<PAGE>   1


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

                                 FORM 10-K/A-1

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the fiscal year ended JUNE 30, 2000
[ ] 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                                              58-2458679
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)


      4370 PEACHTREE ROAD, N.E., ATLANTA, GA                         30319
     (Address of principal executive offices)                      (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       Name of each exchange on which registered
                  None                           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. [X] Yes [ ] 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. [X]


         The aggregate market value of the voting and non-voting common equity
held by non-affiliates as of June 30, 2001 was $31,661,354 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 June 30, 2001, was 35,984,126.


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>   2


Items 6, 7,8 of Part II and Item 14 of Part IV are hereby amended and restated
in their entirety as follows:

                                     PART II

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 year ended
June 30, 2000, the six months ended June 30, 1999, and for each of the four
years in the period ended December 31, 1998 are derived from the audited
consolidated financial statements of the Company. The selected consolidated
financial data as of and for the six months ended June 30, 1998 are derived from
unaudited condensed consolidated financial statements of the Company.

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


<TABLE>
<CAPTION>

OPERATING RESULTS:                                      SIX MONTHS ENDED
                                       YEAR ENDED           JUNE 30,                            YEAR ENDED DECEMBER 31,
                                        JUNE 30,      --------------------                 ------------------------------
                                          2000          1999         1998         1998         1997         1996         1995
                                       ----------     -------      -------      -------      -------      -------      -------
                                       (RESTATED)                (UNAUDITED)
<S>                                     <C>           <C>          <C>          <C>          <C>          <C>          <C>
Total revenue                           $ 72,000      $   609      $   652      $ 1,618      $   681      $   844      $   722
Direct operating costs                   (49,437)
Selling, general and administrative      (21,891)        (693)        (691)      (1,312)      (1,039)      (1,022)        (848)
Amortization of acquisition intangibles   (2,602)
                                        --------      -------      -------      -------      -------      -------      -------
    Income (loss) from operations         (1,930)         (84)         (39)         306         (358)        (178)        (126)
Equity in earnings (losses) of
      affiliated companies                (2,698)        (997)        (146)       6,734         (599)       1,731          107
Correction of purchase price allocation  (11,330)
Other income (expense) derived from
      investments in affiliates, net        (358)                                                           8,179
Interest expense and other, net           (7,909)      (1,858)      (1,547)      (3,162)      (1,614)      (1,250)        (944)
                                        --------      -------      -------      -------      -------      -------      -------
    Income (loss) from continuing
      operations before income taxes,
      extraordinary item and cumulative
      effect of accounting change        (24,225)      (2,939)      (1,732)       3,878       (2,571)       8,482         (963)
Income tax benefit (provision)             4,368          944          542       (1,599)       1,032       (3,349)         421
                                        --------      -------      -------      -------      -------      -------      -------
Income (loss) from continuing
     operations before extraordinary
      item and cumulative effect of
     accounting change                   (19,857)      (1,995)      (1,190)       2,279       (1,539)       5,133         (542)
Extraordinary loss                                                                                           (295)
Cumulative effect of accounting
      change                                                                                                 (274)
                                        --------      -------      -------      -------      -------      -------      -------
    Income (loss) from continuing
      operations                         (19,857)      (1,995)      (1,190)       2,279       (1,539)       4,564         (542)
    Income (loss) from discontinued
      operations, net of tax              (6,839)        (266)         (92)          81         (234)         744        1,265
                                        --------      -------      -------      -------      -------      -------      -------
    Net income (loss)                   $(26,696)     $(2,261)     $(1,282)     $ 2,360      $(1,773)     $ 5,308      $   723
                                        ========      =======      =======      =======      =======      =======      =======
</TABLE>

        See Notes to the Selected Financial Data on the following page.


                                       2
<PAGE>   3


<TABLE>
<CAPTION>
                                          SELECTED FINANCIAL DATA, CONTINUED

                                                         SIX MONTHS ENDED
EARNINGS (LOSS) PER                    YEAR ENDED             JUNE 30,                          YEAR ENDED DECEMBER 31,
   SHARE:                               JUNE 30,     ------------------------    --------------------------------------------------
                                           2000         1999          1998          1998        1997          1996         1995
                                       ----------    ----------    ----------    ----------   ---------    ----------   -----------
                                       (RESTATED)                  (UNAUDITED)
<S>                                    <C>           <C>           <C>           <C>          <C>           <C>          <C>
Earnings (loss) per share - Basic:
    Income (loss) from continuing
      operations before extraordinary
      item and cumulative effect of
      accounting change                $    (0.68)   $    (0.09)   $    (0.05)   $     0.10   $    (0.07)   $     0.22   $    (0.02)
    Income (loss) from continuing
      operations                       $    (0.68)   $    (0.09)   $    (0.05)   $     0.10   $    (0.07)   $     0.21   $    (0.02)
    Income (loss) from discontinued
      operations, net of tax           $    (0.24)   $    (0.01)   $    (0.01)   $     0.01   $    (0.01)   $     0.03   $     0.05
    Net income (loss)                  $    (0.92)   $    (0.10)   $    (0.06)   $     0.11   $    (0.08)   $     0.24   $     0.03
Weighted average shares
      outstanding - Basic                  29,044        22,330        22,098        22,189       21,302        22,013       22,127

Earnings (loss) per share - Diluted:
    Income (loss) from continuing
      operations before extraordinary
      item and cumulative effect of
      accounting change                $    (0.68)   $    (0.09)   $    (0.05)   $     0.10   $    (0.07)   $     0.21   $    (0.02)
    Income (loss) from continuing
      operations                       $    (0.68)   $    (0.09)   $    (0.05)   $     0.10   $    (0.07)   $     0.20   $    (0.02)
    Income (loss) from discontinued
      operations, net of tax           $    (0.24)   $    (0.01)   $    (0.01)   $     0.00   $    (0.01)   $     0.03   $     0.05
    Net income (loss)                  $    (0.92)   $    (0.10)   $    (0.06)   $     0.10   $    (0.08)   $     0.23   $     0.03
Weighted average shares
      outstanding - Diluted                29,044        22,330        22,098        23,182       21,302        22,945       23,236

<CAPTION>

FINANCIAL POSITION:
                                            AS OF JUNE 30,                      AS OF DECEMBER 31,
                                       ----------------------     --------------------------------------------
                                         2000         1999          1998        1997        1996        1995
                                       --------     ---------     --------     ------      ------      -------
                                      (RESTATED)
<S>                                    <C>          <C>            <C>         <C>         <C>         <C>
Working capital                        $  5,449     $ (61,595)     $ 4,074     $ 2,913     $ 4,262     $ 4,005
Investment in affiliated companies       77,935        85,311       74,767      62,972      53,752      29,246
Total assets                            228,555       104,317       95,195      76,402      66,211      41,692
Long-term obligations                   122,794                     51,848      41,998      31,364      14,896
Stockholders' equity                     55,707        27,994       29,791      25,056      28,318      24,079
Current ratio                               1.1           0.1          2.4         1.7         3.4         3.9
Book value per share                   $   1.59     $    1.25      $  1.34     $  1.18     $  1.30     $  1.09
</TABLE>


                      NOTES TO THE SELECTED FINANCIAL DATA

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

2000 - Acquisition of Host, USA and Capital effective December 17, 1999
       financed with common stock, options to acquire common stock and
       long-term debt. (See Notes 2 and 4 to the consolidated financial
       statements.)
1999 - Investment in Tarzian, financed with short-term debt; all amounts
       outstanding under long-term debt agreements were classified as current
       liabilities until December 17, 1999, when the obligations were
       refinanced.
1998 - Equity in the earnings attributable to Gray's gain on disposal of a
       television station; additional investments in Rawlings; and investment
       in Total Sports.
1997 - Initial investments in Rawlings.
1996 - Increase in the investment in Gray of $8.2 million resulting from
       Gray's public offering of its class B common stock; and purchase of
       Gray preferred stock for $15 million.
1995 - Initial investments in Host, USA and Capital.

No dividends were declared or paid during the periods presented.

Amounts presented as of and for the year ended June 30, 2000 have been restated
where applicable to reflect the correction of errors discussed in Note 2 to the
consolidated financial statements.

Certain reclassifications, including the presentation of the Datasouth business
segment as a discontinued operation, have been made in the results of operations
and financial position for all prior periods to conform to the June 30, 2000
presentation.


                                       3
<PAGE>   4

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 primary
operating business, Host Communications, Inc. ("Host"), acquired in December
1999. Host's "Collegiate Marketing and Production Services" business segment
provides sports marketing and production services to a number of collegiate
conferences and universities, the National Collegiate Athletic Association, and
state high school associations. Host's "Affinity Events" business segment
produces and manages individual events, such as the "NFL Quarterback Challenge,"
and several events series, including the "Hoop-It-Up(R)" 3-on-3 basketball tour
and the "Toyota Golf Skills Challenge". 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,
marketing and administration.

Effective December 17, 1999, the Company acquired the stock of Host, Universal
Sports America, Inc. ("USA") and Capital Sports Properties, Inc. ("Capital") not
then owned, directly or indirectly, by the Company. In January 2000, Host's
executive management team assumed executive management responsibilities for USA,
and many administrative and operating functions of the two companies were
combined. Effective July 1, 2000, USA was merged into Host. As used herein,
"Host-USA" refers to the combined businesses of Host and USA. Capital was solely
an investor in Host and has no operating business.

The Company also has significant investments in other sports and media
companies, including Gray Communications Systems, Inc. ("Gray"), the owner and
operator of 13 television stations, four newspapers and other media and
communications businesses; Sarkes Tarzian, Inc. ("Tarzian"), the owner and
operator of two television stations and four radio stations; Rawlings Sporting
Goods Company, Inc. ("Rawlings"), a supplier of team sports equipment; Total
Sports, Inc. ("Total Sports"), a sports content Internet company; and iHigh.com,
Inc. ("iHigh.com"), a company developing a network of Internet web sites focused
on high school sports and activities. The Company provides consulting services
to Gray, in connection with Gray's acquisitions and dispositions.

As of June 30, 2000, the Company owned approximately 13.1% of the outstanding
common stock of Gray (representing 26.2% of the voting rights), in addition to
non-voting preferred stock and warrants to purchase additional Gray common
stock; 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); 10.2% of the outstanding common stock of Rawlings, in addition to
warrants for the purchase of additional shares of Rawlings common stock; 10.6%
of the outstanding capital stock of Total Sports; and 37.0% of the outstanding
common stock of iHigh.com.

HOST-USA ACQUISITION

On December 17, 1999, the Company acquired the stock of Host, USA and Capital
not previously owned, directly or indirectly, by the Company (the "Host-USA
Acquisition"). Aggregate consideration (net of cash acquired) was approximately
$116.9 million, which included Common Stock (totaling 11,687,000 shares) and
stock options (for a total of 2,819,000 shares of Common Stock) valued at
approximately $52.3 million, 8% subordinated notes having a face value of
approximately $18.6 million, cash (net of approximately $9.7



                                       4
<PAGE>   5

million in cash acquired) of $44.8 million and transaction expenses of
approximately $1.2 million. The Company allocated $24.5 million of the Host-USA
Acquisition purchase price to identifiable intangible assets and recognized
goodwill in the amount of $66.4 million. As of June 30, 2000, goodwill and
acquired intangibles, net of accumulated amortization, were approximately 39% of
the Company's total assets.

Prior to the Host-USA Acquisition, the Company accounted for its investment in
Host and Capital under the equity method, and for its investment in USA under
the cost method. Beginning December 17, 1999, the financial results of Host, USA
and Capital have been consolidated with those of the Company.

RESTATEMENT OF FINANCIAL STATEMENTS

In April 2001, the Company became aware that the financial statements of USA
prior to the Host-USA Acquisition, and financial information prepared by USA, as
of and following the Host-USA Acquisition, contained errors resulting from the
use of incorrect methodology used for the accounting for prepaid costs and
expenses and sponsor contract receivables and deferred revenue associated with
the Company's (and prior to the Host-USA Acquisition, USA's) Affinity Events
business. The accompanying consolidated financial statements as of and for the
year ended June 30, 2000 have been restated for the correction of such errors.

DISPOSAL OF COMPUTER PRINTER OPERATIONS

On July 26, 2000, the Company's Board of Directors authorized management to sell
the operating assets of Datasouth Computer Corporation ("Datasouth"), the
Company's wholly owned computer printer manufacturing business segment. The
Company's decision to discontinue its Datasouth segment was attributable to the
strategic decision to focus on the sports and affinity marketing and management
businesses following the Host-USA Acquisition. Immediately following the board's
authorization, the Company formalized its plan of disposal and began to
aggressively pursue a sale of the assets of Datasouth to a potential purchaser.
The Company consummated the sale of Datasouth's operating assets on September
29, 2000. Accordingly, the operating results and net assets associated with
Datasouth's computer printer manufacturing business as of and for the year ended
June 30, 2000 and all prior periods presented herein have been reflected as
discontinued operations in the accompanying consolidated financial statements.

An estimated loss on the sale of Datasouth of $6,522,000, including a $350,000
pretax provision for estimated operating losses during the disposal period, has
been combined with Datasouth's operating results and presented as discontinued
operations in the consolidated financial statements for the year ended June 30,
2000. The proceeds realized on the sale of Datasouth's assets were based on
management's estimates of the most likely outcome, considering, among other
things, the Company's discussions with the potential purchaser. Management's
estimate of operating losses during the disposal period is based on management's
knowledge of customer ordering patterns, industry trends and estimates of the
length of time until a sale might be consummated. Actual amounts ultimately
realized on the sale and losses incurred during the disposal period could differ
materially from the amounts assumed in arriving at the loss on disposal. To the
extent actual proceeds or operating results during the disposal period differ
from the estimates that are reflected as of June 30, 2000, or as management's
estimates are revised, the variance will be reported in discontinued operations
in future periods. Management uses the proceeds from the sale to reduce
outstanding debt under its bank credit agreement and paid transaction expenses
of less than $100,000.


                                       5
<PAGE>   6


RESULTS OF CONTINUING OPERATIONS

YEAR ENDED JUNE 30, 2000

Total revenues for the year ended June 30, 2000 were $72,000,000. Revenue
derived from the companies acquired in the Host-USA Acquisition for the period
from December 17, 1999 (date of acquisition) through June 30, 2000, was
$70,689,000, of which, $54,443,000 was attributable to the Affinity Marketing
and Production Services business segment (formerly named the "Collegiate"
segment), $11,312,000 was attributable to the Affinity Events segment and
$4,934,000 was attributable to the Affinity Management Services segment.
Consulting fee income on services provided to Gray was $1,311,000 for the year
ended June 30, 2000. As a result of the Company's 13.1% equity investment in
Gray, approximately 13.1% of consulting fees charged to Gray is deferred and
recognized as consulting fee income over 40 years. There can be no assurance
that the Company will recognize any consulting fees in the future, other than
recognition of currently deferred fees.

Operating costs and expenses of $73,930,000 for the year ended June 30, 2000
included $68,320,000 associated with companies acquired in the Host-USA
Acquisition, for the period from December 17, 1999 (date of acquisition) through
June 30, 2000, amortization of acquisition intangibles of $2,602,000 as a result
of the Host-USA Acquisition, and nonrecurring expenses of $1,460,000 in
connection with a potential transaction involving one of the Company's
investments.

Operating income (loss) for the period December 17, 1999 (date of acquisition)
to June 30, 2000 derived from the Affinity Marketing and Production Services,
Affinity Events and Affinity Management Services business segments was
$4,354,000, $(2,551,000) and $568,000, respectively. A significant portion of
the Affinity Marketing and Production Services operating income is generated in
the fiscal quarter ended March 31, due to the timing of events in connection
from which revenues of this segment are generated. Likewise, the Affinity Events
business segment generates most of its revenue during the fiscal quarters ended
June 30 and September 30, the periods in which the majority of the events are
held. Therefore, revenue and operating profit for the period from December 17,
1999 (date of acquisition) to June 30, 2000 is not necessarily indicative of the
actual results that might have occurred had a full year's results been
consolidated in the Company's consolidated financial statements for the year
ended June 30, 2000.

Equity in earnings (losses) of affiliated companies, totaling $(2,698,000) for
the year ended June 30, 2000 included the Company's proportionate share of the
earnings or losses of (a) Gray; (b) Rawlings; (c) subsequent to December 17,
1999, iHigh.com and certain other equity investments; and (d) prior to December
17, 1999, Host and Capital, net of amortization charges totaling $1,823,000.

In January 1999, USA sold its investment in broadcast.com, inc., recognizing a
gain of approximately $40 million. As a result of Host's equity investment in
USA and the Company's equity investment in Host reported on a six-month lag
basis, the Company recognized approximately $1.9 million in equity in earnings
of affiliates in the year ended June 30, 2000 due to USA's gain on the sale.

Rawlings recognized an after-tax charge of approximately $12.8 million
associated with its decision to sell its Vic hockey business in its fiscal
quarter ended May 31, 2000. As a result, the Company's pretax equity in earnings
(losses) of Rawlings was negatively impacted in the year ended June 30, 2000 by
approximately $1.3 million.


                                       6
<PAGE>   7

In the year ended June 30, 2000, the Company recognized an expense of $2,850,000
associated with an impairment in the value of the Company's investment in a
warrant for Rawlings common stock. The determination to reduce the carrying
value of the Company's investment in the Rawlings warrant was made based on
management's assessment that the likelihood that the warrant would vest, in
accordance with the present terms of the warrant, prior to its expiration date,
was remote. As a result of this assessment, management believes its ability to
recover any of the carrying value of the investment in the warrant is remote.

As a result of Gray's issuance of shares of its class B common stock on October
1, 1999 in connection with consideration paid in the acquisition of three
television stations, the Company's common equity ownership of Gray was reduced
from 16.9% to 13.1%, resulting in a pretax gain for the Company of $2,492,000 in
the year ended June 30, 2000. This share issuance also reduced the Company's
common equity voting power in Gray from 27.5% to 26.2%. There can be no
assurance that such sales or such gains of a material nature will occur in the
future.

As a result of the accounting errors discovered by the Company in the financial
statements of USA, the Company recorded a charge of $11,330,000 in December
1999, reflecting the extent to which USA's net tangible assets as of the date of
the Host-USA Acquisition were overstated.

Interest and dividend income was $958,000 for the year ended June 30, 2000,
primarily derived from dividends accrued on the Company's investment in Gray's
series A and series B preferred stock. Interest expense was $8,746,000 for the
year ended June 30, 2000, increasing in the last six months of the fiscal year
due to the financing of the Host-USA Acquisition in December 1999, and to a
lesser extent, an increase in interest rates. During the year ended June 30,
2000, the Company issued approximately 305,000 shares of Common Stock to a
director of the Company who personally guaranteed up to $75 million of the
Company's debt under its bank credit agreement. The value of the shares issued,
approximately $1,219,000, is being amortized over one year, and approximately
$610,000 is included in debt issue cost amortization for the year ended June 30,
2000.

Other income for the year ended June 30, 2000 consisted primarily of income from
an option agreement with Gray whereby Gray has the right to acquire the
Company's investment in Tarzian.

As of June 30, 2000, the Company has a net operating loss carryforward for tax
purposes of approximately $14.2 million to reduce Federal taxable income in the
future, an alternative minimum tax credit carryforward of $490,000 and a
business credit carryforward of $142,000, to reduce regular Federal tax
liabilities in the future. The principal differences between the federal
statutory tax rate of 34% and the effective tax rate are nondeductible goodwill
amortization, correction of purchase price and state income taxes.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

Total revenue for the six months ended June 30, 1999, representing consulting
fees earned from services rendered to Gray in connection with Gray's
acquisitions and dispositions, was $609,000 compared to $652,000 for the same
period in 1998. Operating expenses of $693,000 for the six months ended June 30,
1999 were comparable to operating expenses of $691,000 for the six months ended
June 30, 1998.

Equity in losses of affiliated companies, totaling $(997,000) and $(146,000) for
the six months ended June 30, 1999 and 1998, respectively, included the
Company's proportionate


                                       7
<PAGE>   8

share of the earnings or losses of Gray, Host, Capital and Rawlings, and
amortization charges totaling $549,000 and $389,000, respectively.

Interest and dividend income of $453,000 and $562,000 for the six months ended
June 30, 1999 and 1998, respectively, was primarily derived from dividends paid
on the Company's investment in Gray's series A and series B preferred stock.
Interest expense, totaling $2,529,000 and $2,101,000 for the six months ended
June 30, 1999 and 1998, respectively, was incurred primarily in connection with
bank term loans and notes payable, the proceeds of which were used to finance
(a) the Company's investments in Gray, Host, Capital, USA and Rawlings, and (b)
the acquisition of a computer printer business in January 1998 (the "CodeWriter
Acquisition"); and, for the six months ended June 30, 1999 only, (x) the
Company's investments in Total Sports in August 1998 and January 1999, and (y)
the Company's investment in Tarzian in January 1999.

The Company's effective tax rate was 32.1% and 31.3% for the six months ended
June 30, 1999 and 1998, respectively.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Total revenue for 1998, representing consulting fees earned from services
rendered to Gray in connection with Gray's acquisitions and dispositions, was
$1,618,000 compared to $681,000 in 1997. Operating expenses of $1,312,000 in
1998 represented a 26.3% increase from 1997, due primarily to an increase in
professional fees of approximately $80,000, an increase in insurance costs of
approximately $75,000 and an increase in travel expenses of approximately
$66,000.

Equity in earnings (losses) of affiliated companies, totaling $6,734,000 in 1998
and ($599,000) in 1997, included the Company's proportionate share of the
earnings of Gray, Host, Capital, and in 1998 only, Rawlings, net of amortization
charges totaling $777,000 and $610,000 in 1998 and 1997, respectively. In 1998,
Gray disposed of WALB-TV, its NBC affiliate in Albany, Georgia, fulfilling a
Federal Communications Commission divestiture order. As a result of the gain on
the disposition of WALB-TV, the Company's equity in Gray's earnings was
favorably impacted by approximately $6.9 million in 1998.

Interest and dividend income of $1,085,000 in 1998 and $1,102,000 in 1997 was
primarily derived from dividends paid on the Company's investment in Gray's
series A and series B preferred stock. Interest expense, totaling $4,247,000 in
1998 and $2,716,000 in 1997, was incurred primarily in connection with bank term
loans, the proceeds of which were used to finance (a) the Company's investments
in Gray, Host, Capital and USA; (b) the Company's investments in Rawlings from
November 1997 through January 1998; (c) the acquisition of a computer printer
business in January 1998; and (d) the Company's investment in Total Sports in
August 1998.

The Company's effective tax rate was 41.2% and 40.1% for the years ended
December 31, 1998 and 1997, respectively.

RESULTS OF DISCONTINUED OPERATIONS

YEAR ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

Revenue from Datasouth's computer printer operations of $24,959,000 for the year
ended June 30, 2000, compared to $13,626,000 for the six months ended June 30,
1999, reflect a decline in sales to The Sabre Group, Inc., Datasouth's largest
customer, to $4.2 million in 2000, compared to $2.8 million for the six months
ended June 30, 1999. Short term revenue


                                       8
<PAGE>   9

trends in the Company's computer printer business fluctuate due to variable
ordering patterns of large customers. Gross profit from printer operations was
24.8% for the year ended June 30, 2000 compared to 26.6% for the six months
ended June 30, 1999, due to an increase in overhead costs per manufactured unit
sold during the year resulting from a decline in manufactured unit volume,
primarily caused by the decline in sales to Sabre.

Operating expenses associated with discontinued operations of $6,507,000 for the
year ended June 30, 2000 represent 26.1% of revenue compared to 19.1% for the
six months ended June 30, 1999. Operating expenses include non-cash goodwill
amortization expense of $555,000 and $266,000 for the year ended June 30, 2000
and for the six months ended June 30, 1999, respectively.

The Company allocated an income tax benefit to the discontinued segment of
$10,000 and $72,000 for the year ended June 30, 2000 and the six months ended
June 30, 1999, respectively, representing an effective tax rate of 3.0% and
21.3%, respectively. The change was due entirely to the impact of nondeductible
goodwill amortization in each period, as was the differences between the
effective tax rate and the statutory federal tax rate of 34%.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

Revenue from Datasouth's computer printer operations was $13,636,000 for the six
months ended June 30, 1999, compared to $14,158,000 for the same period in 1998,
due to a decrease in printer sales to Sabre. Printer sales to this customer were
$2.8 million for the six months ended June 30, 1999, compared to $4.3 million
for the six months ended June 30, 1998. Gross profit from printer operations of
26.6% for the six months ended June 30, 1999 increased from the 24.9% realized
for the same period in 1998, primarily due to a different mix of products sold
and initial production costs associated with the introduction of a new printer
line in 1998, which collectively increased gross profit 2.1% of revenue.

Operating expenses associated with discontinued operations of $3,964,000 for the
six months ended June 30, 1999 represented a 10.8% increase from the same period
in 1998, due primarily to (a) a $181,000 increase in research and development
costs attributable to software development activities for an airline
ticket/boarding pass printer (the marketing rights for which were acquired in
September 1998) and (b) expenses of $244,000 associated with the Company's
European sales office established in October 1998. Operating expenses include
non-cash goodwill amortization expense of $266,000 and $241,000 for the six
months ended June 30, 1999 and 1998, respectively.

The Company allocated an income tax benefit to the discontinued segment of
$72,000 for the six months ended June 30, 1999 and a $36,000 income tax
provision for the six months ended June 30, 1998, representing an effective tax
rate of 21.3% and (65.2)%, respectively. The change from 1998 to 1999, as well
as the difference between the effective tax rate and the federal statutory tax
rate of 34%, was due primarily to the impact of nondeductible goodwill
amortization in each period.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Revenue from Datasouth's computer printer operations (including the CodeWriter
product line, which was acquired in the CodeWriter Acquisition in January 1998)
was $29,848,000 in 1998, representing a 38% increase over such revenue in 1997
of $21,639,000. CodeWriter products contributed revenue of approximately $4.4
million in 1998. Printer sales to Sabre were approximately $9.2 million in 1998
and $7.2 million in 1997. Gross profit from printer operations of 25.9% for 1998
decreased slightly from the 26.2% realized in 1997, primarily due to a different
mix of products sold which increased gross profit 1.8% of revenue; less (a)


                                       9
<PAGE>   10

the impact of costs incurred by the Company immediately following the CodeWriter
Acquisition, prior to the integration of manufacturing operations into the
Company's existing product manufacturing facility, which decreased gross profit
by 0.1% of revenue; and (b) an increase in freight costs and increases in
inventory reserves, offset by some manufacturing overhead efficiencies gained as
a result of higher unit volumes, which collectively reduced gross profit by 2.3%
of revenue.

Operating expenses associated with discontinued operations of $7,282,000 in 1998
represented a 25.2% increase from 1997, due primarily to (a) expenses of
$245,000 associated with an increase in sales and marketing personnel
attributable to the Company's expanded printer line; (b) expenses of $75,000
associated with the Company's European sales office opened in October 1998; (c)
a $175,000 increase in advertising expenses relating to the introduction of new
products in 1998; (d) an increase in personnel and administrative costs of
$560,000 resulting from the CodeWriter Acquisition; and (e) goodwill
amortization expense and certain nonrecurring post-acquisition transition costs
of $225,000 in 1998 associated with the CodeWriter Acquisition. Operating
expenses included non-cash goodwill amortization expense of $488,000 in 1998 and
$301,000 in 1997, associated with the acquisition of Datasouth and, in 1998
only, the CodeWriter Acquisition.

The Company allocated an income tax provision to the discontinued segment of
$255,000 and $93,000 for the years ended December 31, 1998 and 1997,
respectively, representing an effective tax rate of 75.9% and (65.4)%,
respectively. The change from 1997 to 1998, as well as the difference between
the effective tax rate and the federal statutory tax rate of 34%, was due
primarily to the impact of nondeductible goodwill amortization in each period.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operating activities of continuing operations was $117,000 for the
year ended June 30, 2000. In the year ended June 30, 2000, accounts receivable
and prepaid costs and expenses decreased $15,527,000 due to decreases
(subsequent to the date of the Host-USA Acquisition) in prepaid costs under
various contracts and accounts receivable, and accounts payable and accrued
expenses decreased $11,585,000 due primarily to decreases (subsequent to the
date of the Host-USA Acquisition) in the accruals for guaranteed rights payments
and incurred unbilled costs under various contracts.

Cash used in operating activities of continuing operations was $1,120,000 for
the six months ended June 30, 1999, compared to $1,388,000 for the same period
in 1998, and cash used in operating activities of continuing operations was
$2,091,000 and $1,028,000 for the years ended December 31, 1998 and 1997,
respectively. In the six months ended June 30, 1999, receivables, net of
payables and accruals, decreased $898,000, compared to a decrease of $90,000 in
the six months ended June 30, 1999. Additionally, deferred income increased
$126,000 more in the six months ended June 30, 1998 than in the following year,
and interest paid was $2,050,000 compared to $2,346,000 for the six months ended
June 30, 1999. In the year ended December 31, 1998, interest paid was $4,404,000
compared to $2,460,000 in the year ended December 31, 1997; however, consulting
fees received in 1998 exceeded consulting fees received in 1997 by approximately
$900,000.

Cash provided by operating activities of discontinued operations was $676,000
for the year ended June 30, 2000, reflecting a decrease in accounts receivable
and inventories, net of payables and accruals, of $376,000. Cash provided by
operating activities of discontinued operations was $1,958,000 for the six
months ended June 30, 1999, whereas cash used in operating activities of
discontinued operations for the six months ended June 30, 1998 was $488,000, and
was $533,000 and $799,000 for the years ended December 31, 1998 and 1997,
respectively. In the six months ended June 30, 1999, accounts receivable and



                                       10
<PAGE>   11

inventories, net of payables and accruals, decreased $1,587,000, compared to an
increase of $813,000 in the six months ended June 30, 1998. In the year ended
December 31, 1998, accounts receivable and inventories, net of payables and
accruals, increased $1,739,000, compared to an increase of $1,378,000 in the
year ended December 31, 1997.

In 1984, Host and the National Affinity Marketing and Production Services
Athletic Association ("NCAA(R)") initiated the NCAA Corporate Partner Program.
Under this program, Host partners with an exclusive group of corporations to
link their target markets to and implement promotions around the NCAA and its
championship events through a variety of advertising and promotional
opportunities. Host's current contract with the NCAA expires in 2002. In 2000,
Host announced the decision to withdraw from negotiations for an extension of
Host's NCAA corporate marketing rights beyond 2002; however, Host subsequently
reentered negotiations related to retaining NCAA corporate marketing rights and,
in July 2001, announced that it had reached an agreement with CBS Sports for the
exclusive right to administer the NCAA Corporate Partner Program, along with
other NCAA marketing programs, beginning in September 2002 through August 2013.
Guaranteed rights fee expense under the current NCAA contract for the period
from December 17, 1999 (effective date of the Host-USA Acquisition) to June 30,
2000 was approximately $7,850,000, and will be $16,167,000, $19,417,000 and
$3,333,000 for the years ending June 30, 2001, 2002 and 2003, respectively. The
new agreement with CBS Sports will likewise require payment of significant
guaranteed rights fees beginning in September 2002.

Cash used in investing activities of continuing operations was $46,072,000 for
the year ended June 30, 2000, of which, $45,315,000 was associated with the
Host-USA Acquisition.

Cash used in investing activities of continuing operations was $12,226,000 for
the six months ended June 30, 1999, of which $10,000,000 was associated with the
Company's investment in Sarkes Tarzian, Inc., $1,000,000 was a result of an
additional investment in Total Sports preferred stock and $674,000 represented
deferred acquisition costs of the Host-USA Acquisition. Cash used in investing
activities of continuing operations was $5,043,000 for the six months ended June
30, 1998, of which $4,961,000 was associated with Company investments in
Rawlings common stock.

Cash used in investing activities of continuing operations was $4,886,000 for
the year ended December 31, 1998, as a result of Company's investments in
Rawlings totaling $4,961,000, the Company's initial investment in Total Sports
capital stock of $2,500,000 and investments in Host totaling $1,263,000. Also
during 1998, the Company received proceeds of $3,805,000 from Gray on the
redemption of shares of its series B preferred stock. For the year ended
December 31, 1997, cash used in investing activities of continuing operations
was $8,109,000 as a result of the Company's initial investments in Rawlings of
$5,804,000 and investments in Gray common stock of $3,108,000.

Cash used in investing activities of discontinued operations was $642,000 for
the six months ended June 30, 2000; $323,000 and $2,231,000 for the six months
ended June 30, 1999 and 1998, respectively; and $3,268,000 and $1,148,000 for
the years ended December 31, 1998 and 1997, respectively. Cash used for the
CodeWriter Acquisition was $558,000 in the year ended June 30, 2000, $100,000 in
the six months ended June 30, 1999 and approximately $2,000,000 in the six
months ended June 30, 1998, and approximately $2,250,000 for the year ended
December 31, 1998. Cash used for other acquisitions attributable to discontinued
operations was approximately $660,000 in the year ended December 31, 1998.
Capital expenditures of discontinued operations were $84,000 in the year ended
June 30, 2000; $223,000 in the six months ended June 30, 1999 and 1998; and
$353,000 and $1,148,000 for the years ended December 31, 1998 and 1997,
respectively.


                                       11
<PAGE>   12

Cash provided by financing activities of continuing operations was $46,451,000
for the year ended June 30, 2000 as a result of borrowings utilized for the
Host-USA Acquisition. Cash provided by financing activities of $11,976,000 for
the six months ended June 30, 1999 was primarily as a result of financing the
$10,000,000 investment in Sarkes Tarzian, Inc. in January 1999.

Cash provided by financing activities of continuing operations was $7,096,000
for the six months ended June 30, 1998 and $7,534,000 for the year ended
December 31, 1998 primarily as a result of financing Company investments in
Rawlings and Total Sports. Cash provided by financing activities of continuing
operations of $11,145,000 for the year ended December 31, 1997 was primarily a
result of financing Company investments in Rawlings and Gray, as well as
repurchases of the Company's common stock totaling $1,751,000.

Cash provided by financing activities of discontinued operations of $2,500,000
for the six months ended June 30, 1998 and $3,160,000 for the year ended
December 31, 1998 was a result of financing the CodeWriter Acquisition in
January 1998 and an acquisition of product rights in September 1998.

In connection with the Host-USA Acquisition, the Company entered into a new
credit agreement with a group of banks on December 17, 1999, as modified in
2000, providing for (a) two term loans for borrowings totaling $95,000,000,
bearing interest at either the banks' prime rate or the London Interbank Offered
Rate ("LIBOR") plus 2.5%, requiring a minimum aggregate principal payment of
$10,000,000 by December 17, 2000, with all amounts outstanding under the term
loans due on December 17, 2001; and (b) a revolving loan commitment (the
"Revolver") for borrowings of up to a maximum amount ranging from $25,000,000 to
$35,000,000 through December 17, 2001, bearing interest at either the banks'
prime rate or LIBOR plus 2.5%. Borrowings under the Revolver are limited to an
amount not to exceed a percentage of eligible accounts receivable, determined
monthly, and such borrowings may include up to $20,500,000 in outstanding
letters of credit. In July 2001, certain provisions of the credit agreement were
modified as discussed below. As of June 30, 2000, borrowings of $19,200,000 and
letters of credit totaling $3,835,000 were outstanding under the Revolver, and
additional available borrowing capacity under the Revolver was $560,000 at that
date.

Also in connection with the Host-USA Acquisition, the Company issued
subordinated notes on December 17, 1999, bearing interest at 8%, having an
aggregate face value of $18,594,000. Interest is payable quarterly until
maturity on January 17, 2003. Payment of interest and principal are subordinate
to the bank credit agreement. The new bank credit agreement and the subordinated
notes provided the necessary financing for the Host-USA Acquisition, and
refinanced all existing bank indebtedness of the Company, Host and USA.

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 up to
$75,000,000, for which he received compensation from the Company during the year
ended June 30, 2000 in the form of 305,000 restricted shares of the Company's
common stock valued at $1,219,000. Such agreement provides that if the Company
defaults on its bank loan, the chairman will repay the amount of such loan to
the banks. If he is obligated to pay such amount, he would have the right to
purchase certain of the Company's collateral under such loan as would be
necessary for him to recoup his obligation, with such collateral including the
Company's investments in Gray and Tarzian.

As a result of issues pertaining to the restatement of financial statements
discussed above under "Restatement of Financial Statements" and in Note 2 to the
consolidated financial


                                       12
<PAGE>   13

statements, among other reasons, the Company was not in compliance with certain
financial covenants and other provisions considered to be events of default
under the terms of its bank credit agreement; however, the Company obtained a
waiver of these events of default. On July 27, 2001, the Company and its lenders
amended certain provisions of the credit agreement to, among other things, (a)
revise future financial covenants; (b) change the maturity date of the credit
agreement from December 17, 2001 to July 1, 2002; (c) revise the interest rate
on the term loans to prime plus 1.5% or LIBOR plus 4.0% and the Revolver to
prime plus 1.0% or LIBOR plus 3.5%; and (d) require principal payments of at
least $10,000,000 on or before October 15, 2001 plus $10,000,000 on or before
December 15, 2001. In connection with the waiver and amendment, the Company's
chairman of the board increased his personal guarantee of the Company's debt
under its bank credit agreement to $100,000,000.

The Company is a party to two interest rate swap agreements, which effectively
modify the interest characteristics of $45,000,000 of its outstanding long-term
debt. The first agreement, effective January 1, 1999, involves the exchange of
amounts based currently on a fixed interest rate of 8.58% for amounts currently
based on a variable interest rate of LIBOR plus 2.5% through December 31, 2002,
without an exchange of the $20,000,000 notional amount upon which the payments
are based. The second agreement, effective January 5, 2000, involves the
exchange of amounts based on a fixed interest rate of 9.21% for amounts based on
a variable interest rate of LIBOR plus 2.5% through December 31, 2002 (or
December 31, 2004, at the bank's option), without an exchange of the $25,000,000
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. The
estimated amount to be received on terminating the swap agreements as of June
30, 2000, if the Company elected to do so, was approximately $511,000.

Dividends on the series B preferred stock of Gray owned by the Company are
payable in cash at an annual rate of $600 per share or, at Gray's option,
payable in additional shares of series B preferred stock. During 1998, Gray
redeemed 435.94 shares of its series B preferred stock owned by the Company,
including 110.94 shares previously issued in-kind as dividends on the series B
preferred stock, for a total of $3,805,000. The Company anticipates some amount
of dividends on the series B preferred stock may be paid in the future in
additional shares of series B preferred stock.

The Company anticipates that its current working capital, funds available under
its current credit facilities, quarterly cash dividends on the Gray preferred
stock and Gray common stock owned by the Company, and cash flow from operations
will be sufficient to fund its working capital requirements, capital spending
requirements and debt service requirements, for at least the next 12 months. The
Company's bank credit agreement requires aggregate principal payments totaling
$20,000,000 by December 2001, and such principal payments may require the sale
of certain investments whose sale may have some restrictions under applicable
securities laws, and there can be no assurance that the Company will be able to
sell such investments. Payment of the Company's $10,000,000 required principal
payment in December 2000 was funded in part by the redemption by Gray in the
amount of $5,000,000 of series B preferred stock owned by the Company having a
face value of $5,000,000. The Company's capital expenditures are expected to
total approximately $1,200,000 for the year ending June 30, 2001.

IMPACT OF YEAR 2000

Some of the Company's computer programs were written using two digits rather
than four to define the applicable year. As a result, those computer programs
had time-sensitive software


                                       13
<PAGE>   14

that recognized a date using "00" as the year 1900 rather than the year 2000
(the "Year 2000 Issue"). The Company implemented a program designed to address
the Year 2000 Issue. As a result of this program, the Company experienced no
significant disruption in its operations from the Year 2000 Issue. The Company's
total cost for this program was less than $200,000, excluding rent expense for
new computer hardware. Equipment rent expense does not differ materially from
depreciation expense attributed to the replaced equipment.

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 (as described in "Liquidity and Capital Resources" above) 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 at June 30, 2000 and 1999, 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 $538,000 for the year ended June 30, 2000;
$216,000 and $254,000 for the six months ended June 30, 1999 and 1998,
respectively; and $517,000 and $353,000 for the years ended December 31, 1998
and 1997, 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.

The Company holds investments in certain common stocks, preferred stocks and
options to purchase common stock. The Company is exposed to changes in market
values of these investments, some of which are publicly-traded common stocks. In
each case where there exists a quoted market price for a publicly-traded
security in which the Company holds investments, the investment is accounted for
under the equity method, whereby changes in the quoted market price of the
security do not impact the carrying value of the investment. However,
fluctuations in market prices of investments could ultimately affect the amounts
the Company might realize upon a disposal of some or all of its investments.
Based on management's estimates of the aggregate fair value of the Company's
investments in affiliated companies (as described in Note 12 to the consolidated
financial statements), a 10% change in the aggregate market value of such
investments would increase or decrease such aggregate market value by
approximately $6.3 million as of June 30, 2000, $10.5 million as of June 30,
1999 and $8.8 million as of December 31, 1998.

RECENTLY-ISSUED ACCOUNTING STANDARD

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Company will
be required to adopt the new Statement effective July 1, 2000. The Statement
will require the Company to recognize all derivatives on the balance sheet at
fair value. The Company's adoption of this Statement resulted in an increase in
Stockholders' Equity and Total Assets of approximately $3,160,000 on July 1,
2000. In addition, the Statement could increase


                                       14
<PAGE>   15

the volatility in earnings and comprehensive income for fiscal reporting periods
subsequent to June 30, 2000 as a result of recognizing the net change in the
value of an interest rate swap agreement during the future period.


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 and Gray's leverage may adversely affect their
ability to obtain financing, thereby impairing their ability to withstand
economic downturns or competitive pressures; (ii) Gray's business depends on its
relationships with, and success of, its national network affiliates; (iii)
Rawlings' and Host-USA's businesses are seasonal; (iv) adverse events affecting
baseball, such as negative publicity or strikes, may adversely affect Rawlings'
business; (v) Rawlings' and Host-USA's businesses depend on short term contracts
and the inability to renew or extend these contracts could adversely affect
their businesses; and (vi) Host-USA may lose money on some of its contracts,
because it guarantees certain payments thereunder.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Interest Rate and Market Rate Risk" in Item 7 "Management's Discussion and
Analysis."


                                       15
<PAGE>   16

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Consolidated Financial Statements of Bull Run Corporation:

<TABLE>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                            <C>
     Report of Independent Auditors                                                              18
     Consolidated Balance Sheets at June 30, 2000 (restated) and 1999, and
        December 31, 1998                                                                        19
     Consolidated Statements of Operations for the year ended June 30, 2000
        (restated), the six months ended June 30, 1999 and June 30, 1998
        (unaudited), and the years ended December 31, 1998 and 1997                              20
     Consolidated Statements of Stockholders' Equity for the year ended June 30,
        2000 (restated), the six months ended June 30, 1999 and the years ended
        December 31, 1998 and 1997                                                               21
     Consolidated Statements of Cash Flows for the year ended June 30, 2000
        (restated), the six months ended June 30, 1999 and June 30, 1998
        (unaudited), and the years ended December 31, 1998 and 1997                              22
     Notes to Consolidated Financial Statements                                                  23
     Selected Quarterly Financial Data (Unaudited)                                               45

Consolidated Financial Statements of Gray Communications Systems, Inc.,
incorporated by reference to pages F-1 to F-29 of Bull Run's Form 10-K Annual
Report for the year ended June 30, 2000:

     Report of Independent Auditors
     Consolidated Balance Sheets at December 31, 1999 and 1998
     Consolidated Statements of Operations for each of the three years in the period
        ended December 31, 1999
     Consolidated Statements of Stockholders' Equity for each of the three years
        in the period ended December 31, 1999
     Consolidated Statements of Cash Flows for each of the three years in the
        period ended December 31, 1999
     Notes to Consolidated Financial Statements

Condensed Consolidated Financial Statements of Gray Communications Systems,
Inc., incorporated by reference to pages F-30 to F-36 of Bull Run's Form 10-K
Annual Report for the year ended June 30, 2000:

Condensed  Consolidated  Balance  Sheets  at June 30, 2000 (Unaudited)
     Condensed Consolidated Statements of Operations for the six months ended
        June 30, 2000 and 1999 (Unaudited)
     Condensed Consolidated Statement of Stockholders' Equity for the six months
        ended June 30, 2000 (Unaudited)
     Condensed Consolidated Statements of Cash Flows for the six months ended
       June 30, 2000 and 1999 (Unaudited)
     Notes to Condensed Consolidated Financial Statements (Unaudited)
</TABLE>


                                       16
<PAGE>   17

Consolidated Financial Statements of Rawlings Sporting Goods Company, Inc.,
incorporated by reference to pages F-37 to F-54 of Bull Run's Form 10-K Annual
Report for the year ended June 30, 2000:

    Report of Independent Public Accountants
    Consolidated Statements of Income for each of the three years in the period
       ended August 31, 1999
    Consolidated Balance Sheets at August 31, 1999 and 1998 Consolidated
    Statements of Stockholders' Equity for each of the three years
       in the period ended August 31, 1999
    Consolidated Statements of Cash Flows for each of the three years in the
       period ended August 31, 1999
    Notes to Consolidated Financial Statements

Condensed Consolidated Financial Statements of Rawlings Sporting Goods Company,
Inc incorporated by reference to pages F-55 to F-61 of Bull Run's Form 10-K
Annual Report for the year ended June 30, 2000:

Consolidated Statements of Income for the nine months ended May 31, 2000
       and 1999 (Unaudited)
    Consolidated Balance Sheets at May 31, 2000 and August 31, 1999
       (Unaudited)
    Consolidated Statements of Cash Flow for the nine months ended May 31, 2000
       and 1999 (Unaudited)
    Notes to Consolidated Financial Statements (Unaudited)


                                       17
<PAGE>   18


                         REPORT OF INDEPENDENT AUDITORS


   BOARD OF DIRECTORS AND STOCKHOLDERS OF BULL RUN CORPORATION:

   We have audited the accompanying consolidated balance sheets of Bull Run
   Corporation as of June 30, 2000 and 1999, and December 31, 1998, and the
   related consolidated statements of operations, stockholders' equity and cash
   flows for the year ended June 30, 2000, the six months ended June 30, 1999
   and for each of the two years in the period ended December 31, 1998. 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. The financial statements of Rawlings Sporting Goods Company,
   Inc., (a corporation in which the Company has a 10% interest), as of August
   31, 1999 and 1998 and for the years then ended, have been audited by other
   auditors whose report has been furnished to us; insofar as our opinion
   relates to data included for Rawlings Sporting Goods Company, Inc., it is
   based solely on their report.

   We conducted our audits in accordance with auditing standards generally
   accepted in the United States. Those standards 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. An audit also includes assessing the accounting
   principles used and significant estimates made by management, as well as
   evaluating the overall financial statement presentation. We believe that our
   audits and the report of other auditors provide a reasonable basis for our
   opinion.

   In our opinion, based on our audits and the report of other auditors, the
   consolidated financial statements referred to above present fairly, in all
   material respects, the consolidated financial position of Bull Run
   Corporation at June 30, 2000 and 1999, and December 31, 1998, and the
   consolidated results of its operations and its cash flows for the year ended
   June 30, 2000, the six months ended June 30, 1999 and for each of the two
   years in the period ended December 31, 1998, in conformity with accounting
   principles generally accepted in the United States.

   As more fully described in Note 2, the Company restated certain amounts
   previously reported as of and for the year ended June 30, 2000.

                                                           /s/ ERNST & YOUNG LLP

   Charlotte, North Carolina
   September 28, 2000,
   except for Notes 2, 4 and 10, as to which the date is
   July 27, 2001


                                       18
<PAGE>   19


                              BULL RUN CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                                    JUNE 30,
                                                            -------------------------      DECEMBER 31,
                                                              2000             1999            1998
                                                            ---------       ---------        --------
                                                            (RESTATED)
<S>                                                         <C>             <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                $     619       $     323        $     58
   Accounts receivable, net of allowance of $1,155 and
      $-0- as of June 30, 2000 and 1999, respectively,
      and $-0- as of December 31, 1998                         30,384             267           1,127
   Inventories                                                    648
   Prepaid costs and expenses                                   3,710              78              34
   Income taxes receivable                                      3,148
   Deferred income taxes                                        3,516
   Net assets of discontinued segment                           6,286           6,845           8,546
                                                            ---------       ---------        --------
           Total current assets                                48,311           7,513           9,765
Property and equipment, net                                     6,868              22              14
Investment in affiliated companies                             77,935          85,311          74,767
Goodwill                                                       64,506
Customer base and trademarks                                   23,836
Other assets                                                    2,714             771             114
Net noncurrent assets of discontinued segment                   4,385          10,700          10,535
                                                            ---------       ---------        --------
                                                            $ 228,555       $ 104,317        $ 95,195
                                                            =========       =========        ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable and current portion of long-term debt      $  10,000       $  67,361        $  4,000
   Accounts payable                                             2,690             402           1,115
   Accrued and other liabilities                               30,172           1,345             574
                                                            ---------       ---------        --------
           Total current liabilities                           42,862          69,108           5,689
Long-term debt                                                122,794                          51,848
Deferred income taxes                                           3,924           5,030           5,682
Other liabilities                                               3,268           2,185           2,185
Stockholders' equity:
   Common stock, $.01 par value (authorized 100,000
      shares; issued 35,627 and 22,983 shares as of
      June 30, 2000 and 1999, respectively, and 22,785
      shares as of December 31, 1998)                             356             230             228
   Additional paid-in capital                                  76,123          21,840          21,378
   Treasury stock, at cost (542 shares)                        (1,393)         (1,393)         (1,393)
   Retained earnings (accumulated deficit)                    (19,379)          7,317           9,578
                                                            ---------       ---------        --------
           Total stockholders' equity                          55,707          27,994          29,791
                                                            ---------       ---------        --------
                                                            $ 228,555       $ 104,317        $ 95,195
                                                            =========       =========        ========
</TABLE>


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


                                       19
<PAGE>   20


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

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED                YEARS ENDED
                                                           YEAR ENDED              JUNE 30,                    DECEMBER 31,
                                                            JUNE 30,       -----------------------       -----------------------
                                                              2000           1999           1998           1998           1997
                                                            --------       --------       --------       --------       --------
                                                           (RESTATED)                    (UNAUDITED)
<S>                                                         <C>            <C>            <C>            <C>            <C>
Revenue from services rendered                              $ 72,000       $    609       $    652       $  1,618       $    681
Operating costs and expenses:
   Direct operating costs of services rendered                49,437
   Selling, general and administrative                        21,891            693            691          1,312          1,039
   Amortization of acquisition intangibles                     2,602
                                                            --------       --------       --------       --------       --------
                                                              73,930            693            691          1,312          1,039
                                                            --------       --------       --------       --------       --------
     Operating income (loss)                                  (1,930)           (84)           (39)           306           (358)
Other income (expense):
   Equity in earnings (losses) of affiliated companies        (2,698)          (997)          (146)         6,734           (599)
   Gain on issuance of shares by affiliate                     2,492
   Reduction in valuation of investment in affiliate          (2,850)
   Correction of purchase price allocation                   (11,330)
   Interest and dividend income                                  958            453            562          1,085          1,102
   Interest expense                                           (8,746)        (2,529)        (2,101)        (4,247)        (2,716)
   Debt issue cost amortization                                 (953)
   Other income (expense)                                        832            218             (8)
                                                            --------       --------       --------       --------       --------
     Income (loss) from continuing operations before
       income taxes                                          (24,225)        (2,939)        (1,732)         3,878         (2,571)
Income tax benefit (provision)                                 4,368            944            542         (1,599)         1,032
                                                            --------       --------       --------       --------       --------
     Income (loss) from continuing operations                (19,857)        (1,995)        (1,190)         2,279         (1,539)
Income (loss) on operations of discontinued
   segment, net of tax                                          (317)          (266)           (92)            81           (234)
Estimated loss on disposal of discontinued segment,
   net of tax                                                 (6,522)
                                                            --------       --------       --------       --------       --------
     Net income (loss)                                      $(26,696)      $ (2,261)      $ (1,282)      $  2,360       $ (1,773)
                                                            ========       ========       ========       ========       ========

Earnings (loss) per share:
  Basic:
   Income (loss) from continuing operations                 $  (0.68)      $  (0.09)      $  (0.05)      $   0.10       $  (0.07)
   Income (loss) from discontinued segment                     (0.24)         (0.01)         (0.01)          0.01          (0.01)
                                                            --------       --------       --------       --------       --------
   Net income (loss)                                        $  (0.92)      $  (0.10)      $  (0.06)      $   0.11       $  (0.08)
                                                            ========       ========       ========       ========       ========
  Diluted:
   Income (loss) from continuing operations                 $  (0.68)      $  (0.09)      $  (0.05)      $   0.10       $  (0.07)
   Income (loss) from discontinued segment                     (0.24)         (0.01)         (0.01)          0.00          (0.01)
                                                            --------       --------       --------       --------       --------
   Net income (loss)                                        $  (0.92)      $  (0.10)      $  (0.06)      $   0.10       $  (0.08)
                                                            ========       ========       ========       ========       ========

Weighted average number of common shares outstanding:
   Basic                                                      29,044         22,330         22,098         22,189         21,302
   Diluted                                                    29,044         22,330         22,098         23,182         21,302
</TABLE>

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


                                       20
<PAGE>   21

                              BULL RUN CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                           RETAINED
                                                              ADDITIONAL                   EARNINGS        TOTAL
                                           COMMON STOCK        PAID-IN       TREASURY    (ACCUMULATED   STOCKHOLDERS'
                                         SHARES     AMOUNT     CAPITAL        STOCK        DEFICIT)        EQUITY
                                         ------     ------    ----------     --------    ------------   -------------

<S>                                      <C>        <C>       <C>            <C>         <C>            <C>
Balances, January 1, 1997                22,325      $223      $ 20,541      $ (1,437)     $   8,991      $ 28,318

   Purchase of treasury stock                                                  (1,751)                      (1,751)
   Exercise of stock options                258         3           259                                        262
   Net loss                                                                                   (1,773)       (1,773)
                                         ------      ----      --------      --------      ---------      --------

BALANCES, DECEMBER 31, 1997              22,583       226        20,800        (3,188)         7,218        25,056

   Issuance of treasury stock                                       555         1,945                        2,500
   Purchase of treasury stock                                                    (150)                        (150)
   Exercise of stock options                202         2            23                                         25
   Net income                                                                                  2,360         2,360
                                         ------      ----      --------      --------      ---------      --------

BALANCES, DECEMBER 31, 1998              22,785       228        21,378        (1,393)         9,578        29,791

   Exercise of stock options                198         2           462                                        464
   Net loss                                                                                   (2,261)       (2,261)
                                         ------      ----      --------      --------      ---------      --------

BALANCES, JUNE 30, 1999                  22,983       230        21,840        (1,393)         7,317        27,994

   Issuance of common stock              11,992       120        44,657                                     44,777
   Issuance of nonqualified stock
     options                                                      8,700                                      8,700
   Exercise of stock options                652         6           776                                        782
   Tax benefit from exercise of
     nonqualified stock options                                     150                                        150
   Net loss (restated)                                                                       (26,696)      (26,696)
                                         ------      ----      --------      --------      ---------      --------

BALANCES, JUNE 30, 2000
   (RESTATED)                            35,627      $356      $ 76,123      $ (1,393)     $ (19,379)     $ 55,707
                                         ======      ====      ========      ========      =========      ========
</TABLE>

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


                                       21
<PAGE>   22

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

<TABLE>
<CAPTION>
                                                                                  SIX MONTHS ENDED          YEARS ENDED
                                                                   YEAR ENDED         JUNE 30,              DECEMBER 31,
                                                                    JUNE 30,    --------------------    --------------------
                                                                      2000        1999        1998        1998        1997
                                                                   ----------   --------    --------    --------    --------
                                                                   (RESTATED)              (UNAUDITED)

<S>                                                                <C>          <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                $(26,697)   $ (2,261)   $ (1,282)   $  2,360    $ (1,773)
   Loss (income) from discontinued segment                             6,839         266          92         (81)        234
   Adjustments to reconcile net income (loss) to net cash
      provided by (used in) continuing operations:
   Other expense derived from investment in affiliates, net              358
  Correction of purchase price allocation                             11,330
   Provision for bad debts                                               267
   Depreciation and amortization                                       4,669          17          17          35          34
   Equity in (earnings) losses of affiliated companies                 2,698         997         146      (6,734)        599
   Deferred income taxes                                              (4,638)     (1,014)       (396)      1,976        (759)
   Accrued preferred stock dividend income                                                      (150)       (175)       (300)
   Loss on disposition of assets                                          64
   Change in operating assets and liabilities:
      Accounts receivable                                             12,497         860        (280)        (64)        149
      Inventories                                                        270
      Prepaid costs and expenses                                       3,030         (25)        (33)                     15
      Accounts payable and accrued expenses                          (11,585)         38         370         230         645
      Deferred income and other long-term liabilities                    781           2         128         362         128
                                                                    --------    --------    --------    --------    --------
Net cash used in continuing operations                                  (117)     (1,120)     (1,388)     (2,091)     (1,028)
Net cash provided by (used in) discontinued operations                   676       1,958        (488)       (533)       (799)
                                                                    --------    --------    --------    --------    --------
Net cash provided by (used in) operating activities                      559         838      (1,876)     (2,624)     (1,827)
                                                                    --------    --------    --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                                  (1,146)        (10)                                (12)
Investment in affiliated companies                                               (11,623)     (5,071)     (8,812)     (9,099)
Proceeds on sale of investment                                           267
Acquisition of businesses, net of cash acquired                      (45,315)       (674)
Redemption of preferred stock investment                                                                   3,805
Dividends received from affiliated companies                             122          81          28         121       1,002
                                                                    --------    --------    --------    --------    --------
Net cash used in continuing operation investing activities           (46,072)    (12,226)     (5,043)     (4,886)     (8,109)
Net cash used in discontinued operation investing activities            (642)       (323)     (2,231)     (3,268)     (1,148)
                                                                    --------    --------    --------    --------    --------
Net cash used in investing activities                                (46,714)    (12,549)     (7,274)     (8,154)     (9,257)
                                                                    --------    --------    --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from notes payable                                                     10,000         500       1,200       1,500
Borrowings from revolving lines of credit                             32,702       8,648       7,966      17,598      15,232
Repayments on notes payable                                          (12,000)                               (700)
Repayments on revolving lines of credit                              (21,698)     (7,988)     (8,146)    (18,718)     (9,941)
Proceeds from long-term debt                                          95,000       1,352       7,625       9,815       5,843
Repayments on long-term debt                                         (47,165)       (500)       (864)     (1,536)
Debt issue costs                                                      (1,170)
Exercise of stock options                                                782         464          17          25         262
Repurchase of common stock                                                                        (2)       (150)     (1,751)
                                                                    --------    --------    --------    --------    --------
Net cash provided by continuing operation financing activities        46,451      11,976       7,096       7,534      11,145
Net cash provided by discontinued operation financing activities                               2,500       3,160
                                                                    --------    --------    --------    --------    --------
Net cash provided by financing activities                             46,451      11,976       9,596      10,694      11,145
                                                                    --------    --------    --------    --------    --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     296         265         446         (84)         61
Cash and cash equivalents, beginning of year                             323          58         142         142          81
                                                                    --------    --------    --------    --------    --------
CASH AND CASH EQUIVALENTS, END OF YEAR                              $    619    $    323    $    588    $     58    $    142
                                                                    ========    ========    ========    ========    ========
</TABLE>

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


                                       22
<PAGE>   23
                              BULL RUN CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Amounts in thousands, except per share data)


1.       DESCRIPTION OF BUSINESS

Bull Run Corporation ("Bull Run," and collectively with its subsidiaries, the
"Company"), based in Atlanta, Georgia, is a sports and affinity marketing and
management company through its wholly owned subsidiary, Host Communications,
Inc. ("Host"). Effective December 17, 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. Effective
July 1, 2000, USA was merged into Host.

In July 2000, the Company made a strategic decision to sell the computer printer
manufacturing business segment operated by wholly owned subsidiary, Datasouth
Computer Corporation ("Datasouth"). Datasouth is reported as a discontinued
operation (see Note 5).

The Company also holds significant investments in sports and media companies,
including Gray Communications Systems, Inc. ("Gray"), an owner and operator of
thirteen television stations, four daily newspapers and other media and
communications businesses; Sarkes Tarzian, Inc. ("Tarzian"), owner and operator
of two television stations and four radio stations; Rawlings Sporting Goods
Company, Inc. ("Rawlings"), a leading supplier of team sports equipment in North
America; Total Sports, Inc. ("Total Sports"), a sports content Internet company;
and iHigh.com, Inc. ("iHigh.com"), a company developing a network of Internet
web sites focused on high school sports and activities.

Effective June 30, 1999, Bull Run changed its fiscal year end from December 31
to June 30. All amounts appearing in the consolidated financial statements and
accompanying notes for the six months ended June 30, 1998 are unaudited.

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


2.       RESTATEMENT OF FINANCIAL STATEMENTS

In April 2001, the Company became aware that the financial statements of USA
prior to the Host-USA Acquisition, and financial information prepared by USA, as
of and following the Host-USA Acquisition, contained errors resulting from the
use of incorrect methodology used for the accounting for prepaid costs and
expenses and sponsor contract receivables and deferred revenue associated with
the Company's (and USA's) Affinity Events business. The accompanying
consolidated financial statements as of and for the year ended June 30, 2000
have been restated for the correction of such errors.


                                       23
<PAGE>   24


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

<TABLE>
<CAPTION>

                                                                                    PREVIOUSLY
                                                             RESTATED                REPORTED
                                                             --------               ----------
         <S>                                               <C>                      <C>
         YEAR ENDED JUNE 30, 2000:
           Revenue from services rendered                  $  72,000                $  72,000
           Operating income (loss)                            (1,930)                   2,282
           Loss from continuing operations                   (19,857)                  (5,944)
           Net loss                                          (26,696)                 (12,783)
           Earnings (loss) per share:
             Loss from continuing operations               $   (0.68)               $   (0.20)
             Net loss                                      $   (0.92)               $   (0.44)

         AS OF JUNE 30, 2000:
           Current assets                                  $  48,311                $  61,466
           Total assets                                      228,555                  241,851
           Current liabilities                                42,862                   42,245
           Stockholders' equity                               55,707                   69,620
</TABLE>

3.       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. Host, USA and Capital are
included as wholly owned subsidiaries beginning December 17, 1999.

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.

REVENUE RECOGNITION AND RIGHTS FEE EXPENSES - Revenue from services are
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 within the contract. Contractual arrangements with
associations or institutions may also involve net profit sharing arrangements
("profit splits"), pursuant to applicable terms and conditions specified in the
contract. Profit splits are 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 adjusted to actual at the end of the term
specified in the contract.

BARTER TRANSACTIONS - The Company provides advertising and licensing rights to
certain customers or sub-licensees 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
sub-license agreement. Net revenues include approximately $1,800 and operating
expenses include approximately $1,100 for the year ended June 30,


                                       24
<PAGE>   25
2000 related to barter transactions. The Company had no barter transactions
prior to the year ended June 30, 2000.

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 income 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. The Company has a significant amount of revenue generated from
sub-licensing National Affinity Marketing and Production Services Athletic
Association ("NCAA") corporate sponsorship rights to major corporations. The
Company's current contract with the NCAA, which gives the Company the sole
rights to sub-license NCAA corporate partners, expires August 31, 2002.
Approximately 36% of the Company's revenues from continuing operations for the
year ended June 30, 2000 arose from sub-licensing NCAA corporate sponsor rights.
As of June 30, 2000, accounts receivable included approximately $9,286 due from
NCAA corporate sponsors.

INVENTORIES - Inventories, stated at cost, consist of primarily materials and
supplies associated with the Company's printing operations.

PROPERTY AND EQUIPMENT - Property and equipment is stated at cost less
depreciation computed under the straight-line method over the estimated useful
life of the asset, generally from 3 to 10 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 $1,054 in the year ended June 30, 2000; $2 in each of
the six months ended June 30, 1999 and 1998; and $4 in each of the years ended
December 31, 1998 and 1997. Depreciation expense for discontinued operations was
$426 in the year ended June 30, 2000; $219 and $332 in the six months ended June
30, 1999 and 1998, respectively; and $588 and $610 in the years ended December
31, 1998 and 1997, respectively.

INVESTMENT IN AFFILIATED COMPANIES - The Company accounts for its investments in
Gray, Rawlings, iHigh.com and prior to December 17, 1999, Host and Capital, by
the equity method, and its investments in Total Sports, Tarzian and prior to
December 17, 1999, USA, by the cost method. On December 17, 1999, the Company
acquired the capital stock of Host, USA and Capital not then owned, directly or
indirectly, by the Company. The excess of the Company's investment over the
underlying equity of equity method investments, totaling approximately $23,118
and $31,750 as of June 30, 2000 and 1999, respectively, and $29,600 as of
December 31, 1998, is being amortized over 20 to 40 years, with such
amortization (totaling $864 in the year ended June 30, 2000, $549 and $389 in
the six months ended June 30, 1999 and 1998, respectively, and $777 and $610 in
the years ended December 31, 1998 and 1997, respectively) reported as a
reduction in the Company's equity in earnings of affiliated companies. The
Company has accounted for its investments in Host (prior to the December 17,
1999 acquisition) and Rawlings by the equity method on a six-month and one-month
lag basis, respectively. The Company recognizes a gain or loss on the issuance
of shares by an affiliated company resulting in dilution of the Company's
investment. The gain or loss is determined based on the difference between the
Company's post-issuance allocable share of the affiliate's underlying equity,
compared to the Company's allocable share of the affiliate's underlying equity
immediately prior to the issuance. Deferred taxes are provided on recognized
gains.


                                       25
<PAGE>   26
GOODWILL AND OTHER LONG-LIVED ASSETS - Goodwill and purchased intangibles (i.e.,
customer base and trademarks) associated with the Company's acquisition of Host,
USA and Capital is being amortized over 20 years. The carrying value of
goodwill, as well as other long-lived assets, are reviewed if the facts and
circumstances suggest that they may be impaired. If an evaluation is required,
the estimated future undiscounted cash flows associated with these assets would
be compared to their carrying amount to determine if a write down to fair market
value or discounted cash flow value is required. Accumulated amortization of
acquisition intangibles was $2,602 as of June 30, 2000, including $1,939
associated with goodwill.

INCOME TAXES - Income taxes are recognized in accordance with Statement of
Accounting Standards No. 109, "Accounting for Income Taxes," whereby 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 optionholders 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. The value of stock options
issued by the Company in connection with the Host-USA Acquisition, having an
exercise price which was less than the fair value of the shares on December 17,
1999, is included as a component of the Host-USA Acquisition price (see Note 4).

EARNINGS (LOSS) PER SHARE - Basic and diluted earnings (loss) per share are
determined in accordance with Financial Accounting Standards Board Statement No.
128, "Earnings Per Share", whereby 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.

RECENTLY-ISSUED ACCOUNTING STANDARD - In June 1998, the Financial Accounting
Standards Board issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities". The Company will be required to adopt the new Statement
effective July 1, 2000. The Statement will require the Company to recognize all
derivatives on the balance sheet at fair value. The Company's adoption of this
Statement resulted in an increase in Stockholders' Equity and Total Assets of
$3,160 on July 1, 2000. In addition, the Statement could increase the volatility
in earnings and comprehensive income for fiscal reporting periods subsequent to
June 30, 2000 as a result of recognizing the net change in the value of an
interest rate swap agreement during future periods.


4.       HOST-USA ACQUISITION

On December 17, 1999, the Company acquired the stock of Host, USA and Capital
not previously owned, directly or indirectly, by the Company (the "Host-USA
Acquisition"). Aggregate consideration (net of cash acquired) was approximately
$116,900, which included common stock (totaling 11,687 shares) and stock options
(for a total of 2,819 shares of common stock) valued at approximately $52,300,
8% subordinated notes having a face value of approximately $18,600, cash (net of
approximately $9,700 in cash acquired) of $44,800 and transaction expenses of
approximately $1,200.


                                       26
<PAGE>   27

Prior to the Host-USA Acquisition, the Company accounted for its investment in
Host and Capital under the equity method, and for its investment in USA under
the cost method. Beginning December 17, 1999, the financial results of Host, USA
and Capital have been consolidated with those of the Company. The acquisition
has been accounted for under the purchase method of accounting, whereby the
assets and liabilities of the acquired businesses have been included as of
December 17, 1999 based on a preliminary allocation of the purchase price. The
preliminary allocation of the purchase price was based upon estimated fair
values at the date of acquisition and is subject to refinement upon obtaining
certain additional information. The excess of the purchase price over assets
acquired (i.e., goodwill) of approximately $66.4 million is being amortized on a
straight-line basis over 20 years. The estimated fair values of assets and
liabilities acquired are summarized as follows:

<TABLE>
<CAPTION>
                                                              (RESTATED)
         <S>                                                 <C>
         Receivables                                         $  42,218
         Inventories                                               918
         Prepaid costs and expenses                              6,740
         Income taxes receivable                                 2,689
         Property and equipment                                  7,112
         Investment in affiliated companies                     11,320
         Goodwill                                               66,444
         Customer base and trademarks                           24,500
         Other assets                                            1,075
         Current liabilities assumed                           (42,763)
         Deferred income taxes                                     (58)
         Other liabilities assumed                                (330)
                                                             ---------
                                                               119,865
         Less: Investment in Host, Capital and USA
           immediately prior to the acquisition                (14,339)
                                                             ---------
                                                               105,526
         Purchase price in excess of fair values of
           assets and liabilities acquired                      11,330
                                                             ---------
                                                             $ 116,856
                                                             =========

</TABLE>


Host, based in Lexington, Kentucky, and USA, based in Dallas, Texas, provide
media and marketing services to universities, athletics conferences and various
associations representing collegiate sports and, in addition, market and operate
amateur participatory sporting events. Capital has no operations. Effective July
1, 2000, USA was merged into Host.

As a result of the anticipated reorganization following the Host-USA
Acquisition, the Company accrued approximately $195 for costs to close certain
duplicative office facilities and accrued approximately $1,500 in severance
costs for approximately fifty terminated employees of the acquired companies,
primarily in the Affinity Marketing and Production Services and the Affinity
Events business segments. These costs were accrued as part of the preliminary
allocation of the purchase price. The facility consolidation and employee
terminations resulted primarily from combining certain office facilities and
duplicative functions, including management functions, of Host and USA. Although
the Company has finalized its reduction and relocation of employees, it has not
yet completed consolidation of its facilities. Any adjustment to the accrual for
facility consolidation costs subsequent to June 30, 2000 is not expected to be
significant. These adjustments, if any, will be reported as an increase or
decrease in goodwill. Through June 30, 2000, the Company had charged $566 (which
consisted of cash expenditures) against the reserve, and the accrual for future
costs to be incurred was $1,129 as of June 30, 2000.


                                       27
<PAGE>   28

Pro forma operating results, assuming the Host-USA Acquisition had been
consummated as of July 1, 1999, January 1, 1999 and January 1, 1998 for the year
ended June 30, 2000, the six months ended June 30, 1999 and the year ended
December 31, 1998, respectively, would have been as follows:

<TABLE>
<CAPTION>
                                       YEAR ENDED    SIX MONTHS ENDED      YEAR ENDED
                                         JUNE 30,         JUNE 30,         DECEMBER 31,
                                          2000              1999              1998
                                       -----------   ----------------      -----------
                                       (UNAUDITED)      (UNAUDITED)        (UNAUDITED)
                                        (RESTATED)      (RESTATED)         (RESTATED)
<S>                                    <C>           <C>                  <C>
Net revenue                            $ 129,711         $ 53,974         $ 113,289
Operating loss                            (3,317)          (9,898)           (4,315)
Loss from continuing operations          (13,823)         (10,976)           (5,975)
Net loss                                 (20,662)         (10,976)           (5,975)

Loss per share:
   Basic                               $   (0.60)        $  (0.32)        $   (0.17)
   Diluted                             $   (0.60)        $  (0.32)        $   (0.17)

</TABLE>

Pro forma operating income (loss) includes amortization of acquisition
intangibles of $4,545 for the years ended June 30, 2000 and December 31, 1998,
and $2,318 for the six months ended June 30, 1999. The pro forma results do not
include the $11,330 charge for the correction of the purchase price allocation.
These pro forma results are not necessarily indicative of actual results that
might have occurred had the operations and management of the Company and the
acquired companies been combined in prior years.

5.       DISCONTINUED OPERATION

On July 26, 2000, the Company's Board of Directors authorized management to sell
the operating assets of Datasouth, the Company's computer printer manufacturing
operation. The Company's decision to discontinue its Datasouth operations was
attributable to the strategic decision to focus on the sports, affinity
marketing and management businesses acquired on December 17, 1999. Immediately
following the board's authorization, the Company formalized its plan of disposal
and began to aggressively pursue a sale of the assets of Datasouth to a
potential purchaser. The Company consummated the sale of Datasouth on September
29, 2000. Accordingly, the operating results and net assets associated with
Datasouth's computer printer manufacturing business as of and for the year ended
June 30, 2000 and all prior periods presented herein have been reported as
discontinued operations in the accompanying financial statements.

An estimated loss on the sale of Datasouth of $6,522, including a $350 pretax
provision for estimated operating losses during the disposal period, have been
combined with Datasouth's operating results and presented as discontinued
operations in the financial statements for the year ended June 30, 2000. The
proceeds expected to be realized on the sale of Datasouth's assets are based on
management's estimates of the most likely outcome, considering, among other
things, the Company's current discussions with a potential buyer. Management's
estimate of operating losses during the expected disposal period is based on
management's knowledge of customer ordering patterns, industry trends and
estimates of the length of time until a sale might be consummated. Actual
amounts ultimately realized on the sale and losses incurred during the disposal
period could differ materially from the amounts assumed in arriving at the loss
on disposal. To the extent actual proceeds or



                                       28
<PAGE>   29
operating results during the expected disposal period differ from the estimates
that are reported as of June 30, 2000, or as management's estimates are revised,
such differences will be reported as discontinued operations in future periods.

Management expects to use the proceeds from the sale to reduce outstanding debt
under its bank credit agreements and pay transaction expenses estimated to be
less than $100.

Assets and liabilities of the discontinued operations have been reflected in the
consolidated balance sheets as current or noncurrent based on the original
classification of the accounts, except that current assets are presented net of
current liabilities and noncurrent assets are presented net of noncurrent
liabilities. As of June 30, 2000, net noncurrent assets reflect a valuation
allowance of $7,419 to recognize the estimated loss on disposal. The following
is a summary of assets and liabilities of discontinued operations:

<TABLE>
<CAPTION>
                                                                    JUNE 30,                     DECEMBER 31,
                                                              --------------------------         -----------
                                                               2000               1999               1998
                                                              -------            -------         -----------
         <S>                                                  <C>               <C>              <C>
            Current assets:
                Accounts receivable, net                      $  3,166           $  3,660           $  5,615
                Inventories                                      5,501              5,505              5,167
                Other current assets                               328                 82                197
            Current liabilities:
                Accounts payable and accrued expenses           (2,709)            (2,402)            (2,433)
                                                              --------           --------           --------
                                                              $  6,286           $  6,845           $  8,546
                                                              ========           ========           ========

         Noncurrent assets:
             Property, plant and equipment, net of
               accumulated depreciation                       $  2,254           $  2,599           $  2,609
             Goodwill                                            7,419              7,417              7,583
             Other assets                                           38                 63                 70
             Deferred income taxes                               2,093                621                273
             Provision for estimated loss on disposal of
               discontinued operations                          (7,419)
                                                                                 --------           --------
                                                              $  4,385           $ 10,700           $ 10,535
                                                              ========           ========           ========

</TABLE>
The following summarizes revenues and operating results from discontinued
operations:


<TABLE>
<CAPTION>
                                         YEAR ENDED                  SIX MONTHS ENDED              YEARS ENDED
                                          June 30,                      June 30,                   December 31,
                                           2000                1999               1998           1998         1997
                                           ----                ----               ----           ----         ----
                                                                              (unaudited)
<S>                                      <C>                <C>                <C>             <C>          <C>
Revenue from printer operations          $ 24,959           $ 13,636           $ 14,157        $29,848      $ 21,639
Income (loss) from operations                (326)              (338)               (56)           464          (141)

</TABLE>

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, that are expected to remain
with the Company after the disposal of Datasouth's assets.


                                       29
<PAGE>   30

6.       SUPPLEMENTAL CASH FLOW DISCLOSURES

<TABLE>
<CAPTION>
                                                             YEAR ENDED              SIX MONTHS ENDED         YEARS ENDED
                                                              JUNE 30,                    JUNE 30,            DECEMBER 31,
                                                         2000          1999         1998            1998         1997
                                                        -------       ------       -------        -------        ------
                                                                                 (unaudited)
<S>                                                     <C>           <C>          <C>            <C>            <C>
Interest paid                                           $ 8,323       $2,346       $ 2,050        $ 4,404        $2,460
Income taxes paid (recovered), net                          397            3           (25)           (58)

Noncash investing and financing activities:
  Treasury stock issued in business acquisition                                      2,500          2,500
  Deferred payment on investment in stock warrant                                                                 1,421
  Common stock and stock options issued in
     Host-USA Acquisition                                52,258
  Issuance of subordinated notes in Host-USA
     Acquisition                                         18,594

</TABLE>

7.       INVESTMENT IN AFFILIATED COMPANIES

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

<TABLE>
<CAPTION>
                             JUNE 30, 2000                JUNE 30, 1999               DECEMBER 31, 1998
         AFFILIATE        AMOUNT       VOTING %       AMOUNT         VOTING%       AMOUNT            VOTING%
         ---------        ------       --------      ------          ------        ------            -------
     <S>                 <C>           <C>          <C>              <C>           <C>               <C>
     Gray                $46,057        26.2%       $45,513            27.5%       $46,151            27.4%
     Tarzian              10,000        33.5%        10,000            33.5%
     Rawlings              8,071        10.2%        13,008            10.6%        12,422            10.3%
     Total Sports          7,151        10.6%         3,500             7.6%         2,500             7.7%
     iHigh.com             5,416        37.0%
     Host                                             2,747             7.7%         2,896             7.7%
     Capital                                          9,893            48.5%        10,148            48.5%
     USA                                                650             3.0%           650             3.0%
     Other                 1,240
                         -------                    -------                       --------
             Total       $77,935                    $85,311                       $ 74,767
                         =======                    =======                       ========

     </TABLE>

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

<TABLE>
<CAPTION>
                         YEAR ENDED      SIX MONTHS ENDED            YEARS ENDED
                          JUNE 30,            JUNE 30,               DECEMBER 31,
                                         ----------------         -----------------
        AFFILIATE         2000          1999          1998        1998         1997
        ---------         ----          ----          ----        ----         ----
                                                 (unaudited)
     <S>                <C>            <C>          <C>          <C>          <C>
     Gray               $(1,826)       $(757)       $(455)       $6,127       $(844)
     Rawlings            (1,770)         164          501           237
     iHigh.com             (706)
     Host                   492         (149)         (53)          124          25
     Capital              1,091         (255)        (139)          246         220
     Other                   21
                        -------        -----        -----        ------       -----
            Total       $(2,698)       $(997)       $(146)       $6,734       $(599)
                        =======        =====        =====        ======       =====

</TABLE>


                                       30
<PAGE>   31

INVESTMENT IN GRAY AND GAIN ON ISSUANCE OF COMMON SHARES - As of June 30, 2000,
the Company owned approximately 13.1% of Gray's outstanding common stock, shares
of series A and series B preferred stock having an aggregate face value of
$11,750 and warrants to purchase additional shares of Gray's class A and class B
common stock. Gray is a communications company, based in Atlanta, Georgia, that
operates thirteen network affiliated television stations, four daily newspapers,
and other media properties. Certain executive officers of the Company are also
executive officers of Gray.

In October 1999, Gray acquired three television stations for consideration that
included 3,436 shares of Gray's class B common stock valued at approximately
$49,500. As a result of such issuance, the Company's common equity ownership of
Gray was reduced from 16.9% to 13.1% (resulting in a reduction in the Company's
voting interest in Gray from 27.5% to 26.2%). As a result of this dilution, the
Company recognized a $2,492 pretax gain on Gray's issuance of shares in the year
ended June 30, 2000. In July 1998, Gray disposed of a television station and
recognized an after-tax gain of approximately $43,000 in connection with the
disposition. As a result, the Company's equity in Gray's earnings was favorably
impacted by approximately $6,900 in 1998.

The Company provides consulting services to Gray from time to time in connection
with Gray's acquisitions (including acquisition financing) and dispositions. As
a result of the Company's 13.1% equity investment in Gray, approximately 13.1%
of consulting fees charged to Gray is deferred and recognized as consulting fee
income over 40 years. The Company recognized consulting fee income from Gray of
$1,311 for the year ended June 30, 2000; $609 and $652 for the six months ended
June 30, 1999 and 1998, respectively; and $1,618 and $681 for the years ended
December 31, 1998 and 1997, respectively, for services rendered in connection
with certain of Gray's acquisitions and dispositions. As of June 30, 2000 and
1999, income from additional consulting fees of $699 and $608, respectively, has
been deferred and will be recognized as Gray amortizes goodwill associated with
its acquisitions.

The Company owns all of shares of Gray's series A preferred stock entitling the
holder thereof to annual cash dividends of $800 per share, payable quarterly,
which are cumulative. The Company also owns 50% of Gray's series B preferred
stock entitling the holder thereof to annual dividends of $600 per share,
payable quarterly, which are cumulative. Dividends on the series B preferred
stock are 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 $905 for the year ended June 30, 2000; $452 and
$550 for the six months ended June 30, 1999 and 1998, respectively; and $1,072
and $1,100 for the years ended December 31, 1998 and 1997, respectively. In
1998, Gray redeemed $3,805 of the series B preferred stock held by the Company.

In connection with the Company's purchases of Gray's series A and series B
preferred stock in 1996, the Company acquired 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. Of
the total warrants owned by the Company to purchase 1,106 shares of Gray's class
A common stock, 990 are fully vested and exercisable as of June 30, 2000, with
the remaining warrants vesting periodically through 2001. All warrants for
Gray's class A common stock expire in 2006. The Company's warrants for 100
shares of Gray's class B common stock are described under "Investment in
Tarzian" below.

Gray's class A and class B common stock is publicly traded on the New York Stock
Exchange (symbols: GCS and GCS.B, respectively). The aggregate market value of
Gray common stock owned by the Company, which excludes the value of the
Company's investments in Gray


                                       31
<PAGE>   32
preferred stock and warrants to purchase additional shares of Gray's common
stock, was $19,913 on June 30, 2000 and $40,519 on June 30, 1999.

INVESTMENT IN TARZIAN - In January 1999, the Company acquired shares of the
outstanding common stock of Tarzian for $10,000. The acquired shares represent
33.5% of the total outstanding common stock of Tarzian as of June 30, 2000, both
in terms of the number of shares of common stock outstanding and in terms of
voting rights, but such investment represents 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 a complaint with the
United States District Court for the Southern District of Indiana, claiming that
it had a binding contract with the seller to purchase the shares from the seller
prior to the Company's purchase of the shares, and requests judgment providing
that the seller be required to sell the shares to Tarzian. The Company believes
that a binding contract between Tarzian and the seller did not exist prior to
the Company's purchase of the shares, and in any case, the Company's purchase
agreement with the seller provides that in the event that a court of competent
jurisdiction awards title to a person or entity other than the Company, the
purchase agreement is rescinded, and the seller is required to pay the Company
the full $10,000 purchase price, plus interest. 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
has the option of acquiring the Tarzian investment from the Company for $10,000
plus related costs. Gray has the ability to extend the option period in 30-day
increments at a fee of $67 per extension and as of June 30, 2000, has extended
this option period through October 31, 2000. In addition, the Company receives a
fee of $50 per month for services rendered in connection with the original
investment in Tarzian. A portion of the option income and finders fee is
deferred and recognized over 40 years as a result of the Company's equity
investment position in Gray. The Company recognized option and finders fee
income from Gray of $810 for the year ended June 30, 2000, and $222 for the six
months ended June 30, 1999. As of June 30, 2000 and 1999, option and finder fee
income of $152 and $45, respectively, has been deferred and will be recognized
as Gray amortizes goodwill associated with its acquisitions.

The Company received from Gray warrants to acquire 100 shares of Gray's class B
common stock at $13.625 per share, in connection with the option agreement. The
warrants will vest immediately upon Gray's exercise of the option. The warrants
expire 10 years following the date on which Gray exercises its option.

INVESTMENT IN RAWLINGS - In November 1997, the Company entered into an
Investment Purchase Agreement with Rawlings (the "Purchase Agreement"), a
supplier of team sports equipment based near St. Louis, Missouri. Pursuant to
the Purchase Agreement, the Company acquired warrants to purchase approximately
10% of Rawlings' common stock, and has the right, under certain circumstances,
to acquire additional warrants. The Company's total cost to purchase the
warrants pursuant to this agreement (excluding the additional warrants) was
$2,842. Fifty percent of the purchase price, or $1,421, was paid to Rawlings
upon execution of the agreement in November 1997. The remaining fifty percent,
plus interest at 7% per annum from November 21, 1997 until the date of payment,
will be due on the earlier of the date of exercise or the date of expiration of
the warrants. In the event of a partial exercise of warrants, a pro rata portion
of the purchase price with interest accrued thereon will be payable. The
warrants have a four-year term and an exercise price of $12.00 per share, but
are exercisable only if Rawlings' common stock closes at or above $16.50 for
twenty consecutive trading days during the four-year term. During the year ended
June 30, 2000,


                                       32
<PAGE>   33
the Company reduced the book value of its investment in the Rawlings warrant to
zero, recognizing a $2,850 expense. Under the terms of the Purchase Agreement,
the Company also acquired approximately 10.2% of Rawlings' outstanding common
stock in the open market from November 1997 through January 1998. The Company
has the right to appoint two members to Rawlings' board of directors, currently
having a total of seven members.

The Company and Rawlings also entered into a Standstill Agreement, which, among
other things, provides that, for a specified period, the Company will be
restricted in acquiring additional shares of Rawlings' common stock or
participating in certain types of corporate events relating to Rawlings,
including proxy contests and tender offers, subject to certain exceptions.
Pursuant to a Registration Rights Agreement, Rawlings has also granted the
Company rights to have shares issuable upon the exercise of the warrants (and
the additional warrants, if any) registered under the Securities Act of 1933
under certain circumstances.

In its fiscal quarter ended May 31, 2000, Rawlings recognized an after tax
charge of $12,800 associated with its decision to sell its Vic hockey business.
As a result, the Company's pretax equity in losses of Rawlings was negatively
impacted in the year ended June 30, 2000 by approximately $1,300.

Rawlings' common stock is publicly traded on the Nasdaq Stock Market (symbol:
RAWL). The aggregate market value of Rawlings common stock owned by the Company
was $5,437 on June 30, 2000 and $8,260 on June 30, 1999.

INVESTMENT IN TOTAL SPORTS - In 1998, the Company acquired shares of Total
Sports series C convertible preferred stock for $2,500. In January 1999, the
Company invested an additional $1,000 for shares of series C1 convertible
preferred stock. In December 1999 in connection with the Host-USA Acquisition,
the Company acquired Total Sports common stock owned by Host valued at $3,651.
Total Sports, based in Raleigh, North Carolina, is a web site services provider
for amateur and professional sports organizations and conferences, college
athletic departments, and selected corporations. Assuming conversion of all
Total Sports preferred stock, the Company's investment equates to approximately
a 10.6% share of Total Sports capital stock as of June 30, 2000. Dividends on
the series C and series C1 convertible preferred stock are cumulative, and
accrue at $.85 per share per annum and $1.14 per share per annum, respectively,
from the issue date, and are payable quarterly at Total Sports' discretion.
Accumulated and unpaid dividends on outstanding series C and series C1 preferred
stock are to be paid in cash on July 31, 2003. Due to the speculative nature of
the Company's investment in Total Sports, and due to the preference of series A
and series B preferred shareholders with respect to Total Sports dividend
rights, the Company has not recognized dividend income on its preferred stock
investment in Total Sports.

In November 2000, Total Sports was sold to Quokka Sports, Inc. ("Quokka"). In
exchange for its investment in preferred stock and common stock of Total Sports,
the Company received Quokka common stock and warrants to purchase Quokka common
stock. Quokka's common stock was publicly traded on the Nasdaq Stock Market
(symbol: QKKA), until April 2001, when Quokka announced its intention to seek
protection under the Federal Bankruptcy Code. The number of shares of Quokka
common stock ultimately received by the Company in exchange for its Total Sports
capital stock was determined based on the value of Quokka common stock at the
closing date and the rights accorded Total Sports' preferred stockholders.

INVESTMENT IN IHIGH.COM - In connection with the Host-USA Acquisition, the
Company acquired 39.4% of the then outstanding common stock of iHigh.com valued
at $6,122. Subsequently, iHigh.com issued additional shares such that the
Company owns 37% of the outstanding common stock of iHigh.com as of June 30,
2000.


                                       33
<PAGE>   34
INVESTMENTS IN HOST, USA AND CAPITAL - Prior to the Host-USA Acquisition
effective December 17, 1999, the Company was effectively Host's largest
stockholder, owning directly or indirectly approximately 32.5% of Host's
outstanding common stock and 51.5% of Host's preferred stock. The Company's
indirect ownership of Host's common stock and Host's preferred stock was owned
by Capital, in which the Company owned 51.5% of the outstanding common stock.
The Company and Host together were the largest stockholders of USA, with the
Company owning approximately 3% of USA's outstanding capital stock and Host
owning approximately 33.8% of USA's outstanding capital stock. Capital's assets
consisted solely of investments in Host's outstanding common stock and all of
Host's 8% series B preferred stock.

The Company recognized its equity in earnings of Host on a six-month lag basis.
In January 1999, USA sold its investment in broadcast.com, inc., a marketable
security, recognizing an after-tax gain of approximately $40,000. As a result of
Host's equity investment in USA and the Company's equity investment in Host
reported on a six-month lag basis, the Company recognized approximately $1,900
as equity in earnings of affiliates in the year ended June 30, 2000 due to USA's
gain on the disposal of broadcast.com, inc.

SUMMARIZED AGGREGATE FINANCIAL INFORMATION (unaudited) -

The aggregate financial position of affiliated companies accounted for by the
equity method (reflecting Gray as of June 30, 2000, June 30, 1999 and December
31, 1998; combined, for the June 30, 2000 data only, with iHigh.com and certain
other equity investments as of June 30, 2000; combined with Rawlings as of May
31, 2000, May 31, 1999 and November 30, 1998; combined, for the June 30, 1999
and December 31, 1998 data only, with Capital as of June 30, 1999 and December
31, 1998, and Host as of December 31, 1999 and June 30, 1998) is as follows:

<TABLE>
<CAPTION>
                                                                 June 30,
                                                         ------------------------       December 31,
                                                            2000           1999             1998
                                                         ---------      ---------        ---------
                   <S>                                   <C>            <C>              <C>
                   Current assets                        $ 124,272      $ 148,446        $ 144,648
                   Property and equipment                   90,124         71,665           70,614
                   Total assets                            769,437        658,364          644,568
                   Current liabilities                     100,099         64,514           59,699
                   Long-term debt                          382,434        352,090          339,677
                   Total liabilities                       568,274        477,219          462,833
                   Stockholders' equity                    201,163        181,145          181,735

</TABLE>

The aggregate operating results of affiliated companies accounted for by the
equity method (reflecting Gray for the year ended June 30, 2000, the six months
ended June 30, 1999 and 1998, and the years ended December 31, 1998 and 1997;
combined with iHigh.com and certain other equity investments for the year ended
June 30, 2000; combined with Rawlings for the year ended May 31, 2000, the six
months ended May 31, 1999 and 1998, and the years ended November 30, 1998 and
1997; combined with Capital for the six months ended June 30, 1999 and 1998, and
the years ended December 31, 1998 and 1997; combined with


                                       34
<PAGE>   35
Host for the six months ended December 31, 1998 and 1997, and the years ended
June 30, 1998 and 1997) is as follows:

<TABLE>
<CAPTION>

                            YEAR ENDED       SIX MONTHS ENDED            YEARS ENDED
                            JUNE 30,              JUNE 30,               DECEMBER 31,
                                             -------------------         ------------
                              2000           1999          1998        1998          1997
                              ----           ----          ----        ----          ----
<S>                        <C>            <C>            <C>          <C>          <C>
Operating revenue          $ 369,374      $ 190,094      $185,708     $347,850     $294,583
Income from operations        24,708         15,284        24,047       37,351       34,106
Net income (loss)            (23,051)          (938)        5,062       47,546        4,845

</TABLE>

Undistributed earnings of investments accounted for by the equity method amount
to approximately $260 as of June 30, 2000.


8.       PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                           JUNE 30,
                                                         -------------    DECEMBER 31,
                                                         2000     1999       1998
                                                         ----     ----       ----
         <S>                                           <C>        <C>     <C>
         Land                                          $  448     $          $
         Building                                         950
         Leasehold and building improvements              560
         Machinery & equipment                          2,274
         Office furniture and equipment                 3,700      43         38
                                                       ------     ---        ---
                                                        7,932      43         38

         Accumulated depreciation and amortization      1,064      21         24
                                                       ------     ---        ---
                                                       $6,868     $22        $14
                                                       ======     ===        ===

</TABLE>

9.       ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consist of the following:

<TABLE>
<CAPTION>
                                                              JUNE 30,
                                                       --------------------     DECEMBER 31,
                                                         2000          1999        1998
                                                         ----          ----        ----
                                                      (RESTATED)
         <S>                                          <C>             <C>          <C>
         Incurred unbilled costs                       $ 2,279        $            $
         Guaranteed rights fees and profit splits        6,879
         Deferred income                                15,581
         Interest                                        1,030           579        396
         Other                                           4,403           766        178
                                                       -------        ------       ----
                                                       $30,172        $1,345       $574
                                                       =======        ======       ====
</TABLE>

10.      LONG-TERM DEBT AND NOTES PAYABLE

In connection with the Host-USA Acquisition the Company entered into a new
credit agreement with a group of banks on December 17, 1999, as modified in
2000, providing for (a) two term loans (the "Term Loans") for borrowings
totaling $95,000, bearing interest at


                                       35
<PAGE>   36
either the banks' prime rate or the London Interbank Offered Rate ("LIBOR") plus
2.5%, requiring a minimum aggregate principal payment of $10,000 by December 17,
2000, with all amounts outstanding under the term loans due on December 17,
2001; and (b) a revolving loan commitment (the "Revolver") for borrowings of up
to a maximum amount ranging from $25,000 to $35,000 through December 17, 2001,
bearing interest at either the banks' prime rate or LIBOR plus 2.5%. Borrowings
under the Revolver are limited to an amount not to exceed a percentage of
eligible accounts receivable, determined monthly, and such borrowings may
include up to $20,500 in outstanding letters of credit. As of June 30, 2000,
borrowings of $19,200 and letters of credit totaling $3,835 were outstanding
under the Revolver, and additional available borrowing capacity under the
Revolver was $560 at that date. As of June 30, 2000, borrowings totaling $99,900
under the Term Loans and the Revolver were subject to a LIBOR-based rate of
9.31% and borrowings of $14,300 were subject to the banks' prime rate of 9.5%.
Interest on prime rate advances is payable quarterly and at least quarterly on
LIBOR-based borrowings. The credit agreement contains certain financial
covenants, the most restrictive of which requires the maintenance of a debt
service coverage ratio determined quarterly. On September 28, 2000, the Company
amended certain provisions of the credit agreement to, among other things, ease
covenant restrictions. Long-term debt is collateralized by all of the Company's
assets, including all of its investments in affiliated companies.

As a result of issues pertaining to the restatement of financial statements
discussed in Note 2, among other reasons, the Company was not in compliance with
certain financial covenants and other provisions considered to be events of
default under the terms of the credit agreement as of March 31, 2001; however,
the Company obtained a waiver of these events of default. On July 27, 2001, the
Company and its lenders amended certain provisions of the credit agreement to,
among other things, (a) revise future financial covenants; (b) change the
maturity date of the credit agreement from December 17, 2001 to July 1, 2002;
(c) revise the interest rate on the term loans to prime plus 1.5% or LIBOR plus
4.0% and the Revolver to prime plus 1.0% or LIBOR plus 3.5%; and (d) require
principal payments of at least $10,000 on or before October 15, 2001 plus
$10,000 on or before December 15, 2001.

Also in connection with the Host-USA Acquisition, the Company issued
subordinated notes on December 17, 1999, bearing interest at 8%, having an
aggregate face value of $18,594. Interest is payable quarterly until maturity on
January 17, 2003. Payment of interest and principal are subordinate to the bank
credit agreement. The new bank credit agreement and the subordinated notes
provided the necessary financing for the Host-USA Acquisition, and refinanced
all existing bank indebtedness of the Company, Host and USA.

Prior to the Host-USA Acquisition, the Company had long-term debt agreements and
notes with two banks providing for (a) two term notes payable to a bank under
which $42,313 was outstanding on June 30, 1999 and December 31, 1998; (b) two
term notes payable to a bank issued in 1999, under which $1,353 was outstanding
on June 30, 1999; (c) a revolving bank credit facility for borrowings of up to
$3,500, under which $3,392 was outstanding on June 30, 1999 and $2,536 was
outstanding on December 31, 1998; (d) a term note, under which $3,500 was
outstanding on June 30, 1999 and $4,000 was outstanding on December 31, 1998;
(e) a revolving bank credit facility for borrowings of up to $5,000, under which
$4,803 was outstanding on June 30, 1999 and $5,000 was outstanding on December
31, 1998; (f) a bank note in the amount of $10,000 outstanding as of June 30,
1999; and (g) a demand bank note for borrowings of up to $2,000, bearing
interest at the bank's prime rate, under which $2,000 was outstanding as of June
30, 1999 and December 31, 1998. As a result of the potential for future covenant
violations under the credit facilities, the Company classified all of its
long-term debt as current as of June 30, 1999. As of June 30, 1999, the weighted
average interest rate for the term notes



                                       36
<PAGE>   37

was 6.91%, and the weighted average interest rate for the revolving bank notes
and notes payable was 7.75%.

The Company is a party to two interest rate swap agreements, which effectively
modify the interest characteristics of $45,000 of its outstanding long-term
debt. The first agreement, effective January 1, 1999, involves the exchange of
amounts based on a fixed interest rate of 8.58% for amounts currently based on a
variable interest rate of LIBOR plus 2.5% through December 31, 2002, without an
exchange of the $20,000 notional amount upon which the payments are based. The
second agreement, effective January 5, 2000, involves the exchange of amounts
based on a fixed interest rate of 9.21% for amounts currently based on a
variable interest rate of LIBOR plus 2.5% through December 31, 2002 (or December
31, 2004, at the bank's option), without an exchange of the $25,000 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.

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 up to
$75,000, for which he received compensation from the Company during the year
ended June 30, 2000 in the form of 305 restricted shares of the Company's common
stock valued at $1,219. Such agreement provides that if the Company defaults on
its bank loan, the chairman will repay the amount of such loan to the banks. If
he is obligated to pay such amount, he would have the right to purchase certain
of the Company's collateral under such loan as would be necessary for him to
recoup his obligation, with such collateral including the Company's investments
in Gray and Tarzian. In connection with the waiver and amendment in 2001, the
Company's chairman increased his personal guarantee of the Company's debt under
its bank credit agreement to $100,000.


11.      INCOME TAXES

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

<TABLE>
<CAPTION>
                          YEAR ENDED           SIX MONTHS ENDED                            YEARS ENDED
                          JUNE 30,                  JUNE 30,                              DECEMBER 31,
                                             -----------------------                 -----------------------
                            2000             1999               1998                  1998              1997
                            ----             ----               ----                  ----              ----
                         (RESTATED)                        (UNAUDITED)
         <S>            <C>                <C>                  <C>                 <C>                 <C>
         Current:
            Federal     $                  $                    $                   $                    $   50
            State          (271)
                        -------                                                                          ------
                           (271)                                                                             50
         Deferred         4,639             944                     542              (1,599)                982
                        -------            ----                 -------             -------              ------
                        $ 4,368            $944                 $   542             $(1,599)             $1,032
                        =======            ====                 =======             =======              ======


</TABLE>


                                       37
<PAGE>   38
The principal differences between the federal statutory tax rate and the
effective tax rate applicable to continuing operations are as follows:

<TABLE>
<CAPTION>
                                               YEAR              SIX MONTHS ENDED           YEARS ENDED
                                               ENDED                 JUNE 30,               DECEMBER 31,
                                              JUNE 30,         --------------------     --------------------
                                                2000             1999        1998         1998        1997
                                             ---------         --------    --------     --------    --------
                                             (RESTATED)                  (UNAUDITED)
<S>                                          <C>               <C>         <C>          <C>         <C>
Federal statutory tax rate                     34.0%             34.0%       34.0%        34.0%       34.0%
Non-deductible goodwill amortization           (3.6)
Correction of purchase price allocation       (15.9)
State income taxes, net of federal
     benefit                                    1.5
Other, net                                      2.0              (1.9)       (2.7)         7.2         6.1
                                              -----             -----       -----         ----        ----
Effective tax rate                             18.0%             32.1%       31.3%        41.2%       40.1%
                                              =====             =====       =====         ====        ====
</TABLE>

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

<TABLE>
<CAPTION>
                                                                      JUNE 30,
                                                               ----------------------    DECEMBER 31,
                                                                2000           1999         1998
                                                               -------        -------    ------------
                                                              (RESTATED)
          <S>                                                  <C>            <C>        <C>
          Prepaid costs and expenses                           $   668        $              $
          Investment in affiliated companies                     6,877          6,578          6,971
          Property and equipment                                   749
          Other, net                                               916             92              1
                                                               -------        -------        -------
             Gross deferred tax liabilities                      9,210          6,670          6,972
                                                               -------        -------        -------

          Allowance for doubtful accounts                         (809)
          Accrued expenses                                        (727)
          Deferred income                                         (570)          (262)          (263)
          Nonqualified stock options outstanding                (1,293)
          Charitable contributions                                 (75)
          Net operating loss carryforward                       (4,838)          (993)          (535)
          Alternative Minimum Tax credit carryforward             (490)          (385)          (492)
                                                               -------        -------        -------
             Gross deferred tax assets                          (8,802)        (1,640)        (1,290)
                                                               -------        -------        -------

             Total deferred taxes, net                         $   408        $ 5,030        $ 5,682
                                                               =======        =======        =======
</TABLE>

Income (loss) on the operations of the discontinued segment is presented net of
a tax (provision) benefit of $10, $72, $(36), $(255) and $(92) for the year
ended June 30, 2000, the six months ended June 30, 1999 and 1998, and the years
ended December 31, 1998 and 1997, respectively. The loss on disposal of the
discontinued segment for the year ended June 30, 2000 is presented net of an
income tax benefit of $1,247.

As of June 30, 2000, the Company has a net operating loss carryforward for tax
purposes of approximately $14,200 expiring beginning in 2018 to reduce Federal
taxable income in the future. The Company also has as of June 30, 2000 an
Alternative Minimum Tax ("AMT") credit carryforward of $490, and a business
credit carryforward of $142, to reduce regular Federal tax liabilities in the
future.


                                       38
<PAGE>   39

12. STOCK OPTIONS

The Company's 1994 Long Term Incentive Plan (the "1994 Plan") reserves 7,200
shares of the Company's common stock for issuance of stock options, restricted
stock awards and stock appreciation rights, following shareholder approval on
September 14, 1999 of an increase in the number of shares available for grant
under the 1994 Plan. 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, options for an aggregate of 2,819
exercisable shares were granted to former holders of options for Host and USA
shares, at exercise prices ranging from $.34 to $4.06 per share. As of June 30,
2000, June 30, 1999 and December 31, 1998, there were 2,207, 1,478 and 1,528
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 350 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 160 as of June 30, 2000 and 170 as of June 30, 1999 and December 31,
1998.

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

<TABLE>
<CAPTION>
                                                                          OPTION        OPTION
                                                                          SHARES      PRICE RANGE
                                                                         --------    -------------
                <S>                                                      <C>         <C>
                Outstanding as of January 1, 1997                         2,035      $0.75 - $2.68
                  Grants                                                    135      $2.31 - $2.44
                  Exercised                                                (258)     $0.75 - $1.48
                  Forfeited                                                 (30)         $2.44
                                                                         ------
                OUTSTANDING AS OF DECEMBER 31, 1997                       1,882      $0.75 - $2.68
                  Grants                                                     50      $3.19 - $4.38
                  Exercised                                                (254)     $0.88 - $0.96
                                                                         ------
                OUTSTANDING AS OF DECEMBER 31, 1998                       1,678      $0.75 - $4.38
                  Grants                                                     50          $3.69
                  Exercised                                                (198)     $0.88 - $2.68
                                                                         ------
                OUTSTANDING AS OF JUNE 30, 1999                           1,530      $0.75 - $4.38
                  Grants                                                  3,004      $0.34 - $4.25
                  Exercised                                                (652)     $0.34 - $4.06
                  Forfeited                                                 (24)     $2.31 - $2.41
                                                                         ------
                OUTSTANDING AS OF JUNE 30, 2000                           3,858      $0.34 - $4.38
                                                                         ======
                                             EXERCISABLE AS OF:
                                              DECEMBER 31, 1997           1,287      $0.75 - $2.68
                                              DECEMBER 31, 1998           1,387      $0.75 - $4.38
                                                  JUNE 30, 1999           1,363      $0.75 - $4.38
                                                  JUNE 30, 2000           3,594      $0.34 - $4.38
</TABLE>

The weighted average per share fair value of options granted was $1.85 for the
year ended June 30, 2000, $1.98 for the six months ended June 30, 1999, and
$1.59 and $1.26 for the years ended December 31, 1998 and 1997. As of June 30,
2000, the number of outstanding shares under option, weighted average option
exercise price and weighted average remaining option contractual life is as
follows: 75 exercisable shares at $.75 per share, expiring in 2.3 years; 526
exercisable shares at $.88 per share, expiring in 4.0 years; 150 exercisable
shares at $1.50 per share, expiring in 4.3 years; 380 exercisable shares at
$2.63 per share, expiring in 1.9 years; 45 shares at $2.40 per share, expiring
in 6.5 years (23 shares of which were

                                       39
<PAGE>   40

exercisable); 50 shares at $3.59 per share, expiring in 7.9 years (23 shares of
which were exercisable); 60 shares at $3.73 per share expiring in 8.7 years (20
shares of which were exercisable); 2,397 exercisable shares at $1.03 per share
expiring in 4.4 years; and 175 non-exercisable shares at $4.25 per share
expiring in 9.8 years.

Pro forma net income and earnings per share required by FASB Statement No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") has 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
risk-free interest rate of 6.32%, dividend yield of 0.0%, a volatility factor of
 .632, and a weighted-average expected life for the options of four to six years.
Had compensation cost been measured based on the fair value based accounting of
FAS 123, net income (loss) would have been $(26,846), or $(.92) per share (basic
and diluted), for the year ended June 30, 2000; $(2,303), or $(.10) per share
(basic and diluted), for the six months ended June 30, 1999; $2,224, or $.10 per
share (basic and diluted), for the year ended December 31, 1998; and $(1,900),
or $(.09) per share (basic and diluted), for the year ended December 31, 1997.
These pro forma results are provided for comparative purposes only and do not
purport to be indicative of what would have occurred had compensation cost been
measured under FAS 123 or of results that may occur in the future. Since FAS 123
is applicable only to options granted subsequent to December 31, 1994, its pro
forma effect will not be fully reflected until at least the year ending June 30,
2001.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The aggregate fair value of the Company's investment in affiliated companies was
approximately $63,000, compared to the carrying value of $77,935, as of June 30,
2000; $105,000, compared to the carrying value of $85,311, as of June 30, 1999;
and $88,000, compared to the carrying value of $74,767, as of December 31, 1998.
The estimate of fair value was based on, in the case of publicly-traded Gray and
Rawlings, quoted market prices on the New York Stock Exchange and the Nasdaq
Stock Market as of June 30, 2000 and 1999, and December 31, 1998; in the case of
Tarzian, acquisition cost; in the case of Total Sports and iHigh.com, recent
transactions in its capital stock; in the case of privately-held Host, USA and
Capital, for June 30, 1999 and December 31, 1998, the negotiated Host-USA
Acquisition per share purchase price for shares not then owned by the Company;
and management estimates.

The fair value of the Company's interest rate swap agreements, having an
aggregate notional amount of $45,000 as of June 30, 2000, $20,000 as of June 30,
1999 and $24,000 as of December 31, 1998, is not recognized in the financial
statements. If, in the future, an interest rate swap agreement was terminated,
any resulting gain or loss would be deferred and amortized to interest expense
over the initial remaining life of the interest rate swap agreement. In the
event of early extinguishment of a designated debt obligation, any realized or
unrealized gain or loss from the swap would be recognized in the statement of
operations coincident with the extinguishment. During the year ended June 30,
2000, the Company amended one of its agreements to change the termination date
from December 31, 2007 to December 31, 2002, resulting in a cash settlement of
$882, which was deferred and recognized as income ratably over the remaining
term of the agreement. As of June 30, 2000, deferred income on the settlement to
be recognized over the remaining 30 months of the agreement was $825. The
estimated amount to be received on terminating the swap agreements, if the
Company had elected to do so, was approximately $511 and $432 as of June 30,
2000 and 1999, respectively.


                                       40
<PAGE>   41

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.

14. EARNINGS (LOSS) PER SHARE

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

<TABLE>
<CAPTION>                                                                   SIX MONTHS ENDED                   YEARS ENDED
                                                       YEAR ENDED               JUNE 30,                       DECEMBER 31,
                                                        JUNE 30,       --------------------------      -------------------------
                                                          2000            1999            1998            1998           1997
                                                       ----------      ----------      ----------      ----------     ----------
                                                       (RESTATED)                     (UNAUDITED)
<S>                                                    <C>             <C>             <C>             <C>            <C>
Income (loss) from continuing operations               $  (19,857)     $   (1,995)     $   (1,190)     $    2,279     $   (1,539)
Income (loss) from discontinued operations                 (6,839)           (266)            (92)             81           (234)
                                                       ----------      ----------      ----------      ----------     ----------
Net income (loss)                                      $  (26,696)     $   (2,261)     $   (1,282)     $    2,360     $   (1,773)
                                                       ==========      ==========      ==========      ==========     ==========
Weighted average number of common shares
   outstanding for basic earnings (loss) per share         29,044          22,330          22,098          22,189         21,302
Effect of dilutive employee stock options                                                                     993
                                                       ----------      ----------      ----------      ----------     ----------
Adjusted weighted average number of common
   shares and assumed conversions for diluted
   earnings (loss) per share                               29,044          22,330          22,098          23,182         21,302
                                                       ==========      ==========      ==========      ==========     ==========
Basic earnings (loss) per share:
Income (loss) from continuing operations               $    (0.68)     $    (0.09)     $    (0.05)     $     0.10     $    (0.07)
Loss from discontinued operations                           (0.24)          (0.01)          (0.01)           0.01          (0.01)
                                                       ----------      ----------      ----------      ----------     ----------
Net income (loss)                                      $    (0.92)     $    (0.10)     $    (0.06)     $     0.11     $    (0.08)
                                                       ==========      ==========      ==========      ==========     ==========
Diluted earnings (loss) per share:
Income (loss) from continuing operations               $    (0.68)     $    (0.09)     $    (0.05)     $     0.10     $    (0.07)
Loss from discontinued operations                           (0.24)          (0.01)          (0.01)           0.00          (0.01)
                                                       ----------      ----------      ----------      ----------     ----------
Net income (loss)                                      $    (0.92)     $    (0.10)     $    (0.06)     $     0.10     $    (0.08)
                                                       ==========      ==========      ==========      ==========     ==========
</TABLE>

The effect of potentially dilutive employee stock options not considered above
because they were anti-dilutive is 1,831 shares for the year ended June 30,
2000; 927 shares and 1,084 shares for the six months ended June 30, 1999 and
1998, respectively; and 847 shares for the year ended December 31, 1997.

15. RETIREMENT PLANS

The Company has three 401(k) defined contribution benefit plans, two of which
pertain to the employees of Host and USA, whereby employees of the Company may
contribute a portion of their gross pay to the plan subject to limitations set
forth by the Internal Revenue Service. 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
plan were $349 for the year ended June 30, 2000 (including contributions made to
the Host and USA plans subsequent to the Host-USA Acquisition effective date of
December 17, 1999), $163 and $140 for the six months ended June 30, 1999 and
1998, respectively, and $252 and $208 for the years ended December 31, 1998 and
1997, respectively.


                                       41
<PAGE>   42

16. COMMITMENTS AND CONTINGENCIES

The Company commits under certain contracts, the nature and terms of which vary,
to the payment of guaranteed rights fees. Future guaranteed rights fee
commitments at June 30, 2000 total approximately $92,000.

The Company is also committed under contracts, the nature and terms of which
vary, projects to share the net profits ("profit splits") with other parties to
the contract. Profit split expense for the period December 17, 1999 (the
effective date of the Host-USA Acquisition) through June 30, 2000 was $6,705.

The Company is obligated under its contract with the NCAA expiring August 31,
2002 to issue an irrevocable letter of credit in contractually determined
amounts to guarantee the Company's payments to the NCAA for each contract
period. As of June 30, 2000, the outstanding letter of credit for the benefit of
the NCAA was $3,625. The maximum letter of credit contractual requirement during
the remainder of the NCAA contract in 2002 is $20,000. In July 2001, the Company
announced that it had reached an agreement with CBS Sports for the exclusive
right to administer the NCAA Corporate Partner Program, along with other NCAA
marketing programs, beginning in September 2002 through August 2013. The new
agreement with CBS Sports will likewise require the Company to issue an
irrevocable letter of credit to guarantee each of the Company's annual
guaranteed rights fee payments to CBS Sports.

The Company has a 25% interest and NBA Properties, Inc. ("NBA") has a 75%
interest in a joint venture, Hall of Fame Properties, LLC ("HOFP"). Under a
contract executed in 1998, HOFP was granted exclusive marketing rights by the
Naismith Memorial Basketball Hall of Fame ("HOF") for the HOF. Under the terms
of the contract, HOFP solicits advertising and sponsorship revenues for the HOF
intended to supplement funding for the museum facility. In exchange for these
exclusive marketing rights, HOFP pays HOF a guaranteed amount of $2,117 per year
during the first six years of the 10-year contract. The agreement also includes
a revenue sharing arrangement between the parties based on certain revenue
thresholds achieved in excess of the initial guarantee by HOFP. The joint
venture agreement with NBA provides that the Company's portion of the
liabilities associated with this joint venture will not exceed $530 annually.

Bull Run's executive offices are leased from a company affiliated with a
principal stockholder and director of the Company under an operating lease
expiring in 2002. Host and USA have various operating leases for facilities and
equipment expiring in 2001 through 2006. The Company's total rental expense was
$1,843 for the year ended June 30, 2000, $226 and $263 for the six months ended
June 30, 1999 and 1998, respectively, and $481 and $328 for the years ended
December 31, 1998 and 1997, respectively. The minimum annual rental commitments
under these and other leases with an original lease term exceeding one year are
$2,687, $2,097, $1,484, $1,176 and $961 for the years ending June 30, 2001,
2002, 2003, 2004 and 2005, respectively, and $480 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.


                                       42
<PAGE>   43

17. SEGMENT DATA (UNAUDITED)

Following the Host-USA Acquisition, the Company had 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 and high school athletics
("Affinity Marketing and Production Services", formerly named the "Collegiate"
segment); (b) event management and marketing services ("Affinity Events"); (c)
association management services ("Affinity Management Services"); and (d)
consulting services ("Consulting"). A fifth business segment, associated with
computer printer manufacturing and related sales and services, has been
classified as a discontinued segment. Information for each of the Company's
segments associated with continuing operations is presented below. Operating
results for the Affinity Marketing and Production Services, Affinity Events and
Affinity Management Services segments only include results for the period
December 17, 1999 (effective date of the Host-USA Acquisition) through June 30,
2000.

<TABLE>
<CAPTION>                                                       SIX MONTHS ENDED          YEAR ENDED
                                                 YEAR ENDED          JUNE 30,             DECEMBER 31,
                                                  JUNE 30,    --------------------    ----------------------
                                                    2000        1999        1998        1998          1997
                                                  --------    --------    --------    --------      --------
                                                 (RESTATED)
<S>                                               <C>           <C>       <C>         <C>           <C>
Net revenues, continuing
    operations:
  Affinity Marketing and
      Production Services                         $ 54,443      $          $            $            $
  Affinity Events                                   11,312
  Affinity Management Services                       4,934
  Consulting                                         1,311        609          652        1,618          681
                                                  --------      -----      -------      -------      -------
                                                  $ 72,000      $ 609      $   652      $ 1,618      $   681
                                                  ========      =====      =======      =======      =======

Income (loss) from continuing operations:
  Affinity Marketing and
      Production Services                         $  4,354      $          $            $            $
  Affinity Events                                   (2,551)
  Affinity Management Services                         568
  Consulting                                         1,311        609          652        1,618          681
  Amortization of acquisition
    intangibles                                     (2,602)
  Unallocated general and
    administrative costs                            (3,010)      (693)        (691)      (1,312)      (1,039)
                                                  --------      -----      -------      -------      -------
                                                  $ (1,930)     $ (84)     $   (39)     $   306      $  (358)
                                                  ========      =====      =======      =======      =======
</TABLE>


                                       43
<PAGE>   44

<TABLE>
<CAPTION>                                                       SIX MONTHS ENDED           YEAR ENDED
                                                 YEAR ENDED          JUNE 30,              DECEMBER 31,
                                                  JUNE 30,    --------------------    ----------------------
                                                    2000        1999        1998        1998          1997
                                                  --------    --------    --------    --------      --------
                                                 (restated)
<S>                                               <C>         <C>         <C>         <C>           <C>
Depreciation expense,
    continuing operations:
  Affinity Marketing and
      Production Services                         $    692      $          $            $            $
  Affinity Events                                      176
  Affinity Management Services                         181
  Unallocated general and
    administrative costs                                 5          2            2            4            4
                                                  --------      -----      -------      -------      -------
                                                  $  1,054      $   2      $     2      $     4      $     4
                                                  ========      =====      =======      =======      =======

Capital expenditures,
    continuing operations:
  Affinity Marketing and
      Production Services                         $    910      $          $            $            $
  Affinity Events                                       47
  Affinity Management Services                         182
  Unallocated general and
    administrative expenditures                          7         10                                     12
                                                  --------      -----      -------      -------      -------
                                                  $  1,146      $  10      $            $            $    12
                                                  ========      =====      =======      =======      =======
</TABLE>


<TABLE>
<CAPTION>
                                                                           JUNE 30,          JUNE 30,
                                                                             2000              1999
                                                                           --------          --------
                                                                          (RESTATED)
               <S>                                                         <C>               <C>
               Total assets, continuing operations:
                 Affinity Marketing and Production Services                $ 31,811          $
                 Affinity Events                                              7,151
                 Affinity Management Services                                 9,917
                 Investments in affiliated companies                         77,935            85,311
                 Goodwill, customer base and trademarks                      88,342
                 Net assets of discontinued segment                          10,671            17,545
                 Other                                                        2,728             1,461
                                                                           --------          --------
                                                                           $228,555          $104,317
                                                                           ========          ========
</TABLE>


                                       44
<PAGE>   45

                               SUPPLEMENTARY DATA

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

<TABLE>
<CAPTION>
                                                                                 QUARTERS ENDED
                                                         ----------------------------------------------------------------
                                                         SEPTEMBER 30,    DECEMBER 31,       MARCH 31,           JUNE 30,
                                                             1999            1999              2000               2000
                                                         -------------    ------------       ---------          ---------
                                                                           (RESTATED)        (RESTATED)         (RESTATED)
<S>                                                      <C>              <C>                <C>                <C>
Revenue from services rendered                             $    670         $  6,720          $ 39,426          $ 25,184
Operating income (loss)                                         270             (354)            1,088            (2,934)
Income (loss) from continuing operations                         23          (11,278)           (1,935)           (6,667)
Income (loss) from discontinued operations                      460              (56)             (141)           (7,102)
Net income (loss)                                               483          (11,334)           (2,076)          (13,769)
Income (loss) from continuing operations
   per share:
    Basic                                                  $   0.00         $  (0.47)         $  (0.06)         $  (0.19)
    Diluted                                                $   0.00         $  (0.47)         $  (0.06)         $  (0.19)
Earnings (loss) per share:
    Basic                                                  $   0.02         $  (0.47)         $  (0.06)         $  (0.39)
    Diluted                                                $   0.02         $  (0.47)         $  (0.06)         $  (0.39)
Weighted average number of shares:
    Basic                                                    22,467           24,080            34,700            34,928
    Diluted                                                  23,310           25,321            34,700            34,928

<CAPTION>
                                                         SEPTEMBER 30,    DECEMBER 31,       MARCH 31,           JUNE 30,
                                                             1998            1998              1999                1999
                                                         -------------    ------------       ---------          ---------
<S>                                                      <C>              <C>                <C>                <C>
Revenue from services rendered                             $    964         $      2          $    195          $    414
Operating income (loss)                                         657             (312)             (201)              117
Income (loss) from continuing operations                      4,058             (589)           (1,074)             (921)
Loss from discontinued operations                               (18)             191                17              (283)
Net income (loss)                                             4,040             (398)           (1,057)           (1,204)
Income (loss) from continuing operations
   per share:
    Basic                                                  $   0.18         $  (0.03)         $  (0.05)         $  (0.04)
    Diluted                                                $   0.17         $  (0.03)         $  (0.05)         $  (0.04)
Earnings (loss) per share:
    Basic                                                  $   0.18         $  (0.02)         $  (0.05)         $  (0.05)
    Diluted                                                $   0.17         $  (0.02)         $  (0.05)         $  (0.05)
Weighted average number of shares:
    Basic                                                    22,283           22,277            22,264            22,396
    Diluted                                                  23,285           22,277            22,264            22,396
</TABLE>


                                       45
<PAGE>   46

                                     PART IV

ITEM 14. 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' Reports:

                  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 at June 30, 2000
                                    (restated), June 30, 1999 and December 31,
                                    1998
                           Consolidated Statements of Operations for the year
                                    ended June 30, 2000 (restated), the six
                                    months ended June 30, 1999 and 1998
                                    (unaudited), and the years ended December
                                    31, 1998 and 1997
                           Consolidated Statements of Stockholders' Equity for
                                    the year ended June 30, 2000 (restated), the
                                    six months ended June 30, 1999 and the years
                                    ended December 31, 1998 and 1997
                           Consolidated Statements of Cash Flows for the year
                                    ended June 30, 2000 (restated), the six
                                    months ended June 30, 1999 and 1998
                                    (unaudited) and the years ended December 31,
                                    1998 and 1997
                           Notes to Consolidated Financial Statements
                           Supplementary Data, Selected Quarterly Financial Data
                                    (Unaudited)

                  The consolidated financial statements of Gray Communications
                  Systems, Inc. and Gray's "Schedule II - Valuation and
                  qualifying accounts" and the independent auditors reports
                  thereon dated January 31, 2000, filed on pages F-1 through
                  F-29 of Bull Run's Form 10-K Annual Report for the year ended
                  June 30, 2000 and incorporated by reference herein.

                  The condensed consolidated financial statements of Gray
                  Communications Systems, Inc. as of June 30, 2000 and for the
                  six months ended June 30, 2000 and 1999 (Unaudited), file on
                  pages F-30 through F-36 of Bull Run's Form 10-K Annual Report
                  for the year ended June 30, 2000 and incorporated by reference
                  herein.

                  The consolidated financial statements of Rawlings Sporting
                  Goods Company, Inc. and the report of independent public
                  accountants thereon dated December 14, 1999 (except as to the
                  matter discussed in Note 2 to Rawlings' consolidated financial
                  statements, as to which the date is December 28, 1999), on
                  pages F-37 through F-54 of Bull Run's Form 10-K Annual Report
                  for the year ended June 30, 2000 and incorporated by reference
                  herein.

                  The consolidated financial statements of Rawlings Sporting
                  Goods Company, Inc. as of May 31, 2000 and August 31, 1999,
                  and for the nine months ended May 31, 2000 and 1999
                  (Unaudited), on pages F-55 through F-61 of Bull Run's Form
                  10-K Annual Report for the year ended June 30, 2000 and
                  incorporated by reference herein.

         (2)      The following consolidated financial statement schedule of
                  Bull Run Corporation is included in Item 14(d):
                           Schedule II - Valuation and qualifying accounts


                                       46
<PAGE>   47

                  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

            None

(c)      Exhibits

<TABLE>
<CAPTION>
            Exhibit
            Numbers                       Description
            -------                       -----------
            <S>         <C>
            (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 (a)

            (3.2)       Certificate of Amendment to Articles of Incorporation,
                        filed November 29, 1994 (a)

            (3.3)       Bylaws of the Registrant (a)

            (3.4)       Articles of Incorporation of Bull Run Corporation
                        (formerly, BR Holding, Inc.) (g)

            (3.5)       Bylaws of Bull Run Corporation (formerly, BR Holding,
                        Inc.) (g)

            (10.1)      Amended and Restated 1994 Long Term Incentive Plan (g)

            (10.2)      Non-Employee Directors' 1994 Stock Option Plan (a)

            (10.3)      1987 Non-Qualified Stock Option Plan (b)

            (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)

            (10.5)      Credit Agreement and among BR Holding, Inc. (formerly,
                        Bull Run Corporation), Capital Sports Properties, Inc.,
                        Host Communications, Inc., Universal Sports America,
                        Inc. and Datasouth Computer Corporation, as Borrowers,
                        Bull Run Corporation (formerly, BR Holding, Inc.), as a
                        Guarantor, and Bank of America, N.A. and Bank One,
                        Kentucky, N.A., as Issuing Banks, First Union National
                        Bank, as Syndication Agent for the Issuing Banks and the
                        Lenders, and Bank of America, N.A., as Administrative
                        Agent for the Issuing Banks and the Lenders, dated
                        December 17, 1999 (h)

            (10.6)      Gray Communications Systems, Inc. Warrant dated
                        September 24, 1996 (731,250 shares of Gray class A
                        common stock) (c)

            (10.7)      Gray Communications Systems, Inc. Warrant dated
                        September 24, 1996 (375,000 shares of Gray class A
                        common stock) (c)

            (10.8)      Investment Purchase Agreement dated November 21, 1997 by
                        and between Rawlings Sporting Goods Company, Inc. and
                        Bull Run Corporation (d)

            (10.9)      Common Stock Purchase Warrant dated November 21, 1997
                        issued by Rawlings Sporting Goods Company, Inc. to Bull
                        Run Corporation (d)

            (10.10)     Standstill Agreement dated November 21, 1997 by and
                        between Rawlings Sporting Goods Company, Inc. and Bull
                        Run Corporation (d)
</TABLE>


                                       47
<PAGE>   48

<TABLE>
<CAPTION>
            Exhibit
            Numbers                       Description
            -------                       -----------
            <S>         <C>
            (10.11)     Amendment Number One to Standstill Agreement dated April
                        23, 1999 by and between Rawlings Sporting Goods Company,
                        Inc. and Bull Run Corporation (f)

            (10.12)     Registration Rights Agreement dated November 21, 1997 by
                        and between Rawlings Sporting Goods Company, Inc. and
                        Bull Run Corporation (d)

            (10.13)     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)

            (21)        List of Subsidiaries of Registrant (i)

            (23.1)      Consent of Ernst & Young LLP - Bull Run Corporation (x)

            (23.2)      Consent of Ernst & Young LLP - Gray Communications
                        Systems, Inc. (x)

            (23.3)      Consent of Arthur Andersen LLP - Rawlings Sporting Goods
                        Company, Inc. (x)
</TABLE>

       (a)  Filed as an exhibit to Registration Statement on Form S-4
            (Registration No. 33-81816), effective November 3, 1994 and
            incorporated by reference herein

       (b)  Filed as an exhibit to Form 10-K Annual Report for the year ended
            December 31, 1988 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 8-K Current Report dated as of December
            17, 1999 and incorporated by reference herein

       (i)  Filed as an exhibit to Form 10-K Annual Report for the year ended
            June 30, 2000 and incorporated by reference herein

       (x)  Filed herewith

(d)    Financial Statement Schedules

       The response to this section is submitted as part of Item 14(a)(1) and
Item 14(a)(2).


                                       48
<PAGE>   49

                                   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 July 27, 2001.

                                 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.

<TABLE>
<CAPTION>
             Signature                                     Title                           Date
             ---------                                     -----                           ----
<S>                                                   <C>                              <C>


/s/ ROBERT S. PRATHER, JR.                            President, Chief                 July 27, 2001
----------------------------------------              Executive Officer and
Robert S. Prather, Jr.                                Director
                                                      (Principal Executive
                                                      Officer)


/s/ GERALD N. AGRANOFF                                Director                         July 27, 2001
----------------------------------------
Gerald N. Agranoff


/s/ JAMES W. BUSBY                                    Director                         July 27, 2001
----------------------------------------
James W. Busby


/s/ FREDERICK J. ERICKSON                             Vice President -                 July 27, 2001
----------------------------------------              Finance and
Frederick J. Erickson                                 Treasurer
                                                      (Principal Accounting
                                                      and Financial Officer)


/s/ W. JAMES HOST                                     Director                         July 27, 2001
----------------------------------------
W. James Host


/s/ HILTON H. HOWELL, JR.                             Vice President,                  July 27, 2001
----------------------------------------              Secretary  and Director
Hilton H. Howell, Jr.


/s/ MONTE C. JOHNSON                                  Director                         July 27, 2001
----------------------------------------
Monte C. Johnson


/s/ J. MACK ROBINSON                                  Chairman of the Board            July 27, 2001
----------------------------------------
J. Mack Robinson

</TABLE>


                                       49
<PAGE>   50

                         REPORT OF INDEPENDENT AUDITORS



We have audited the consolidated financial statements of Bull Run Corporation as
of June 30, 2000, June 30, 1999 and December 31, 1998, and for the year ended
June 30, 2000, for the six months ended June 30, 1999 and for each of the years
ended December 31, 1998 and 1997, and have issued our report thereon dated
September 28, 2000 (except for Notes 2, 4 and 10, as to which the date is July
27, 2001), included elsewhere in this Form 10-K/A-1. Our audits also included
the financial statement schedule of Bull Run Corporation listed in Item 14(a).
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. The financial
statements of Rawlings Sporting Goods Company, Inc., (a corporation in which the
Company has a 10% interest), as of August 31, 1999 and 1998 and for the years
then ended, have been audited by other auditors whose report has been furnished
to us; insofar as our opinion relates to data included for Rawlings Sporting
Goods Company, Inc., it is based solely on their report.

In our opinion, based on our audits and the report of other auditors, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

As more fully described in Note 2 to the consolidated financial statements, the
Company restated certain amounts previously reported as of and for the year
ended June 30, 2000.



                              /s/ ERNST & YOUNG LLP


Charlotte, North Carolina
September 28, 2000


                                       50
<PAGE>   51

                              BULL RUN CORPORATION

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                   Additions
                           Balance at    Charged to        Charged to                        Balance at
                           Beginning     Costs and            Other                            End of
Description                Of Period      Expenses         Accounts(1)      Deductions(2)      Period
-----------                ----------    ----------       ------------      -------------    ----------
<S>                        <C>           <C>              <C>               <C>              <C>
YEAR ENDED JUNE 30, 2000

Allowance for
doubtful accounts          $    0         $267,000         $1,999,000         $1,111,000     $1,155,000
</TABLE>

There was no allowance for doubtful accounts reported for continuing operations
prior to the year ended June 30, 2000.

(1)      Represents amounts recorded in connection with the Host-USA
         Acquisition.
(2)      "Deductions" represent write-offs of amounts not considered
         collectible.


                                       51