##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedNovember 30, 2004
 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  Georgia
(State of incorporation
or organization)
    
    58-2458679
(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.þ Yes     o No Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date: 6,413,879 shares of Common Stock, par value $.01 per share, were
outstanding as of January 7, 2005. Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act).oYes     þ  No




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLECONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSItem 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 2. Unregistered Sales of Equity SecuritiesItem 6. ExhibitsSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2 
 PART I. FINANCIAL INFORMATION 
 Item 1. Financial Statements BULL RUN CORPORATION 
 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 November 30,
    
    
    August 31,2004
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    810
    
    
    $
    450Accounts receivable, net of allowance of $445 and $309 as of
November 30, 2004 and August 31, 2004, respectively
    
    
    15,339
    
    
    
    5,219Inventories
    
    
    1,019
    
    
    
    663Prepaid costs and expenses
    
    
    1,393
    
    
    
    1,757Total current assets
    
    
    18,561
    
    
    
    8,089Property and equipment, net
    
    
    3,056
    
    
    
    3,184Goodwill
    
    
    40,364
    
    
    
    40,364Customer relationships and trademarks
    
    
    8,129
    
    
    
    8,308Other assets
    
    
    1,495
    
    
    
    997$
    71,605
    
    
    $
    60,942LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt
    
    $
    61,022
    
    
    $
    590Accounts payable
    
    
    3,142
    
    
    
    5,866Deferred revenue
    
    
    5,430
    
    
    
    4,819Accrued fees payable to related party
    
    
    1,189
    
    
    
    1,721Advances from stockholder
    
    
    4,550
    
    
    
    4,550Accrued and other liabilities
    
    
    16,507
    
    
    
    9,215Net current liabilities of discontinued segment
    
    
    973
    
    
    
    474Total current liabilities
    
    
    92,813
    
    
    
    27,235Long-term debt
    
    
    8,693
    
    
    
    64,625Other liabilities, excluding redeemable preferred stock
    
    
    356
    
    
    
    497Net noncurrent liabilities of discontinued segments
    
    
    697
    
    
    
    840Redeemable preferred stock:Series D preferred stock, $.01 par value (authorized 100 shares;
issued and outstanding 12.5 shares; $12,497 liquidation value)
    
    
    12,497
    
    
    
    12,497Series E preferred stock, $.01 par value (authorized 25 shares;
issued and outstanding 7.6 shares as of November 30, 2004
and 9.8 shares as of August 31, 2004; $7,606 and $9,799
liquidation value, respectively)
    
    
    7,606
    
    
    
    9,799Series F preferred stock, $.01 par value (authorized 25 shares;
issued and outstanding 2.0 shares; $2,000 liquidation value)
    
    
    2,000
    
    
    
    2,000Total liabilities
    
    
    124,662
    
    
    
    117,493Commitments and contingenciesStockholders deficit:Common stock, $.01 par value (authorized 100,000 shares;
issued 6,414 and 5,386 shares as of November 30, 2004
and August 31, 2004, respectively)
    
    
    64
    
    
    
    54Additional paid-in capital
    
    
    84,149
    
    
    
    81,706Accumulated deficit
    
    
    (137,270
    )
    
    
    (138,311
    )Total stockholders deficit
    
    
    (53,057
    )
    
    
    (56,551
    )$
    71,605
    
    
    $
    60,942
 The accompanying notes are an integral part of these condensed consolidated financial statements. 2




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##### 



BULL RUN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 Three Months EndedNovember 30,2004
    
    
    2003Revenue from services rendered
    
    $
    23,075
    
    
    $
    19,495Operating costs and expenses:Direct operating costs of services rendered
    
    
    15,776
    
    
    
    12,958Selling, general and administrative
    
    
    4,343
    
    
    
    4,408Amortization of acquisition intangibles
    
    
    179
    
    
    
    313Total operating costs and expenses
    
    
    20,298
    
    
    
    17,679Operating income
    
    
    2,777
    
    
    
    1,816Other income (expense):Net change in value of derivative instrument
    
    
    310
    
    
    
    306Interest expense
    
    
    (1,171
    )
    
    
    (1,086
    )Debt issue cost amortization
    
    
    (249
    )
    
    
    (291
    )Other income (expense)
    
    
    12
    
    
    
    6Income from continuing operations
    
    
    1,679
    
    
    
    751Loss from discontinued operations
    
    
    (109
    )
    
    
    (1,873
    )Net income (loss)
    
    
    1,570
    
    
    
    (1,122
    )Preferred dividends
    
    
    (529
    )
    
    
    (532
    )Net income (loss) available to common stockholders
    
    $
    1,041
    
    
    $
    (1,654
    )Income (loss) per share available to common stockholders, basic:Income from continuing operations
    
    $
    0.20
    
    
    $
    0.05Loss from discontinued operations
    
    
    (0.02
    )
    
    
    (0.43
    )$
    0.18
    
    
    $
    (0.38
    )Income (loss) per share available to common stockholders, diluted:Income from continuing operations
    
    $
    0.11
    
    
    $
    0.05Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.43
    )$
    0.10
    
    
    $
    (0.38
    )Weighted average number of common shares outstanding:Basic
    
    
    5,713
    
    
    
    4,340Diluted
    
    
    15,278
    
    
    
    4,340
 The accompanying notes are an integral part of these condensed consolidated financial statements. 3




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##### 



BULL RUN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS DEFICIT (Unaudited)
 RedeemablePreferred
    
    
    Common StockStock
    
    
    Shares
    
    
    AmountAs of September 1, 2004
    
    $
    24,296
    
    
    
    5,386
    
    
    $
    54Conversion of redeemable preferred stock
to shares of common stock
    
    
    (2,193
    )
    
    
    313
    
    
    
    3Issuance of common stock
    
    
    
    
    
    
    715
    
    
    
    7As of November 30, 2004
    
    $
    22,103
    
    
    
    6,414
    
    
    $
    64
 Additional
    
    
    
    
    
    
    TotalPaid-In
    
    
    Accumulated
    
    
    StockholdersCapital
    
    
    Deficit
    
    
    DeficitAs of September 1, 2004
    
    $
    81,706
    
    
    $
    (138,311
    )
    
    $
    (56,551
    )Conversion of redeemable preferred stock
to shares of common stock
    
    
    2,190
    
    
    
    
    
    
    
    2,193Issuance of common stock
    
    
    253
    
    
    
    
    
    
    
    260Preferred dividends
    
    
    
    
    
    
    (529
    )
    
    
    (529
    )Net income
    
    
    
    
    
    
    1,570
    
    
    
    1,570As of November 30, 2004
    
    $
    84,149
    
    
    $
    (137,270
    )
    
    $
    (53,057
    )
 The accompanying notes are an integral part of these condensed consolidated financial statements. 4




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##### 



BULL RUN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months EndedNovember 30,2004
    
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    1,570
    
    
    $
    (1,122
    )Loss from discontinued operations
    
    
    109
    
    
    
    1,873Adjustments to reconcile net loss to net cash used in
continuing operations:Provision for bad debts
    
    
    45
    
    
    
    50Depreciation, amortization and intangibles impairment
    
    
    573
    
    
    
    871Net change in value of derivative instrument
    
    
    (310
    )
    
    
    (306
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (10,164
    )
    
    
    (4,972
    )Inventories
    
    
    (356
    )
    
    
    (48
    )Prepaid costs and expenses
    
    
    371
    
    
    
    442Accounts payable and accrued expenses
    
    
    4,309
    
    
    
    (425
    )Other long-term liabilities
    
    
    169Net cash used in continuing operations
    
    
    (3,684
    )
    
    
    (3,637
    )Net cash provided by (used in) discontinued operations
    
    
    99
    
    
    
    (2,722
    )Net cash used in operating activities
    
    
    (3,585
    )
    
    
    (6,359
    )Cash flows from investing activities:Capital expenditures
    
    
    (17
    )
    
    
    (48
    )Other investing activities
    
    
    10
    
    
    
    13Net cash used in continuing operation investing activities
    
    
    (7
    )
    
    
    (35
    )Net cash provided by (used in) discontinued operation
investing activities
    
    
    150
    
    
    
    (12
    )Net cash provided by (used in) investing activities
    
    
    143
    
    
    
    (47
    )Cash flows from financing activities:Borrowings from notes payable and revolving line of credit
    
    
    4,500Debt issue costs
    
    
    (444
    )
    
    
    (38
    )Preferred stock dividends paid
    
    
    (254
    )Issuance of preferred stock
    
    
    
    
    
    
    2,000Net cash provided by continuing operation financing activities
    
    
    3,802
    
    
    
    1,962Net increase (decrease) in cash and cash equivalents
    
    
    360
    
    
    
    (4,444
    )Cash and cash equivalents, beginning of period
    
    
    450
    
    
    
    4,520Cash and cash equivalents, end of period
    
    $
    810
    
    
    $
    76
 The accompanying notes are an integral part of these condensed consolidated financial statements. 5




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BULL RUN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Bull Run Corporation
(Bull Run or the Company) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal, recurring adjustments) considered
necessary for a fair presentation of the Companys financial position and results of operations
have been included. Operating results for the three-month period ended November 30, 2004 are not
necessarily indicative of the results that may be expected for the fiscal year ending August 31,
2005. For further information, refer to the consolidated financial statements and footnotes
thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended August 31,
2004. The accompanying condensed consolidated financial statements include the accounts of Bull Run and
its wholly owned subsidiaries, including Host Communications, Inc. (Host), after elimination of
intercompany accounts and transactions. Bull Run, through Host, provides comprehensive sales,
marketing, multimedia, special event and convention/hospitality services, primarily for National
Collegiate Athletic Association (NCAA) Division I universities and conferences, and
national/global associations. Discontinued OperationIn August 2004, the Company announced its intent to suspend and sell its
Affinity Events business segment due to the segments historical operating losses and the
Companys intention to focus on its Collegiate Marketing and Production Services segment and its
Association Management segment. As a result, the Affinity Events segment has been reflected in the
Companys financial statements as a discontinued operation for all periods presented. In December
2004, the principal assets of the Affinity Events segment were sold. Proceeds on the sale received
at closing of approximately $875 were used to reduce current liabilities, approximately $300 of
which pertained to the cancellation of the remaining principal amount and accrued interest on
subordinated debt previously issued by the Company to an officer of the company purchasing the
assets. In addition, the Company received a $675 subordinated installment note issued by the
purchaser and other future consideration estimated to be valued at approximately $150. At this
time, the Company has judged that the collection of the note is in doubt, due to its subordinate
nature and the amount of time before which scheduled payments are to be made. As a result, the
Companys loss on its discontinued operations reported in the fiscal year ended August 31, 2004 was
presented net of the $875 proceeds then anticipated on, and ultimately received at the closing of,
the sale of the Affinity Events assets. If the Company ultimately receives more than $875 on the
sale, such income will be reported in the future as income from discontinued operations. Unless otherwise indicated, amounts provided in these notes to the condensed consolidated financial
statements pertain to continuing operations. Stock-Based
Compensation The Company follows the provisions of Statement of Financial Accounting
Standards No. 123 Accounting for Stock-Based Compensation (SFAS 123). SFAS 123 allows
companies to either expense the estimated fair value of stock options or continue to follow the
intrinsic value method set forth in Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees (APB 25), but disclose the pro forma effects on net income (loss) had
the fair value of the options been expensed. The Company has elected to continue to apply APB 25
in accounting for its stock option incentive plans. 6




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For purposes of the following pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options vesting period: Three Months EndedNovember 30,2004
    
    
    2003Net income (loss) available to common stockholders, as reported
    
    $
    1,041
    
    
    $
    (1,654
    )Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects
    
    
    (1
    )
    
    
    (92
    )Net income (loss) available to common stockholders, pro forma, for
computation of basic income (loss) per share
    
    $
    1,040
    
    
    $
    (1,746
    )Net income (loss) per common share, basic:As reported
    
    $
    0.18
    
    
    $
    (0.38
    )Pro forma
    
    $
    0.18
    
    
    $
    (0.40
    )Net income (loss) available to common stockholders, as reported
    
    $
    1,041
    
    
    $
    (1,654
    )Adjustment to accrued preferred dividends for computation of diluted
earnings (loss) per share
    
    
    500Deduct: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects
    
    
    (1
    )
    
    
    (92
    )Net income (loss) available to common stockholders, pro forma, for
computation of diluted income (loss) per share
    
    $
    1,540
    
    
    $
    (1,746
    )Net income (loss) per common share, diluted:As reported
    
    $
    0.10
    
    
    $
    (0.38
    )Pro forma
    
    $
    0.10
    
    
    $
    (0.40
    )
 2. LIQUIDITY As of November 30, 2004, the Companys negative working capital was $74,252, including $58,932 of
bank debt maturing on November 30, 2005 and $2,090 of subordinated debt maturing on December 31,
2004. Certain current liabilities, including deferred revenue of $5,430, advances from stockholder
of $4,550 and certain accrued preferred stock dividends of $2,392, do not represent cash
obligations or do not represent liabilities expected to be paid in cash prior to the November 30,
2005 maturity date of the bank credit facility. In recent fiscal years, the Company has reported
substantial losses and has consumed substantial cash in its operations. The Company has funded its
liquidity needs through the sale of investments, the issuance of preferred stock and other cash
advances made by the Companys majority stockholder and Chairman of the board, and the issuance of
subordinated debt to the Chairman and companies affiliated with the Chairman. Based upon the
Companys forecasted operating cash flows and capital expenditures for the remainder of its fiscal
year ending August 31, 2005 and a commitment from the Chairman to invest cash of up to $3,000 prior
to the November 30, 2005 maturity date of the Companys bank credit agreement (from which, $1,500
would be used to repay a subordinated note payable to a company controlled by the Chairman),
management believes the Company has sufficient liquidity until the November 30, 2005 maturity date
of its bank credit agreement. As further discussed in Note 6, the Company currently has $58,932 of debt outstanding under its
bank credit agreement. As further discussed in Note 6, the Companys Chairman has guaranteed
repayment of up to $55,932 of the outstanding bank debt. Amounts outstanding under the credit
agreement are due on November 30, 2005. The Companys ability to continue this or similar
financing beyond the November 30, 2005 maturity date is significantly dependent on the continued
support of the Companys Chairman and, in part, on the Companys future operating results. There
can be no assurances with respect to either the Companys future operating results or the continued
support of its Chairman. 3. DISCONTINUED OPERATIONS The Company discontinued its Affinity Events business segment during the fiscal year ended August
31, 2004. In August 2004, the Company announced its decision to suspend the Affinity Events
business, and declared its intent to offer the business unit for sale, and ultimately sold the
principal assets of the segment in December 2004. Accordingly, the operating results and net
assets associated with the Consulting and the Affinity Events business segments as of 7




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and for all
fiscal periods presented herein have been reflected as discontinued operations in the accompanying
consolidated financial statements. As a result of the suspension of its Affinity Events business, the Company incurred certain costs
charged to discontinued operations in the fiscal year ended August 31, 2004, including (a) employee
severance costs; (b) the present value of future lease obligations, net of estimated sublease
income, to be incurred through 2010; and (c) the present value of consulting agreement commitments
through 2010 for arrangements under which no future benefits are expected to be derived; less (d)
the estimated proceeds to be derived from the sale of Affinity Events assets. A reconciliation of the accrued liability associated with the suspension and sale of the Affinity
Events segment is as follows: Accrued liability as of August 31, 2004
    
    $
    2,625Costs incurred during the period
    
    
    (524
    )Accrued liability as of November 30, 2004
    
    $
    2,101
 Potential income subsequent to November 30, 2004 to be derived from subleasing vacated office space
has been estimated to be approximately $750 over the remaining lives of the leases. The estimated
proceeds to be derived from the sale of Affinity Events assets do not include amounts payable to
the Company in the future which are anticipated to be subordinated to the purchasers bank
financing. Actual amounts received in connection with deferred proceeds on the sale and any other
unanticipated income or expenses, including income from the future subleases of vacated office
space, could differ materially from amounts assumed in arriving at the loss on termination of the
business. To the extent actual proceeds or other amounts differ from the estimates that are
reflected as of November 30, 2004, or as managements estimates are revised, the variance will be
reported in discontinued operations in future periods. Likewise, the results of any remaining
Events operations occurring subsequent to November 30, 2004 will be reported in discontinued
operations in future periods. Proceeds of $875 derived from the sale of the Affinity Events assets
at closing in December 2004 were used to repay a subordinated note totaling $295 and certain
liabilities associated with the prior operations of the business. The Company consummated the sale of Datasouths computer printer manufacturing operation on
September 29, 2000. Certain of the proceeds to be realized on the sale of Datasouths assets are
deferred under a subordinated note agreement with the purchaser that was amended during the fiscal
year ended August 31, 2004. The amended note agreement provides for gradually reducing discounts on the amount due to the
Company which are earned by the purchaser as payments are made through the notes maturity in
December 2006. As of November 30, 2004, the amount due to the Company was $2,217; however the
Company has recorded a $1,122 reserve on the note receivable as of November 30, 2004 as an estimate
of the amounts that might ultimately become uncollectible and/or discounted. To the extent actual
proceeds on the note differ from managements current estimate of the proceeds to be ultimately
received, such differences will be reported as discontinued operations in future periods. There are no material contingent liabilities related to discontinued operations, such as product or
environmental liabilities or litigation, which remain with the Company after the termination and/or
disposal of its discontinued operations. Assets and liabilities of the discontinued operations have been reflected in the consolidated
balance sheets as current or noncurrent based on the original classification of the accounts,
except that current liabilities are presented net of current assets and noncurrent liabilities are
presented net of noncurrent assets. 8




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##### 



The following is a summary of assets and liabilities of discontinued operations: November 30,
    
    
    August 31,2004
    
    
    2004Current liabilities:Accounts payable and accrued expenses
    
    $
    805
    
    
    $
    1,429Restructuring obligations
    
    
    282
    
    
    
    513Deferred revenue
    
    
    339
    
    
    
    831Current assets:Accounts receivable, net
    
    
    (365
    )
    
    
    (2,163
    )Inventories
    
    
    
    
    
    
    (6
    )Prepaid costs and expenses
    
    
    (88
    )
    
    
    (130
    )Net current liabilities of discontinued segment
    
    $
    973
    
    
    $
    474Noncurrent liabilities:Restructuring obligations
    
    $
    1,819
    
    
    $
    2,112Noncurrent assets:Note receivable, net
    
    
    (1,095
    )
    
    
    (1,245
    )Property and equipment, net
    
    
    (12
    )
    
    
    (12
    )Other assets
    
    
    (15
    )
    
    
    (15
    )Net noncurrent liabilities of discontinued segments
    
    $
    697
    
    
    $
    840
 The following summarizes revenues and operating results from discontinued operations: Three Months EndedNovember 30,2004
    
    
    2003Revenues:Affinity Events
    
    $
    292
    
    
    $
    2,139Costs and Expenses:Affinity Events:Direct operating costs of services rendered
    
    $
    285
    
    
    $
    2,433Selling, general and administrative
    
    
    116
    
    
    
    1,579$
    401
    
    
    $
    4,012Income
(Loss) from Discontinued Operations:Affinity Events
    
    $
    (109
    )
    
    $
    (1,873
    )
 4. SUPPLEMENTAL CASH FLOW DISCLOSURES Supplemental cash flow information follows: Three Months EndedNovember 30,2004
    
    
    2003Interest paid
    
    $
    1,089
    
    
    $
    1,211Income taxes paid
    
    
    0
    
    
    
    27Noncash investing and financing activities:Exchange of subordinated debt for shares
of preferred stock
    
    
    
    
    
    
    8,016Issuance of common stock in connection
with debt issuance costs
    
    
    260Issuance of common stock to a retirement
plan and as a component of directors fees
    
    
    
    
    
    
    100Conversion of Series E preferred stock to
shares of common stock
    
    
    2,190
 9




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##### 



5. GOODWILL AND OTHER ACQUISITION INTANGIBLE ASSETS The net change in the carrying amount of goodwill by reportable business segment is as follows: CollegiateMarketing and
    
    
    AffinityProduction
    
    
    ManagementServices
    
    
    Services
    
    
    TotalAs of September 1, 2003
    
    $
    37,189
    
    
    $
    6,475
    
    
    $
    43,664Impairment charge
    
    
    (3,300
    )
    
    
    
    
    
    
    (3,300
    )As of August 31, 2004
    
    
    33,889
    
    
    
    6,475
    
    
    
    40,364As of November 30, 2004
    
    $
    33,889
    
    
    $
    6,475
    
    
    $
    40,364
 The net change in the carrying amount of customer relationships and trademarks by reportable
business segment is as follows: CollegiateMarketing and
    
    
    AffinityProduction
    
    
    ManagementServices
    
    
    Services
    
    
    TotalAs of September 1, 2003
    
    $
    7,306
    
    
    $
    2,256
    
    
    $
    9,562Amortization
    
    
    (1,113
    )
    
    
    (141
    )
    
    
    (1,254
    )As of August 31, 2004
    
    
    6,193
    
    
    
    2,115
    
    
    
    8,308Amortization
    
    
    (144
    )
    
    
    (35
    )
    
    
    (179
    )As of November 30, 2004
    
    $
    6,049
    
    
    $
    2,080
    
    
    $
    8,129
 As of November 30, 2004, customer relationships constitute $6,385 and trademarks represent $1,744
of the $8,129 carrying amount presented above, and as of August 31, 2004, customer relationships
constitute $6,525 and trademarks represent $1,783 of the $8,308 carrying amount. A goodwill impairment charge of $3,300 was recognized during the fiscal year ended August 31, 2004,
upon managements consideration of current fiscal year operating results and the forecasted
operating results and business plans for one of the Companys business units. The Company
currently estimates that annual amortization expense of customer
relationships and trademarks for
the fiscal year ending August 31, 2005 will total approximately $718 per year until fully amortized
in December 2015. Accumulated amortization of acquisition intangibles and impairment charges was $39,560 as of
November 30, 2004 and $39,381 as of August 31, 2004, including $29,689 associated with goodwill as
of each of the respective dates. 6. LONG-TERM DEBT Long-term debt and notes payable consist of the following: November 30,
    
    
    August 31,2004
    
    
    2004Term Loans
    
    $
    35,932
    
    
    $
    35,932Revolving Loans
    
    
    23,000
    
    
    
    20,000Subordinated Notes
    
    
    10,783
    
    
    
    9,28369,715
    
    
    
    65,215Less current portion
    
    
    61,022
    
    
    
    590$
    8,693
    
    
    $
    64,625
 10




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##### 



As amended in October 2004, the Companys bank credit agreement provides for (a) two term loans
(the Term Loans) for borrowings totaling $35,932 and (b) two revolving loan commitments (the
Revolving Loans) for aggregate maximum borrowings of $23,000. All amounts outstanding bear
interest at either (a) the banks prime rate or (b) the London Interbank Offered Rate (LIBOR)
plus 2.75%, payable monthly. Under the October 2004 amendment, the Company was provided a new
$3,000 revolving loan commitment (the Revolver B included as a component of the Revolving Loans),
which was funded in full in October 2004, thereby increasing the bank indebtedness to $58,932. As
amended, the agreement has a maturity date of November 30, 2005, at which time all amounts
outstanding become due and payable. The amended agreement does not require any payments of
principal prior to maturity, nor does it provide for any additional borrowing capacity beyond the
Revolver B. The Company anticipates that it will continue to utilize fully the availability under
the Revolving Loans throughout the remaining term of the credit agreement. In September 2004, a company under the Chairmans control provided the Company $1,500 of cash which
was used for working capital purposes in exchange for a subordinated note bearing interest at 6%
per annum, having a maturity date of December 31, 2004. This note was refinanced by another
company under the Chairmans control, by substituting a subordinated note bearing interest at 6%
per annum, having a maturity date of February 28, 2006. Under the terms of the amended credit
agreement, up to an aggregate of $10,000 in funding for working capital purposes, if necessary, may
be sourced from the issuance of equity securities, including shares of the Companys preferred
stock, or by the issuance of subordinated debt. During the fiscal year ended August 31, 2004, the
Company received $6,550 from the Companys Chairman, of which $2,000 was invested in newly-issued
shares of the Companys preferred stock. The remaining investment of $4,550 is presented in the
consolidated balance sheet as Advances from stockholder. Management believes that it is the
Chairmans intention to ultimately convert these advances to subordinated debt or equity
securities. In connection with the credit agreement amendment, the Chairman committed to the
Company an additional aggregate cash investment of up to $3,000 as and when needed at any time and
from time to time on or prior to the maturity date, provided that up to $1,500 of such cash
investments would be used to repay the $1,500 subordinated note issued by his affiliated company. Since the maturity date of the bank credit agreement is November 30, 2005, the total amount
outstanding under the agreement has been presented in the consolidated balance sheet as a current
liability as of November 30, 2004. As of November 30, 2004, principally all borrowings under the
bank credit agreement were subject to the banks LIBOR rate-based rate of 4.74%. The bank credit agreement, as amended, contains certain financial covenants, including the
maintenance of minimum interest coverage ratios determined quarterly. The Company is presently in
compliance with all provisions of the credit agreement as last amended. Long-term debt is
collateralized by all of the Companys assets. In addition, the Companys Chairman personally
guarantees up to $55,932 of the debt outstanding under the bank credit agreement, and if the
Company is unable to meet payment obligations under the agreement, 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. The Chairmans guarantee is collateralized by certain personal holdings of marketable
securities pledged to the Companys bank lenders. Under the terms of his guarantee, the Chairman
has the option to purchase the entire loan from the banks, and thereby becoming the holder of the
debt currently payable to the banks and the related lien on the Companys assets. The Chairman is
compensated by the Company for his guarantee in the form of newly issued shares of the Companys
common stock, valued at an annual rate of 1.625% of the guarantee amount. The guarantee amount
will reduce in the future if principal payments are made to the bank lenders on the outstanding
term loans, and may increase if additional bank financing is made available to the Company. During
the three months ended November 30, 2004, the Chairman was compensated by the Company for his
personal guarantee in the form of 675 restricted shares of the Companys common stock then valued
at $247. There was no compensation paid to the Chairman in any form in the three months ended
November 30, 2003. In December 1999, the Company issued 8% subordinated notes in connection with the acquisition of
Host, representing long-term debt of $8,693 as of November 30, 2004 and August 31, 2004. During the
three months ended November 30, 2003, holders of 8% subordinated notes representing an aggregate
face value of approximately $8,016 exchanged their notes for shares of Series E Preferred Stock.
Interest is payable quarterly in cash on all but a $3,019 subordinated note payable to the
Companys Chairman, on which interest is payable at maturity in the form of cash or shares of the
Companys common stock, at the Companys option. The notes all have a maturity date of January 17,
2006. In connection with the acquisition of certain business operations, the Company also issued
two 9% subordinated notes in September 2000, representing long-term debt of $590 as of November 30,
2004 and August 31, 2004. One note for $295 was cancelled in connection with the Companys sale of
its Affinity Events segment assets (discussed in Notes 1 and 3) and the outstanding balance of $295
on the other note was repaid subsequent to November 30, 2004.Payment of interest and principal on
all subordinated notes is subordinate to the Companys bank credit agreement. The amended bank
agreement provides for the terms under which these notes may be paid by the maturity date. Aggregate maturities of the
Companys long-term debt as of November 30, 2004 were $2,090 and $67,625
in the fiscal years ending August 31, 2005 and 2006, respectively, and none thereafter. 11




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The Company was a party to an interest rate swap agreement that terminated on December 31, 2004,
which involved 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 were based. The differential paid or received as interest rates
changed was settled quarterly and was accrued and recognized as an adjustment of interest expense
related to the debt. 7. INCOME TAXES The Company has recognized a full valuation allowance for net deferred tax assets. The differences
between the federal statutory tax rate of 34% and the effective tax rate of zero are principally
due to increases (decreases) in the valuation allowance for potentially non-realizable deferred tax
assets of $(645) and $352 for the three months ended November 30, 2004 and 2003, respectively. 8. PREFERRED STOCK As of November 30, 2004, 12.497 shares of the Companys series D convertible preferred stock
(Series D Preferred Stock) were outstanding, having an aggregate face value of $12,497, all of
which are currently convertible at the holders option into an aggregate 1,250 shares of the
Companys common stock. Each holder of the Series D Preferred Stock is entitled to receive
dividends at an annual rate of $90.00 per share in cash or in shares of the Companys common stock
at the holders option, except that, until the second anniversary of the date of issuance, the
Company has the option to pay such dividends in cash or in shares of the Companys common stock.
The liquidation and redemption price of the Series D Preferred Stock is $1,000 per share, and
dividends are cumulative. The Company has the option to redeem the Series D Preferred Stock at any
time. As of November 30, 2004, 7.606 shares of the Companys series E convertible preferred stock
(Series E Preferred Stock) were outstanding, having an aggregate face value of $7,606. Each
share of the Series E Preferred Stock is convertible at the holders option into 0.14286 shares of
the Companys common stock beginning one year following the date of issuance of the Series E
Preferred Stock (initially, October 2004). Each holder of the Series E Preferred Stock is entitled
to receive dividends at an annual rate of $90.00 per share in cash or in shares of the Companys
common stock at the holders option, except that, no dividend is payable prior to June 30, 2005, or
upon conversion to common stock, if earlier. The liquidation and redemption price of the Series E
Preferred Stock is $1,000 per share. The Company has the option to redeem the Series E Preferred
Stock at any time. During the three months ended November 30, 2004, certain holders of Series E
Preferred Stock, including a former director of the Company and his spouse, elected to convert an
aggregate 2.193 shares of Series E Preferred Stock to an aggregate 313 shares of the Companys
common stock, in accordance with terms of the Series E Preferred Stock. During the three months
ended November 30, 2003, subordinated note holders elected to exchange an aggregate $8,016 of
subordinated debt for an aggregate 8.016 shares of Series E Preferred Stock, including subordinated
notes having an aggregate face amount of $5,257 acquired by the Companys Chairman immediately
prior to the exchange. Also during the three months ended November 30, 2003, 1.783 shares of
Series D Preferred Stock issued to the former director and his spouse were exchanged for the same
number of shares of Series E Preferred Stock. As of November 30, 2004, 2.0 shares of the Companys series F convertible preferred stock (Series
F Preferred Stock) were outstanding, having an aggregate face value of $2,000, all of which were
issued in the fiscal year ended August 31, 2004. Each share of the Series F Preferred Stock is
convertible at the holders option into 0.78125 shares of the Companys common stock beginning in
November 2006. The holder of Series F Preferred Stock is entitled to receive dividends at an
annual rate of $90.00 per share in cash or in shares of the Companys common stock at the holders
option, except that, until the second anniversary of the date of issuance, the Company has the
option to pay such dividends in cash or in shares of the Companys common stock. The liquidation
and redemption price of the Series F Preferred Stock is $1,000 per share. The Company has the
option to redeem the Series F Preferred Stock at any time. As of November 30, 2004, all shares of Series D Preferred Stock and Series F Preferred Stock, and
certain shares of Series E Preferred Stock are held by either the Companys Chairman or his
affiliates. All shares of preferred stock issued by the Company are redeemable by the Company at
solely the Companys option. Since the Chairmans beneficial ownership of the Companys common
stock is more than 50%, all issued and outstanding preferred stock is required to be classified as
liabilities in the consolidated balance sheet in accordance with Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards No. 150 Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity issued in May 2003. As
of November 30, 2004, 89.4% of the aggregate carrying amount of all preferred stock was held by the
Chairman or one of his affiliates. Management 12




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##### 



does not believe that any of the preferred stock issued to the Chairman or his affiliates or any
other party will be redeemed in the foreseeable future. All shares of preferred stock rank, as to payment of dividends and as to distribution of assets
upon liquidation or dissolution of the Company, on a parity with all other currently issued
preferred stock and any preferred stock issued by the Company in the future, and senior to the
Companys currently issued common stock and common stock issued in the future. 9. EARNINGS (LOSS) PER SHARE The following table sets forth the computation of basic and diluted earnings (loss) per share: Three Months EndedNovember 30,2004
    
    
    2003Income (loss) for computation of basic income (loss) per share:Income from continuing operations
    
    $
    1,679
    
    
    $
    751Preferred dividends
    
    
    (529
    )
    
    
    (532
    )Income from continuing operations available to common stockholders
    
    
    1,150
    
    
    
    219Loss from discontinued operations
    
    
    (109
    )
    
    
    (1,873
    )Net income (loss) available to common stockholders
    
    $
    1,041
    
    
    $
    (1,654
    )Weighted average number of common shares outstanding for
the computation of basic income (loss) per share
    
    
    5,713
    
    
    
    4,340Basic income (loss) per share:Income from continuing operations
    
    $
    0.20
    
    
    $
    0.05Discontinued operations
    
    
    (0.02
    )
    
    
    (0.43
    )Net income (loss) available to common stockholders
    
    $
    0.18
    
    
    $
    (0.38
    )Income (loss) for computation of diluted income (loss) per share:Income from continuing operations
    
    $
    1,679
    
    
    $
    751Preferred dividends
    
    
    (529
    )
    
    
    (532
    )Income from continuing operations available to common stockholders
    
    
    1,150
    
    
    
    219Adjustment to preferred dividends assuming preferred stock was converted to
common stock at the beginning of the period, except to the extent of preferred shares
actually converted and preferred dividends paid in cash during the period
    
    
    5001,650
    
    
    
    219Loss from discontinued operations
    
    
    (109
    )
    
    
    (1,873
    )Net income
(loss) available to common stockholders for the computation
of diluted earnings (loss) per share
    
    $
    1,541
    
    
    $
    (1,654
    )Weighted average number of common shares outstanding
    
    
    5,713
    
    
    
    4,340Effect of
accrued stock compensation for guarantee of debt and asset pledge
    
    
    22Effect of weighted average dilutive convertible preferred stock outstanding
    
    
    4,075Effect of accrued preferred stock dividends at the beginning of the period
potentially payable in the form of common stock
    
    
    5,468Adjusted weighted average number of common shares and assumed
conversions for the computation of diluted earnings (loss) per share
    
    
    15,278
    
    
    
    4,340Diluted earnings (loss) per share:Income from continuing operations
    
    $
    0.11
    
    
    $
    0.05Discontinued operations
    
    
    (0.01
    )
    
    
    (0.43
    )Net income (loss) available to common stockholders
    
    $
    0.10
    
    
    $
    (0.38
    )
 13




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##### 



10. SEGMENT INFORMATION The Company has two 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); and (b) association management services (Association Management Services).
Discontinued operations include event management and marketing services (Affinity Events) and
computer printer manufacturing and related sales and services formerly operated by wholly-owned
Datasouth Computer Corporation (Datasouth). Information for each of the Companys segments associated with continuing operations follows: Three Months EndedNovember 30,2004
    
    
    2003Net revenues, continuing operations:Collegiate Marketing and Production Services
    
    $
    20,937
    
    
    $
    17,332Association Management Services
    
    
    2,138
    
    
    
    2,163$
    23,075
    
    
    $
    19,495Operating income (loss), continuing operations:Collegiate Marketing and Production Services
    
    $
    2,703
    
    
    $
    1,942Association Management Services
    
    
    508
    
    
    
    509Amortization of acquisition intangibles
    
    
    (179
    )
    
    
    (313
    )Unallocated general and administrative costs
    
    
    (255
    )
    
    
    (322
    )$
    2,777
    
    
    $
    1,816
 14




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##### 



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 and
affinity marketing and management company through its sole operating business, Host Communications,
Inc. (Host), acquired in December 1999 (the Host-USA Acquisition). Hosts Collegiate
Marketing and Production Services business segment provides sports marketing and production
services to a number of collegiate conferences and universities, and on behalf of the National
Collegiate Athletic Association (NCAA). Hosts Association Management Services business
segment provides various associations with services such as member communication, recruitment and
retention, conference planning, Internet web site management, marketing and administration. The Company discontinued its Consulting and its Affinity Events business segments during the
fiscal year ended August 31, 2004. In January 2004, the Company determined that it would not be
engaged in consulting services to Gray Television, Inc. (Gray), an affiliated party, or any other
party in the future. In August 2004, the Company announced its decision to suspend the Affinity
Events business, and declared its intent to offer the business unit for sale. Accordingly, the
operating results and net assets associated with the Consulting and the Affinity Events business
segments presented herein are reflected as discontinued operations in the accompanying consolidated
financial statements. In November 2004, the Company reached an agreement to sell the assets
associated with the basketball and soccer tours operated within the Affinity Events business
segment, and closed the sale in December 2004. Accrued restructuring charges associated with the
discontinuation of this segment recognized in the fiscal year ended August 31, 2004 have been
reduced by the estimated amount of proceeds to be ultimately derived from the sale. Actual amounts
ultimately realized on the sale and any other unanticipated income or expenses, including income
from the future subleases of vacated office space, could differ materially from amounts assumed in
arriving at the loss on termination of the business. To the extent actual proceeds or other
amounts differ from the estimates that are reflected as of November 30, 2004, or as managements
estimates are revised, the variance will be reported in discontinued operations in future periods. CERTAIN RELATIONSHIPS J. Mack Robinson, Chairman of the board of the Company, is the beneficial owner of approximately
57.0%of the Companys common stock as of November 30, 2004, and Mr. Robinson and his affiliates
also own shares of the Companys convertible preferred stock having an aggregate face amount of
approximately $19.8 million as of that date representing approximately 89.4%of the aggregate face
amount of all outstanding preferred stock on that date. Mr. Robinson is also Chief Executive
Officer, Chairman and a director of Gray, and the beneficial owner of Gray common stocks
representing approximately 28.8% of the combined voting power of Grays two classes of common stock
as of March 22, 2004. Robert S. Prather, Jr., President, Chief Executive Officer and a director of
the Company, is President, Chief Operating Officer and a director of Gray, and the beneficial owner
of Gray common stocks representing approximately 2.6% of the combined voting power of Grays two
classes of common stock as of March 22, 2004. Hilton H. Howell, Jr., the Companys Vice President
and Secretary, is Vice Chairman and a director of Gray, and the beneficial owner of Gray common
stocks representing approximately 7.0% of the combined voting power of Grays two classes of common
stock as of the same date. Beneficial ownership percentages include warrants and options to
acquire shares of Gray common stocks that were exercisable on, or within 60 days after, such date. Mr. Robinson personally guarantees substantially all of the debt outstanding under the Companys
bank credit facility. Under the terms of his guarantee, Mr. Robinson has the option to purchase
the entire loan from the banks, and thereby would become the holder of the debt currently payable
to the banks and the related lien on the Companys assets. W. James Host, a director of the Company until his resignation in January 2004, previously owned
along with his wife, shares of the Companys convertible preferred stock having an aggregate face
amount of approximately $1.8 million. In October 2004, Mr. Host and his wife exercised their right
to convert their shares of preferred stock to approximately 255,000 shares of the Companys common
stock. As of November 30, 2004, other officers or directors of the Company own shares of the
Companys preferred stock having an aggregate face value of approximately $0.2 million. Through a rights-sharing agreement with Gray, the Company participates jointly with Gray in the
marketing, selling and broadcasting of certain collegiate sporting events and in related
programming, production and other associated activities on behalf of a university. The current
agreement commenced in April 2000 and terminates in April 2005. As a result of the current
rights-sharing agreement, Gray may be called upon for payment of a share of certain guaranteed
rights fees to the university. During the fiscal year ended August 31, 2004, Gray had paid
approximately $1.5 million under this provision, and as of November 30, 2004, the Company has
accrued fees payable to Gray of approximately $1.2 million. In October 2004, both the Company and
Gray executed a new 10-year multimedia rights-sharing agreement with the university commencing in
April 2005 at the end of the Companys current contract. The Company 15




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##### 



and Gray will share equally
the costs of the rights, and will jointly administer and manage the rights over the term of the
agreement. CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make judgments and estimations that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from
those estimates. The Company considers the following accounting policies to be critical policies
that require judgments or estimations in their application where variances in those judgments or
estimations could make a significant difference to future reported results. Revenue Recognition and Rights Fee Expenses 
Revenue from services is recognized as the services are rendered. Corporate sponsor license fee
revenue that is not related to specific events is recognized ratably over the term of the
sponsorship. In certain circumstances, the Company enters into contractual arrangements with
associations or institutions it represents in various capacities which involve payment of
guaranteed rights fees. Guaranteed rights fee expense that is not related to specific events is
recognized ratably over the term specified in the contract. The Companys contractual arrangements
with associations or institutions may also involve net profit sharing arrangements (profit
splits) based on the net profit associated with services rendered under the contract. Profit
split expense is accrued over the contract period, based on estimates, and is adjusted at the end
of the contract term in order to reflect the actual profit split. Goodwill and Other Intangible Assets 
Prior to July 1, 2001, goodwill was amortized over 20 years. Effective July 1, 2001, the Company
adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets, (SFAS 142) which eliminated the requirement to amortize goodwill, and also affected the
Companys accounting for its equity in losses of affiliated companies. Under the provisions of
SFAS 142, the Company is required to periodically assess the carrying value of goodwill associated
with each of four distinct business units that comprise two business segments of the Companys
continuing operations to determine if an impairment in value has occurred. Prior to the fiscal
year ended August 31, 2004, such an assessment was also required in connection with a discontinued
business segment. Annual impairment tests prior to the fiscal year ended August 31, 2003 concluded
that the carrying amount of goodwill for each acquired
business unit did not exceed its net realizable value based on the Companys estimate of expected
future cash flows to be generated by each of the business units. However, the Company updated its
assessment as of August 31, 2003 and concluded that based on a valuation model incorporating
expected future cash flows in consideration of historical cash flows and operating results, a
goodwill impairment charge of $23.4 million was necessary to reduce the carrying value of goodwill
to net realizable value, $2.4 million of which was attributable to the discontinued business
segment. Management further determined that an additional goodwill impairment charge of $3.3
million was necessary during the fiscal year ended August 31, 2004, upon managements consideration
of current fiscal year operating results and the forecasted operating results and business plans
for one of the Companys business units. If the Company concludes in the future that the adjusted
carrying value of goodwill for any of the four business units comprising the Companys continuing
operations exceeds its respective net realizable value, the Company would expense such excess and
decrease goodwill as reported in the consolidated balance sheet. Other purchased intangibles, including customer relationships, are amortized primarily over a
16-year average life. The use of a 16-year average life for customer relationships acquired in the
acquisition of Host, amortized on a straight-line method, is not materially different from using
the estimated life of each individual relationship using a systematic allocation method. Prior to
the fiscal year ended August 31, 2003, the Company determined that an impairment charge of
approximately $6.6 million was necessary to reduce the carrying amount of certain customer
relationship intangible assets as a result of a significant change in the contractual nature of the
Companys underlying relationship with the NCAA. An updated impairment analysis performed as of
August 31, 2003 indicated the need for an additional charge to reduce customer relationships and
other acquisition intangibles by approximately $7.0 million at that date, all of which was
attributable to a discontinued operating segment. If the Company concludes in the future that
significant changes occur in its customer relationships, additional impairment charges may be
necessary. The remaining value assigned to acquisition intangibles other than goodwill will continue to be
amortized over a 16-year average life, at a rate of approximately $0.7 million 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. Goodwill and intangible assets, net of accumulated amortization, were approximately $48.5 million
as of November 30, 2004 and $48.7 million as of August 31, 2004, of which, goodwill was
approximately $40.4 million as of each date. The carrying value of goodwill and acquired
intangibles, net of accumulated amortization, represented approximately 68% of the Companys total
assets as of November 30, 2004. 16




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##### 



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 November 30, 2004 the Company has recognized
a full valuation allowance for net deferred tax assets thereby resulting in a carrying amount for
deferred taxes in the balance sheet of zero. If and when the Company generates taxable income in
the future and benefits primarily from net operating loss carryforwards for federal tax purposes
that expire beginning in 2018, some or all of the deferred tax assets may be reinstated on the
balance sheet, and the Company would report income tax benefits in the period that such
reinstatement occurs. Derivative Instruments and Hedging Activities 
Effective July 1, 2000, the Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Investments and Hedging Activities (SFAS 133). SFAS 133 requires the
Company to recognize all derivative instruments (since April 2003, consisting solely of an interest
rate swap agreement which terminated on December 31, 2004) on the balance sheet at fair value. The aggregate fair market value of the
derivative as of November 30, 2004 and August 31, 2004 of approximately $(0.1) million and $(0.4)
million, respectively, is included in the Companys balance sheet as a component of Other
liabilities. Changes in the estimated fair value of derivatives that do not meet the specific
criteria in SFAS 133 for hedge accounting are included in the earnings (losses) reported for the
period of the change. The Companys interest rate swap agreement does not qualify for hedge
accounting treatment. Management estimates the fair value of interest rate swap agreement based on
the estimated market value provided by the counterparty to the swap agreement. Valuation of Certain Non-Trade Receivables 
As of November 30, 2004, the Company has a non-trade receivable from iHigh, Inc., a 37%-owned
equity investee of the Company, and a subordinated note receivable from the purchaser of Datasouth
Computer Corporation (Datasouth), the Companys former computer printer manufacturing company.
The Company performs ongoing credit evaluations of parties from which such non-trade receivables
are due, and if and when management determines that the carrying value of such receivables may not
ultimately be realized, the estimated impairment amount is charged to the earnings (losses)
reported for the period in which the determination is made. In prior years, impairment charges
reduced the carrying amount of the investment in and amounts due from iHigh to zero, and the
Companys note
receivable from the purchaser of Datasouth to estimated net realizable value. As a result of
payments received on the note subsequent to the adjustment to net realizable value, the carrying
amount of the subordinated note receivable has been reduced to approximately $1.1 million as of
November 30, 2004. LIQUIDITY AND CAPITAL RESOURCES Credit Arrangements 
As of November 30, 2004, the Companys indebtedness to its bank lenders was approximately $58.9
million. In October 2004, the bank credit agreement was amended and restated to provide an
additional $3 million in financing, which was borrowed in October 2004. The agreement, having a
maturity date of November 30, 2005 at which time all amounts outstanding become due and payable,
does not require any payments of principal prior to maturity, nor does it provide for any
additional borrowing capacity. The agreement requires the maintenance of interest coverage ratios,
determined quarterly. The Companys debt to the banks is collateralized by a lien on all of the Companys assets. In
addition, the Companys Chairman personally guarantees substantially all of the debt outstanding
under the bank credit agreement, and if the Company is unable to meet payment obligations under the
agreement, 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. The Chairmans guarantee is collateralized
by certain personal holdings of marketable securities pledged to the Companys bank lenders. Under
the terms of his guarantee, the Chairman has the option to purchase the entire loan from the banks,
and thereby becoming the holder of the debt currently payable to the banks and the related lien on
the Companys assets. The Chairman is compensated by the Company for his guarantee in the form of
newly issued shares of the Companys common stock, valued at an annual rate of 1.625% of the
guarantee amount. The guarantee amount will reduce in the future if principal payments are made to
the bank lenders on the outstanding term loans, and may increase if additional bank financing is
made available to the Company. In September 2004, a company under the Chairmans control provided the Company $1.5 million of cash
which was used for working capital purposes, in exchange for a subordinated note bearing interest
at 6% per annum, having a maturity date of December 31, 2004. This note was refinanced by another
company under the Chairmans control, by substituting a subordinated note bearing interest at 6%
per annum, having a maturity date of February 28, 2006. Under the terms of the credit agreement,
as amended in October 2004, up to an aggregate of $10 million in additional funding for working
capital purposes, if necessary, could be sourced from the issuance of equity securities, including
shares of the Companys preferred stock, or by the issuance of subordinated debt. During the
fiscal year ended August 31, 2004, 17




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##### 



the Company received approximately $6.6 million from the Companys Chairman, of which $2 million
was invested in newly-issued shares of the Companys preferred stock. The remaining investment of
approximately $4.6 million is presented in the consolidated balance sheet as Advances from
stockholder. Management believes that it is the Chairmans intention to ultimately convert these
advances to subordinated debt or equity securities. In connection with the credit agreement
amendment, the Chairman committed to the Company an additional aggregate cash investment of up to
$3 million as and when needed at any time and from time to time on or prior to the maturity date,
and provided that up to $1.5 million of such cash investments would be used to repay the $1.5
million subordinated note issued by his affiliated company. As amended in October 2004, the Companys bank credit agreement provides for (a) two term loans
(the Term Loans) for borrowings totaling approximately $35.9 million and (b) two revolving loan
commitments (the Revolvers) for aggregate maximum borrowings of $23 million. All amounts
outstanding bear interest at either (a) the banks prime rate or (b) the London Interbank Offered
Rate (LIBOR) plus 2.75%, payable monthly. The Company anticipates that it will continue to
utilize fully the availability under the Revolvers throughout the remaining term of the credit
agreement. In connection with the Host-USA Acquisition, the Company issued 8% subordinated notes, representing
long-term debt of approximately $8.7 million as of November 30, 2004. During the fiscal year ended
August 31, 2004, holders of 8% subordinated notes representing an aggregate face value of
approximately $8.0 million exchanged their notes for shares of Series E Preferred Stock. Interest
is payable quarterly in cash on all but a $3.0 million subordinated note payable to the Companys
Chairman, on which interest is payable at maturity in the form of cash or shares of the Companys
common stock, at the Companys option. The notes all have a maturity date of January 17, 2006.
Payment of interest and principal on all subordinated notes is subordinate to the Companys bank
credit agreement. Due to negative operating cash flow generated in the past, the Company currently has trade payables
and other cash obligations that exceed its current assets. In the fiscal year ended August 31,
2004, the Companys Chairman provided an aggregate total of $6.6 million in cash used for operating
purposes. Management believes the Company has sufficient liquidity sources, which include the
Companys Chairman and his affiliates, to meet its cash obligations until the November 30, 2005
maturity date of its bank credit agreement. Prior to the November 30, 2005 maturity date, the
Company anticipates that will be required to refinance the total amount due and payable to the
banks at that time. The Companys ability to continue this or similar financing beyond the
November 30, 2005 maturity date is significantly dependent on the continued support of the
Companys Chairman and, in part, on the Companys future operating results. There can be no
assurances with respect to either the Companys future operating results or the continued support
of its Chairman. In exchange for cash advances made in the past or in the future by the Companys
Chairman, his affiliates and/or other parties, the Company may (a) issue and sell equity securities
of the Company, which may include the Companys preferred stock; (b) issue additional subordinated
debt; or (c) a combination thereof. The use of future cash investments or advances in excess of an
aggregate $10 million for purposes other than the reduction of the bank debt would require approval
of the Companys bank lenders. The Companys capital expenditures are not expected to exceed
$600,000 for the fiscal year ending August 31, 2005. Historical Cash Flow
Information   Summary 
The following summarizes the Companys historical cash flow activities (amounts in 000s): Three Months EndedNovember 30,2004
    
    
    2003Cash flows from operating activities:Continuing operations
    
    $
    (3,684
    )
    
    $
    (3,637
    )Discontinued operations
    
    
    99
    
    
    
    (2,722
    )Cash flows from investing activities:Continuing operation investing activities
    
    
    (7
    )
    
    
    (35
    )Discontinued operation investing activities
    
    
    150
    
    
    
    (12
    )Cash flows from financing activities
    
    
    3,802
    
    
    
    1,962Net increase (decrease) in cash and cash equivalents
    
    $
    360
    
    
    $
    (4,444
    )
 18




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##### 



Historical Cash Flow
Information   Cash Flows from Operating Activities 
The following summarizes the Companys historical cash flows from operating activities (amounts in
000s): Three Months EndedNovember 30,2004
    
    
    2003Income from operations
    
    $
    2,777
    
    
    $
    1,816Depreciation and amortization included in operations
    
    
    344
    
    
    
    530Interest expense
    
    
    (1,171
    )
    
    
    (1,086
    )Net change in operating assets and liabilities
    
    
    (5,626
    )
    
    
    (4,953
    )Other operating cash flows
    
    
    (8
    )
    
    
    56Net cash flows from continuing operations
    
    
    (3,684
    )
    
    
    (3,637
    )Net cash flows from discontinued operations
    
    
    99
    
    
    
    (2,722
    )Net cash flows from operating activities
    
    $
    (3,585
    )
    
    $
    (6,359
    )
 The net change in operating assets and liabilities had an unfavorable impact on total cash flows
from continuing operations during the three months ended November 30, 2004 and 2003. The Companys
most significant business segment, the Collegiate Marketing and Production Services segment,
produces a high proportion of its annual revenues during the three months ended November 30, since
the college football season generally begins in September and the college basketball season
generally begins in November. For this reason, accounts receivable increase substantially during
the first fiscal quarter. Accounts receivable associated with continuing operations increased
approximately $10.1 million and $4.9 million during the three months ended November 30, 2004 and
2003, respectively. The increase in 2004 was substantially higher than in 2003 because, in
addition to generating more revenue in 2004 compared to 2003, most of the Companys collegiate
properties began their college football seasons in September 2004 as compared to August in 2003.
The accounts payable and accrued expenses increase of approximately $4.3 million during the three
months ended November 30, 2004 was not as significant as the increase in accounts receivable due to
the Companys use of $3 million in proceeds on additional bank debt during the period to pay
outstanding current liabilities. The accounts payable and accrued expenses decrease of approximately
$0.4 million during the three months ended November 30, 2003 was likewise not consistent with the
increase in accounts receivable during the period due to the Companys use of cash available at the
beginning of the period to reduce accounts payable and accrued expenses to the extent possible, in
addition to funding losses of the Affinity Events discontinued segment operations. The Companys total cash flows from continuing operations were also used to fund interest expense.
Interest paid, net of interest income received, was approximately $1.2 million and $1.1 million for
three months ended November 30, 2004 and 2003, respectively, with the increase caused by a
combination of an increase in variable interest rates to which a significant amount of the debt is
subject, and an increase in the average amount of outstanding debt during the current year period. Historical Cash Flow
Information   Cash Flows from Investing Activities
The following summarizes the Companys historical cash flows from investing activities (amounts in
000s): Three Months EndedNovember 30,2004
    
    
    2003Capital expenditures
    
    $
    (17
    )
    
    $
    (48
    )Increase in other assets
    
    
    10
    
    
    
    13Net cash flows from continuing operation investing activities
    
    
    (7
    )
    
    
    (35
    )Net cash flows from discontinued operation investing activities
    
    
    150
    
    
    
    (12
    )Net cash flows from investing activities
    
    $
    143
    
    
    $
    (47
    )
 In the three months ended November 30, 2004, the Company received $150 as payment on its note
receivable from the purchaser of Datasouth. 19




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##### 



Historical Cash Flow
Information  Cash Flows from Financing Activities
The following summarizes the Companys historical cash flows from financing activities (amounts in
000s): Nine Months EndedMay 31,2004
    
    
    2003Borrowings from revolving line of credit
    
    $
    3,000
    
    
    $Proceeds on subordinated note payable to affiliated company
    
    
    1,500Debt issue costs
    
    
    (444
    )
    
    
    (38
    )Preferred stock dividends paid
    
    
    (254
    )Proceeds on issuance of preferred stock
    
    
    
    
    
    
    2,000Net cash flows from financing activities
    
    $
    3,802
    
    
    $
    1,962
 CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS The following summarizes the Companys contractual obligations as of November 30, 2004 (amounts in
000s): Payments Due by Period as of November 30, 2004Less than
    
    
    More than 1
    
    
    More than 3
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    to 3 Years
    
    
    to 5 Years
    
    
    5 YearsLong-term debt obligations
    
    $
    69,715
    
    
    $
    61,022
    
    
    $
    8,693
    
    
    $
    
    
    
    $Capital lease obligations
    
    
    217
    
    
    
    79
    
    
    
    138Operating lease obligations
    
    
    5,647
    
    
    
    1,716
    
    
    
    1,756
    
    
    
    1,292
    
    
    
    883Purchase obligations
    
    
    79,896
    
    
    
    15,222
    
    
    
    27,264
    
    
    
    12,772
    
    
    
    24,638Total
    
    $
    155,475
    
    
    $
    78,039
    
    
    $
    37,851
    
    
    $
    14,064
    
    
    $
    25,521
 Operating lease obligations are presented net of future receipts on contracted sublease
arrangements totaling approximately $0.9 million as of November 30, 2004. Purchase obligations primarily consist of future guaranteed rights fee commitments to associations
or institutions under contractual arrangements of typically one to four years, which expire at
varying times through 2015. The Company is a party to an interest rate swap agreement 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 $0.3 million as of November 30, 2004, including accrued
interest through that date. Dividends on Series D Preferred Stock and Series F Preferred Stock are payable annually at an
annual rate of $90 per share in cash or in shares of the Companys common stock, at the holders
option, except that, until the second anniversary of the date of issuance, the Company has the
option to pay such dividends in cash or in shares of the Companys common stock. For purposes of
determining the number of shares of common stock to be issued as payment of a dividend, the common
stock is valued at the average market closing price for the twenty trading days immediately
preceding each dividend payment date. All dividends accruing through June 30, 2003 on issued
shares of the Companys preferred stock have been paid. Dividends on Series D Preferred Stock
payable through June 30, 2004 in shares of the Companys common stock under the terms of such
issuance, have not been declared by the board of directors. Under the Companys Articles of
Incorporation, if dividends on any class of its preferred stock are in arrears in an amount equal
to 150% of an annual dividend, the holders of such preferred stock shall be entitled to vote for
and elect two additional directors of the Company. Such rights would thereby be afforded the
holders of Series D Preferred Stock if dividends accrued through June 30, 2004 are not paid by
December 31, 2006. Dividends on Series E Preferred Stock are payable annually at an annual rate of $90 per share in
cash or in shares of the Companys common stock at the holders option, except that the initial
dividend on Series E Preferred Stock is not payable until July 2005 on dividends accruing through
June 30, 2005, or upon a conversion of shares of Series E Preferred Stock to shares of the
Companys common stock, whichever is sooner. The amount of dividends accruing through November 30,
2004 on the outstanding shares of Series E Preferred Stock potentially payable in cash in the
fiscal year ending August 31, 2005 is approximately $0.9 million, including $0.6 million in
connection with shares of Series E Preferred Stock issued to the Companys Chairman. 20




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##### 



RESULTS OF CONTINUING
OPERATIONS  THREE MONTHS ENDED NOVEMBER 30, 2004 COMPARED TO THREE MONTHS
ENDED NOVEMBER 30, 2003 Results Derived from
Operating Businesses 
Operating results for the three months ended November 30, 2004 and 2003 are summarized as follows
(amounts in $000s): Three Months EndedNovember 30,2004
    
    
    2003RevenuesCollegiate Marketing and Production Services
    
    $
    20,937
    
    
    $
    17,332Association Management Services
    
    
    2,138
    
    
    
    2,163$
    23,075
    
    
    $
    19,495Operating Costs and ExpensesDirect operating costs of services rendered
    
    $
    15,776
    
    
    $
    12,958Selling, general and administrative
    
    
    4,343
    
    
    
    4,408Amortization of acquisition intangibles
    
    
    179
    
    
    
    313$
    20,298
    
    
    $
    17,679Income (Loss) from OperationsCollegiate Marketing and Production Services
    
    $
    2,703
    
    
    $
    1,942Association Management Services
    
    
    508
    
    
    
    509Amortization of acquisition intangibles
    
    
    (179
    )
    
    
    (313
    )Unallocated general and administrative costs
    
    
    (255
    )
    
    
    (322
    )$
    2,777
    
    
    $
    1,816
 Total revenues and operating results for the Collegiate Marketing and Production Services segment
were impacted in the three months ended November 30, 2004 by the addition of two university
contractual relationships beginning in the current fiscal year, less the effects of a contractual
relationship that terminated at the end of the previous fiscal year. The additional contracts, net
of the terminated contract, increased the segments revenues, direct costs and operating profits by
approximately $1.4 million, $1.2 million and $0.1 million, respectively, compared to the prior year
period. Other increases in segment revenues resulted from (a) an increase in advertising sales,
due in some cases to additional rights acquired from the universities; and (b) an increase in
revenues generated by the segments printing, publishing and broadcasting operations of
approximately $0.6 million. Direct operating costs of services rendered increased for the three months ended November 30, 2004
from the same period in the prior year due to (a) the additional university contracts, net of the
terminated contract, as discussed above; (b) an increase of approximately $1.0 million in
guaranteed rights fees and revenue and profit splits, excluding the effects of the new and
terminated contracts; and (c) an increase of approximately $0.4 million in production expenses
associated with the previously-discussed increased revenues from the printing, publishing and
broadcasting operations. Selling, general and administrative costs associated with continuing operations decreased slightly
for the three months ended November 30, 2004 compared to the same period in the prior fiscal year.
However, in the prior year period, approximately $0.4 million of general and administrative costs
were allocable to the discontinued Affinity Events segment. These costs were effectively
eliminated as a result of the discontinuation of the segment prior to the current fiscal year. Results Derived from Derivative Instrument 
The net change in the value of the interest rate swap agreement discussed in Note 6 to the
Condensed Consolidated Financial Statements was approximately $0.3 million in each of the three
months ended November 30, 2004 and 2003. The interest rate swap agreement terminated on December
31, 2004. Interest Expense and
Debt Related Costs 
Interest expense increased to approximately $1.2 million for the three months ended November 30,
2004 from approximately $1.1 million for the same period in the prior year, as a result of an
increase in variable interest rates to which a significant amount of the debt is subject, and an
increase in average outstanding debt during the current year period. 21




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##### 



Debt issue cost amortization was approximately $0.2 million and $0.3 million for the three months
ended November 30, 2004 and 2003, respectively. Debt issue costs consist of fees paid by the
Company to bank lenders and other costs in connection with the issuance of debt and significant
amendments to the bank credit agreement, and compensation paid in the form of shares of the
Companys common stock to the Companys Chairman to compensate him for his personal guarantee and
to a former director of the Company to compensate him for his pledge of personal assets to the
Companys bank lenders. During the three months ended November 30, 2004, the Company issued
approximately 715,000 shares of restricted common stock to the Chairman and the former director,
then valued at approximately $0.3 million. Income Taxes 
The principal differences between the federal statutory tax rate of 34% and the effective tax rate
of zero are increases (or decreases) in the valuation allowance for potentially non-realizable
deferred tax assets of $(0.6) million and $0.4 million for the three months ended November 30, 2004
and 2003, respectively. The valuation allowance for net deferred tax assets was approximately
$23.1 million as of November 30, 2004. RESULTS OF DISCONTINUED OPERATIONS Results derived from the Companys discontinued operations for the three months ended November 30,
2004 and 2003, all of which pertaining to the Affinity Events business segment, are summarized as
follows (amounts in 000s): Three Months EndedNovember 30,2004
    
    
    2003Revenue from services rendered
    
    $
    292
    
    
    $
    2,139Operating costs and expenses:Direct operating costs of services rendered
    
    
    285
    
    
    
    2,433Selling, general and administrative
    
    
    116
    
    
    
    1,579401
    
    
    
    4,012Loss from discontinued operations
    
    $
    (109
    )
    
    $
    (1,873
    )
 Total revenues and direct operating costs for the Affinity Events business segment were lower in
the three months ended November 30, 2004 than in the same period of the prior year due to a
reduction in the number of Hoop-It-Up 3-on-3 basketball events held during the 2004 tour year and
the shorter duration of the tour in 2004. The Company made the decision in August 2004 to suspend
the Affinity Events business and offer it for sale. However, the Company committed to complete all
previously-scheduled events, in order to fulfill contractual obligations. In December 2004, the
principal assets of the Affinity Events business, consisting of the tangible and intangible assets
associated with the Hoop-It-Up tour and the 3v3 Soccer Shootout tour, were sold. Under the terms
of the asset sale agreement, the Company will fulfill its obligation to promote and operate the
soccer national finals event in January 2005, and will retain the rights to any profits (or loss)
to be derived from the event. INTEREST RATE AND MARKET RATE RISK The Company is exposed to changes in interest rates due to the Companys financing of its
acquisitions, investments and operations. Interest rate risk is present with both fixed and
floating rate debt. Until December 31, 2004, the Company used interest rate swap agreements to
manage its debt profile. Interest rate swap agreements generally involve exchanges of underlying
face (notional) amounts of designated hedges. The Company continually evaluated the credit quality
of the counterparty to its interest rate swap agreement and did not believe there was a significant
risk of nonperformance by the counterparty to the agreement. The Companys decision to forego interest
rate swap agreements as a hedge against its floating rate debt is due to the relatively short
duration of the Companys bank credit agreement and the Companys willingness to accept additional
interest rate risk for that period of time. Based on the Companys debt profile as of each fiscal year end, a 1% increase in market interest
rates would increase interest expense and decrease the income before income taxes (or
alternatively, increase interest expense and increase the loss before income taxes) by less than
$0.1 million for each of the three-month periods ended November 30, 2004 and 2003. Such amount
was approximately $0.3 million for the fiscal year ended August 31, 2004. 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 agreement. The Companys
floating rate debt increased and fixed rate debt decreased by $25 million after the termination of
the interest rate swap agreement on 22




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##### 



December 31, 2004. 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. 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 leverage and/or operating
results may adversely affect its ability to obtain new financing or extend its current bank credit
agreement beyond the November 30, 2005 maturity date under terms acceptable to the Company and its
bank lenders, thereby impairing the Companys ability to withstand economic downturns or
competitive pressures; (ii) the Company may not ultimately be successful in obtaining bank
financing beyond the November 30, 2005 maturity date, or be successful in obtaining financing at
acceptable terms; (iii) the inability of the Company to currently meet listing requirements of The
Nasdaq Stock Market or other national stock exchange may hinder the Companys ability to raise new
capital through the issuance of equity securities; (iv) significant segments of the Companys
business are seasonal; (v) the Companys business depends on short term contracts and the inability
to renew or extend these contracts could adversely affect its business; (vi) 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 domestic economic downturn or recession could materially adversely impact
corporate discretionary spending, such as advertising and corporate sponsorships sold by the
Company. Item 3. Quantitative and Qualitative Disclosures About Market Risk See Interest Rate and Market Rate Risk in Item 2 of this Form 10-Q Item 4. Controls and Procedures The Company carried out, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and the Companys Chief Financial
Officer, an evaluation of the effectiveness of the design and operation of the Companys disclosure
controls and procedures performed pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
as amended. Based on that evaluation, the Companys Chief Executive Officer and its Chief Financial
Officer concluded that, as of November 30, 2004, the Companys disclosure controls and procedures
are effective in timely alerting them to information which is required to be included in the
periodic reports that the Company must file with the Securities and Exchange Commission. There were no changes in the Companys internal control over financial reporting during the quarter
ended November 30, 2004 identified in connection with the evaluation thereof by the Companys
management, including the Chief Executive Officer and Chief Financial Officer, that have materially
affected, or are reasonably likely to materially affect, the Companys internal control over
financial reporting. 23




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##### 



PART II. OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities During the three months ended November 30, 2004, certain holders of Series E Preferred Stock,
including a former director of the Company and his spouse, elected to convert an aggregate 2.193
shares of Series E Preferred Stock to an aggregate 313 shares of the Companys common stock, in
accordance with terms of the Series E Preferred Stock. The issuances of shares of common stock were made under the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended, because the issuances did not involve any
public offering. Item 6.
    
    Exhibits31.1
    
    
    Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 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 CORPORATIONDate:  January 11, 2005
    By:
    /s/ FREDERICK J. ERICKSONFrederick J. EricksonVice President-Finance, Treasurer
and Assistant Secretary 24