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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission File Number 0-9385

BULL RUN CORPORATION

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

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

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

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

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

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE

BULL RUN CORPORATION

FORM 10-K

for the fiscal year ended August 31, 2003

INDEX

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PART I

Item 1. Business

General

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

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

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

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

Collegiate Marketing and Production Services Segment

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

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

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

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

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

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

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

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

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

Affinity Events Segment

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

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

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

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

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

Affinity Management Services Segment

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

Consulting Segment

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

Sales and Marketing

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

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

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

Competition

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

Seasonality

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

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

Employees

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

Executive Officers

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

Discontinued Segment — Datasouth

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

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Available Information

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

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

Item 2. Properties

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

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

Item 3. Legal Proceedings

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

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

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

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

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

Bull Run Corporation v. Ernst & Young, LLP

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

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

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

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PART II

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

Market Information

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

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

Holders

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

Dividends

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

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

Equity Plan Compensation Information

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

Item 6. Selected Financial Data

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

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

OPERATING RESULTS:

See Notes to the Selected Financial Data on page 12.

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SELECTED FINANCIAL DATA, continued

OPERATING RESULTS:

EARNINGS (LOSS) PER SHARE:

EARNINGS (LOSS) PER SHARE:

See Notes to the Selected Financial Data on page 12.

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SELECTED FINANCIAL DATA, continued

FINANCIAL POSITION:

NOTES TO THE SELECTED FINANCIAL DATA

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

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

No dividends were declared or paid during the periods presented.

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

Item 7. Management’s Discussion and Analysis

OVERVIEW

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

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

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

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

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

CERTAIN RELATIONSHIPS

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

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

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

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

CRITICAL ACCOUNTING POLICIES

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

Revenue Recognition and Rights Fee Expenses –

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

Goodwill and Other Intangible Assets –

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

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

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

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

Goodwill and intangible assets, net of accumulated amortization, were $53.2 million as of August 31, 2003 and $84.2 million as of August 31, 2002, of which, goodwill was $43.7 million as of August 31, 2003 and $67.2 million as of August 31, 2002. As of August 31, 2003, the carrying value of goodwill and acquired intangibles, net of accumulated amortization, represented approximately 69% of the Company’s total assets.

Deferred Income Taxes –

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

Derivative Instruments and Hedging Activities –

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

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

Valuation of Certain Non-Trade Receivables –

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

LIQUIDITY AND CAPITAL RESOURCES

Credit Arrangements –

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

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

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

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

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

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

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

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

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

Historical Cash Flow Information – Summary –

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

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):

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

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

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

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

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

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

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

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Historical Cash Flow Information – Cash Flows from Investing Activities

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

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

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

Historical Cash Flow Information – Cash Flows from Financing Activities

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

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

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

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

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

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

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

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

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RESTATEMENT OF FINANCIAL STATEMENTS

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

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

Results Derived from Operating Businesses –

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

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

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

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