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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

[ X ]
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended August 31, 2003[   ]
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from             to


Commission File Number 0-9385

BULL RUN CORPORATION

(Exact name of registrant as specified in its charter)


Georgia
(State or other jurisdiction of
incorporation or organization)
    
    58-2458679
(I.R.S. Employer Identification No.)4370 Peachtree Road, N.E., Atlanta, GA
(Address of principal executive offices)
    
    30319
(Zip Code)


Registrants telephone number, including area code (404) 266-8333

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:  None
    
    Name of each exchange on which registered:  N/A


Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past
90 days.   þ Yes     o  No

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of 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.
o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange
Act.   o Yes     þ No

The aggregate market value of the voting and non-voting common equity held by
non-affiliates as of October 31, 2003 was $5,329,143 based on the closing price
thereof on The Nasdaq Stock Market.

The number of shares outstanding of the registrants Common Stock, par value
$.01 per share, as of October 31, 2003, was 4,339,052.

DOCUMENTS INCORPORATED BY REFERENCE

Documents
    
    Form 10-K ReferenceDefinitive Proxy Statement for the 2003
Annual Meeting of Shareholders
    
    Part II, Item 5 and
Part III, Items 10, 11, 12, 13 and 14






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BULL RUN CORPORATION

FORM 10-K

for the fiscal year ended August 31, 2003

INDEX

PagePART IItem 1.
    
    Business
    
    
    3Item 2.
    
    Properties
    
    
    7Item 3.
    
    Legal Proceedings
    
    
    7Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    8PART IIItem 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters
    
    
    9Item 6.
    
    Selected Financial Data
    
    
    10Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    12Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 8.
    
    Financial Statements and Supplementary Data
    
    
    33Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    66Item 9A.
    
    Controls and Procedures
    
    
    66PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    66Item 11.
    
    Executive Compensation
    
    
    67Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    67Item 13.
    
    Certain Relationships and Related Transactions
    
    
    67Item 14.
    
    Principal Accountant Fees and Services
    
    
    67PART IVItem 15.
    
    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
    
    
    68Signatures
    
    
    71


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PART I

Item 1. Business

General

Bull Run Corporation (Bull Run or the Company), based in Atlanta, Georgia,
is a sports and affinity marketing and management company through its sole
operating business, Host Communications, Inc. (Host), acquired in December
1999 (the Host-USA Acquisition). Hosts Collegiate Marketing and Production
Services business segment provides sports marketing and production services to
a number of collegiate conferences and universities, and on behalf of the
National Collegiate Athletic Association (NCAA). Hosts Affinity Events
business segment produces and manages individual events and several events
series, including NBA Hoop-It-Up® (the National Basketball Associations
official 3-on-3 basketball tour) and the Got Milk? 3v3 Soccer Shootout (a
3-on-3 soccer tour). Hosts Affinity Management Services business segment
provides associations such as the National Tour Association and Quest (the J.D.
Edwards users group association), with services ranging from member
communication, recruitment and retention, to conference planning, Internet web
site management, marketing and administration.

The Company formerly held significant investments in other sports, media and
marketing companies, including Gray Television, Inc. (Gray), the owner and
operator of 29 television stations, four newspapers and other communications
businesses, and Rawlings Sporting Goods Company, Inc. (Rawlings), a supplier
of team sports equipment. The Company currently owns 35.1% of the outstanding
common stock of iHigh, Inc. (iHigh), an Internet and marketing company
focused on high school students. The Company sold its investments in Gray
(representing approximately 4.0% of Grays outstanding common stock and
warrants to purchase additional shares of Gray common stocks) and Rawlings
(representing approximately 10.1% of Rawlings outstanding common stock) during
the fiscal year ended August 31, 2003. The Company has provided consulting
services to Gray in connection with certain of Grays acquisitions and
dispositions. J. Mack Robinson, the Companys Chairman of the Board, Hilton H.
Howell, Jr., the Companys Vice President, Secretary and a director, and Robert
S. Prather, Jr., the Companys President and Chief Executive Officer and a
director, are members of Grays board of directors. Mr. Robinson is also
Chairman and the Chief Executive Officer of Gray, Mr. Prather is also President
and Chief Operating Officer of Gray and Mr. Howell is Vice Chairman of Gray.

The Company changed its fiscal year end from June 30 to a new fiscal year end
of August 31, effective August 31, 2002.

For financial information for each of our business segments described below,
see Note 20 of the Notes to Consolidated Financial Statements appearing in Item
8 Financial Statements and Supplemental Data.

Collegiate Marketing and Production Services Segment

Collegiate Sports The Company, through Host, provides sports and marketing
services for a number of NCAA Division I universities and conferences. The
agreements relating to the services rendered by the Company vary by school or
conference, but typically provide for some or all of the following: (a) the
production of radio and television broadcasts of certain athletic events and
coaches shows; (b) sale of advertising during radio and television broadcasts
of games and coaches shows; (c) sale of media advertising and venue signage;
(d) sale of official sponsorship rights to corporations; (e) publishing,
printing and vending of game-day and other programs; (f) creative design of
materials; video production; construction and management of Internet web sites;
and (g) coaches endorsements and pay-per-view telecasts. Institutions and
organizations with which the Company has agreements are Boston College, Florida
State University, the University of Kentucky, the University of Michigan,
Mississippi State University, Purdue University, the University of Tennessee,
the University of Texas, the Metro Atlantic Athletic Conference and

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the
Southeastern Conference. The Company also has marketing rights to the SBC Red
River Shootout featuring the University of Texas and University of Oklahomas
annual football rivalry, and the Lone Star Showdown football game featuring
Texas and Texas A&M University.

The Company has published Dave Campbells Texas Football Magazine and has had
marketing rights to an annual series of football games that features six
prominent Texas high school teams. The Company also has partnered with the
Texas Radio Network to broadcast and televise key high school championship
events.

Contracts with institutions and organizations for marketing and production
services are generally three to five years in length and require the Company to
pay to the institution or organization: (a) an annual guaranteed rights fee;
(b) a percentage of revenues or profits derived from the relationship; or (c) a
combination thereof.

NCAA Group Under an agreement with CBS Sports (the Host-CBS Contract), the
Company: (a) has the exclusive rights to produce, distribute and sell all of
the approximately 150 game programs and publications in connection with 87 NCAA
championships; (b) engages in merchandise licensing utilizing registered marks
of the NCAA and its championships; and (c) coordinates, promotes and operates
the Hoop City festival interactive events at the Mens and Womens Final Four
Division I basketball championships. The agreement expires in 2006, with the
final two years at CBS Sports sole discretion.

In addition to the sublicensing rights through CBS Sports, the Company has an
exclusive license with NCAA Football USA, Inc. (NCAA Football) (a separate
501(c)(4) entity organized to promote college football). Under the terms of
this agreement, the Company is entitled to retain 40% of all revenues derived
through the sale of corporate sponsorships and all merchandise licensing
associated with the brand. Through its Integrated Media Group, the Company
produces various commercial spots and other media to promote the brand. The
Companys current contract with NCAA Football expires in 2013.

Integrated Media Group The Company produces more than 700 publications
annually for a variety of clients, including the NCAA, college football
conferences, universities, and various collegiate associations. The Companys
publications include game programs, media guides, posters and marketing
brochures, including the NCAA championship programs and specialty publications,
such as the official NCAA Basketball Championship Guide. The Company also
provides high quality printing services for corporations and non-profit
organizations nationwide, consisting of directories, annual reports, brochures,
posters, programs and catalogs.

The Company produces television programs, videos, radio broadcasts, commercial
audio and Internet related services, and administers the regional radio
networks of seven NCAA Division I universities and the Southeastern Conference.
The Companys digital recording studios handle network quality soundtracks for
radio, television and multi-image presentations.

The Company has collaborated with NCAA On-line and iHigh on www.finalfour.net,
the official site for the NCAA Division I Mens and Womens Basketball
Championships, the College World Series official site, other NCAA championship
sites and certain official collegiate sites. Other web sites developed and
managed by the Company include those for Quest (the J.D. Edwards software user
group association), the International SPA Association and the National Tour
Association.

Affinity Events Segment

The Companys Affinity Events division produces and manages large participatory
sporting events throughout the United States and Canada. In connection with
these events, the Company provides professional marketing and management
services to corporations looking to supplement their own sales and promotional
activities with sports-based events that target specific

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participating
audiences and demographics. The Company organizes and promotes the events,
sells national, regional and local sponsorships and advertising, and generates
merchandise sales. Sponsors and advertisers receive, among other benefits,
on-site consumer interactive opportunities, print and other media advertising,
and signage.

NBA Hoop-It-Up®, historically held in approximately 45 cities in the United
States and Canada each year, is the official 3-on-3 basketball tournament of
the National Basketball Association. The NBA Hoop-It-Up tours involved over
20,000 teams made up of approximately 88,000 participants in 2003. For 2004, the Company is in the process of restructuring its basketball events
into three primary tours: (a) the NBA Hoop-It-Up tour in the U.S., reduced to a
tour of events in approximately 15 major cities; (b) the NBA Hoop-It-Up tour in
Canada, continued to be held in 8 cities; and (c) a new basketball tour
currently in the formative stages, to be held in approximately 25 U.S. cities
generally on or near major college campuses.

The Company also operates the Got Milk? 3v3 Soccer Shootout, Major League
Soccers official 3-on-3 soccer tour, held in approximately 65 U.S. cities.
The tour culminates with a series of national championship matches held at
Disney World in Orlando, Florida. The 2003 tour involved approximately 10,000
teams made up of approximately 50,000 participants. The 2002 tour finals,
played in January 2003, attracted the highest number of attendees for any event
ever held at Disneys Wide World of Sports Complex.

The Company creates and executes events for corporate clients, including the
SBC Red River Shootout and the Sony TechPit mobile marketing unit, which
travels to NASCAR race sites to promote Sony products to NASCAR fans. Other
recent endeavors include a 3-on-3 Hispanic soccer event for NIKE in Los Angeles
and an Army mobile marketing unit tour.

Affinity Management Services Segment

The Affinity Management Services segment, doing business as Affinity Management
International, provides a full range of management services to a number of
associations, including the National Tour Association (which has been a client
since 1974), Quest (the J.D. Edwards software user group association) and the
International SPA Association. The Companys services include association
management, financial reporting, accounting, marketing, publishing, government
lobbying, education, event management, Internet web site management and
membership growth activities.

Consulting Segment

The Company has provided consulting services to Gray from time to time in
connection with Grays acquisitions, dispositions and acquisition financing.
Consulting services have included transaction search, analysis, due diligence,
negotiation and closing. Fees have generally been based on a rate of 1% of
transaction value. Gray has stated that it does not intend to engage the
Company for such services in the future.

Sales and Marketing

The Company provides sponsorship opportunities, typically ranging from one to
five years in length, to a variety of corporate clients having access to all of
the Companys vertically-integrated sponsorship fulfillment capabilities. The
Company also provides sports and marketing services for a number of NCAA
Division I universities and conferences, under contracts typically ranging from
three to five years in length. The Company intends to continue to seek
long-term sponsorship agreements.

The Company employs a full-time national sales and marketing staff and has
dedicated a senior group of sales and marketing executives to identify
potential client relationship opportunities and

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promote the Companys expertise
and range of services. The Company solicits prospective clients through its
sales team and through personal contacts by members of Hosts senior
management. When a new account is established, the Company immediately assigns
a sales executive to the client to ensure that the clients needs are met and
to seek out further opportunities to expand the relationship. Generally,
account managers are assigned several different clients, which may be comprised
of a number of businesses or divisions, departments or groups within the same
business. In addition, the personnel that staff the Companys offices on
university campuses and at athletic conference locations are responsible for
soliciting local sponsors and advertisers.

Competition

As a provider of marketing services, the Company competes with suppliers of
traditional advertising in broadcast and print media as well as with other
marketing service producers and internal marketing
programs. The competition for brand marketing expenditures is very intense and
highly fragmented. The Company believes that in certain of its business
segments, certain of its competitors have capabilities and resources comparable
to and in some respects greater than those of the Company; however, the Company
does not believe that there is any other competitor that currently provides all
of the marketing and integrated media services offered by the Company. The
Companys success will depend on its ability to create value-added marketing
opportunities that utilize its uniquely wide range of service capabilities.

Seasonality

The Companys Collegiate Marketing and Production Services business is
seasonal, in that the majority of the revenue and operating profit is derived
from the period beginning in September and concluding in March, since much of
the revenue derived in this segment is related to events and promotions held
during the collegiate football and basketball seasons.

The Companys Affinity Events business is seasonal, in that the majority of the
revenue and operating profit is derived during the period beginning in March
and ending in September, since much of the revenue derived in this segment is
currently generated from the Companys basketball and soccer tours, which
operate primarily during the spring and summer months.

Employees

The Company has approximately 330 full-time and approximately 50 part-time
employees, of whom, approximately 240 are employed by Host at its Lexington,
Kentucky facilities and approximately 30 are employed by Host at its Dallas,
Texas facility. The balance of the employees are located in offices throughout
the United States supporting either sales or the collegiate properties. The
Company is not a party to any collective bargaining agreements and believes its
relations with its employees are satisfactory.

Executive Officers

The information contained in Item 10 hereof is incorporated herein by
reference.

Discontinued Segment  Datasouth

The Company formerly marketed and sold heavy-duty dot matrix and thermal
printers under the Datasouth name. The Company sold its Datasouth business
in September 2000. For additional information with respect to this business
segment, including financial reporting as a discontinued operation, see
Managements Discussion and Analysis  Discontinued Operations in Item 7
hereof and Note 5 to the Companys Consolidated Financial Statements in Item 8.

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Available Information

The Companys Internet address is www.bullruncorp.com, where the Company makes
available, free of charge, the Companys annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and any amendments to those
reports, as soon as practicable after such reports are electronically filed
with, or furnished to, the SEC. The SEC reports can be accessed through the
SEC Reports link in the index on the Companys web site. Other information
found on our web site is not part of this or any other report we file with or
furnish to the SEC.

The public may also read and copy any materials the Company files with the SEC
at the SECs Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, at www.sec.gov.

Item 2. Properties

The Companys executive offices are located in Atlanta, Georgia in
approximately 2,000 square feet of office space leased on a month-to-month
basis from Delta Life Insurance Company, a company in which the Companys
Chairman of the Board is an executive officer and principal stockholder.

The Company owns seven acres of land and a building with approximately 25,000
square feet of production, office and warehouse space in Lexington, Kentucky
for Hosts Printing and Publishing Divisions. Host also has approximately
41,000 square feet of office space under two leases in Lexington expiring in
October 2004; approximately 48,600 square feet of office space under lease in
Dallas, Texas through December 2005, of which, approximately 37,000 is
subleased through December 2005; and approximately 4,300 square feet of office
space under lease in New York City through August 2010. Host also has small
regional and local field offices primarily located close to the universities
and conferences with which it has contracts.

Item 3. Legal Proceedings

Sarkes Tarzian, Inc. v. Bull Run Corporation and Gray Television, Inc.

In January 1999, the Company acquired shares of Sarkes Tarzian, Inc.
(Tarzian) common stock, $4.00 par value, (the Tarzian Shares) from the
Estate of Mary Tarzian (the Estate) for $10.0 million. In March 1999, the
Company and Gray entered into an option agreement whereby Gray purchased an
option to acquire the Tarzian Shares from the Company, and in December 2001,
Gray exercised such option, purchasing the Tarzian Shares from the Company for
$10.0 million. During the option period, the Company received fees from Gray
in the aggregate amount of $3.2 million.

On February 12, 1999, Tarzian filed suit in the United States District Court
for the Southern District of Indiana against U.S. Trust Company of Florida
Savings Bank as Personal Representative of the Estate, claiming that Tarzian
had a binding and enforceable contract to purchase the Tarzian Shares from the
Estate. On February 3, 2003, the Court entered judgment on a jury verdict in
favor of Tarzian for breach of contract and awarded Tarzian $4.0 million in
damages. On June 23, 2003, the Court denied the Estates renewed motion
for judgment as a matter of law, and alternatively, for a new trial on the
issue of liability; denied Tarzians motion to amend the judgment to award
Tarzian specific performance of the contract and title to the Tarzian Shares;
and granted Tarzians motion to amend the judgment to include pre-judgment
interest on the $4.0

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million damage award. The Estate has appealed the
judgment and the Courts rulings on the post-trial motions and Tarzian has
cross-appealed. The Company cannot predict when the final resolution of this
litigation will occur.

On March 7, 2003, Tarzian filed suit in the United States District Court for
the Northern District of Georgia against Gray and the Company for tortious
interference with contract and conversion. The lawsuit alleges that Bull Run
and Gray purchased the Tarzian Shares with actual knowledge that
Tarzian had a binding agreement to purchase the stock from the Estate. The
lawsuit seeks damages in an amount equal to the liquidation value of the
interest in Tarzian that the stock represents, which Tarzian claims to be as
much as $75 million, as well as attorneys fees, expenses, and punitive
damages. The lawsuit also seeks an order requiring Gray and the Company to
turn over the Tarzian Shares to Tarzian and relinquish all claims to the stock.
The stock purchase agreement with the Estate would permit the Company to make
a claim against the Estate in the event that title to the Tarzian Shares is
ultimately awarded to Tarzian. There is no assurance that the Estate would have
sufficient assets to honor any or all of such claim. The Company filed its
answer to the lawsuit on May 14, 2003 denying any liability for Tarzians
claims. The Company believes it has meritorious defenses and intends to
vigorously defend the lawsuit. The Company cannot predict when the final
resolution of this litigation will occur.

Bull Run Corporation v. Ernst & Young, LLP

In January 2002, the Company filed a lawsuit in the State Court of Fulton
County, Georgia, against Ernst & Young LLP, as previously reported on the
Companys Form 8-K dated January 8, 2002. In September 2002, the Court ruled
that the matter was subject to arbitration. The arbitration hearing was
conducted in September 2003 and the arbitration panel ruled against the Company
on one of the Companys assertions in its demand and in favor of the Company on
another assertion, resulting in an award for the Company of an immaterial
amount.

Item 4. Submission of Matters to a Vote of Security Holders

The Company did not submit any matter to a vote of security holders during the
quarter ended August 31, 2003.

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PART II

Item 5. Market for the Registrants Common Equity and Related Stockholder Matters

Market Information

The Companys common stock, par value $.01 per share, trades on the Nasdaq
SmallCap Market under the symbol BULL. The following table sets forth for
each period indicated the high and low sale prices for the Companys common
stock as reported by The Nasdaq Stock Market (Nasdaq). Such prices reflect
interdealer prices without adjustments for retail markups, markdowns or
commissions. Per share amounts have been retroactively adjusted for a 1-for-10
reverse stock split effective May 18, 2003. The Company changed its fiscal
year end from June 30 to a new fiscal year end of August 31, effective August
31, 2002.

|                                       |  |      |       |     |  |   |      | 
|-------------------------------------- |  | ---- | ----- | --- |  | - | ---- | 
|                                       |  | High |       | Low
|                                       |  |      |       |    
|Fiscal Year Ended June 30, 2002        |  |      |       |     |  |   |      | 
|First Quarter ended September 30, 2001 |  | $    | 15.10 |     |  | $ | 7.80 | 
|Second Quarter ended December 31, 2001 |  |      | 12.90 |     |  |   | 4.70 | 
|Third Quarter ended March 31, 2002     |  |      | 12.50 |     |  |   | 5.30 | 
|Fourth Quarter ended June 30, 2002     |  |      | 10.40 |     |  |   | 5.80 | 
|Two Months Ended August 31, 2002       |  | $    | 9.50  |     |  | $ | 3.90 | 
|Fiscal Year Ended August 31, 2003      |  |      |       |     |  |   |      | 
|First Quarter ended November 30, 2002  |  | $    | 7.20  |     |  | $ | 4.30 | 
|Second Quarter ended February 28, 2003 |  |      | 10.20 |     |  |   | 3.00 | 
|Third Quarter ended May 31, 2003       |  |      | 5.70  |     |  |   | 3.00 | 
|Fourth Quarter ended August 31, 2003   |  |      | 3.78  |     |  |   | 2.74 | 

As of August 31, 2003, the Company did not meet all of Nasdaqs continued
listing maintenance requirements due to its stockholders deficit as of that
date. Subsequent to August 31, 2003, the Company decreased its stockholders
deficit by over $10 million as a result of the issuance of shares of its
preferred stock in exchange for over $8 million of its long-term debt, and in
consideration for $2 million in cash invested by the Companys Chairman of its
board of directors. Management is continuing to pursue means by which the
Company can meet and exceed Nasdaqs minimum stockholders equity requirement
of $2.5 million; however, management acknowledges that it is
likely that Nasdaq will not
ultimately provide the Company sufficient additional time to regain compliance prior to a
delisting of the Companys common stock from the Nasdaq SmallCap Market. If
the Company is unable to comply with Nasdaqs requirements in an amount of time
acceptable to Nasdaq, the Companys common stock would be delisted by Nasdaq
and begin trading on the OTC Bulletin Board under the same trading symbol.

Holders

As of October 31, 2003, there were 2,213 holders of record of the Companys
common stock.

Dividends

Since its inception, the Company has not declared or paid a cash dividend on
its common stock. It is the present policy of the Companys Board of Directors
to retain all earnings to finance the development and growth of the Companys
business. The Companys future dividend policy will depend upon its earnings,
capital requirements, financial condition and

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other relevant circumstances
existing at that time. The Companys bank credit agreement also contains
restrictions on the Companys ability to declare and pay dividends on its
common stock.

Equity Plan Compensation Information

The information required by the item is set forth under the caption Management
Compensation  Equity Plan Compensation Information in the Companys Proxy
Statement to be filed with the Commission not later than 120 days after the end
of the Companys fiscal year, which is incorporated by reference herein.

Item 6. Selected Financial Data

Set forth below are certain selected historical consolidated financial
data of the Company. This information should be read in conjunction with the
audited consolidated financial statements of the Company and related notes
thereto appearing elsewhere herein, as well as Managements Discussion and
Analysis. The selected consolidated financial data as of and for the fiscal
year ended August 31, 2003; as of and for the two months ended August 31, 2002;
as of and for the fiscal years ended June 30, 2002 and 2001; as of and for the
six months ended June 30, 1999; and as of and for the fiscal year ended
December 31, 1998 are derived from the audited consolidated financial
statements of the Company. The selected consolidated financial data for the
two months ended August 31, 2001, for the year ended June 30,
2000 and for the six months ended June 30, 1998 are
derived from unaudited condensed consolidated financial statements of the
Company.

SELECTED FINANCIAL DATA
(Dollar and share amounts in thousands, except per share amounts)

OPERATING RESULTS:

|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |        |  
|------------------------------------------------------------------------- | -------------------- | - | ---------- | ------- | ---------- | - | ------------------- | ------ | ---- | - | ---------- | ------ | ---------- | - | ---------- | ------- | ---------- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                          |                      |   |            |         |            |   | Two Months Ended    |        |      |   |            |        |            |   |            |         |            |   |        
|                                                                          |                      |   | Year Ended |         | August 31, |   | Year Ended June 30,
|                                                                          |                      |   | August 31, |         |            |   |                    
|                                                                          |                      |   | 2003       |         | 2002       |   | 2001                |        | 2002 |   | 2001       |        | 2000      
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |           
|                                                                          |                      |   |            |         |            |   |                     |        |      |   | (restated) |        | (restated) |   | (restated) |         | (restated)
|Total revenue                                                             |                      | $ | 83,844     |         |            | $ | 9,490               |        |      | $ | 12,777     |        |            | $ | 113,072    |         |            | $ | 120,337 |        |   | $ | 72,000  |       
|Direct operating costs                                                    |                      |   | (55,069    | )       |            |   | (7,265              | )      |      |   | (8,082     | )      |            |   | (88,531    | )       |            |   | (81,421 | )      |   |   | (49,437 | )     
|Selling, general and administrative                                       |                      |   | (25,878    | )       |            |   | (5,643              | )      |      |   | (6,154     | )      |            |   | (32,773    | )       |            |   | (38,527 | )      |   |   | (21,891 | )     
|Amortization and impairment of acquisition
intangibles                    |                      |   | (31,756    | )       |            |   | (203                | )      |      |   | (171       | )      |            |   | (7,824     | )       |            |   | (4,720  | )      |   |   | (2,847  | )     
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|                                                                          | Loss from operations |   |            | (28,859 | )          |   |                     | (3,621 | )    |   |            | (1,630 | )          |   |            | (16,056 | )          |   |         | (4,331 | ) |   |         | (2,175 | )
|Equity in earnings (losses) of affiliated
companies                       |                      |   | (204       | )       |            |   | (110                | )      |      |   | (554       | )      |            |   | (2,912     | )       |            |   | (4,235  | )      |   |   | (2,533  | )     
|Correction of purchase price allocation                                   |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   | (11,330 | )     
|Other income (expense) derived from
investments in affiliates, net        |                      |   | 9,622      |         |            |   |                     |        |      |   | (250       | )      |            |   | 242        |         |            |   | (6,796  | )      |   |   | (2,360  | )     
|Net change in value of derivatives                                        |                      |   | (1,035     | )       |            |   | (423                | )      |      |   | (632       | )      |            |   | (3,345     | )       |            |   | 2,988   |        |   |   |         |       
|Interest expense and other, net                                           |                      |   | (10,593    | )       |            |   | (1,201              | )      |      |   | (1,948     | )      |            |   | (12,042    | )       |            |   | (11,891 | )      |   |   | (7,909  | )     
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|Loss from continuing operations before
income taxes and cumulative effect |                      |   | (31,069    | )       |            |   | (5,355              | )      |      |   | (5,014     | )      |            |   | (34,113    | )       |            |   | (24,265 | )      |   |   | (26,307 | )     
|Income tax benefit (provision)                                            |                      |   | (5,222     | )       |            |   |                     |        |      |   | 1,586      |        |            |   | 2,175      |         |            |   | 6,681   |        |   |   | 5,322   |       
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|Loss from continuing operations before
cumulative effect, net of tax      |                      |   | (36,291    | )       |            |   | (5,355              | )      |      |   | (3,428     | )      |            |   | (31,938    | )       |            |   | (17,584 | )      |   |   | (20,985 | )     
|Cumulative effect of accounting change,
net of tax                        |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   | (2,620     | )       |            |   | (1,120  | )      |   |   |         |       
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|Loss from continuing operations                                           |                      |   | (36,291    | )       |            |   | (5,355              | )      |      |   | (3,428     | )      |            |   | (34,558    | )       |            |   | (18,704 | )      |   |   | (20,985 | )     
|Loss from discontinued operations, net of tax                             |                      |   | (1,695     | )       |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   | (6,839  | )     
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|Net loss                                                                  |                      |   | (37,986    | )       |            |   | (5,355              | )      |      |   | (3,428     | )      |            |   | (34,558    | )       |            |   | (18,704 | )      |   |   | (27,824 | )     
|Preferred dividends                                                       |                      |   | (1,149     | )       |            |   | (93                 | )      |      |   | (45        | )      |            |   | (396       | )       |            |   |         |        |   |   |         |       
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       
|Net loss available to common stockholders                                 |                      | $ | (39,135    | )       |            | $ | (5,448              | )      |      | $ | (3,473     | )      |            | $ | (34,954    | )       |            | $ | (18,704 | )      |   | $ | (27,824 | )     
|                                                                          |                      |   |            |         |            |   |                     |        |      |   |            |        |            |   |            |         |            |   |         |        |   |   |         |       

See Notes to the Selected Financial Data on page 12.

10



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##### 



SELECTED FINANCIAL DATA, continued

OPERATING RESULTS:

|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |     | 
|------------------------------------------------------------ | ----------------------------- | - | ---------------- | --- | ------------ | - | ------ | --- | - | - | ------ | --- | 
|                                                             |                               |   | Six Months Ended |     |              |   |       
|                                                             |                               |   | June 30,         |     | Year Ended  
|                                                             |                               |   |                  |     | December 31,
|                                                             |                               |   | 1999             |     | 1998         |   | 1998  
|                                                             |                               |   |                  |     |              |   |       
|Total revenue                                                |                               | $ | 609              |     |              | $ | 652    |     |   | $ | 1,618  |    
|Selling, general and administrative                          |                               |   | (693             | )   |              |   | (691   | )   |   |   | (1,312 | )  
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    
|                                                             | Income (loss) from operations |   |                  | (84 | )            |   |        | (39 | ) |   |        | 306 | 
|Equity in earnings (losses) of affiliated companies          |                               |   | (910             | )   |              |   | (61    | )   |   |   | 6,337  |    
|Other income derived from investments in affiliates, net     |                               |   |                  |     |              |   |        |     |   |   | 1,680  |    
|Interest expense and other, net                              |                               |   | (1,858           | )   |              |   | (1,547 | )   |   |   | (3,162 | )  
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    
|Income (loss) from continuing operations before income taxes |                               |   | (2,852           | )   |              |   | (1,647 | )   |   |   | 5,161  |    
|Income tax benefit (provision)                               |                               |   | 911              |     |              |   | 509    |     |   |   | (2,094 | )  
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    
|Income (loss) from continuing operations                     |                               |   | (1,941           | )   |              |   | (1,138 | )   |   |   | 3,067  |    
|Income (loss) from discontinued operations, net of tax       |                               |   | (266             | )   |              |   | (92    | )   |   |   | 81     |    
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    
|Net income (loss)                                            |                               |   | (2,207           | )   |              |   | (1,230 | )   |   |   | 3,148  |    
|Preferred dividends                                          |                               |   |                  |     |              |   |        |     |   |   |        |    
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    
|Net income (loss) available to common stockholders           |                               | $ | (2,207           | )   |              | $ | (1,230 | )   |   | $ | 3,148  |    
|                                                             |                               |   |                  |     |              |   |        |     |   |   |        |    

EARNINGS (LOSS) PER SHARE:

|                                                                                |                                                                                                                |                   |   |            |       |            |   |                     |       |      |   |            |       |            |   |       |       |  |   |       |       |  |   |       |       | 
|------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ----------------- | - | ---------- | ----- | ---------- | - | ------------------- | ----- | ---- | - | ---------- | ----- | ---------- | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                                                                |                                                                                                                |                   |   |            |       |            |   | Two Months Ended    |       |      |   |            |       |            |   |       |       |  |   |      
|                                                                                |                                                                                                                |                   |   | Year Ended |       | August 31, |   | Year Ended June 30,
|                                                                                |                                                                                                                |                   |   | August 31, |       |            |   |                    
|                                                                                |                                                                                                                |                   |   | 2003       |       | 2002       |   | 2001                |       | 2002 |   | 2001       |       | 2000      
|                                                                                |                                                                                                                |                   |   |            |       |            |   |                     |       |      |   |            |       |           
|                                                                                |                                                                                                                |                   |   |            |       |            |   |                     |       |      |   | (restated) |       | (restated) |   |       |       |  |   |       |       | 
|Earnings (loss) per share available to
common stockholders - Basic and Diluted: |                                                                                                                |                   |   |            |       |            |   |                     |       |      |   |            |       |            |   |       |       |  |   |       |       |  |   |      
|                                                                                | Loss available to common stockholders
from continuing operations before
cumulative effect of accounting change |                   | $ | (9.39      | )     |            | $ | (1.44               | )     |      | $ | (0.96      | )     |            | $ | (8.86 | )     |  | $ | (4.98 | )     |  | $ | (7.23 | )    
|                                                                                | Loss available to common stockholders
from continuing operations                                               |                   | $ | (9.39      | )     |            | $ | (1.44               | )     |      | $ | (0.96      | )     |            | $ | (9.58 | )     |  | $ | (5.30 | )     |  | $ | (7.23 | )    
|                                                                                | Income (loss) from discontinued operations,
net of tax                                                         |                   | $ | (0.43      | )     |            |   |                     |       |      |   |            |       |            |   |       |       |  |   |       |       |  | $ | (2.35 | )    
|                                                                                | Net loss available to common stockholders                                                                      |                   | $ | (9.82      | )     |            | $ | (1.44               | )     |      | $ | (0.96      | )     |            | $ | (9.58 | )     |  | $ | (5.30 | )     |  | $ | (9.58 | )    
|Weighted average shares outstanding -                                           |                                                                                                                |                   |   |            |       |            |   |                     |       |      |   |            |       |            |   |       |       |  |   |       |       |  |   |      
|                                                                                |                                                                                                                | Basic and Diluted |   |            | 3,987 |            |   |                     | 3,793 |      |   |            | 3,599 |            |   |       | 3,649 |  |   |       | 3,531 |  |   |       | 2,904 | 

EARNINGS (LOSS) PER SHARE:

|                                              |                                                        |  |                  |       |              |  |       |       |   |  |       |      | 
|--------------------------------------------- | ------------------------------------------------------ |  | ---------------- | ----- | ------------ |  | ----- | ----- | - |  | ----- | ---- | 
|                                              |                                                        |  | Six Months Ended |       |              |  |      
|                                              |                                                        |  | June 30,         |       | Year Ended  
|                                              |                                                        |  |                  |       | December 31,
|                                              |                                                        |  | 1999             |       | 1998         |  | 1998 
|                                              |                                                        |  |                  |       |              |  |      
|Earnings (loss) per share - Basic:            |                                                        |  |                  |       |              |  |       |       |   |  |       |     
|                                              | Income (loss) from continuing operations               |  | $                | (0.87 | )            |  | $     | (0.52 | ) |  | $     | 1.38 | 
|                                              | Income (loss) from discontinued operations,
net of tax |  | $                | (0.12 | )            |  | $     | (0.04 | ) |  | $     | 0.04 | 
|                                              | Net income (loss)                                      |  | $                | (0.99 | )            |  | $     | (0.56 | ) |  | $     | 1.42 | 
|Weighted average shares outstanding - Basic   |                                                        |  | 2,233            |       |              |  | 2,209 |       |   |  | 2,218 |     
|Earnings (loss) per share - Diluted:          |                                                        |  |                  |       |              |  |       |       |   |  |       |     
|                                              | Income (loss) from continuing operations               |  | $                | (0.87 | )            |  | $     | (0.52 | ) |  | $     | 1.32 | 
|                                              | Income (loss) from discontinued operations,
net of tax |  | $                | (0.12 | )            |  | $     | (0.04 | ) |  | $     | 0.04 | 
|                                              | Net income (loss)                                      |  | $                | (0.99 | )            |  | $     | (0.56 | ) |  | $     | 1.36 | 
|Weighted average shares outstanding - Diluted |                                                        |  | 2,233            |       |              |  | 2,209 |       |   |  | 2,318 |     

See Notes to the Selected Financial Data on page 12.

11



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##### 



SELECTED FINANCIAL DATA, continued

FINANCIAL POSITION:

|                                   |  |                  |         |                |  |              |         |            |  |      |         |      |  |            |         |   |  |   |         |  |  |   |         |   |  |   |        | 
|---------------------------------- |  | ---------------- | ------- | -------------- |  | ------------ | ------- | ---------- |  | ---- | ------- | ---- |  | ---------- | ------- | - |  | - | ------- |  |  | - | ------- | - |  | - | ------ | 
|                                   |  | As of August 31, |         | As of June 30, |  | As of       
|                                   |  |                  |         |                |  | December 31,
|                                   |  | 2003             |         | 2002           |  | 2002         |         | 2001       |  | 2000 |         | 1999 |  | 1998      
|                                   |  |                  |         |                |  |              |         |            |  |      |         |      |  |           
|                                   |  |                  |         |                |  | (restated)   |         | (restated) |  |      |         |      |  | (restated) |         |   |  |   |         |  |  |  
|Working capital (deficit)          |  | $                | (12,034 | )              |  | $            | (32,252 | )          |  | $    | (26,827 | )    |  | $          | (16,951 | ) |  | $ | 5,449   |  |  | $ | (61,595 | ) |  | $ | 4,074  | 
|Investment in affiliated
companies |  |                  |         |                |  |              | 25,013  |            |  |      | 25,115  |      |  |            | 50,399  |   |  |   | 64,782  |  |  |   | 73,994  |   |  |   | 63,361 | 
|Total assets                       |  |                  | 76,610  |                |  |              | 146,969 |            |  |      | 155,594 |      |  |            | 206,538 |   |  |   | 231,126 |  |  |   | 99,903  |   |  |   | 90,694 | 
|Long-term obligations              |  |                  | 72,641  |                |  |              | 93,091  |            |  |      | 98,091  |      |  |            | 107,693 |   |  |   | 122,794 |  |  |   |         |   |  |   | 51,848 | 
|Stockholders equity
(deficit)     |  |                  | (27,002 | )              |  |              | (2,188  | )          |  |      | (1,274  | )    |  |            | 37,604  |   |  |   | 51,864  |  |  |   | 25,279  |   |  |   | 27,022 | 

NOTES TO THE SELECTED FINANCIAL DATA

The changes from year to year are primarily a result of the following items:



|2003
 | Sale of investments in Gray common stocks, warrants for Gray common
stocks and Rawlings common stock, with $38 million of the proceeds being
applied to long-term debt; impairment charge of $30.5 million taken to
reduce the carrying value of goodwill and other acquisition intangible
assets; and an aggregate of $5.2 million in valuation impairment charges
taken to reduce carrying value of investments in affiliates and non-trade
receivables.                                   
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|2002
 | Sale of investments in Gray preferred stock and Tarzian common stock
with such proceeds being applied to long-term debt; and the acceleration
of costs and expenses, including an intangibles impairment charge, as a
result of a change in a significant contractual relationship;
proportionate share of Grays cumulative effect adjustment, net of tax.                                                                                                                                  
|      
|2001
 | First full year of Host and USA operating results included in the
Companys consolidated financial statements; $9.0 million pretax charge
recognized to reduce book value of certain equity investments; change in
accounting for certain derivatives resulting in a cumulative effect
adjustment; and the inclusion of the net change in the value of
derivatives in the Companys operating results.                                                                                       
|      
|2000
 | Acquisition of Host, USA and Capital in December 1999 for $116.9
million, financed with common stock, options to acquire common stock and
long-term debt; decision to sell Datasouth (consummated in September 2000)
resulting in an estimated loss of $6.5 million and reclassification of the
segment as a discontinued operation; and the subsequent discovery of
accounting errors in USAs financial statements as of the acquisition date
resulted in a pretax charge of $11.3 million.
|      
|1999
 | Investment in Tarzian, financed with short-term debt; all amounts
outstanding under long-term debt agreements were classified as current
liabilities until December 1999, when the obligations were refinanced.                                                                                                                                                                                                                                                                              

No dividends were declared or paid during the periods presented.



|Amounts                                                                                                                             | presented for the fiscal years ended June 30, 2002 and 2001, and
amounts presented as of August 31, 2002 have been restated where
applicable to reflect the correction of errors discussed in Note 2 to the
consolidated financial statements. Amounts presented for the fiscal year
ended June 30, 2000 have likewise been restated, as follows: (a)
amortization and impairment of acquisition intangibles was previously
reported to be $2,602; (b) the loss from operations was previously
reported to be $(1,930); (c) the loss from continuing operations before
income taxes and cumulative effect was previously reported to be
$(26,062); and (d) the income tax benefit was previously reported to be
$5,077. Amounts presented as of June 30, 2002 have likewise been restated
as follows: (a) total assets were previously reported to be $160,999; and
(b) total stockholders equity was previously reported to be $4,131. The
amount of total assets previously reported as of June 30, 2000 of $222,306
has likewise been restated.
|----------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                   
|Share and per share data have been retroactively adjusted for the effects of a
1-for-10 reverse stock split effective May 18, 2003.

Item 7. Managements Discussion and Analysis

OVERVIEW

Bull Run Corporation (Bull Run or the Company), based in Atlanta, Georgia,
is a sports and affinity marketing and management company through its sole
operating business, Host Communications, Inc. (Host), acquired in December
1999 (the Host-USA Acquisition). Hosts Collegiate Marketing and Production
Services business segment provides sports marketing and production services to
a number of collegiate conferences and universities, and on behalf of the
National Collegiate Athletic Association (NCAA). Hosts Affinity Events

12



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business segment produces and manages individual events and several events
series, including NBA Hoop-It-Up® (the National Basketball Associations
official 3-on-3 basketball tour) and the Got Milk? 3v3 Soccer Shootout (a
3-on-3 soccer tour). Hosts Affinity Management Services business segment
provides associations such as the National Tour Association and Quest (the J.D.
Edwards users group association), with services ranging from member
communication, recruitment and retention, to conference planning, Internet web
site management, marketing and administration.

The Company formerly held significant investments in other sports, media and
marketing companies, including Gray Television, Inc. (Gray), the owner and
operator of 29 television stations, four newspapers and other communications
businesses, and Rawlings Sporting Goods Company, Inc. (Rawlings), a supplier
of team sports equipment. The Company currently owns 35.1% of the outstanding
common stock of iHigh, Inc. (iHigh), an Internet and marketing company
focused on high school students. The Company sold its investments in Gray
(representing approximately 4.0% of Grays outstanding common stock and
warrants to purchase additional shares of Gray common stocks) and Rawlings
(representing approximately 10.1% of Rawlings outstanding common stock) during
the fiscal year ended August 31, 2003. The Gray common stocks and warrants
were sold by the Company to Gray and other parties affiliated with the Company,
including the Companys Chairman of its board of directors. The Company has
provided consulting services to Gray in connection with certain of Grays
acquisitions and dispositions.

In the fiscal year ended June 30, 2002, the Company sold its investment in
Sarkes Tarzian, Inc. (Tarzian) to Gray. The Company owned 33.5% of the total
outstanding common stock of Tarzian both in terms of the number of shares of
common stock outstanding and in terms of voting rights (representing 73% of the
equity of Tarzian for purposes of dividends, as well as distributions in the
event of any liquidation, dissolution or other termination of Tarzian.

The Company changed its fiscal year end from June 30 to a new fiscal year end
of August 31, effective August 31, 2002. As a result of this change, the
Company has reported herein the audited consolidated financial results for the
fiscal years ended August 31, 2003, June 30, 2002 and June 30, 2001, and the
two months ended August 31, 2002, as well as unaudited consolidated financial
statements for the two months ended August 31, 2001.

CERTAIN RELATIONSHIPS

J. Mack Robinson, Chairman of the board of the Company, is Chief Executive
Officer, Chairman and a director of Gray, and the beneficial owner of Gray
common stocks representing approximately 31.0% of the combined voting power of
Grays two classes of common stock as of the date of the Companys disposition
of its investment in Gray common stocks. Additionally, Mr. Robinson is the
beneficial owner of approximately 40.9% of the Companys common stock as of
October 31, 2003, and Mr. Robinson and his affiliates also own shares of the
Companys convertible preferred stock having an aggregate face amount of
approximately $17.7 million as of that date. Robert S. Prather, Jr.,
President, Chief Executive Officer and a director of the Company, is President,
Chief Operating Officer and a director of Gray, and the beneficial owner of
Gray common stocks representing approximately 20.2% of the combined voting
power of Grays two classes of common stock as of that date. Hilton H. Howell,
Jr., the Companys Vice President and Secretary, is Vice Chairman and a
director of Gray, and the beneficial owner of Gray common stocks representing
approximately 23.3% of the combined voting power of Grays two classes of
common stock as of the same date. Each of Messrs. Robinson, Prather and
Howells beneficial ownership percentages noted above includes the Companys
beneficial ownership of approximately 17.2% of the combined voting power of
Grays two classes of common stock. Beneficial ownership percentages include

13



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warrants and options to acquire shares of Gray common stocks that were
exercisable on, or within 60 days after, such date.

Mr. Robinson personally guarantees substantially all of the debt outstanding
under the Companys bank credit facility. Under the terms of his guarantee,
Mr. Robinson has the option to purchase the entire loan from the banks, and
thereby would become the holder of the debt currently payable to the banks and
the related lien on the Companys assets.

W, James Host, a director of the Company, owns along with his wife, shares of
the Companys convertible preferred stock having an aggregate face amount of
approximately $1.8 million.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
judgments and estimations that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. The Company considers the following accounting policies to be
critical policies that require judgments or estimations in their application
where variances in those judgments or estimations could make a significant
difference to future reported results.

Revenue Recognition and Rights
Fee Expenses 
Revenue from services is recognized as the services are rendered. Corporate
sponsor license fee revenue that is not related to specific events is
recognized ratably over the term of the sponsorship. In certain circumstances,
the Company enters into contractual arrangements with associations or
institutions it represents in various capacities which involve payment of
guaranteed rights fees. Guaranteed rights fee expense that is not related to
specific events is recognized ratably over the term specified in the contract.
The Companys contractual arrangements with associations or institutions may
also involve net profit sharing arrangements (profit splits) based on the net
profit associated with services rendered under the contract. Profit split
expense is accrued over the contract period, based on estimates, and is
adjusted at the end of the contract term in order to reflect the actual profit
split.

Goodwill and Other Intangible Assets 

Prior to July 1, 2001, goodwill and certain purchased intangible assets (i.e.,
trademarks) were amortized over 20 years. Effective July 1, 2001, the Company
adopted Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets,(SFAS 142) which eliminated the requirement to
amortize goodwill and trademarks, and also affected the Companys accounting
for its equity in earnings (losses) of affiliated companies. Under the
provisions of SFAS 142, the Company is required to periodically assess the
carrying value of goodwill and trademarks associated with each of five distinct
business units that comprise three business segments of the Company to
determine if an impairment in value has occurred. Impairment tests completed
as of December 31, 2002 and 2001 concluded that the carrying amount of goodwill
and trademarks for each acquired business unit did not exceed its net
realizable value based on the Companys estimate of expected future cash flows
to be generated by each of the five business units. However, as further
discussed in Note 9 to the consolidated financial statements, the Company
updated its assessment as of August 31, 2003 and concluded that based on a
valuation model incorporating expected future cash flows in consideration of
historical cash flows and results to date, an impairment charge of $28.2
million was necessary to reduce the carrying value of goodwill and trademarks
to net realizable value. If the Company concludes in the future that the
adjusted carrying value of such intangibles for any of the five business units
exceeds its respective net

14



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realizable value, the Company would expense such
excess and decrease goodwill and/or trademarks as reported in the consolidated
balance sheet.

Other purchased intangibles, including customer relationships, are amortized
primarily over a 16-year average life. The use of a 16-year average life for
customer relationships acquired in the Host-USA Acquisition, amortized on a
straight-line method, is not materially different from using the estimated life
of each individual relationship using a systematic allocation method. As
further discussed in Note 9 to the consolidated financial statements, the
Company determined that an impairment charge of approximately $6.6 million was
necessary to reduce the carrying amount of certain customer
relationship intangible
assets as of June 30, 2002 as a result of a significant change in the
contractual nature of the Companys underlying relationship with the NCAA. The
impairment analysis performed as of August 31, 2003 indicated the need for an
additional impairment charge of approximately $2.3 million at that date. If
the Company concludes in the future that significant
changes occur in its customer relationships, additional
impairment charges may be necessary.

The remaining value assigned to customer relationships will continue to be
amortized over a 16-year average life, at a rate of approximately $0.6 million
per year, except for a specific customer relationship having a remaining
carrying value of $0.5 million that will be amortized over the fiscal year
ending August 31, 2004. The use of a 16-year average life of customer
relationships amortized on a straight-line method is not materially different
than using the estimated life of each individual relationship using a
systematic allocation method.

Goodwill and intangible assets, net of accumulated amortization, were $53.2
million as of August 31, 2003 and $84.2 million as of August 31, 2002, of which, goodwill was $43.7 million as of August
31, 2003 and $67.2 million as of August 31, 2002. As

of August 31, 2003, the carrying value of goodwill and acquired intangibles,
net of accumulated amortization, represented approximately 69% of the Companys
total assets.

Deferred Income Taxes 

Deferred income tax liabilities or assets at the end of each period are
determined using the tax rate expected to be in effect when the taxes are
actually paid or recovered. A valuation allowance is recognized on certain
deferred tax assets if it is more likely than not that some or all of these
deferred tax assets will not be realized. As of August 31, 2003 the Company
has recognized a full valuation allowance for net deferred tax assets thereby
resulting in a carrying amount for deferred taxes in the balance sheet of zero.
If and when the Company generates taxable income in the future and benefits
primarily from net operating loss carryforwards for federal tax purposes that
expire beginning in 2018, some or all of the deferred tax assets may be
reinstated on the balance sheet, and the Company would report income tax
benefits in the period that such reinstatement occurs.

Derivative Instruments and Hedging Activities 

Effective July 1, 2000, the Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Investments and Hedging
Activities(SFAS 133). SFAS 133 requires the Company to recognize all
derivative instruments (i.e., interest rate swap agreements, and until sold in
April 2003, warrants to purchase additional shares of Gray common stocks) on
the balance sheet at fair value. The aggregate fair market value of
derivatives as of August 31, 2003 and August 31, 2002 of
approximately $(1.7) million and $4.5 million, respectively, is
included in the Companys balance sheet as a component of Other liabilities
as of August 31, 2003 and Other assets as of August 31, 2002. Changes in the estimated fair value of derivatives that do not meet the
specific criteria in SFAS 133 for hedge accounting are included in the earnings
(losses) reported for the period of the change. None of the Companys
derivative instruments have been determined to qualify for hedge accounting
treatment. Management estimates the fair value of interest rate swap
agreements

15



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based on estimated market values provided by the counterparties to
the swap agreements, and until sold, estimated the fair value of the warrants
based on independent appraisals received on a quarterly basis. The warrants
were sold to Gray at approximately the independently appraised values,
resulting in no gain or loss on the sale.

Valuation of Certain Non-Trade Receivables 

The Company recorded impairment charges of approximately $5.2 million and $1.7
million in the fiscal year ended August 31, 2003, associated with its
investment in and amounts due from iHigh and a note receivable from the
purchaser of Datasouth, respectively. The Company performs ongoing credit
evaluations of parties from such non-trade receivables are due, and if and when
management determines that the carrying value of such receivables may not
ultimately be realized, the estimated impairment amount is charged to the
earnings (losses) reported for the period in which the determination is made.
The impairment charges recorded in the fiscal year ended August 31, 2003
reduced the carrying amount of the investment in and amounts due from iHigh to
zero, and the Companys note receivable from the purchaser of Datasouth to
approximately $1.7 million.

LIQUIDITY AND CAPITAL RESOURCES

Credit Arrangements 

As of August 31, 2003, the Companys indebtedness to its bank lenders was
approximately $55.9 million, a reduction of $38 million since June 30, 2002.
The reduction in the indebtedness was funded through the sales of substantially
all of the Companys investment assets. The bank credit agreement has a
maturity date of November 30, 2004 at which time all amounts outstanding become
due and payable. The agreement does not require any payments of principal
prior to maturity, nor does it provide for any additional borrowing capacity.
The agreement, which was last amended on August 18, 2003, requires the
maintenance of interest coverage ratios, determined quarterly beginning
November 30, 2003. Prior to the maturity date, the Company will likely be
required to refinance the total amount due and payable to the banks at that
time. The Companys debt to the banks is collateralized by a lien on all of
the Companys assets, and is personally guaranteed by the Companys Chairman of
the Companys board of directors. The Companys ability to
continue this or similar financing beyond the November 30, 2004
maturity date is significantly dependent on the continued support of
the Companys Chairman and, in part, on the Companys future
operating results. There can be no assurances with respect to either
the Companys future operating results or the continued support
of its Chairman.

As amended in August 2003, the Companys bank credit agreement provides for (a)
two term loans (the Term Loans) for borrowings totaling approximately $35.9
million and (b) a revolving loan commitment (the Revolver) for maximum
borrowings of $20 million. All amounts outstanding bear interest at either the
banks prime rate or the London Interbank Offered Rate (LIBOR) plus 3.25%,
payable monthly. The amendment in August 2003 reduced the interest rate
charged by the banks and revised the maturity date of the agreement to November
30, 2004 from September 30, 2003. The Company anticipates that it will
continue to utilize fully the availability under the Revolver throughout the
remaining term of the agreement.

Under the terms of the credit agreement, up to an aggregate of $12.5 million in
funding for working capital purposes, if necessary, may be sourced from the
issuance of equity securities, including shares of the Companys preferred
stock, or by the issuance of subordinated debt. In July 2002, the Companys
Chairman provided the Company short-term loans totaling $4 million to provide
cash to the Company for working capital purposes. In August 2002, the loans
were refinanced with the issuance of the Companys convertible preferred stock
having a face amount of approximately $4.1 million to the Companys Chairman.
In September

16



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2002, the Companys Chairman and certain other affiliates of the
Chairman invested an aggregate $3 million in cash used for working capital
purposes, for shares of the Companys convertible preferred stock. In November
2003, the Companys Chairman invested an additional $2 million in cash used for
working capital purposes for shares of the Companys convertible preferred
stock. The Companys Chairman also committed to invest up to an additional $1
million in cash over the next year for additional shares of the Companys
common or preferred stocks or for subordinated debt, to be used for working
capital purposes if the Company determines that such investment is necessary.
Therefore, the Company has sourced approximately $9.1 million of cash for
working capital purposes of the $12.5 million available, and as a result, the
Company has the capacity under its bank credit agreement to source
approximately an additional $3.4 million of cash (inclusive of the $1.0 million
committed by the Companys Chairman) from the issuance of equity or debt
securities during the remaining term of the credit facility.

The Companys Chairman of the board personally guarantees substantially all of
the debt outstanding under the current credit facility, and if the Company is
unable to meet its principal payment obligations under the recently amended
credit facility, it is likely that the bank lenders would call the guarantee,
thereby requiring the Chairman to repay the amount of the loan to the banks.
Under the terms of his guarantee, the Chairman has the option to purchase the
entire loan from the banks, and thereby would become the holder of the debt
currently payable to the banks and the related lien on the Companys assets.
The Chairman is compensated by the Company for his guarantee in the form of
newly-issued shares of the Companys common stock, valued at an annual rate of
1.625% of the guarantee amount. The guarantee amount will reduce in the future
as principal payments are made to the bank lenders on the outstanding term
loans.

In connection with the Host-USA Acquisition, the Company issued 8% subordinated
notes having an aggregate face value of approximately $18.6 million. Interest
is payable quarterly and the notes had an original maturity date of January 17,
2003. During the fiscal year ended August 31, 2003, each remaining holder of 8%
subordinated notes agreed to amend the maturity date of their note, in
substantially all cases, to January 17, 2006. In May 2003, a director of the
Company and his spouse each agreed to exchange 8% subordinated notes held by
them, having an aggregate face value of approximately $1.8 million, for shares
of the Companys convertible series D preferred stock. Subsequent to August
31, 2003 and through November 2003, holders of 8% subordinated notes
representing an aggregate face value of approximately $8.0 million agreed to
exchange their notes for shares of the Companys series E preferred stock.
Payment of interest and principal on all subordinated notes is subordinate to
the Companys bank credit agreement.

The Company met and exceeded all of its principal payment requirements during
the fiscal year ended August 31, 2003, reducing its bank debt by $38 million.
The Company sourced these principal payments through the sales of its
investments in Rawlings common stock, Gray common stocks and warrants to
purchase additional shares of Gray common stocks, for cash proceeds aggregating
approximately $46.2 million.

As a result of the seasonality of its business, the Company generally expects
to use more cash than it generates during the first half of its fiscal year,
and generate more cash than it uses during the second half of its fiscal year.
Due to negative operating cash flow generated in the past, the Company
currently has trade payables and other cash obligations that exceed its current
assets. In November 2003, the Companys Chairman invested
$2 million in cash to be used for operating purposes and
committed an additional $1 million of cash to be used for operations,
if necessary. While the Company believes its cash flow will be
sufficient to meet its needs through August 31, 2004, the Company may
also seek to (a) issue and sell equity securities of the Company, which
may include the Companys preferred stock; (b) issue

17



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additional subordinated debt; (c) accelerate cash flows
otherwise anticipated to be received later in the current fiscal year or future
fiscal years; or (d) a combination thereof. The Companys bank credit
agreement does provide the Company the ability to issue additional subordinated
debt or equity securities for cash proceeds of up to approximately $3.4 million
without requiring an associated reduction in its outstanding debt to
the banks. The Companys capital expenditures are not expected to exceed $600,000 for the
year ending August 31, 2004.

Historical Cash Flow Information  Summary 

The following summarizes the Companys historical cash flow activities (amounts
in 000s):

|                                                     |                                             |   |             |        |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |        |        |  
|---------------------------------------------------- | ------------------------------------------- | - | ----------- | ------ | ---------- | - | ---------------- | ------ | ---------- | - | ------ | ------ | - | - | ------- | ------ | - | - | ------ | ------ | -
|                                                     |                                             |   |             |        |            |   | Two Months Ended |        | Year Ended
|                                                     |                                             |   | Year Ended  |        | August 31, |   | June 30,        
|                                                     |                                             |   | August 31,  |        |            |   |                 
|                                                     |                                             |   | 2003        |        | 2002       |   | 2001             |        | 2002       |   | 2001  
|                                                     |                                             |   |             |        |            |   |                  |        |            |   |       
|                                                     |                                             |   | (unaudited)
|Cash flows from operating activities:                |                                             |   |             |        |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |        |       
|                                                     | Continuing operations                       |   | $           | (5,193 | )          |   | $                | (3,992 | )          |   | $      | (2,523 | ) |   | $       | (5,321 | ) |   | $      | (1,758 | )
|                                                     | Discontinued operations                     |   |             | 106    |            |   |                  | (3     | )          |   |        | 53     |   |   |         | (127   | ) |   |        | 2,126  |  
|Cash flows from investing activities:                |                                             |   |             |        |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |        |       
|                                                     | Continuing operation investing activities   |   |             | 45,178 |            |   |                  | (85    | )          |   |        | (100   | ) |   |         | 15,691 |   |   |        | 2,695  |  
|                                                     | Discontinued operation investing activities |   |             | (5     | )          |   |                  | (18    | )          |   |        | 1,007  |   |   |         | 843    |   |   |        | 2,347  |  
|Cash flows from financing activities                 |                                             |   | (35,963     | )      |            |   | 3,842            |        |            |   | (2,125 | )      |   |   | (13,070 | )      |   |   | (3,392 | )     
|                                                     |                                             |   |             |        |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |        |       
|Net increase (decrease) in cash and cash equivalents |                                             | $ | 4,123       |        |            | $ | (256             | )      |            | $ | (3,688 | )      |   | $ | (1,984  | )      |   | $ | 2,018  |       
|                                                     |                                             |   |             |        |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |        |       

Historical Cash Flow Information  Cash Flows from Operating Activities 

The following summarizes the Companys historical cash flows from operating
activities (amounts in 000s):

|                                                                                 |  |            |         |            |  |                  |        |            |  |             |        |   |  |   |         |            |  |   |         |  
|-------------------------------------------------------------------------------- |  | ---------- | ------- | ---------- |  | ---------------- | ------ | ---------- |  | ----------- | ------ | - |  | - | ------- | ---------- |  | - | ------- | -
|                                                                                 |  |            |         |            |  | Two Months Ended |        | Year Ended
|                                                                                 |  | Year Ended |         | August 31, |  | June 30,        
|                                                                                 |  | August 31, |         |            |  |                 
|                                                                                 |  | 2003       |         | 2002       |  | 2001             |        | 2002       |  | 2001       
|                                                                                 |  |            |         |            |  |                  |        |            |  |            
|                                                                                 |  |            |         |            |  |                  |        |            |  | (unaudited) |        |   |  |   |         | (restated)
|Operating loss                                                                   |  | $          | (28,859 | )          |  | $                | (3,621 | )          |  | $           | (1,630 | ) |  | $ | (16,056 | )          |  | $ | (4,331  | )
|Depreciation, amortization and impairment charges
included in the operating loss |  |            | 32,949  |            |  |                  | 451    |            |  |             | 428    |   |  |   | 9,342   |            |  |   | 6,370   |  
|Interest expense, net of interest income and dividends                           |  |            | (8,005  | )          |  |                  | (812   | )          |  |             | (1,630 | ) |  |   | (9,562  | )          |  |   | (10,735 | )
|Net change in operating assets and liabilities                                   |  |            | (1,284  | )          |  |                  | 25     |            |  |             | 182    |   |  |   | 10,385  |            |  |   | 5,017   |  
|Other changes in operating cash flows                                            |  |            | 6       |            |  |                  | (35    | )          |  |             | 127    |   |  |   | 570     |            |  |   | 1,921   |  
|                                                                                 |  |            |         |            |  |                  |        |            |  |             |        |   |  |   |         |            |  |   |         |  
|Total cash flows from continuing operations                                      |  |            | (5,193  | )          |  |                  | (3,992 | )          |  |             | (2,523 | ) |  |   | (5,321  | )          |  |   | (1,758  | )
|Cash flows from discontinued operating activities                                |  |            | 106     |            |  |                  | (3     | )          |  |             | 53     |   |  |   | (127    | )          |  |   | 2,126   |  
|                                                                                 |  |            |         |            |  |                  |        |            |  |             |        |   |  |   |         |            |  |   |         |  
|Total cash flows from operating activities                                       |  | $          | (5,087  | )          |  | $                | (3,995 | )          |  | $           | (2,470 | ) |  | $ | (5,448  | )          |  | $ | 368     |  
|                                                                                 |  |            |         |            |  |                  |        |            |  |             |        |   |  |   |         |            |  |   |         |  

The Companys total cash flows from continuing operations for each of the
periods presented have been unfavorably affected as a result of interest
expense, net of interest and dividend income, which has exceeded the Companys
net operating income (expense) before non-cash depreciation and amortization.

The net change in operating assets and liabilities had an unfavorable impact on
total cash flows from continuing operations in the fiscal year ended August 31,
2003 of approximately $1.3 million. Increases in accounts payable and accrued
expenses were offset by a total
increase of a similar amount in accounts
receivable and inventories. Deferred income decreased by $1.1 million due most
notably to the realization as income of approximately $0.7 million of deferred
fees from Gray.
These fees were originally deferred as a result of the

18



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Companys ownership
position in Gray, and became realizable as income upon the Companys sale of
that ownership position.

The net change in operating assets and liabilities had a favorable impact on
total cash flows from continuing operations in the fiscal year ended June 30,
2002 of $10.4 million. Accounts receivable decreased $13.3 million due to an
acceleration of customer payments and a reduction in the total amount of
revenue under contract as of June 30, 2002 compared to June 30, 2001; prepaid
costs and expenses were comparable with the prior year, decreasing $0.4
million; and accounts payable and accrued expenses decreased $1.9 million
primarily due to (a) a $7.3 million decline in deferred revenue; less (b) a
$1.7 million increase in guaranteed rights fees and profit splits payable; less
(c) a $1.2 million increase in accounts payable; and less (d) a $3.8 million
increase in incurred unbilled costs. Deferred revenue declined during the
fiscal year ended June 30, 2002 due to a reduction in the amount of corporate
sponsor contracts in place as of June 30, 2002 compared to the prior fiscal
year end, and to a lesser extent, the decision of certain corporate sponsors to
accelerate the termination date of their multi-year sponsorship contract with
the Company from August 31, 2002 to June 30, 2002. The number and amount of
corporate sponsor contracts in place as of June 30, 2002 compared to the prior
year was directly affected by the fact that the Host-NCAA Contract ended in
August 2002, and therefore NCAA corporate sponsorships sold by Host could not
extend beyond August 2002. The result of amending the termination dates of
certain sponsorship contracts in the fiscal year ended June 30, 2002 and the
decision to modify the terms of the Host-CBS Contract in August 2002, was to
accelerate revenue (and thereby decreasing deferred income) by approximately
$1.5 million, and increasing accrued expenses (primarily guaranteed rights fees
payable) by approximately $3.7 million. Accounts payable increased primarily
due to the deferred payment of certain operating expenses as of June 30, 2002
compared to June 30, 2001. Incurred unbilled costs increased as of June 30,
2002 compared to the prior year as a result of the differences in the timing of
billings related to certain active projects as of June 30, 2002 compared to the
active projects as of June 30, 2001.

In the fiscal year ended June 30, 2001, the net change in operating assets and
liabilities had a favorable impact on total cash flows from continuing
operations of approximately $5.0 million. Accounts receivable increased $0.8
million primarily due to changes in the timing of billings for contracts in
place as of June 30, 2001 compared to June 30, 2000; prepaid costs and expenses
decreased $0.6 million due to decreases in event management costs of the 2001
event tours compared to those during the 2000 event tours; and accounts payable
and accrued expenses increased $4.3 million primarily due to the deferred
payment of certain operating expenses at June 30, 2001 compared to June 30,
2000.

Other changes in operating cash flows include the income on Grays option to
purchase the Companys investment in Tarzian of approximately $0.3 million and
$1.3 million in the fiscal years ended June 30, 2002 and 2001, respectively.
The option was exercised by Gray in December 2001.

Accounts receivable, accounts payable and certain accrued expenses were
retained by the Company to be liquidated and were not included in the sale of
the Datasouth assets in September 2000. Therefore, during the fiscal year
ended June 30, 2001, cash was provided by discontinued operations due to a
decrease in inventories prior to the sale of Datasouth in September 2000, and a
decrease in accounts receivable, net of accounts payable and accrued expenses,
during the period subsequent to the sale.

19



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Historical Cash Flow Information  Cash Flows from Investing Activities

The following summarizes the Companys historical cash flows from investing
activities (amounts in 000s):

|                                                                |  |            |        |            |  |                  |      |            |  |             |       |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------------- |  | ---------- | ------ | ---------- |  | ---------------- | ---- | ---------- |  | ----------- | ----- | - |  | - | ------ | - |  | - | ------ | -
|                                                                |  |            |        |            |  | Two Months Ended |      | Year Ended
|                                                                |  | Year Ended |        | August 31, |  | June 30,        
|                                                                |  | August 31, |        |            |  |                 
|                                                                |  | 2003       |        | 2002       |  | 2001             |      | 2002       |  | 2001       
|                                                                |  |            |        |            |  |                  |      |            |  |            
|                                                                |  |            |        |            |  |                  |      |            |  | (unaudited) |       |   |  |   |        |   |  |  
|Capital expenditures                                            |  | $          | (340   | )          |  | $                | (66  | )          |  | $           | (78   | ) |  | $ | (279   | ) |  | $ | (1,166 | )
|Investments in and acquisition of businesses                    |  |            |        |            |  |                  |      |            |  |             |       |   |  |   | (705   | ) |  |   | (1,232 | )
|Proceeds on dispositions of investments                         |  |            | 46,183 |            |  |                  |      |            |  |             |       |   |  |   | 16,803 |   |  |   | 5,330  |  
|Other investing cash flows                                      |  |            | (665   | )          |  |                  | (19  | )          |  |             | (22   | ) |  |   | (128   | ) |  |   | (237   | )
|                                                                |  |            |        |            |  |                  |      |            |  |             |       |   |  |   |        |   |  |   |        |  
|Total cash flows from continuing operation
investing activities |  |            | 45,178 |            |  |                  | (85  | )          |  |             | (100  | ) |  |   | 15,691 |   |  |   | 2,695  |  
|Cash flows from discontinued operation
investing activities     |  |            | (5     | )          |  |                  | (18  | )          |  |             | 1,007 |   |  |   | 843    |   |  |   | 2,347  |  
|                                                                |  |            |        |            |  |                  |      |            |  |             |       |   |  |   |        |   |  |   |        |  
|Total cash flows from investing activities                      |  | $          | 45,173 |            |  | $                | (103 | )          |  | $           | 907   |   |  | $ | 16,534 |   |  | $ | 5,042  |  
|                                                                |  |            |        |            |  |                  |      |            |  |             |       |   |  |   |        |   |  |   |        |  

In the fiscal year ended August 31, 2003, the Company sold its investment in
Rawlings common stock to an unrelated company for cash proceeds of
approximately $6.8 million, and sold its investments in Gray common stocks and
warrants to purchase additional shares of Gray common stocks to parties
affiliated with the Companys Chairman and to Gray for aggregate cash proceeds
of approximately $39.4 million. In the fiscal year ended June 30, 2002, the
Company sold investments in Gray series A and series B preferred stock to a
company affiliated with the Companys Chairman for cash proceeds of
approximately $6.8 million, and sold its investment in Tarzian common stock to
Gray under the terms of an option agreement between the Company and Gray, for
cash proceeds of $10 million. In the fiscal year ended June 30, 2001, Gray
redeemed $5 million of its series B preferred stock owned by the Company.

In the fiscal years ended June 30, 2002 and 2001, cash of approximately $0.9
million and $2.4 million, respectively, was provided by investing activities of
discontinued operations as a result of the proceeds on the sale of Datasouth,
some of which were deferred until after the effective date of the sale.

Historical Cash Flow Information  Cash Flows from Financing Activities

The following summarizes the Companys historical cash flows from financing
activities (amounts in 000s):

|                                                                          |  |            |         |            |  |                  |       |            |  |      |        |   |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ---------- | ------- | ---------- |  | ---------------- | ----- | ---------- |  | ---- | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                          |  |            |         |            |  | Two Months Ended |       | Year Ended
|                                                                          |  | Year Ended |         | August 31, |  | June 30,        
|                                                                          |  | August 31, |         |            |  |                 
|                                                                          |  | 2003       |         | 2002       |  | 2001             |       | 2002       |  | 2001
|                                                                          |  |            |         |            |  |                  |       |            |  |     
|Net borrowings (repayments) on notes
payable and revolving line of credit |  | $          | 175     |            |  | $                | 3,850 |            |  | $    | (650   | ) |  | $ | 5,600   |   |  | $ | 5,175   |  
|Net proceeds (repayments) on long-term debt                               |  |            | (38,000 | )          |  |                  |       |            |  |      | (1,050 | ) |  |   | (20,793 | ) |  |   | (10,866 | )
|Issuance of preferred stock                                               |  |            | 3,000   |            |  |                  |       |            |  |      |        |   |  |   | 2,400   |   |  |   | 3,000   |  
|Other financing cash flows                                                |  |            | (1,138  | )          |  |                  | (8    | )          |  |      | (425   | ) |  |   | (277    | ) |  |   | (701    | )
|                                                                          |  |            |         |            |  |                  |       |            |  |      |        |   |  |   |         |   |  |   |         |  
|Total cash flows from financing activities                                |  | $          | (35,963 | )          |  | $                | 3,842 |            |  | $    | (2,125 | ) |  | $ | (13,070 | ) |  | $ | (3,392  | )
|                                                                          |  |            |         |            |  |                  |       |            |  |      |        |   |  |   |         |   |  |   |         |  

In the fiscal year ended August 31, 2003, the Company reduced its long-term
debt as a result of proceeds on the sales of its investment Rawlings common
stock, Gray common stocks and warrants to purchase additional shares of Gray
common stocks. In the fiscal year ended June 30, 2002 and 2001, the Company
reduced its long-term debt as a result of proceeds received on the sales or
other dispositions of investment assets, including the Companys investments in
Tarzian and Gray preferred stock, in addition to proceeds received on the sale

20



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of Datasouth. Proceeds on the issuance of the Companys preferred stock to the
Companys Chairman of the board and to companies affiliated with the Companys
Chairman were used to reduce long-term debt in the fiscal year ended June 30,
2002 and were used to fund working capital needs in the fiscal years ended
August 31, 2003 and June 30, 2001. Other financing cash flows primarily
include cash used for
debt issue costs, less proceeds from the exercise of stock options and from
other issuances of common stock for cash. There were no discontinued operation
financing activities in any of the fiscal periods presented above.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The following summarizes the Companys contractual obligations as of August 31,
2003 (amounts in 000s):

|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |     | 
|--------------------------- | ----- | ----- | -------------------------------------------- | ------- |  | ---------- | --------- | ---------- | ----------- | ------- | ----------- | ------ | --------- | - | ----- | ----- |  | - | --- | --- | 
|                            |       |       | Payments Due by Period as of August 31, 2003
|                            |       |       |                                             
|                            |       |       |                                              |         |  |            | Less than |            | More than 1 |         | More than 3 |        | More than
|Contractual Obligations     |       | Total |                                              | 1 Year  |  | to 3 Years |           | to 5 Years |             | 5 Years
|                            |       |       |                                              |         |  |            |           |            |             |        
|Long-term debt obligations  |       | $     | 73,231                                       |         |  | $          | 590       |            |             | $       | 72,641      |        |           | $ |       |       |  | $ |     |    
|Operating lease obligations |       |       | 4,248                                        |         |  |            | 1,691     |            |             |         | 1,354       |        |           |   | 640   |       |  |   | 563 |    
|Purchase obligations        |       |       | 39,187                                       |         |  |            | 14,508    |            |             |         | 19,062      |        |           |   | 5,617 |       |  |   |     |    
|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |    
|                            | Total |       | $                                            | 116,666 |  |            | $         | 16,789     |             |         | $           | 93,057 |           |   | $     | 6,257 |  |   | $   | 563 | 
|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |    

Purchase obligations primarily consist of future guaranteed rights fee
commitments to associations or institutions under contractual arrangements of
typically one to four years, which expire at varying times through 2008.

The Company is a party to an interest
rate swap agreement described in Note 11
to the Consolidated Financial Statements. The estimated cost of terminating
the swap agreements, if the Company elected to do so, was approximately $1.9
million as of August 31, 2003, including accrued interest through that date.

Dividends on the Companys series D preferred stock are payable annually at an
annual rate of $90 per share in cash or in shares of the Companys common
stock, at the holders option, except that, until the second anniversary of the
date of issuance, the Company has the option to pay such dividends in cash or
in shares of the Companys common stock. For purposes of determining the
number of shares of common stock to be issued as payment of a dividend, the
common stock is valued at the average Nasdaq closing price for the twenty
trading days immediately preceding each dividend payment date. The terms of
payment for dividends on the Companys series B preferred stock and the
dividend rate were identical to that for series D preferred stock. Effective
June 30, 2003, the Company declared a dividend to its series D preferred
stockholders of record as of June 15, 2003, and paid a portion of such dividend
in July 2003, having an aggregate value of approximately $0.6 million, in the
form of 168,724 shares of the Companys common stock. Dividends on Series D
preferred stock payable to the Companys Chairman were likewise declared
effective June 30, 2003, but payment of such dividend, having an aggregate
value of approximately $0.5 million, in the form of 148,713 shares of the
Companys common stock, was deferred until such time as the Companys
stockholders approve such issuance of shares. Effective July 1, 2002, the
Company declared a dividend to its series B preferred stockholders of record as
of June 15, 2002, and paid such dividend in July 2002, having an aggregate
value of $408,000, in the form of 440,165 shares of the Companys common stock.
There were no shares of series B preferred stock outstanding as of June 15,
2003.

21



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RESTATEMENT OF FINANCIAL STATEMENTS

In November 2003, the Company became aware of an inadvertent
error in that it did not record deferred income tax liabilities and
the corresponding increase in goodwill related to certain intangible
assets acquired in prior years. The Company also determined that it provided an insufficient
valuation allowance for its net deferred tax assets as of June 30, 2002, as
further discussed in Note 2 to the consolidated financial statements. The
accompanying consolidated financial statements as of August 31, 2002, for the
unaudited two months ended August 31, 2001, and for the fiscal years ended June
30, 2002 and 2001 have been restated for the correction of such errors. The
restatement had no effect on cash or cash flows.

RESULTS OF CONTINUING OPERATIONS
 FISCAL YEAR ENDED AUGUST 31, 2003 COMPARED
TO FISCAL YEAR ENDED JUNE 30, 2002

Results Derived from Operating Businesses 

Total revenues for the fiscal years ended August 31, 2003 and June 30, 2002 are
summarized as follows (amounts in $000s):

|                                             |  |            |        |          |  |   |         | 
|-------------------------------------------- |  | ---------- | ------ | -------- |  | - | ------- | 
|                                             |  | Year Ended
|                                             |  |           
|                                             |  | August 31, |        | June 30,
|                                             |  | 2003       |        | 2002    
|                                             |  |            |        |         
|Collegiate Marketing and Production Services |  | $          | 55,354 |          |  | $ | 79,099  | 
|Affinity Events                              |  |            | 14,051 |          |  |   | 19,248  | 
|Affinity Management Services                 |  |            | 8,775  |          |  |   | 14,714  | 
|Consulting                                   |  |            | 5,664  |          |  |   | 11      | 
|                                             |  |            |        |          |  |   |         | 
|                                             |  | $          | 83,844 |          |  | $ | 113,072 | 
|                                             |  |            |        |          |  |   |         | 

In the fiscal year ended August 31, 2003, total revenues for the Collegiate
Marketing and Production Services segment were substantially less than in the
fiscal year ended June 30, 2002 due to the termination of most of the Companys
contracts with NCAA corporate sponsors as of or prior to June 30, 2002.
Likewise, total direct operating costs of services rendered for the Collegiate
Marketing and Production Services segment were substantially less, due to the
elimination of very significant guaranteed rights fee obligations required of
the Company under the Host-NCAA Contract in order to acquire NCAA corporate
marketing rights. In the fiscal year ended June 30, 2002, the Company
generated approximately $28 million in revenue from sublicensing NCAA corporate
marketing rights, which the Company no longer does as a result of the
termination of the Host-NCAA Contract.

Total revenues in the Affinity Events segment were less than in the fiscal year
ended June 30, 2002 due to the elimination of certain non-profitable tours and
events prior to the fiscal year, and reductions in national sponsorship sales
and team entry fees for the Companys basketball and soccer event tours.

Total revenues for the Affinity Management Services segment were also less than
in the fiscal year ended June 30, 2002 due to the termination of certain
contracts prior to the fiscal year ended August 31, 2003, which also resulted
in a decrease in the Companys direct operating costs.

During the fiscal year ended August 31, 2003, the Company recognized as income
a $5 million consulting fee from Gray for services performed in connection with
Grays acquisition of Stations Holding Company, Inc. (Stations), which was
consummated in October 2002. Also in October 2002, Gray completed a public
offering of its common stock, and in November 2002, Gray issued additional
shares of its common stock. These issuances of

22



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##### 



common stock by Gray resulted
in a reduction of the Companys equity investment in Grays outstanding common
stock from 12.9% to 4.0% (representing 18.0% of the voting rights). In August
2003, the Company sold its investment in Gray common stocks. As a result of
these transactions by Gray, and ultimately as a result of the Companys
disposition of its ownership position in Gray, the Company recognized
previously deferred consulting fee income of $5 million in the fiscal year ended August
31, 2003 attributable to Grays acquisition of Stations, plus approximately
$0.7 million of previously deferred consulting fee income. The Company does
not anticipate receiving any additional consulting fees from Gray in the
future.

Total operating costs and expenses for the fiscal years ended August 31, 2003
and June 30, 2002 are summarized as follows (amounts in $000s):

|                                                       |  |            |         |          |  |   |         | 
|------------------------------------------------------ |  | ---------- | ------- | -------- |  | - | ------- | 
|                                                       |  | Year Ended
|                                                       |  |           
|                                                       |  | August 31, |         | June 30,
|                                                       |  | 2003       |         | 2002    
|                                                       |  |            |         |         
|Direct operating costs of services rendered            |  | $          | 55,069  |          |  | $ | 88,531  | 
|Selling, general and administrative                    |  |            | 25,878  |          |  |   | 32,773  | 
|Amortization and impairment of acquisition intangibles |  |            | 31,756  |          |  |   | 7,824   | 
|                                                       |  |            |         |          |  |   |         | 
|                                                       |  | $          | 112,703 |          |  | $ | 129,128 | 
|                                                       |  |            |         |          |  |   |         | 

Direct operating costs of services rendered were significantly lower in the
fiscal year ended August 31, 2003 compared to the fiscal year ended June 30,
2002 due to (a) the aforementioned elimination of guaranteed rights fee expense
associated with the Host-NCAA Contract, which amounted to approximately $22.8
million in the fiscal year ended June 30, 2002; plus (b) decreases in events
management and other production costs due to the elimination of certain
non-profitable tours and events, plus (c) net decreases in other rights fees
and profit split expenses associated with other contracts within the Collegiate
Marketing and Production Services segment and the Affinity Management Services
segment.

Selling, general and administrative costs were significantly lower in the
fiscal year ended August 31, 2003 compared to the fiscal year ended June 30,
2002 due to a reduction in the Companys workforce and a reduction in travel
costs. Prior to the fiscal year ended                      August 31, 2003, the Company
reduced its workforce by eliminating certain positions, reorganizing certain
responsibilities and terminating certain projects that were not currently or
expected to generate an adequate operating profit. Total employee compensation
costs included in selling, general and administrative expense were
approximately $15.6 million for the fiscal year ended August 31, 2003 compared
to approximately $19.2 million for the fiscal year ended June 30, 2002. Travel
costs were substantially reduced through efforts to operate more efficiently
and control travel spending. As a result, total travel expense included in
selling, general and administrative expense were approximately $1.0 million for
the fiscal year ended August 31, 2003 compared to approximately $1.5 million
for the fiscal year ended June 30, 2002.

Amortization and impairment of acquisition intangibles, primarily attributable
to the Host-USA Acquisition, included an impairment charge of approximately
$30.5 million in the fiscal year ended August 31, 2003 (of which, approximately
$23.5 million was attributable to goodwill, $4.7 million to trademarks and $2.3
million to customer relationships) based on managements consideration of historical
operating results and reevaluation of the forecasted operating results and
business plans for each of the Companys business units. As a result of the
changes made to the Host-CBS Contract, the Company recorded an impairment
charge of $6.6 million at June 30, 2002 pertaining to the
customer relationship intangible asset, since such modifications significantly altered the
contractual nature of the Companys underlying relationship with the NCAA.

23



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Operating income (loss) for the fiscal years ended August 31, 2003 and June 30,
2002 is summarized as follows (amounts in 000s):

|                                                       |  |            |         |          |  |   |         |  
|------------------------------------------------------ |  | ---------- | ------- | -------- |  | - | ------- | -
|                                                       |  | Year Ended
|                                                       |  |           
|                                                       |  | August 31, |         | June 30,
|                                                       |  | 2003       |         | 2002    
|                                                       |  |            |         |         
|Collegiate Marketing and Production Services           |  | $          | 930     |          |  | $ | (4,944  | )
|Affinity Events                                        |  |            | (3,896  | )        |  |   | (2,424  | )
|Affinity Management Services                           |  |            | 1,553   |          |  |   | 1,275   |  
|Consulting                                             |  |            | 5,664   |          |  |   | 11      |  
|Amortization and impairment of acquisition intangibles |  |            | (31,756 | )        |  |   | (7,824  | )
|Unallocated general and administrative costs           |  |            | (1,354  | )        |  |   | (2,150  | )
|                                                       |  |            |         |          |  |   |         |  
|                                                       |  | $          | (28,859 | )        |  | $ | (16,056 | )
|                                                       |  |            |         |          |  |   |         |  

Results Derived from Investments and Derivative Instruments 

Equity in earnings (losses) of affiliated companies, totaling approximately
$(0.2) million for the fiscal years ended August 31, 2003 and approximately
$(2.9) million for the fiscal year ended June 30, 2002 included the Companys
proportionate share of the earnings or losses of iHigh, and until the Companys
sale of its investment in August 2003, Gray. The Companys sale of its
investment in Gray common stocks in August 2003 resulted in a gain to the
Company of approximately $17.2 million. As a result of Grays issuance of
common stock in October and November 2002 for average net proceeds to Gray of
approximately $7.72 per share, and since the Companys carrying value of its
investment in Gray common stocks prior to Grays issuance exceeded $7.72 per
share, the Company reported a non-cash loss on Grays issuance of shares in the
fiscal year ended August 31, 2003 of approximately $2.3 million.

In the fiscal year ended August 31, 2003, an investment valuation charge of
approximately $4.2 million was reported by the Company to reduce a non-trade
receivable from iHigh and the carrying value of the investment in iHigh to
zero. Also in the fiscal year ended August 31, 2003, a loss of approximately
$1.0 million was recognized in connection with the Companys investment in
Rawlings that had been previously reported as Other comprehensive accumulated
loss (a component of the Companys stockholders equity). The determination
to reduce the carrying amount of these investments was made based on
managements current estimate of the amount that would, more likely than not,
ultimately be recovered on these assets.

The net change in the value of certain derivative instruments, currently
consisting of an interest rate swap agreement, and previously consisting of a
second interest rate swap agreement and warrants to purchase Gray common stocks
and, was approximately $(1.0) million for the fiscal year ended August 31, 2003
and $(3.3) million for the fiscal year ended June 30, 2002. The value of the
derivative instruments declined in the fiscal year ended August 31, 2002 as a
result of a decline in the value of the warrants prior to the Companys sale of
the warrants in April 2003, net of an increase in the value of the interest
rate swap agreements as the agreements reached, in one case, and approached, in
the other case, the dates on which the agreements terminate. The remaining
interest rate swap agreement terminates on December 31, 2004.

Interest Expense and Debt
Related Costs 

Interest expense of approximately $8.2 million for the fiscal year ended August
31, 2003 was substantially less than interest expense reported for the fiscal
year ended June 30, 2002 of approximately $9.7 million, as a result of the
reduction in long-term debt and declines in variable interest rates on which a
significant amount of the debt is subject.

24



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Debt issue cost amortization of approximately $2.4 million and $2.8 million for
the fiscal years ended August 31, 2003 and June 30, 2002, respectively,
resulted from the amortization of costs
paid in connection with amendments to the Companys bank credit agreement, as
well as amortization of the value of shares of the Companys common stock
issued to the Companys Chairman, who has personally guaranteed the Companys
debt under its bank credit agreement. During the fiscal years ended August 31,
2003 and June 30, 2002, the Company issued approximately 221,000 shares and
106,000 shares, respectively, of restricted common stock to the Companys
Chairman to compensate him for his personal guarantee. The value of the shares
issued in the fiscal years ended August 31, 2003 and June 30, 2002 of
approximately $1.3 million and $0.8 million, respectively, is amortized over
the period for which the shares provide compensation, and approximately $1.4
million and $1.6 million is included in debt issue cost amortization for each
respective fiscal year.

Income Taxes 

As of August 31, 2003, the Company had a net operating loss carryforward for
tax purposes of approximately $59.3 million to reduce Federal taxable income in
the future, and other tax credit carryforwards totaling approximately $0.6
million to reduce regular Federal income tax liabilities in the future. As of
August 31, 2003, the Company increased its valuation allowance for net deferred
tax assets to $19.5 million, reporting a tax provision of $5.2 million, which
reduced the carrying amount of deferred taxes in the balance sheet to zero.
The principal differences between the federal statutory tax rate of 34% and the
effective tax rate are nondeductible goodwill impairment charges, state income
taxes and, the increase in the amount of the valuation allowance.

RESULTS OF CONTINUING OPERATIONS
 TWO MONTHS ENDED AUGUST 31, 2002 COMPARED TO
TWO MONTHS ENDED AUGUST 31, 2001

Results Derived from Operating Businesses 

Total revenues for the two months ended August 31, 2002 and 2001 are summarized
as follows (amounts in $000s):

|                                             |  |                  |       |      |  |             |        | 
|-------------------------------------------- |  | ---------------- | ----- | ---- |  | ----------- | ------ | 
|                                             |  | Two Months Ended
|                                             |  | August 31,      
|                                             |  |                 
|                                             |  | 2002             |       | 2001
|                                             |  |                  |       |     
|                                             |  |                  |       |      |  | (unaudited)
|Collegiate Marketing and Production Services |  | $                | 3,307 |      |  | $           | 5,838  | 
|Affinity Events                              |  |                  | 4,899 |      |  |             | 4,921  | 
|Affinity Management Services                 |  |                  | 1,284 |      |  |             | 2,015  | 
|Consulting                                   |  |                  |       |      |  |             | 3      | 
|                                             |  |                  |       |      |  |             |        | 
|                                             |  | $                | 9,490 |      |  | $           | 12,777 | 
|                                             |  |                  |       |      |  |             |        | 

Total revenues and operating results for the Collegiate Marketing and
Production Services segment were impacted in the two months ended August 31,
2002 by the termination of most of the Companys contracts with NCAA corporate
sponsors as of or prior to June 30, 2002. In the two months ended August 31,
2001, the Company recognized revenues of approximately $2.5 million in
connection with NCAA corporate sponsorships. No such revenue was recognized in
the two months ended August 31, 2002. Total revenues for the Affinity
Management Services segment declined due to the termination of certain
contracts in 2001, which also caused a similar decline in the Companys direct
operating costs. The termination of these contracts resulted in a nominal
increase in operating profit derived from the Affinity Management Services
segment for the periods presented.

The Company believes that its revenues and operating results for the fiscal
periods prior to August 31, 2002 were significantly impacted by general
market conditions, i.e., the significant

25



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decline in corporate advertising and
sponsorship spending during Hosts peak selling period from
September 2001 through February 2002, and the expiration of the Host-NCAA
Contract on August 31, 2002. The Company believes that NCAA corporate sponsors
strongly preferred multi-year renewable commitments to single-year commitments,
given the required time that it takes for a corporate sponsor to activate
promotional programs related to an NCAA corporate sponsorship. It was
therefore very difficult for the Company, in the final year of the Host-NCAA
Contract, to attract and sign new NCAA corporate sponsors or replace NCAA
corporate sponsors whose contracts had expired.

Total operating costs and expenses for the two months ended August 31, 2002 and
2001 are summarized as follows (amounts in $000s):

|                                            |  |                  |        |      |  |             |        | 
|------------------------------------------- |  | ---------------- | ------ | ---- |  | ----------- | ------ | 
|                                            |  | Two Months Ended
|                                            |  | August 31,      
|                                            |  |                 
|                                            |  | 2002             |        | 2001
|                                            |  |                  |        |     
|                                            |  |                  |        |      |  | (unaudited)
|Direct operating costs of services rendered |  | $                | 7,265  |      |  | $           | 8,082  | 
|Selling, general and administrative         |  |                  | 5,643  |      |  |             | 6,154  | 
|Amortization of acquisition intangibles     |  |                  | 203    |      |  |             | 171    | 
|                                            |  |                  |        |      |  |             |        | 
|                                            |  | $                | 13,111 |      |  | $           | 14,407 | 
|                                            |  |                  |        |      |  |             |        | 

Direct operating costs of services rendered decreased for the two months ended
August 31, 2002 from the same period in the prior year due to (a) the
elimination of guaranteed rights fee expense associated with the Host-NCAA
Contract, which amounted to approximately $2.0 million for the two months ended
August 31, 2001, less (b) an increase in events management costs of
approximately $0.7 million, less (c) increases in other rights fees and profit
split expenses of approximately $0.2 million, less (d) increases in the direct
costs of publishing and printing and compensation costs charged as direct
expenses.

Selling, general and administrative costs declined for the two months ended
August 31, 2002 from the same period in the prior fiscal year due to a
reduction in the Companys workforce and a decrease in travel costs. During
the fiscal year ended June 30, 2002, the Company reduced its workforce by
eliminating certain positions, reorganizing certain responsibilities and
terminating certain projects that were not currently or expected to generate an
adequate operating profit. Total employee compensation costs included in
selling, general and administrative expense were approximately $2.9 million for
the two months ended August 31, 2002 compared to approximately $3.7 million for
the same period in the prior year. Travel costs were substantially reduced
through efforts to operate more efficiently and control travel spending. As a
result, total travel expense included in selling, general and administrative
expense declined to approximately $0.1 million for the two months ended August
31, 2002 compared to approximately $0.5 million for the same period in the
prior year. In August 2002, the Company terminated its basketball tour in
Europe, closing its Paris, France office, and combined the management of all of
the Companys Affinity Events soccer and basketball tours in Dallas, Texas,
thereby resulting in the closing of the Companys Denver, Colorado office. As
a result, the Company incurred approximately $0.7 million in nonrecurring costs
primarily associated with employee severance costs and future lease
obligations.

26



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##### 



Operating income (loss) for the two months ended August 31, 2002 and 2001 is
summarized as follows (amounts in 000s):

|                                             |  |                  |        |      |  |             |        |  
|-------------------------------------------- |  | ---------------- | ------ | ---- |  | ----------- | ------ | -
|                                             |  | Two Months Ended
|                                             |  | August 31,      
|                                             |  |                 
|                                             |  | 2002             |        | 2001
|                                             |  |                  |        |     
|                                             |  |                  |        |      |  | (unaudited)
|Collegiate Marketing and Production Services |  | $                | (1,941 | )    |  | $           | (1,182 | )
|Affinity Events                              |  |                  | (1,389 | )    |  |             | 117    |  
|Affinity Management Services                 |  |                  | 152    |      |  |             | 47     |  
|Consulting                                   |  |                  |        |      |  |             | 3      |  
|Amortization of acquisition intangibles      |  |                  | (203   | )    |  |             | (171   | )
|Unallocated general and administrative costs |  |                  | (240   | )    |  |             | (444   | )
|                                             |  |                  |        |      |  |             |        |  
|                                             |  | $                | (3,621 | )    |  | $           | (1,630 | )
|                                             |  |                  |        |      |  |             |        |  

Results Derived from Investments and Derivative Instruments 

Equity in earnings (losses) of affiliated companies, totaling approximately
$(0.1) million for the two months ended August 31, 2002 and approximately
$(0.6) million for the two months ended August 31, 2001 included (a) the
Companys proportionate share of the earnings or losses of (i) Gray; (ii)
iHigh; and (iii) until December 31, 2001, Rawlings. Subsequent to December 31,
2001, the Company accounts for its investment in Rawlings as an
available-for-sale marketable security until the investment was sold in
December 2002.

Interest and dividend income of approximately $0.7 million for the two months
ended August 31, 2002 was primarily attributable to interest earned on
income tax refunds received by the Company in August 2002 pertaining to amended
federal income tax returns. Interest and dividend income of approximately $0.1
million for the two months ended August 31, 2001 was primarily attributable to
dividends earned on the Companys investment in shares of Gray series A and
series B preferred stock, all of which were sold in September 2001.

The net change in the value of certain derivative instruments, consisting of
warrants to purchase Gray common stocks and interest rate swap agreements, was
approximately $(0.4) million and $(0.6) million for the two months ended August
31, 2002 and 2001, respectively. The value of the derivative instruments
declined during these periods as a result of declines in the values of the
interest rate swap agreements.

Other income for the two months ended August 31, 2001 consisted primarily of
income from an option agreement with Gray whereby Gray had the right to acquire
the Companys investment in Tarzian.

Interest Expense and Debt Related Costs 

Interest expense decreased to approximately $1.5 million for the two months
ended August 31, 2002 compared to approximately $1.7 million for the same
period in the prior year, as a result of a reduction in long-term debt and
declines in variable interest rates to which a significant amount of the debt
is subject.

Debt issue cost amortization was approximately $0.3 million and $0.4 million
for the two months ended August 31, 2002 and 2001, respectively. Debt issue
costs consist of (a) amounts paid in connection with obtaining bank financing
amortized over the remaining term of the bank credit facility; and (b) the
value of shares of the Companys common stock issued to the Companys Chairman
to compensate him for his personal guarantee of the Companys debt under its
bank credit agreement. Approximately $0.3 million of such amortization is
included in debt issue cost amortization for each of the two months ended
August 31, 2002 and 2001.

27



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##### 



Income Taxes 

The principal differences between the federal statutory tax rate of 34% and the
effective tax rate are state
income taxes and, for the two months ended August 31, 2002, a change in the
amount of the valuation allowance.

RESULTS OF CONTINUING OPERATIONS
 FISCAL YEAR ENDED JUNE 30, 2002 COMPARED TO
FISCAL YEAR ENDED JUNE 30, 2001

Results Derived from Operating Businesses 

Total revenues for the fiscal years ended June 30, 2002 and 2001 are summarized
as follows (amounts in $000s):

|                                             |  |                     |         |      |  |   |         | 
|-------------------------------------------- |  | ------------------- | ------- | ---- |  | - | ------- | 
|                                             |  | Year Ended June 30,
|                                             |  |                    
|                                             |  | 2002                |         | 2001
|                                             |  |                     |         |     
|Collegiate Marketing and Production Services |  | $                   | 79,099  |      |  | $ | 85,019  | 
|Affinity Events                              |  |                     | 19,248  |      |  |   | 24,177  | 
|Affinity Management Services                 |  |                     | 14,714  |      |  |   | 11,117  | 
|Consulting                                   |  |                     | 11      |      |  |   | 24      | 
|                                             |  |                     |         |      |  |   |         | 
|                                             |  | $                   | 113,072 |      |  | $ | 120,337 | 
|                                             |  |                     |         |      |  |   |         | 

Total revenues and operating results for the Collegiate Marketing and
Production Services segment and the Affinity Events segment were unfavorably
impacted in the fiscal year ended June 30, 2002 by the economic downturn and
the resulting decline in corporate advertising and sponsorships, particularly
during Hosts peak selling period for corporate advertising and sponsorships
which was primarily from September 2001 through February 2002. The Company
believes that sales of corporate sponsorships associated with the NCAA
Corporate Sponsor Program were negatively affected in the fiscal year ended
June 30, 2002 since the Host-NCAA Contract was due to expire on August 31,
2002. The Company believes that NCAA corporate sponsors strongly preferred
multi-year renewable commitments over single-year commitments, given the
required time that it takes for a corporate sponsor to activate promotional
programs related to an NCAA corporate sponsorship. It was therefore very
difficult for the Company to attract and sign new NCAA corporate sponsors or
replace NCAA corporate sponsors whose contracts had expired. Even though Host
had signed the Host-CBS Contract under which Host then had the ability to
continue selling NCAA corporate sponsorships, due to the nature of the Host-CBS
Contract, no existing NCAA corporate sponsor contracts could extend beyond the
August 31, 2002 termination date of the Host-NCAA Contract. Total revenues for
the Collegiate Marketing and Production Services segment were favorably
affected by approximately $1.5 million in the fiscal year ended June 30, 2002
as a result of amending the termination dates of certain sponsorship contracts
during the fiscal year from August 31, 2002 to June 30, 2002.

Total operating costs and expenses for the fiscal years ended June 30, 2002 and
2001 are summarized as follows (amounts in $000s):

|                                                       |  |                     |         |      |  |            |         | 
|------------------------------------------------------ |  | ------------------- | ------- | ---- |  | ---------- | ------- | 
|                                                       |  | Year Ended June 30,
|                                                       |  |                    
|                                                       |  | 2002                |         | 2001
|                                                       |  |                     |         |     
|                                                       |  |                     |         |      |  | (restated)
|Direct operating costs of services rendered            |  | $                   | 88,531  |      |  | $          | 81,421  | 
|Selling, general and administrative                    |  |                     | 32,773  |      |  |            | 38,527  | 
|Amortization and impairment of acquisition intangibles |  |                     | 7,824   |      |  |            | 4,720   | 
|                                                       |  |                     |         |      |  |            |         | 
|                                                       |  | $                   | 129,128 |      |  | $          | 124,668 | 
|                                                       |  |                     |         |      |  |            |         | 

28



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##### 



Direct operating costs of services rendered increased for the fiscal year ended
June 30, 2002 from the prior fiscal year due to increases in the direct cost of
obtaining certain marketing rights from the NCAA, colleges and universities,
and athletic conferences. The Company must commit under certain contracts to
the payment of guaranteed rights fees and/or profit-sharing fees, and the total
amounts incurred as guaranteed rights fees and profit-sharing fees historically
increase each year under the terms of multi-year contracts and contract renewal
agreements. The total amount expensed by the Company for guaranteed rights
fees and profit-sharing fees was approximately $54.7 million for the fiscal
year ended June 30, 2002 compared to approximately $46.1 million for the prior
fiscal year. Direct operating costs of services rendered were increased in the
fiscal year ended June 30, 2002 by approximately $3.3 million as a result of
the acceleration of termination dates of certain corporate sponsorship
contracts to June 30, 2002 from August 31, 2002.

Selling, general and administrative costs declined for the fiscal year ended
June 30, 2002 from the prior fiscal year due to a reduction in the Companys
workforce and a decrease in travel costs. During the fiscal year ended June
30, 2002, the Company reduced its workforce by eliminating certain positions,
reorganizing certain responsibilities and terminating certain projects that
were not currently or expected to generate an adequate operating profit. Total
employee compensation costs included in selling, general and administrative
expense were approximately $19.2 million for the year ended June 30, 2002
compared to approximately $21.4 million for the prior fiscal year. Travel
costs were substantially reduced through efforts to operate more efficiently
and control travel spending. As a result, total travel expense included in
selling, general and administrative expense declined to approximately $1.6
million for the year ended June 30, 2002 compared to approximately $3.6 million
for the prior fiscal year.

Amortization and impairment of acquisition intangibles increased for the fiscal
year ended June 30, 2002 from the prior fiscal year as a result of the
Companys previously-discussed impairment charge of $6.6 million in the fiscal
year ended June 30, 2002, less the effects of the adoption of SFAS 142, which
eliminated the requirement to amortize goodwill and other acquisition
intangible assets.

Operating income (loss) for the fiscal years ended June 30, 2002 and 2001 is
summarized as follows (amounts in 000s):

|                                                       |  |                     |         |      |  |            |        |  
|------------------------------------------------------ |  | ------------------- | ------- | ---- |  | ---------- | ------ | -
|                                                       |  | Year Ended June 30,
|                                                       |  |                    
|                                                       |  | 2002                |         | 2001
|                                                       |  |                     |         |     
|                                                       |  |                     |         |      |  | (restated)
|Collegiate Marketing and Production Services           |  | $                   | (4,944  | )    |  | $          | 4,795  |  
|Affinity Events                                        |  |                     | (2,424  | )    |  |            | (3,837 | )
|Affinity Management Services                           |  |                     | 1,275   |      |  |            | 1,681  |  
|Consulting                                             |  |                     | 11      |      |  |            | 24     |  
|Amortization and impairment of acquisition intangibles |  |                     | (7,824  | )    |  |            | (4,720 | )
|Unallocated general and administrative costs           |  |                     | (2,150  | )    |  |            | (2,274 | )
|                                                       |  |                     |         |      |  |            |        |  
|                                                       |  | $                   | (16,056 | )    |  | $          | (4,331 | )
|                                                       |  |                     |         |      |  |            |        |  

Results Derived from Investments and Derivative Instruments 

Equity in earnings (losses) of affiliated companies, totaling approximately
$(2.9) million and $(4.2) million for the fiscal years ended June 30, 2002 and
2001, respectively, included (a) the Companys proportionate share of the
earnings or losses of (i) Gray; (ii) iHigh; and (iii) until December 31, 2001,
Rawlings, net of (b) amortization charges totaling approximately $0.7 million
in 2001. Subsequent to December 31, 2001, the Company accounted for its
investment in Rawlings as an available-for-sale marketable security. As a
result of adopting SFAS 142 effective July 1, 2001, which eliminated the
requirement for amortizing goodwill

29



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##### 



and certain other intangible assets, no
amortization was charged to the investment in affiliated companies in the
fiscal year ended June 30, 2002, thereby having a favorable impact of
approximately $0.6 million on the equity in earnings (losses) of affiliated
companies.

Interest and dividend income of approximately $0.2 million and $0.8 million for
the fiscal years ended June 30, 2002 and 2001, respectively, was primarily
derived from dividends paid on the Companys investment in Grays series A and
series B preferred stock, all of which was sold by September 2001. Shares of
Gray series A and series B preferred stock were sold in September 2001 for
approximately $6.8 million, resulting in a gain of approximately $3.1 million.
Shares of Gray series A preferred stock were redeemed by Gray in December 2000
for $5.0 million, resulting in a gain of approximately $2.2 million.

In the fiscal year ended June 30, 2002, the Company recognized a charge of
approximately $2.8 million associated with the estimated impairment in the
value of certain of the Companys investments.

In the fiscal year ended June 30, 2001, Total Sports, Inc. (Total Sports) was
sold to Quokka Sports Inc. (Quokka). In exchange for the Companys
investment in preferred and common stock of Total Sports, the Company received
Quokka common stock and warrants to purchase Quokka common stock. During the
fiscal year ended June 30, 2001, Quokka declared bankruptcy and discontinued
its business operations. As a result, the Company reduced the book value of
its investment in Quokka to zero, recording non-cash charges totaling
approximately $8.0 million. In addition to the charge taken to reduce the book
value of its investment in Quokka, the Company also recognized charges totaling
approximately $0.9 million associated with the estimated impairment in the
value of other investments.

The net change in the value of certain derivative instruments, consisting of
warrants to purchase Gray common stocks and interest rate swap agreements, was
approximately $(3.3) million and $3.0 million for the fiscal years ended June
30, 2002 and 2001, respectively. The value of the derivative instruments
declined in the fiscal year ended June 30, 2002 as a result of a decline on the
value of the warrants, and a decline on the value of the interest rate swap
agreements as variable interest
rates declined. As a result of the adoption of SFAS 133, the
Company
recognized the cumulative effect of the accounting change of approximately
$(1.1) million, representing the value of the derivatives as of July 1, 2000 of
approximately $(1.8) million, less a deferred tax provision of approximately
$0.7 million.

Other income for the fiscal years ended June 30, 2002 and 2001 consisted
primarily of income from an option agreement with Gray whereby Gray had the
right to acquire the Companys investment in Tarzian. In December 2001, Gray
exercised its option and acquired the investment in Tarzian for $10.0 million.

In the fiscal year ended June 30, 2002, the Company recognized the cumulative
effect of an accounting change of approximately $(2.6) million, net of tax, as
its proportionate share of a cumulative effect adjustment recognized by Gray in
January 2002 in connection with a change in Grays accounting for goodwill and
other intangible assets.

Interest Expense and Debt Related Costs 

Interest expense decreased to approximately $9.7 million for the fiscal year
ended June 30, 2002 from approximately $11.5 million for the prior fiscal year,
as a result of a reduction in long-term debt and declines in variable interest
rates on which a significant amount of the debt is subject.

Debt issue cost amortization of approximately $2.8 million and $2.4 million for
the fiscal years ended June 30, 2002 and 2001, respectively, resulted from the
amortization of costs paid in

30



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##### 



connection with obtaining bank financing, as well
as amortization of the value of shares of the Companys common stock issued to
the Companys Chairman, who has personally guaranteed the Companys debt under
its bank credit agreement. During the fiscal years ended June 30, 2002 and
2001, the Company issued approximately 106,000 shares and 87,000 shares,
respectively, of restricted common stock to the Companys Chairman to
compensate him for his personal guarantee. The value of the shares issued were
approximately $0.8 million and $1.4 million in the fiscal years ended June 30,
2002 and 2001, respectively, and approximately $1.6 million and $1.3 million is
included in debt issue cost amortization for each respective fiscal year.

Income Taxes 

The principal differences between the federal statutory tax rate of 34% and the
effective tax rate are state income taxes and, for the fiscal year ended June
30, 2002, a change in the amount of the valuation allowance.

DISCONTINUED OPERATIONS

The Company sold the operations of Datasouth Computer Corporation
(Datasouth), the Companys computer printer manufacturing business segment,
in September 2000. Accordingly, the operating results and net assets
associated with Datasouths computer printer manufacturing business have been
reported as discontinued operations in the accompanying financial statements
for all periods presented.

As of August 31, 2003, remaining proceeds on the sale of Datasouth of
approximately $1.7 million, net of a reserve of approximately $1.7 million,
recognized in the fiscal year ended August 31, 2003, are currently estimated to
collectible by the Company under a subordinated note agreement with the
purchaser of Datasouth. To the extent actual proceeds on the note differ from
managements current estimate of the proceeds to be ultimately received, such
differences will be reported as discontinued operations in future periods.

INTEREST RATE AND MARKET RATE RISK

The Company is exposed to changes in interest rates due to the Companys
financing of its acquisitions, investments and operations. Interest rate risk
is present with both fixed and floating rate debt. The Company uses interest
rate swap agreements to manage its debt profile. Interest rate swap agreements
generally involve exchanges of underlying face (notional) amounts of designated
hedges. The Company continually evaluates the credit quality of counterparties
to interest rate swap agreements and does not believe there is a significant
risk of nonperformance by any of the counterparties to the agreements.

Based on the Companys debt profile as of each fiscal year end, a 1% increase
in market interest rates would increase interest expense and decrease the
income before income taxes (or alternatively, increase interest expense and
increase the loss before income taxes) by approximately $0.5 million for the
fiscal year ended August 31, 2003; $0.1 million for each of the two months
ended August 31, 2002 and 2001; and $0.5 million and $0.7 million for the
fiscal years ended June 30, 2002 and 2001, respectively. These amounts were
determined by calculating the effect of the hypothetical interest rate on the
Companys floating rate debt, after giving effect to the Companys interest
rate swap agreements. These amounts do not include the effects of certain
potential results of increased interest rates, such as a reduced level of
overall economic activity or other actions management may take to mitigate the
risk. Furthermore, this sensitivity analysis does not assume changes in the
Companys financial structure that could occur if interest rates were higher.

31



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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. When used
in this report, the words believes, expects, anticipates, estimates and
similar words and expressions are generally intended to identify
forward-looking statements. Statements that describe the Companys future
strategic plans, goals or objectives are also forward-looking statements.
Readers of this Report are cautioned that any forward-looking statements,
including those regarding the intent, belief or current expectations of the
Company or management, are not guarantees of future performance, results or
events, and involve risks and uncertainties. The forward-looking statements
included in this report are made only as of the date hereof. The Company
undertakes no obligation to update such forward-looking statements to reflect
subsequent events or circumstances. Actual results and events may differ
materially from those in the forward-looking statements as a result of various
factors including, but not limited to the following: (i) the Companys leverage
may adversely affect its ability to obtain financing, thereby impairing their
ability to withstand economic downturns or competitive pressures; (ii) a
delisting of the Companys common stock from the Nasdaq Stock Market may hinder
the Companys ability to raise new capital through the issuance of equity
securities; (iii) significant segments of the Companys business are seasonal;
(iv) the Companys business depends on short term contracts and the inability
to renew or extend these contracts could adversely affect its business; (v)
the Company may lose money on some of its contracts, because it guarantees
certain payments thereunder; and (vi) war or acts of terrorism or a continued
domestic economic downturn or recession could materially adversely impact
corporate discretionary spending, such as sponsorships and advertising sold by
the Company.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

See Interest Rate and Market Rate Risk in Item 7 Managements Discussion and
Analysis.

32



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##### 



Item 8. Financial Statements and Supplementary Data

Consolidated Financial Statements of Bull Run Corporation:

|                                                                                                                                                                                                                                   |  |      |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                                                                                                   |  | Page
|                                                                                                                                                                                                                                   |  |     
|Report of Independent Auditors                                                                                                                                                                                                     |  |      | 34 | 
|Consolidated Balance Sheets as of August 31, 2003 and 2002                                                                                                                                                                         |  |      | 35 | 
|Consolidated Statements of Operations for the year ended August 31, 2003, the
two months ended August 31, 2002 and 2001 (unaudited), and the years
ended June 30, 2002 and 2001                                                    |  |      | 36 | 
|Consolidated Statements of Redeemable Preferred Stock and Stockholders Equity
(Deficit) for the year ended August 31, 2003, the two months ended August 31,
2002 and 2001 (unaudited), and the years ended June 30, 2002 and 2001 |  |      | 37 | 
|Consolidated Statements of Cash Flows for the year ended August 31, 2003, the
two months ended August 31, 2002 and 2001 (unaudited), and the years
ended June 30, 2002 and 2001                                                    |  |      | 38 | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                         |  |      | 39 | 
|Selected Quarterly Financial Data (Unaudited)                                                                                                                                                                                      |  |      | 65 | 

33



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##### 



REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS AND STOCKHOLDERS OF BULL RUN CORPORATION:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, redeemable preferred stock and
stockholders equity (deficit) and cash flows present fairly, in all material respects, the financial position of
Bull Run Corporation at August 31, 2003 and 2002, and the results of its
operations and its cash flows for the year ended August 31, 2003, the two
months ended August 31, 2002 and the years ended June 30, 2002 and 2001 in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Notes 4 and 9, the Company adopted Statement of Financial
Accounting Standard No. 142 effective July 1, 2001 and, accordingly, changed
its method of accounting for goodwill and other intangible assets. Also, as
discussed in Note 4, the Company adopted Statement of Financial Accounting
Standard No. 133 effective July 1, 2000 and, accordingly, changed its method of
accounting for derivative instruments.

As discussed in Note 2, the Company
restated its prior period financial statements.

As discussed in Note 3, approximately
$56 million of the Companys outstanding debt matures in
November 2004.

PRICEWATERHOUSECOOPERS LLP

Atlanta, Georgia
November 25, 2003

34



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BULL RUN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |            |         |  
|------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | --------------------------- | ------ | ---------- | ------- | ---- | ------- | ---------- | ------- | -
|                                                                                                                          |                                                                                                                                      |                             |        | August 31,
|                                                                                                                          |                                                                                                                                      |                             |        |           
|                                                                                                                          |                                                                                                                                      |                             |        | 2003       |         | 2002
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |     
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         | (restated)
|ASSETS                                                                                                                    |                                                                                                                                      |                             |        |            |         |      |         |           
|Current assets:                                                                                                           |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          | Cash and cash equivalents                                                                                                            |                             | $      | 4,520      |         |      | $       | 397        |        
|                                                                                                                          | Accounts receivable, net of allowance of $465 and $514
as of August 31, 2003 and 2002, respectively                                  |                             |        | 10,071     |         |      |         | 13,502     |        
|                                                                                                                          | Inventories                                                                                                                          |                             |        | 409        |         |      |         | 1,005      |        
|                                                                                                                          | Prepaid costs and expenses                                                                                                           |                             |        | 1,576      |         |      |         | 1,559      |        
|                                                                                                                          | Income taxes receivable                                                                                                              |                             |        |            |         |      |         | 561        |        
|                                                                                                                          | Net current assets of discontinued segment                                                                                           |                             |        |            |         |      |         | 106        |        
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | Total current assets        |        |            | 16,576  |      |         |            | 17,130  |  
|Property and equipment, net                                                                                               |                                                                                                                                      |                             | 4,310  |            |         |      | 5,171   |           
|Investment in affiliated companies                                                                                        |                                                                                                                                      |                             |        |            |         |      | 25,013  |           
|Goodwill                                                                                                                  |                                                                                                                                      |                             | 43,664 |            |         |      | 67,157  |           
|Customer
relationships and trademarks                                                                                     |                                                                                                                                      |                             | 9,562  |            |         |      | 16,999  |           
|Deferred income taxes                                                                                                     |                                                                                                                                      |                             |        |            |         |      | 6,681   |           
|Other assets                                                                                                              |                                                                                                                                      |                             | 803    |            |         |      | 5,433   |           
|Net noncurrent assets of discontinued segment                                                                             |                                                                                                                                      |                             | 1,695  |            |         |      | 3,385   |           
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | $                           | 76,610 |            |         | $    | 146,969 |           
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                            |                                                                                                                                      |                             |        |            |         |      |         |           
|Current liabilities:                                                                                                      |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          | Current portion of long-term debt                                                                                                    |                             | $      | 590        |         |      | $       | 19,850     |        
|                                                                                                                          | Accounts payable                                                                                                                     |                             |        | 11,878     |         |      |         | 6,558      |        
|                                                                                                                          | Deferred revenue                                                                                                                     |                             |        | 6,542      |         |      |         | 13,616     |        
|                                                                                                                          | Accrued and other liabilities                                                                                                        |                             |        | 9,600      |         |      |         | 9,358      |        
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | Total current liabilities   |        |            | 28,610  |      |         |            | 49,382  |  
|Long-term debt                                                                                                            |                                                                                                                                      |                             | 72,641 |            |         |      | 93,091  |           
|Other liabilities                                                                                                         |                                                                                                                                      |                             | 2,361  |            |         |      | 1,284   |           
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | Total liabilities           |        |            | 103,612 |      |         |            | 143,757 |  
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|Commitments and contingencies                                                                                             |                                                                                                                                      |                             |        |            |         |      |         |           
|Redeemable Series B convertible preferred stock, $.01 par value,
(authorized 100 shares; issued and outstanding 5 shares) |                                                                                                                                      |                             |        |            |         |      | 5,400   |           
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|Stockholders deficit:                                                                                                    |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          | Series C preferred stock, $.01 par value (authorized 100 shares;
issued and outstanding 4.1 shares)                                  |                             |        |            |         |      |         | 4,097      |        
|                                                                                                                          | Series D preferred stock, $.01 par value (authorized 100 shares;
issued and outstanding 14.3 shares; $14,280 liquidation value)      |                             |        | 14,280     |         |      |         |            |        
|                                                                                                                          | Common stock, $.01 par value (authorized 100,000 shares;
issued 4,324 and 3,854 shares as of August 31, 2003 and 2002,
respectively) |                             |        | 43         |         |      |         | 38         |        
|                                                                                                                          | Additional paid-in capital                                                                                                           |                             |        | 80,138     |         |      |         | 79,448     |        
|                                                                                                                          | Treasury stock, at cost (54 shares)                                                                                                  |                             |        |            |         |      |         | (1,393     | )      
|                                                                                                                          | Other comprehensive accumulated loss                                                                                                 |                             |        |            |         |      |         | (2,050     | )      
|                                                                                                                          | Accumulated deficit                                                                                                                  |                             |        | (121,463   | )       |      |         | (82,328    | )      
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | Total stockholders deficit |        |            | (27,002 | )    |         |            | (2,188  | )
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           
|                                                                                                                          |                                                                                                                                      | $                           | 76,610 |            |         | $    | 146,969 |           
|                                                                                                                          |                                                                                                                                      |                             |        |            |         |      |         |           

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

35



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BULL RUN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)

|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |         |         |  
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------------------ | ------- | ---------- | ------- | ---------- | ------ | ------------------- | ------ | ---- | ------ | ----------- | ------ | ---------- | ------- | ---------- | ------- | - | ------- | ------- | ------- | -
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        | Two Months Ended    |        |      |        |             |        |            |         |           
|                                                                                              |                                                        |                                                                                            |         | Year Ended |         | August 31, |        | Year Ended June 30,
|                                                                                              |                                                        |                                                                                            |         | August 31, |         |            |        |                    
|                                                                                              |                                                        |                                                                                            |         | 2003       |         | 2002       |        | 2001                |        | 2002 |        | 2001       
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |            
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        | (restated)  |        | (restated) |         | (restated)
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        | (unaudited) |        |            |         |           
|Revenue from services rendered                                                                |                                                        | $                                                                                          | 83,844  |            |         | $          | 9,490  |                     |        | $    | 12,777 |             |        | $          | 113,072 |            |         | $ | 120,337 |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|Operating costs and expenses:                                                                 |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              | Direct operating costs of services rendered            |                                                                                            |         | 55,069     |         |            |        | 7,265               |        |      |        | 8,082       |        |            |         | 88,531     |         |   |         | 81,421  |        
|                                                                                              | Selling, general and administrative                    |                                                                                            |         | 25,878     |         |            |        | 5,643               |        |      |        | 6,154       |        |            |         | 32,773     |         |   |         | 38,527  |        
|                                                                                              | Amortization and impairment of acquisition intangibles |                                                                                            |         | 31,756     |         |            |        | 203                 |        |      |        | 171         |        |            |         | 7,824      |         |   |         | 4,720   |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        |                                                                                            | 112,703 |            |         |            | 13,111 |                     |        |      | 14,407 |             |        |            | 129,128 |            |         |   | 124,668 |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Operating loss                                                                             |         |            | (28,859 | )          |        |                     | (3,621 | )    |        |             | (1,630 | )          |         |            | (16,056 | ) |         |         | (4,331  | )
|Other income (expense):                                                                       |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              | Equity in earnings (losses) of affiliated companies    |                                                                                            |         | (204       | )       |            |        | (110                | )      |      |        | (554        | )      |            |         | (2,912     | )       |   |         | (4,235  | )      
|                                                                                              | Loss on issuance of shares by affiliate                |                                                                                            |         | (2,339     | )       |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |         |        
|                                                                                              | Gain on disposition of investments                     |                                                                                            |         | 17,150     |         |            |        |                     |        |      |        |             |        |            |         | 3,064      |         |   |         | 2,160   |        
|                                                                                              | Reduction in valuation of investment in affiliates     |                                                                                            |         | (5,189     | )       |            |        |                     |        |      |        | (250        | )      |            |         | (2,822     | )       |   |         | (8,956  | )      
|                                                                                              | Net change in value of certain derivative instruments  |                                                                                            |         | (1,035     | )       |            |        | (423                | )      |      |        | (632        | )      |            |         | (3,345     | )       |   |         | 2,988   |        
|                                                                                              | Interest and dividend income                           |                                                                                            |         | 12         |         |            |        | 652                 |        |      |        | 99          |        |            |         | 151        |         |   |         | 810     |        
|                                                                                              | Interest expense                                       |                                                                                            |         | (8,179     | )       |            |        | (1,505              | )      |      |        | (1,729      | )      |            |         | (9,713     | )       |   |         | (11,545 | )      
|                                                                                              | Debt issue cost amortization                           |                                                                                            |         | (2,367     | )       |            |        | (269                | )      |      |        | (434        | )      |            |         | (2,830     | )       |   |         | (2,410  | )      
|                                                                                              | Other income (expense)                                 |                                                                                            |         | (59        | )       |            |        | (79                 | )      |      |        | 116         |        |            |         | 350        |         |   |         | 1,254   |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Loss from continuing operations before income
taxes and cumulative effect                  |         |            | (31,069 | )          |        |                     | (5,355 | )    |        |             | (5,014 | )          |         |            | (34,113 | ) |         |         | (24,265 | )
|Income tax (provision) benefit                                                                |                                                        |                                                                                            | (5,222  | )          |         |            |        |                     |        |      | 1,586  |             |        |            | 2,175   |            |         |   | 6,681   |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Loss from continuing operations before
cumulative effect, net of tax                       |         |            | (36,291 | )          |        |                     | (5,355 | )    |        |             | (3,428 | )          |         |            | (31,938 | ) |         |         | (17,584 | )
|Cumulative effect of accounting change, net of tax
benefit of $1,350 in 2002 and $687 in 2001 |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            | (2,620  | )          |         |   | (1,120  | )      
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Loss from continuing operations                                                            |         |            | (36,291 | )          |        |                     | (5,355 | )    |        |             | (3,428 | )          |         |            | (34,558 | ) |         |         | (18,704 | )
|Loss on disposal of discontinued segment                                                      |                                                        |                                                                                            | (1,695  | )          |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Net loss                                                                                   |         |            | (37,986 | )          |        |                     | (5,355 | )    |        |             | (3,428 | )          |         |            | (34,558 | ) |         |         | (18,704 | )
|Preferred dividends                                                                           |                                                        |                                                                                            | (1,149  | )          |         |            | (93    | )                   |        |      | (45    | )           |        |            | (396    | )          |         |   |         |        
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Net loss available to common stockholders                                                  |         | $          | (39,135 | )          |        | $                   | (5,448 | )    |        | $           | (3,473 | )          |         | $          | (34,954 | ) |         | $       | (18,704 | )
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|Loss per share available to common stockholders, basic and diluted:                           |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | Loss from continuing operations before extraordinary
item and cumulative effect adjustment |         | $          | (9.39   | )          |        | $                   | (1.44  | )    |        | $           | (0.96  | )          |         | $          | (8.86   | ) |         | $       | (4.98   | )
|                                                                                              |                                                        | Cumulative effect of accounting change                                                     |         |            |         |            |        |                     |        |      |        |             |        |            |         |            | (0.72   | ) |         |         | (0.32   | )
|                                                                                              |                                                        | Loss from discontinued segment                                                             |         |            | (0.43   | )          |        |                     |        |      |        |             |        |            |         |            |         |   |         |         |         |  
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              |                                                        | $                                                                                          | (9.82   | )          |         | $          | (1.44  | )                   |        | $    | (0.96  | )           |        | $          | (9.58   | )          |         | $ | (5.30   | )      
|                                                                                              |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|Weighted average number of common shares outstanding:                                         |                                                        |                                                                                            |         |            |         |            |        |                     |        |      |        |             |        |            |         |            |         |   |         |        
|                                                                                              | Basic and diluted                                      |                                                                                            |         | 3,987      |         |            |        | 3,793               |        |      |        | 3,599       |        |            |         | 3,649      |         |   |         | 3,531   |        

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

36



---



##### 



BULL RUN CORPORATION
CONSOLIDATED STATEMENTS OF REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS EQUITY (DEFICIT)
(Amounts in thousands)

|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | ------ | --------- |  | ------ | ------ | ------------ |  |  | ----- | - |  | - | -- | -
|                                                                                               |  | Redeemable         |        |           |  |        |        | Common Stock
|                                                                                               |  | Series B Preferred |        | Preferred |  |       
|                                                                                               |  | Stock              |        | Stock     |  | Shares |        | Amount      
|                                                                                               |  |                    |        |           |  |        |        |             
|As of July 1, 2000                                                                             |  |                    |        |           |  | $      |        |              |  |  | 3,563 |   |  | $ | 36 |  
|Issuance of Series A pfd stock with warrants                                                   |  |                    |        |           |  |        | 2,178  |              |  |  |       |   |  |   |    |  
|Issuance of common stock                                                                       |  |                    |        |           |  |        |        |              |  |  | 87    |   |  |   | 1  |  
|Exercise of stock options                                                                      |  |                    |        |           |  |        |        |              |  |  | 3     |   |  |   | 0  |  
|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  
|As of June 30, 2001                                                                            |  | $                  |        |           |  | $      | 2,178  |              |  |  | 3,653 |   |  | $ | 37 |  
|Exchange of Series A preferred stock
and warrants for Series B preferred stock                 |  |                    | 3,000  |           |  |        | (2,178 | )            |  |  |       |   |  |   |    |  
|Issuance of Series B preferred stock                                                           |  |                    | 2,400  |           |  |        |        |              |  |  |       |   |  |   |    |  
|Issuance of common stock                                                                       |  |                    |        |           |  |        |        |              |  |  | 152   |   |  |   | 1  |  
|Exercise of stock options                                                                      |  |                    |        |           |  |        |        |              |  |  | 6     |   |  |   | 0  |  
|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  
|As of June 30, 2002                                                                            |  | $                  | 5,400  |           |  | $      | 0      |              |  |  | 3,811 |   |  | $ | 38 |  
|Issuance of Series C preferred stock                                                           |  |                    |        |           |  |        | 4,097  |              |  |  |       |   |  |   |    |  
|Issuance of common stock                                                                       |  |                    |        |           |  |        |        |              |  |  | 44    |   |  |   | 0  |  
|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  
|As of August 31, 2002                                                                          |  | $                  | 5,400  |           |  | $      | 4,097  |              |  |  | 3,855 |   |  | $ | 38 |  
|Cancellation of treasury stock                                                                 |  |                    |        |           |  |        |        |              |  |  | (54   | ) |  |   | (1 | )
|Exchange of Series B and C preferred stock and
subordinated notes for Series D preferred stock |  |                    | (5,400 | )         |  |        | 7,183  |              |  |  |       |   |  |   |    |  
|Issuance of Series D preferred stock                                                           |  |                    |        |           |  |        | 3,000  |              |  |  |       |   |  |   |    |  
|Issuance of common stock                                                                       |  |                    |        |           |  |        |        |              |  |  | 463   |   |  |   | 5  |  
|Exercise of stock options                                                                      |  |                    |        |           |  |        |        |              |  |  | 60    |   |  |   | 1  |  
|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  
|As of August 31, 2003                                                                          |  | $                  | 0      |           |  | $      | 14,280 |              |  |  | 4,324 |   |  | $ | 43 |  
|                                                                                               |  |                    |        |           |  |        |        |              |  |  |       |   |  |   |    |  

|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  
|---------------------------------------------------------------------------------------------- |  | ---------- | ------ | -------- |  | ----------- | ------ | ------------- |  | --------- | ------ | ------------- |  | ----- | -------- | - |  | - | ------- | -
|                                                                                               |  |            |        |          |  |             |        |               |  | Other     |        | Retained      |  | Total
|                                                                                               |  | Additional |        |          |  |             |        | Comprehensive |  | Earnings  |        | Stockholders
|                                                                                               |  | Paid-In    |        | Treasury |  | Accumulated |        | (Accumulated  |  | Equity   
|                                                                                               |  | Capital    |        | Stock    |  | Loss        |        | Deficit)      |  | (Deficit)
|                                                                                               |  |            |        |          |  |             |        |               |  |          
|As of July 1, 2000                                                                             |  | $          | 76,443 |          |  | $           | (1,393 | )             |  |           |        |               |  | $     | (23,222  | ) |  | $ | 51,864  |  
|Issuance of Series A pfd stock with warrants                                                   |  |            | 822    |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 3,000   |  
|Issuance of common stock                                                                       |  |            | 1,448  |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 1,449   |  
|Exercise of stock options                                                                      |  |            | 17     |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 17      |  
|Tax effect of nonqualified stock options                                                       |  |            | (22    | )        |  |             |        |               |  |           |        |               |  |       |          |   |  |   | (22     | )
|Net loss available to common stockholders                                                      |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (18,704  | ) |  |   | (18,704 | )
|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  
|As of June 30, 2001                                                                            |  | $          | 78,708 |          |  | $           | (1,393 | )             |  | $         |        |               |  | $     | (41,926  | ) |  | $ | 37,604  |  
|Exchange of Series A preferred stock
and warrants for Series B preferred stock                 |  |            | (822   | )        |  |             |        |               |  |           |        |               |  |       |          |   |  |   | (3,000  | )
|Issuance of common stock                                                                       |  |            | 1,102  |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 1,103   |  
|Exercise of stock options                                                                      |  |            | 53     |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 53      |  
|Other comprehensive loss                                                                       |  |            |        |          |  |             |        |               |  |           | (2,080 | )             |  |       |          |   |  |   | (2,080  | )
|Preferred dividends                                                                            |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (396     | ) |  |   | (396    | )
|Net
loss, restated                                                                             |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (34,558  | ) |  |   | (34,558 | )
|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  
|As of June 30, 2002, restated                                                                  |  | $          | 79,041 |          |  | $           | (1,393 | )             |  | $         | (2,080 | )             |  | $     | (76,880  | ) |  | $ | (1,274  | )
|Issuance of Series C preferred stock                                                           |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 4,097   |  
|Issuance of common stock                                                                       |  |            | 407    |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 407     |  
|Other comprehensive income                                                                     |  |            |        |          |  |             |        |               |  |           | 30     |               |  |       |          |   |  |   | 30      |  
|Preferred dividends                                                                            |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (93      | ) |  |   | (93     | )
|Net
loss                                                                                       |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (5,355   | ) |  |   | (5,355  | )
|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  
|As of August 31, 2002, restated                                                                |  | $          | 79,448 |          |  | $           | (1,393 | )             |  | $         | (2,050 | )             |  | $     | (82,328  | ) |  | $ | (2,188  | )
|Cancellation of treasury stock                                                                 |  |            | (1,392 | )        |  |             | 1,393  |               |  |           |        |               |  |       |          |   |  |   | 0       |  
|Exchange of Series B and C preferred stock and
subordinated notes for Series D preferred stock |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 7,183   |  
|Issuance of Series D preferred stock                                                           |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 3,000   |  
|Issuance of common stock                                                                       |  |            | 2,257  |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 2,262   |  
|Exercise of stock options                                                                      |  |            | 206    |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   | 207     |  
|Tax effect of nonqualified stock options                                                       |  |            | (381   | )        |  |             |        |               |  |           |        |               |  |       |          |   |  |   | (381    | )
|Other comprehensive income                                                                     |  |            |        |          |  |             |        |               |  |           | 2,050  |               |  |       |          |   |  |   | 2,050   |  
|Preferred dividends                                                                            |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (1,149   | ) |  |   | (1,149  | )
|Net loss                                                                                       |  |            |        |          |  |             |        |               |  |           |        |               |  |       | (37,986  | ) |  |   | (37,986 | )
|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  
|As of August 31, 2003                                                                          |  | $          | 80,138 |          |  | $           | 0      |               |  | $         | 0      |               |  | $     | (121,463 | ) |  | $ | (27,002 | )
|                                                                                               |  |            |        |          |  |             |        |               |  |           |        |               |  |       |          |   |  |   |         |  

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

37



---



##### 



BULL RUN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |         |        |  
|-------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------- | ------- | ---------- | ------ | ---------- | ------ | ------------------- | ------ | ---- | ------ | ----------- | ------ | ---------- | ------- | ---------- | ------ | - | ------- | ------- | ------ | -
|                                                                           |                                                                              |                                       |         |            |        |            |        | Two Months Ended    |        |      |        |             |        |            |         |           
|                                                                           |                                                                              |                                       |         | Year Ended |        | August 31, |        | Year Ended June 30,
|                                                                           |                                                                              |                                       |         | August 31, |        |            |        |                    
|                                                                           |                                                                              |                                       |         | 2003       |        | 2002       |        | 2001                |        | 2002 |        | 2001       
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |            
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        | (restated)  |        | (restated) |         | (restated)
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        | (unaudited) |        |            |         |           
|Cash flows from operating activities:                                      |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|                                                                           | Net loss                                                                     |                                       | $       | (37,986    | )      |            | $      | (5,355              | )      |      | $      | (3,428      | )      |            | $       | (34,558    | )      |   | $       | (18,704 | )     
|                                                                           | Loss from disposal of discontinued segment                                   |                                       |         | 1,695      |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |         |       
|                                                                           | Adjustments to reconcile net loss to net cash used in
continuing operations: |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |         |       
|                                                                           | Cumulative effect of accounting change                                       |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         | 2,620      |        |   |         | 1,120   |       
|                                                                           | Provision for bad debts                                                      |                                       |         | 300        |        |            |        | 85                  |        |      |        | 61          |        |            |         | 630        |        |   |         | 576     |       
|                                                                           | Depreciation, amortization and intangibles impairment                        |                                       |         | 35,326     |        |            |        | 764                 |        |      |        | 873         |        |            |         | 12,270     |        |   |         | 8,891   |       
|                                                                           | Equity in (earnings) losses of affiliated companies                          |                                       |         | 204        |        |            |        | 110                 |        |      |        | 554         |        |            |         | 2,912      |        |   |         | 4,235   |       
|                                                                           | Loss on issuance of shares by affiliate                                      |                                       |         | 2,339      |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |         |       
|                                                                           | Dividends received from affiliated company                                   |                                       |         | 162        |        |            |        | 41                  |        |      |        |             |        |            |         |            |        |   |         |         |       
|                                                                           | Other expense (income) derived from investment in
affiliates, net            |                                       |         | (11,906    | )      |            |        |                     |        |      |        | 250         |        |            |         | (120       | )      |   |         | 6,718   |       
|                                                                           | Net change in value of derivative instruments                                |                                       |         | 1,035      |        |            |        | 423                 |        |      |        | 632         |        |            |         | 3,345      |        |   |         | (2,988  | )     
|                                                                           | Deferred income taxes                                                        |                                       |         | 5,222      |        |            |        |                     |        |      |        | (1,586      | )      |            |         | (2,175     | )      |   |         | (6,047  | )     
|                                                                           | Change in operating assets and liabilities:                                  |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |         |       
|                                                                           |                                                                              | Accounts receivable                   |         |            | 595    |            |        |                     | 2,709  |      |        |             | (4,205 | )          |         |            | 12,621 |   |         |         | (1,409 | )
|                                                                           |                                                                              | Inventories                           |         |            | 596    |            |        |                     | (361   | )    |        |             | (118   | )          |         |            | (150   | ) |         |         | 185    |  
|                                                                           |                                                                              | Prepaid costs and expenses            |         |            | 190    |            |        |                     | 1,114  |      |        |             | (972   | )          |         |            | 428    |   |         |         | 572    |  
|                                                                           |                                                                              | Accounts payable and accrued expenses |         |            | (1,873 | )          |        |                     | (2,871 | )    |        |             | 5,555  |            |         |            | (1,868 | ) |         |         | 4,271  |  
|                                                                           |                                                                              | Other long-term liabilities           |         |            | (1,092 | )          |        |                     | (651   | )    |        |             | (139   | )          |         |            | (1,276 | ) |         |         | 822    |  
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net cash used in continuing operations                                     |                                                                              |                                       | (5,193  | )          |        |            | (3,992 | )                   |        |      | (2,523 | )           |        |            | (5,321  | )          |        |   | (1,758  | )      
|Net cash provided by (used in) discontinued operations                     |                                                                              |                                       | 106     |            |        |            | (3     | )                   |        |      | 53     |             |        |            | (127    | )          |        |   | 2,126   |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net cash provided by (used in) operating activities                        |                                                                              |                                       | (5,087  | )          |        |            | (3,995 | )                   |        |      | (2,470 | )           |        |            | (5,448  | )          |        |   | 368     |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Cash flows from investing activities:                                      |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Capital expenditures                                                       |                                                                              |                                       | (340    | )          |        |            | (66    | )                   |        |      | (78    | )           |        |            | (279    | )          |        |   | (1,166  | )      
|Investment in affiliated companies                                         |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            | (705    | )          |        |   | (223    | )      
|Proceeds on dispositions of investments                                    |                                                                              |                                       | 46,183  |            |        |            |        |                     |        |      |        |             |        |            | 16,803  |            |        |   | 5,330   |        
|Acquisition of businesses, net of cash acquired                            |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   | (1,232  | )      
|Other investing activities                                                 |                                                                              |                                       | (665    | )          |        |            | (19    | )                   |        |      | (22    | )           |        |            | (128    | )          |        |   | (14     | )      
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net cash provided by (used in) continuing operation
investing activities   |                                                                              |                                       | 45,178  |            |        |            | (85    | )                   |        |      | (100   | )           |        |            | 15,691  |            |        |   | 2,695   |        
|Net cash provided by (used in) discontinued operation
investing activities |                                                                              |                                       | (5      | )          |        |            | (18    | )                   |        |      | 1,007  |             |        |            | 843     |            |        |   | 2,347   |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net cash provided by (used in) investing activities                        |                                                                              |                                       | 45,173  |            |        |            | (103   | )                   |        |      | 907    |             |        |            | 16,534  |            |        |   | 5,042   |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Cash flows from financing activities:                                      |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Borrowings from notes payable and revolving line of credit                 |                                                                              |                                       | 5,175   |            |        |            | 4,000  |                     |        |      | 1,350  |             |        |            | 22,950  |            |        |   | 23,625  |        
|Repayments on notes payable and revolving line of credit                   |                                                                              |                                       | (5,000  | )          |        |            | (150   | )                   |        |      | (2,000 | )           |        |            | (17,350 | )          |        |   | (18,450 | )      
|Repayments on long-term debt                                               |                                                                              |                                       | (38,000 | )          |        |            |        |                     |        |      | (1,050 | )           |        |            | (20,793 | )          |        |   | (10,866 | )      
|Debt issue costs                                                           |                                                                              |                                       | (1,345  | )          |        |            | (8     | )                   |        |      | (460   | )           |        |            | (680    | )          |        |   | (718    | )      
|Issuance of common stock                                                   |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            | 350     |            |        |   |         |        
|Exercise of stock options                                                  |                                                                              |                                       | 207     |            |        |            |        |                     |        |      | 35     |             |        |            | 53      |            |        |   | 17      |        
|Issuance of preferred stock                                                |                                                                              |                                       | 3,000   |            |        |            |        |                     |        |      |        |             |        |            | 2,400   |            |        |   | 3,000   |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net cash provided by (used in) continuing operation
financing activities   |                                                                              |                                       | (35,963 | )          |        |            | 3,842  |                     |        |      | (2,125 | )           |        |            | (13,070 | )          |        |   | (3,392  | )      
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Net increase (decrease) in cash and cash
equivalents                       |                                                                              |                                       | 4,123   |            |        |            | (256   | )                   |        |      | (3,688 | )           |        |            | (1,984  | )          |        |   | 2,018   |        
|Cash and cash equivalents, beginning of period                             |                                                                              |                                       | 397     |            |        |            | 653    |                     |        |      | 2,637  |             |        |            | 2,637   |            |        |   | 619     |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        
|Cash and cash equivalents, end of period                                   |                                                                              | $                                     | 4,520   |            |        | $          | 397    |                     |        | $    | (1,051 | )           |        | $          | 653     |            |        | $ | 2,637   |        
|                                                                           |                                                                              |                                       |         |            |        |            |        |                     |        |      |        |             |        |            |         |            |        |   |         |        

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

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BULL RUN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share data)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Bull Run Corporation (Bull Run, and collectively with its subsidiaries, the
Company) provides media and marketing services to universities, athletic
conferences and various associations and, in addition, market, and operate,
amateur participatory sporting events through its wholly owned subsidiary, Host
Communications, Inc. (Host). In December 1999, Bull Run acquired the capital
stock of Host, Universal Sports America, Inc. (USA) and Capital Sports
Properties, Inc. (Capital) not then owned, directly or indirectly, by Bull
Run (the Host-USA Acquisition). All operations of the acquired entities are
now combined under Host.

The Company previously held significant investments in Gray Television, Inc.
(Gray), an owner and operator of 13 television stations, four daily
newspapers and other media and communications businesses, and Rawlings Sporting
Goods Company, Inc. (Rawlings), a leading supplier of team sports equipment
in North America. The Companys investments in Gray and Rawlings were sold
during the fiscal year ended August 31, 2003. The Company currently holds an
investment in iHigh, Inc. (iHigh), a company that provides marketing services
and programs in connection with high school sports and activities.

Effective August 31, 2002, the Company changed its fiscal year end from June 30
to August 31. As a result, the accompanying audited consolidated financial
statements include those as of and for the fiscal year ended August 31, 2003,
as of and for the two-month transition period ended August 31, 2002 (with
corresponding unaudited consolidated financial statements for the two months
ended August 31, 2001), and for the fiscal years ended June 30, 2002 and 2001.

Unless otherwise indicated, amounts provided in these notes to the consolidated
financial statements pertain to continuing operations.

2. RESTATEMENT OF FINANCIAL STATEMENTS

In November 2003, the Company became aware of an inadvertent error
in that it did not record deferred income tax liabilities and
the corresponding increase in goodwill related to certain intangible
assets acquired in prior years. The Company also determined that it provided an insufficient
valuation allowance for its net deferred tax assets as of June 30, 2002. The
accompanying consolidated financial statements as of August 31, 2002, for
the unaudited two months ended August 31, 2001, and for the fiscal years ended
June 30, 2002 and 2001 have been restated for the correction of such errors.
The restatement had no effect on cash or cash flows.

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A comparison of the Companys consolidated financial position and results of
operations prior to and following the restatement follows:

|                                              |                                                        |  |          |         |          |  |            |         |  
|--------------------------------------------- | ------------------------------------------------------ |  | -------- | ------- | -------- |  | ---------- | ------- | -
|                                              |                                                        |  |          |         |          |  | Previously
|                                              |                                                        |  | Restated |         | Reported
|                                              |                                                        |  |          |         |         
|As of August 31, 2002:                        |                                                        |  |          |         |          |  |            |        
|                                              | Goodwill                                               |  | $        | 67,157  |          |  | $          | 57,862  |  
|                                              | Deferred income tax asset, net                         |  |          | 6,681   |          |  |            | 21,381  |  
|                                              | Total assets                                           |  |          | 146,969 |          |  |            | 152,374 |  
|                                              | Stockholders equity (accumulated deficit)             |  |          | (2,188  | )        |  |            | 3,217   |  
|Two Months Ended August 31, 2001 (unaudited): |                                                        |  |          |         |          |  |            |        
|                                              | Amortization and impairment of acquisition intangibles |  | $        | 171     |          |  | $          | 171     |  
|                                              | Operating loss                                         |  |          | (1,630  | )        |  |            | (1,630  | )
|                                              | Loss
from continuing operations before income taxes    |  |          | (5,014  | )        |  |            | (5,014  | )
|                                              | Income tax benefit                                     |  |          | 1,586   |          |  |            | 1,509   |  
|                                              | Net loss                                               |  |          | (3,428  | )        |  |            | (3,505  | )
|                                              | Loss per share available to common stockholders        |  | $        | (0.96   | )        |  | $          | (0.99   | )
|Year Ended June 30, 2002:                     |                                                        |  |          |         |          |  |            |        
|                                              | Amortization and impairment of acquisition intangibles |  | $        | 7,824   |          |  | $          | 7,824   |  
|                                              | Operating loss                                         |  |          | (16,056 | )        |  |            | (16,056 | )
|                                              | Loss
from continuing operations before income taxes    |  |          | (34,113 | )        |  |            | (34,113 | )
|                                              | Income tax benefit                                     |  |          | 2,175   |          |  |            | 7,580   |  
|                                              | Net loss                                               |  |          | (34,558 | )        |  |            | (29,153 | )
|                                              | Loss per share available to common stockholders        |  | $        | (9.58   | )        |  | $          | (8.10   | )
|Year Ended June 30, 2001:                     |                                                        |  |          |         |          |  |            |        
|                                              | Amortization and impairment of acquisition intangibles |  | $        | 4,720   |          |  | $          | 4,267   |  
|                                              | Operating loss                                         |  |          | (4,331  | )        |  |            | (3,878  | )
|                                              | Loss
from continuing operations before income taxes    |  |          | (24,265 | )        |  |            | (23,812 | )
|                                              | Income tax benefit                                     |  |          | 6,681   |          |  |            | 6,228   |  
|                                              | Net loss                                               |  |          | (18,704 | )        |  |            | (18,704 | )
|                                              | Loss per share available to common stockholders        |  | $        | (5.30   | )        |  | $          | (5.30   | )

3. LIQUIDITY

As of August 31, 2003, the
Companys negative working capital was approximately
$12 million. The Company has reported substantial losses and has
consumed substantial cash in its operations. The Company has funded
its liquidity needs through the issuance of preferred stock and
through the sale of investments. Based upon the Companys
forecasted operating cash flows and
capital expenditures for its fiscal year ending August 31, 2004,
and $2 million of cash proceeds received from the issuance of
preferred stock in November 2003, management believes the Company has
sufficient liquidity through at least August 31, 2004.
Additionally, the Companys Chairman has committed to contribute
an additional $1 million in capital to the Company through
November 2004, if necessary.

As further discussed in
Note 11, the Company has approximately $56 million of debt
outstanding at August 31, 2003 under its bank credit agreement.
As further discussed in Note 11, the Companys Chairman has
guaranteed repayment of $53 million of the outstanding bank
debt. Amounts outstanding under the credit agreement are due on
November 30, 2004. The Companys ability to continue this
or similar financing beyond the November 30, 2004 maturity date
is significantly dependent on the continued support of the
Companys Chairman and, in part, on the Companys future
operating results. There can be no assurances with respect to either
the Companys future operating results or the continued support
of its Chairman.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation- The accompanying consolidated financial
statements include the accounts of Bull Run and its wholly owned subsidiaries,
after elimination of intercompany accounts and transactions.

Use of Estimates- The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

Reclassifications Certain amounts in the prior period financial statements
have been reclassified for comparative purposes.

Revenue Recognition and Rights
Fee Expenses Revenue from services is
recognized as the services are rendered. Corporate sponsor license fee revenue
that is not related to specific events is recognized
ratably over the term of the sponsorship. In certain circumstances, the
Company enters into contractual arrangements with associations or institutions
it represents in various capacities which involve payment of guaranteed rights
fees. Guaranteed rights fee expense that is not related to specific events is
recognized ratably over the term specified in the contract. The Companys
contractual arrangements with associations or institutions may also involve
net profit sharing arrangements (profit splits) based on the
net profit associated with services rendered under the contract. Profit split
expense is accrued over the contract period, based on estimates, and is
adjusted at the end of the contract term in order to reflect the actual profit
split.

Barter Transactions The Company provides advertising and licensing rights to
certain customers or sublicensees in exchange for services. The estimated fair
value of the services to be received is recognized as accounts receivable and
deferred revenue. As these services are used, an amount is charged to
operating expense. Advertising revenue is recognized as the advertising is
used by the customer and license fee revenue is recognized ratably over the
term of the sublicense agreement. For the fiscal year ended August 31, 2003,
net revenues and operating expenses included barter transactions of
approximately $3,000. For the fiscal years ended June 30, 2002 and 2001, net
revenues included barter transactions of approximately $2,700 and $2,400,
respectively, and operating expenses included barter transactions of
approximately $3,100 and $2,500, respectively. Barter transactions for the
two-month periods ended August 31, 2002 and 2001 were negligible.

Cash and Cash Equivalents- Cash equivalents are composed of all highly liquid
investments with an original maturity of three months or less.

Accounts Receivable and Credit Risk In certain situations, the Company may
invoice certain customers up to 90 days in advance. Accounts receivable
pertaining to advance billings are also included as deferred revenue until such
time as the revenue is earned. The Company performs ongoing credit evaluations
of its customers financial condition and generally requires no collateral from
its customers.

Until June 30, 2002, the Company generated a significant amount of revenue from
sublicensing National Collegiate Athletic Association (NCAA) corporate
sponsorship rights to major corporations. The Companys final contract with
the NCAA (the Host-NCAA Contract), which provided these rights to the
Company, in addition to other rights, ended on August 31, 2002. The Company
became a party to an agreement with CBS Sports (the Host-CBS Contract) which
commenced on September 1, 2002. Although the Host-CBS

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Contract continues to
provide for licensing of NCAA trademarks, publishing and other rights, it does
not provide for the sublicensing of NCAA corporate sponsorship rights;
therefore, the Company no longer derived revenues from the sale of NCAA
corporate sponsorship rights subsequent to June 30, 2002. The Host-CBS
Contract also substantially eliminated the obligation to pay a significant
guaranteed rights fee associated with the procurement of corporate sponsorship
rights. As a result, the differences between the Host-CBS Contract
and the predecessor Host-NCAA Contract resulted in a significant reduction in total
revenues and direct operating costs of services rendered, and a reduction in
accounts receivable and accrued expenses after June 30, 2002. For the fiscal
years ended June 30, 2002 and 2001, approximately 25% and 26% of the Companys
revenues from continuing operations arose from sublicensing NCAA corporate
sponsor rights, respectively. Accounts receivable as of June 30, 2002 included
approximately $2,790 due from NCAA corporate sponsors.

Inventories Inventories, stated at cost, consist primarily of materials and
supplies associated with the Companys printing operations.

Property and Equipment- Property and equipment is stated at cost less
depreciation computed on the straight-line method over the estimated useful
life of the asset, generally from three to ten years. Leasehold improvements
and equipment held under capital leases are amortized over the lesser of the
lease term or the estimated useful life of the asset. Depreciation expense for
continuing operations was $1,193 for the fiscal year ended August 31, 2003;
$249 and $256 for the two months ended August 31, 2002 and 2001, respectively;
and $1,518 and $1,650 for the fiscal years ended June 30, 2002 and 2001,
respectively. Depreciation expense for discontinued operations was $76 for the
fiscal year ended June 30, 2001.

Investment in Affiliated Companies- The Company accounts for its investment in
iHigh by the equity method. The Company accounted for its investment in Gray
by the equity method until the sale of the investment in August 2003. The
Company accounted for its investment in Rawlings by the equity method until
December 2001. The Company accounted for its investment in Sarkes Tarzian,
Inc. (Tarzian) by the cost method until the sale of the investment in
December 2001.

In December 2001, the two directors of the Company who also served on Rawlings
board of directors resigned from Rawlings board. As a result, the Company
determined it no longer exercised significant influence over Rawlings
policy-making decisions, and began accounting for its investment in Rawlings as
an available-for-sale marketable security. Therefore, Investment in
affiliated companies on the consolidated balance sheet as of August 31, 2002
includes the Companys investment in Rawlings at the current market value as
determined by the closing price of Rawlings common stock as quoted on the
Nasdaq Stock Market. Until the Company sold its investment in Rawlings in
December 2002, the carrying value of the investment in Rawlings in excess of
the current market value, net of deferred taxes, was reported in the balance
sheet as Other comprehensive accumulated loss. Unrealized market value
changes in Rawlings common stock were reflected as a change in Investment in
affiliated companies and Other comprehensive accumulated loss, except for
impairment charges, which were reported as losses in the Consolidated Statement
of Operations.

As a result of the Companys adoption of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets,(SFAS 142)
effective July 1, 2001, the requirement to amortize the excess of the Companys
investment over the underlying equity of the Companys equity method
investments was eliminated. The unamortized difference, which was
approximately $8,057 as of June 30, 2002, was amortized over 10 to 40 years

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until June 30, 2001, and such amortization (totaling $684 in the fiscal year
ended June 30, 2001) resulted in a reduction in the Companys equity in
earnings of affiliated companies.

The Company recognizes a gain or loss on the issuance of shares by an investee
company resulting in dilution of the Companys interest in the investee. The
gain or loss is determined based on the difference between (a) the Companys
post-issuance allocable share of the investees underlying equity, as compared
to the Companys allocable share of the investees underlying equity
immediately prior to the issuance, and (b) a pro rata reduction of the
unamortized difference between the Companys carrying value of the investment
and the Companys allocable share of the investees underlying equity
immediately prior to the issuance. Deferred taxes are provided on recognized
gains or losses, subject to a determination of deferred tax valuation
allowances.

Goodwill and Other Long-Lived Assets Prior to July 1, 2001, goodwill and
certain purchased intangible assets (i.e., trademarks) were amortized over 20
years. The Companys adoption of SFAS 142 eliminated the requirement to
amortize goodwill and trademarks subsequent to the fiscal year ending June 30,
2001. Under the provisions of SFAS 142, the Company is required to
periodically assess the carrying value of goodwill and trademarks associated
with each of five distinct business units that comprise three business segments
of the Company to determine if an impairment in value has occurred. Impairment
tests completed as of December 31, 2002 and 2001 concluded that the carrying
amount of goodwill and trademarks for each acquired business unit did not
exceed its net realizable value based on the Companys estimate of expected
future cash flows to be generated by each of the five business units. However,
as further discussed in Note 9, the Company updated its assessment as of August
31, 2003 and concluded that based on a valuation model incorporating expected
future cash flows in consideration of historical cash flows and results to
date, an impairment charge was necessary. If the Company concludes in the
future that the adjusted carrying value of such intangibles for any of the five
business units exceeds its respective net realizable value, the Company would
expense such excess and decrease goodwill and/or trademarks as reported in the
consolidated balance sheet.

Other purchased intangibles, including customer relationships, are amortized
primarily over a 16-year average life. The use of a 16-year average life for
customer relationships acquired in the Host-USA Acquisition, amortized on a
straight-line method, is not materially different from using the estimated life
of each individual relationship using a systematic allocation method. As
further discussed in Note 9, the Company determined that an impairment charge
was necessary to reduce the carrying amount of certain customer
relationship intangible
assets in the fiscal year ended June 30, 2002 as a result of a significant
change in the contractual nature of the Companys underlying relationship with
the NCAA. The impairment analysis performed as of August 31, 2003 indicated
the need for an additional impairment charge. If the Company concludes in the
future that significant changes occur in its customer relationships, additional
impairment charges may be necessary.

Income Taxes- Deferred income tax liabilities or assets at the end of each
period are determined using the tax rate expected to be in effect when the
taxes are actually paid or recovered. A valuation allowance is recognized on
certain deferred tax assets if it is more likely than not that some or all of
these deferred tax assets will not be realized.

Stock-Based Compensation Except for stock options granted to former Host and
USA option holders in connection with the Host-USA Acquisition, the Company
grants stock options for a fixed number of shares to employees with an exercise
price equal to the fair value of the shares at the date of grant. In
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
no compensation expense is recognized for such grants.

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Pro forma net loss and loss per share required by FASB Statement No. 123,
Accounting for Stock-Based Compensation (FAS 123) have been determined as
if the Company had accounted for its employee stock options under the fair
value method of that Statement. The fair values for these options were
estimated at the time of grant using a Black-Scholes option pricing model
assuming a weighted average risk-free interest rate of 5.15%, dividend yield of
0.0%, a weighted average volatility factor of .481, and a weighted average
expected life for the options of 7.3 years. Had compensation cost been
measured based on the fair value based accounting of FAS 123, the net loss
available to common stockholders would have been $(39,703), or $(9.96) per
share (basic and diluted), for the fiscal year ended August 31, 2003; $(5,552),
or $(1.46) per share (basic and diluted), for the two months ended August 31,
2002; $(34,994), or $(9.59) per share (basic and diluted), for the fiscal year
ended June 30, 2002; and $(18,901), or $(5.35) per share (basic and diluted),
for the fiscal year ended June 30, 2001. Since FAS 123 is applicable only to
options granted subsequent to December 31, 1994, its pro forma effect is not
fully reflected until the year ended June 30, 2001.

Derivative Instruments and Hedging Activities Effective July 1, 2000, the
Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities.As a result,
as of July 1, 2000, the Company recognizes all derivatives, which include the
value of interest rate swap agreements and, previously, the value of the
Companys warrants to purchase Gray common stocks (which were sold by the
Company to Gray in April 2003), on the balance sheet at fair value.
Net appreciation (depreciation) in the value of the Companys derivatives was
$(1,035) for the fiscal year ended August 31, 2003; $(423) and $(632) for the
two months ended August 31, 2002 and 2001, respectively; and $(3,345) and
$2,988 for the fiscal years ended June 30, 2002 and 2001, respectively.

Earnings (Loss) Per Share Basic earnings per share excludes any dilutive
effects of stock options. In periods where they are anti-dilutive, dilutive
effects of stock options are excluded from the calculation of dilutive earnings
(loss) per share. Earnings (loss) per share and share amounts for periods
prior to May 2003 have been retroactively adjusted to consider the effects of
the Companys 1-for-10 reverse stock split on May 18, 2003.

Implementation of Other New Accounting Principles In June 2002, the FASB
issued Statement of Financial Accounting Standards No. 146, Accounting for
Costs Associated with Exit
of Disposal Activities(SFAS 146), effective for exit or disposal activities
that are initiated after December 31, 2002. The Companys adoption of this new
standard did not have a material impact on the results of operations or
financial position.

In April 2002, the FASB issued Statement of Financial Accounting Standards No.
145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB
Statement No. 13, and Technical Corrections(SFAS 145), effective for fiscal
years beginning after May 15, 2002. For most companies, SFAS 145 requires gains
and losses on extinguishments of debt to be classified as income or loss from
continuing operations rather than as extraordinary items as previously required
under FASB Statement No. 4.

Previously, in the year ended June 30, 2002, Gray, a company in which Bull Run
has a significant investment (refer to Note 7), recorded an extraordinary
charge in connection with an early extinguishment of debt. Since Bull Run
accounts for its investment in Gray using the equity method, Bull Run reported
its proportionate share of each of Grays extraordinary losses as an
extraordinary charge, net of tax, in its financial statements. Gray adopted
SFAS 145 in its first quarter ended March 31, 2003, and accordingly,
reclassified each of its losses on its early extinguishment of debt from an
extraordinary charge to income from continuing operations. Therefore, Bull Run
has reclassified its proportionate share of such losses,

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amounting to $(950) in
the year ended June 30, 2002, to continuing operations as a component of
Equity in earnings (losses) of affiliates. The related income tax benefit of
$323 in the year ended June 30, 2002 was reclassified to Income tax benefit.

5. DISCONTINUED OPERATION

The Company consummated the sale of Datasouths computer printer manufacturing
operation on September 29, 2000. Accordingly, the operating results and net
assets associated with Datasouths computer printer manufacturing business have
been reported as discontinued operations in the accompanying financial
statements.

Certain of the proceeds to be realized on the sale of Datasouths assets are
deferred under a subordinated note agreement with the purchaser that was
amended in July 2002 to provide for variable quarterly payments by the
purchaser to the Company calculated based on the purchasers operating profits,
with any calculated payment subject to the purchasers borrowing capacity
limitations under its senior credit agreement. Only a nominal payment on this
note was received by the Company in the fiscal year ended August 31, 2003. The
Company has concluded that a full recovery of the remaining $3,390 due on the
note is doubtful. As a result, $1,695 was recorded as a reserve on the note
receivable and accordingly charged to the Consolidated Statement of Operations
to discontinued operations in the fiscal year ended August 31, 2003 as an
adjustment of the loss on the sale of Datasouth. To the extent actual proceeds
on the note differ from managements current estimate of the proceeds to be
ultimately received, such differences will be reported as discontinued
operations in future periods.

Datasouth generated revenue of $4,406 during the fiscal year ended June 30,
2001 prior to its sale and no operating profit or loss. No interest expense
has been allocated to discontinued operations. There are no material
contingent liabilities related to discontinued operations, such as product or
environmental liabilities or litigation, which remain with the Company after
the disposal of Datasouth.

6. SUPPLEMENTAL CASH FLOW DISCLOSURES

|                                            |                                                                  |   |             |       |            |   |                  |       |            |   |       |   |  |   |        |     |  |   |        |       | 
|------------------------------------------- | ---------------------------------------------------------------- | - | ----------- | ----- | ---------- | - | ---------------- | ----- | ---------- | - | ----- | - |  | - | ------ | --- |  | - | ------ | ----- | 
|                                            |                                                                  |   |             |       |            |   | Two Months Ended |       | Year Ended
|                                            |                                                                  |   | Year Ended  |       | August 31, |   | June 30,        
|                                            |                                                                  |   | August 31,  |       |            |   |                 
|                                            |                                                                  |   | 2003        |       | 2002       |   | 2001             |       | 2002       |   | 2001 
|                                            |                                                                  |   |             |       |            |   |                  |       |            |   |      
|                                            |                                                                  |   | (unaudited)
|Interest paid                               |                                                                  | $ | 8,271       |       |            | $ | 1,151            |       |            | $ | 1,693 |   |  | $ | 10,143 |     |  | $ | 11,907 |      
|Income taxes paid (recovered), net          |                                                                  |   | 61          |       |            |   | (3,627           | )     |            |   | (99   | ) |  |   | (472   | )   |  |   | (2,015 | )    
|Noncash investing and financing activities: |                                                                  |   |             |       |            |   |                  |       |            |   |       |   |  |   |        |     |  |   |        |      
|                                            | Issuance of common stock in payment
of preferred stock dividends |   |             | 571   |            |   |                  | 407   |            |   |       |   |  |   |        |     |  |   |        |       | 
|                                            | Exchange of subordinated debt for
shares of preferred stock      |   |             | 1,783 |            |   |                  | 4,097 |            |   |       |   |  |   |        |     |  |   |        |       | 
|                                            | Issuance of common stock in
connection with debt issuance costs  |   |             | 1,349 |            |   |                  |       |            |   |       |   |  |   |        | 753 |  |   |        | 1,449 | 

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7. INVESTMENT IN AFFILIATED COMPANIES

The Companys investment in affiliated companies consists of the following:

|          |       |        |                 |          |                 |        |      |          |  |   |        |        |  |  |      |   | 
|--------- | ----- | ------ | --------------- | -------- | --------------- | ------ | ---- | -------- |  | - | ------ | ------ |  |  | ---- | - | 
|          |       |        | August 31, 2003 |          | August 31, 2002
|          |       |        |                 |          |                
|Affiliate |       | Amount |                 | Voting % |                 | Amount |      | Voting %
|          |       |        |                 |          |                 |        |      |         
|Gray      |       |        |                 |          |                 |        |      |          |  | $ | 19,102 |        |  |  | 26.1 | %
|Rawlings  |       |        |                 |          |                 |        |      |          |  |   | 4,377  |        |  |  | 10.1 | %
|iHigh     |       | $      | 0               |          |                 |        | 35.1 | %        |  |   | 1,534  |        |  |  | 35.1 | %
|          |       |        |                 |          |                 |        |      |          |  |   |        |        |  |  |      |  
|          | Total |        | $               | 0        |                 |        |      |          |  |   | $      | 25,013 |  |  |      |   | 
|          |       |        |                 |          |                 |        |      |          |  |   |        |        |  |  |      |  

Equity in earnings (losses) of affiliated companies consists of the following:

|          |       |      |             |      |            |      |                  |      |            |      |      |      |   |   |        |        |   |   |        |        |  
|--------- | ----- | ---- | ----------- | ---- | ---------- | ---- | ---------------- | ---- | ---------- | ---- | ---- | ---- | - | - | ------ | ------ | - | - | ------ | ------ | -
|          |       |      |             |      |            |      | Two Months Ended |      | Year Ended
|          |       |      | Year Ended  |      | August 31, |      | June 30,        
|          |       |      | August 31,  |      |            |      |                 
|Affiliate |       | 2003 |             | 2002 |            | 2001 |                  | 2002 |            | 2001
|          |       |      |             |      |            |      |                  |      |            |     
|          |       |      | (unaudited)
|Gray      |       | $    | 546         |      |            | $    | 83               |      |            | $    | (177 | )    |   | $ | (1,364 | )      |   | $ | (1,661 | )     
|Rawlings  |       |      |             |      |            |      |                  |      |            |      | (263 | )    |   |   | (474   | )      |   |   | 113    |       
|iHigh     |       |      | (750        | )    |            |      | (193             | )    |            |      | (114 | )    |   |   | (1,074 | )      |   |   | (2,614 | )     
|Other     |       |      |             |      |            |      |                  |      |            |      |      |      |   |   |        |        |   |   | (73    | )     
|          |       |      |             |      |            |      |                  |      |            |      |      |      |   |   |        |        |   |   |        |       
|          | Total |      | $           | (204 | )          |      | $                | (110 | )          |      | $    | (554 | ) |   | $      | (2,912 | ) |   | $      | (4,235 | )
|          |       |      |             |      |            |      |                  |      |            |      |      |      |   |   |        |        |   |   |        |       

Investment in Gray and Gain on Issuance of Common Shares Prior to the sale in
August 2003 of all Gray common stocks owned by the Company, the Company owned
approximately 4.0% of Grays outstanding common stock. In addition, the
Company previously owned warrants to purchase additional shares of Grays
common stocks until the sale of such warrants in April 2003. Certain executive
officers of the Company are also executive officers of Gray. Approximately
half of the Gray common stocks owned by the Company were sold to Gray, and the
remainder of the shares were sold to the Companys Chairman of the board and
family entities. Total proceeds on the sale of common stock, net of expenses
of the sale, were $34,297. The warrants were sold back to Gray for total
proceeds of $5,121. Proceeds of $31,233 from the sales of Gray common stocks
and warrants were used to reduce outstanding long-term debt. All of these
transactions were approved by independent members of the Companys board of
directors or a special committee appointed by the board made up of independent
directors.

The Company has provided consulting services to Gray from time to time in
connection with Grays acquisitions (including acquisition financing) and
dispositions. In the fiscal year ended August 31, 2003, the Company recognized
a $5,000 fee for services provided in connection with an acquisition by Gray.
As a result of the Companys equity investment in Gray, a portion of all
consulting fees previously charged to Gray was deferred (such portion equal to
the Companys ownership % of Grays outstanding common stock). Upon the
Companys sale of its investment in Grays common stock in the August 2003, the
Company recognized as consulting fee income all previously deferred income.
The Company recognized consulting fee income of $5,664 in the fiscal year ended
August 31, 2003; $0 and $3 for the two months ended August 31, 2002 and 2001,
respectively; and $11 and $24 for the fiscal years ended June 30, 2002 and
2001, respectively.

In October 2002, Gray completed a public offering of 30,000 shares of its
common stock for net proceeds of approximately $231,000, and in November 2002,
Gray issued 4,500

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additional shares for additional proceeds of approximately
$35,000. Such cumulative proceeds were used in part by Gray to finance an
October 2002 acquisition of a company that owns television stations, and
finance an acquisition of an additional television station in December 2002.
As a result of these transactions by Gray, the Companys ownership of Grays
outstanding common stock was reduced from 12.9% to 4.0%, representing a decline
in the Companys voting power in Gray from 26.1% to 18.0%. Since Grays net
proceeds per share of issued common stock was an amount which was less than the
Companys carrying value per share of Gray common stocks owned prior to such
transactions, a loss of $2,339 on the issuance of shares by Gray was reported
by the Company in the fiscal year ended August 31, 2003. Certain executive
officers of Gray and certain directors of Gray are also executive officers and
directors of the Company; therefore the Company continued to account for its
investment in Gray under the equity method subsequent to the issuance of shares
by Gray, despite the dilution of the Companys voting power to less than 20%,
since the Company continued to have significant influence in Gray.

In the fiscal year ended June 30, 2002, the Company recognized the cumulative
effect of an accounting change of $2,620, net of tax, as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002 as a
result of Grays adoption of SFAS 142, and Grays associated reduction in
previously unamortized goodwill and purchased intangibles.

Until all remaining shares were sold in September 2001, the Company owned
shares of Grays series A and series B preferred stocks. Dividends on the
series B preferred stock were payable in cash or in additional shares of series
B preferred stock, at Grays option. Total dividend income on Gray series A
and B preferred stock recognized by the Company was $127, $695 and $905 for the
fiscal years ended June 30, 2002 and 2001. In September 2001, the Company
sold its remaining shares of Gray series A and series B preferred stock for the
redemption value of $6,803 to certain companies of which the Companys Chairman
of the board is an executive officer and/or principal stockholder, resulting in
a gain to the Company of $3,064. In the fiscal year ended June 30, 2001, Gray
redeemed series A preferred stock held by the Company at its redemption value
of $5,000, resulting in a gain to the Company of $2,160.

In connection with the Companys purchases of Grays series A and series B
preferred stock in 1996, the Company acquired the warrants to purchase up to
731 shares of Grays class A common stock at $11.92 per share and warrants to
purchase up to 375 shares of Grays class A common stock at $16.00 per share.
Prior to the sale of these warrants in April 2003, the aggregate carrying value
amounting to $7,409 as of August 31, 2002 and June 30, 2002, was included on
the balance sheet as a component of other assets (refer also to the
discussion of FASB Statement No. 133 in Note 4 under the caption Derivative
Instruments and Hedging Activities).

Grays common stocks are publicly traded on The New York Stock Exchange
(symbols: GTN and GTN.A). The aggregate market value of Gray common stocks
owned by the Company was $27,175 on August 31, 2002 and $36,676 on June 30,
2002, based on the closing price per share as quoted on The New York Stock
Exchange as of those dates.

Investment in Tarzian- In January 1999, the Company acquired shares of the
outstanding common stock of Tarzian for $10,000, and subsequently sold such
shares to Gray in December 2001. The Tarzian shares represented 33.5% of the
total outstanding common stock of Tarzian, both in terms of the number of
shares of common stock outstanding and in terms of voting rights, but such
investment represented 73% of the equity of Tarzian for purposes of dividends,
as well as distributions in the event of any liquidation, dissolution or other
termination of Tarzian. Tarzian filed suit in the United States District Court
for the Southern District of Indiana against the seller, claiming that Tarzian
had a binding and

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enforceable contract with the seller to purchase the shares.
In February 2003, the Court entered judgment on a jury verdict in favor of
Tarzian for breach of contract and awarded Tarzian $4.0 million in damages.
The matter continues to be contested by both parties to the lawsuit. In March
2003, Tarzian filed suit in the United States District Court for the Northern
District of Georgia against Gray and the Company for tortious interference with
contract and conversion. The lawsuit seeks damages in an amount equal to the
liquidation value of the interest in Tarzian that the stock represents, which
Tarzian claims to be as much as $75 million, as well as attorneys fees,
expenses and punitive damages. The lawsuit also seeks an order requiring Gray
and the Company to turn over the shares to Tarzian and relinquish all claims to
the stock. The Companys stock purchase agreement with the seller would permit
the Company to make a claim against the seller in the event that title to the
shares is ultimately awarded to Tarzian. There is no assurance that the Estate
would have sufficient assets to honor any or all of such claims. The Company
believes it has meritorious defenses and intends to vigorously defend the
lawsuit. Tarzian owns and operates two television stations and four radio
stations: WRCB-TV Channel 3 in Chattanooga, Tennessee, an NBC affiliate;
KTVN-TV Channel 2 in Reno, Nevada, a CBS affiliate; WGCL-AM and WTTS-FM in
Bloomington, Indiana; and WAJI-FM and WLDE-FM in Fort Wayne, Indiana.

In March 1999, the Company executed an option agreement with Gray, whereby Gray
had the option of acquiring the Tarzian investment from the Company for
$10,000, plus related costs. In addition, Gray agreed to pay the Company a
finders fee of $1,000. In connection with this option agreement, the Company
also received from Gray warrants to acquire 100 shares of Grays common stock
at $13.625 per share. After multiple extensions of this option, Gray exercised
the option in December 2001 and acquired the Companys investment for cash
proceeds of $10,000. In April 2003, the Company sold the warrant to Gray
(refer to Investment in Gray and Gain on Issuance of Shares above for a
discussion of the sale of the warrant). The Company used the proceeds on the
sale of the Tarzian shares to reduce its outstanding long-term debt.

The Company recognized option and finders fee income from Gray of $349 and
$1,289 for the fiscal years ended June 30, 2002 and 2001, respectively. Option
and finder fee income of $398 was deferred as of August 31, 2002 and June 30,
2002, as a result of the Companys equity investment position in Gray. The
previously deferred income of $398 was recognized as income in the fiscal year
ended August 31, 2003 upon the Companys sale of all of its investment in Gray
common stocks in August 2003.

Investment in Rawlings The Company sold its investment in Rawlings common
stock in December 2002 for cash of $6,764, which was used to reduce the
Companys outstanding long-term debt. A loss on the Rawlings investment of
$1,032 that had been previously reported as Other comprehensive accumulated
loss (a component of the Companys stockholders equity) was expensed in the
fiscal year ended August 31, 2003, and reported as an investment valuation
adjustment in the Companys results of operations.

Rawlings common stock is publicly traded on the Nasdaq Stock Market. The
aggregate market value of Rawlings common stock owned by the Company was $4,377
on August 31, 2002 and $4,328 on June 30, 2002, based on the closing price per
share as quoted on the Nasdaq Stock Market as of those dates.

Investment in iHigh In connection with the Host-USA Acquisition, the Company
acquired 39.4% (currently, approximately 35.1%) of the then outstanding common
stock of iHigh. The Company has a non-trade receivable due from iHigh of
approximately $3.4 million, which has been fully reserved as of August 31,
2003, because the Company currently does not believe the receivable will be
recovered in the foreseeable future. In the fiscal year ended August 31, 2003,
a $4,211 investment valuation charge was reported by the Company to reduce the

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non-trade receivable and the carrying value of the investment in iHigh to zero.
Amounts due from iHigh were previously reported as a component of Accounts
receivable in prior years.

Investment in Quokka / Total Sports In 1998 and 1999, the Company acquired
shares of Total Sports, Inc. convertible preferred stocks. In connection with
the Host-USA Acquisition, the Company acquired shares of Total Sports common
stock owned by Host. In November 2000, Total Sports was sold to Quokka Sports,
Inc. (Quokka). In exchange for its investment in preferred and common stock
of Total Sports, the Company received Quokka common stock and warrants to
purchase Quokka common stock. In April 2001, Quokka announced its intention to
seek protection under the Federal Bankruptcy Code and soon thereafter, ceased
all operations. For the fiscal year ended June 30, 2001, the Company
recognized an investment impairment charge of approximately $8,000 in
connection with its investment in Total Sports and Quokka. Quokka operated a
sports-oriented web site and provided web site services for amateur and
professional sports organizations and conferences, college athletic
departments, and selected corporations.

Summarized Aggregate Financial Information(unaudited)

The aggregate financial position of Gray and iHigh as of August 31, 2002 was as
follows:

|                           |  |            |         | 
|-------------------------- |  | ---------- | ------- | 
|                           |  | August 31,
|                           |  | 2002      
|                           |  |           
|Current assets             |  | $          | 47,392  | 
|Property and equipment     |  |            | 60,488  | 
|Total assets               |  |            | 598,005 | 
|Current liabilities        |  |            | 25,476  | 
|Long-term debt             |  |            | 378,799 | 
|Total liabilities          |  |            | 461,802 | 
|Redeemable preferred stock |  |            | 39,156  | 
|Stockholders equity       |  |            | 97,047  | 

The aggregate operating results of Gray and iHigh are as follows:

|                       |  |            |         |                  |  |            |        |      |  |      |        |   |  |   |         |   |  |   |         |  
|---------------------- |  | ---------- | ------- | ---------------- |  | ---------- | ------ | ---- |  | ---- | ------ | - |  | - | ------- | - |  | - | ------- | -
|                       |  |            |         | Two Months Ended |  | Year Ended
|                       |  | Year Ended |         | August 31,       |  | June 30,  
|                       |  | August 31, |         |                  |  |           
|                       |  | 2003       |         | 2002             |  | 2001       |        | 2002 |  | 2001
|                       |  |            |         |                  |  |            |        |      |  |     
|Operating revenue      |  | $          | 256,741 |                  |  | $          | 27,518 |      |  | $    | 24,496 |   |  | $ | 161,819 |   |  | $ | 168,518 |  
|Income from operations |  |            | 65,984  |                  |  |            | 6,667  |      |  |      | 1,069  |   |  |   | 27,147  |   |  |   | 20,936  |  
|Net income (loss)      |  |            | 11,879  |                  |  |            | 658    |      |  |      | (3,112 | ) |  |   | (5,597  | ) |  |   | (14,305 | )

Due to aggregate cumulative net losses reported by iHigh during the period in
which the Company has had its investment, there are no aggregate undistributed
earnings of investments accounted for by the equity method as of August 31,
2003.

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8. PROPERTY AND EQUIPMENT

The Companys property and equipment consist of the following:

|                                          |  |            |       |      |  |   |       | 
|----------------------------------------- |  | ---------- | ----- | ---- |  | - | ----- | 
|                                          |  | August 31,
|                                          |  |           
|                                          |  | 2003       |       | 2002
|                                          |  |            |       |     
|Land                                      |  | $          | 448   |      |  | $ | 448   | 
|Building                                  |  |            | 962   |      |  |   | 962   | 
|Leasehold and building improvements       |  |            | 614   |      |  |   | 614   | 
|Machinery and equipment                   |  |            | 2,827 |      |  |   | 2,840 | 
|Office furniture and equipment            |  |            | 3,558 |      |  |   | 3,586 | 
|                                          |  |            |       |      |  |   |       | 
|                                          |  |            | 8,409 |      |  |   | 8,450 | 
|Accumulated depreciation and amortization |  |            | 4,099 |      |  |   | 3,279 | 
|                                          |  |            |       |      |  |   |       | 
|                                          |  | $          | 4,310 |      |  | $ | 5,171 | 
|                                          |  |            |       |      |  |   |       | 

9. GOODWILL AND OTHER ACQUISITION INTANGIBLE ASSETS

The net change in the carrying amount of goodwill by reportable business
segment is as follows:

|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |         |  
|------------------------------- | ----------------- | - | ------------- | ------- | -------- | - | ---------- | ------ | -------- | - | ----- | ---- | - | - | ------ | ------- | -
|                                |                   |   | Collegiate    |         |          |   |            |        |          |   |       |      |   |   |       
|                                |                   |   | Marketing and |         |          |   |            |        | Affinity |   |       |      |  
|                                |                   |   | Production    |         | Affinity |   | Management |        |          |   |      
|                                |                   |   | Services      |         | Events   |   | Services   |        | Total   
|                                |                   |   |               |         |          |   |            |        |         
|As of July 1, 2000, restated    |                   | $ | 63,581        |         |          | $ | 2,675      |        |          | $ | 7,070 |      |   | $ | 73,326 |        
|                                | Adjustments       |   |               | (2,400  | )        |   |            | (101   | )        |   |       | (267 | ) |   |        | (2,768  | )
|                                | Amortization      |   |               | (2,949  | )        |   |            | (124   | )        |   |       | (328 | ) |   |        | (3,401  | )
|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |        
|As of June 30, 2001, restated   |                   |   | 58,232        |         |          |   | 2,450      |        |          |   | 6,475 |      |   |   | 67,157 |        
|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |        
|As of June 30, 2002, restated   |                   |   | 58,232        |         |          |   | 2,450      |        |          |   | 6,475 |      |   |   | 67,157 |        
|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |        
|As of August 31, 2002, restated |                   |   | 58,232        |         |          |   | 2,450      |        |          |   | 6,475 |      |   |   | 67,157 |        
|                                | Impairment charge |   |               | (21,043 | )        |   |            | (2,450 | )        |   |       |      |   |   |        | (23,493 | )
|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |        
|As of August 31, 2003           |                   | $ | 37,189        |         |          | $ | 0          |        |          | $ | 6,475 |      |   | $ | 43,664 |        
|                                |                   |   |               |         |          |   |            |        |          |   |       |      |   |   |        |        

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The net change in the carrying amount
of customer relationships and trademarks by
reportable business segment is as follows:

|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |        |  
|--------------------- | ----------------- | - | ------------- | ------ | -------- | - | ---------- | ------ | -------- | - | ----- | ---- | - | - | ------ | ------ | -
|                      |                   |   | Collegiate    |        |          |   |            |        |          |   |       |      |   |   |       
|                      |                   |   | Marketing and |        |          |   |            |        | Affinity |   |       |      |  
|                      |                   |   | Production    |        | Affinity |   | Management |        |          |   |      
|                      |                   |   | Services      |        | Events   |   | Services   |        | Total   
|                      |                   |   |               |        |          |   |            |        |         
|As of July 1, 2000    |                   | $ | 16,855        |        |          | $ | 4,281      |        |          | $ | 2,700 |      |   | $ | 23,836 |       
|                      | Acquisition       |   |               |        |          |   |            | 2,509  |          |   |       |      |   |   |        | 2,509  |  
|                      | Amortization      |   |               | (866   | )        |   |            | (314   | )        |   |       | (139 | ) |   |        | (1,319 | )
|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |       
|As of June 30, 2001   |                   |   | 15,989        |        |          |   | 6,476      |        |          |   | 2,561 |      |   |   | 25,026 |       
|                      | Amortization      |   |               | (984   | )        |   |            | (117   | )        |   |       | (141 | ) |   |        | (1,242 | )
|                      | Impairment charge |   |               | (6,582 | )        |   |            |        |          |   |       |      |   |   |        | (6,582 | )
|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |       
|As of June 30, 2002   |                   |   | 8,423         |        |          |   | 6,359      |        |          |   | 2,420 |      |   |   | 17,202 |       
|                      | Amortization      |   |               | (160   | )        |   |            | (20    | )        |   |       | (23  | ) |   |        | (203   | )
|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |       
|As of August 31, 2002 |                   |   | 8,263         |        |          |   | 6,339      |        |          |   | 2,397 |      |   |   | 16,999 |       
|                      | Adjustments       |   |               |        |          |   |            | 826    |          |   |       |      |   |   |        | 826    |  
|                      | Amortization      |   |               | (957   | )        |   |            | (118   | )        |   |       | (141 | ) |   |        | (1,216 | )
|                      | Impairment charge |   |               |        |          |   |            | (7,047 | )        |   |       |      |   |   |        | (7,047 | )
|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |       
|As of August 31, 2003 |                   | $ | 7,306         |        |          | $ | 0          |        |          | $ | 2,256 |      |   | $ | 9,562  |       
|                      |                   |   |               |        |          |   |            |        |          |   |       |      |   |   |        |       

The Company recognized a total impairment charge of $30,540 at August 31, 2003
(of which, $23,493 was attributable to goodwill, $4,735 to trademarks and
$2,312 to customer relationships) based on managements consideration of historical
operating results and reevaluation of the forecasted operating results and
business plans for each of the Companys business units. The impairment charge is reflected in Amortization of
acquisition intangibles in the Companys consolidated results of operations
for the fiscal year ended August 31, 2003, and the amounts reported in the
Companys consolidated balance sheet as Goodwill and
Customer relationships and
trademarks as of August 31, 2003 were reduced accordingly.

As a result of the differences between the Host-CBS Contract and the
predecessor Host-NCAA Contract, the Company accelerated approximately $6,582 of
amortization expense at June 30, 2002, pertaining to the
customer relationship
intangible assets, since such differences significantly altered the contractual
nature of the Companys underlying relationship with the NCAA.

The Company currently estimates that annual amortization expense of customer
relationship intangible assets for the fiscal year ending August 31, 2004 will be
approximately $1,099, then $563 per year thereafter until fully amortized in
December 2015.

Accumulated amortization of
acquisition intangibles and impairment charges were $47,348
and $15,592 as of August 31, 2003 and 2002, respectively, including $29,076 and
$5,583 associated with goodwill as of each of the respective dates.

51



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SFAS 142 was adopted effective July 1, 2001. Had SFAS 142 been effective for
the fiscal year ended June 30, 2001, the Companys reported net loss, as
adjusted would have been as follows:

|                                               |                                                                |   |               |        |           |   |       |       |  
|---------------------------------------------- | -------------------------------------------------------------- | - | ------------- | ------ | --------- | - | ----- | ----- | -
|                                               |                                                                |   | Year Ended    |        | Per Share
|                                               |                                                                |   | June 30, 2001 |        | Amounts  
|                                               |                                                                |   |               |        |          
|Net loss, as reported                          |                                                                | $ | (18,704       | )      |           | $ | (5.30 | )    
|Adjustments for pro forma effects of SFAS 142: |                                                                |   |               |        |           |   |       |      
|                                               | Reduction in amortization of acquisition intangibles, restated |   |               | 3,724  |           |   |       | 1.06  |  
|                                               | Adjustment to equity in losses of affiliates                   |   |               | 1,696  |           |   |       | 0.48  |  
|                                               | Decrease in income tax benefit, restated                       |   |               | (1,063 | )         |   |       | (0.30 | )
|                                               |                                                                |   |               |        |           |   |       |      
|Net loss, as adjusted                          |                                                                | $ | (14,347       | )      |           | $ | (4.06 | )    
|                                               |                                                                |   |               |        |           |   |       |      

10. ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consist of the following:

|                                         |  |            |       |      |  |   |       | 
|---------------------------------------- |  | ---------- | ----- | ---- |  | - | ----- | 
|                                         |  | August 31,
|                                         |  |           
|                                         |  | 2003       |       | 2002
|                                         |  |            |       |     
|Incurred unbilled costs                  |  | $          | 3,253 |      |  | $ | 5,442 | 
|Guaranteed rights fees and profit splits |  |            | 2,793 |      |  |   | 1,371 | 
|Interest                                 |  |            | 746   |      |  |   | 614   | 
|Other                                    |  |            | 2,808 |      |  |   | 1,931 | 
|                                         |  |            |       |      |  |   |       | 
|                                         |  | $          | 9,600 |      |  | $ | 9,358 | 
|                                         |  |            |       |      |  |   |       | 

11. LONG-TERM DEBT AND NOTES PAYABLE

Long-term debt and notes payable consist of the following:

|                     |  |            |        |      |  |   |         | 
|-------------------- |  | ---------- | ------ | ---- |  | - | ------- | 
|                     |  | August 31,
|                     |  |           
|                     |  | 2003       |        | 2002
|                     |  |            |        |     
|Term Loans           |  | $          | 35,932 |      |  | $ | 73,932  | 
|Revolver             |  |            | 20,000 |      |  |   | 19,825  | 
|Subordinated Notes   |  |            | 17,299 |      |  |   | 19,184  | 
|                     |  |            |        |      |  |   |         | 
|                     |  |            | 73,231 |      |  |   | 112,941 | 
|Less current portion |  |            | 590    |      |  |   | 19,850  | 
|                     |  |            |        |      |  |   |         | 
|                     |  | $          | 72,641 |      |  | $ | 93,091  | 
|                     |  |            |        |      |  |   |         | 

As amended in August 2003, the Companys bank credit agreement provides for (a)
two term loans (the Term Loans) for borrowings totaling $35,932 and (b) a
revolving loan commitment (the Revolver) for maximum borrowings of $20,000.
All amounts outstanding under the Term Loans and the Revolver are due on
November 30, 2004, and bear interest at either the banks prime rate or the
London Interbank Offered Rate (LIBOR) plus 3.25%, payable monthly. The
amendment in August 2003 reduced the interest rate charged by the banks and
revised the maturity date of the agreement to November 30, 2004 from September
30, 2003. As of August 31, 2003, all amounts available under the Revolver were
borrowed, and no additional borrowing capacity was available. As of August 31,
2003, all borrowings under the Term Loans and Revolver were subject to the
prime rate of 4.0%.

52



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Under the terms of the credit agreement, up to an aggregate of $12.5 million in
funding for working capital purposes, if necessary, may be sourced from the
issuance of equity securities, including shares of the Companys preferred
stock, or by the issuance of subordinated debt. Through November 2003, the
Company has received $9.1 million of cash for working capital purposes,
including $2 million received from the Companys Chairman in November 2003, and
as a result, the Company has the capacity under its bank credit agreement to
source approximately an additional $3.4 million of cash from the issuance of
equity or debt securities during the remaining term of the credit facility.
The Companys Chairman has committed up to an additional $1 million in cash
over the next year to be used for working capital purposes at the Companys
option, in return for equity or debt securities of the Company.

As a result of an amendment to the Companys bank credit agreement in October
2002 and the Companys plans for principal repayment by August 31, 2003 and
June 30, 2003, $19,850 was presented in the balance sheet as the current
portion of long-term debt as of August 31, 2002, and the remainder was
classified as a long-term liability. As of August 31, 2002 all borrowings
under the Term Loans were subject to the banks prime rate-based rate of 6.25%
and all borrowings under the
Revolver were subject to the banks prime rate-based rate of 5.75%.

The bank credit agreement, as amended, contains certain financial covenants,
including the maintenance of minimum interest coverage ratios determined
quarterly. Long-term debt is collateralized by all of the Companys assets.
During the fiscal years ended June 30, 2002 and 2001, the Company was
periodically out of compliance with certain financial covenants, some of which
having since been eliminated under the amended credit agreement, and other
provisions considered to be events of default under the terms of the credit
agreement; however, the Company obtained waivers of each of these events of
default, and is presently in compliance with all provisions of the credit
agreement as last amended in August 2003.

In connection with the Companys bank credit facilities, the Companys Chairman
of the board entered into a guarantee agreement in favor of the banks, for
which he received compensation from the Company during the fiscal year ended
August 31, 2003, and the fiscal years ended June 30, 2002 and 2001 in the form
of 221, 106, and 87 restricted shares of the Companys common stock then valued
at $1,349, $753 and $1,449, respectively. The value of the shares issued to
the Chairman is based on an annual compensation rate of 1.625% of the guarantee
amount. The guarantee agreement currently requires the Chairman to personally
guarantee up to $53,000 of the Companys outstanding bank debt. The guaranteed
amount has historically reduced, and will continue to reduce, dollar for
dollar, as the aggregate outstanding amount under the Term Loans is reduced,
subject to certain limitations. The guarantee agreement provides that if the
Company defaults on its bank loan, the banks have the right to require the
Chairman to repay the amount of such loan to the banks up to the maximum amount
of his personal guarantee. Under the terms of his guarantee, if the banks
exercise their rights to demand repayment from the guarantor, the Chairman has
the option to purchase the entire loan from the banks, and thereby becoming the
holder of the Companys debt currently payable to the banks as a secured
creditor.

In connection with the Host-USA Acquisition, the Company issued 8% subordinated
notes having an aggregate face value of $18,594. Interest is payable quarterly
and the notes had an original maturity date of January 17, 2003. During the
fiscal year ended August 31, 2003, each remaining holder of 8% subordinated
notes agreed to amend the maturity date of their note, in substantially all
cases, to January 17, 2006. In May 2003, a director of the Company and his
spouse each agreed to exchange 8% subordinated notes held by them, having an
aggregate face value of $1,783, to shares of the Companys convertible series D
preferred

53



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##### 



stock. Subsequent to August 31, 2003 and through November 2003,
holders of 8% subordinated notes representing an aggregate face value of $8,016
agreed to exchange their notes for shares of the Companys series E preferred
stock. In connection with the acquisition of certain business operations, the
Company also issued 9% subordinated notes in September 2000 having an aggregate
face value of $1,180, due in annual installments of $590 with interest. In
October 2002 the holders of these subordinated notes representing an aggregate
outstanding amount of $590 agreed to amend the maturity date of their notes to
March 31, 2004. Payment of interest and principal on all subordinated notes is
subordinate to the Companys bank credit agreement.

In July 2003, the Company issued to a company of which the Companys
Chairman is the principal stockholder and an executive officer, a 9% subordinated note
for $5,000, the proceeds from which were used for a principal payment paid on
the Term Loans. In August 2003, this note was paid in full with a portion of
the proceeds received upon the sale of the Companys shares of Gray common
stocks.

In July 2002, the Company issued to the Companys Chairman 9% subordinated
notes totaling $4,000, the proceeds from which were used by the Company for
working capital purposes. In August 2002, these notes and the accrued interest
thereon were exchanged for shares of the Companys series C preferred stock
(then in May 2003, exchanged for shares of the Companys series D preferred
stock) having an aggregate face amount of $4,097.

Aggregate maturities of the Companys long-term debt and notes payable as of
August 31, 2003
are $590, $58,951 and $13,690 in the fiscal years ending August 31, 2004, 2005
and 2006, respectively, and none thereafter; however, subsequent to August 31,
2003, aggregate debt of $8,016 maturing in the fiscal year ending August 31,
2006 was exchanged for shares of the Companys series E preferred stock.

The Company is a party to an interest rate swap agreement terminating on
December 31, 2004, involves the exchange of interest at a fixed rate of 6.71%
for interest at a variable rate, determined quarterly, equal to the 90-day
LIBOR rate, without an exchange of the $25,000 notional amount upon which the
payments are based. The Company was a party to a second interest rate swap
agreement terminating on December 31, 2002, which involved the exchange of
interest at a fixed rate of 6.08% for interest at a variable rate, determined
quarterly, equal to the 90-day LIBOR rate, without an exchange of the $20,000
notional amount upon which the payments are based. The differential paid or
received as interest rates change is settled quarterly and is accrued and
recognized as an adjustment of interest expense related to the debt.

54



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12. INCOME TAXES

The Companys income tax benefit (provision) attributable to continuing
operations consists of the following:

|         |  |            |        |                  |  |            |   |      |  |             |       |            |  |            |       |  |  |   |       | 
|-------- |  | ---------- | ------ | ---------------- |  | ---------- | - | ---- |  | ----------- | ----- | ---------- |  | ---------- | ----- |  |  | - | ----- | 
|         |  |            |        | Two Months Ended |  | Year Ended
|         |  | Year Ended |        | August 31,       |  | June 30,  
|         |  | August 31, |        |                  |  |           
|         |  | 2003       |        | 2002             |  | 2001       |   | 2002 |  | 2001       
|         |  |            |        |                  |  |            |   |      |  |            
|         |  |            |        |                  |  |            |   |      |  | (restated)  |       | (restated) |  | (restated)
|         |  |            |        |                  |  |            |   |      |  | (unaudited) |       |            |  |           
|Current  |  | $          |        |                  |  | $          |   |      |  | $           |       |            |  | $          |       |  |  | $ |       | 
|Deferred |  |            | (5,222 | )                |  |            |   |      |  |             | 1,586 |            |  |            | 2,175 |  |  |   | 6,681 | 
|         |  |            |        |                  |  |            |   |      |  |             |       |            |  |            |       |  |  |   |       | 
|         |  | $          | (5,222 | )                |  | $          | 0 |      |  | $           | 1,586 |            |  | $          | 2,175 |  |  | $ | 6,681 | 
|         |  |            |        |                  |  |            |   |      |  |             |       |            |  |            |       |  |  |   |       | 

The principal differences between the federal statutory tax rate and the
effective tax rate applicable to continuing operations are as follows:

|                                                    |  |            |       |                  |  |            |       |      |  |             |      |            |  |            |       |   |  |  |      |  
|--------------------------------------------------- |  | ---------- | ----- | ---------------- |  | ---------- | ----- | ---- |  | ----------- | ---- | ---------- |  | ---------- | ----- | - |  |  | ---- | -
|                                                    |  |            |       | Two Months Ended |  | Year Ended
|                                                    |  | Year Ended |       | August 31,       |  | June 30,  
|                                                    |  | August 31, |       |                  |  |           
|                                                    |  | 2003       |       | 2002             |  | 2001       |       | 2002 |  | 2001       
|                                                    |  |            |       |                  |  |            |       |      |  |            
|                                                    |  |            |       |                  |  |            |       |      |  | (restated)  |      | (restated) |  | (restated)
|                                                    |  |            |       |                  |  |            |       |      |  | (unaudited) |      |            |  |           
|Federal statutory tax rate                          |  |            | 34.0  | %                |  |            | 34.0  | %    |  |             | 34.0 | %          |  |            | 34.0  | % |  |  | 34.0 | %
|Non-deductible goodwill
amortization and impairment |  |            | (25.7 | )                |  |            |       |      |  |             |      |            |  |            |       |   |  |  | (4.8 | )
|State income taxes, net of federal
tax benefit      |  |            | 1.0   |                  |  |            | 5.0   |      |  |             | 2.1  |            |  |            | 2.1   |   |  |  | 2.0  |  
|Change in valuation allowance                       |  |            | (26.0 | )                |  |            | (34.5 | )    |  |             |      |            |  |            | (28.1 | ) |  |  |      |  
|Other, net                                          |  |            | (0.1  | )                |  |            | (4.5  | )    |  |             | (4.5 | )          |  |            | (1.6  | ) |  |  | (3.7 | )
|                                                    |  |            |       |                  |  |            |       |      |  |             |      |            |  |            |       |   |  |  |      |  
|Effective tax rate                                  |  |            | (16.8 | )%               |  |            | 0.0   | %    |  |             | 31.6 | %          |  |            | 6.4   | % |  |  | 27.5 | %
|                                                    |  |            |       |                  |  |            |       |      |  |             |      |            |  |            |       |   |  |  |      |  

As of August 31, 2003, the Company has a net operating loss carryforward for
tax purposes of approximately $59,300 expiring beginning in 2018 to reduce
Federal taxable income in the future. The Company also has an Alternative
Minimum Tax credit carryforward of $490 and a business credit carryforward of
$116 as of August 31, 2003, to reduce regular Federal tax liabilities in the
future.

In the fiscal year ended June 30, 2002, the Company established a valuation
allowance of $9,575 and increased it to $11,425 in the two months ended August
31, 2002, because it was estimated that the Company may not ultimately realize
all of the tax benefits from the net operating loss carryforward prior to its
expiration. As of August 31, 2003 the Company increased the valuation
allowance for net deferred tax assets to $19,498, thereby reducing the carrying
amount of deferred taxes in the balance sheet to zero. If and when the Company
generates taxable income in the future and benefits primarily from net
operating loss carryforwards for federal tax purposes that expire beginning in
2018, some or all of the deferred tax asset may be reinstated on the balance
sheet, and the Company would report income tax benefits in the period that such
reinstatement occurs.

55



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Deferred tax liabilities (assets) associated with continuing operations are
comprised of the following:

|                                               |  |            |         |      |  |            |         |  
|---------------------------------------------- |  | ---------- | ------- | ---- |  | ---------- | ------- | -
|                                               |  | August 31,
|                                               |  |           
|                                               |  | 2003       |         | 2002
|                                               |  |            |         |     
|                                               |  |            |         |      |  | (restated)
|Property and equipment                         |  | $          | 1,710   |      |  | $          | 1,488   |  
|Acquisition intangible assets                  |  |            | 3,586   |      |  |            | 6,334   |  
|Valuation of derivative financial instruments  |  |            |         |      |  |            | 941     |  
|                                               |  |            |         |      |  |            |         |  
|Gross deferred tax liabilities                 |  |            | 5,296   |      |  |            | 8,763   |  
|                                               |  |            |         |      |  |            |         |  
|Allowance for doubtful accounts                |  |            | (174    | )    |  |            | (192    | )
|Investment in and advances to affiliates       |  |            | (699    | )    |  |            | (4,063  | )
|Valuation of derivative financial instruments  |  |            | (640    | )    |  |            |         |  
|Reserves against nonoperating receivables      |  |            | (1,862  | )    |  |            |         |  
|Accrued expenses                               |  |            | (203    | )    |  |            | (43     | )
|Deferred income                                |  |            |         |      |  |            | (430    | )
|Nonqualified stock options outstanding         |  |            | (1,399  | )    |  |            | (1,395  | )
|Net operating loss carryforward                |  |            | (19,211 | )    |  |            | (20,140 | )
|Alternative Minimum Tax credit carryforward    |  |            | (490    | )    |  |            | (490    | )
|Business credit carryforward                   |  |            | (116    | )    |  |            | (116    | )
|                                               |  |            |         |      |  |            |         |  
|Gross deferred tax assets                      |  |            | (24,794 | )    |  |            | (26,869 | )
|Less: valuation allowance                      |  |            | 19,498  |      |  |            | 11,425  |  
|                                               |  |            |         |      |  |            |         |  
|Deferred tax assets net of valuation allowance |  |            | (5,296  | )    |  |            | (15,244 | )
|                                               |  |            |         |      |  |            |         |  
|Total deferred tax liability (asset), net      |  | $          | 0       |      |  | $          | (6,681  | )
|                                               |  |            |         |      |  |            |         |  

13. PREFERRED STOCK ISSUANCE AND EXCHANGE

In June 2001, the Company issued 3 shares of its series A preferred stock (the
Series A Preferred Stock) with detachable warrants, for cash of $3,000, to
companies of which the Companys Chairman is an executive officer and/or
principal stockholder. In November 2001, the Company issued 2.4 shares of its
redeemable series B convertible preferred stock (the Series B Preferred
Stock) for cash of $2,400 to a company of which the Companys Chairman is an
executive officer and principal stockholder. In addition, all holders of the
Series A Preferred Stock elected to exchange their aggregate total of 3 shares
of Series A
Preferred Stock and the detachable warrants for the same number of
shares of Series B Preferred Stock. In May 2003, the holders of Series B
Preferred Stock elected to exchange their aggregate total of 5.4 shares of
Series B Preferred Stock for the same number of shares of the Companys series
D convertible preferred stock (Series D Preferred Stock).

In August 2002, 9% subordinated notes issued to the Companys Chairman, along
with accrued interest and fees thereon, were exchanged for 4.1 newly-issued
shares of the Companys series C convertible preferred stock (Series C
Preferred Stock) having an aggregate face amount of $4,097. In September
2002, the Companys Chairman and companies of which the Chairman is an
executive officer and/or principal stockholder invested an additional aggregate
total of $3,000 in cash for 3 shares of Series C Preferred Stock, which was
used by the Company for working capital purposes. In May 2003, each of the
holders of Series C Preferred Stock elected to exchange the aggregate total of
7.1 shares of Series C Preferred Stock for the same number of shares of Series
D Preferred Stock.

In May 2003, a director of the Company and his spouse each agreed to convert 8%
subordinated notes held by them, having an aggregate face value of $1,783, to
1.8 shares of Series D Preferred Stock.

56



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Each share of the Series D Preferred Stock held by former holders of Series A
and Series B Preferred Stock is convertible at the holders option into one
hundred shares of the Companys common stock beginning in November 2003. Each
share of the Series D Preferred Stock held by the former holder of Series C
Preferred Stock is convertible at the holders option into one hundred shares
of the Companys common stock beginning in July 2004. Each holder of the
Series D Preferred Stock is entitled to receive dividends at an annual rate of
$90.00 per share in cash or in shares of the Companys common stock at the
holders option, except that, until the second anniversary of the date of
issuance, the Company has the option to pay such dividends in cash or in shares
of the Companys common stock. The liquidation and redemption price of the
Series D Preferred Stock is $1,000 per share, and dividends are cumulative.
The Company has the option to redeem the Series D Preferred Stock at any time.
All shares of preferred stock rank, as to payment of dividends and as to
distribution of assets upon liquidation or dissolution of the Company, on a
parity with all other currently issued preferred stock and any preferred stock
issued by the Company in the future, and senior to the Companys currently
issued common stock and common stock issued in the future.

In September 2003, the Company offered to its 8% subordinated note holders an
ability to exchange their notes for shares of a newly-authorized series E
convertible preferred stock (Series E Preferred Stock). Each share of the
Series E Preferred Stock is convertible at the holders option into 0.14286
shares of the Companys common stock beginning one year following the date of
issuance of the Series E Preferred Stock. Each holder of the Series E
Preferred Stock is entitled to receive dividends at an annual rate of $90.00
per share in cash or in shares of the Companys common stock at the holders
option, except that, no dividend is payable prior to June 30, 2005, or upon
conversion to common stock, if earlier. The liquidation and redemption price
of the Series E Preferred Stock is $1,000 per share. The Company has the
option to redeem the Series E Preferred Stock at any time. Through November
2003, subordinated note holders have elected to exchange an aggregate $8,016 of
subordinated debt for an aggregate 8.0 shares of Series E Preferred Stock. Of
the $8,016 exchanged, $5,257 notes having an aggregate face amount of $5,257
were acquired by the Companys Chairman immediately prior to the exchange. In
addition, the 1.8 shares of Series D Preferred Stock previously issued to a
director of the Company and his spouse (both of which were formerly holders of
subordinated notes) were exchanged for the same number of shares of Series E
Preferred Stock.

In November 2003, the Company issued 2.0 shares of series F convertible
preferred stock (Series F Preferred Stock) to the Companys Chairman for
$2,000. Each share of the Series F Preferred Stock is convertible at the
holders option into 0.78125 shares of the Companys common stock beginning two
years following the date of issuance of the Series F Preferred Stock. Each
holder of the Series F Preferred Stock is entitled to receive dividends at an
annual rate of $90.00 per share in cash or in shares of the Companys common
stock at the holders option, except that, until the
second anniversary of the date of issuance, the Company has the option to pay
such dividends in cash or in shares of the Companys common stock. The
liquidation and redemption price of the Series F Preferred Stock is $1,000 per
share. The Company has the option to redeem the Series F Preferred Stock at
any time.

14. STOCK OPTIONS

The Companys 1994 Long Term Incentive Plan (the 1994 Plan) reserves 720
shares of Company common stock for issuance of stock options, restricted stock
awards and stock appreciation rights. Certain options granted under the 1994
Plan are fully vested at the date of grant, and others vest over three to five
year periods. Options granted under the 1994 Plan have terms ranging from five
to ten years. In connection with the Host-USA Acquisition,

57



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##### 



options for an
aggregate of approximately 282 exercisable shares were granted to former
holders of options for Host and USA shares, at exercise prices ranging from
$3.40 to $40.60 per share. As of August 31, 2003 and 2002, there were
approximately 180 and 79 shares available for future option grants under the
1994 Plan, respectively.

The Companys Non-Employee Directors 1994 Stock Option Plan (the 1994
Directors Plan) reserves 35 shares of the Companys common stock for issuance
of stock options. Options under the 1994 Directors Plan are fully vested when
granted. Shares available for future option grants under the 1994 Directors
Plan were 120 as of August 31, 2003 and 135 as of August 31, 2002.

Information with respect to the Companys stock option plans follows:

|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  |  | 
|--------------------------------- | --------- |  | ------ | ---- | ----------- | -------------- | --------------- |  | ----------- |  |  | -------------- |  |  |  |  | 
|                                  |           |  | Option |      | Option      |                | Exercisable     |  | Option     
|                                  |           |  | Shares |      | Price Range |                | Shares          |  | Price Range
|                                  |           |  |        |      |             |                |                 |  |            
|Outstanding as of July 1, 2000    |           |  | 385    |      |             | $3.44 - $43.75 |                 |  |             |  |  |                |  | 
|                                  | Grants    |  |        | 136  |             |                | $13.50 - $20.63 |  |             |  |  |                |  |  | 
|                                  | Exercised |  |        | (3   | )           |                | $6.87           |  |             |  |  |                |  |  | 
|                                  | Forfeited |  |        | (36  | )           |                | $6.87 - $40.60  |  |             |  |  |                |  |  | 
|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  | 
|Outstanding as of June 30, 2001   |           |  | 482    |      |             | $3.44 - $43.75 |                 |  | 336         |  |  | $3.44 - $43.75
|                                  | Grants    |  |        | 118  |             |                | $9.30 - $10.50  |  |             |  |  |                |  |  | 
|                                  | Exercised |  |        | (6   | )           |                | $8.75           |  |             |  |  |                |  |  |  | 
|                                  | Forfeited |  |        | (48  | )           |                | $8.75 - $42.50  |  |             |  |  |                |  |  |  | 
|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  | 
|Outstanding as of June 30, 2002   |           |  | 546    |      |             | $3.44 - $43.75 |                 |  | 377         |  |  | $3.44 - $43.75
|                                  | Forfeited |  |        | (26  | )           |                | $10.50 - $42.50 |  |             |  |  |                |  |  | 
|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  | 
|Outstanding as of August 31, 2002 |           |  | 520    |      |             | $3.44 - $43.75 |                 |  | 388         |  |  | $3.44 - $43.75
|                                  | Grants    |  |        | 12   |             |                | $5.70 - $5.80   |  |             |  |  |                |  |  | 
|                                  | Exercised |  |        | (60  | )           |                | $3.44           |  |             |  |  |                |  |  |  | 
|                                  | Forfeited |  |        | (118 | )           |                | $3.44 - $20.63  |  |             |  |  |                |  |  | 
|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  | 
|Outstanding as of August 31, 2003 |           |  | 354    |      |             | $3.44 - $43.75 |                 |  | 277         |  |  | $3.44 - $43.75
|                                  |           |  |        |      |             |                |                 |  |             |  |  |                |  |  |  | 

The weighted average per share fair value of options granted was $3.70 for the
fiscal year ended August 31, 2003, and $6.19 and $8.30 for the fiscal years
ended June 30, 2002 and 2001, respectively.

As of August 31, 2003, the number of outstanding shares under option, weighted
average option exercise price and weighted average remaining option contractual
life was as follows: 7 exercisable shares at $8.75 per share, expiring in 0.8
years; 15 exercisable shares at $15.00 per share, expiring in 1.1 years; 8
exercisable shares at $24.38 per share, expiring in 2.6 years; 1 exercisable
share at $23.80 per share, expiring in 3.6 years; 1 exercisable share at $43.75
per share, expiring in 4.7 years; 6 exercisable shares at $37.29 per share
expiring in 5.5 years; 65 exercisable shares at
$8.53 per share expiring in 3.6 years; 12 exercisable shares at $42.50 per
share expiring in 6.6 years; 132 shares at $14.79 per share expiring in 6.2
years (88 shares of which were exercisable); 95 shares at $10.48 per share
expiring in 7.9 years (72 shares of which were exercisable); and 12 shares at
$5.79 per share expiring in 9.2 years (2 shares of which were exercisable).

58



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##### 



15. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Companys interest rate swap agreement, having a notional
amount of $25,000, is included as a component of either Other liabilities or
Other assets in the consolidated balance sheet (see Derivative Instruments
and Hedging Activities in Note 4). A second interest rate swap agreement,
having a notional amount of $20,000 expired in December 2002. The fair value,
which equals the estimated amount to be received (paid) on terminating the swap
agreements, if the Company had elected to do so, was $(1,705) as of August 31,
2003 and $(2,958) as of August 31, 2002. The aggregate fair value of warrants
to acquire the common stock of Gray, likewise included as a component of other
assets in the consolidated balance sheet until sold in April 2003, was $7,409
as of August 31, 2002. The fair values of the warrants were determined based
on an independent appraisal as of June 30, 2002.

The aggregate fair value of the Companys investment in affiliated companies
was approximately $52,000, compared to the carrying value of $32,423, as of
August 31, 2002. There was no value attributed to investments or carrying
value of investments as of August 31, 2003 as a result of the Companys sale
of its investments in Gray and Rawlings, and its impairment charge taken in
connection with its investment in iHigh during the fiscal year then ended. The
estimate of fair value was based on, in the case of Gray, independent
appraisals as of June 30, 2002 used in connection for valuing the warrants to
acquire the common stock of Gray owned by the Company; in the case of
publicly-traded Rawlings, quoted market prices on the Nasdaq Stock Market as of
August 31, 2002; and in the case of iHigh, the value attributed to iHigh at the
date of the Host-USA Acquisition less the Companys equity in iHighs net
losses through August 31, 2002; and management estimates.

All other financial instruments, including cash, cash equivalents, receivables,
payables and variable rate bank debt are estimated to have a fair value which
approximates carrying value in the financial statements.

16. RETIREMENT PLANS

The Company has a 401(k) defined contribution benefit plan (following a
merger of two plans effective July 1, 2001), whereby employees of the Company
may contribute a portion of their gross pay to the plans subject to limitations
set forth by the Internal Revenue Service. A 401(k) plan for Datasouths
employees was terminated as of January 1, 2002. The Company may make matching
and/or discretionary contributions to the employees accounts in amounts based
on criteria set forth in the plan agreements. Total Company contributions to
the plans were $335 for the fiscal year ended August 31, 2003, including shares
of the Companys common stock then valued at an aggregate of $273; $59 and $150
for the two months ended August 31, 2002 and 2001, respectively; and $517 and
$1,163 for the fiscal years ended June 30, 2002 and 2001, respectively.

59



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##### 



17. COMMITMENTS AND CONTINGENCIES

The following summarizes the Companys contractual obligations as of August 31,
2003:

|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |     | 
|--------------------------- | ----- | ----- | -------------------------------------------- | ------- |  | ---------- | --------- | ---------- | ----------- | ------- | ----------- | ------ | --------- | - | ----- | ----- |  | - | --- | --- | 
|                            |       |       | Payments Due by Period as of August 31, 2003
|                            |       |       |                                             
|                            |       |       |                                              |         |  |            | Less than |            | More than 1 |         | More than 3 |        | More than
|Contractual Obligations     |       | Total |                                              | 1 Year  |  | to 3 Years |           | to 5 Years |             | 5 Years
|                            |       |       |                                              |         |  |            |           |            |             |        
|Long-term debt obligations  |       | $     | 73,231                                       |         |  | $          | 590       |            |             | $       | 72,641      |        |           | $ |       |       |  | $ |     |    
|Operating lease obligations |       |       | 4,248                                        |         |  |            | 1,691     |            |             |         | 1,354       |        |           |   | 640   |       |  |   | 563 |    
|Purchase obligations        |       |       | 39,187                                       |         |  |            | 14,508    |            |             |         | 19,062      |        |           |   | 5,617 |       |  |   |     |    
|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |    
|                            | Total |       | $                                            | 116,666 |  |            | $         | 16,789     |             |         | $           | 93,057 |           |   | $     | 6,257 |  |   | $   | 563 | 
|                            |       |       |                                              |         |  |            |           |            |             |         |             |        |           |   |       |       |  |   |     |    

Purchase obligations primarily consist of future guaranteed rights fee
commitments to associations or institutions under contractual arrangements of
typically one to four years, which expire at varying times through 2008.

Bull Runs executive offices are leased from a company affiliated with a
principal stockholder and director of the Company under a month-to-month
operating lease. Host has various operating leases for facilities and
equipment expiring in 2004 through 2010. The Companys total rental expense
was $2,414 for the fiscal year ended August 31, 2003; $484 and $404 for the two
months ended August 31, 2002 and 2001, respectively; and $2,617 and $2,505 for
the fiscal years ended June 30, 2002 and 2001, respectively. The minimum
annual rental commitments under these and other leases with an original lease
term exceeding one year are $1,691, $838, $516, $344 and $296 for the fiscal
years ending August 31, 2004 through 2008, respectively, and $563 thereafter.

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a significant effect on the
Companys consolidated financial position or results of operations.

60



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##### 



18. EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings
(loss) per share:

|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | ----------- | ------- | ---------- |  | ---------------- | ------ | ---------- |  | ---------- | ------ | ---------- |  | - | ------- | - |  | - | ------- | -
|                                                                                                     |  |             |         |            |  | Two Months Ended |        | Year Ended
|                                                                                                     |  | Year Ended  |         | August 31, |  | June 30,        
|                                                                                                     |  | August 31,  |         |            |  |                 
|                                                                                                     |  | 2003        |         | 2002       |  | 2001             |        | 2002       |  | 2001      
|                                                                                                     |  |             |         |            |  |                  |        |            |  |           
|                                                                                                     |  |             |         |            |  |                  |        |            |  | (restated) |        | (restated) |  |   |         |  
|                                                                                                     |  | (unaudited)
|Loss from continuing operations before
cumulative effect of accounting change                        |  | $           | (36,291 | )          |  | $                | (5,355 | )          |  | $          | (3,428 | )          |  | $ | (31,938 | ) |  | $ | (17,584 | )
|Preferred dividends                                                                                  |  |             | (1,149  | )          |  |                  | (93    | )          |  |            | (45    | )          |  |   | (396    | ) |  |   |         |  
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Loss available to common stockholders before
cumulative effect of accounting change                  |  |             | (37,440 | )          |  |                  | (5,448 | )          |  |            | (3,473 | )          |  |   | (32,334 | ) |  |   | (17,584 | )
|Cumulative effect of accounting change                                                               |  |             |         |            |  |                  |        |            |  |            |        |            |  |   | (2,620  | ) |  |   | (1,120  | )
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Loss from continuing operations                                                                      |  |             | (37,440 | )          |  |                  | (5,448 | )          |  |            | (3,473 | )          |  |   | (34,954 | ) |  |   | (18,704 | )
|Loss from discontinued operations                                                                    |  |             | (1,695  | )          |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Net loss available to common stockholders                                                            |  | $           | (39,135 | )          |  | $                | (5,448 | )          |  | $          | (3,473 | )          |  | $ | (34,954 | ) |  | $ | (18,704 | )
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Weighted average number of common shares
outstanding for basic loss per share                        |  |             | 3,987   |            |  |                  | 3,793  |            |  |            | 3,599  |            |  |   | 3,649   |   |  |   | 3,531   |  
|Effect of dilutive employee stock options                                                            |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Adjusted weighted average number of
common shares and assumed conversions
for diluted loss per share |  |             | 3,987   |            |  |                  | 3,793  |            |  |            | 3,599  |            |  |   | 3,649   |   |  |   | 3,531   |  
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Basic and diluted earnings (loss) per share:                                                         |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Loss available to common stockholders before
cumulative effect of accounting change                  |  | $           | (9.39   | )          |  | $                | (1.44  | )          |  | $          | (0.96  | )          |  | $ | (8.86   | ) |  | $ | (4.98   | )
|Cumulative effect of accounting change                                                               |  |             |         |            |  |                  |        |            |  |            |        |            |  |   | (0.72   | ) |  |   | (0.32   | )
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Loss from continuing operations                                                                      |  |             | (9.39   | )          |  |                  | (1.44  | )          |  |            | (0.96  | )          |  |   | (9.58   | ) |  |   | (5.30   | )
|Loss from discontinued operations                                                                    |  |             | (0.43   | )          |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  
|Net loss available to common stockholders                                                            |  | $           | (9.82   | )          |  | $                | (1.44  | )          |  | $          | (0.96  | )          |  | $ | (9.58   | ) |  | $ | (5.30   | )
|                                                                                                     |  |             |         |            |  |                  |        |            |  |            |        |            |  |   |         |   |  |   |         |  

The effect of potentially dilutive employee stock options, which were not
considered above because they were anti-dilutive, was 38 shares for the fiscal
year ended August 31, 2003; 70 shares and 141 shares for the two months ended
August 31, 2002 and 2001, respectively; and 109 shares and 181 shares for the
fiscal years ended June 30, 2002 and 2001, respectively.

Outstanding shares of the Companys convertible preferred stock as of August
31, 2003 may ultimately be converted into an aggregate total of 1,428 shares of
the Companys common stock, subject to required preferred stock holding
periods. In November 2003, preferred stock having an aggregate face value of
$5,400 is eligible to be converted into an aggregate total of 540 shares of
common stock. No other currently outstanding shares of preferred stock
outstanding are eligible for conversion prior to August 31, 2004.

61



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19. OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is as follows:

|                                   |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   |            |   |      |  |      |  |            |   |         |        |   |   |         |   | 
|---------------------------------- | --------------------------------------------------------- | - | ----------- | ----- | ---------- |  | ---------------- |  | ---------- | - | ------ | -- |  | - | ---------- | - | ---- |  | ---- |  | ---------- | - | ------- | ------ | - | - | ------- | - | 
|                                   |                                                           |   |             |       |            |  | Two Months Ended |  | Year Ended
|                                   |                                                           |   | Year Ended  |       | August 31, |  | June 30,        
|                                   |                                                           |   | August 31,  |       |            |  |                 
|                                   |                                                           |   | 2003        |       |            |  |                  |  | 2002       |   | 2001   |    |  |   |            |   | 2002 |  | 2001
|                                   |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   |            |   |      |  |     
|                                   |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   | (restated) |   |      |  |      |  | (restated) |   |         |        |  
|                                   |                                                           |   | (unaudited)
|Net loss                           |                                                           | $ | (37,986     | )     |            |  |                  |  |            | $ | (5,355 | )  |  | $ | (3,428     | ) |      |  |      |  |            | $ | (34,558 | )      |   | $ | (18,704 | )
|Other comprehensive income (loss): |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   |            |   |      |  |      |  |            |   |         |        |   |   |         |  
|                                   | Change in the valuation of
available-for-sale investments |   |             | 2,050 |            |  |                  |  |            |   |        | 30 |  |   |            |   |      |  |      |  |            |   |         | (2,080 | ) |   |         |   | 
|                                   |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   |            |   |      |  |      |  |            |   |         |        |   |   |         |  
|Comprehensive loss                 |                                                           | $ | (35,936     | )     |            |  |                  |  |            | $ | (5,325 | )  |  | $ | (3,428     | ) |      |  |      |  |            | $ | (36,638 | )      |   | $ | (18,704 | )
|                                   |                                                           |   |             |       |            |  |                  |  |            |   |        |    |  |   |            |   |      |  |      |  |            |   |         |        |   |   |         |  

The change in valuation of available-for-sale investments resulted from the
change in accounting for the Companys investment in Rawlings from the equity
method to accounting for it as an available-for-sale marketable security (as
discussed in Note 8 under the caption Investment in Affiliated Companies).

20. SEGMENT DATA

Following the Host-USA Acquisition, the Company has four business segments
associated with its continuing operations that provide different products or
services: (a) marketing and production services, which primarily includes
services rendered in connection with college athletics (Collegiate Marketing
and Production Services); (b) event management and marketing services
(Affinity Events); (c) association management services (Affinity Management
Services); and (d) consulting services rendered to a related party
(Consulting). The Company does not anticipate receiving any additional
consulting fees from the related party in the future. A fifth business
segment, associated with computer printer manufacturing and related sales and
services, has been classified as a discontinued segment.

62



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##### 



Information for each of the Companys segments associated with continuing
operations follows:

|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|-------------------------------------------- | ------------------------------------------------------ | - | ---------- | ------- | ---------- | - | ---------------- | ------ | ---------- | - | ------ | ------ | - | - | ------- | ------ | - | - | ------- | ------ | ---
|                                             |                                                        |   |            |         |            |   | Two Months Ended |        | Year Ended
|                                             |                                                        |   | Year Ended |         | August 31, |   | June 30,        
|                                             |                                                        |   | August 31, |         |            |   |                 
|                                             |                                                        |   | 2003       |         | 2002       |   | 2001             |        | 2002       |   | 2001  
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |       
|Net revenues, continuing operations:         |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |       
|                                             | Collegiate Marketing and
Production Services           |   | $          | 55,354  |            |   | $                | 3,307  |            |   | $      | 5,838  |   |   | $       | 79,099 |   |   | $       | 85,019 |    
|                                             | Affinity Events                                        |   |            | 14,051  |            |   |                  | 4,899  |            |   |        | 4,921  |   |   |         | 19,248 |   |   |         | 24,177 |    
|                                             | Affinity Management Services                           |   |            | 8,775   |            |   |                  | 1,284  |            |   |        | 2,015  |   |   |         | 14,714 |   |   |         | 11,117 |    
|                                             | Consulting                                             |   |            | 5,664   |            |   |                  |        |            |   |        | 3      |   |   |         | 11     |   |   |         | 24     |    
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|                                             |                                                        | $ | 83,844     |         |            | $ | 9,490            |        |            | $ | 12,777 |        |   | $ | 113,072 |        |   | $ | 120,337 |       
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|Operating income (loss):                     |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |       
|                                             | Collegiate Marketing and
Production Services           |   | $          | 930     |            |   | $                | (1,941 | )          |   | $      | (1,182 | ) |   | $       | (4,944 | ) |   | $       | 4,795  |    
|                                             | Affinity Events                                        |   |            | (3,896  | )          |   |                  | (1,389 | )          |   |        | 117    |   |   |         | (2,424 | ) |   |         | (3,837 | )  
|                                             | Affinity Management Services                           |   |            | 1,553   |            |   |                  | 152    |            |   |        | 47     |   |   |         | 1,275  |   |   |         | 1,681  |    
|                                             | Consulting                                             |   |            | 5,664   |            |   |                  |        |            |   |        | 3      |   |   |         | 11     |   |   |         | 24     |    
|                                             | Amortization and impairment of
acquisition intangibles |   |            | (31,756 | )          |   |                  | (203   | )          |   |        | (171   | ) |   |         | (7,824 | ) |   |         | (4,720 | ) a
|                                             | Unallocated general and
administrative costs           |   |            | (1,354  | )          |   |                  | (240   | )          |   |        | (444   | ) |   |         | (2,150 | ) |   |         | (2,274 | )  
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|                                             |                                                        | $ | (28,859    | )       |            | $ | (3,621           | )      |            | $ | (1,630 | )      |   | $ | (16,056 | )      |   | $ | (4,331  | ) b   
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|Depreciation expense, continuing operations: |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |       
|                                             | Collegiate Marketing and
Production Services           |   | $          | 923     |            |   | $                | 185    |            |   | $      | 190    |   |   | $       | 1,301  |   |   | $       | 901    |    
|                                             | Affinity Events                                        |   |            | 145     |            |   |                  | 35     |            |   |        | 30     |   |   |         | 92     |   |   |         | 634    |    
|                                             | Affinity Management Services                           |   |            | 117     |            |   |                  | 27     |            |   |        | 35     |   |   |         | 118    |   |   |         | 109    |    
|                                             | Unallocated general and
administrative costs           |   |            | 8       |            |   |                  | 2      |            |   |        | 1      |   |   |         | 7      |   |   |         | 6      |    
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|                                             |                                                        | $ | 1,193      |         |            | $ | 249              |        |            | $ | 256    |        |   | $ | 1,518   |        |   | $ | 1,650   |       
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|Capital expenditures:                        |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |       
|                                             | Collegiate Marketing and
Production Services           |   | $          | 216     |            |   | $                | 44     |            |   | $      | 52     |   |   | $       | 214    |   |   | $       | 430    |    
|                                             | Affinity Events                                        |   |            | 110     |            |   |                  | 22     |            |   |        | 26     |   |   |         | 44     |   |   |         | 656    |    
|                                             | Affinity Management Services                           |   |            | 12      |            |   |                  |        |            |   |        |        |   |   |         | 7      |   |   |         | 77     |    
|                                             | Unallocated general and
administrative costs           |   |            | 2       |            |   |                  |        |            |   |        |        |   |   |         | 14     |   |   |         | 3      |    
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    
|                                             |                                                        | $ | 340        |         |            | $ | 66               |        |            | $ | 78     |        |   | $ | 279     |        |   | $ | 1,166   |       
|                                             |                                                        |   |            |         |            |   |                  |        |            |   |        |        |   |   |         |        |   |   |         |        |    



|a |  | Amount has been restated; the amount previously reported was $(4,267).
|- |  | ----------------------------------------------------------------------
| 
|b |  | Amount has been restated; the amount previously reported was $(3,878).

63



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##### 



|              |                                              |   |            |        |      |   |         |        |  
|------------- | -------------------------------------------- | - | ---------- | ------ | ---- | - | ------- | ------ | -
|              |                                              |   | August 31,
|              |                                              |   |           
|              |                                              |   | 2003       |        | 2002
|              |                                              |   |            |        |     
|Total assets: |                                              |   |            |        |      |   |         |       
|              | Collegiate Marketing and Production Services |   | $          | 12,611 |      |   | $       | 16,661 |  
|              | Affinity Events                              |   |            | 3,514  |      |   |         | 3,587  |  
|              | Affinity Management Services                 |   |            | 827    |      |   |         | 906    |  
|              | Investments in affiliated companies          |   |            |        |      |   |         | 25,013 |  
|              | Goodwill, customer base and trademarks       |   |            | 53,226 |      |   |         | 84,156 | a
|              | Net assets of discontinued segment           |   |            | 1,695  |      |   |         | 3,491  |  
|              | Other                                        |   |            | 4,737  |      |   |         | 13,155 | b
|              |                                              |   |            |        |      |   |         |       
|              |                                              | $ | 76,610     |        |      | $ | 146,969 | c     
|              |                                              |   |            |        |      |   |         |       



|a |  | Amount has been restated; the amount previously reported was $74,861. 
|- |  | ----------------------------------------------------------------------
| 
|b |  | Amount has been restated; the amount previously reported was $27,855. 
| 
|c |  | Amount has been restated; the amount previously reported was $152,374.

64



---



##### 



SUPPLEMENTARY DATA

SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars and shares in thousands, except per share amounts)

|                                                     |                                                                  |   |               |       |              |   |         |       |            |   |        |       |   |   |         |       |  
|---------------------------------------------------- | ---------------------------------------------------------------- | - | ------------- | ----- | ------------ | - | ------- | ----- | ---------- | - | ------ | ----- | - | - | ------- | ----- | -
|                                                     |                                                                  |   | Quarter Ended
|                                                     |                                                                  |   |              
|                                                     |                                                                  |   | November 30,  |       | February 28, |   | May 31, |       | August 31,
|                                                     |                                                                  |   | 2002          |       | 2003         |   | 2003    |       | 2003      
|                                                     |                                                                  |   |               |       |              |   |         |       |           
|Revenue from services rendered                       |                                                                  | $ | 31,109        |       |              | $ | 17,626  |       |            | $ | 18,154 |       |   | $ | 16,955  |      
|Operating income (loss)                              |                                                                  |   | 6,308         |       |              |   | (1,760  | )     |            |   | (738   | )     |   |   | (32,669 | )    
|Loss from continuing operations                      |                                                                  |   | (1,244        | )     |              |   | (5,042  | )     |            |   | (4,659 | )     |   |   | (25,346 | )    
|Loss on disposal of discontinued segment             |                                                                  |   |               |       |              |   |         |       |            |   |        |       |   |   | (1,695  | )    
|Net loss                                             |                                                                  |   | (1,244        | )     |              |   | (5,042  | )     |            |   | (4,659 | )     |   |   | (27,041 | )    
|Preferred dividends                                  |                                                                  |   | (259          | )     |              |   | (281    | )     |            |   | (288   | )     |   |   | (321    | )    
|Net loss available to common stockholders            |                                                                  |   | (1,503        | )     |              |   | (5,323  | )     |            |   | (4,947 | )     |   |   | (27,362 | )    
|Per share data, basic and diluted:                   |                                                                  |   |               |       |              |   |         |       |            |   |        |       |   |   |         |      
|                                                     | Loss available to common stockholders
from continuing operations |   | $             | (0.39 | )            |   | $       | (1.38 | )          |   | $      | (1.25 | ) |   | $       | (6.22 | )
|                                                     | Loss from discontinued segment                                   |   |               |       |              |   |         |       |            |   |        |       |   |   | $       | (0.41 | )
|                                                     | Net loss available to common stockholders                        |   | $             | (0.39 | )            |   | $       | (1.38 | )          |   | $      | (1.25 | ) |   | $       | (6.63 | )
|Weighted average number of shares,
basic and diluted |                                                                  |   | 3,831         |       |              |   | 3,867   |       |            |   | 3,971  |       |   |   | 4,129   |      

|                                                                    |                                                                                                      |   |               |       |              |   |           |       |          |   |            |       |   |   |            |       |   |   |        |       |  
|------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | - | ------------- | ----- | ------------ | - | --------- | ----- | -------- | - | ---------- | ----- | - | - | ---------- | ----- | - | - | ------ | ----- | -
|                                                                    |                                                                                                      |   | Quarter Ended |       | Two Months  
|                                                                    |                                                                                                      |   |               |       | Ended       
|                                                                    |                                                                                                      |   | September 30, |       | December 31, |   | March 31, |       | June 30, |   | August 31,
|                                                                    |                                                                                                      |   | 2001          |       | 2001         |   | 2002      |       | 2002     |   | 2002      
|                                                                    |                                                                                                      |   |               |       |              |   |           |       |          |   |           
|                                                                    |                                                                                                      |   |               |       |              |   |           |       |          |   |            |       |   |   | (restated) |       |   |   |       
|Revenue from services rendered                                      |                                                                                                      | $ | 23,104        |       |              | $ | 34,082    |       |          | $ | 34,035     |       |   | $ | 21,851     |       |   | $ | 9,490  |      
|Operating income (loss)                                             |                                                                                                      |   | (2,133        | )     |              |   | (672      | )     |          |   | (1,540     | )     |   |   | (11,711    | )     |   |   | (3,621 | )    
|Loss from continuing operations before
cumulative effect adjustment |                                                                                                      |   | (3,665        | )     |              |   | (3,297    | )     |          |   | (4,103     | )     |   |   | (20,873    | )     |   |   | (5,355 | )    
|Cumulative effect of accounting change                              |                                                                                                      |   |               |       |              |   |           |       |          |   | (2,620     | )     |   |   |            |       |   |   |        |      
|Loss from continuing operations                                     |                                                                                                      |   | (3,665        | )     |              |   | (3,297    | )     |          |   | (6,723     | )     |   |   | (20,873    | )     |   |   | (5,355 | )    
|Net loss                                                            |                                                                                                      |   | (3,665        | )     |              |   | (3,297    | )     |          |   | (6,723     | )     |   |   | (20,873    | )     |   |   | (5,355 | )    
|Preferred dividends                                                 |                                                                                                      |   | (68           | )     |              |   | (85       | )     |          |   | (121       | )     |   |   | (122       | )     |   |   | (93    | )    
|Net loss available to common stockholders                           |                                                                                                      |   | (3,733        | )     |              |   | (3,382    | )     |          |   | (6,844     | )     |   |   | (20,995    | )     |   |   | (5,448 | )    
|Per share data, basic and diluted:                                  |                                                                                                      |   |               |       |              |   |           |       |          |   |            |       |   |   |            |       |   |   |        |      
|                                                                    | Loss available to common stockholders
from continuing operations before
cumulative effect adjustment |   | $             | (1.04 | )            |   | $         | (0.94 | )        |   | $          | (1.16 | ) |   | $          | (5.63 | ) |   | $      | (1.44 | )
|                                                                    | Loss available to common stockholders
from continuing operations                                     |   | $             | (1.04 | )            |   | $         | (0.94 | )        |   | $          | (1.87 | ) |   | $          | (5.63 | ) |   | $      | (1.44 | )
|                                                                    | Net loss available to common stockholders                                                            |   | $             | (1.04 | )            |   | $         | (0.94 | )        |   | $          | (1.87 | ) |   | $          | (5.63 | ) |   | $      | (1.44 | )
|Weighted average number of shares,
basic and diluted                |                                                                                                      |   | 3,600         |       |              |   | 3,614     |       |          |   | 3,651      |       |   |   | 3,729      |       |   |   | 3,793  |      

The Company changed its fiscal year end from June 30 to August 31, effective
August 31, 2002.

Certain amounts for the quarter ended June 30, 2002 have been restated as
follows: (a) the previously reported loss from continuing operations and net
loss was $(19,073); (b) the previously reported net loss available to common
stockholders was $(15,590); and (c) the previously reported loss per share was
$(4.18).

65



---



##### 



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

The Company carried out, under the supervision and with the participation
of the Companys management, including the Companys Chief Executive Officer
and the Companys Chief Financial Officer, an evaluation of the effectiveness
of the design and operation of the Companys disclosure controls and procedures
performed pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
amended. Based on that evaluation, the Companys Chief Executive Officer and
its Chief Financial Officer concluded that, as of August 31, 2003, the
Companys disclosure controls and procedures are effective in timely alerting
them to material information which is required to be included in the periodic
reports that the Company must file with the Securities and Exchange Commission.

There have been no significant changes in the Companys internal controls
or in other factors that could significantly affect the internal controls
subsequent to August 31, 2003.

PART III

Item 10. Directors and Executive Officers of the Registrant

Except for the information stated below, the information required by the
item is set forth under the caption Election of Directors  Nominees in the
Companys Proxy Statement to be filed with the Commission not later than 120
days after the end of the Companys fiscal year, which is incorporated by
reference herein.

In addition to Messrs. Robinson, Prather and Howell, who are listed in the
Companys Proxy Statement to be filed with the Commission not later than 120
days after the end of the Companys fiscal year, which is incorporated by
reference herein, the Company has the following executive officer:

FREDERICK J. ERICKSON, 45, has been Vice President  Finance, Treasurer
and Chief Financial Officer of the Company since 1994; has served in the
capacity of Executive Vice President  Finance & Administration or similar
capacities with Datasouth from 1993 to 2001.

Code of Ethics

Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, the Company has
adopted a Code of Ethics for the Chief Executive Officer and Senior Financial
Officer. The Code of Ethics for the Chief Executive Officer and Chief
Financial Officer is posted on the Companys website, www.bullruncorp.com,
(under the Corporate Governance caption) and is included as Exhibit 14 to the
Form 10-K. The Company intends to satisfy the disclosure requirement regarding
any amendment to, or waiver of, a provision of the Code of Ethics for the Chief
Executive Officer and Senior Financial Officer by posting such information on
its website. The Company undertakes to provide to any person a copy of this
Code of Ethics upon request to the Secretary of the Company at the Companys
principal executives offices.

66



---



##### 



Item 11. Executive Compensation

The information required by the item is set forth under the caption
Management Compensation in the Companys Proxy Statement to be filed with the
Commission not later than 120 days after the end of the Companys fiscal year,
which is incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by the item is set forth under the captions
Principal Stockholders and Security Ownership of Management in the
Companys Proxy Statement to be filed with the Commission not later than 120
days after the end of the Companys fiscal year, which is incorporated by
reference herein.

Item 13. Certain Relationships and Related Transactions

The information required by the item is set forth under the captions
Certain Relationships and Related Transactions in the Companys Proxy
Statement to be filed with the Commission not later than 120 days after the end
of the Companys fiscal year, which is incorporated by reference herein.

Item 14. Principal Accountant Fees and Services

The information required by the item is set forth under the captions
Ratification of Appointment of Auditors  Fees in the Companys Proxy
Statement to be filed with the Commission not later than 120 days after the end
of the Companys fiscal year, which is incorporated by reference herein.

67



---



##### 



PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K



|(a) |  | List of documents filed as part of this report:
|--- |  | -----------------------------------------------



| | (1) |  | Financial Statements and Related Independent Auditors Report:                                                            
| | --- |  | -------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The following consolidated financial statements of the Company and
Report of Independent Auditors are included in Item 8:

|                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Report of Independent Auditors                                                                                                                                                                                          
|                                                                                                                                                                                                                        
|Consolidated Balance Sheets as of August 31, 2003, August 31,
2002 and June 30, 2002                                                                                                                                    
|                                                                                                                                                                                                                        
|Consolidated Statements of Operations for the year ended August
31, 2003, the two months ended August 31, 2002 and 2001
(unaudited), and the years ended June 30, 2002 and 2001                                         
|                                                                                                                                                                                                                        
|Consolidated Statements of Redeemable Preferred Stock and
Stockholders Equity for the year ended August 31, 2003,
the two months ended August 31, 2002 and 2001 (unaudited),
and the years ended June 30, 2002 and 2001
|                                                                                                                                                                                                                        
|Consolidated Statements of Cash Flows for the year ended August
31, 2003, the two months ended August 31, 2002 and 2001
(unaudited), and the years ended June 30, 2002 and 2001                                         
|                                                                                                                                                                                                                        
|Notes to Consolidated Financial Statements                                                                                                                                                                              
|                                                                                                                                                                                                                        
|Supplementary Data, Selected Quarterly Financial Data (Unaudited)                                                                                                                                                       



| | (2) |  | The following consolidated financial statement schedule of
Bull Run Corporation is included in Item 15(d):                                                                                                                            
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Schedule II - Valuation and qualifying accounts                                                                                                                                                                                       
|
| |     |  | All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and
therefore have been omitted.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



| |  |  | Current Report on Form 8-K dated July 16, 2003 for the purpose of
furnishing the press release announcing the Companys financial
results for the fiscal quarter ended May 31, 2003.                                                                                                      
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Current Report on Form 8-K dated August 19, 2003 for the purpose of
disclosing the Companys sale of its investment in Gray common stocks
and an amendment to the Companys credit facility, and related pro
forma financial information.                                                 
|
| |  |  | Current Report on Form 8-K dated August 28, 2003 for the purpose of
disclosing the Companys determination of its need to record a charge
in the Companys financial statements for the year ended August 31,
2003 for the impairment of goodwill and other acquisition intangible
assets.

68



---



##### 





|(c) |  | Exhibits
|--- |  | --------

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Numbers |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2.1)   |  | Restated Agreement and Plan of Merger, dated as of
February 15, 1999, by and among Bull Run Corporation (formerly,
BR Holding, Inc.), BR Holding, Inc. (formerly, Bull Run
Corporation), Capital Sports Properties, Inc., Host
Communications, Inc., Universal Sports America, Inc., Capital
Merger Sub, Inc., Host Merger Sub, Inc., and USA Merger Sub,
Inc. (g)                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2.2)   |  | Form of Agreement and Plan of Merger, by and among
Bull Run Corporation (formerly, BR Holding, Inc.), BR Holding,
Inc. (formerly, Bull Run Corporation) and a wholly owned
subsidiary of Bull Run Corporation (formerly, BR Holding, Inc.)
(g)                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.1)   |  | Articles of Incorporation of Bull Run Corporation (formerly, BR Holding, Inc.) (g)                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.2)   |  | Certificate of Amendment to Articles of Incorporation, filed November 9, 2001 (h)                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.3)   |  | Certificate of Amendment to Articles of Incorporation, filed February 12, 2002 (h)                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.4)   |  | Certificate of Amendment to Articles of Incorporation, filed November 8, 2002 (i)                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.5)   |  | Certificate of Amendment to Articles of Incorporation, filed May 13, 2003 (j)                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.6)   |  | Certificate of Amendment to Articles of Incorporation, filed May 30, 2003 (j)                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.7)   |  | Certificate of Amendment to Articles of Incorporation, filed October 8, 2003 (x)                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.8)   |  | Certificate of Amendment to Articles of Incorporation, filed November 26, 2003 (x)                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3.9)   |  | Bylaws of Bull Run Corporation (formerly, BR Holding, Inc.) (g)                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.1)  |  | Amended and Restated 1994 Long Term Incentive Plan (g)                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.2)  |  | 1987 Non-Qualified Stock Option Plan (a)                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.3)  |  | Non-Employee Directors 1994 Stock Option Plan (b)                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.5)  |  | Stock Purchase Agreement dated January 28, 1999 by and between
U.S. Trust Company of Florida Savings Bank, as Personal
Representative of the Estate of Mary Tarzian and Bull Run
Corporation (e)                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.4)  |  | Form of Stockholders Agreement, by and among Hilton H.
Howell, Jr., Douglas L. Jarvie, Robinson-Prather Partnership, W.
James Host and Charles L. Jarvie (g)                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.6)  |  | Second Amended and Restated Credit Agreement among BR Holding,
Inc., Capital Sports Properties, Inc., Host Communications, Inc.
and Datasouth Computer Corporation, as Borrowers, Bull Run
Corporation, as a Guarantor, and Wachovia Bank, National
Association, as Issuing Bank, Wachovia Securities, Inc., as Sole
Lead Arranger and Book Manager and Wachovia Bank, National
Association, as Administrative Agent, dated October 11, 2002 (h)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10.7)  |  | First Amendment to Second Amended and Restated Credit
Agreement, dated August 18, 2003 (k)                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(14)    |  | Code of Ethics for Senior Financial Officers (x)                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(21)    |  | List of Subsidiaries of Registrant (x)                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(23.1)  |  | Consent of PricewaterhouseCoopers LLP (x)                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(31.1)  |  | Certifications of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (x)                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(31.2)  |  | Certifications of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (x)                                                                                                                                                                                                                                                                                                                                         

69



---



##### 



|        |  |                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                        
|Numbers |  | Description                                                                                            
|        |  |                                                                                                        
|(32.1)  |  | Certifications of Chief Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (x)
|        |  |                                                                                                        
|(32.2)  |  | Certifications of Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (x)



|(a) |  | Filed as an exhibit to Form 10-K Annual Report for the year
ended December 31, 1988 and incorporated by reference herein                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Filed as an exhibit to Registration Statement on Form S-4
(Registration No. 33-81816), effective November 3, 1994 and
incorporated by reference herein
|   
|(c) |  | Filed as an exhibit to Form 10-KSB Annual Report for the year
ended December 31, 1996 and incorporated by reference herein                            
|   
|(d) |  | Filed as an exhibit to Form 8-K Current Report dated as of
November 21, 1997 and incorporated by reference herein                                     
|   
|(e) |  | Filed as an exhibit to Form 8-K Current Report dated as of
January 28, 1999 and incorporated by reference herein                                      
|   
|(f) |  | Filed as an exhibit to Form 8-K Current Report dated as of
April 23, 1999 and incorporated by reference herein                                        
|   
|(g) |  | Filed as an exhibit to Registration Statement on Form S-4
(Registration No. 333-84833), effective August 11, 1999 and
incorporated by reference herein
|   
|(h) |  | Filed as an exhibit to Form 10-K Annual Report for the year
ended June 30, 2002 and incorporated by reference herein                                  
|   
|(i) |  | Filed as an exhibit to Form 10-Q Quarterly Report for the
quarterly period ended November 30, 2002 and incorporated by
reference herein               
|   
|(j) |  | Filed as an exhibit to Form 10-Q Quarterly Report for the
quarterly period ended May 31, 2003 and incorporated by reference
herein                    
|   
|(k) |  | Filed as an exhibit to Form 8-K Current Report dated as of
August 18, 2003 and incorporated by reference herein                                       
|   
|(x) |  | Filed herewith                                                                                                                                        
|   
|(d) |  | Financial Statement Schedules                                                                                                                         
|   
|    |  | The response to this section is submitted as part of Item 15(a)(1) and
Item 15(a)(2).                                                                 

70



---



##### 



SIGNATURES

Pursuant to the requirements of Section 13 of 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, on November 28,
2003.

| |  |                      |  |                                      
| |  | -------------------- |  | -------------------------------------
| |  | BULL RUN CORPORATION
| |  |                      |  |                                      
| |  | by:                  |  | /s/ ROBERT S. PRATHER, JR.           
| |  |                      |  |                                      
| |  |                      |  | Robert S. Prather, Jr.               
| |  |                      |  | President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

|                                                 |  |                                                                                   |  |                  
|------------------------------------------------ |  | --------------------------------------------------------------------------------- |  | -----------------
|Signature                                        |  | Title                                                                             |  | Date             
|                                                 |  |                                                                                   |  |                  
|/s/ ROBERT S. PRATHER, JR.Robert S. Prather, Jr. |  | President, Chief Executive
Officer and Director
(Principal Executive
Officer)     |  | November 28, 2003
|                                                
|/s/ GERALD N. AGRANOFFGerald N. Agranoff         |  | Director                                                                          |  | November 28, 2003
|                                                
|/s/ JAMES W. BUSBYJames W. Busby                 |  | Director                                                                          |  | November 28, 2003
|                                                
|/s/ FREDERICK J. ERICKSONFrederick J. Erickson   |  | Vice President-Finance and
Treasurer
(Principal Accounting and
Financial Officer) |  | November 28, 2003
|                                                
|/s/ W. JAMES HOSTW. James Host                   |  | Director                                                                          |  | November 28, 2003
|                                                
|/s/ HILTON H. HOWELL, JR.Hilton H. Howell, Jr.   |  | Vice President, Secretary
and Director                                            |  | November 28, 2003
|                                                
|/s/ MONTE C. JOHNSONMonte C. Johnson             |  | Director                                                                          |  | November 28, 2003
|                                                
|/s/ J. MACK ROBINSONJ. Mack Robinson             |  | Chairman of the Board                                                             |  | November 28, 2003
|                                                
|/s/ GORDON D. WHITENERGordon D. Whitener         |  | Director                                                                          |  | November 28, 2003

71



---



##### 



REPORT OF INDEPENDENT AUDITORS

Our audits of the consolidated financial statements of Bull Run Corporation
referred to in our report dated November 25, 2003 appearing elsewhere in this
Form 10-K also included an audit of the financial statement schedule listed in
Item 15(a)(2). In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

Atlanta, Georgia
November 25, 2003

72



---



##### 



BULL RUN CORPORATION

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

|                                 |  |            |           |            |  |            |         |             |  |        |   |            |  |   |           |  |  |   |         | 
|-------------------------------- |  | ---------- | --------- | ---------- |  | ---------- | ------- | ----------- |  | ------ | - | ---------- |  | - | --------- |  |  | - | ------- | 
|                                 |  |            |           |            |  | Additions  |         |             |  |        |   |            |  |  
|                                 |  |            |           |            |  |            |         |             |  |        |   |            |  |  
|                                 |  | Balance at |           | Charged to |  | Charged to |         |             |  |        |   | Balance at
|                                 |  | Beginning  |           | Costs and  |  | Other      |         |             |  |        |   | End of    
|Description                      |  | Of Period  |           | Expenses   |  | Accounts   |         | Deductions1 |  | Period
|                                 |  |            |           |            |  |            |         |             |  |       
|Year Ended August
31, 2003       |  |            |           |            |  |            |         |             |  |        |   |            |  |   |           |  |  |   |         | 
|Allowance for
doubtful accounts  |  | $          | 514,000   |            |  | $          | 300,000 |             |  | $      | 0 |            |  | $ | 349,000   |  |  | $ | 465,000 | 
|Two Months Ended
August 31, 2002 |  |            |           |            |  |            |         |             |  |        |   |            |  |   |           |  |  |   |         | 
|Allowance for
doubtful accounts  |  | $          | 444,000   |            |  | $          | 85,000  |             |  | $      | 0 |            |  | $ | 15,000    |  |  | $ | 514,000 | 
|Year Ended June
30, 2002         |  |            |           |            |  |            |         |             |  |        |   |            |  |   |           |  |  |   |         | 
|Allowance for
doubtful accounts  |  | $          | 545,000   |            |  | $          | 630,000 |             |  | $      | 0 |            |  | $ | 731,000   |  |  | $ | 444,000 | 
|Year Ended June
30, 2001         |  |            |           |            |  |            |         |             |  |        |   |            |  |   |           |  |  |   |         | 
|Allowance for
doubtful accounts  |  | $          | 1,155,000 |            |  | $          | 576,000 |             |  | $      | 0 |            |  | $ | 1,186,000 |  |  | $ | 545,000 | 

1 Deductions represent write-offs of amounts not considered collectible.

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