##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

x   
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

OR

o   
TRANSITION REPORT UNDER 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 of incorporation
or organization) |  | (I.R.S. Employer
Identification No.)

4370 Peachtree Road, N.E., Atlanta, GA 30319
(Address of principal executive offices) (Zip Code)

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

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

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 37,180,695 shares of Common
Stock, par value $.01 per share, were outstanding as of April 30, 2002.





---



##### 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BULL RUN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)

|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |         |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | --------- | ------- | -------- | ------- | ------- | ------- | 
|                                                                                                                                                             |                                                                                                                                                |                            |         | March 31, |         | June 30,
|                                                                                                                                                             |                                                                                                                                                |                            |         | 2002      |         | 2001    
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |         
|ASSETS                                                                                                                                                       |                                                                                                                                                |                            |         |           |         |          |         |        
|Current assets:                                                                                                                                              |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             | Cash and cash equivalents                                                                                                                      |                            | $       | 217       |         |          | $       | 2,637   |        
|                                                                                                                                                             | Accounts receivable, net of allowance of $345 and $545 as of
March 31, 2002 and June 30, 2001, respectively                                    |                            |         | 28,019    |         |          |         | 29,547  |        
|                                                                                                                                                             | Inventories                                                                                                                                    |                            |         | 547       |         |          |         | 494     |        
|                                                                                                                                                             | Prepaid costs and expenses                                                                                                                     |                            |         | 2,912     |         |          |         | 3,117   |        
|                                                                                                                                                             | Income taxes receivable                                                                                                                        |                            |         | 4,217     |         |          |         | 4,626   |        
|                                                                                                                                                             | Deferred income taxes                                                                                                                          |                            |         | 121       |         |          |         | 121     |        
|                                                                                                                                                             | Net current assets of discontinued segment                                                                                                     |                            |         | 113       |         |          |         |         |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | Total current assets       |         |           | 36,146  |          |         |         | 40,542  | 
|Property and equipment, net                                                                                                                                  |                                                                                                                                                |                            | 5,882   |           |         |          | 6,623   |        
|Investment in affiliated companies                                                                                                                           |                                                                                                                                                |                            | 27,744  |           |         |          | 50,399  |        
|Goodwill                                                                                                                                                     |                                                                                                                                                |                            | 57,862  |           |         |          | 57,862  |        
|Customer relationships and trademarks                                                                                                                        |                                                                                                                                                |                            | 24,094  |           |         |          | 25,026  |        
|Deferred income taxes                                                                                                                                        |                                                                                                                                                |                            | 19,261  |           |         |          | 11,069  |        
|Other assets                                                                                                                                                 |                                                                                                                                                |                            | 9,100   |           |         |          | 14,313  |        
|Net noncurrent assets of discontinued segment                                                                                                                |                                                                                                                                                |                            |         |           |         |          | 704     |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | $                          | 180,089 |           |         | $        | 206,538 |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                         |                                                                                                                                                |                            |         |           |         |          |         |        
|Current liabilities:                                                                                                                                         |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             | Current portion of long-term debt                                                                                                              |                            | $       | 110,841   |         |          | $       | 20,590  |        
|                                                                                                                                                             | Accounts payable                                                                                                                               |                            |         | 5,315     |         |          |         | 6,060   |        
|                                                                                                                                                             | Deferred revenue                                                                                                                               |                            |         | 12,609    |         |          |         | 16,889  |        
|                                                                                                                                                             | Accrued and other liabilities                                                                                                                  |                            |         | 23,782    |         |          |         | 13,942  |        
|                                                                                                                                                             | Net current liabilities of discontinued segment                                                                                                |                            |         |           |         |          |         | 11      |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | Total current liabilities  |         |           | 152,547 |          |         |         | 57,492  | 
|Long-term debt                                                                                                                                               |                                                                                                                                                |                            |         |           |         |          | 107,693 |        
|Other liabilities                                                                                                                                            |                                                                                                                                                |                            | 2,638   |           |         |          | 3,749   |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | Total liabilities          |         |           | 155,185 |          |         |         | 168,934 | 
|Commitments and contingencies                                                                                                                                |                                                                                                                                                |                            |         |           |         |          |         |        
|Redeemable Series B convertible preferred stock, $.01 par value
(authorized 100 shares; issued and outstanding 5 shares; $5,400
aggregate liquidation value) |                                                                                                                                                |                            | 5,400   |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|Stockholders equity:                                                                                                                                        |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             | Series A preferred stock, $.01 par value (authorized 100 shares;
issued and outstanding 3 shares; $3,000 aggregate liquidation value)          |                            |         |           |         |          |         | 2,178   |        
|                                                                                                                                                             | Common stock, $.01 par value (authorized 100,000 shares; issued
37,723 and 36,526 shares as of March 31, 2002 and June 30, 2001,
respectively) |                            |         | 377       |         |          |         | 365     |        
|                                                                                                                                                             | Additional paid-in capital                                                                                                                     |                            |         | 78,315    |         |          |         | 78,380  |        
|                                                                                                                                                             | Treasury stock, at cost (542 shares)                                                                                                           |                            |         | (1,393    | )       |          |         | (1,393  | )      
|                                                                                                                                                             | Other comprehensive accumulated loss                                                                                                           |                            |         | (1,910    | )       |          |         |         |        
|                                                                                                                                                             | Retained earnings (accumulated deficit)                                                                                                        |                            |         | (55,885   | )       |          |         | (41,926 | )      
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | Total stockholders equity |         |           | 19,504  |          |         |         | 37,604  | 
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        
|                                                                                                                                                             |                                                                                                                                                | $                          | 180,089 |           |         | $        | 206,538 |        
|                                                                                                                                                             |                                                                                                                                                |                            |         |           |         |          |         |        

See accompanying notes to condensed consolidated financial statements.

2



---



##### 



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

|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |        |         |  
|---------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------------------------------------------------- | ------ | ------------------ | ------ | ----------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------- | - | ------ | ------ | ------- | -
|                                                                                               |                                                       |                                                                        |        | Three Months Ended |        | Nine Months Ended
|                                                                                               |                                                       |                                                                        |        | March 31,          |        | March 31,        
|                                                                                               |                                                       |                                                                        |        |                    |        |                  
|                                                                                               |                                                       |                                                                        |        | 2002               |        | 2001              |        | 2002   |        | 2001
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |     
|Revenue from services rendered                                                                 |                                                       | $                                                                      | 34,035 |                    |        | $                 | 35,645 |        |        | $    | 91,221 |        |         | $ | 95,533 |       
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|Operating costs and expenses:                                                                  |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               | Direct operating costs for services rendered          |                                                                        |        | 27,852             |        |                   |        | 25,158 |        |      |        | 70,230 |         |   |        | 66,770 |        
|                                                                                               | Selling, general and administrative                   |                                                                        |        | 7,412              |        |                   |        | 10,496 |        |      |        | 24,404 |         |   |        | 28,381 |        
|                                                                                               | Amortization of acquisition intangibles               |                                                                        |        | 311                |        |                   |        | 1,127  |        |      |        | 932    |         |   |        | 3,285  |        
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Total operating costs and expenses                                     |        |                    | 35,575 |                   |        |        | 36,781 |      |        |        | 95,566  |   |        |        | 98,436  |  
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Loss from operations                                                   |        |                    | (1,540 | )                 |        |        | (1,136 | )    |        |        | (4,345  | ) |        |        | (2,903  | )
|Other income (expense):                                                                        |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               | Equity in earnings (losses) of affiliated companies   |                                                                        |        | (224               | )      |                   |        | (924   | )      |      |        | (1,265 | )       |   |        | (2,678 | )      
|                                                                                               | Gain on sale of investments                           |                                                                        |        |                    |        |                   |        |        |        |      |        | 2,814  |         |   |        | 2,160  |        
|                                                                                               | Reduction in valuation of investment in affiliate     |                                                                        |        |                    |        |                   |        | (1,837 | )      |      |        |        |         |   |        | (8,017 | )      
|                                                                                               | Net change in value of certain derivative instruments |                                                                        |        | (445               | )      |                   |        | (1,359 | )      |      |        | (3,938 | )       |   |        | 4,569  |        
|                                                                                               | Interest and dividend income                          |                                                                        |        | 10                 |        |                   |        | 144    |        |      |        | 149    |         |   |        | 646    |        
|                                                                                               | Interest expense                                      |                                                                        |        | (2,165             | )      |                   |        | (2,715 | )      |      |        | (7,357 | )       |   |        | (8,953 | )      
|                                                                                               | Debt issue cost amortization                          |                                                                        |        | (691               | )      |                   |        | (557   | )      |      |        | (2,158 | )       |   |        | (1,810 | )      
|                                                                                               | Other income (expense), net                           |                                                                        |        | (18                | )      |                   |        | 173    |        |      |        | 316    |         |   |        | 1,117  |        
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Loss before income taxes, extraordinary item
and cumulative adjustment |        |                    | (5,073 | )                 |        |        | (8,211 | )    |        |        | (15,784 | ) |        |        | (15,869 | )
|Income tax benefit                                                                             |                                                       |                                                                        | 1,597  |                    |        |                   | 2,485  |        |        |      | 5,346  |        |         |   | 4,400  |       
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Loss before extraordinary item and cumulative
effect adjustment        |        |                    | (3,476 | )                 |        |        | (5,726 | )    |        |        | (10,438 | ) |        |        | (11,469 | )
|Extraordinary loss (net of tax benefit of $323)                                                |                                                       |                                                                        | (627   | )                  |        |                   |        |        |        |      | (627   | )      |         |   |        |       
|Cumulative effect of accounting change (net of tax
benefit of $1,350 in 2002 and $687 in 2001) |                                                       |                                                                        | (2,620 | )                  |        |                   |        |        |        |      | (2,620 | )      |         |   | (1,120 | )     
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Net loss                                                               |        |                    | (6,723 | )                 |        |        | (5,726 | )    |        |        | (13,685 | ) |        |        | (12,589 | )
|Preferred dividends                                                                            |                                                       |                                                                        | (121   | )                  |        |                   |        |        |        |      | (274   | )      |         |   |        |       
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Net loss available to common stockholders                              |        | $                  | (6,844 | )                 |        | $      | (5,726 | )    |        | $      | (13,959 | ) |        | $      | (12,589 | )
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|Loss per share available to common stockholders, basic
and diluted:                            |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | Loss before extraordinary item and cumulative
effect adjustment        |        | $                  | (0.10  | )                 |        | $      | (0.16  | )    |        | $      | (0.30   | ) |        | $      | (0.33   | )
|                                                                                               |                                                       | Extraordinary loss                                                     |        |                    | (0.02  | )                 |        |        |        |      |        |        | (0.02   | ) |        |        |         |  
|                                                                                               |                                                       | Cumulative effect of accounting change                                 |        |                    | (0.07  | )                 |        |        |        |      |        |        | (0.07   | ) |        |        | (0.03   | )
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       
|                                                                                               |                                                       | $                                                                      | (0.19  | )                  |        | $                 | (0.16  | )      |        | $    | (0.39  | )      |         | $ | (0.36  | )     
|                                                                                               |                                                       |                                                                        |        |                    |        |                   |        |        |        |      |        |        |         |   |        |       

See accompanying notes to condensed consolidated financial statements.

3



---



##### 



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

|                                                                  |                                                       |                                       |         |                   |       |      |         |        |        |  
|----------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------- | ------- | ----------------- | ----- | ---- | ------- | ------ | ------ | -
|                                                                  |                                                       |                                       |         | Nine Months Ended
|                                                                  |                                                       |                                       |         | March 31,        
|                                                                  |                                                       |                                       |         |                  
|                                                                  |                                                       |                                       |         | 2002              |       | 2001
|                                                                  |                                                       |                                       |         |                   |       |     
|Cash flows from operating activities:                             |                                                       |                                       |         |                   |       |      |         |       
|Net loss                                                          |                                                       | $                                     | (13,685 | )                 |       | $    | (12,589 | )     
|Adjustments to reconcile net loss to net cash used in operations: |                                                       |                                       |         |                   |       |      |         |       
|                                                                  | Cumulative effect of accounting change                |                                       |         | 2,620             |       |      |         | 1,120  |       
|                                                                  | Extraordinary loss                                    |                                       |         | 627               |       |      |         |        |       
|                                                                  | Provision for bad debts                               |                                       |         | 272               |       |      |         | 638    |       
|                                                                  | Depreciation and amortization                         |                                       |         | 4,351             |       |      |         | 6,325  |       
|                                                                  | Equity in (earnings) losses of affiliated companies   |                                       |         | 1,265             |       |      |         | 2,678  |       
|                                                                  | Dividends received from affiliated company            |                                       |         | 81                |       |      |         | 162    |       
|                                                                  | Gain on sale of investments                           |                                       |         | (2,814            | )     |      |         | (2,160 | )     
|                                                                  | Reduction in valuation of investment in affiliate     |                                       |         |                   |       |      |         | 8,017  |       
|                                                                  | Net change in value of certain derivative instruments |                                       |         | 3,938             |       |      |         | (4,569 | )     
|                                                                  | Deferred income taxes                                 |                                       |         | (5,346            | )     |      |         | (3,504 | )     
|                                                                  | Accrued preferred stock dividend income               |                                       |         |                   |       |      |         | (79    | )     
|                                                                  | Change in operating assets and liabilities:           |                                       |         |                   |       |      |         |        |       
|                                                                  |                                                       | Accounts receivable                   |         |                   | 1,255 |      |         |        | 3,013  |  
|                                                                  |                                                       | Inventories                           |         |                   | (53   | )    |         |        | (57    | )
|                                                                  |                                                       | Prepaid costs and expenses            |         |                   | 190   |      |         |        | (3,917 | )
|                                                                  |                                                       | Accounts payable and accrued expenses |         |                   | 4,558 |      |         |        | 3,237  |  
|                                                                  |                                                       | Other long-term liabilities           |         |                   | (717  | )    |         |        | 1,148  |  
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net cash used in continuing operations                            |                                                       |                                       | (3,458  | )                 |       |      | (537    | )     
|Net cash provided by (used in) discontinued operations            |                                                       |                                       | (107    | )                 |       |      | 1,972   |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net cash provided by (used in) operating activities               |                                                       |                                       | (3,565  | )                 |       |      | 1,435   |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Cash flows from investing activities:                             |                                                       |                                       |         |                   |       |      |         |       
|Capital expenditures                                              |                                                       |                                       | (448    | )                 |       |      | (875    | )     
|Investment in affiliated companies                                |                                                       |                                       | (705    | )                 |       |      | (46     | )     
|Proceeds on sales of investments                                  |                                                       |                                       | 16,803  |                   |       |      | 5,330   |       
|Acquisition of business                                           |                                                       |                                       |         |                   |       |      | (1,219  | )     
|Increase in other assets                                          |                                                       |                                       | (106    | )                 |       |      | (204    | )     
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net cash provided by continuing operation investing activities    |                                                       |                                       | 15,544  |                   |       |      | 2,986   |       
|Net cash provided by discontinued operation investing activities  |                                                       |                                       | 879     |                   |       |      | 2,067   |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net cash provided by investing activities                         |                                                       |                                       | 16,423  |                   |       |      | 5,053   |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Cash flows from financing activities:                             |                                                       |                                       |         |                   |       |      |         |       
|Borrowings from revolving lines of credit                         |                                                       |                                       | 19,700  |                   |       |      | 22,925  |       
|Repayments on revolving lines of credit                           |                                                       |                                       | (16,350 | )                 |       |      | (18,450 | )     
|Repayments on long-term debt                                      |                                                       |                                       | (20,793 | )                 |       |      | (10,000 | )     
|Debt issue costs                                                  |                                                       |                                       | (620    | )                 |       |      | (596    | )     
|Issuance of preferred stock                                       |                                                       |                                       | 2,400   |                   |       |      |         |       
|Issuance of common stock, including exercise of stock options     |                                                       |                                       | 385     |                   |       |      | 4       |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net cash used in financing activities                             |                                                       |                                       | (15,278 | )                 |       |      | (6,117  | )     
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Net increase (decrease) in cash and cash equivalents              |                                                       |                                       | (2,420  | )                 |       |      | 371     |       
|Cash and cash equivalents, beginning of period                    |                                                       |                                       | 2,637   |                   |       |      | 619     |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       
|Cash and cash equivalents, end of period                          |                                                       | $                                     | 217     |                   |       | $    | 990     |       
|                                                                  |                                                       |                                       |         |                   |       |      |         |       

See accompanying notes to condensed consolidated financial statements.

4



---



##### 



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

|                                                                                                  |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |   | 
|------------------------------------------------------------------------------------------------- |  | ---------- | ----- | --------- |  | ------------ | ------ | ---------- |  | ------- | ------ |  |  | - | --- |  |  | - | ------ | - | 
|                                                                                                  |  | Redeemable |       |           |  |              |        |            |  |         |        |  |  |   |    
|                                                                                                  |  | Series B   |       | Series A  |  | Common Stock |        | Additional
|                                                                                                  |  | Preferred  |       | Preferred |  |              |        | Paid-In   
|                                                                                                  |  | Stock      |       | Stock     |  | Shares       |        | Amount     |  | Capital
|                                                                                                  |  |            |       |           |  |              |        |            |  |        
|As
of June 30, 2001                                                                               |  | $          |       |           |  | $            | 2,178  |            |  |         | 36,526 |  |  | $ | 365 |  |  | $ | 78,380 |  
|Exchange of series A preferred stock
stock and common stock warrants
for series B preferred stock |  |            | 3,000 |           |  |              | (2,178 | )          |  |         |        |  |  |   |     |  |  |   | (822   | )
|Issuance of Series B preferred stock                                                              |  |            | 2,400 |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  
|Issuance of common stock                                                                          |  |            |       |           |  |              |        |            |  |         | 1,157  |  |  |   | 12  |  |  |   | 721    |  
|Exercise of stock options                                                                         |  |            |       |           |  |              |        |            |  |         | 40     |  |  |   | 0   |  |  |   | 36     |  
|Other comprehensive loss                                                                          |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  
|Preferred dividends                                                                               |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  
|Net loss                                                                                          |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  
|                                                                                                  |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  
|As of March 31, 2002                                                                              |  | $          | 5,400 |           |  | $            |       |            |  |         | 37,723 |  |  | $ | 377 |  |  | $ | 78,315 |  
|                                                                                                  |  |            |       |           |  |              |        |            |  |         |        |  |  |   |     |  |  |   |        |  

|                                                                                                  |  |          |        |             |  |               |        |               |  |       |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------- |  | -------- | ------ | ----------- |  | ------------- | ------ | ------------- |  | ----- | ------- | - |  | - | ------- | -
|                                                                                                  |  |          |        |             |  | Other         |        | Retained      |  |       |         |  
|                                                                                                  |  |          |        |             |  | Comprehensive |        | Earnings      |  | Total
|                                                                                                  |  | Treasury |        | Accumulated |  | (Accumulated  |        | Stockholders'
|                                                                                                  |  | Stock    |        | Loss        |  | Deficit)      |        | Equity       
|                                                                                                  |  |          |        |             |  |               |        |              
|As of June 30, 2001                                                                               |  | $        | (1,393 | )           |  | $             |        |               |  | $     | (41,926 | ) |  | $ | 37,604  |  
|Exchange of series A preferred stock
stock and common stock warrants
for series B preferred stock |  |          |        |             |  |               |        |               |  |       |         |   |  |   | (3,000  | )
|Issuance of common stock                                                                          |  |          |        |             |  |               |        |               |  |       |         |   |  |   | 733     |  
|Exercise of stock options                                                                         |  |          |        |             |  |               |        |               |  |       |         |   |  |   | 36      |  
|Other comprehensive loss                                                                          |  |          |        |             |  |               | (1,910 | )             |  |       |         |   |  |   | (1,910  | )
|Preferred dividends                                                                               |  |          |        |             |  |               |        |               |  |       | (274    | ) |  |   | (274    | )
|Net loss                                                                                          |  |          |        |             |  |               |        |               |  |       | (13,685 | ) |  |   | (13,685 | )
|                                                                                                  |  |          |        |             |  |               |        |               |  |       |         |   |  |   |         |  
|As of March 31, 2002                                                                              |  | $        | (1,393 | )           |  | $             | (1,910 | )             |  | $     | (55,885 | ) |  | $ | 19,504  |  
|                                                                                                  |  |          |        |             |  |               |        |               |  |       |         |   |  |   |         |  

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

5



---



##### 



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

1.   BASIS OF PRESENTATION

In managements opinion, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting solely of normal,
recurring adjustments) necessary to present fairly the financial position and
results of operations for the interim periods reported. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements contained in the Annual Report on Form 10-K
of Bull Run Corporation for the fiscal year ended June 30, 2001.

On December 17, 1999, Bull Run Corporation (Bull Run) acquired the stock of
Host Communications, Inc. (Host), Universal Sports America, Inc. (USA) and
Capital Sports Properties, Inc. (Capital) not previously owned, directly or
indirectly, by Bull Run (the Host-USA Acquisition). All operations of the
acquired entities are now combined under Host.

The accompanying condensed consolidated financial statements include the
accounts of Bull Run and its wholly owned subsidiaries (collectively, unless
the context otherwise requires, the Company), after elimination of
intercompany accounts and transactions.

Certain amounts in the prior year condensed consolidated financial statements
have been reclassified to conform to the current year presentation.

2.   CHANGES IN ACCOUNTING METHODS

Effective July 1, 2001, the Company adopted Financial Accounting Standards
Board Statement No. 142, Accounting for Goodwill and Other Intangible Assets,
(FASB Statement No. 142) which changed the Companys accounting for the
goodwill and certain other intangible assets acquired in the Host-USA
Acquisition, and also affected the Companys accounting for its equity in
earnings (losses) of affiliated companies. In accordance with FASB Statement
No. 142, commencing July 1, 2001, the Company ceased amortizing the unamortized
amount of goodwill and trademarks. The Company is now required to periodically
assess the carrying value of goodwill and trademarks associated with each of
five distinct business units that comprise three business segments of the
Company to determine if an impairment in value has occurred. The initial
impairment test has been completed, and the Company concluded that the carrying
amount of goodwill and trademarks as of July 1, 2001 for each business unit
acquired in the Host-USA Acquisition did not exceed its net realizable value.
Therefore, the adoption of FASB Statement No. 142 had no effect on the
Companys financial statements as of July 1, 2001. The value assigned to
customer relationships will continue to be amortized over a 16-year average
life, at a rate of approximately $1,125 per year. The use of a 16-year average
life of customer relationships amortized on a straight-line method is not
materially different than using the estimated life of each individual
relationship using a systematic allocation method. FASB Statement No. 142 also
eliminated the requirement to amortize the excess of the Companys investment
over the underlying equity of the Companys equity method investments, to the
extent that such excess is attributable to indefinite life intangible assets.

6



---



##### 



Pro forma results for the three months and nine months ended March 31, 2001,
assuming FASB Statement No. 142 was effective as of July 1, 2000, are as
follows:

|                                                                     |                                          |                                         |        |                    |        |                   |         |       |        | 
|-------------------------------------------------------------------- | ---------------------------------------- | --------------------------------------- | ------ | ------------------ | ------ | ----------------- | ------- | ----- | ------ | 
|                                                                     |                                          |                                         |        | Three Months Ended |        | Nine Months Ended
|                                                                     |                                          |                                         |        | March 31, 2001     |        | March 31, 2001   
|                                                                     |                                          |                                         |        |                    |        |                  
|Revenue from services rendered                                       |                                          | $                                       | 35,645 |                    |        | $                 | 95,533  |      
|Operating costs and expenses:                                        |                                          |                                         |        |                    |        |                   |         |      
|                                                                     |                                          | Amortization of acquisition intangibles |        |                    | 318    |                   |         |       | 907    | 
|                                                                     |                                          | Total operating costs and expenses      |        |                    | 35,972 |                   |         |       | 96,058 | 
|Loss from operations                                                 |                                          |                                         | (327   | )                  |        |                   | (525    | )    
|Equity in earnings (losses) of affiliated companies                  |                                          |                                         | (696   | )                  |        |                   | (1,461  | )    
|Loss before income taxes and cumulative effect
adjustment            |                                          |                                         | (7,174 | )                  |        |                   | (12,274 | )    
|Income tax benefit                                                   |                                          |                                         | 2,317  |                    |        |                   | 4,064   |      
|Loss before cumulative effect adjustment                             |                                          |                                         | (4,857 | )                  |        |                   | (8,210  | )    
|Net loss                                                             |                                          |                                         | (4,857 | )                  |        |                   | (9,330  | )    
|Loss per share available to common stockholders
(basic and diluted): |                                          |                                         |        |                    |        |                   |         |      
|                                                                     | Loss before cumulative effect adjustment |                                         | $      | (0.14              | )      |                   | $       | (0.24 | )     
|                                                                     | Cumulative effect of accounting change   |                                         |        |                    |        |                   |         | (0.03 | )     
|                                                                     |                                          |                                         |        |                    |        |                   |         |      
|                                                                     | Net loss                                 |                                         | $      | (0.14              | )      |                   | $       | (0.27 | )     
|                                                                     |                                          |                                         |        |                    |        |                   |         |      

Gray Communications Systems, Inc. (Gray), a 13.0%-owned affiliate of the
Company, adopted FASB Statement No. 142 effective January 1, 2002 and reported
a $30,592 charge for the cumulative effect of the change in its accounting for
goodwill and other intangible assets. As a result of this charge reported by
Gray, in the three months and nine months ended March 31, 2002 the Company has
recognized a cumulative effect of accounting change adjustment of $2,620, net
of tax, as its proportionate share of the cumulative effect adjustment
recognized by Gray in January 2002.

Effective July 1, 2000, the Company adopted Financial Accounting Standards
Boards Statement No. 133, Accounting for Derivative Investments and Hedging
Activities(FASB Statement No. 133). Commencing July 1, 2000, the Company
recognizes the value of all derivative instruments (i.e., warrants to purchase
additional shares of Gray common stock and interest rate swap agreements) on
the balance sheet at fair value as a component of Other assets. As a result
of the adoption of FASB Statement No. 133, the Company recorded a charge for
the cumulative effect of the accounting change of $(1,120), net of a deferred
tax benefit of $687. Changes in the value of these derivative instruments
subsequent to July 1, 2000 are recognized as earnings or losses. The valuation
of the warrants is based on an independent appraisal and the valuations of
interest rate swap agreements are based on estimated market values provided by
the counterparties to the agreements.

3.   DISCONTINUED OPERATION

On September 29, 2000, the Company sold the inventories, property and equipment
and intangible assets of Datasouth Computer Corporation (Datasouth), a wholly
owned subsidiary, for cash and an installment note payable to the Company.
Accordingly, the operating results and net assets associated with Datasouths
computer printer manufacturing business have been reported as discontinued
operations in the accompanying financial statements. To the extent actual
proceeds ultimately received on the sale differ from estimates that are
reported as of March 31, 2002, such differences will be reported as
discontinued operations in future periods.

7



---



##### 



Assets and liabilities of the discontinued operations have been reflected in
the condensed consolidated balance sheets as current or noncurrent based on the
original classification of the accounts, except that current liabilities are
presented net of current assets.

The following is a summary of assets and liabilities of discontinued
operations:

|                     |                                       |   |           |     |          |   |     |      |  
|-------------------- | ------------------------------------- | - | --------- | --- | -------- | - | --- | ---- | -
|                     |                                       |   | March 31, |     | June 30,
|                     |                                       |   | 2002      |     | 2001    
|                     |                                       |   |           |     |         
|Current assets:      |                                       |   |           |     |          |   |     |     
|                     | Accounts receivable, net              |   | $         | 113 |          |   | $   | 168  |  
|Current liabilities: |                                       |   |           |     |          |   |     |     
|                     | Accounts payable and accrued expenses |   |           |     |          |   |     | (179 | )
|                     |                                       |   |           |     |          |   |     |     
|                     |                                       | $ | 113       |     |          | $ | (11 | )   
|                     |                                       |   |           |     |          |   |     |     
|Noncurrent assets:   |                                       |   |           |     |          |   |     |     
|                     | Undeveloped land held for sale        |   | $         |     |          |   | $   | 700  |  
|                     | Other assets                          |   |           |     |          |   |     | 4    |  
|                     |                                       |   |           |     |          |   |     |     
|                     |                                       | $ |          |     |          | $ | 704 |     
|                     |                                       |   |           |     |          |   |     |     

For the three months ended September 30, 2000, Datasouth generated total
revenues of $4,406 and a loss from operations of $201. 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 remained with the Company after
the disposal of Datasouths assets.

4.   SUPPLEMENTAL CASH FLOW DISCLOSURES

Supplemental cash flow information follows:

|                                                                                                       |  |                   |       |      |  |   |       | 
|------------------------------------------------------------------------------------------------------ |  | ----------------- | ----- | ---- |  | - | ----- | 
|                                                                                                       |  | Nine Months Ended
|                                                                                                       |  | March 31,        
|                                                                                                       |  |                  
|                                                                                                       |  | 2002              |       | 2001
|                                                                                                       |  |                   |       |     
|Interest paid                                                                                          |  | $                 | 7,954 |      |  | $ | 9,200 | 
|Income taxes paid (recovered)                                                                          |  | $                 | (411  | )    |  | $ | 333   | 
|Noncash investing and financing activity, issuance of
common stock in connection with debt issue costs |  | $                 | 383   |      |  | $ | 1,219 | 

5.   INVESTMENT IN AFFILIATED COMPANIES

In the three months ended March 31, 2002, the Company recognized an
extraordinary loss of $627, net of tax, as its proportionate share of an
extraordinary loss recognized by Gray in January 2002 related to a charge
resulting from Grays early extinguishment of debt.

In the three months ended March 31, 2002, the Company recognized the cumulative
effect of an accounting change of $2,620, net of tax, as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002
(refer also to the discussion of FASB Statement No. 142 in Note 2.)

8



---



##### 



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

|                                      |           |   |           |        |          |   |        |        | 
|------------------------------------- | --------- | - | --------- | ------ | -------- | - | ------ | ------ | 
|                                      |           |   | March 31, |        | June 30,
|                                      |           |   | 2002      |        | 2001    
|                                      |           |   |           |        |         
|Gray Communications Systems, Inc.:    |           |   |           |        |          |   |        |       
|                                      | Common    |   | $         | 19,299 |          |   | $      | 24,515 | 
|                                      | Preferred |   |           |        |          |   |        | 3,738  | 
|Sarkes Tarzian, Inc.                  |           |   |           |        |          |   | 10,000 |       
|Rawlings Sporting Goods Company, Inc. |           |   | 4,605     |        |          |   | 8,184  |       
|iHigh, Inc.                           |           |   | 2,225     |        |          |   | 2,802  |       
|Other                                 |           |   | 1,615     |        |          |   | 1,160  |       
|                                      |           |   |           |        |          |   |        |       
|                                      |           | $ | 27,744    |        |          | $ | 50,399 |       
|                                      |           |   |           |        |          |   |        |       

The Company accounts for its investments in Gray and iHigh, Inc. (iHigh)
using the equity method. Until December 31, 2001, the Company accounted for
its investment in Rawlings Sporting Goods Company, Inc. (Rawlings) using the
equity method on a one month lag basis, in order to align Rawlings fiscal
quarters ending November 30, February 28, May 31 and August 31 with the
Companys fiscal quarters. In December 2001, the two directors of the Company
who also served on Rawlings board of directors resigned from Rawlings board.
As a result, the Company no longer exercises significant influence over
Rawlings policy-making decisions. Therefore, effective December 31, 2001, the
Company began accounting for its investment in Rawlings as an
available-for-sale marketable security. As of December 31, 2001, the current
market value of the Companys investment in Rawlings, based on the closing
price of Rawlings common stock as quoted on the Nasdaq Stock Market, is
reported on the balance sheet as a component of Investment in affiliated
companies. The carrying value of the investment in excess of the current
market value, net of deferred taxes, is reported in the balance sheet as Other
comprehensive accumulated loss. Unrealized market value changes in Rawlings
common stock will be reflected as a change in Investment in affiliated
companies and Other comprehensive accumulated loss, except for any potential
permanent impairment charges, which would be reported as losses in the
Consolidated Statement of Operations.

All remaining shares of Gray preferred stock owned by the Company were sold to
parties affiliated with the Company in September 2001 for $6,803, resulting in
a gain of $3,064. The Gray preferred stock, having a redemption value of
$6,803, was acquired from Gray in 1997, along with detachable warrants to
acquire Gray common stock, at an aggregate cost equal to the redemption value
of the preferred stock. The Company retained the warrants, the value of which
are included on the balance sheet as a component of Other assets (refer also
to discussion of FASB Statement No. 133 in Note 2). In December 2001, Gray
exercised its option to acquire the Companys investment in Sarkes Tarzian,
Inc. from the Company for the exercise price of $10,000.

Aggregated condensed operating results of Gray and iHigh were as follows:

|                                       |  |                    |         |                   |  |      |        |      |  |   |         |   |  |   |         |  
|-------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                       |  | Three Months Ended |         | Nine Months Ended
|                                       |  | March 31,          |         | March 31,        
|                                       |  |                    |         |                  
|                                       |  | 2002               |         | 2001              |  | 2002 |        | 2001
|                                       |  |                    |         |                   |  |      |        |     
|Net revenue                            |  | $                  | 38,306  |                   |  | $    | 37,768 |      |  | $ | 118,416 |   |  | $ | 126,996 |  
|Income from operations                 |  |                    | 8,001   |                   |  |      | 1,621  |      |  |   | 16,150  |   |  |   | 16,614  |  
|Extraordinary loss                     |  |                    | (7,317  | )                 |  |      |        |      |  |   | (7,317  | ) |  |   |         |  
|Cumulative effect of accounting change |  |                    | (30,592 | )                 |  |      |        |      |  |   | (30,592 | ) |  |   |         |  
|Net loss                               |  |                    | (38,400 | )                 |  |      | (5,894 | )    |  |   | (45,254 | ) |  |   | (10,376 | )

9



---



##### 



The excess of the Companys carrying value of its equity investments over the
Companys allocable share of the investees underlying equity, totaling
approximately $8,442 and $8,300 as of March 31, 2002 and June 30, 2001,
respectively, was amortized over 10 to 40 years until June 30, 2001, and such
amortization (totaling $233 in the nine months ended March 31, 2001) resulted
in a reduction in the Companys equity in earnings of affiliated companies.
Effective July 1, 2001, the Company adopted FASB Statement No. 142, thereby
eliminating the requirement to amortize the excess of the Companys investment
over the underlying equity of the Companys equity method investments (see Note
2), all of which is attributable to investees indefinite life intangibles.

6.   LONG-TERM DEBT

The Company is a party to a credit agreement with a group of banks providing
for (a) two term loans (the Term Loans) for borrowings totaling $73,932 as of
March 31, 2002, bearing interest at either the banks prime rate plus 1.5% or
the London Interbank Offered Rate (LIBOR) plus 4.0%, with all amounts
outstanding under the term loans due on its maturity date of June 28, 2002; and
(b) a revolving loan commitment (the Revolver) for borrowings of up to
$20,000 until its maturity date of June 28, 2002, bearing interest at either
the banks prime rate plus 1.0% or LIBOR plus 3.5%. Borrowings under the
Revolver are limited to an amount not to exceed 100% of eligible accounts
receivable plus $5,000 and such borrowings may include up to $15,100 in
outstanding letters of credit. As of March 31, 2002, borrowings of $17,725
and a letter of credit for $25 were outstanding under the Revolver. As of
March 31, 2002, all borrowings under the Term Loans and all borrowings under
the Revolver were subject to prime rate-based rates of 6.25% and 5.75%,
respectively. Interest is payable monthly. The credit agreement contains
certain financial covenants, the most restrictive of which requires the
maintenance of minimum profitability thresholds determined quarterly. Under
two agreements effective February 22, 2002 and March 29, 2002, the Company and
its lenders amended certain provisions of the credit agreement to waive certain
events of default, modify borrowing capacity and borrowing capacity
restrictions, and revise the maturity date of the obligations under the bank
credit facility, among other changes. Under the terms of the amendment dated
March 29, 2002, the Company had available capacity under the revolving credit
facility of $2,250 as of March 31, 2002.

Long-term debt is collateralized by all of the Companys assets, including all
of its investments in affiliated companies. In addition, the Companys
chairman of the board has personally guaranteed, in favor of the banks,
substantially all of the debt payable to the banks. In connection with this
guarantee, the Company periodically compensates the chairman by issuing to him
restricted shares of the Companys common stock. During the nine months ended
March 31, 2002 and 2001, the Company issued to its chairman 689,902 shares and
696,429 shares, respectively. Refer to Managements Discussion and Analysis 
Liquidity and Capital Resources for further discussion regarding managements
plans to provide sufficient liquidity subsequent to June 28, 2002.

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. In connection with the acquisition of certain business operations,
the Company also has subordinated notes outstanding in the amount of $590,
bearing interest at 9%, due in September 2002 with accrued interest. Payment
of interest and principal on all of the subordinated notes is subordinate to
the Companys bank credit agreement.

The Company is a party to two interest rate swap agreements. The first
agreement, terminating on December 31, 2002, involves the exchange of interest
at a fixed rate of 6.08% for interest at a variable rate, determined quarterly,
equal to the 90-day LIBOR rate, without an exchange of the $20,000 notional
amount upon which the payments are based. The second agreement, terminating
December 31, 2002 (or December 31, 2004, at the banks option), involves the
exchange of interest at a fixed rate of 6.71% for interest at a variable rate,
determined quarterly, equal to the 90-day LIBOR rate, without an exchange of
the $25,000 notional amount upon which the payments are based. The
differential paid or received as interest rates change is settled quarterly and
is accrued

10



---



##### 



and recognized as an adjustment of interest expense related to the debt. The
aggregate fair market value of the interest rate swap agreements as of March
31, 2002 and June 30, 2001 are combined with the fair market value of other
derivative instruments and included as a component of Other assets in the
Companys Condensed Consolidated Balance Sheets. The net change in the
aggregate fair market value of the interest rate swap agreements for the three
months and nine months ended March 31, 2002 and 2001 are combined with the net
change in value of other derivatives and included in the Companys Condensed
Consolidated Statements of Operations for those periods (see Note 2).

7.   INCOME TAXES

The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible amortization of acquisition intangible
assets and state income taxes.

8.   PREFERRED STOCK ISSUANCE AND EXCHANGE

The Company issued 2,400 shares of its redeemable series B convertible
preferred stock (the Series B Preferred Stock) in November 2001 for cash of
$2,400 to a company of which the Companys chairman is an executive officer and
principal stockholder. In addition, all holders of the Companys series A
preferred stock (the Series A Preferred Stock), consisting of companies of
which the Companys chairman is an executive officer and/or principal
stockholder, elected to exchange their 3,000 shares of Series A Preferred Stock
and the detachable warrants received by each holder in connection with
Companys issuance of the Series A Preferred Stock in June 2001 for 3,000
shares of Series B Preferred Stock. Each share of the Series B Preferred Stock
is convertible at the holders option into 1,000 shares of the Companys common
stock beginning in November 2003. The holder of the Series B Preferred Stock
is entitled to receive dividends at an annual rate of $90.00 per share in cash
or in shares of the Companys common stock at the holders option, except that,
until the second anniversary of the date of issuance, the Company has the
option to pay such dividends in cash or in shares of the Companys common
stock. The liquidation and redemption price of the Series B Preferred Stock is
$1,000 per share. The Company has the option to redeem the Series B Preferred
Stock at any time; however, the Series B Preferred Stock must be redeemed by
the tenth anniversary of the date of issuance.

11



---



##### 



9.   EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share are as follows:

|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |         |  
|----------------------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- |  | ------- | ------- | - | - | ------- | ------- | -
|                                                                                          |                                                                 |   | Three Months Ended |        | Nine Months Ended
|                                                                                          |                                                                 |   | March 31,          |        | March 31,        
|                                                                                          |                                                                 |   |                    |        |                  
|                                                                                          |                                                                 |   | 2002               |        | 2001              |   | 2002   |        | 2001
|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |     
|Loss before extraordinary item and cumulative
effect adjustment                           |                                                                 | $ | (3,476             | )      |                   | $ | (5,726 | )      |      |  | (10,438 | )       |   | $ | (11,469 | )      
|Extraordinary loss                                                                        |                                                                 |   | (627               | )      |                   |   |        |        |      |  | (627    | )       |   |   |         |        
|Cumulative effect of accounting change                                                    |                                                                 |   | (2,620             | )      |                   |   |        |        |      |  | (2,620  | )       |   |   | (1,120  | )      
|Preferred dividends                                                                       |                                                                 |   | (121               | )      |                   |   |        |        |      |  | (274    | )       |   |   |         |        
|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |        
|                                                                                          | Net loss available to common stockholders                       |   | $                  | (6,844 | )                 |   | $      | (5,726 | )    |  | $       | (13,959 | ) |   | $       | (12,589 | )
|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |        
|Weighted average number of common shares
outstanding for basic and diluted loss per share |                                                                 |   | 36,514             |        |                   |   | 35,213 |        |      |  | 36,217  |         |   |   | 35,128  |        
|Loss per share (basic and diluted):                                                       |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |        
|                                                                                          | Loss before extraordinary item and cumulative
effect adjustment |   | $                  | (0.10  | )                 |   | $      | (0.16  | )    |  | $       | (0.30   | ) |   | $       | (0.33   | )
|                                                                                          | Extraordinary loss                                              |   |                    | (0.02  | )                 |   |        |        |      |  |         | (0.02   | ) |   |         |         |  
|                                                                                          | Cumulative effect of accounting change                          |   |                    | (0.07  | )                 |   |        |        |      |  |         | (0.07   | ) |   |         | (0.03   | )
|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |        
|                                                                                          | Net loss available to common stockholders                       |   | $                  | (0.19  | )                 |   | $      | (0.16  | )    |  | $       | (0.39   | ) |   | $       | (0.36   | )
|                                                                                          |                                                                 |   |                    |        |                   |   |        |        |      |  |         |         |   |   |         |        

10.   COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is as follows:

|                          |                    |                                                                                |        |                    |       |                   |        |        |   |      |         |         |        |   |         |         |   | 
|------------------------- | ------------------ | ------------------------------------------------------------------------------ | ------ | ------------------ | ----- | ----------------- | ------ | ------ | - | ---- | ------- | ------- | ------ | - | ------- | ------- | - | 
|                          |                    |                                                                                |        | Three Months Ended |       | Nine Months Ended
|                          |                    |                                                                                |        | March 31,          |       | March 31,        
|                          |                    |                                                                                |        |                    |       |                  
|                          |                    |                                                                                |        | 2002               |       | 2001              |        | 2002   |   | 2001
|                          |                    |                                                                                |        |                    |       |                   |        |        |   |     
|Net loss                  |                    | $                                                                              | (6,723 | )                  |       | $                 | (5,726 | )      |   | $    | (13,685 | )       |        | $ | (12,589 | )      
|Other comprehensive loss: |                    |                                                                                |        |                    |       |                   |        |        |   |      |         |         |        |   |         |        
|                          |                    | Change in the valuation of available-for-sale
investments, net of deferred tax |        |                    | 1,333 |                   |        |        |   |      |         |         | (1,910 | ) |         |         |   | 
|                          |                    |                                                                                |        |                    |       |                   |        |        |   |      |         |         |        |   |         |        
|                          | Comprehensive loss |                                                                                | $      | (5,390             | )     |                   | $      | (5,726 | ) |      | $       | (15,595 | )      |   | $       | (12,589 | )
|                          |                    |                                                                                |        |                    |       |                   |        |        |   |      |         |         |        |   |         |        

The change in valuation of available-for-sale investments resulted from the
change in accounting for the Companys investment in Rawlings from the equity
method to accounting for it as an available-for-sale marketable security as
discussed in Note 5. Increases (decreases) in the value of the Companys
investment in Rawlings common stock, as determined by the closing price of
Rawlings common stock quoted on the Nasdaq Stock Market as the beginning and
end of each fiscal period, will result in future comprehensive income (loss).

12



---



##### 



11.   SEGMENT INFORMATION

The Company has four business segments associated with its continuing
operations that provide different products or services: (a) marketing and
production services, which primarily include services rendered in connection
with college athletics (Collegiate Marketing and Production Services); (b)
event management and marketing services (Affinity Events); (c) association
management services (Affinity Management Services) and (d) consulting
services (Consulting). Information for each of the Companys segments is
presented below.

|                         |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------ | -------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                         |                                              |   | Three Months Ended |        | Nine Months Ended
|                         |                                              |   | March 31,          |        | March 31,        
|                         |                                              |   |                    |        |                  
|                         |                                              |   | 2002               |        | 2001              |   | 2002   |        | 2001
|                         |                                              |   |                    |        |                   |   |        |        |     
|Net revenues:            |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                         | Collegiate Marketing and Production Services |   | $                  | 29,050 |                   |   | $      | 30,115 |      |   | $      | 69,162 |   |   | $      | 72,716 |  
|                         | Affinity Events                              |   |                    | 2,466  |                   |   |        | 2,758  |      |   |        | 10,721 |   |   |        | 14,981 |  
|                         | Affinity Management Services                 |   |                    | 2,519  |                   |   |        | 2,764  |      |   |        | 11,328 |   |   |        | 7,817  |  
|                         | Consulting                                   |   |                    |        |                   |   |        | 8      |      |   |        | 10     |   |   |        | 19     |  
|                         |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                         |                                              | $ | 34,035             |        |                   | $ | 35,645 |        |      | $ | 91,221 |        |   | $ | 95,533 |       
|                         |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Operating income (loss): |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                         | Collegiate Marketing and Production Services |   | $                  | 274    |                   |   | $      | 1,667  |      |   | $      | 921    |   |   | $      | 5,003  |  
|                         | Affinity Events                              |   |                    | (1,066 | )                 |   |        | (1,200 | )    |   |        | (3,433 | ) |   |        | (3,740 | )
|                         | Affinity Management Services                 |   |                    | 54     |                   |   |        | 132    |      |   |        | 732    |   |   |        | 768    |  
|                         | Consulting                                   |   |                    |        |                   |   |        | 8      |      |   |        | 10     |   |   |        | 19     |  
|                         | Amortization of acquisition intangibles      |   |                    | (311   | )                 |   |        | (1,127 | )    |   |        | (932   | ) |   |        | (3,285 | )
|                         | Unallocated general and administrative costs |   |                    | (491   | )                 |   |        | (616   | )    |   |        | (1,643 | ) |   |        | (1,668 | )
|                         |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                         |                                              | $ | (1,540             | )      |                   | $ | (1,136 | )      |      | $ | (4,345 | )      |   | $ | (2,903 | )     
|                         |                                              |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       

13



---



##### 



Item 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Bull Run Corporation (Bull Run or the Company), based in Atlanta, Georgia,
is a sports, affinity marketing and management company through Host
Communications, Inc. (Host), its primary operating business, which was
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 and the National Collegiate
Athletic Association (NCAA). Hosts Affinity Events business segment
produces and manages individual events and several events series, including
NBA Hoop-It-Up® (the National Basketball Associations official 3-on-3
basketball tour) and the Got Milk? 3v3 Soccer Shootout (Major League Soccers
official 3-on-3 soccer tour). Hosts Affinity Management Services
business segment provides associations, such as the National Tour Association
and Quest (the J.D. Edwards users group association) with services ranging from
member communication, recruitment and retention, to conference planning,
Internet web site management, marketing, sales representation 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 (the Host-USA
Acquisition). All operations of the acquired entities are now combined under
Host.

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 communications
businesses; Rawlings Sporting Goods Company, Inc. (Rawlings), a supplier of
team sports equipment; and iHigh, Inc. (iHigh), an Internet and marketing
company focused on high school students. In December 2001, Gray exercised its
option to acquire from the Company for $10,000,000, 33.5% of the outstanding
common stock of Sarkes Tarzian, Inc. (Tarzian), the owner and operator of two
television stations and four radio stations. The Company periodically provides
consulting services to Gray for a fee, in connection with Grays acquisitions
and dispositions.

As of March 31, 2002, the Company owned approximately: 13.0% of the outstanding
common stock of Gray (representing 26.1% of the voting rights), in addition to
warrants to purchase additional Gray common stock; 10.1% of the outstanding
common stock of Rawlings; and 35.1% of the outstanding common stock of iHigh.

DISPOSAL OF COMPUTER PRINTER OPERATIONS

On September 29, 2000, the Company sold the inventories, property and equipment
and intangible assets of Datasouth Computer Corporation (Datasouth), a wholly
owned subsidiary, for cash and an installment note payable to the Company.
Accordingly, the operating results and net assets associated with Datasouths
computer printer manufacturing business have been reported as discontinued
operations in the accompanying financial statements. To the extent actual
proceeds ultimately received on the sale differ from estimates that are
reported as of March 31, 2002, such differences will be reported as
discontinued operations in future periods.

CERTAIN RELATIONSHIPS

J. Mack Robinson, Chairman of the Board of the Company, is Chief Executive
Officer and a director of Gray and the beneficial owner of Gray common stocks
representing approximately 52.9% of the combined voting percent of Grays
common stocks. Robert S. Prather, Jr., President, Chief Executive Officer and
a director of the Company, is an Executive Vice President and a director of
Gray and the beneficial owner of Gray common stocks representing approximately
37.9% of the

14



---



##### 



combined voting percent of Grays common stocks. Hilton H. Howell, Jr., the
Companys Vice President and Secretary, is an Executive Vice President and a
director of Gray and the beneficial owner of Gray common stocks representing
approximately 42.4% of the combined voting percent of Grays common stocks.
Each of Messrs. Robinson, Prather and Howells beneficial ownership percentages
includes the Companys beneficial ownership of approximately 35.2% of the
combined voting percent of Grays common stocks.

CRITICAL ACCOUNTING POLICIES

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

Goodwill and Other Intangible Assets 
Goodwill and purchased intangible assets (i.e., customer relationships and
trademarks) associated with the Host-USA Acquisition were amortized over their
estimated useful lives on a straight-line basis until June 30, 2001. Goodwill
and intangible assets, net of accumulated amortization, were $81,956,000 as of
March 31, 2002 and $82,888,000 as of June 30, 2001, of which, goodwill was
$57,862,000 as of both dates. Effective July 1, 2001, the Company adopted
Financial Accounting Standards Board Statement No. 142, Accounting for
Goodwill and Other Intangible Assets,(FASB Statement No. 142) which changed
the Companys accounting for the goodwill and certain other intangible assets
acquired in the Host-USA Acquisition, and also affected the Companys
accounting for its equity in earnings (losses) of affiliated companies. In
accordance with FASB Statement No. 142, commencing July 1, 2001, the Company
ceased amortizing the unamortized amount of goodwill and trademarks, but the
Company is now required to periodically assess the carrying value of goodwill
and trademarks associated with each of five distinct business units that
comprise three business segments of the Company to determine if an impairment
in value has occurred. The initial impairment test has been completed, and the
Company concluded that the carrying amount of goodwill and trademarks as of
July 1, 2001 for each business unit acquired in the Host-USA Acquisition did
not exceed its net realizable value. Therefore, the adoption of FASB Statement
No. 142 had no effect on the Companys financial statements as of July 1, 2001.
The value assigned to customer relationships will continue to be amortized
over a 16-year average life, at a rate of approximately $1,125,000 per year.
The use of a 16-year average life of customer relationships amortized on a
straight-line method is not materially different than using the estimated life
of each individual relationship using a systematic allocation method.

FASB Statement No. 142 also eliminated the requirement to amortize the excess
of the Companys investment over the underlying equity of the Companys equity
method investments, to the extent that such excess is attributable to
indefinite life intangible assets. The carrying value of the Companys
investment in Gray of $19,299,000 as of March 31, 2002 is largely dependent on
Grays assessment of the value of Grays goodwill, broadcast licenses, network
affiliation agreements and other intangible assets. Impairment in Grays
carrying value of its intangible assets could have a significant impact on the
Companys carrying value of its investment in Gray.

Deferred Income Taxes 
Deferred income tax liabilities or assets at the end of each period are
determined using the tax rate expected to be in effect when the taxes are
actually paid or recovered. A valuation allowance is recognized on certain
deferred tax assets if it is more likely than not that some or all of these
deferred tax assets will not be realized. As of March 31, 2002 the Company has
a net deferred tax asset of $19,382,000, primarily due to net operating loss
carryforwards for federal tax purposes that expire beginning in 2018. The
Company believes it will generate adequate taxable income from operations
and/or the sale or other disposition of appreciated investment assets in an
amount sufficient to realize the deferred tax asset.

15



---



##### 



Derivative Instruments and Hedging Activities 
Effective July 1, 2000, the Company adopted the Financial Accounting Standards
Boards Statement No. 133, Accounting for Derivative Investments and Hedging
Activities(FASB Statement No. 133). FASB Statement No. 133 requires the
Company to recognize all derivative instruments (i.e., warrants to purchase
additional shares of Gray common stock and interest rate swap agreements) on
the balance sheet at fair value. The Companys adoption of this Statement
resulted in a decrease in Stockholders Equity and Total Assets
of $1,120,000 as of
July 1, 2000. Changes in the estimated fair value of derivatives that do not
meet the specific criteria in FASB Statement No. 133 for hedge accounting (and
none of the Companys derivative instruments have been determined to qualify
for hedge accounting treatment) are included in the earnings (losses) reported
for the period of the change. Management estimates the fair value of the
warrants based on independent appraisals received on a quarterly basis, and
estimates the fair value of interest rate swap agreements based on estimated
market values provided by the counterparties to the swap agreements.

Valuation of Investments in Affiliated Companies 
The Company accounts for its investments in Gray and iHigh, and until December
31, 2001, Rawlings, by the equity method. Effective December 31, 2001, the
Company began accounting for its investment in Rawlings as an
available-for-sale marketable security. (See Notes 5 and 10 to the Condensed
Consolidated Financial Statements for a complete discussion of the accounting
for the investment in Rawlings.) As a result, the Companys carrying value of
its investment in Rawlings is based on the closing price of Rawlings common
stock as quoted on the Nasdaq Stock Market, and is reported on the balance
sheet as a component of Investment in affiliated companies. As of March 31,
2002, the Companys unrealized loss in its investment in Rawlings, as reported
as Other comprehensive accumulated loss, was $3,105,000. If and when
management believes that any or all of the unrealized loss represents a
permanent impairment in the estimated value of the investment in Rawlings, the
estimated impairment amount would be charged to the earnings (losses) reported
for the period in which that determination was made. Likewise, if management
determines that the carrying value of those investments accounted for by the
equity method become permanently impaired in whole or in part, the estimated
amount of the permanent impairment would be charged to the earnings (losses)
reported for the period in which that determination was made. Management has
made such permanent impairment determinations in prior years, and accordingly
in the period of such determination, the Company reduced the carrying value of
the investment and reported an associated charge in its Statement of
Operations. For the three months and nine months ended March 31, 2002, no
permanent impairment charges were determined to be necessary.

LIQUIDITY AND CAPITAL RESOURCES

Credit Arrangements 
As of March 31, 2002, the Companys indebtedness to its bank lenders was
$91,657,000. Under two agreements effective February 22, 2002 and March 29,
2002, the Company and its bank lenders amended the Companys bank credit
agreement to waive certain events of default, modify borrowing capacity and
borrowing capacity restrictions, and revise the maturity date of the
obligations under the bank credit facility to June 28, 2002, among other
changes. The Company expects to negotiate the terms of a long-term refinancing
of the credit facility for execution prior to June 28, 2002. Although the
Company believes that it will be successful in negotiating a long-term
refinancing of the credit facility, there is no assurance that it will be able
to do so. A long-term refinancing of the credit facility may involve a
significant reduction in the total amount of financing available from the bank
lenders and, therefore, require the Company to sell certain investment assets
held by the Company and/or issue and sell equity securities of the Company,
which may include the Companys preferred stock, in order to repay a portion of
the existing indebtedness to the bank lenders. Although there is no assurance
that the Company will be able to effect the foregoing potential transactions or
generate sufficient cash from these potential transactions within a time frame
required by the bank lenders, on the basis of preliminary discussions with
third parties,

16



---



##### 



including affiliates, with whom such transactions may be consummated, the
Company believes that it would be able to achieve an adequate amount of debt
reduction to satisfy the bank lenders. The Companys chairman of the board
personally guarantees substantially all of the debt outstanding under the
current credit facility, and if the Company is unable to successfully negotiate
a long-term refinancing by June 28, 2002 or an extension of the current
facility beyond June 28, 2002, it is likely that the bank lenders would call
the guarantee, thereby requiring the chairman to repay the amount of the loan
to the banks. Under the terms of his guarantee, the chairman has the option to
purchase the entire loan from the banks, and thereby would become the holder of
the debt currently payable to the banks as a secured creditor.

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 on all subordinated notes
is subordinate to the Companys bank credit agreement. The Company does not
currently anticipate having the ability to repay the $18,594,000 outstanding
under the subordinated notes by the January 17, 2003 maturity date due to
restrictions placed on making such payments under the Companys present bank
credit facility and the anticipated terms of a long-term refinancing of the
senior credit facility with its banks. Interest on overdue principal payments
on the subordinated notes accrues at an annual rate of 10%.

The Company met all of its principal payment requirements for the nine months
ended March 31, 2002, reducing its term debt by $20,793,000. In order to meet
these principal payment obligations, the Company, as anticipated by the Company
at the time it agreed to the principal maturity schedule, sold its remaining
investments in Gray preferred stock and its investment in Tarzian common stock,
resulting in cash proceeds of $16,803,000. In addition, the Company issued
shares of its series B convertible preferred stock, resulting in cash proceeds
of $2,400,000.

The maximum borrowings under the Companys revolving credit facility are
$20,000,000 until expiration of the facility on June 28, 2002, limited by a
borrowing base computation determined as 100% of eligible accounts receivable
plus $5,000,000. The Company believes that available borrowings under the
revolving credit facility are sufficient to fund its working capital, capital
spending and debt service requirements through June 28, 2002. Under the terms
of the amendment dated March 29, 2002, the Company had available capacity under
the revolving credit facility of $2,250,000 as of March 31, 2002.

Historical Cash Flow Information 
Cash used in continuing operations for the nine months ended March 31, 2002 was
$3,458,000, compared to $537,000 for the same period in the prior year. Income
(loss) from operations before depreciation and amortization decreased
$3,919,000 in the nine months ended March 31, 2002 compared to the same period
in the prior year. In the nine months ended March 31, 2002 and 2001,
receivables decreased $1,255,000 and $3,013,000, respectively, and accounts
payable and accrued expenses increased $4,558,000 and $3,237,000, respectively,
due, in each case, primarily to the seasonality of the Companys Collegiate
Marketing and Production Services segment, which generates most of its revenue
during the collegiate football and basketball seasons which generally run from
late August through late March or early April. In the nine months ended March
31, 2002 and 2001, prepaid costs and expenses decreased (increased) $190,000
and $(3,917,000), respectively, due to a change in the timing of certain rights
fees payments. Cash provided by (used in) discontinued operations was
$(107,000) and $1,972,000 for the nine months ended March 31, 2002 and 2001,
respectively. The difference in cash provided by (used in) discontinued
operations was primarily a result of reductions in inventories and accounts
receivable in the prior year in connection with the sale of Datasouth on
September 29, 2000.

Cash provided by continuing operation investing activities was $15,544,000 for
the nine months ended March 31, 2002 as a result of the Companys sale of
investments in Gray preferred stock and Tarzian common stock, resulting in
proceeds of $16,803,000, net of capital expenditures and additional investments
in affiliated companies, compared to $2,986,000 for the nine months ended

17



---



##### 



March 31, 2001 resulting from the Companys sales of investments for aggregate
proceeds of $5,330,000, net of capital expenditures and cash used to acquire an
operating business. Cash provided by discontinued operation investing
activities was $879,000 and $2,067,000 in the nine months ended March 31, 2002
and 2001, respectively, as a result of cash proceeds on the sale of Datasouth
assets received during those periods.

Cash used in financing activities was $15,278,000 for the nine months ended
March 31, 2002 as a result of principal payments made on the Companys bank
term debt credit facilities totaling $20,793,000, less net borrowings under the
Companys revolving bank credit facility of $3,350,000. Cash used in financing
activities was $6,117,000 for the nine months ended March 31, 2001 as a result
of principal payments made on the Companys bank term debt credit facilities
totaling $10,000,000, less net borrowings under the Companys revolving bank
credit facility of $4,475,000.

Commitments 
In 1984, Host and the NCAA 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 August 2002.
In July 2001, Host executed an agreement with CBS Sports for the exclusive
right to continue administering the NCAA Corporate Partner Program, along with
other NCAA marketing programs for the NCAA, beginning in September 2002 and
terminating in 2013. Guaranteed rights fee expense under the current NCAA
contract will be $19,417,000 and $3,333,000 for the fiscal years ending June
30, 2002 and 2003, respectively. The guaranteed rights fee payable to CBS
Sports in four equal quarterly installments for the initial contract year
beginning September 1, 2002 will be $40 million, with gradual annual increases
throughout the 11-year period of the contract, for an aggregate guaranteed
rights fee of $575 million. The increase in rights fees, as compared to the
Companys earlier NCAA agreement, primarily results from the increased
marketing, licensing and media rights sublicensed by CBS under the new contract
with CBS Sports compared to the Companys current agreement directly with the
NCAA.

The Company is a party to two interest rate swap agreements described in Note 6
to the Condensed Consolidated Financial Statements. The estimated cost of
terminating the swap agreements, if the Company elected to do so, was
approximately $2,186,000 as of March 31, 2002.

RESULTS OF OPERATIONS  THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE
MONTHS ENDED MARCH 31, 2001

Results Derived from Operating Businesses 
Total revenues associated with continuing operations for the three months ended
March 31, 2002 were $34,035,000 compared to $35,645,000 for the same period in
2001. For the three months ended March 31, 2002 and 2001, the total revenue
derived from the Collegiate Marketing and Production Services segment was
$29,050,000 and $30,115,000, respectively; total revenue derived from the
Affinity Events segment was $2,466,000 and $2,758,000, respectively; and total
revenue derived from the Affinity Management Services segment was $2,519,000
and $2,764,000, respectively. Management believes that the weak U.S. economy
has had a significantly unfavorable impact on corporate advertising, promotion
and sponsorship spending, such as the advertising, promotional and sponsorship
opportunities offered by the Companys Collegiate Marketing and Production
Services segment. Although the Company believes that the decline in corporate
advertising, promotion and sponsorship spending is temporary, management cannot
determine when or if such spending will return to historical levels. The
Company believes that the weak economy and downturn in corporate spending will
continue to have an unfavorable impact on its revenues and operating results
for at least the remainder of the fiscal year, particularly since the sales
cycle associated with events held during the current fiscal year has
substantially concluded. Revenues derived from the Affinity Events segment
declined from the prior year primarily due to the reduction in the scope of
certain events and tours.

18



---



##### 



The Companys Collegiate Marketing and Production Services business is
seasonal, in that the majority of the revenue and operating profit is derived
during the fiscal quarters ending December 31 and March 31, since much of the
revenue derived in this segment is related to events and promotions held during
the collegiate football and basketball seasons. The Companys Affinity Events
business is also seasonal, in that the majority of the revenue and operating
profit is derived during the fiscal quarters ending June 30 and to a lesser
extent, September 30, since a significant amount of the revenue derived in this
segment is generated during the NBA Hoop-It-Up tour, which begins in March and
runs through October in each year.

Operating costs and expenses were $35,575,000 for the three months ended March
31, 2002 compared to $36,781,000 for the same period in 2001. Direct operating
costs for services rendered increased to $27,852,000 for the three month period
ended March 31, 2002 from $25,158,000 for the same period in the prior year due
primarily to an increase in contractually determined guaranteed rights fees
charged by the NCAA and other collegiate institutions. Selling, general and
administrative expenses decreased to $7,412,000 for the three month period
ended March 31, 2002 from $10,496,000 for the same period in the prior year
primarily due to reductions in the number of employees and travel expenses,
most significantly in the Affinity Events segment. A change in accounting
method for goodwill and other intangible assets (see Changes in Accounting
Methods below and Note 2 to the Condensed Consolidated Financial Statements)
resulted in the reduction of $816,000 in the amount of acquisition intangible
amortization.

For the three months ended March 31, 2002 and 2001, the operating income from
the Collegiate Marketing and Production Services segment was $274,000 and
$1,667,000, respectively; the operating loss from the Affinity Events segment
was $(1,066,000) and $(1,200,000), respectively; and the operating income from
the Affinity Management Services segment was $54,000 and $132,000,
respectively. The decline in the operating income in the Collegiate Marketing
and Production Services segment was due primarily to the decrease in total
revenue and increase in guaranteed rights fees expense discussed above. The
change in the amount of operating loss in the Affinity Events segment was
affected by the decline in revenue, but offset by the reduction in the
operating expenses of this segment through internal operating efficiency
initiatives and greater focus on cost control. Unallocated general and
administrative costs decreased to $491,000 in the three months ended March 31,
2002 from $616,000 in the same period of the prior year primarily due to a
reduction in compensation costs.

Results Derived from Investments and Derivative Instruments 
Equity in earnings (losses) of affiliated companies, totaling $(224,000) and
$(924,000) for the three months ended March 31, 2002 and 2001, respectively,
included the Companys proportionate share of the earnings or losses of Gray,
iHigh and certain other equity investments in 2002 and 2001, and of Rawlings in
2001 only. Prior to December 31, 2001, the Companys investment in Rawlings
was determined using the equity method of accounting and the Company recognized
its proportionate share of the earnings or losses of Rawlings in the Statement
of Operations; subsequent to December 31, 2001, the Company accounts for its
investment in Rawlings as an available-for-sale marketable security (see
Notes 5 and 10 to the Condensed Consolidated Financial Statements). The change
in the accounting method for goodwill and other intangible assets had a
favorable impact on the current year results by approximately $228,000.

The net change in the value of certain derivative instruments, consisting of
warrants to purchase Gray common stock and interest rate swap agreements, was
$(445,000) and $(1,359,000) for the three months ended March 31, 2002 and 2001,
respectively, resulting from changes in the aggregate appraised value of the
warrants and the changes in the values of interest rate swap agreements caused
by changes in prospective market interest rates.

Interest and dividend income of $144,000 for the three months ended March 31,
2001 was primarily derived from dividends on the Companys investment in Gray
series A and series B preferred stock, all of which was sold by September 2001.
The Company incurred a $1,837,000 loss on a non-cash

19



---



##### 



adjustment in the valuation of its investment in Quokka Sports, Inc. in the
three months ended March 31, 2001.

Other income for the three months ended March 31, 2001 consisted primarily of
income on an option agreement with Gray whereby Gray had the right to acquire
the Companys investment in Tarzian for $10,000,000 plus related costs. Gray
exercised its option in December 2001.

In the three months ended March 31, 2002, the Company recognized an
extraordinary loss of $627,000, net of tax, as its proportionate share of an
extraordinary loss recognized by Gray in January 2002 related to a charge
resulting from Grays early extinguishment of debt.

In the three months ended March 31, 2002, the Company recognized the cumulative
effect of an accounting change of $2,620,000, net of tax, as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002 in
connection with a change in Grays accounting for goodwill and other intangible
assets.

Interest Expense and Debt Related Costs 
Interest expense decreased to $2,165,000 for the three months ended March 31,
2002 from $2,715,000 for the same period in the prior year, as a result of a
reduction in long-term debt and declines in variable interest rates on which a
significant amount of the debt is subject.

Debt issue cost amortization of $691,000 and $557,000 for the three months
ended March 31, 2002 and 2001, respectively, resulted from the amortization of
costs paid in connection with obtaining bank financing, as well as amortization
of the value of shares of the Companys common stock issued to the Companys
chairman who, as previously noted, has personally guaranteed the Companys debt
under its bank credit agreement. The value of the shares issued on an annual
basis is amortized over the period for which it benefits, which is typically
one year or the period ending on the maturity date of the credit agreement.
Unamortized debt issue costs as of March 31, 2002 of $228,000 are being
amortized over the remaining term of the Companys bank credit agreement, which
matures June 28, 2002.

Income Taxes 
The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible amortization of acquisition intangible
assets and state income taxes.

RESULTS OF OPERATIONS  NINE MONTHS ENDED MARCH 31, 2002 COMPARED TO NINE
MONTHS ENDED MARCH 31, 2001

Results Derived from Operating Businesses
Total revenues associated with continuing operations for the nine months ended
March 31, 2002 were $91,221,000 compared to $95,533,000 for the same period in
the prior year. For the nine months ended December 31, 2001 and 2000, the
total revenue derived from the Collegiate Marketing and Production Services
segment was $69,612,000 and $72,716,000, respectively; total revenue derived
from the Affinity Events segment was $10,721,000 and $14,981,000, respectively;
and total revenue derived from the Affinity Management Services segment was
$11,328,000 and $7,817,000, respectively. Revenues derived from the Collegiate
Marketing and Production Services segment declined from the prior year due to a
reduction in advertising and sponsorship revenues, discussed above in the
section Results of Operations  Three Months Ended March 31, 2002 Compared To
Three Months Ended March 31, 2001. Revenues derived from the Affinity Events
segment declined from the prior year due to the change in timing of certain
events and tours, the reduction in the scope of certain events and tours, and a
decline in sponsor revenue associated with the NBA Hoop-It-Up tour. Revenues
derived from the Companys Affinity Management Services segment increased from
the prior year primarily due to the addition of a new contract with the
National Thoroughbred Racing Association that generated total revenues of
$3,077,000 in the nine months ended March 31, 2002.

20



---



##### 



Operating costs and expenses were $95,566,000 for the nine months ended March
31, 2002 compared to $98,436,000 for the same period in the prior year. Direct
operating costs for services rendered increased to $70,230,000 for the nine
month period ended March 31, 2002 from $66,770,000 for the same period in the
prior year due primarily to an increase in contractually determined guaranteed
rights fees charged by the NCAA and other collegiate institutions. Selling,
general and administrative expenses decreased to $24,404,000 for the nine month
period ended March 31, 2002 from $28,381,000 for the same period in the prior
year primarily due to reductions in the number of employees and travel
expenses, most significantly in the Affinity Events segment. The change in
accounting method for goodwill and other intangible assets resulted in the
reduction of $2,353,000 in the amount of acquisition intangible amortization.

For the nine months ended March 31, 2002 and 2001, the operating income from
the Collegiate Marketing and Production Services segment was $921,000 and
$5,003,000, respectively; the operating loss from the Affinity Events segment
was $(3,433,000) and $(3,740,000), respectively; and the operating income from
the Affinity Management Services segment was $732,000 and $768,000,
respectively. The decline in the operating income in the Collegiate Marketing
and Production Services segment was due primarily to the decrease in total
revenue and increase in guaranteed rights fees expense discussed above. The
decline in the operating loss in the Affinity Events segment was due to a
reduction in the operating expenses of this segment, through internal operating
efficiency initiatives and greater focus on cost control, net of the impact of
the decline in revenue. Unallocated general and administrative costs were
$1,643,000 in the nine months ended March 31, 2002, comparable to the
$1,669,000 incurred in the same period of the prior year.

Results Derived from Investments and Derivative Instruments 
Equity in earnings (losses) of affiliated companies, totaling $(1,265,000) and
$(2,678,000) for the nine months ended March 31, 2002 and 2001, respectively,
included the Companys proportionate share of the earnings or losses of Gray,
Rawlings, iHigh and certain other equity investments, however, only as to
Rawlings for the six months ended December 31, 2001 and the nine months ended
March 31, 2001. (Refer to the section Results of Operations  Three Months
Ended March 31, 2002 Compared To Three Months Ended March 31, 2001 and Notes 5
and 10 of the Condensed Consolidated Financial Statements for further
discussion regarding the accounting for the investment in Rawlings.) The
change in the accounting method for goodwill and other intangible assets had a
favorable impact on the current year results by $1,217,000.

The net change in the value of certain derivative instruments, consisting of
warrants to purchase common stock of affiliated companies and interest rate
swap agreements, was $(3,938,000) and $4,569,000 for the nine months ended
March 31, 2002 and 2001, respectively, resulting from the change in the value
of interest rate swap agreements caused by changes in prospective market
interest rates, and changes in the aggregate value of the warrants.

Interest and dividend income of $149,000 and $646,000 for the nine months ended
March 31, 2002 and 2001, respectively, was primarily derived from dividends on
the Companys investment in Gray series A and series B preferred stock, all of
which was sold by September 2001. Shares of Gray series A and series B
preferred stock were sold in September 2001 resulting in a gain of $3,064,000.
Shares of Gray series A preferred stock were redeemed by Gray in December 2000
resulting in a gain of $2,160,000. The Company incurred a $8,017,000 loss on
an adjustment in the valuation of its investment in Quokka Sports, Inc. in the
nine months ended March 31, 2001.

Other income for the nine months ended March 31, 2002 and 2001 consisted
primarily of income on an option agreement with Gray whereby Gray had the right
to acquire the Companys investment in Tarzian for $10,000,000 plus related
costs. Gray exercised its option in December 2001.

In the nine months ended March 31, 2002, the Company recognized an
extraordinary loss of $627,000, net of tax, as its proportionate share of an
extraordinary loss recognized by Gray related to a charge resulting from Grays
early extinguishment of debt.

21



---



##### 



In the nine months ended March 31, 2002, the Company recognized the cumulative
effect of an accounting change of $2,620,000, net of tax, as its proportionate
share of a cumulative effect adjustment recognized by Gray in January 2002 in
connection with a change in Grays accounting for goodwill and other intangible
assets.

In the nine months ended March 31, 2001, the Company recognized the cumulative
effect of an accounting change of $1,120,000, net of tax, due to the Companys
change in accounting for certain derivative instruments.

Interest Expense and Debt Related Costs 
Interest expense decreased to $7,357,000 for the nine months ended March 31,
2002 from $8,953,000 for the same period in the prior year, as a result of a
reduction in long-term debt and declines in variable interest rates on which a
significant amount of the debt is subject.

Debt issue cost amortization of $2,158,000 and $1,810,000 for the nine months
ended March 31, 2002 and 2001, respectively, resulted from the amortization of
costs paid in connection with obtaining bank financing, as well as amortization
of the value of shares of the Companys common stock issued to the Companys
chairman who, as previously noted, has personally guaranteed the Companys debt
under its bank credit agreement. In addition, amortization expense for the
nine months ended March 31, 2002 and 2001 included $235,000 and $395,000,
respectively, for the reduction of previously unamortized debt issue costs as a
result of amending certain terms of the bank credit agreement.

Income Taxes 
The principal differences between the federal statutory tax rate of 34% and the
effective tax rates are nondeductible amortization of acquisition intangible
assets and state income taxes.

INTEREST RATE AND MARKET 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 Note 6 to the Condensed Consolidated
Financial Statements) 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 March 31, 2002 and 2001, a 1% increase
in market interest rates would increase interest expense and increase the loss
before income taxes by $110,000 and $399,000 for the three months and nine
months ended March 31, 2002, respectively, and by $157,000 and $509,000 for the
three months and nine months ended March 31, 2001, respectively. These amounts
were determined by calculating the effect of the hypothetical interest rate on
the Companys floating rate debt, after giving effect to the Companys interest
rate swap agreements. These amounts do not include the effects of certain
potential results of increased interest rates, such as a reduced level of
overall economic activity or other actions management may take to mitigate the
risk. Furthermore, this sensitivity analysis does not assume changes in the
Companys financial structure that could occur if interest rates were higher.

The Company holds investments in certain common stocks and warrants to purchase
common stocks, and previously held investments in Gray preferred stock. The
Company is exposed to changes in market values of these investments, some of
which are publicly traded common stocks. In the case of the Companys
investment in Gray common stocks, where there exists a quoted market price for
the publicly-traded securities in which the Company holds investments, the
investment is accounted for under the equity method, whereby changes in the
quoted market prices

22



---



##### 



of the securities do not impact the carrying value of the investment. However,
fluctuations in market prices of these 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 5 to
the Condensed Consolidated Financial Statements), a 10% change in the aggregate
market value of such investments and related warrants would increase or
decrease the aggregate market value by approximately $5.3 million as of March
31, 2002 and $8.7 million as of June 30, 2001.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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; (iii) Grays business depends, in part, on sales of advertising time
and space and on its relationships with, and success of, its national network
affiliates; (iv) significant segments of the Companys business are seasonal;
(v) adverse events affecting baseball, such as negative publicity or strikes,
may adversely affect Rawlings business; (vi) the Companys and Rawlings
businesses depend on short term contracts and the inability to renew or extend
these contracts could adversely affect their businesses; (vii) the Company may
lose money on some of its contracts, because it guarantees certain payments
thereunder; and (vii) war or acts of terrorism or a continued domestic downturn
or recession could materially adversely impact corporate discretionary
spending, such as sponsorship and advertising sold by the Company and Gray.

23



---



##### 



PART II.   OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits



| |     
| | ----
| | None

(b)  Reports on Form 8-K



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Form 8-K dated January 8, 2002 related to the
announcement concerning the Companys filing of a lawsuit
against Ernst & Young LLP
|
| | Form 8-K dated February 28, 2002 related to the
execution of an amendment to the Companys bank credit
facility                  

SIGNATURES

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

|                   |  |                                                                
|------------------ |  | ---------------------------------------------------------------
|                   |  | BULL RUN CORPORATION                                           
|                  
|Date: May 14, 2002 |  | By:   /s/ FREDERICK J. ERICKSON                                
|                   |  |                                                                
|                   |  | Frederick J. Erickson                                          
|                   |  | Vice President-Finance, Treasurer
      and Assistant Secretary

24