclassifications have been made to the prior years financial
statements to be consistent with the February 28, 2003 presentation.

2. COMMON STOCK

Emmis has authorized 170,000,000 shares of Class A common stock, par value
$.01 per share, 30,000,000 shares of Class B common stock, par value $.01 per
share, and 30,000,000 shares of Class C common stock, par value $.01 per share.
The rights of these three classes are essentially identical except that each
share of Class A common stock has one vote with respect to substantially all
matters, each share of Class B common stock has 10 votes with respect to
substantially all matters, and each share of Class C common stock has no voting
rights with respect to substantially all matters. Class B common stock is owned
by the principal shareholder (Jeffrey H. Smulyan). All shares of Class B common
stock convert to Class A common stock upon sale or other transfer to a party
unaffiliated with the principal shareholder. At February 28, 2002 and 2003, no
shares of Class C common stock were issued or outstanding. The financial
statements presented reflect the issuance of Class A and Class B common stock.

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 obligations under our
credit facility. The remainder was invested, and in July 2002 distributed to ECC
and used to redeem approximately 22.6% of ECC's outstanding 12 1/2% senior
discount notes (see Note 4).

3. PREFERRED STOCK

Emmis has authorized 10,000,000 shares of preferred stock, which may be
issued with such designations, preferences, limitations and relative rights as
Emmis' Board of Directors may authorize.

Emmis has 2.875 million shares of 6.25% Series A cumulative convertible
preferred stock outstanding, which have a liquidation preference of $50 per
share and a par value of $.01 per share. Each preferred share is convertible at
the option of the holder into 1.28 shares of Class A common stock, subject to
certain events. Dividends are cumulative and payable quarterly in arrears on
January 15, April 15, July 15, and October 15 of each year at an annual rate of
$3.125 per preferred share.

Beginning on October 15, 2002, and each October 15 thereafter, Emmis may
redeem the preferred stock for cash at the following redemption premiums (which
are expressed as a percentage of the liquidation preference per share), plus in
each case accumulated and unpaid dividends, if any, whether or not declared to
the redemption date:


Year Amount
---- --------
2002 103.571%
2003 102.679%
2004 101.786%
2005 100.893%
2006 and thereafter 100.000%


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. While
Emmis had sufficient liquidity to declare and pay the dividends as they become
due, it was not permitted to do so for the October 15, 2001, January 15, 2002,
and April 15, 2002 payments because Emmis' leverage ratio under the senior
discount notes indenture exceeded 8:1 and its leverage ratio under the senior
subordinated notes indenture exceeded 7:1. ECC's board of directors set a record
date for payments, but did not declare the dividends. Instead, a wholly-owned,
unrestricted subsidiary of EOC made a payment of $.78125 per share to each
preferred shareholder of record. This subsidiary was permitted to make the
payments to the preferred shareholders under the senior discount notes and
senior subordinated notes indentures. Currently, Emmis meets its leverage ratio
requirements under both the senior discount notes indenture and the senior
subordinated notes indenture. On July 2, 2002, ECC's board of directors declared
the April 15, 2002 dividend, as well as dividends payable October 15, 2001 and
January 15, 2002, and deemed the obligation to pay each dividend to have been
discharged by the subsidiary's prior payment.






4. CREDIT FACILITY, SENIOR SUBORDINATED NOTES AND SENIOR DISCOUNT NOTES

The credit facility, senior subordinated notes and senior discount notes
were comprised of the following at February 28, 2002 and 2003:

2002 2003
---- ----
Credit Facility
Revolver $ - $ 2,112
Term Note A 398,453 204,786
Term Note B 553,547 500,000
8 1/8% Senior Subordinated Notes Due 2009 300,000 300,000
------- -------
1,252,000 1,006,898
Less: Credit facility debt to be repaid with proceeds
of assets held for sale and current maturities 135,000 9,953
------- -----
EOC total 1,117,000 996,945

12 1/2% Senior Discount Notes Due 2011 226,507 197,844
--------- -------
Emmis total $ 1,343,507 $ 1,194,789
=========== ===========


CREDIT FACILITY

On December 29, 2000 ECC entered into an amended and restated credit
facility for $1.4 billion (consisting of a $320.0 million revolver, a $480.0
million term note A and a $600.0 million term note B). In June 2001, upon
completion of the Company's reorganization (see Note 1c), the Company repaid
$93.0 million of term notes and transferred the credit facility to EOC. The
repayment resulted in the cancellation of a portion of the term notes and the
Company recorded an extraordinary loss of approximately $1.1 million, net of
taxes, related to unamortized deferred debt issuance costs for the year ended
February 28, 2002. During fiscal 2002, EOC repaid and cancelled an additional
$35.0 million in term notes. On November 30, 2001, EOC amended the financial
covenants of its credit facility through November 30, 2002, which, among other
things, reduced total availability under the revolver to $220.0 million and
resulted in the amortization of $1.4 million of deferred debt issuance costs
into interest expense during the year ended February 28, 2002.

In the first quarter of fiscal 2003, we repaid approximately $195.1 million
of credit facility debt with the net proceeds from our Denver radio station
asset sales and 50% of the net proceeds from our April 2002 equity offering. In
connection with the repayment of existing term loans outstanding, the Company
recorded a $2.3 million extraordinary charge, net of taxes of $1.3 million,
relating to the write off of deferred debt fees.

On June 21, 2002, EOC amended its credit facility to (1) issue a $500.0
million new Term B Loan which was used to repay amounts outstanding under the
existing $552.1 million Term B loan, (2) reset financial covenants for the
remaining term of the credit facility, and (3) permit EOC to make a one time
cash distribution to ECC for the purpose of redeeming a portion of its 12 1/2%
senior discount notes. In connection with the repayment of the existing Term B
Loan, the Company recorded a $0.5 million extraordinary charge, net of taxes of
$0.3 million, relating to the write off of deferred debt fees.

The revolver and term note A mature February 28, 2009 and the term note B
matures August 31, 2009. Net deferred debt costs of approximately $15.8 million
and $20.0 million, respectively, relating to the credit facility are reflected
in the accompanying consolidated balance sheets as of February 28, 2003 and
2002, and are being amortized over the life of the credit facility as a
component of interest expense.

Prior to the existing credit facility, EOC entered into a bridge financing
arrangement in October 2000 that provided up to $1.0 billion in capacity. The
bridge financing was replaced by the existing credit facility and accordingly
$3.4 million of fees associated with the bridge financing were amortized into
interest expense during the year ended February 28, 2001.

The amended and restated credit facility provides for letters of credit to
be made available to EOC not to exceed $100.0 million. The aggregate amount of
outstanding letters of credit and amounts borrowed under the revolver cannot
exceed the revolver commitment. At February 28, 2003, $1.4 million in letters of
credit were outstanding.






All outstanding amounts under the credit facility bear interest, at the
option of EOC, at a rate equal to the Eurodollar Rate or an alternative base
rate (as defined in the credit facility) plus a margin. The margin over the
Eurodollar Rate or the alternative base rate varies (ranging from 0% to 2.9% and
0.5% to 2.5%), depending on Emmis' ratio of debt to operating cash flow, as
defined in the agreement. The weighted-average interest rate on borrowings
outstanding under the credit facility, including the effects of interest rate
swaps was approximately 4.7% and 6.3% at February 28, 2003 and February 28,
2002, respectively. Interest is due on a calendar quarter basis under the
alternative base rate and at least every three months under the Eurodollar Rate.
The credit facility requires EOC to have fixed interest rates for a two year
period on at least 50% of its total outstanding debt, as defined (including the
senior subordinated debt). After the first two years, this ratio of fixed to
floating rate debt must be maintained if EOC's total leverage ratio, as defined,
is greater than 6:1 at any quarter end. The notional amount of interest rate
protection agreements at February 28, 2003 totaled $230 million. The interest
rate swap agreements, which expire at various dates beginning May 8, 2003 to
February 8, 2004, effectively establish interest rates on the credit facility's
underlying base rate approximating a weighted average rate of 4.76% on the
three-month LIBOR interest rate.

As indicated in footnote 1u., Emmis accounts for interest rate swap
arrangements under SFAS No. 133 as amended by SFAS No. 138. The fair market
value of these swaps at February 28, 2003, was a liability of $4.3 million which
is reflected in the accompanying consolidated balance sheets, with an associated
income tax asset of $1.7 million. As Emmis has designated these interest rate
swap agreements as cash flow hedges and the swaps were highly effective during
the year ended February 28, 2003, the net liability was recorded as a component
of comprehensive income and the ineffectiveness was not material. Interest paid
under these swap arrangements was $3.6 million and $11.0 million for the years
ended February 28, 2002 and 2003, respectively.

The aggregate amount of term notes A and B begin amortizing in December
2003. The annual amortization and reduction schedules for debt outstanding as of
February 28, 2003, are as follows:

SCHEDULED AMORTIZATION/REDUCTION OF CREDIT FACILITY


Term Loan A/
Year Ended Revolver Term Loan B Total
February 28 (29), Amortization Amortization Amortization
----------------- ------------ ------------ ------------
2004 $ 8,703 $ 1,250 $ 9,953
2005 35,838 5,000 40,838
2006 37,886 5,000 42,886
2007 38,909 5,000 43,909
2008 40,957 5,000 45,957
2009 44,605 5,000 49,605
2010 - 473,750 473,750
--------- --------- ---------
Total $ 206,898 $ 500,000 $ 706,898
========= ========= =========


Proceeds from raising additional equity, issuing additional subordinated
debt, or from asset sales, as well as excess cash flow beginning in fiscal 2004,
may be required to repay amounts outstanding under the credit facility. These
mandatory repayment provisions may apply depending on EOC's total leverage
ratio, as defined under the credit facility. Additionally, EOC may reborrow
amounts paid in accordance with these provisions under certain circumstances.

The credit facility contains various financial and operating covenants and
other restrictions with which EOC must comply, including, among others,
restrictions on additional indebtedness, incurrence of liens, engaging in
businesses other than its primary business, paying cash dividends on common
stock, redeeming or repurchasing capital stock of ECC, acquisitions and asset
sales, as well as requirements to maintain certain financial ratios. After
giving effect to the July 2002 amendment, EOC was in compliance with these
covenants at February 28, 2003. The credit facility provides that an event of
default will occur if there is a change of control of ECC, as defined. A change
of control includes, but is not limited to, Jeffrey H. Smulyan ceasing to own,
directly or indirectly, at least 35% of the general voting rights of the capital
stock of ECC. Substantially all of Emmis' assets, including the stock of Emmis'
wholly-owned subsidiaries, are pledged to secure the credit facility.






SENIOR SUBORDINATED NOTES

On February 12, 1999, ECC issued $300 million of 8 1/8% senior subordinated
notes. The senior subordinated notes were sold at 100% of the face amount. In
March 1999, EOC filed an Exchange Offer Registration Statement with the SEC to
exchange the senior subordinated notes for new series B notes registered under
the Securities Act. The terms of the series B notes are identical to the terms
of the senior subordinated notes. In June 2001, ECC transferred the senior
discount notes to EOC as part of the company's reorganization (see Note 1c).

On or after March 15, 2004 and until March 14, 2007, the notes may be
redeemed at the option of EOC in whole or in part at prices ranging from
104.063% to 101.354% plus accrued and unpaid interest. On or after March 15,
2007, the notes may be redeemed at 100% plus accrued and unpaid interest. Upon a
change of control (as defined), EOC is required to make an offer to purchase the
notes then outstanding at a purchase price equal to 101% plus accrued and unpaid
interest. Interest on the notes is payable semi-annually. The notes have no
sinking fund requirements and are due in full on March 15, 2009.

The notes are guaranteed by certain subsidiaries of EOC and expressly
subordinated in right of payment to all existing and future senior indebtedness
(as defined) of EOC. The notes will rank pari passu with any future senior
subordinated indebtedness (as defined) and senior to all subordinated
indebtedness (as defined) of EOC.

The indenture relating to the notes contains covenants with respect to EOC
which include limitations of indebtedness, restricted payments (including
preferred stock dividend payments, see Note 3), transactions with affiliates,
issuance and sale of capital stock of restricted subsidiaries, sale/leaseback
transactions and mergers, consolidations or sales of substantially all of EOC's
assets. EOC was in compliance with these covenants at February 28, 2003.

SENIOR DISCOUNT NOTES

On March 27, 2001, Emmis received $202.6 million of proceeds from the
issuance of senior discount notes due 2011, less approximately $12.0 million of
debt issuance costs. The notes, for which ECC is the obligor, accrete interest
at a rate of 12.5% per year, compounded semi-annually to an aggregate principal
amount of $286.3 million on March 15, 2006, after considering the July 2002
redemption. Commencing on September 15, 2006, interest is payable in cash on
each March 15 and September 15, with the aggregate principal amount of $286.3
million due on March 15, 2011. The notes have no sinking fund requirement. A
portion of the net proceeds was used to fund the acquisition of three radio
stations in Phoenix, Arizona and the remaining net proceeds ($93.0 million) were
placed in escrow. In June 2001, upon completion of the Company's reorganization
(see Note 1c), the proceeds held in escrow were released and used to reduce
outstanding borrowings under the credit facility.

On July 1, 2002, ECC redeemed approximately 22.6% of its senior discount
notes. Approximately $60.1 million of the proceeds from the Company's April 2002
equity offering were used to repay approximately $53.4 million of the carrying
value of the discount notes at July 1, 2002 and pay approximately $6.7 million
for a redemption premium. The redemption premium and approximately $1.6 million
of deferred debt fees related to the discount notes, net of taxes of $0.8
million, were recorded as an extraordinary charge in the year ended February 28,
2003.

Prior to March 15, 2004, the Company may, at its option, use the net cash
proceeds of one or more Public Equity Offerings (as defined), to redeem up to an
additional 12.4% of the aggregate principal amount of the notes at a redemption
price equal to 112.5% plus accrued and unpaid interest, provided that at least
$240.5 million of the aggregate principal amount at maturity of the notes
originally issued remains outstanding after such redemption. Additionally, any
time prior to March 15, 2006, the Company may redeem all or part of the notes at
a redemption price equal to 100% of the accreted value (as defined) of the notes
plus the applicable premium (as defined) as of, and liquidating damages (as
defined), if any, to the date of redemption. On or after March 15, 2006 and
until March 14, 2009, the notes may be redeemed at the option of the Company in
whole or in part at prices ranging from 106.25% to 102.083% plus accrued and
unpaid interest. On or after March 15, 2009, the notes may be redeemed at 100%
plus accrued and unpaid interest. Upon a change of control (as defined), the
Company is required to make an offer to purchase the notes then outstanding.
Prior to March 15, 2006, the purchase price will be 101% of the accreted value
of the notes. On or after March 15, 2006, the purchase price will be 101% of the
outstanding principal amount of the notes plus accrued and unpaid interest.

In June 2001, ECC filed an Exchange Offer Registration Statement with the
SEC to exchange the senior discount notes for new senior discount notes
registered under the Securities Act. The terms of the new senior discount notes
are identical to the terms of the senior discount notes they replaced.


The notes are unsecured obligations of ECC and will rank pari passu with
all future senior indebtedness (as defined) and senior in right of payment to
future subordinated indebtedness (as defined). The notes are subordinated to all
indebtedness and liabilities (as defined) of ECC's subsidiaries.

The indenture relating to the notes contains covenants with respect to the
Company which include limitations of indebtedness, restricted payments
(including preferred stock dividend payments, see Note 3), transactions with
affiliates, issuance and sale of capital stock of restricted subsidiaries, and
mergers, consolidations or sales of substantially all of the Company's assets.
The Company was in compliance with these covenants at February 28, 2003.


5. OTHER LONG-TERM DEBT

Other long-term debt was comprised of the following at February 28, 2002
and 2003:

2002 2003
---- ----
Hungary:
License Obligation $ 11,285 $ 13,363
Bonds Payable 2,261 3,099
Notes Payable 659 1,277
Other 677 307
------ ------
Total Other Long-Term Debt 14,882 18,046
Less: Current Maturities 7,933 4,959
------ ------
Other Long-Term Debt, Net of
Current Maturities $ 6,949 $ 13,087
======= ========



Subsequent to the license restructuring completed in December 2002, the
license obligation is comprised of the original obligation due in November 2004
and five additional equal annual installments that will commence in November
2005 and end in November 2009. The original obligation is non-interest bearing;
however, in accordance with the license purchase agreement, a Hungarian cost of
living adjustment is calculated annually and is payable, concurrent with the
principal payments, on the outstanding obligation. The cost of living adjustment
is estimated each reporting period and is included in interest expense. The
original license obligation has been discounted at an imputed interest rate of
approximately 3% to reflect the obligation at its fair value. The additional
obligation that stems from the restructuring is also non-interest bearing and no
cost of living adjustment applies. Prevailing market interest rates in Hungary
exceed inflation by approximately 7%. Accordingly, the License Obligation has
been discounted at an imputed interest rate of approximately 7% to reflect the
additional obligation at its fair value. The total License Obligation of $13.4
million as of February 28, 2003, is reflected net of an unamortized discount of
$ 1.5 million.

The Bonds and Notes Payable are payable by Emmis' Hungarian subsidiary to
the minority shareholders of the subsidiary. The Bonds, payable in Hungarian
forints, are due on maturity at November 2004 and bear interest at the Hungarian
State Bill rate plus 3% (approximately 17.5% and 12.4% at February 28, 2002 and
2003, respectively). Interest is payable semi-annually. The Notes Payable and
accrued interest, payable in U.S. dollars, are due December 31, 2003 and bear
interest at the prime rate plus 2%.


6. ACQUISITIONS, DISPOSITONS AND INVESTMENTS

Effective May 1, 2002 Emmis completed the sale of substantially all of the
assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for
$88.0 million. Emmis had purchased KALC-FM on January 17, 2001, from Salem
Communications Corporation for $98.8 million in cash plus a commitment fee of
$1.2 million and transaction related costs of $0.9 million. On February 12,
2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and
Entercom began operating KALC-FM under a time brokerage agreement on March 16,
2002. Proceeds were used to repay amounts outstanding under our credit facility.
The assets of KALC-FM are reflected as held for sale in the accompanying
consolidated balance sheet as of February 28, 2002. Since the agreed-upon sales
price for this station was less than its carrying amount as of February 28,
2002, we recognized an impairment loss of $9.1 million in fiscal 2002.



Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in
connection with the sale. The $87.7 million of credit facility debt repaid with
the net proceeds of the sale is reflected as a current liability in the
accompanying consolidated balance sheet as of February 28, 2002.

Effective May 1, 2002 Emmis completed the sale of substantially all of the
assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation
for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000, from AMFM,
Inc. for an allocated purchase price of $35.0 million in cash plus liabilities
recorded of $1.2 million and transaction related costs of $0.4 million. Emmis
entered into a definitive agreement to sell KXPK-FM to Entravision on February
12, 2002. Proceeds were used to repay amounts outstanding under our credit
facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.
The assets of KXPK-FM are reflected as held for sale in the accompanying
consolidated balance sheet as of February 28, 2002. The $47.3 million of credit
facility debt repaid with the net proceeds of the sale is reflected as a current
liability in the accompanying consolidated balance sheet as of February 28,
2002.

On March 28, 2001, Emmis completed its acquisition of substantially all of
the assets of radio stations KTAR-AM, KMVP-AM and KKLT-FM in Phoenix, Arizona
from Hearst-Argyle Television, Inc. for $160.0 million in cash, plus transaction
related costs of $0.7 million. The Company financed the acquisition through a
$20.0 million advance payment borrowed under the credit facility in June 2000
and the remainder with borrowings under the credit facility and proceeds from
ECC's March 2001 senior discount notes offering. The acquisition was accounted
for as a purchase. Emmis began programming and selling advertising on the radio
stations on August 1, 2000 under a time brokerage agreement. The total purchase
price was allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

On January 15, 2001, Emmis entered into an agreement to sell WTLC-AM and
the intellectual property of WTLC-FM (both located in Indianapolis, Indiana) to
Radio One, Inc., for $8.0 million. The FM sale occurred on February 15, 2001 and
the AM sale occurred on April 25, 2001. Emmis retained the FCC license at 105.7
and reformatted the station as WYXB-FM.

On October 6, 2000, Emmis acquired certain assets of radio stations WIL-FM,
WRTH-AM, WVRV-FM, KPNT-FM, KXOK-FM (reformatted as KFTK-FM) and KIHT-FM in St.
Louis, Missouri from Sinclair Broadcast Group, Inc. for $220.0 million in cash,
plus transaction related costs of $10.9 million (the "Sinclair Acquisition").
The agreement also included the settlement of outstanding lawsuits by and
between Emmis and Sinclair. The settlement resulted in no gain or loss by either
party. This acquisition was financed through borrowings under Emmis' credit
facility and was accounted for as a purchase. The total purchase price was
allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

On October 6, 2000, Emmis acquired certain assets of KZLA-FM (the "KZLA
Acquisition") in Los Angeles, California from Bonneville International
Corporation in exchange for radio stations WIL-FM, WRTH-AM and WVRV-FM, which
Emmis acquired from Sinclair, as well as radio station WKKX-FM which Emmis
already owned (all in the St. Louis, Missouri market). Since the fair value of
WKKX exceeded the book value of the station at the date of the exchange, Emmis
recorded a gain on exchange of assets of $22.0 million. The fair value of
WKKX-FM was determined by an independent appraiser. In connection therewith,
tangible assets were valued using either replacement cost or current market
value, depending on the asset being valued. Intangible assets with an
identifiable revenue stream were valued using discounted cash flows. Intangible
assets not producing a readily identifiable income stream were valued using
residual fair market value. This gain is included in other income, net in the
accompanying consolidated statements of operations. From August 1, 2000 through
the date of acquisition, Emmis operated KZLA-FM under a time brokerage
agreement. The exchange was accounted for as a purchase. The total purchase
price of $185.0 million was allocated to property and equipment and broadcast
licenses based on an appraisal. Broadcast licenses are included in intangible
assets in the accompanying consolidated balance sheets and, effective March 1,
2002, are no longer amortized in the consolidated statements of operations in
accordance with SFAS No. 142.

Effective October 1, 2000 (closed October 2, 2000), Emmis purchased eight
network-affiliated and seven satellite television stations from Lee Enterprises,
Inc. for $559.5 million in cash, the payment of $21.3 million for working
capital and transaction related costs of $2.2 million (the "Lee Acquisition").
In connection with the acquisition, Emmis recorded $31.3 million of deferred tax
liabilities and $17.5 million in contract liabilities. Also, Emmis recorded a
severance related liability of $1.8 million, of which $1.3 million remains
outstanding as of February 28, 2003. This transaction was financed through
borrowings under Emmis' credit facility and was accounted for as a purchase. The
Lee Acquisition consisted of the following stations:


- KOIN-TV (CBS) in Portland, Oregon

- KRQE-TV (CBS) in Albuquerque, New Mexico (including satellite stations
KBIM-TV, Roswell, New Mexico and KREZ-TV, Durango,
Colorado-Farmington, New Mexico)

- WSAZ-TV (NBC) in Charleston-Huntington, West Virginia

- KSNW-TV (NBC) in Wichita, Kansas (including satellite stations
KSNG-TV, Garden City, Kansas, KSNC-TV, Great Bend, Kansas and KSNK-TV,
Oberlin, Kansas-McCook, Nebraska)

- KGMB-TV (CBS) in Honolulu, Hawaii (including satellite stations
KGMD-TV, Hilo, Hawaii and KGMV-TV, Wailuku, Hawaii)

- KGUN-TV (ABC) in Tucson, Arizona

- KMTV-TV (CBS) in Omaha, Nebraska and

- KSNT-TV (NBC) in Topeka, Kansas.

The total purchase price was allocated to property and equipment,
television program rights, working capital related items and broadcast licenses
based on an appraisal. Broadcast licenses are included in intangible assets in
the accompanying consolidated balance sheets and, effective March 1, 2002, are
no longer amortized in the consolidated statements of operations in accordance
with SFAS No. 142.

Because we already own KHON-TV in Honolulu, and both KHON and KGMB were
rated among the top four television stations in the Honolulu market, FCC
regulations prohibited us from owning both stations. However, we received a
temporary waiver from the FCC that has allowed us to operate both stations (and
their related "satellite" stations). As a result of recent regulatory
developments, we have requested a stay of divestiture until the FCC completes
its biennial review. We are currently awaiting the FCC's decision. No assurances
can be given that the FCC will grant us the stay of divestiture and we may need
to sell one of the two stations in Hawaii.

On August 24, 2000, Emmis acquired the assets of radio station KKFR-FM in
Phoenix, Arizona from AMFM, Inc. for an allocated $72.0 million in cash, plus
transaction related costs of $0.5 million (the "AMFM Acquisition"). Emmis
financed the acquisition through borrowings under its credit facility. The
acquisition was accounted for as a purchase. The total purchase price was
allocated to property and equipment and broadcast licenses based on an
appraisal. Broadcast licenses are included in intangible assets in the
accompanying consolidated balance sheets and, effective March 1, 2002, are no
longer amortized in the consolidated statements of operations in accordance with
SFAS No. 142.

In May, 2000, Emmis made an offer to purchase the stock of a company that
owns and operates WALR-FM in Atlanta, Georgia. Because an affiliate of Cox
Radio, Inc. held a right of first refusal to purchase WALR-FM, Emmis' offer was
made on the condition that Emmis would receive a $17.0 million break-up fee if
WALR-FM was sold pursuant to the right of first refusal. In June, 2000, the Cox
affiliate submitted an offer to purchase WALR-FM under the right of first
refusal and an application to transfer the station's FCC licenses was filed with
the FCC. Emmis received the break-up fee upon the closing of the sale of WALR-FM
under the right of first refusal on August 31, 2000, which is included in other
income in the accompanying consolidated statements of operations.

On March 3, 2000, Emmis acquired all of the outstanding capital stock of
Los Angeles Magazine Holding Company, Inc. for approximately $36.8 million in
cash plus liabilities recorded of $2.7 million (the "Los Angeles Magazine
Acquisition"). Los Angeles Magazine Holding Company, Inc., through a
wholly-owned subsidiary, owns and operates Los Angeles, a city magazine. The
acquisition was accounted for as a purchase and was financed through additional
borrowings under its credit facility. The excess of the purchase price over the
estimated fair value of identifiable assets was $36.0 million, which is included
in intangible assets in the accompanying consolidated balance sheets and,
effective March 1, 2002, are no longer amortized in the consolidated statements
of operations in accordance with SFAS No. 142.

7. INTANGIBLE ASSETS AND GOODWILL

Effective March 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangible Assets," which requires the Company to cease amortizing
goodwill and certain intangibles. Instead, these assets will be reviewed at
least annually for impairment, and will be written down and charged to results
of operations in periods in which the recorded value of goodwill and certain
intangibles is more than its fair value. On February 28, 2002, prior to the
adoption of SFAS No. 142, the Company reflected unamortized goodwill and
unamortized FCC licenses in the amounts of $175.1 million and $1,743.2 million,
respectively. FCC licenses are renewed every eight years for a nominal amount
and historically all of our FCC licenses have been renewed at the end of their
respective eight-year periods. Since we expect that all of our FCC licenses will
continue to be renewed in the future, we believe they have indefinite lives. The
Company had previously amortized these assets over the maximum period allowed of



40 years. Adoption of this accounting standard eliminated the Company's
amortization expense for goodwill and FCC licenses. For comparison purposes, for
the years ended February 28, 2001 and 2002, the Company recorded amortization
expense for goodwill and FCC licenses of $39.5 million and $58.2 million,
respectively.

The following unaudited pro forma summary presents the Company's estimate
of the effect of the adoption of SFAS No. 142 as of the beginning of the periods
presented. Reported income (loss) before extraordinary loss and accounting
change and reported net loss available to common shareholder are adjusted to
eliminate the amortization expense recognized in those periods related to
goodwill and FCC licenses as these assets are not amortized under this new
accounting standard.

EMMIS




(Dollars in thousands, except per share data)
Years ended February 28,
2001 2002 2003
---- ---- ----

Reported income (loss) before extraordinary loss
and accounting change $ 13,736 $ (63,024) $ 14,049
Add back: amortization of goodwill, net of tax
provision of $2,119 and $2,343 for the years
ended February 28, 2001 and 2002 4,560 5,348 -
Add back: amortization of FCC licenses,
net of tax provision of $10,427 and $15,378 for the years
ended February 28, 2001 and 2002 22,434 35,098 -
Adjusted income (loss) before extraordinary loss -------- --------- --------
and accounting change $ 40,730 $ (22,578) $ 14,049
======== ========= ========

Reported net income (loss) available to common shareholders $ 4,752 $ (73,092) $ (173,452)
Add back: amortization of goodwill, net of tax
provision of $2,119 and $2,343 for the years
ended February 28, 2001 and 2002 4,560 5,348 -
Add back: amortization of FCC licenses,
net of tax provision of $10,427 and $15,378 for the years
ended February 28, 2001 and 2002 22,434 35,098 -
-------- --------- ----------
Adjusted net income (loss) available to common shareholders $ 31,746 $ (32,646) $ (173,452)
======== ========= ==========

Basic net loss available to common shareholders:
Reported net income (loss) available to common shareholders $ 0.10 $ (1.54) $ (3.27)
Amortization of goodwill, net of taxes 0.10 0.11 -
Amortization of FCC licenses, net of taxes 0.48 0.74 -
------ ------- -------
Adjusted net income (loss) available to common shareholders $ 0.68 $ (0.69) $ (3.27)
====== ======= =======

Diluted net loss available to common shareholders:
Reported net income (loss) available to common shareholders $ 0.10 $ (1.54) $ (3.27)
Amortization of goodwill, net of taxes 0.09 0.11 -
Amortization of FCC licenses, net of taxes 0.47 0.74 -
------ ------- -------
Adjusted net income (loss) available to common shareholders $ 0.66 $ (0.69) $ (3.27)
====== ======= =======

Basic Shares 46,869 47,334 53,014
Diluted Shares 47,940 47,334 53,014








EOC



(Dollars in thousands) Years Ended Feburary 28,
2001 2002 2003
---- ---- ----

Reported income (loss) before extraordinary
loss and accounting change $ 13,736 $(46,802) $ 30,724
Add back: amortization of goodwill, net of tax
provision of $2,119 and $2,343 for the years
ended February 28, 2001 and 2002 4,560 5,348 -
Add back: amortization of FCC licenses, net of
tax provision of $10,427 and $15,378 for the
years ended February 28, 2001 and 2002 22,434 35,098 -
-------- -------- --------
Adjusted income before extraordinary
loss and accounting change $ 40,730 $ (6,356) $ 30,724
======== ======== ========

Reported net income (loss) $ 13,736 $(47,886) $(139,565)
Add back: amortization of goodwill, net of tax
provision of $2,119 and $2,343 for the years
ended February 28, 2001 and 2002 4,560 5,348 -
Add back: amortization of FCC licenses, net of
tax provision of $10,427 and $15,378 for the
years ended February 28, 2001 and 2002 22,434 35,098 -
-------- -------- --------
Adjusted net income (loss) $ 40,730 $ (7,440) $(139,565)
======== ======== =========



Because EOC is a wholly-owned subsidiary of Emmis, per share data is excluded.






Indefinite-lived Intangibles

Under the guidance in SFAS No. 142, the Company's FCC licenses are
considered indefinite-lived intangibles. These assets, which the Company
determined were its only indefinite-lived intangibles, are not subject to
amortization, but will be tested for impairment at least annually. As of
February 28, 2003 and 2002 (prior to the adoption of SFAS No. 142), the carrying
amounts of the Company's FCC licenses were $1,508.9 million and $1,743.2
million, respectively.

In accordance with SFAS 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. Prior to March 1, 2002, an
impairment adjustment was recorded if the carrying value of an intangible asset
exceeded its estimated undiscounted cash flows in accordance with SFAS No. 121.
Upon adoption of SFAS No. 142, 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 year ended February 28, 2003. 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 broadcast cash flow 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 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

SFAS 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. The Company
completed the initial two-step impairment test during the first quarter of
fiscal 2003. As a result of this test, the Company recognized impairment of
approximately $22.4 million, net of $13.8 million in tax benefit, as a component
of the cumulative effect of an accounting change during the year ended February
28, 2003. 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 February 28, 2003 and 2002 (prior to the adoption of SFAS No. 142),
the carrying amount of the Company's goodwill was $139.0 million and $175.1
million, respectively. 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 has definite-lived intangible assets recorded that continue to
be amortized in accordance with SFAS No. 142. These 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. In accordance with the transitional requirements of SFAS No.
142, the Company reassessed the useful lives of these intangibles and determined
that no changes to their useful lives were necessary. The following table
presents the gross carrying amount and accumulated amortization for each major
class of definite-lived intangible asset at February 28, 2002 and 2003 (dollars
in thousands):









February 28, 2002 February 28, 2003
------------------------ ---------------------
Gross Net Gross Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
------ ------------ ------ ------ ------------ ------

Foreign Broadcasting Licenses $ 22,542 $ 8,694 $ 13,848 $ 23,178 $ 10,993 $ 12,185
Subscription Lists 12,189 11,077 1,112 12,189 12,176 13
Lease Rights 11,502 407 11,095 11,502 695 10,807
Customer Lists 7,371 1,734 5,637 7,371 4,336 3,035
Non-Compete Agreements 5,738 5,561 177 5,738 5,601 137
Other 4,335 1,240 3,095 4,211 1,527 2,684
----- ----- ----- ----- ----- -----
TOTAL $ 63,677 $ 28,713 $ 34,964 $ 64,189 $ 35,328 $ 28,861
======== ======== ======== ======== ======== ========




Total amortization expense from definite-lived intangibles for the years
ended February 28, 2001, 2002 and 2003 was $9.5 million, $7.8 million and $7.1
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 February 28, 2003
(dollars in thousands):

FISCAL YEAR ENDED FEBRUARY,
2004 $ 4,797
2005 2,616
2006 2,175
2007 2,147
2008 2,131



8. EMPLOYEE BENEFIT PLANS

a. 1994 Equity Incentive Plan

At the 1994 annual meeting, the shareholders of Emmis approved the 1994
Equity Incentive Plan. Under this Plan, awards equivalent to 2,000,000 shares of
common stock may be granted. The awards, which have certain restrictions, may be
for incentive stock options, nonqualified stock options, shares of restricted
stock, stock appreciation rights, performance units or limited stock
appreciation rights. Under this Plan, all awards are granted with an exercise
price equal to the fair market value of the stock except for shares of
restricted stock which may be granted with a purchase price at amounts greater
than or equal to the par value of the underlying stock. No more than 1,000,000
shares of Class B common stock are available for grant and issuance under this
Plan. The stock options under this Plan are generally not exercisable for one
year after the date of grant and expire not more than 10 years from the date of
grant. Under this Plan, awards equivalent to 22,000 shares of common stock are
available for grant at February 28, 2003. Certain stock options awarded remain
outstanding as of February 28, 2002 and 2003.

b. 1995 Equity Incentive Plan

At the 1995 annual meeting, the shareholders of Emmis approved the 1995
Equity Incentive Plan. Under this Plan, awards equivalent to 1,300,000 shares of
common stock may be granted pursuant to employment agreements. Under the Plan,
no further awards are available for grant at February 28, 2003. Certain stock
options awarded remain outstanding as of February 28, 2002 and 2003.

c. Non-Employee Director Stock Option Plan

At the 1995 annual meeting, the shareholders of Emmis approved a
Non-Employee Director Stock Option Plan. Under this Plan, each non-employee
director, as of January 24, 1995, was granted an option to acquire 10,000 shares
of the Company's Class A common stock. Thereafter, upon election or appointment
of any non-employee director or upon a continuing director becoming a
non-employee director, such individual will also become eligible to receive a
comparable option. In addition, an equivalent option will be automatically
granted on an annual basis to each non-employee director. All awards are granted
with an exercise price equal to the fair market value of the stock on the date
of grant. Under this Plan, awards equivalent to 20,000 shares of Class A common
stock are available for grant at February 28, 2003. Certain stock options
awarded remain outstanding as of February 28, 2002 and 2003.






d. 1997 Equity Incentive Plan

At the 1997 annual meeting, the shareholders of Emmis approved the 1997
Equity Incentive Plan. Under this plan, awards equivalent to 2,000,000 shares of
common stock may be granted. The awards, which have certain restrictions, may be
for incentive stock options, nonqualified stock options, shares of restricted
stock, stock appreciation rights or performance units. Under this Plan, all
awards are granted with a purchase price equal to the fair market value of the
stock except for shares of restricted stock which may be granted with an
exercise price at amounts greater than or equal to the par value of the
underlying stock. No more than 1,000,000 shares of Class B common stock are
available for grant and issuance under this Plan. The stock options under this
Plan are generally not exercisable for one year after the date of grant and
expire not more than 10 years from the date of grant. Under this Plan, awards
equivalent to 154,000 shares of common stock are available for grant at February
28, 2003. Certain stock options and restricted stock awarded remain outstanding
as of February 28, 2002 and 2003.

e. 1999 Equity Incentive Plan

At the 1999 annual meeting, the shareholders of Emmis approved the 1999
Equity Incentive Plan. Under this plan, awards equivalent to 3,000,000 shares of
common stock may be granted. The awards, which have certain restrictions, may be
for incentive stock options, nonqualified stock options, shares of restricted
stock, stock appreciation rights or performance units. Under this Plan, all
awards are granted with a purchase price equal to the fair market value of the
stock except for shares of restricted stock which may be granted with an
exercise price at amounts greater than or equal to the par value of the
underlying stock. No more than 1,000,000 shares of Class B common stock are
available for grant and issuance under this Plan. The stock options under this
Plan are generally not exercisable for one year after the date of grant and
expire not more than 10 years from the date of grant. Under this Plan, awards
equivalent to 232,000 shares of common stock are available for grant at February
28, 2003. Certain stock options and restricted stock awarded remain outstanding
as of February 28, 2002 and 2003.

f. 2001 Equity Incentive Plan

At the 2001 annual meeting, the shareholders of Emmis approved the 2001
Equity Incentive Plan. Under this plan, awards equivalent to 3,000,000 shares of
common stock may be granted. The awards, which have certain restrictions, may be
for incentive stock options, nonqualified stock options, shares of restricted
stock, stock appreciation rights or performance units. Under this Plan, all
awards are granted with a purchase price equal to the fair market value of the
stock except for shares of restricted stock which may be granted with an
exercise price, if any, at amounts greater than or equal to the par value of the
underlying stock. No more than 1,000,000 shares of Class B common stock are
available for grant and issuance under this Plan. The stock options under this
Plan generally expire not more than 10 years from the date of grant. Under this
Plan, awards equivalent to 1,617,000 shares of common stock are available for
grant at February 28, 2003. Certain stock awards remain outstanding as of
February 28, 2002 and 2003.

g. 2002 Equity Compensation Plan

At the 2002 annual meeting, the shareholders of Emmis approved the 2002
Equity Compensation Plan. Under this plan, awards equivalent to 3,000,000 shares
of common stock may be granted. The awards, which have certain restrictions, may
be for incentive stock options, nonqualified stock options, shares of restricted
stock, stock appreciation rights or performance units. Under this Plan, all
awards are granted with a purchase price equal to the fair market value of the
stock except for shares of restricted stock which may be granted with an
exercise price, if any, at amounts greater than or equal to the par value of the
underlying stock. No more than 1,000,000 shares of Class B common stock are
available for grant and issuance under this Plan. The stock options under this
Plan generally expire not more than 10 years from the date of grant. Under this
Plan, awards equivalent to 2,550,000 shares of common stock are available for
grant at February 28, 2003. Certain stock awards remain outstanding as of
February 28, 2003.






h. Other Disclosures Related to Stock Option and Equity Incentive Plans

A summary of the status of options and restricted stock at February 2001,
2002, and 2003 and the related activity for the year is as follows:




2001 2002 2003
---- ---- ----
Number of Weighted Number of Weighted Number of Weighted
Options/ Average Options/ Average Options/ Average
Restricted Exercise Restricted Exercise Restricted Exercise
Stock Price Stock Price Stock Price
----- ----- ----- ----- ----- -----

Outstanding at Beginning of Year 4,559,168 18.07 4,144,793 23.14 4,753,513 25.39
Granted 814,629 34.66 1,089,369 29.01 1,926,228 14.96
Exercised (1,092,688) 9.78 (250,420) 17.56 (311,234) 17.90
Lapsing of restrictions on stock awards (101,805) - (190,162) - (920,571) -
Expired and other (34,511) 20.32 (40,067) 23.68 (188,457) 25.75
Outstanding at End of Year 4,144,793 23.14 4,753,513 25.39 5,259,479 26.53
Exercisable at End of Year 2,008,680 19.26 2,464,827 21.10 2,602,475 23.90
Total Available for Grant 1,382,000 3,333,000 4,595,000




During the years ended February 2001, 2002 and 2003, all options were
granted with an exercise price equal to fair market value of the stock on the
date of grant. During fiscal 2001, 2002 and 2003, the Company entered into
employment agreements providing for grants of 9,200, 26,190 and 22,500 shares,
respectively, at a weighted average fair value of $35.51, $27.57 and $27.16,
respectively.

The following information relates to options outstanding and exercisable at
February 28, 2003:

Options Outstanding Options Exercisable
-------------------------------- -----------------------
Weighted Weighted Weighted
Range of Average Average Average
Exercise Number of Exercise Remaining Number of Exercise
Prices Options Price Contract Life Options Price
- ------ ------- ----- ------------- ------- -----
7.60-11.40 200,000 7.75 4.0 years 200,000 7.75
11.40-15.20 10,163 14.44 0.6 years 10,163 14.44
15.20-19.00 369,972 16.55 3.0 years 369,972 16.55
19.00-22.80 852,003 21.24 2.0 years 802,003 21.33
22.80-26.60 172,528 24.63 3.0 years 172,528 24.63
26.60-30.40 2,985,426 28.76 7.8 years 601,206 28.62
30.40-34.20 - - - years - -
34.20-38.00 669,387 35.41 7.0 years 446,603 35.39


In addition to the benefit plans noted above, Emmis has the following employee
benefit plans:

i. Profit Sharing Plan

In December 1986, Emmis adopted a profit sharing plan that covers all
nonunion employees with six months of service. Contributions to the plan are at
the discretion of the Emmis Board of Directors and can be made in the form of
newly issued Emmis common stock or cash. Historically, all contributions to the
plan have been in the form of Emmis common stock. Contributions reflected in
non-cash compensation in the consolidated statements of operations for the years
ended February 2001, 2002 and 2003 were $1,250, $0, and $0 respectively.

j. 401(k) Retirement Savings Plan

Emmis sponsors two Section 401(k) retirement savings plans. One covers
substantially all nonunion employees age 18 years and older who have at least
six months of service and the other covers substantially all union employees
that meet the same qualifications. Employees may make pretax contributions to
the plans up to 15% of their compensation, not to exceed the annual limit
prescribed by the Internal Revenue Service. Emmis may make discretionary
matching contributions to the plans in the form of cash or shares of the
Company's Class A common stock. Emmis' contributions to the plans totaled
$1,337, $1,684 and $1,503 for the years ended February 2001, 2002 and 2003,
respectively.






k. Defined Contribution Health and Retirement Plan

Emmis contributes to a multi-employer defined contribution health and
retirement plan for employees who are members of a certain labor union. Amounts
charged to expense related to the multi-employer plan were approximately $441,
$465, and $414 for the years ended February 2001, 2002 and 2003, respectively.

l. Employee Stock Purchase Plan

The Company has in place an employee stock purchase plan that allows
employees to purchase shares of the Company's Class A common stock at the lesser
of 90% of the fair value of such shares at the beginning or end of each
semi-annual offering period. Purchases are subject to a maximum limitation of
$22.5 annually per employee. The Company does not record compensation expense
pursuant to this plan as it is designed to meet the requirements of Section
423(b) of the Internal Revenue Code.


9. OTHER COMMITMENTS AND CONTINGENCIES

a. TV Program Rights Payable

The Company has obligations to various program syndicators and distributors
in accordance with current contracts for the rights to broadcast programs.
Future payments scheduled under contracts for programs available as of February
28, 2003, are as follows:

Fiscal year ended February 28(29),
2004 $ 27,424
2005 13,516
2006 8,997
2007 4,856
2008 2,839
Thereafter 1,836
-----
59,468
Less: Current Portion 27,424
------
TV Program Rights Payable,
Net of Current Portion $ 32,044
========

In addition, the Company has entered into commitments for future program
rights (programs not available as of February 28, 2003). Future payments
scheduled under these commitments are summarized as follows: Year ended February
2004 - $10,877, 2005 - $23,184, 2006 - $9,779, 2007 - $7,036, 2008 - $4,216 and
thereafter - $2,187.

b. Radio Broadcast Agreements

The Company has entered into agreements to broadcast certain syndicated
programs and sporting events. Future payments scheduled under these agreements
are summarized as follows: Year ended February 2004 - $1,640, 2005 - $1,454,
2006 - $915, 2007 - $940, 2008 - $965 and thereafter - $80. Expense related to
these broadcast rights totaled $2,376, $2,522, and $1,771 for the years ended
February 2001, 2002, and 2003, respectively.

c. Operating Leases

The Company leases certain office space, tower space, equipment, an
airplane and automobiles under operating leases expiring at various dates
through August 2019. Some of the lease agreements contain renewal options and
annual rental escalation clauses (generally tied to the Consumer Price Index or
increases in the lessor's operating costs), as well as provisions for payment of
utilities and maintenance costs. Maintenance costs are recorded using the
accrual method.






Future minimum rental payments (exclusive of future escalation costs)
required by non-cancelable operating leases, with an initial term of one year or
more as of February 28, 2003, are as follows:


Fiscal year ended February 28(29),
2004 $ 9,494
2005 8,481
2006 6,830
2007 6,046
2008 5,646
Thereafter 29,604
------
$ 66,101
========

Rent expense totaled $6,457, $7,995, and $9,798 for the years ended
February 2001, 2002, and 2003, respectively. Rent expense for the years ended
February 2001, 2002, and 2003 is net of sublease income of approximately $86,
$0, and $34, respectively.

d. Employment Agreements

The Company enters into employment agreements with certain officers and
employees. These agreements generally specify base salary, along with bonuses
and grants of stock and/or stock options based on certain criteria. Future
minimum cash payments scheduled under terms of these agreements are summarized
as follows: Year ended February 2004 - $25,743, 2005 - $13,847, 2006 - $6,112,
2007 - $1,651, 2008 - $1,038 and thereafter - $1,380.

In addition to future cash payments, at February 28, 2003, 7,500 shares of
common stock and options to purchase 1,169,000 shares of common stock have been
granted in connection with current employment agreements. Additionally, up to
55,000 shares and options to purchase up to 413,000 shares of common stock may
be granted (or have been granted subject to forfeiture) under the agreements in
the next two years.

e. Litigation

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

In December 2002, Emmis reached an agreement with the Hungarian
broadcasting authority, the National Radio and Television Board (ORTT), that
resolved pending legal issues and extended the national license for Slager, its
subsidiary in Hungary, through 2009. Slager agreed to pay the fees due under the
original broadcast contract in installments through November 2004, the date the
contract was set to expire. The license has been extended an additional five
years with payment terms more reflective of the current Hungarian advertising
environment.






10. INCOME TAXES

The provision (benefit) for income taxes for the years ended February 2001,
2002, and 2003, consisted of the following:

EMMIS:


2001 2002 2003
---- ---- ----
Current:
Federal $ 1,540 $ - $ -
State 300 - -
------ ------- ------
1,840 - -
------ ------- ------
Deferred:
Federal 14,360 (25,189) 12,446
State 1,450 (434) 819
------ ------- ------
15,810 (25,623) 13,265
------ ------- ------
Provision (benefit) for
income taxes 17,650 (25,623) 13,265

Tax benefit of extraordinary item - (664) (2,389)
Tax benefit of accounting change - - (102,600)
------ ------- ------

Net provision (benefit) for income taxes $ 17,650 $ (26,287) $ (91,724)
======== ========= =========




EOC:


2001 2002 2003
---- ---- ----
Current:
Federal $ 1,540 $ - $ -
State 300 - -
------ ------- ------
1,840 - -
------ ------- ------
Deferred:
Federal 14,360 (17,399) 20,773
State 1,450 (434) 1,593
------ ------- ------
15,810 (17,833) 22,366
------ ------- ------
Provision (benefit) for
income taxes 17,650 (17,833) 22,366

Tax benefit of extraordinary item - (664) (1,555)
Tax benefit of accounting change - - (102,600)
------ ------- ------
Net provision (benefit) for income taxes $ 17,650 $ (18,497) $ (81,789)
======== ========= =========



The provision (benefit) for income taxes for the years ended February 2001,
2002, and 2003, differs from that computed at the Federal statutory corporate
tax rate as follows:

EMMIS:


2001 2002 2003
---- ---- ----
Computed income taxes at 35% $ 10,985 $ (31,026) $ 9,560
State income tax 1,138 (282) 819
Nondeductible foreign losses 1,778 1,084 1,061
Nondeductible goodwill 1,537 2,637 -
Nondeductible interest - 616 695
Other 2,212 1,348 1,130
----- ----- -----
Provision (benefit) for income taxes $ 17,650 $ (25,623) $ 13,265
======== ========= ========

EOC:


2001 2002 2003
---- ---- ----
Computed income taxes at 35% $ 10,985 $ (22,620) $ 18,582
State income tax 1,138 (282) 1,593
Nondeductible foreign losses 1,778 1,084 1,061
Nondeductible goodwill 1,537 2,637 -
Nondeductible interest - - -
Other 2,212 1,348 1,130
----- ----- -----
Provision (benefit) for income taxes $ 17,650 $ (17,833) $ 22,366
======== ========= ========




The components of deferred tax assets and deferred tax liabilities at
February 2002 and 2003 are as follows:

EMMIS:

2002 2003
---- ----
Deferred tax assets:
Net operating loss carryforwards $ 44,443 $ 61,929
Compensation relating to stock options 5,601 6,660
Noncash interest expense 8,412 14,250
Impairment loss 3,444 -
Other 8,731 6,452
Valuation allowance (2,017) (5,031)
------ ------
Total deferred tax assets 68,614 84,260
------ ------
Deferred tax liabilities
Intangible assets (167,130) (103,700)
Other (2,682) (2,905)
------ ------
Total deferred tax liabilities (169,812) (106,605)
------ ------
Net deferred tax liabilities $ (101,198) $ (22,345)
========== =========


EOC:

2002 2003
---- ----
Deferred tax assets:
Net operating loss carryforwards $ 45,065 $ 58,454
Compensation relating to stock options 5,601 6,660
Noncash interest expense - -
Impairment loss 3,444 -
Other 8,731 6,452
Valuation allowance (2,017) (5,031)
------ ------
Total deferred tax assets 60,824 66,535
------ ------
Deferred tax liabilities
Intangible assets (167,130) (103,700)
Other (2,682) (2,905)
------ ------
Total deferred tax liabilities (169,812) (106,605)
-------- --------
Net deferred tax liabilities $ (108,988) $ (40,070)
========== =========


A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the net operating loss carryforwards related to the
Company's foreign subsidiaries since these subsidiaries have not yet generated
taxable income against which the net operating losses could be utilized.
Additionally a valuation allowance has been provided for the net operating loss
carryforwards related to certain state net operating losses as it is more likely
than not that a portion of the state net operating losses will expire
unutilized. With respect to Emmis, the expiration of net operating loss
carryforwards, excluding those at the Company's Hungarian subsidiary which do
not expire, approximate $1,177 in fiscal 2005, $758 in fiscal 2006 and $142,654
thereafter. With respect to EOC, the expiration of net operating loss
carryforwards, excluding those at the Company's Hungarian subsidiary which do
not expire, approximate $1,177 in fiscal 2005, $758 in fiscal 2006 and $104,672
thereafter.






11. SEGMENT INFORMATION

The Company's operations are aligned into three business segments: Radio,
Television, and Publishing. These business segments are consistent with the
Company's management of these businesses and its financial reporting structure.
Corporate represents expense not allocated to reportable segments. Amounts
included in Interactive in prior years have been reclassified into the Radio
segment. Noncash compensation expense for fiscal 2001 and 2002 attributable to
our stations, previously included in Corporate, has been reclassified to the
appropriate business segment.

The Company's segments operate primarily in the United States with one
radio station located in Hungary and two radio stations located in Argentina.
Total revenues of the radio station in Hungary for the years ended February
2001, 2002, and 2003 were $6.2 million, $7.2 million, and $9.2 million,
respectively. This station's long lived assets as of February 28, 2002 and 2003
were $6.9 million and $9.9 million, respectively. Total revenues of the radio
stations in Argentina for the years ended February 2001, 2002 and 2003 were $8.4
million, $9.5 million and $2.6 million, respectively. Long lived assets for
these stations as of February 28, 2002 and 2003 were $10.0 million and $4.7
million, respectively.



YEAR ENDED FEBRUARY 28, 2003 Radio Television Publishing Corporate Consolidated
- ---------------------------- ----- ---------- ---------- --------- ------------

Net revenues $ 254,818 $ 234,752 $ 72,793 $ - $ 562,363
Station operating expenses,
excluding noncash compensation 138,385 148,041 62,825 - 349,251
Corporate expenses, excluding
noncash compensation - - - 21,359 21,359
Depreciation and amortization 8,133 28,453 1,917 4,867 43,370
Time brokerage fees - - - - -
Noncash compensation 10,151 6,528 2,358 3,491 22,528
Impairment loss and other - - - - -
Restructuring fees - - - - -
--------- ----------- -------- -------- -----------
Operating income (loss) $ 98,149 $ 51,730 $ 5,693 $ (29,717) $ 125,855
======== ======== ======= ========= =========
Total assets $ 898,010 $ 1,050,486 $ 81,073 $ 86,844 $2,116,413
========= =========== ======== ======== ===========

With respect to EOC, the above information would be identical, except corporate
total assets would be $79,315 and consolidated total assets would be $2,108,884.

YEAR ENDED FEBRUARY 28, 2002 Radio Television Publishing Corporate Consolidated
- ---------------------------- ----- ---------- ---------- --------- ------------
Net revenues $ 262,077 $ 206,529 $ 71,216 $ - $ 539,822
Station operating expenses,
excluding noncash compensation 149,059 140,325 64,773 - 354,157
Corporate expenses, excluding
noncash compensation - - - 20,283 20,283
Depreciation and amortization 33,516 53,513 8,477 4,752 100,258
Time brokerage fees 479 - - - 479
Noncash compensation 5,505 2,345 428 817 9,095
Impairment loss and other 9,063 1,609 - - 10,672
Restructuring fees - - - 768 768
--------- ----------- -------- -------- -----------
Operating income (loss) $ 64,455 $ 8,737 $ (2,462) $ (26,620) $ 44,110
======== ======= ======== ========= ========
Total assets $1,037,846 $1,288,428 $ 88,913 $ 94,882 $ 2,510,069
=========== =========== ======== ======== ===========

With respect to EOC, the above information would be identical, except corporate
total assets would be $83,952 and consolidated total assets would be $2,499,139.

YEAR ENDED FEBRUARY 28, 2001 Radio Television Publishing Corporate Consolidated
- ---------------------------- ----- ---------- ---------- --------- ------------
Net revenues $ 242,207 $ 156,993 $ 74,145 $ - $ 473,345
Station operating expenses,
excluding noncash compensation 136,052 97,485 65,595 - 299,132
Corporate expenses, excluding
noncash compensation - - - 17,601 17,601
Depreciation and amortization 21,475 33,574 14,941 4,028 74,018
Time brokerage fees 7,344 - - - 7,344
Noncash compensation 3,657 500 228 1,015 5,400
Impairment loss and other 2,000 - - - 2,000
Restructuring fees - - - 2,057 2,057
--------- ----------- -------- -------- -----------
Operating income (loss) $ 71,679 $ 25,434 $ (6,619) $ (24,701) $ 65,793
======== ======== ======== ========= ========
Total assets $ 920,028 $1,312,270 $ 96,550 $ 178,024 $2,506,872
========= =========== ======== ========= ===========




12. RELATED PARTY TRANSACTIONS

No loans were made to directors, officers or employees during periods
covered by these financial statements. However, one loan to Jeffrey H. Smulyan
remains outstanding. The approximate amount of such loan at February 28, 2002
and 2003 was $1,117 and $1,158, respectively. This loan bears interest at the
Company's average borrowing rate of approximately 7.6% and 5.7% for the years
ended February 2002 and 2003.

During the year ended February 28, 2003, the Company purchased
approximately $135 in corporate gifts and specialty items from a company owned
by the sister of Richard Leventhal, one of our directors. Also during fiscal
2003, Emmis made payments of approximately $162 to a company owned by Mr.
Smulyan for use of an airplane to transport employees to various trade shows and
meetings. The Company believes that the terms of these transactions were no less
favorable to the Company than terms available from independent third parties.

A significant amount of business is conducted between EOC and its parent
company, ECC. This activity includes equity financing and certain debt financing
arrangements as well as reimbursement by EOC to ECC for corporate overhead
expenses. Corporate overhead expenses are third party costs incurred in the
ordinary course of conducting business as a parent holding company and include,
but are not limited to, SEC filing fees and expenses, and legal, accounting,
trustee and outside director fees.


13. FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND SUBSIDIARY
NON-GUARANTORS

Emmis conducts a significant portion of its business through subsidiaries.
The senior subordinated notes are fully and unconditionally guaranteed, jointly
and severally, by certain direct and indirect subsidiaries (the "Subsidiary
Guarantors"). As of February 28, 2003, subsidiaries holding Emmis' interest in
its radio stations in Hungary and Argentina, as well as certain other
subsidiaries conducting joint ventures with third parties, did not guarantee the
senior subordinated notes (the "Subsidiary Non-Guarantors"). The claims of
creditors of Emmis subsidiaries have priority over the rights of Emmis to
receive dividends or distributions from such subsidiaries.

Presented below is condensed consolidating financial information for the
Parent Company Only, the Subsidiary Guarantors and the Subsidiary Non-Guarantors
as of February 28, 2002 and 2003 and for each of the three years in the period
ended February 28, 2003.

Emmis uses the equity method with respect to investments in subsidiaries.
Separate financial statements for Subsidiary Guarantors are not presented based
on management's determination that they do not provide additional information
that is material to investors.






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





Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------

CURRENT ASSETS:

Cash and cash equivalents $ 3,885 $ 5,844 $ 6,350 $ - $ 16,079
Accounts receivable, net - 98,799 3,546 - 102,345
Prepaid expenses 2,016 13,462 118 - 15,596
Income tax refund receivable - - - - -
Other 222 23,249 2,190 - 25,661
Assets held for sale ------ ------ ------ ------ ------
Total current assets 6,123 141,354 12,204 - 159,681

Property and equipment, net 35,874 186,004 1,552 - 223,430
Intangible assets, net 3,035 1,661,513 12,185 - 1,676,733
Investment in affiliates 1,874,882 - - (1,874,882) -
Other assets, net 52,373 13,916 926 (18,175) 49,040
------ ------ --- ------- ------
Total assets $ 1,972,287 $ 2,002,787 $ 26,867 $ (1,893,057) $ 2,108,884
=========== =========== ======== ============ ===========

CURRENT LIABILITIES:
Accounts payable $ 13,161 $ 18,530 $ 7,835 $ - $ 39,526
Current maturities of other long-term debt 9,976 - 7,151 (2,215) 14,912
Current portion of TV program rights payable - 27,424 - - 27,424
Accrued salaries and commissions 3,326 10,746 175 - 14,247
Accrued interest 13,844 - - (2,203) 11,641
Deferred revenue - 15,805 - - 15,805
Other 3,339 3,640 - - 6,979
Credit facility debt to be repaid with assets held
for sale - - - - -
Liabilities associated with assets held for sale ------ ------ ------ ------ ------
Total current liabilities 43,646 76,145 15,161 (4,418) 130,534

Long-term debt, net of current maturities 996,945 - - - 996,945
Other long-term debt, net of current maturities 41 2,412 24,391 (13,757) 13,087
TV program rights payable, net of current portion - 32,044 - - 32,044
Other noncurrent liabilities 13,167 3,898 721 - 17,786
Deferred income taxes 40,070 - - - 40,070
------ ------ ------ ------ ------
Total liabilities 1,093,869 114,499 40,273 (18,175) 1,230,466

SHAREHOLDER'S EQUITY:
Common stock 1,027,221 - - - 1,027,221
Additional paid-in capital 95,582 - 4,393 (4,393) 95,582
Subsidiary 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) 878,418
------- --------- ------- ---------- -------
Total liabilities and shareholder's equity $1,972,287 $ 2,002,787 $ 26,867 $(1,893,057) $ 2,108,884
=========== =========== ======== ============ ===========





Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2003



Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------


Net revenues $ 923 $ 549,630 $ 11,810 $ - $ 562,363
Operating expenses:
Station operating expenses,
excluding noncash compensation 702 339,176 9,373 - 349,251
Corporate expenses, excluding
noncash compensation 21,359 - - - 21,359
Noncash compensation 3,491 19,037 - - 22,528
Depreciation and amortization 4,867 35,519 2,984 - 43,370
------- ----- ------ ---- -------
Total operating expenses 30,419 393,732 12,357 - 436,508
------- ----- ------ ---- -------
Operating income (loss) (29,496) 155,898 (547) - 125,855
------- ----- ------ ---- -------
Other income (expense)
Interest expense (77,050) (771) (912) 675 (78,058)
Loss from unconsolidated affiliates (4,544) - - - (4,544)
Gain on sale of assets - 9,313 - - 9,313
Other income (expense), net 983 873 (229) (1,103) 524
--- --- ---- ------ ---
Total other income (expense) (80,611) 9,415 (1,141) (428) (72,765)
------- ----- ------ ---- -------

Income (loss) before income taxes,
extraordinary loss and accounting
change (110,107) 165,313 (1,688) (428) 53,090

Provision (benefit) for income taxes (40,453) 62,819 - - 22,366
------- ----- ------ ---- -------
Income (loss) before extraordinary loss
and accounting change (69,654) 102,494 (1,688) (428) 30,724
Extraordinary loss, net of tax (2,889) - - - (2,889)
Cumulative effect of accounting change,
net of tax (167,400) (167,400) - 167,400 (167,400)
Equity in earnings (loss) of subsidiaries 100,378 - - (100,378) -
------- ----- ------ ---- -------
Net income (loss) $(139,565) $ (64,906) $ (1,688) $ 66,594 $ (139,565)
========= ========= ======== ======== ==========






Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2003





Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ (139,565) $ (64,906) $ (1,688) $ 66,594 $ (139,565)
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) 167,400
Extraordinary item 2,889 - - - 2,889
Depreciation and amortization 8,806 56,403 2,984 - 68,193
Provision for bad debts - 4,102 - - 4,102
Provision (benefit) for deferred income taxes 22,366 - - - 22,366
Noncash compensation 3,491 19,037 - - 22,528
Gain on sale of assets - (9,313) - - (9,313)
Equity in earnings of subsidiaries (100,378) - - 100,378 -
Other (428) - (8,079) 428 (8,079)
Changes in assets and liabilities -
Accounts receivable - (11,657) 450 - (11,207)
Prepaid expenses and other current assets (1,355) 11 (2,048) - (3,392)
Other assets (10,398) 6,615 (399) - (4,182)
Accounts payable and accrued liabilities (2,899) 965 2,738 - 804
Deferred liabilities - (587) - - (587)
Other liabilities 1,483 (34,604) 15,353 - (17,768)
----- ------- ------ ------ -------
Net cash provided (used) by investing activities (48,588) 133,466 9,311 - 94,189
------- ------- ----- ------ ------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,354) (25,195) - - (30,549)
Disposals of property and equipment - 1,752 602 - 2,354
Proceeds from sale of assets - 135,500 - - 135,500
Other (1,004) - - - (1,004)
------ ------ ------ ------ ------
Net cash provided (used) by investing activities (6,358) 112,057 602 - 106,301
------ ------- --- ------ -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (260,101) - - - (260,101)
Proceeds from long-term debt 15,000 - - - 15,000
Intercompany 306,686 (244,649) (4,955) - 57,082
Debt related costs (2,754) - - - (2,754)
------ ------ ------ ------ ------
Net cash provided (used) by investing activities 58,831 (244,649) (4,955) - (190,773)
------ -------- ------ ------ --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,885 874 4,958 - 9,717

CASH AND CASH EQUIVALENTS:
Beginning of period - 4,970 1,392 - 6,362
----- ----- ----- ----- -----
End of period $ 3,885 $ 5,844 $ 6,350 $ - $ 16,079
======= ======= ======= ======= ========









Emmis Operating Company
Condensed Consolidating Balance Sheet
As of February 28, 2002



Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------
CURRENT ASSETS:

Cash and cash equivalents $ - $ 4,970 $ 1,392 $ - $ 6,362
Accounts receivable, net - 91,244 3,996 - 95,240
Prepaid expenses 612 14,049 186 - 14,847
Income tax refund receivable - - - - -
Other 271 23,312 74 - 23,657
Assets held for sale - 123,416 - - 123,416
------ ------ --- ------ ------
Total current assets 883 256,991 5,648 - 263,522

Property and equipment, net 35,957 192,690 2,492 - 231,139
Intangible assets, net 5,637 1,933,846 13,848 - 1,953,331
Investment in affiliates 2,274,321 - - (2,274,321) -
Other assets, net 43,428 12,655 527 (5,463) 51,147
------ ------ --- ------ ------
Total assets $ 2,360,226 $ 2,396,182 $ 22,515 $ (2,279,784) $ 2,499,139
=========== =========== ======== ============ ===========

CURRENT LIABILITIES:
Accounts payable $ 15,646 $ 18,373 $ 4,976 $ - $ 38,995
Current maturities of other long-term debt 34 10 10,722 (2,833) 7,933
Current portion of TV program rights payable - 27,507 - - 27,507
Accrued salaries and commissions 214 7,363 275 - 7,852
Accrued interest 14,047 - 21 - 14,068
Deferred revenue - 16,392 - - 16,392
Other 2,813 3,595 - - 6,408
Credit facility debt to be repaid with assets held
for sale 135,000 - - - 135,000
Liabilities associated with assets held for sale - 63 - - 63
------- ------ ------ ------ -------
Total current liabilities 167,754 73,303 15,994 (2,833) 254,218

Long-term debt, net of current maturities 1,117,000 - - - 1,117,000
Other long-term debt, net of current maturities 41 366 9,172 (2,630) 6,949
TV program rights payable, net of current portion - 40,551 - - 40,551
Other noncurrent liabilities 21,976 4,403 587 - 26,966
Deferred income taxes 108,988 - - - 108,988
------- ------ ------ ------ -------

Total liabilities 1,415,759 118,623 25,753 (5,463) 1,554,672

SHAREHOLDER'S EQUITY:
Common stock 1,027,221 - - - 1,027,221
Additional paid-in capital 8,108 - 4,393 (4,393) 8,108
Subsidiary investment - 1,888,538 20,650 (1,909,188) -
Retained earnings/(accumulated deficit) (78,477) 389,021 (21,380) (367,641) (78,477)
Accumulated other comprehensive loss (12,385) - (6,901) 6,901 (12,385)
------- ------- ------ ----- -------
Total shareholder's equity 944,467 2,277,559 (3,238) (2,274,321) 944,467
------- --------- ------ ---------- -------
Total liabilities and shareholder's equity $ 2,360,226 $ 2,396,182 $ 22,515 $ (2,279,784) $ 2,499,139
=========== =========== ======== ============ ===========




Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2002




Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------


Net revenues $ 1,695 $ 521,429 $ 16,698 $ - $ 539,822
Operating expenses:
Station operating expenses,
excluding noncash compensation 1,204 338,353 14,600 - 354,157
Time brokerage fees - 479 - - 479
Corporate expenses, excluding
noncash compensation 20,283 - - - 20,283
Noncash compensation 817 8,278 - - 9,095
Depreciation and amortization 4,752 91,979 3,527 - 100,258
Impairment loss and other - 10,672 - - 10,672
Restructuring fees and other 768 - - - 768
------ ------- ------ ------ -------
Total operating expenses 27,824 449,761 18,127 - 495,712
------ ------- ------ ------ -------
Operating income (loss) (26,129) 71,668 (1,429) - 44,110
------- ------ ------ ------ ------
Other income (expense)
Interest expense (102,109) (285) (2,324) 616 (104,102)
Loss from unconsolidated affiliates (4,232) (771) - - (5,003)
Other income (expense), net 1,403 (466) (756) 179 360
----- ---- ---- --- ---
Total other income (expense) (104,938) (1,522) (3,080) 795 (108,745)
-------- ------ ------ --- --------

Income (loss) before income taxes,
extraordinary loss and accounting
change (131,067) 70,146 (4,509) 795 (64,635)

Provision (benefit) for income taxes (44,488) 26,655 - - (17,833)
------- ------ ------ ------ -------

Income (loss) before extraordinary loss
and accounting change (86,579) 43,491 (4,509) 795 (46,802)
Extraordinary loss, net of tax (1,084) - - - (1,084)
Equity in earnings (loss) of subsidiaries 39,777 - - (39,777) -
------ ------ ------ ------- ------
Net income (loss) $ (47,886) $ 43,491 $ (4,509) $ (38,982) $ (47,886)
========= ======== ======== ========= =========





Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2002


Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ (47,886) $ 43,491 $ (4,509) $ (38,982) $(47,886)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities -
Extraordinary item 1,084 - - - 1,084
Depreciation and amortization 10,226 110,582 3,527 - 124,335
Provision for bad debts - 4,005 - - 4,005
Provision (benefit) for deferred income taxes (17,833) - - - (17,833)
Noncash compensation 817 8,278 - - 9,095
Equity in earnings of subsidiaries (39,777) - - 39,777 -
Gain on sale of assets - 9,063 - - 9,063
Other 795 375 (6,303) (795) (5,928)
Changes in assets and liabilities -
Accounts receivable - (3,649) 1,531 - (2,118)
Prepaid expenses and other current assets 3,082 1,202 843 - 5,127
Other assets 2,057 (9,364) 1,355 - (5,952)
Accounts payable and accrued liabilities 5,035 (6,965) (779) - (2,709)
Deferred liabilities - (963) - - (963)
Other liabilities 24,482 (15,553) (10,856) - (1,927)
------ ------- ------- ------- ------
Net cash provided (used) by investing activities (57,918) 140,502 (15,191) - 67,393
------ ------- ------- ------- ------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,252) (29,018) 1,135 - (30,135)
Disposals of property and equipment - 1,719 - - 1,719
Cash paid for acquisitions - (140,746) - - (140,746)
Other (5,943) - - - (5,943)
------ ------ ------ ----- ------
Net cash provided (used) by investing activities (8,195) (168,045) 1,135 - (175,105)
------ -------- ----- ----- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (133,000) - - - (133,000)
Proceeds from long-term debt 5,000 - - - 5,000
Intercompany 143,532 28,495 14,742 - 186,769
Debt related costs (4,594) - - - (4,594)
------ ------ ------ ------ ------
Net cash provided (used) by investing activities 10,938 28,495 14,742 - 54,175
------ ------ ------ ------ ------

INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (55,175) 952 686 - (53,537)

CASH AND CASH EQUIVALENTS:
Beginning of period 55,175 4,018 706 - 59,899
------ ----- --- ----- ------

End of period $ - $ 4,970 $ 1,392 $ - $ 6,362
======= ======= ======= ======= =======







Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2001



Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------


Net revenues $ 1,876 $ 456,891 $ 14,578 $ - $ 473,345
Operating expenses:
Station operating expenses,
excluding noncash compensation 1,692 284,136 13,304 - 299,132
Time brokerage fees - 7,344 - - 7,344
Corporate expenses, excluding
noncash compensation 17,601 - - - 17,601
Noncash compensation 1,015 4,385 - - 5,400
Depreciation and amortization 4,028 66,527 3,463 - 74,018
Restructuring fees and other 2,057 2,000 - - 4,057
-------- -------- -------- --------- --------
Total operating expenses 26,393 364,392 16,767 - 407,552
-------- -------- -------- --------- --------
Operating income (loss) (24,517) 92,499 (2,189) - 65,793
-------- -------- -------- --------- --------
Other income (expense)
Interest expense (69,608) (297) (3,221) 682 (72,444)
Loss from unconsolidated affiliates (1,360) - - - (1,360)
Other income (expense), net 13,332 26,977 (354) (558) 39,397
-------- -------- -------- --------- --------
Total other income (expense) (57,636) 26,680 (3,575) 124 (34,407)
-------- -------- -------- --------- --------

Income (loss) before income taxes,
extraordinary loss and accounting change (82,153) 119,179 (5,764) 124 31,386

Provision (benefit) for income taxes (27,638) 45,288 - - 17,650
-------- -------- -------- --------- --------
Income (loss) before extraordinary loss
and accounting change (54,515) 73,891 (5,764) 124 13,736
Equity in earnings (loss) of subsidiaries 68,251 - - (68,251) -
-------- -------- -------- --------- --------
Net income (loss) $ 13,736 $ 73,891 $ (5,764) $ (68,127) $ 13,736
======== ======== ======== ========= ========






Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2001





Eliminations
Parent Subsidiary and
Company Subsidiary Non- Consolidating
Only Guarantors Guarantors Entries Consolidated
---- ---------- ---------- ------- ------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 13,736 $ 73,891 $ (5,764) $ (68,127) $ 13,736
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities -
Depreciation and amortization 9,758 81,233 3,463 - 94,454
Provision for bad debts - 3,713 - - 3,713
Provision (benefit) for deferred income taxes 15,810 - - - 15,810
Noncash compensation 1,015 4,385 - - 5,400
Equity in earnings of subsidiaries (68,251) - - 68,251 -
Gain on exchange of assets - (22,000) - - (22,000)
Other 379 348 861 (124) 1,464
Changes in assets and liabilities -
Accounts receivable - (7,114) (2,202) - (9,316)
Prepaid expenses and other current assets (12,716) (11,527) (384) - (24,627)
Other assets 10,435 1,216 448 - 12,099
Accounts payable and accrued liabilities 9,070 5,493 778 - 15,341
Deferred liabilities - 569 - - 569
Other liabilities (220) (23,096) 3,544 - (19,772)
---- ------- ----- ---- -------
Net cash provided (used) by investing activities (20,984) 107,111 744 - 86,871
----- ------- ----- ---- -------


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,683) (22,323) (219) - (26,225)
Cash paid for acquisitions - (1,060,681) - - (1,060,681)
Other (23,849) - - - (23,849)
------ ------- ----- ---- -------

Net cash provided (used) by investing activities (27,532) (1,083,004) (219) - (1,110,755)
------- ---------- ---- ---- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (1,048,388) - (3,161) - (1,051,549)
Proceeds from long-term debt 2,128,388 - - - 2,128,388
Intercompany (955,662) 977,347 (11,016) - 10,669
Debt related costs (21,095) - - - (21,095)
------- ---- ---- ---- ---------
Net cash provided (used) by investing activities 103,243 977,347 (14,177) - 1,066,413
------- ------- ------- ---- ---------

INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 54,727 1,454 (13,652) - 42,529

CASH AND CASH EQUIVALENTS:
Beginning of period 448 2,564 14,358 - 17,370
--- ----- ------ ---- ------

End of period $ 55,175 $ 4,018 $ 706 $ - $ 59,899
======== ======= ===== ===== ========







14. SUBSEQUENT EVENTS

Effective March 1, 2003, Emmis completed its acquisition of substantially
all of the assets of television station WBPG-TV in Mobile, AL-Pensacola, FL from
Pegasus Communications Corporation for approximately $11.5 million. The
acquisition was financed through borrowings under the credit facility and was
accounted for as a purchase.

Emmis has agreed to acquire, for a purchase price of $105.2 million, a
controlling interest of 50.1% in LBJS Broadcasting Company, L.P. LBJS owns radio
stations KLBJ-AM, KLBJ-FM, KXMG-FM, KROX-FM and KGSR-FM, all in the Austin,
Texas metropolitan area. The remaining 49.9% interest in LBJS will be held by
Sinclair Telecable, Inc. which will contribute to LBJS a sixth Austin radio
station, KEYI-FM. We expect this acquisition to close in the second quarter of
our fiscal 2004. We will finance the acquisition through borrowings under the
credit facility and the acquisition will be accounted for as a purchase. We need
an amendment under our credit facility for the acquisition, which we expect to
obtain prior to closing. In addition, Emmis will have the option, but not the
obligation, to purchase Sinclair's entire interest in LBJS after a period of
approximately five years based on an 18-multiple of trailing 12-month cash flow.


15. QUARTERLY FINANCIAL DATA (UNAUDITED)

EMMIS




Quarter Ended
-----------------------------------------
Full
May 31 Aug. 31 Nov. 30 Feb. 28 Year
------ ------- ------- ------- ----
Year ended February 28, 2003

Net revenues $ 136,806 $ 143,222 $ 155,544 $ 126,791 $ 562,363
Operating income (loss) 29,229 35,843 44,984 15,799 125,855
Net income (loss) before extraordinary item
and accounting change 4,166 4,221 10,814 (5,152) 14,049
Net income (loss) available to common shareholders (167,820) (6,802) 8,568 (7,398) (173,452)
Basic earnings per common share:
Before extraordinary item and accounting change $ 0.04 $ 0.04 $ 0.16 $ (0.14) $ 0.10
Net income (loss) available to common shareholders $ (3.28) $ (0.13) $ 0.16 $ (0.14) $ (3.27)
Diluted earnings per common share:
Before extraordinary item and accounting change $ 0.04 $ 0.04 $ 0.16 $ (0.14) $ 0.10
Net income (loss) available to common shareholders $ (3.28) $ (0.13) $ 0.16 $ (0.14) $ (3.27)

Year ended February 28, 2002
Net revenues $ 138,253 $ 144,647 $ 138,289 $ 118,633 $ 539,822
Operating income (loss) 15,399 25,691 16,824 (13,804) 44,110
Net income (loss) before extraordinary item
and accounting change (13,477) (6,070) (11,698) (31,779) (63,024)
Net income (loss) available to common shareholders (15,723) (9,400) (13,944) (34,025) (73,092)
Basic earnings per common share:
Before extraordinary item and accounting change $ (0.33) $ (0.18) $ (0.29) $ (0.72) $ (1.52)
Net income (loss) available to common shareholders $ (0.33) $ (0.20) $ (0.29) $ (0.72) $ (1.54)
Diluted earnings per common share:
Before extraordinary item and accounting change $ (0.33) $ (0.18) $ (0.29) $ (0.72) $ (1.52)
Net income (loss) available to common shareholders $ (0.33) $ (0.20) $ (0.29) $ (0.72) $ (1.54)

EOC
Quarter Ended
-----------------------------------------
Full
May 31 Aug. 31 Nov. 30 Feb. 28 Year
------ ------- ------ ------- ----
Year ended February 28, 2003
Net revenues $ 136,806 $ 143,222 $ 155,544 $ 126,791 $ 562,363
Operating income (loss) 29,229 35,843 44,984 15,799 125,855
Net income (loss) before extraordinary item
and accounting change 9,231 8,535 14,772 (1,814) 30,724
Net income (loss) (160,509) 7,986 14,772 (1,814) (139,565)

Year ended February 28, 2002
Net revenues $ 138,253 $ 144,647 $ 138,289 $ 118,633 $ 539,822
Operating income (loss) 15,399 25,691 16,824 (13,804) 44,110
Net income (loss) before extraordinary item
and accounting change (10,862) (2,079) (7,268) (26,593) (46,802)
Net income (loss) (10,862) (3,163) (7,268) (26,593) (47,886)







REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Emmis Communications Corporation
and Subsidiaries:

We have audited the accompanying consolidated balance sheet of Emmis
Communications Corporation and Subsidiaries as of February 28, 2003 and the
related consolidated statement of operations, changes in shareholders' equity
and cash flows for the year then ended. We have also audited the accompanying
consolidated balance sheet of Emmis Operating Company, (a wholly owned
subsidiary of Emmis Communications Corporation) and Subsidiaries as of February
28, 2003 and the related consolidated statement of operations, changes in
shareholder's equity and cash flows for the year then ended. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of Emmis Communications Corporation and
Subsidiaries and Emmis Operating Company and Subsidiaries as of February 28,
2002 and for the two years in the period ended February 28, 2002, were audited
by other auditors who have ceased operations and whose report dated May 2, 2002,
expressed an unqualified opinion on those statements and included an explanatory
paragraph that disclosed the adoption of SFAS No. 133 as discussed in Note 1 to
the consolidated financial statements.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Emmis Communications
Corporation and Subsidiaries as of February 28, 2003, and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States and the financial
position of Emmis Operating Company and Subsidiaries as of February 28, 2003,
and the results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States.

As discussed in Note 7 to the consolidated financial statements, effective
March 1, 2002, the Companies changed the manner in which they account for
goodwill and indefinite lived intangible assets upon the adoption of Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets".

As discussed above, the financial statements of Emmis Communications
Corporation and Subsidiaries and Emmis Operating Company and Subsidiaries as of
February 28, 2002, and for each of the two years in the period ended February
28, 2002, were audited by other auditors who have ceased operations. As
described in Note 7, these consolidated financial statements have been revised
to include the transitional disclosures required by Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". Our
audit procedures with respect to the disclosures in Note 7 with respect to
fiscal 2002 and 2001 included (a) agreeing the previously reported net income
(loss) to the previously issued financial statements, (b) agreeing the
amortization expense and associated tax benefit recognized in those periods
related to goodwill and other intangible assets that are no longer being
amortized as a result of applying SFAS No. 142 to the Company's underlying
records obtained from management and (c) testing the mathematical accuracy of
the reconciliation of adjusted net income (loss) to reported net income (loss),
and the related earnings-per-share amounts. In our opinion, the disclosures for
fiscal 2002 and 2001 in Note 7 are appropriate. However, we were not engaged to
audit, review, or apply any procedures to the fiscal 2002 and 2001 financial
statements of the Companies other than with respect to such disclosures and,
accordingly, we do not express an opinion or any other form of assurance on the
2002 and 2001 financial statements taken as a whole.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana,
April 11, 2003.








THE FOLLOWING IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND
HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Emmis Communications Corporation
and Subsidiaries:

We have audited the accompanying consolidated balance sheets of EMMIS
COMMUNICATIONS CORPORATION (an Indiana corporation) and Subsidiaries as of
February 28, 2002 and 2001, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows for each of the three
years in the period ended February 28, 2002. We have also audited the
accompanying consolidated balance sheets of EMMIS OPERATING COMPANY (an Indiana
corporation and wholly owned subsidiary of Emmis Communications Corporation) and
Subsidiaries as of February 28, 2002 and 2001, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended February 28, 2002. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Emmis Communications
Corporation and Subsidiaries as of February 28, 2002 and 2001, and the results
of their operations and their cash flows for each of the three years in the
period ended February 28, 2002 in conformity with accounting principles
generally accepted in the United States and the financial position of Emmis
Operating Company and Subsidiaries as of February 28, 2002 and 2001, and the
results of their operations and their cash flows for each of the three years in
the period ended February 28, 2002 in conformity with accounting principles
generally accepted in the United States.

As discussed in Note 1v. of the notes to consolidated financial statements,
effective March 1, 2001, the Company changed its accounting for derivative
instruments and hedging activities pursuant to the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Hedging
Activities."


/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Indianapolis, Indiana,
May 2, 2002.






ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

On June 13, 2002, we dismissed Arthur Andersen LLP ("Arthur Andersen") as
our independent auditors and named Ernst & Young LLP as our new independent
auditors in accordance with a recommendation of the Audit Committee of our Board
of Directors. Arthur Andersen previously audited our consolidated financial
statements for the years ended February 28, 2001 and 2002. The reports of Arthur
Andersen on our consolidated financial statements for the years ended February
28, 2001 and 2002 did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. During the same period, there were no disagreements with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.


PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this item with respect to directors or nominees
to be directors of Emmis is incorporated by reference from the section entitled
"Proposal No. 1: Election of Directors" in the Emmis 2003 Proxy Statement and
the section entitled "Compliance with Section 16(a) of the Securities Exchange
Act of 1934" in the Emmis 2003 Proxy Statement. All directors of ECC are also
directors of EOC.

Listed below is certain information about the executive officers of Emmis
or its affiliates who are not directors or nominees to be directors. All such
persons are executive officers of both ECC and EOC.




AGE AT YEAR FIRST
FEBRUARY 28, ELECTED
NAME POSITION 2003 OFFICER
---------------------- ------------------------------ ------------- -------------

Randall D. Bongarten Television Division President 52 2000

Richard F. Cummings Radio Division President 50 1984

Michael Levitan Senior Vice President - Human Resources 45 2002

Gary Thoe Publishing Division President 46 1998



Set forth below is the principal occupation for the last five years of each
executive officer of the Company or its affiliates who is not also a director.

Randall D. Bongarten has been employed as President of Emmis Television
since October 2000. He served as President of Emmis International from June 1998
to September 2002. Prior to June 1998, Mr. Bongarten had served as President of
GAF Broadcasting and as Executive Vice President of Operations for Emmis Radio
Division.

Richard F. Cummings was the Program Director of WENS from 1981 to March
1984, when he became the National Program Director and a Vice President of
Emmis. He became Executive Vice President--Programming in 1988 and became Radio
Division President in December 2001.

Michael Levitan has been employed as Senior Vice President - Human
Resources since September 2002, but he has served as a human resources
consultant to Emmis since 2000. Prior to joining Emmis, Mr. Levitan served as
Director of Human Resources for Apple Computer and as Executive Director of
Organizational Effectiveness and Assistant to the President of Cummins Engine.

Gary Thoe has been employed as President of Emmis Publishing since February
1998. Prior to February 1998, Mr. Thoe served as President and part owner of
Mayhill Publications, Inc.






ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is incorporated by reference from the
section entitled "Executive Compensation" in the Emmis 2003 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item with respect to ECC is incorporated
by reference from the section entitled "Voting Securities and Beneficial Owners"
in the Emmis 2003 Proxy Statement. ECC is the only holder of the common stock of
EOC.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference from the
section entitled "Certain Transactions" in the Emmis 2003 Proxy Statement.


ITEM 14. CONTROLS AND PROCEDURES


Quarterly Evaluation of the Companies' Disclosure Controls


Within the 90 days prior to the date of this Annual Report on Form 10-K, 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


Immediately following the Signatures section of this Annual Report, 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. 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 Annual Report
includes the information concerning the Controls Evaluation 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 Annual
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 Annual
Report. In the course of the Controls Evaluation, we sought to identify data
errors, controls 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 5 and 6 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 Annual 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.


From the date of the Controls Evaluation to the date of this Annual Report,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.


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.







PART IV

ITEM 15. EXHIBITS, FIANANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

Financial Statements

The financial statements filed as a part of this report are set forth under
Item 8.

Fianancial Statement Schedules

No financial statement schedules are required to be filed with this report.

Reports on Form 8-K

On January 13, 2003, the company filed a Form 8-K, reporting an Item 5
Other Event regarding its press release announcing operating results for its
quarter ended November 30, 2002

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
Emmis' Annual Report on Form 10-K/A for the fiscal 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.

4.1 Indenture dated February 12, 1999 among Emmis Communications Corporation,
certain subsidiary guarantors and IBJ Whitehall Bank and Trust Company, as
trustee, including as an exhibit thereto the form of note, incorporated by
reference to Exhibit 4.1 to Emmis' Registration Statement on Form S-4, File
No. 333-74377, as amended (the "1999 Registration Statement").

4.2 Indenture dated March 27, 2001 among Emmis Communications Corporation and
The Bank of Nova Scotia Trust Company of New York, as trustee, including as
an exhibit thereto the form of note, incorporated by reference to Exhibit
4.1 to Emmis' Registration Statement on Form S-4, File No. 333-621604, as
amended (the "2001 Registration Statement").

4.3 Form of stock certificate for Class A common stock, incorporated by
reference from Exhibit 3.5 to the 1994 Emmis Registration Statement on Form
S-1, File No. 33-73218, the "1994 Registration Statement".

10.1 Emmis Operating Company Profit Sharing Plan, as amended, effective March 1,
1997.++ *

10.2 Emmis Communications Corporation 1994 Equity Incentive Plan, incorporated
by reference from Exhibit 10.5 to the 1994 Registration Statement.++

10.3 The Emmis Communications Corporation 1995 Non-Employee Director Stock
Option Plan, incorporated by reference from Exhibit 10.15 to Emmis' Annual
Report on Form 10-K for the fiscal year ended February 28, 1995 (the "1995
10-K").++


10.4 The Emmis Communications Corporation 1995 Equity Incentive Plan
incorporated by reference from Exhibit 10.16 to the 1995 10-K.++

10.5 Emmis Communications Corporation 1997 Equity Incentive Plan, incorporated
by reference from Exhibit 10.5 to Emmis' Annual Report on Form 10-K for the
fiscal year ended February 28, 1998 (the "1998 10-K").++

10.6 Emmis Communications Corporation 1999 Equity Incentive Plan, incorporated
by reference from the Company's proxy statement dated May 26, 1999.++

10.7 Emmis Communications Corporation 2001 Equity Incentive Plan, incorporated
by reference from the Company's proxy statement dated May 25, 2001.++

10.8 Emmis Communications Corporation 2002 Equity Compensation Plan,
incorporated by reference from the Company's proxy statement dated May 30,
2002.++

10.9 Employment Agreement dated as of March 1, 1994, by and between Emmis
Broadcasting Corporation and Jeffrey H. Smulyan, incorporated by reference
from Exhibit 10.13 to Emmis' Annual Report on Form 10-K for the fiscal year
ended February 28, 1994 and amendment to Employment Agreement, effective
March 1, 1999, between the Company and Jeffrey H. Smulyan, incorporated by
reference from Exhibit 10.2 to Emmis' Quarterly Report on Form 10-Q for the
quarter ended November 30, 1999.++

10.10Fourth Amended and Restated Revolving Credit and Term Loan Agreement, and
First Amendment to Fourth Amended and Restated Revolving Credit and Term
Loan Agreement, incorporated by reference from Exhibits 10.1 and 10.2,
respectively, to Emmis' Form 8-K filed on April 12, 2001.

10.11Second Amendment to Fourth Amended and Restated Revolving Credit and Term
Loan Agreement, incorporated by reference from Exhibit 10.10 to Emmis'
Annual Report on Form 10-K for the fiscal year ended February 28, 2001.

10.12Third Amendment to Fourth Amended and Restated Revolving Credit and Term
Loan Agreement, incorporated by reference from Exhibit 10.1 to Emmis'
Quarterly Report on Form 10-Q for the quarter ended November 30, 2001.

10.13Fourth Amendment to Fourth Amended and Restated Revolving Credit and Term
Loan Agreement, incorporated by reference from Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended May 31, 2002.

10.14Asset Purchase Agreement, dated as of February 12, 2002, by and among
Entercom Communications Corporation and Emmis Communications Corporation
incorporated by reference from Exhibit 10.13 to Emmis' Annual Report on
Form 10-K for the fiscal year ended February 28, 2002 (the "2002 10-K").

10.15Asset Purchase Agreement, dated as of February 12, 2002, by and among
Entravision Communications Corporation and Emmis Communications Corporation
incorporated by reference from Exhibit 10.14 to the 2002 10-K.

10.16Purchase and Sale Agreement, dated as of May 7, 2000, by and among Lee
Enterprises, Incorporated, New Mexico Broadcasting Co. and Emmis
Communications Corporation, incorporated by reference from Exhibit 2.1 to
Emmis' Form 8-K filed on October 16, 2000.

10.17Option Agreement, dated as of June 5, 2000, by and among Hearst-Argyle
Properties, Inc. and Emmis Communications Corporation incorporated by
reference from Exhibit 10.16 to the 2002 10-K.

10.18Asset Purchase Agreement, dated as of June 21, 2000, by and among Sinclair
Radio of St. Louis, Inc., Sinclair Radio of St. Louis Licensee, LLC and
Emmis Communications Corporation, incorporated by reference from Exhibit
2.2 to Emmis' Form 8-K filed on October 16, 2000.

10.19Asset Exchange Agreement, dated as of October 6, 2000, between Emmis
Communications Corporation, Emmis 106.5 FM Broadcasting Corporation of St.
Louis and Emmis 106.5 FM License Corporation of St. Louis, and Bonneville
International Corporation and Bonneville Holding Company, incorporated by
reference from Exhibit 2.3 to Emmis' Form 8-K filed on October 16, 2000.


10.20Asset Purchase Agreement, dated as of June 19, 2000, by and among Emmis
Communications Corporation, AMFM Houston, Inc., AMFM Ohio, Inc. and AMFM
Radio Licenses, LLC, incorporated by reference from Exhibit 10.2 to Emmis'
Form 8-K filed on October 16, 2000.

10.21Employment Agreement dated as of March 1, 2002, by and between Emmis
Operating Company and Richard Cummings.* ++

10.22Employment Agreement dated as of September 9, 2002, by and between Emmis
Operating Company and Michael Levitan.* ++

10.23Employment Agreement dated as of March 1, 2003, by and between Emmis
Operating Company and Gary A. Thoe.* ++

10.24Employment Agreement dated as of March 1, 2002, by and between Emmis
Operating Company and Walter Z. Berger.* ++

16.1 Arthur Andersen LLP letter to the SEC dated June 20, 2002, incorporated by
reference to the Company's Current Report on Form 8-K/A filed June 20,
2002.

21.1 Subsidiaries of Emmis.*

23.1 Consent of Accountants.*

24.1 Powers of Attorney.*

99.1 Certification of CEO 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.*

99.2 Certification of CFO 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.*

99.3 Certification of CEO 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.*

99.4 Certification of CFO 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.*

- ------------------------
* Filed with this report.
++ Management contract or compensatory plan or arrangement.






Signatures.

Pursuant to the requirements of Section 13 or 15(d) 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 CORPORATION




Date: May 9, 2003 By: /s/ Jeffrey H. Smulyan
-----------------------
Jeffrey H. Smulyan
Chairman of the Board



Signatures.

Pursuant to the requirements of Section 13 or 15(d) 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 COMPANY




Date: May 9, 2003 By: /s/ Jeffrey H. Smulyan
-----------------------
Jeffrey H. Smulyan
Chairman of the Board






Pursuant to the requirements of the Securities Exchange Act of 1934, these
reports have been signed below by the following persons on behalf of the
registrants and on the dates indicated.

SIGNATURE TITLE

Date: May 9, 2003 /s/ Jeffrey H. Smulyan President, Chairman of the Board and
----------------------
Jeffrey H. Smulyan Director-Principal Executive Officer

Date: May 9, 2003 /s/ Walter Z. Berger Executive Vice President, Treasurer,
--------------------
Walter Z. Berger Chief Financial Officer and Director
-Principal Accounting Officer

Date: May 9, 2003 Susan B. Bayh* Director
-------------
Susan B. Bayh

Date: May 9, 2003 Gary L. Kaseff* Executive Vice President, General
--------------
Gary L. Kaseff Counsel and Director

Date: May 9, 2003 Richard A. Leventhal* Director
--------------------
Richard A. Leventhal

Date: May 9, 2003 Peter A. Lund* Director
-------------
Peter A. Lund

Date: May 9, 2003 Greg A. Nathanson* Director
-----------------
Greg A. Nathanson

Date: May 9, 2003 Frank V. Sica* Director
-------------
Frank V. Sica

Date: May 9, 2003 Lawrence B. Sorrel* Director
------------------
Lawrence B. Sorrel


*By: /s/ J. Scott Enright
J. Scott Enright
Attorney-in-Fact





CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER


I, Jeffrey H. Smulyan, certify that:

1. I have reviewed this annual report on Form 10-K of Emmis Communications
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 9, 2003

/s/ JEFFREY H. SMULYAN
Jeffrey H. Smulyan
Chairman of the Board, President and
Chief Executive Officer







CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Walter Z. Berger, certify that:

1. I have reviewed this annual report on Form 10-K of Emmis Communications
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 9, 2003

/s/ WALTER Z. BERGER
Walter Z. Berger
Executive Vice President, Treasurer
and Chief Financial Officer








CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1. I have reviewed this annual report on Form 10-K of Emmis Operating Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 9, 2003

/s/ JEFFREY H. SMULYAN
Jeffrey H. Smulyan
Chairman of the Board, President and
Chief Executive Officer







CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Walter Z. Berger, certify that:

1. I have reviewed this annual report on Form 10-K of Emmis Operating Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 9, 2003

/s/ WALTER Z. BERGER
Walter Z. Berger
Executive Vice President, Treasurer
and Chief Financial Officer