The Liberty Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
|
|
|
þ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2005
or
|
|
|
o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For
the transition period from
to
Commission
File Number 1-5846
THE LIBERTY CORPORATION
(Exact name of registrant as specified in its charter)
|
|
|
South Carolina
|
|
57-0507055 |
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
identification No.) |
135 South Main Street, Greenville, SC 29601
(Address of principal executive offices)
Registrants telephone number, including area code: 864/241-5400
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes o No þ
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the Registrants classes of common stock as of
the latest practicable date.
|
|
|
|
|
|
|
Number of shares Outstanding |
Title of each class |
|
as of September 30, 2005 |
Common Stock |
|
|
18,301,958 |
|
TABLE OF CONTENTS
PART I, ITEM 1
FINANCIAL STATEMENTS
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(In
000s) |
|
2005 |
|
|
2004 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
19,978 |
|
|
$ |
16,389 |
|
Receivables (net of allowance for doubtful accounts) |
|
|
38,188 |
|
|
|
41,576 |
|
Program rights |
|
|
6,734 |
|
|
|
4,766 |
|
Prepaid and other current assets |
|
|
3,521 |
|
|
|
6,077 |
|
Income taxes receivable |
|
|
848 |
|
|
|
|
|
Deferred income taxes |
|
|
2,587 |
|
|
|
2,453 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
71,856 |
|
|
|
71,261 |
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment
|
|
|
|
|
|
|
|
|
Land |
|
|
5,636 |
|
|
|
5,636 |
|
Buildings and improvements |
|
|
46,904 |
|
|
|
44,073 |
|
Furniture and equipment |
|
|
179,737 |
|
|
|
172,993 |
|
Less: Accumulated depreciation |
|
|
(147,243 |
) |
|
|
(134,133 |
) |
|
|
|
|
|
|
|
|
|
|
85,034 |
|
|
|
88,569 |
|
|
|
|
|
|
|
|
|
|
Intangible assets subject to amortization (net of
$706 and $701 accumulated amortization in 2005 and
2004, respectively) |
|
|
288 |
|
|
|
234 |
|
FCC licenses |
|
|
241,866 |
|
|
|
241,866 |
|
Goodwill |
|
|
101,387 |
|
|
|
101,387 |
|
Investments and other assets |
|
|
22,620 |
|
|
|
24,522 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
523,051 |
|
|
$ |
527,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
18,659 |
|
|
$ |
21,396 |
|
Dividends payable |
|
|
4,465 |
|
|
|
4,510 |
|
Program contract obligations |
|
|
6,777 |
|
|
|
4,791 |
|
Accrued income taxes |
|
|
|
|
|
|
3,573 |
|
Revolving credit facility |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
129,901 |
|
|
|
34,270 |
|
|
|
|
|
|
|
|
|
|
Unearned revenue |
|
|
15,599 |
|
|
|
15,965 |
|
Deferred income taxes |
|
|
60,678 |
|
|
|
60,187 |
|
Other liabilities |
|
|
6,670 |
|
|
|
7,097 |
|
Revolving credit facility |
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
212,848 |
|
|
|
137,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
Common stock |
|
|
42,636 |
|
|
|
49,273 |
|
Unearned stock compensation |
|
|
(16,399 |
) |
|
|
(17,396 |
) |
Retained earnings |
|
|
284,267 |
|
|
|
358,575 |
|
Unrealized investment losses |
|
|
(301 |
) |
|
|
(132 |
) |
|
|
|
|
|
|
|
Total shareholders equity |
|
|
310,203 |
|
|
|
390,320 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
523,051 |
|
|
$ |
527,839 |
|
|
|
|
|
|
|
|
See Notes to Consolidated and Condensed Financial Statements.
2
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In
000s, except per share data) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Television station revenues (net of commissions) |
|
$ |
45,346 |
|
|
$ |
49,915 |
|
|
$ |
138,606 |
|
|
$ |
145,653 |
|
Cable advertising and other revenues (net of commissions) |
|
|
3,405 |
|
|
|
3,691 |
|
|
|
9,969 |
|
|
|
10,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
|
48,751 |
|
|
|
53,606 |
|
|
|
148,575 |
|
|
|
156,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (exclusive of depreciation and
amortization shown separately below) |
|
|
31,099 |
|
|
|
32,045 |
|
|
|
93,873 |
|
|
|
94,725 |
|
Amortization of program rights |
|
|
1,884 |
|
|
|
1,786 |
|
|
|
5,628 |
|
|
|
5,302 |
|
Depreciation and amortization of intangibles |
|
|
4,970 |
|
|
|
5,321 |
|
|
|
14,669 |
|
|
|
14,860 |
|
Corporate, general, and administrative expenses |
|
|
6,419 |
|
|
|
5,206 |
|
|
|
15,421 |
|
|
|
14,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
44,372 |
|
|
|
44,358 |
|
|
|
129,591 |
|
|
|
129,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
4,379 |
|
|
|
9,248 |
|
|
|
18,984 |
|
|
|
27,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income (loss) |
|
|
(273 |
) |
|
|
(22 |
) |
|
|
2,011 |
|
|
|
(5,411 |
) |
Interest expense |
|
|
(1,002 |
) |
|
|
(253 |
) |
|
|
(2,274 |
) |
|
|
(515 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
3,104 |
|
|
|
8,973 |
|
|
|
18,721 |
|
|
|
21,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (Benefit from) income taxes |
|
|
1,871 |
|
|
|
(3,229 |
) |
|
|
5,715 |
|
|
|
1,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,233 |
|
|
$ |
12,202 |
|
|
$ |
13,006 |
|
|
$ |
19,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER COMMON SHARE: |
|
$ |
0.07 |
|
|
$ |
0.67 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER COMMON SHARE: |
|
$ |
0.07 |
|
|
$ |
0.66 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per common share |
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.75 |
|
|
$ |
0.75 |
|
Special dividend per common share |
|
$ |
|
|
|
$ |
|
|
|
$ |
4.00 |
|
|
$ |
4.00 |
|
See Notes to Consolidated and Condensed Financial Statements.
3
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
(In
000s) |
|
2005 |
|
|
|
|
|
|
2004 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
13,006 |
|
|
|
|
|
|
$ |
19,888 |
|
Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
(Gain) Loss on sale of operating assets |
|
|
60 |
|
|
|
|
|
|
|
118 |
|
Realized investment (gains) losses |
|
|
(1,090 |
) |
|
|
|
|
|
|
6,382 |
|
Depreciation |
|
|
14,498 |
|
|
|
|
|
|
|
14,722 |
|
Amortization of intangibles |
|
|
171 |
|
|
|
|
|
|
|
138 |
|
Provision for bad debts |
|
|
590 |
|
|
|
|
|
|
|
620 |
|
Amortization of program rights |
|
|
5,628 |
|
|
|
|
|
|
|
5,302 |
|
Cash paid for program rights |
|
|
(5,610 |
) |
|
|
|
|
|
|
(5,492 |
) |
Restricted stock amortization |
|
|
4,044 |
|
|
|
|
|
|
|
2,426 |
|
Provision for (Benefit from) deferred income taxes |
|
|
357 |
|
|
|
|
|
|
|
(7,783 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
2,798 |
|
|
|
|
|
|
|
2,209 |
|
Other assets |
|
|
2,246 |
|
|
|
|
|
|
|
(3,386 |
) |
Accounts payable and accrued expenses |
|
|
(1,013 |
) |
|
|
|
|
|
|
1,446 |
|
Accrued income taxes |
|
|
(2,805 |
) |
|
|
|
|
|
|
2,086 |
|
Unearned revenue |
|
|
(366 |
) |
|
|
|
|
|
|
1,651 |
|
Other liabilities |
|
|
(427 |
) |
|
|
|
|
|
|
451 |
|
All other operating activities |
|
|
(225 |
) |
|
|
|
|
|
|
425 |
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
|
31,862 |
|
|
|
|
|
|
|
41,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant, and equipment |
|
|
(11,158 |
) |
|
|
|
|
|
|
(9,226 |
) |
Proceeds from sale of property, plant, and equipment |
|
|
135 |
|
|
|
|
|
|
|
163 |
|
Investments acquired |
|
|
|
|
|
|
|
|
|
|
(750 |
) |
Investments sold |
|
|
2,285 |
|
|
|
|
|
|
|
11,257 |
|
Proceeds from sale of investment properties |
|
|
|
|
|
|
|
|
|
|
1,055 |
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
|
|
(8,738 |
) |
|
|
|
|
|
|
2,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
242,000 |
|
|
|
|
|
|
|
105,000 |
|
Principal payments on debt |
|
|
(162,000 |
) |
|
|
|
|
|
|
(55,000 |
) |
Dividends paid |
|
|
(87,359 |
) |
|
|
|
|
|
|
(89,142 |
) |
Proceeds from the exercise of stock options |
|
|
795 |
|
|
|
|
|
|
|
4,095 |
|
Repurchase of common stock |
|
|
(12,971 |
) |
|
|
|
|
|
|
(33,167 |
) |
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES |
|
|
(19,535 |
) |
|
|
|
|
|
|
(68,214 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH |
|
|
3,589 |
|
|
|
|
|
|
|
(24,512 |
) |
Cash at beginning of period |
|
|
16,389 |
|
|
|
|
|
|
|
62,177 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD |
|
$ |
19,978 |
|
|
|
|
|
|
$ |
37,665 |
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated and Condensed Financial Statements.
4
THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)
The accompanying unaudited consolidated and condensed financial
statements of The Liberty Corporation and Subsidiaries have been
prepared in accordance with accounting principles generally accepted
in the United States 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 accounting principles generally accepted in the United
States for complete financial statements.
The information included is not necessarily indicative of the annual
results that may be expected for the year ended December 31, 2005, but
does reflect all adjustments (which are of a normal and recurring
nature) considered, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. In
addition, the Companys revenues are usually subject to seasonal
fluctuations. The advertising revenues of the stations are generally
highest in the second and fourth quarters of each year, due in part to
increases in consumer advertising in the spring and retail advertising
in the period leading up to and including the holiday season.
Additionally, advertising revenues in even-numbered years tend to be
higher as they benefit from advertising placed by candidates for
political offices and demand for advertising time in Olympic
broadcasts.
The December 31, 2004 financial information was derived from the
Companys previously filed 2004 Form 10-K. For further information,
refer to the consolidated financial statements and footnotes thereto
included in The Liberty Corporation annual report on Form 10-K for the
year ended December 31, 2004. Certain reclassifications have been
made in the previously reported financial statements to make the prior
year amounts comparable to those of the current year.
The components of comprehensive income, net of related income taxes, for the three and nine
month periods ended September 30, 2005 and 2004, respectively, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In
000s) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Net income |
|
$ |
1,233 |
|
|
$ |
12,202 |
|
|
$ |
13,006 |
|
|
$ |
19,888 |
|
Unrealized gains
(losses) on
securities |
|
|
(50 |
) |
|
|
(196 |
) |
|
|
(169 |
) |
|
|
(238 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
1,183 |
|
|
$ |
12,006 |
|
|
$ |
12,837 |
|
|
$ |
19,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
The Company operates primarily in the television broadcasting and cable advertising businesses.
The Company currently owns and operates fifteen television stations, primarily in the
Southeast and Midwest. Each of the stations is affiliated with a major network, with eight NBC
affiliates, five ABC affiliates, and two CBS affiliates. The Company evaluates segment
performance based on income before income taxes, excluding unusual, or non-operating items.
The following table summarizes financial information by segment for the three and nine month
periods ended September 30, 2005 and 2004:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In
000s) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Revenues (net of commissions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Television station |
|
$ |
45,346 |
|
|
$ |
49,915 |
|
|
$ |
138,606 |
|
|
$ |
145,653 |
|
Cable advertising |
|
|
3,360 |
|
|
|
3,668 |
|
|
|
9,839 |
|
|
|
10,744 |
|
Other |
|
|
45 |
|
|
|
23 |
|
|
|
130 |
|
|
|
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues |
|
$ |
48,751 |
|
|
$ |
53,606 |
|
|
$ |
148,575 |
|
|
$ |
156,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Television station |
|
$ |
10,620 |
|
|
$ |
14,358 |
|
|
$ |
34,291 |
|
|
$ |
41,523 |
|
Cable advertising |
|
|
451 |
|
|
|
506 |
|
|
|
968 |
|
|
|
1,289 |
|
Corporate and other |
|
|
(7,967 |
) |
|
|
(5,891 |
) |
|
|
(16,538 |
) |
|
|
(21,542 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income before income taxes |
|
$ |
3,104 |
|
|
$ |
8,973 |
|
|
$ |
18,721 |
|
|
$ |
21,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no material changes in assets by segment from those disclosed in the Companys
2004 annual report. The goodwill that appears on the face of the balance sheet arose through
the acquisition of certain television stations, and therefore has been assigned in its entirety
to the Broadcasting segment.
The Company has a postretirement plan that provides medical and life insurance benefits for
qualified retired employees. The postretirement medical plan is generally contributory with
retiree contributions adjusted annually to limit employer contributions to predetermined
amounts. The postretirement life plan provides free insurance coverage for retirees and is
insured with an unaffiliated company.
Net periodic postretirement benefit cost included the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In
000s) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Service cost |
|
$ |
6 |
|
|
$ |
6 |
|
|
$ |
20 |
|
|
$ |
19 |
|
Amortization of prior service cost |
|
|
2 |
|
|
|
1 |
|
|
|
6 |
|
|
|
2 |
|
Amortization of actuarial net gain |
|
|
4 |
|
|
|
6 |
|
|
|
9 |
|
|
|
16 |
|
Interest cost |
|
|
30 |
|
|
|
33 |
|
|
|
90 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic postretirement benefit cost |
|
$ |
42 |
|
|
$ |
46 |
|
|
$ |
125 |
|
|
$ |
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
The calculation of basic and diluted earnings per common share from continuing operations is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In
000s except per share data) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Numerator Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,233 |
|
|
$ |
12,202 |
|
|
$ |
13,006 |
|
|
$ |
19,888 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic and diluted
earnings per common share |
|
$ |
1,233 |
|
|
$ |
12,202 |
|
|
$ |
13,006 |
|
|
$ |
19,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator Average Shares
Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per
common share weighted average shares |
|
|
17,886 |
|
|
|
18,314 |
|
|
|
17,944 |
|
|
|
18,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
82 |
|
|
|
94 |
|
|
|
71 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings
per common share |
|
|
17,968 |
|
|
|
18,408 |
|
|
|
18,015 |
|
|
|
18,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.07 |
|
|
$ |
0.67 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.07 |
|
|
$ |
0.66 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
The diluted earnings per common share calculation excludes the effect of potentially
dilutive shares when the inclusion of those shares in the calculation would have an
anti-dilutive effect. For the three-month periods ended September 30, 2005 and 2004, the
Company had approximately 51,000 and 28,000 weighted average options and approximately 292,000
and 371,000 weighted average restricted shares, respectively, which were not included in the
diluted earnings per common share calculation as their effect was anti-dilutive. For the
nine-month periods ended September 30, 2005 and 2004, the Company had approximately 112,000 and
28,000 weighted average options and 123,000 and 98,000 weighted average restricted shares,
respectively, which were not included in the diluted earnings per common share calculation as
their effect was anti-dilutive.
In accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation, the Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25) and
related interpretations in accounting for its equity compensation plans and does not recognize
compensation expense for its stock-based compensation plans other than for awards of restricted
shares. Expense is recognized over the vesting period of the restricted shares.
Under APB No. 25, because the exercise price of the Companys employee stock options at least
equals the market price of the underlying stock on the date of the grant, no compensation
expense is
7
recognized. Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its employee stock
options under the Black-Scholes fair value method described in that statement.
The Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options that have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions including the
expected stock price volatility. The Companys employee stock options have characteristics
significantly different from those of traded options, and changes in the subjective input
assumptions can materially affect the fair value estimate.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to
expense over the options vesting periods. The Companys pro forma information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
|
For the Nine Months |
|
|
|
Ended September 30, |
|
|
Ended September 30, |
|
(In
000s, except per share amounts) |
|
2005 |
|
|
2004 |
|
|
2005 |
|
|
2004 |
|
Stock-based compensation cost included in
net income (net of taxes) |
|
$ |
859 |
|
|
$ |
760 |
|
|
$ |
2,497 |
|
|
$ |
1,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
1,233 |
|
|
$ |
12,202 |
|
|
$ |
13,006 |
|
|
$ |
19,888 |
|
Pro forma compensation expense (net of
taxes) |
|
|
(197 |
) |
|
|
(203 |
) |
|
|
(588 |
) |
|
|
(605 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income |
|
$ |
1,036 |
|
|
$ |
11,999 |
|
|
$ |
12,418 |
|
|
$ |
19,283 |
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
0.07 |
|
|
$ |
0.67 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
Pro forma |
|
|
0.06 |
|
|
|
0.66 |
|
|
|
0.69 |
|
|
|
1.04 |
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
0.07 |
|
|
$ |
0.66 |
|
|
$ |
0.72 |
|
|
$ |
1.07 |
|
Pro forma |
|
|
0.06 |
|
|
|
0.65 |
|
|
|
0.69 |
|
|
|
1.03 |
|
The following table summarizes the Common Stock activity from the date of the Companys most
recently audited annual financial statements to the end of the period covered by this report:
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
Shares |
|
|
Common |
|
(In 000s) |
|
Outstanding |
|
|
Stock |
|
Balance as of December 31, 2004 |
|
|
18,469 |
|
|
$ |
49,273 |
|
Stock issued for employee benefit and
performance incentive compensation
programs |
|
|
147 |
|
|
|
5,566 |
|
Income tax benefit resulting from
employee exercise of options |
|
|
|
|
|
|
768 |
|
Stock repurchased |
|
|
(314 |
) |
|
|
(12,971 |
) |
|
|
|
|
|
|
|
Balance as of September 30, 2005 |
|
|
18,302 |
|
|
$ |
42,636 |
|
|
|
|
|
|
|
|
During the first quarter of 2005, the Company funded the accrued 2004 discretionary
contribution to its employee retirement and savings plan. Half of this funding, approximately
$1.7 million, was in the form of approximately 40,000 shares of Liberty common stock.
8
In March 2001, the Company entered into a $100 million unsecured 364-day revolving credit
facility with a bank. The Company renewed the facility on substantially similar terms in each
of the years 2002, 2003, 2004, and during the first quarter of 2005. At the end of the term of
the facility, any outstanding principal and interest will come due, unless the bank, in its
sole discretion, otherwise extends the facility. The facility provides that the funds drawn
may be used for working capital, dividends, and other general corporate purposes, capital
expenditures, purchases of common stock, acquisitions, and investments. The Company had $100
million and $20 million of debt outstanding at September 30, 2005 and December 31, 2004,
respectively. As of September 30, 2005 the weighted average interest rate on outstanding
borrowings was 4.50%.
The revolving credit facility has both an interest coverage and a leverage coverage covenant.
These covenants, which involve debt levels, interest expense, EBIT, and EBITDA (measures of
cash earnings defined in the revolving credit agreement), can affect the interest rate on
current and future borrowings. The Company has remained in compliance with all covenants
throughout the period covered by this report.
During the first quarter of 2005, the Company amended the credit agreement to, among other
things, extend the term of the facility through May 17, 2006 and increase the aggregate
facility commitment from $100 million to $150 million. The amended credit facility restricts
payments for dividends and purchases of common stock to no more than $180 million during the
period January 1, 2005 through December 31, 2005, and for periods after January 1, 2006 to $100
million plus fifty percent of cumulative net income of the Company for all fiscal periods
beginning January 1, 2005. As the maturity date of the credit facility, May 17, 2006, is within
one year of the current balance sheet date, the Company has included it within the caption
Current liabilities on the face of the balance sheet.
The Company classified the credit facility outside of the caption Current liabilities in its
June 30, 2005 balance sheet. On that balance sheet the Company reported current liabilities of
approximately $21.2 million. As the maturity date of the credit facility was within one year
of that balance sheet date, the credit facility should have been classified within the caption
Current liabilities and the total for that caption should have been $131.2 million. This
change in presentation does not impact the Companys compliance with its debt covenants.
During the third quarter of 2005, the Company re-evaluated its medical incurred but not
reported (IBNR) expense accrual. Based on information provided by the Companys claims
paying agent, it was determined that the lag-time between when a claim is incurred and when it
is paid has decreased from the historical levels previously used by the Company in its IBNR
accrual calculation. This decrease in lag-time resulted in a reduction in the accrual required
at September 30, 2005. The effect of this change in estimate increased income for the quarter
and year to date periods approximately $300,000. The effect on both basic and diluted earnings
per share for the quarter and year-to-date periods was approximately $0.02 per share.
9
During the third quarter of 2005 Libertys television station in Biloxi, MS, was impacted by
hurricane Katrina. The hurricane damaged the main station building and certain other
equipment. The Company believes that it is fully insured for all property damage resulting
from Katrina. In addition, also during the third quarter of 2005, hurricane Rita impacted the
Companys television station in Lake Charles, LA, to a much lesser extent. The Company has
accrued the applicable deductibles related to theses hurricanes as of September 30, 2005. The
deductibles for both stations, and other hurricane related expenses not expected to be
recovered under the Companys insurance policies, total approximately $740,000 and are included
in operating expenses. The Company does not anticipate significant additional expenses related
to these hurricanes in future periods.
11. |
|
PROVISION FOR INCOME TAXES |
It is the Companys policy to establish reserves for income taxes that may become payable in
future years as a result of an examination by tax authorities. The Company establishes the
reserves based upon managements assessment of exposures related to the recognition of revenue
or the deductions in its tax returns. The reserves are analyzed periodically, and adjustments
are made as events occur to warrant adjustment to the reserve. For example, if the statutory
period for assessing tax on a given tax return or period lapses, the reserve associated with
that period may be adjusted. In addition, the adjustment to the reserve may reflect additional
exposure based on current calculations. To the extent the Company were to prevail in matters
for which accruals have been established, statutory periods for assessing taxes lapse, or it be
required to pay amounts in excess of reserves, the Companys effective tax rate in a given
financial statement period could be materially affected.
During the second quarter of 2005, as a result of a favorable settlement of an IRS matter,
management reversed approximately $1.9 million of valuation allowances associated with a
receivable related to the refund of income taxes previously paid. Also, a receivable of
approximately $0.8 million was recorded resulting from an unrelated refund associated with a
closed examination period.
12. |
|
COMMITMENTS AND CONTINGENCIES |
In November of 2000, the Company sold its insurance operations to a third party. Under the
purchase agreement, subject to certain limitations, the Company agreed to indemnify the buyer
for damages (as defined in the purchase agreement) relating to certain tax matters,
pre-existing litigation and regulatory proceedings. The indemnification relating to the tax
matters is in effect until the expiration of the relevant statutes of limitation. The
indemnifications relating to the other matters are in effect until the final resolution of such
matters. The Company believes that the likelihood of it being required to make payments as a
result of these indemnifications is remote, and therefore has no liability recorded related to
these indemnifications. The limit of amounts recoverable by the acquirer will not exceed
one-half the purchase price, or approximately $324 million.
10
13. |
|
NEW ACCOUNTING PRONOUNCEMENTS |
On December 16, 2004, the Financial Accounting Standards Board issued Statement No. 123
(Revised 2004), Share-Based Payment (Statement No. 123(R)), which is a revision of FASB
Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95,
Statement of Cash Flows. On April 14, 2005 the Securities and Exchange Commission announced
the adoption of a rule that amends the compliance dates for Statement 123(R). The new rule
allows companies to implement Statement 123 (R) at the beginning of their next fiscal year that
begins after June 15, 2005, which for the Company is the first quarter of 2006. Early adoption
is permitted.
Generally, the approach in Statement 123(R) is similar to the approach described in Statement
123. However, Statement 123(R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement based on their fair
values. Pro forma disclosure is no longer an alternative.
Statement 123(R) permits public companies to adopt its requirements using one of two methods:
|
1. |
|
A modified prospective method in which compensation cost is
recognized beginning with the effective date (a) based on the requirements of
Statement 123(R) for all share-based payments granted after the effective date
and (b) based on the requirements of Statement 123 for all awards granted to
employees prior to the effective date of Statement 123(R) that remain unvested
on the effective date. |
|
|
2. |
|
A modified retrospective method which includes the requirements
of the modified prospective method described above, but also permits entities
to restate based on the amounts previously recognized under Statement 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption. |
The Company plans to adopt Statement 123(R) using the modified prospective method.
As permitted by Statement 123, the Company currently accounts for share-based payments to
employees using APB Opinion 25s intrinsic value method and, as such, generally recognizes no
compensation cost for employee stock options. The Company has not granted stock options to its
employees since June of 2002. While authorized under its incentive compensation program to
grant stock options, at this time the Company does not intend to make future stock option
grants. Therefore, the Company anticipates that the effect of Statement 123(R) will be limited
to expensing the remaining value of its previously granted but unvested options. The Company
believes that it will adopt 123(R) in the first quarter of 2006, and the estimated effect of
Statement 123(R) on net income will be approximately $230,000, and $20,000 in the years 2006
and 2007 respectively.
11
14. |
|
AGREEMENT AND PLAN OF MERGER |
On August 25, 2005, Liberty and Raycom Media, Inc., (Raycom) entered into an Agreement and
Plan of Merger (the Merger Agreement). The Merger Agreement provides that, upon the terms and
subject to the conditions set forth therein, (i) a wholly owned subsidiary of Raycom will merge
with and into Liberty, with Liberty as the surviving corporation, and (ii) each share of
Liberty common stock that is outstanding at the effective time of the merger will be converted
into the right to receive $47.35 in cash (the Merger Consideration). Following the merger,
Liberty will be a wholly owned subsidiary of Raycom. Each outstanding share of restricted
stock granted under Libertys Incentive Compensation Program will become fully vested and
converted into the right to receive the Merger Consideration, and each outstanding option to
purchase Libertys common stock will be converted into the right to receive a cash amount equal
to the Merger Consideration less the exercise price for such option.
The closing of the merger is subject to the approval of Libertys shareholders, the approval of
the Federal Communications Commission and other closing conditions. Liberty shareholders owning
approximately 20% of Libertys outstanding shares have agreed to vote in favor of the merger.
Corporate, general, and administrative expenses include approximately $2.5 million of costs
associated with the proposed acquisition of Liberty by Raycom.
12
PART I, ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
The Liberty Corporation is a holding company with operations primarily in the television
broadcasting industry. The Companys television broadcasting subsidiary, Cosmos Broadcasting,
consists of fifteen network-affiliated stations located in the Southeast and Midwest, along with
other ancillary businesses. Eight of the Companys television stations are affiliated with NBC,
five with ABC, and two with CBS.
On August 25, 2005, Liberty and Raycom Media, Inc., (Raycom) entered into an Agreement and Plan
of Merger (the Merger Agreement). The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, (i) a wholly owned subsidiary of Raycom will merge with and
into Liberty, with Liberty as the surviving corporation, and (ii) each share of Liberty common
stock that is outstanding at the effective time of the merger will be converted into the right to
receive $47.35 in cash (the Merger Consideration). Following the merger, Liberty will be a wholly
owned subsidiary of Raycom. Each outstanding share of restricted stock granted under Libertys
Incentive Compensation Program will become fully vested and converted into the right to receive the
Merger Consideration, and each outstanding option to purchase Libertys common stock will be
converted into the right to receive a cash amount equal to the Merger Consideration less the
exercise price for such option.
The closing of the merger is subject to the approval of Libertys shareholders, the approval of the
Federal Communications Commission and other closing conditions. Liberty shareholders owning
approximately 20% of Libertys outstanding shares have agreed to vote in favor of the merger.
SEASONALITY OF TELEVISION REVENUES
The Companys revenues are usually subject to seasonal fluctuations. The advertising revenues of
the stations are generally highest in the second and fourth quarters of each year, due in part to
increases in consumer advertising in the spring and retail advertising in the period leading up to
and including the holiday season. Additionally, advertising revenues in even-numbered years tend to
be higher as they benefit from advertising placed by candidates for political offices and demand
for advertising time in Olympic broadcasts.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
Total net revenue decreased $4.9 million on a year-over-year basis. Station net revenue decreased
$4.6 million for the same period. Cable and other net revenue decreased $0.3 million as compared
to the prior year quarter. Net revenue decreased on a year-over-year basis due mainly to lower
levels of political revenue. The year 2005 is an off-cycle election year, and as such, is expected
to have lower levels of political revenue when compared to 2004 which was a presidential election
year.
Local revenue was down $1.0 million due to softness in the automotive, entertainment, and
supermarket/drug store categories. National revenue was down $0.2 million, on a year-over-year
basis as softness in the automobile and retail store categories was partially offset by increases
in the restaurant and
13
retail telemarketing categories. Political revenue for the third quarter of 2005 was $0.3 million
as compared to $5.3 million in the third quarter of 2004. This is consistent with the Companys
historical experience that advertising revenues in even-numbered years tend to be higher than in
odd-numbered years due to advertising placed by or on behalf of candidates running for political
offices. The Company expects the cyclicality of political advertising revenues to continue to
affect its revenues in future periods. The Company does not, however, know whether the variability
in spending by the entities comprising the other categories tracked by the Company will continue at
similar rates in future periods.
During the third quarter of 2005 Libertys television station in Biloxi, MS, was impacted by
hurricane Katrina. The hurricane damaged the main station building and certain other equipment.
The Company believes that it is fully insured for all property damage resulting from Katrina. In
addition, also during the third quarter of 2005, hurricane Rita impacted the Companys television
station in Lake Charles, LA, to a much lesser extent. The Company has accrued the applicable
deductibles related to theses hurricanes as of September 30, 2005. The deductibles for both
stations, and other hurricane related expenses not expected to be recovered under the Companys
insurance policies, total approximately $740,000 and are included in operating expenses. The
Company does not anticipate significant additional expenses related to these hurricanes in future
periods.
Excluding the hurricane related expenses, operating expenses (including amortization of program
rights) decreased $1.5 million quarter-over-quarter, due mainly to lower medical insurance and
travel expenses. During the third quarter of 2005, the Company re-evaluated its medical incurred
but not reported (IBNR) expense accrual. Based on information provided by the Companys claims
paying agent, it was determined that the lag-time between when a claim is incurred and when it is
paid has decreased from the historical levels previously used by the Company in its IBNR accrual
calculation. This decrease in lag-time resulted in a reduction in the accrual required at
September 30, 2005. Travel expenses were lower in 2005 due to the prior year having included sales
incentive trips for clients to the Olympics, with no such expenses during the current quarter.
Corporate expenses were $6.4 million in the third quarter of 2005, an increase of $1.2 million as
compared to the $6.2 million reported for the third quarter of 2004. The increase in corporate
expenses is due mainly to transaction costs associated with the Companys proposed acquisition by
Raycom, partially offset by lower levels of accrued bonus expense.
Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
Total net revenue decreased $7.9 million on a year-over-year basis. Station net revenue decreased
$7.0 million for the same period. Cable and other net revenue decreased $0.9 million as compared
to the prior year. Net revenue decreased on a year-over-year basis due mainly to lower levels of
political revenue. The year 2005 is an off-cycle election year, and as such, is expected to have
lower levels of political revenue when compared to 2004 which was a presidential election year.
Local revenue increased $1.1 million as softness in the automotive and restaurant categories was
offset by increases in the professional services, medical, and retail telemarketing categories.
National revenue was down $1.7 million, on a year-over-year basis due mainly to softness in the
automotive and telecommunications categories being partially offset by an increase in the retail
telemarketing category. Political revenue for the first nine months of 2005 was $1.2 million as
compared to $11.8 million in the first nine months of 2004. This is consistent with the Companys
historical experience that advertising revenues in even-numbered years tend to be higher than in
odd-numbered years due to advertising placed by or on behalf of candidates running for political
offices. The Company expects the cyclicality of political advertising revenues to continue to
affect its revenues in future periods. The Company does not,
14
however, know whether the variability in spending by the entities comprising the other categories
tracked by the Company will continue at similar rates in future periods.
Exclusive of the additional costs related to the hurricanes, as discussed above, operating expenses
(including amortization of program rights) decreased $1.2 million on a year-over-year basis.
Increases related to planned annual increases in employee compensation and amortization expense
related to restricted stock grants made during 2004 were offset by lower levels of medical
insurance and travel expenses, as noted above, in addition to lower levels of accrued bonus
expense. The Company would expect continued increases in employee compensation related to annual
increases in base pay, while lower levels of bonus expense will be dependant upon the future
overall performance of the Company for the remainder of 2005.
Corporate expenses were $15.4 million for the first nine months of 2005, an increase of $1.0
million as compared to the $14.4 million reported for the first nine months of 2004. The increase
in corporate expenses is due mainly to planned annual increases in employee compensation, increased
amortization expense related to restricted stock grants, and transaction costs related to the
Companys proposed acquisition by Raycom being partially offset by the absence of the $1.6 million
charge in 2004 related to the settlement of all outstanding issues associated with the terminated
GNS Media transaction. During 2003, the Company announced that it was in negotiations with GNS for
the purpose of entering into certain agreements associated with GNSs proposed purchase of a
television station. Those negotiations were subsequently terminated.
Net investment income was $2.0 million for the first nine months of 2005, as a result of gains from
the sale of investments in, and distributions from, the Companys venture capital portfolio,
coupled with interest income earned on cash balances, partially offset by impairments taken in the
Companys venture capital portfolio. Net investment income for the first nine months of 2004 was a
loss of $5.4 million. Interest earned on cash balances and notes receivable, and a $0.7 million
gain on sale of an investment in the Companys venture capital portfolio were offset by $1.1
million of impairments taken during the first quarter of 2004 and a $5.3 million impairment of one
of the Companys strategic investments taken during the second quarter of 2004.
During the second quarter of 2005, as a result of a favorable settlement of an IRS matter,
management reversed approximately $1.9 million of valuation allowances associated with a receivable
related to the refund of income taxes previously paid. Also, a receivable of approximately $0.8
million was recorded resulting from an unrelated refund associated with a closed examination
period. The Companys tax rate, exclusive of the issues noted above, is expected to be
approximately 46.7% for 2005.
Capital, Financing and Liquidity
At September 30, 2005, the Company had cash of approximately $20.0 million, outstanding debt of
$100.0 million, and $50.0 million available under its credit facility. During the first quarter of
2005, the Company declared a special dividend of $4.00 per share, approximately $73.5 million, in
addition to its normal recurring quarterly dividend of $0.25 per share. The special dividend was
paid during the second quarter of 2005 using a significant portion of the Companys then available
cash balance. The Company borrowed $80.0 million under its credit facility to assist in funding the
special and regular dividends.
The revolving credit facility has both an interest coverage and a leverage coverage covenant.
These covenants, which involve debt levels, interest expense, EBIT, and EBITDA (measures of cash
earnings defined in the revolving credit agreement), can affect the interest rate on current and
future borrowings. The Company was in compliance with all covenants throughout the period covered
by this report.
15
During the first quarter of 2005, the Company amended the credit facility to, among other things,
extend the term of the facility through May 17, 2006 and increase the aggregate facility commitment
from $100 million to $150 million. The amended credit facility restricts payments for dividends
and purchases of common stock to no more than $180 million during the period January 1, 2005
through December 31, 2005, and for periods after January 1, 2006 to $100 million plus fifty percent
of cumulative net income of the Company for all fiscal periods beginning January 1, 2005.
The Company has refinanced its revolving credit facility on similar terms in each of the last five
years, and based upon the cash flow of its operations, believes that it will continue to be able to
due so into the foreseeable future. The Company anticipates that its primary sources of cash,
those being current cash balances, operating cash flow, and the available credit facility will be
sufficient to finance the Companys operating requirements and anticipated capital expenditures,
for both the next 12 months and the foreseeable future thereafter.
Cash Flows
The Companys net cash provided by operating activities was $31.9 million for the first nine months
of 2005 compared to $41.2 million for the same period of the prior year. The Companys net cash
used in investing activities was $8.7 million for the first nine months of 2005, as compared to net
cash provided of $2.5 million for the same period of 2004. The decrease in net cash provided by
investing activities is attributable to the cash realized on the sale of an investment in the
Companys strategic portfolio during 2004 that was not present during 2005. Net cash used in
financing activities for the first nine months of 2005 was $19.5 million compared to $68.2 million
for the first nine months of 2004. During 2005, the Company had net borrowings of $80.0 million
under its credit facility, compared to $50.0 million during 2004. As noted above, the Company drew
down the funds to assist in the funding of the 2005 special dividend.
Forward Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. Certain information contained herein or in any other written or oral statements made
by, or on behalf of Liberty, is or may be viewed as forward-looking. The words expect,
believe, anticipate or similar expressions identify forward-looking statements. Although
Liberty has used appropriate care in developing any such forward-looking information,
forward-looking information involves risks and uncertainties that could significantly impact actual
results. These risks and uncertainties include, but are not limited to, the following: the failure
to obtain Liberty shareholder approval of the merger or the failure to obtain regulatory approvals
or satisfy the other conditions to the merger; the termination of the merger agreement prior to the
closing; the merger may not close in the expected timeframe; changes in national and local markets
for television advertising; changes in general economic conditions, including the performance of
financial markets and interest rates; competitive, regulatory, or tax changes that affect the cost
of or demand for Libertys products; and adverse litigation results. Liberty undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future developments, or otherwise.
Additional Information and Where to Find It
In connection with the proposed merger, Liberty filed a definitive proxy statement with the U.S.
Securities and Exchange Commission (SEC) on October 31, 2005 which was subsequently distributed to
Libertys shareholders for purposes of the shareholder meeting scheduled for December 6,2005.
INVESTORS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the proxy
16
statement and other documents filed by Liberty with the SEC at the SECs web site at
http://www.sec.gov. Free copies of the proxy statement and Libertys other filings with the SEC
may also be obtained from Liberty. Free copies of Libertys filings may be obtained by directing a
request to The Liberty Corporation, 135 South Main Street. Greenville, South Carolina 29601.
Participants in the Solicitation
Liberty, Raycom and their respective directors, executive officers and other members of their
management and employees may be deemed to be soliciting proxies from Libertys shareholders in
favor of the merger. Information concerning persons who may be considered participants in the
solicitation of Libertys shareholders under the rules of the SEC is set forth in the proxy
statement filed by Liberty with the SEC on March 28, 2005 and October 31, 2005.
PART I, ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the information, as disclosed in Part II, Item 7A of the
Companys most recent annual report on Form 10-K, that would be provided under Item 305 of
Regulation S-K from the end of the preceding fiscal year to the date of this report.
PART I, ITEM 4
CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Companys disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the end of the period covered by this
report, the Companys disclosure controls and procedures are effective to ensure that information
required to be disclosed in the Companys reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms, and are also effective to ensure that information required to be disclosed in the
Companys reports filed or submitted under the Exchange Act is accumulated and communicated to the
Companys management, including the principal executive and principal financial officers, to allow
timely decisions regarding required disclosure.
During the most recent fiscal quarter, there has been no change in the Companys internal control
over financial reporting that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting.
17
PART II, ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Total Number of |
|
|
Maximum Number |
|
|
|
Number of |
|
|
|
|
|
|
Shares (or Units) |
|
|
of Shares that May |
|
|
|
Shares (or |
|
|
Average Price |
|
|
Purchased as Part of |
|
|
Yet Be Purchased |
|
|
|
Units) |
|
|
Paid per Share |
|
|
Publicly Announced |
|
|
Under the Plans or |
|
Period |
|
Purchased |
|
|
(or Unit) |
|
|
Plans or Programs |
|
|
Programs |
|
July 131, 2005 |
|
|
2,844 |
|
|
$ |
36.77 |
|
|
|
|
|
|
|
3,698,500 |
|
August 131, 2005 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
3,698,500 |
|
September 130,
2005 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
3,698,500 |
|
Total |
|
|
2,844 |
|
|
$ |
36.77 |
|
|
|
|
|
|
|
3,698,500 |
|
During the quarter the Company acquired 2,844 shares as satisfaction of withholding tax obligations
for restricted stock that vested during the period, in accordance with provisions of the Companys
Performance Incentive Compensation plan.
On February 8, 2005 Libertys Board of Directors extended to February 28, 2006 the Companys
authorization to purchase from time to time up to 4,000,000 shares of stock in the open market or
directly negotiated transactions.
PART
II, ITEM 6.
EXHIBITS
INDEX TO EXHIBITS
|
|
|
EXHIBIT 10
|
|
THE PERFORMANCE INCENTIVE COMPENSATION PROGRAM (Amended and Restated November 2000) |
|
|
|
EXHIBIT 11
|
|
Consolidated Earnings Per Share Computation (included in Note 5
of Notes to Consolidated and Condensed Financial Statements) |
|
|
|
EXHIBIT 31
|
|
Rule 13a-14(a)/15d-14(a) Certifications |
|
|
|
EXHIBIT 32
|
|
Section 1350 Certifications |
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
|
|
|
THE LIBERTY CORPORATION
(Registrant)
|
|
Date: November 1, 2005 |
|
|
|
|
|
|
Howard L. Schrott |
|
|
Chief Financial Officer |
|
|
|
|
|
/s/ Martha G. Williams
Martha G. Williams
|
|
|
Vice President and General Counsel |
|
|
19