##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 )
 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
  South Carolina
    
    57-0507055(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer
identification No.)
 135 South Main Street, Greenville, SC 29601
  864/241-5400
 o þ
 þ o
 o þ
  Number of shares OutstandingTitle of each class
    
    as of September 30, 2005Common Stock
    
    
    18,301,958




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TABLE OF CONTENTS  PART I, ITEM 1PART I, ITEM 2PART I, ITEM 3PART I, ITEM 4PART II, ITEM 2PART II, ITEM 6EXHIBITSSIGNATURESEx-10Ex-31Ex-32    Table of Contents  
 PART I, ITEM 1
 FINANCIAL STATEMENTS
 
 September 30,
    
    
    December 31,(In
000s)
    
    2005
    
    
    2004(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    19,978
    
    
    $
    16,389Receivables (net of allowance for doubtful accounts)
    
    
    38,188
    
    
    
    41,576Program rights
    
    
    6,734
    
    
    
    4,766Prepaid and other current assets
    
    
    3,521
    
    
    
    6,077Income taxes receivable
    
    
    848
    
    
    
    Deferred income taxes
    
    
    2,587
    
    
    
    2,453Total current assets
    
    
    71,856
    
    
    
    71,261Property, plant, and equipmentLand

    
    5,636
    
    
    
    5,636Buildings and improvements
    
    
    46,904
    
    
    
    44,073Furniture and equipment
    
    
    179,737
    
    
    
    172,993Less: Accumulated depreciation
    
    
    (147,243
    )
    
    
    (134,133
    )85,034
    
    
    
    88,569Intangible assets subject to amortization (net of
$706 and $701 accumulated amortization in 2005 and
2004, respectively)
    
    
    288
    
    
    
    234FCC licenses
    
    
    241,866
    
    
    
    241,866Goodwill
    
    
    101,387
    
    
    
    101,387Investments and other assets
    
    
    22,620
    
    
    
    24,522Total assets
    
    $
    523,051
    
    
    $
    527,839LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    18,659
    
    
    $
    21,396Dividends payable
    
    
    4,465
    
    
    
    4,510Program contract obligations
    
    
    6,777
    
    
    
    4,791Accrued income taxes
    
    
    
    
    
    
    3,573Revolving credit facility
    
    
    100,000
    
    
    
    Total current liabilities
    
    
    129,901
    
    
    
    34,270Unearned revenue
    
    
    15,599
    
    
    
    15,965Deferred income taxes
    
    
    60,678
    
    
    
    60,187Other liabilities
    
    
    6,670
    
    
    
    7,097Revolving credit facility
    
    
    
    
    
    
    20,000Total liabilities
    
    
    212,848
    
    
    
    137,519Shareholders equityCommon stock
    
    
    42,636
    
    
    
    49,273Unearned stock compensation
    
    
    (16,399
    )
    
    
    (17,396
    )Retained earnings
    
    
    284,267
    
    
    
    358,575Unrealized investment losses
    
    
    (301
    )
    
    
    (132
    )Total shareholders equity
    
    
    310,203
    
    
    
    390,320Total liabilities and shareholders equity
    
    $
    523,051
    
    
    $
    527,839
 .
 2




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THE LIBERTY CORPORATION AND SUBSIDIARIES  CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In
000s, except per share data)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(Unaudited)REVENUESTelevision station revenues (net of commissions)
    
    $
    45,346
    
    
    $
    49,915
    
    
    $
    138,606
    
    
    $
    145,653Cable advertising and other revenues (net of commissions)
    
    
    3,405
    
    
    
    3,691
    
    
    
    9,969
    
    
    
    10,821Net revenues
    
    
    48,751
    
    
    
    53,606
    
    
    
    148,575
    
    
    
    156,474EXPENSESOperating expenses (exclusive of depreciation and
amortization shown separately below)
    
    
    31,099
    
    
    
    32,045
    
    
    
    93,873
    
    
    
    94,725Amortization of program rights
    
    
    1,884
    
    
    
    1,786
    
    
    
    5,628
    
    
    
    5,302Depreciation and amortization of intangibles
    
    
    4,970
    
    
    
    5,321
    
    
    
    14,669
    
    
    
    14,860Corporate, general, and administrative expenses
    
    
    6,419
    
    
    
    5,206
    
    
    
    15,421
    
    
    
    14,391Total operating expenses
    
    
    44,372
    
    
    
    44,358
    
    
    
    129,591
    
    
    
    129,278Operating income
    
    
    4,379
    
    
    
    9,248
    
    
    
    18,984
    
    
    
    27,196Net 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
    
    
    
    21,270Provision for (Benefit from) income taxes
    
    
    1,871
    
    
    
    (3,229
    )
    
    
    5,715
    
    
    
    1,382NET INCOME
    
    $
    1,233
    
    
    $
    12,202
    
    
    $
    13,006
    
    
    $
    19,888BASIC EARNINGS PER COMMON SHARE:
    
    $
    0.07
    
    
    $
    0.67
    
    
    $
    0.72
    
    
    $
    1.07DILUTED EARNINGS PER COMMON SHARE:
    
    $
    0.07
    
    
    $
    0.66
    
    
    $
    0.72
    
    
    $
    1.07Dividends per common share
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.75
    
    
    $
    0.75Special dividend per common share
    
    $
    
    
    
    $
    
    
    
    $
    4.00
    
    
    $
    4.00
  3




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THE LIBERTY CORPORATION AND SUBSIDIARIES  CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
 Nine Months Ended September 30,(In
000s)
    
    2005
    
    
    
    
    
    
    2004(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    13,006
    
    
    
    
    
    
    $
    19,888Adjustments to reconcile net income to net cash
provided by (used in) operating activities:(Gain) Loss on sale of operating assets
    
    
    60
    
    
    
    
    
    
    
    118Realized investment (gains) losses
    
    
    (1,090
    )
    
    
    
    
    
    
    6,382Depreciation
    
    
    14,498
    
    
    
    
    
    
    
    14,722Amortization of intangibles
    
    
    171
    
    
    
    
    
    
    
    138Provision for bad debts
    
    
    590
    
    
    
    
    
    
    
    620Amortization of program rights
    
    
    5,628
    
    
    
    
    
    
    
    5,302Cash paid for program rights
    
    
    (5,610
    )
    
    
    
    
    
    
    (5,492
    )Restricted stock amortization
    
    
    4,044
    
    
    
    
    
    
    
    2,426Provision for (Benefit from) deferred income taxes
    
    
    357
    
    
    
    
    
    
    
    (7,783
    )Changes in operating assets and liabilities:Receivables
    
    
    2,798
    
    
    
    
    
    
    
    2,209Other assets
    
    
    2,246
    
    
    
    
    
    
    
    (3,386
    )Accounts payable and accrued expenses
    
    
    (1,013
    )
    
    
    
    
    
    
    1,446Accrued income taxes
    
    
    (2,805
    )
    
    
    
    
    
    
    2,086Unearned revenue
    
    
    (366
    )
    
    
    
    
    
    
    1,651Other liabilities
    
    
    (427
    )
    
    
    
    
    
    
    451All other operating activities
    
    
    (225
    )
    
    
    
    
    
    
    425NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    31,862
    
    
    
    
    
    
    
    41,203INVESTING ACTIVITIESPurchase of property, plant, and equipment
    
    
    (11,158
    )
    
    
    
    
    
    
    (9,226
    )Proceeds from sale of property, plant, and equipment
    
    
    135
    
    
    
    
    
    
    
    163Investments acquired
    
    
    
    
    
    
    
    
    
    
    (750
    )Investments sold
    
    
    2,285
    
    
    
    
    
    
    
    11,257Proceeds from sale of investment properties
    
    
    
    
    
    
    
    
    
    
    1,055NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (8,738
    )
    
    
    
    
    
    
    2,499FINANCING ACTIVITIESProceeds from borrowings
    
    
    242,000
    
    
    
    
    
    
    
    105,000Principal payments on debt
    
    
    (162,000
    )
    
    
    
    
    
    
    (55,000
    )Dividends paid
    
    
    (87,359
    )
    
    
    
    
    
    
    (89,142
    )Proceeds from the exercise of stock options
    
    
    795
    
    
    
    
    
    
    
    4,095Repurchase 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
    
    
    
    
    
    
    
    62,177CASH AT END OF PERIOD
    
    $
    19,978
    
    
    
    
    
    
    $
    37,665
  4




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THE LIBERTY CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
 1.
    
    BASIS OF PRESENTATION
    2.
    
    COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In
000s)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net income
    
    $
    1,233
    
    
    $
    12,202
    
    
    $
    13,006
    
    
    $
    19,888Unrealized gains
(losses) on
securities
    
    
    (50
    )
    
    
    (196
    )
    
    
    (169
    )
    
    
    (238
    )Comprehensive income
    
    $
    1,183
    
    
    $
    12,006
    
    
    $
    12,837
    
    
    $
    19,650
 
 5




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3.
    
    SEGMENT REPORTING
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In
000s)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues (net of commissions)Television station
    
    $
    45,346
    
    
    $
    49,915
    
    
    $
    138,606
    
    
    $
    145,653Cable advertising
    
    
    3,360
    
    
    
    3,668
    
    
    
    9,839
    
    
    
    10,744Other
    
    
    45
    
    
    
    23
    
    
    
    130
    
    
    
    77Total net revenues
    
    $
    48,751
    
    
    $
    53,606
    
    
    $
    148,575
    
    
    $
    156,474Income (loss) before income taxesTelevision station
    
    $
    10,620
    
    
    $
    14,358
    
    
    $
    34,291
    
    
    $
    41,523Cable advertising
    
    
    451
    
    
    
    506
    
    
    
    968
    
    
    
    1,289Corporate and other
    
    
    (7,967
    )
    
    
    (5,891
    )
    
    
    (16,538
    )
    
    
    (21,542
    )Total income before income taxes
    
    $
    3,104
    
    
    $
    8,973
    
    
    $
    18,721
    
    
    $
    21,270
  4.
    
    EMPLOYEE BENEFITS
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In
000s)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    6
    
    
    $
    6
    
    
    $
    20
    
    
    $
    19Amortization of prior service cost
    
    
    2
    
    
    
    1
    
    
    
    6
    
    
    
    2Amortization of actuarial net gain
    
    
    4
    
    
    
    6
    
    
    
    9
    
    
    
    16Interest cost
    
    
    30
    
    
    
    33
    
    
    
    90
    
    
    
    100Net periodic postretirement benefit cost
    
    $
    42
    
    
    $
    46
    
    
    $
    125
    
    
    $
    137
 
 6




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5.
    
    EARNINGS PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In
000s except per share data)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator  Earnings:Net income
    
    $
    1,233
    
    
    $
    12,202
    
    
    $
    13,006
    
    
    $
    19,888Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Numerator for basic and diluted
earnings per common share
    
    $
    1,233
    
    
    $
    12,202
    
    
    $
    13,006
    
    
    $
    19,888Denominator  Average Shares
Outstanding:Denominator for basic earnings per
common share  weighted average shares
    
    
    17,886
    
    
    
    18,314
    
    
    
    17,944
    
    
    
    18,527Effect of dilutive securities:Stock options
    
    
    82
    
    
    
    94
    
    
    
    71
    
    
    
    134Denominator for diluted earnings
per common share
    
    
    17,968
    
    
    
    18,408
    
    
    
    18,015
    
    
    
    18,661Basic earnings per common share
    
    $
    0.07
    
    
    $
    0.67
    
    
    $
    0.72
    
    
    $
    1.07Diluted earnings per common share
    
    $
    0.07
    
    
    $
    0.66
    
    
    $
    0.72
    
    
    $
    1.07
  6.
    
    EQUITY COMPENSATION
   7




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For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,(In
000s, except per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Stock-based compensation cost included in
net income (net of taxes)
    
    $
    859
    
    
    $
    760
    
    
    $
    2,497
    
    
    $
    1,501Net income:As reported
    
    $
    1,233
    
    
    $
    12,202
    
    
    $
    13,006
    
    
    $
    19,888Pro forma compensation expense (net of
taxes)
    
    
    (197
    )
    
    
    (203
    )
    
    
    (588
    )
    
    
    (605
    )Pro forma net income
    
    $
    1,036
    
    
    $
    11,999
    
    
    $
    12,418
    
    
    $
    19,283Basic earnings per share:As reported
    
    $
    0.07
    
    
    $
    0.67
    
    
    $
    0.72
    
    
    $
    1.07Pro forma
    
    
    0.06
    
    
    
    0.66
    
    
    
    0.69
    
    
    
    1.04Diluted earnings per share:As reported
    
    $
    0.07
    
    
    $
    0.66
    
    
    $
    0.72
    
    
    $
    1.07Pro forma
    
    
    0.06
    
    
    
    0.65
    
    
    
    0.69
    
    
    
    1.03
 7.
    
    COMMON STOCK
  CommonShares
    
    
    Common(In 000s)
    
    Outstanding
    
    
    StockBalance as of December 31, 2004
    
    
    18,469
    
    
    $
    49,273Stock issued for employee benefit and
performance incentive compensation
programs
    
    
    147
    
    
    
    5,566Income tax benefit resulting from
employee exercise of options
    
    
    
    
    
    
    768Stock repurchased
    
    
    (314
    )
    
    
    (12,971
    )Balance as of September 30, 2005
    
    
    18,302
    
    
    $
    42,636
  8




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8.
    
    CREDIT FACILITY
     9.
    
    CHANGE IN ESTIMATE
  9




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##### Table of Contents



10.
    
    HURRICANE COSTS
  11.
    
    PROVISION FOR INCOME TAXES
   12.
    
    COMMITMENTS AND CONTINGENCIES
  10




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##### Table of Contents



13.
    
    NEW ACCOUNTING PRONOUNCEMENTS
    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.
   11




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14.
    
    AGREEMENT AND PLAN OF MERGER
    12




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PART I, ITEM 2
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     SEASONALITY OF TELEVISION REVENUES
  RESULTS OF OPERATIONS
 Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
   13




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Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
   14




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Capital, Financing and Liquidity
   15




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Cash Flows
  Forward Looking Information
  Additional Information and Where to Find It
  16




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Participants in the Solicitation
  
 PART I, ITEM 3
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 PART I, ITEM 4
 CONTROLS AND PROCEDURES
   17




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PART II, ITEM 2.
 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Total
    
    
    
    
    
    
    Total Number of
    
    
    Maximum NumberNumber of
    
    
    
    
    
    
    Shares (or Units)
    
    
    of Shares that MayShares (or
    
    
    Average Price
    
    
    Purchased as Part of
    
    
    Yet Be PurchasedUnits)
    
    
    Paid per Share
    
    
    Publicly Announced
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Plans or Programs
    
    
    ProgramsJuly 131, 2005
    
    
    2,844
    
    
    $
    36.77
    
    
    
    
    
    
    
    3,698,500August 131, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,698,500September 130,
2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,698,500Total
    
    
    2,844
    
    
    $
    36.77
    
    
    
    
    
    
    
    3,698,500
   
 
 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) CertificationsEXHIBIT 32
    
    Section 1350 Certifications
 18




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SIGNATURES
  THE LIBERTY CORPORATION

(Registrant)
    
    Date: November 1, 2005/s/ Howard L. SchrottHoward L. SchrottChief Financial Officer/s/ Martha G. Williams

Martha G. WilliamsVice President and General Counsel
 19