-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GUkAUteleSStnAuOnFMYhLd7uTLSU08YIs3x3Ul8ZDh4OgMu+ms9sQuG0PApUoa4 au2U40Oj41EQjsg5t6AWHA== 0000950168-95-000922.txt : 19951103 0000950168-95-000922.hdr.sgml : 19951103 ACCESSION NUMBER: 0000950168-95-000922 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951102 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BULL RUN CORP CENTRAL INDEX KEY: 0000319697 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 911117599 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09385 FILM NUMBER: 95586611 BUSINESS ADDRESS: STREET 1: 4370 PEACHTREE RD NE CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4042668333 MAIL ADDRESS: STREET 1: 4310 PEACHTREE ROAD N.E. CITY: ATLANTA STATE: GA ZIP: 30319 FORMER COMPANY: FORMER CONFORMED NAME: BULL RUN GOLD MINES LTD DATE OF NAME CHANGE: 19920703 10-Q 1 DATASOUTH 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 0-9385 Bull Run Corporation (Exact name of registrant as specified in its charter) Georgia 91-1117599 (State of incorporation (I.R.S. Employer or organization) Identification No.) 4370 Peachtree Road, N.E., Atlanta, GA 30319 (Address of principal executive offices) (404) 266-8333 (Issuer's telephone number) Check whether issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 22,156,727 shares of Common Stock, par value $.01 per share, were outstanding as of October 31, 1995. PART I. FINANCIAL INFORMATION Item I. Financial Statements BULL RUN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31, 1995 1994 ASSETS Current assets: Cash and cash equivalents $ 71,920 $ 824,207 Marketable securities 500,000 Accounts receivable 3,647,469 3,809,224 Inventories 4,422,530 2,608,850 Other 197,478 73,540 Total current assets 8,339,397 7,815,821 Property and equipment, net 2,481,905 2,358,403 Investment in affiliated companies 27,886,968 15,708,590 Goodwill 4,391,123 4,717,457 Other assets 230,511 156,174 $43,329,904 $30,756,445 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable $ 1,091,000 $ Current portion of long-term debt 225,000 Accounts payable 1,887,759 1,612,214 Accrued and other liabilities: Salaries, wages and related taxes 299,477 281,292 Interest 184,569 2,833 Income taxes 464,696 244,047 Other 536,391 637,803 Total current liabilities 4,463,892 3,003,189 Long-term debt 13,500,000 2,775,000 Deferred income taxes 1,248,382 1,393,728 Stockholders' equity: Common stock ($.01 par value, authorized 100,000,000 shares; issued 22,204,727 shares as of September 30, 1995 and 22,136,727 shares as of December 31, 1994) 222,047 221,367 Additional paid-in capital 20,471,862 20,403,136 Retained earnings 3,630,855 2,960,025 Treasury stock, at cost (88,000 shares) (207,134) Total stockholders' equity 24,117,630 23,584,528 $43,329,904 $30,756,445 ========== ==========
See accompanying notes to condensed consolidated financial statements. BULL RUN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 Revenue from printer operations $ 6,097,082 $ $20,668,171 $ Cost of goods sold 4,255,512 14,394,513 Gross profit 1,841,570 6,273,658 Other operating revenue: Royalties 1,136 60,683 1,031 186,646 Consulting fees 100,000 435,000 100,000 1,136 160,683 436,031 286,646 Operating expenses: Research and development 498,931 1,407,169 Selling, general and administrative 1,024,165 158,568 3,704,250 478,883 1,523,096 158,568 5,111,419 478,883 Income (loss) from operations 319,610 2,115 1,598,270 (192,237) Other income (expense): Equity in earnings (losses) of affiliated companies (38,620) 142,686 181,433 173,502 Interest, net (292,126) 359 (642,704) 1,601 Income (loss) before income taxes (11,136) 145,160 1,136,999 (17,134) Income tax benefit (provision) 38,095 (48,372) (466,169) (272) Net income (loss) 26,959 96,788 670,830 (17,406) Retained earnings, beginning of period 3,603,896 2,630,189 2,960,025 2,744,383 Retained earnings, end of period $ 3,630,855 $2,726,977 $ 3,630,855 $2,726,977 ========= ========= ========== ========= Earnings (loss) per share $ .00 $ .01 $ .03 $ (.00) Weighted average number of common shares outstanding 23,359,084 12,627,032 23,240,925 12,505,377
See accompanying notes to consolidated financial statements. BULL RUN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 1995 1994 Cash flows from operating activities: Net income (loss) $ 670,830 $ (17,406) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 831,540 1,236 Equity in earnings of affiliated companies (181,433) (173,502) Change in operating assets and liabilities: Accounts receivable 161,755 (22,140) Inventories (1,813,680) Other current assets (123,938) (4,636) Accounts payable and accrued expenses 365,565 (25,768) Accrued income taxes 275,303 2,372 Deferred income taxes (2,100) Net cash provided by (used in) operating activities 185,942 (241,944) Cash flows from investing activities: Sale of marketable securities 500,000 Capital expenditures (671,580) (5,169) Investment in affiliated companies (12,161,958) (24,879) Dividends received from affiliated companies 68,287 Net cash used in investing activities (12,265,251) (30,048) Cash flows from financing activities: Borrowings on line of credit 9,222,750 Repayments on line of credit (8,131,750) Proceeds from long-term debt 13,500,000 Repayments on long-term debt (3,000,000) Loan commitment fee (126,250) Repurchase of common stock (207,134) Exercise of incentive stock options 69,406 Net cash provided by financing activities 11,327,022 Net decrease in cash and cash equivalents (752,287) (271,992) Cash and cash equivalents, beginning of period 824,207 291,604 Cash and cash equivalents, end of period $ 71,920 $ 19,612 ======== ======== Supplemental cash flow disclosures: Interest paid $ 404,310 $ 0 Income taxes paid 190,866 0
See accompanying notes to condensed consolidated financial statements. BULL RUN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting solely of normal, recurring adjustments) necessary to present fairly the financial position and results of operations for the interim periods reported. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Annual Report on Form 10-KSB of Bull Run Corporation ("Bull Run") for the year ended December 31, 1994. 2. On November 29, 1994, Datasouth Computer Corporation ("Datasouth") was merged (the "Merger") into BRC Acquisition Corporation ("BRC"), a newly-formed wholly-owned subsidiary of Bull Run. As of the effective date of the Merger, BRC changed its name to Datasouth Computer Corporation (also referred to herein as "Datasouth"). The accompanying condensed consolidated financial statements include the accounts of Bull Run and, since November 30, 1994, Datasouth, after elimination of intercompany accounts and transactions. From April 29, 1993 through November 29, 1994, Bull Run owned 43.6% of the outstanding common stock of Datasouth. On March 29, 1995, Bull Run acquired 50% of the outstanding common stock of Capital Sports Properties, Inc. ("CSP") for a total purchase price of approximately $9,700,000. CSP's assets consist of 50,000 shares of 8% cumulative preferred stock of Host Communications, Inc. ("Host") having a stated value of $100 per share (representing all of Host's outstanding preferred stock) and warrants to purchase 447,002 shares of Host common stock (representing approximately 48% of the outstanding shares after giving effect to the exercise of all outstanding warrants.) The warrants have a negligible exercise price. Host is a collegiate sports marketing company, producing sports publications, syndicating radio and television broadcasts, and producing audio/video marketing presentations. In addition, Bull Run acquired 30,200 shares of Host's outstanding common stock, representing 6.9% of Host's currently outstanding common shares, for $906,000 in January 1995. The following unaudited pro forma summary information presents the consolidated results of Bull Run's operations for the nine months ended September 30, 1995 and for the three months and nine months ended September 30, 1994 as if the Merger and the investments in CSP and Host had occurred on January 1, 1994, after giving effect to certain adjustments, including elimination of Merger expenses, amortization of goodwill, elimination of equity in earnings of Datasouth, pro forma effects of Gray Communications Systems, Inc. ("Gray")'s business acquisitions during 1994, and related income tax effects: Nine Months Three Months Nine Months Ended Ended Ended Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994 Revenue from printer operations $20,668,000 $5,457,000 $14,825,000 Other operating revenue 436,000 161,000 309,000 Net income 709,000 325,000 369,000 Earnings per share $ .03 $ .01 $ .02 BULL RUN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued 3. Inventories associated with the printer operations consist of the following: September 30, December 31, 1995 1994 Raw materials $2,894,397 $1,783,408 Work-in-process 765,599 644,052 Finished goods 762,534 181,390 $4,422,530 $2,608,850 ========= ========= 4. The purchases of CSP's common stock and Host's common stock were primarily financed under bank term loans totaling $13,500,000 bearing interest initially at the prime rate, with the principal amount thereof due in monthly installments of $150,000 commencing May 1998, with all remaining amounts due and payable by April 2002. The debt is collateralized by the shares of Gray owned by Bull Run, as well as by shares of Bull Run common stock held by a principal shareholder of Bull Run. The loan requires adherence to certain financial covenants, the most restrictive of which requires maintaining a minimum net worth of $23,000,000. The $13,500,000 loans also refinanced Datasouth's then existing $3,000,000 bank term loan. 5. Prior to the Merger, Bull Run's 43.6% investment in Datasouth common stock was accounted for by the equity method. Since November 30, 1994 (the day after the effective date of the Merger), Bull Run has accounted for its investment in Gray common stock, which was previously owned by Datasouth, by the equity method. Based in Albany, Georgia, Gray owns: (i) three VHF NBC-affiliated television stations, (ii) two UHF, CBS-affiliated television stations, (iii) a daily newspaper, (iv) two five day a week newspapers and (v) seven area advertising weekly shoppers. The excess of Bull Run's investment over the underlying equity of Gray is being amortized over forty years. The amortization is reported as a reduction in Bull Run's equity in earnings of affiliated companies. During the nine months ended September 30, 1995, Bull Run acquired additional shares of Gray common stock for $1,455,000. As of September 30, 1995, Bull Run owned 26.8% of the outstanding shares of Gray common stock. Since March 29, 1995 (the date Bull Run acquired its investment in CSP), Bull Run has accounted for its investments in CSP and Host by the equity method. Summarized operating results of affiliated companies for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 Operating revenue $26,785,000 $73,006,000 Income from operations 2,713,000 8,620,000 Net income 716,000 2,149,000 6. Earnings (loss) per share is based on the weighted average number of common shares and dilutive common share equivalents outstanding during the period, computed in accordance with the treasury stock method. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Datasouth's printer operations contributed $6,097,000 in revenue for the quarter and $20,668,000 for the nine months ended September 30, 1995, with a gross profit of 30.2% and 30.4%, respectively. Datasouth's revenue, which was $5,457,000 for the quarter ended September 30, 1994 and $14,825,000 for the nine months ended September 30, 1994, is not included in Bull Run's consolidated financial statements prior to November 29, 1994, the date of the Merger. Datasouth's increase in revenue from the same period last year was largely attributable to an increase in printer sales to the SABRE Travel Information Network ("SABRE"), a division of American Airlines, to approximately $1.7 million for the third quarter and $6.4 million for the first nine months of 1995 from $1.1 million for the third quarter and $2.5 million for the first nine months of 1994. Total finished product sales to Datasouth's major account customers, which consist of SABRE and other end users and original equipment manufacturers, were $2.3 million and $9.4 million for the quarter and nine months ended September 30, 1995, respectively, and $2.4 million and $5.4 million for the same respective periods of 1994. Finished product sales through Datasouth's network of distributors and resellers were $2.4 million and $7.0 million for the quarter and nine months ended September 30, 1995, respectively, and $1.8 million and $6.1 million for the same respective periods of 1994. Increases in finished product sales through all channels were a direct result of increases in unit sales of Documax, Datasouth's newest printer family, introduced in mid-1993. Datasouth's parts, accessories and service revenue also increased to $1.4 million in the third quarter and $4.3 million in the first nine months of 1995 from $1.3 million and $3.3 million, respectively, in 1994. Bull Run received royalty income from mining properties sold in 1990 based on quantities of gold processed. Royalty income has been immaterial in 1995, and Bull Run does not foresee any significant amount of royalty income to be received in the future. The amount of the royalty income, if any, to be received in the future will be solely dependent on factors outside Bull Run's control. Bull Run recognized consulting fees from Gray of $435,000 in 1995 for management assistance relative to Gray's pending acquisition of a CBS- affiliated television station and their acquisition of a newspaper publishing operation. There can be no assurance that Bull Run will recognize any consulting fees in the future. Operating expenses were $1,523,000 for the quarter and $5,111,000 for the nine months ended September 30, 1995 compared to $159,000 and $479,000 for the same respective periods in 1994. The increase was due to the consolidation of Bull Run and Datasouth operating results in 1995, and the recognition in 1995 of goodwill amortization resulting from the Merger amounting to $77,000 for the third quarter and $232,000 for the year to date. Datasouth's operating expenses were $1,327,000 for the quarter and $3,885,000 for the nine months ended September 30, 1994. Equity in earnings of affiliated companies relates, in 1995, to Bull Run's investments in Gray, Host and CSP, and in 1994 (prior to November 29, 1994, the date of the Merger), to Bull Run's 43.6% investment in Datasouth. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued Bull Run had interest expense, net of interest income, of $292,000 for the quarter and $643,000 for the nine months ended September 30, 1995 as a result of its $13.5 million term loans dated March 29, 1995, Datasouth's interest expense on its former $3 million bank term loan, and borrowings on its lines of credit. The effective income tax rate of 41% for the nine months ended September 30, 1995 exceeds the federal statutory rate of 34% due principally to nondeductible goodwill amortization and state income taxes. The income tax provision for the nine months ended September 30, 1994 was insignificant due to the utilization of tax net operating loss carryforwards. Liquidity and Capital Resources As discussed more fully in the Notes to Condensed Consolidated Financial Statements, Bull Run acquired 50% of the outstanding common stock of CSP on March 29, 1995 for a total purchase price of approximately $9,700,000, and in January 1995, Bull Run acquired 30,200 shares of Host's outstanding common stock for $906,000. The purchases of CSP's common stock and Host's common stock were primarily financed under bank term loans totaling $13,500,000 bearing interest initially at the prime rate, with the principal amount thereof due in monthly installments of $150,000 commencing May 1998, with all remaining amounts due and payable by April 2002. The $13,500,000 loans also refinanced Datasouth's then existing $3,000,000 bank term loan. Bull Run invested an additional $1,455,000 in the nine months ended September 30, 1995 to purchase shares of Gray common stock, increasing its ownership to 26.8% of Gray's outstanding shares. Gray's common stock is traded on the New York Stock Exchange under the symbol "GCS". Bull Run has available lines of credit of $2,000,000 and $1,500,000, expiring April 30, 1996 and April 1, 1997, respectively. Bull Run anticipates that its current working capital, funds available under the lines of credit and cash flow from Datasouth's operations will be sufficient to fund its debt service and working capital requirements for at least the next twelve months. Any capital required for potential additional business acquisitions would have to be funded by issuing additional securities or by entering into other financial arrangements. Bull Run's working capital was approximately $3.9 million as of September 30, 1995 and $4.8 million as of December 31, 1994. The decrease was primarily attributable to borrowings under its lines of credit to fund additional investments in Gray. In November 1994, Bull Run announced that its Board of Directors authorized the repurchase of up to 2,000,000 shares of its common stock. Repurchases may be made from time to time in the open market or directly from shareholders at prevailing market prices, and may be discontinued at any time. During the quarter and nine months ended September 30, 1995, Bull Run repurchased 18,000 and 88,000 shares, respectively, of its common stock for approximately $54,000 and $207,000, respectively. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings (Loss) Per Share (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. BULL RUN CORPORATION Date: November 2, 1995 By: /s/ FREDERICK J. ERICKSON Frederick J. Erickson Vice President-Finance, Treasurer and Assistant Secretary (Mr. Erickson is the Chief Financial Officer and has been duly authorized to sign on behalf of the registrant.) EX-11 2 EXHIBIT 11 EXHIBIT 11 BULL RUN CORPORATION COMPUTATION OF EARNINGS (LOSS) PER SHARE (Dollars in thousands, except amounts per share) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 Primary: Net income (loss) . . . $ 27 $ 97 $ 671 $ (17) Primary shares: Weighted average number of shares outstanding . . . . . . 22,099 12,505 22,120 12,505 Assuming exercise of operations 1,260 122 1,121 Weighted average number of shares outstanding, as adjusted 23,359 12,627 23,241 12,505 Primary earnings per share: Net income (loss) . . . $ .00 $ .01 $ .03 $ (.00) Assuming full dilution: Net income (loss) . . . $ 27 $ 97 $ 671 $ (17) Fully diluted shares: Weighted average number of shares outstanding 22,099 12,505 22,120 12,505 Assuming exercise of options . . . . 1,287 140 1,288 Weighted average number of shares outstanding, as adjusted 23,386 12,645 23,408 12,505 Fully diluted earnings per share: Net income (loss) . . . $ .00 $ .01 $ .03 $ (.00) EX-27 3 EXHIBIT 27
5 9-MOS DEC-13-1995 SEP-30-1995 71,920 0 3,697,469 50,000 4,422,530 8,339,397 3,138,148 656,243 43,329,904 4,463,892 0 222,047 0 0 23,895,583 43,329,904 20,668,171 21,104,202 14,394,513 0 1,407,169 0 677,978 955,566 466,169 670,830 0 0 0 670,830 .03 .03
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