##### 



FORM 10-Q SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 (Mark One) [x]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2004[  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the transition period from  to
 Commission File Number 1-5846 THE LIBERTY CORPORATION 
  South Carolina
    
    57-0507055(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    identification No.)
 135 South Main Street, Greenville, SC 29601 
  Registrants 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 [X]   No [  ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X]   No [  ] Indicate the number of shares outstanding of each of the Registrants classes
of common stock as of the latest practicable date. Number of shares OutstandingTitle of each class
    
    as of June 30, 2004Common Stock
    
    18,770,530




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##### 



PART I, ITEM 1 
 THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS June 30,
    
    December 31,(In 000s)
    
    2004
    
    2003(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    35,807
    
    
    $
    62,177Receivables (net of allowance for doubtful accounts)
    
    
    39,910
    
    
    
    42,364Program rights
    
    
    1,200
    
    
    
    4,564Prepaid and other current assets
    
    
    5,468
    
    
    
    3,013Deferred income taxes
    
    
    2,398
    
    
    
    2,183Total current assets
    
    
    84,783
    
    
    
    114,301Property, plant, and equipmentLand
    
    
    5,647
    
    
    
    5,657Buildings and improvements
    
    
    50,387
    
    
    
    48,969Furniture and equipment
    
    
    171,740
    
    
    
    167,775Less: Accumulated depreciation
    
    
    (134,517
    )
    
    
    (125,417
    )93,257
    
    
    
    96,984Intangible assets subject to amortization (net of
$606 and $841 accumulated amortization in 2004 and
2003, respectively)
    
    
    329
    
    
    
    270FCC licenses
    
    
    304,525
    
    
    
    304,525Goodwill
    
    
    101,387
    
    
    
    101,387Investments and other assets
    
    
    26,349
    
    
    
    44,798Total assets
    
    $
    610,630
    
    
    $
    662,265LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    16,412
    
    
    $
    19,283Dividends payable
    
    
    4,593
    
    
    
    4,534Program contract obligations
    
    
    1,165
    
    
    
    4,734Accrued income taxes
    
    
    899
    
    
    
    3,874Total current liabilities
    
    
    23,069
    
    
    
    32,425Unearned revenue
    
    
    13,580
    
    
    
    11,802Deferred income taxes
    
    
    92,060
    
    
    
    89,417Other liabilities
    
    
    6,869
    
    
    
    6,621Revolving credit facility
    
    
    55,000
    
    
    
    Total liabilities
    
    
    190,578
    
    
    
    140,265Shareholders equityCommon stock
    
    
    62,127
    
    
    
    71,788Unearned stock compensation
    
    
    (19,849
    )
    
    
    (4,405
    )Retained earnings
    
    
    377,578
    
    
    
    454,379Unrealized investment gains
    
    
    196
    
    
    
    238Total shareholders equity
    
    
    420,052
    
    
    
    522,000Total liabilities and shareholders equity
    
    $
    610,630
    
    
    $
    662,265
 See Notes to Consolidated and Condensed Financial Statements. 2




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##### 



THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In 000s, except per share data)
    
    2004
    
    2003
    
    2004
    
    2003(Unaudited)REVENUESStation revenues (net of commissions)
    
    $
    51,138
    
    
    $
    48,062
    
    
    $
    95,738
    
    
    $
    88,941Cable advertising and other revenues
    
    
    3,899
    
    
    
    3,599
    
    
    
    7,130
    
    
    
    6,654Net revenues
    
    
    55,037
    
    
    
    51,661
    
    
    
    102,868
    
    
    
    95,595EXPENSESOperating expenses
    
    
    32,441
    
    
    
    30,300
    
    
    
    62,680
    
    
    
    59,504Amortization of program rights
    
    
    1,781
    
    
    
    1,744
    
    
    
    3,516
    
    
    
    3,460Depreciation and amortization of intangibles
    
    
    5,047
    
    
    
    4,522
    
    
    
    9,539
    
    
    
    8,822Corporate, general, and administrative expenses
    
    
    5,882
    
    
    
    3,583
    
    
    
    9,185
    
    
    
    6,825Total operating expenses
    
    
    45,151
    
    
    
    40,149
    
    
    
    84,920
    
    
    
    78,611Operating income
    
    
    9,886
    
    
    
    11,512
    
    
    
    17,948
    
    
    
    16,984Net investment loss
    
    
    (4,739
    )
    
    
    (644
    )
    
    
    (5,389
    )
    
    
    (748
    )Interest expense
    
    
    (242
    )
    
    
    
    
    
    
    (262
    )
    
    
    Income before income taxes
    
    
    4,905
    
    
    
    10,868
    
    
    
    12,297
    
    
    
    16,236Provision for income taxes
    
    
    1,839
    
    
    
    4,076
    
    
    
    4,611
    
    
    
    6,089NET INCOME
    
    $
    3,066
    
    
    $
    6,792
    
    
    $
    7,686
    
    
    $
    10,147BASIC EARNINGS PER COMMON SHARE:
    
    $
    0.17
    
    
    $
    0.36
    
    
    $
    0.41
    
    
    $
    0.53DILUTED EARNINGS PER COMMON SHARE:
    
    $
    0.16
    
    
    $
    0.35
    
    
    $
    0.41
    
    
    $
    0.53Dividends per common share
    
    $
    0.25
    
    
    $
    0.24
    
    
    $
    0.50
    
    
    $
    0.48Special dividend per common share
    
    $
    
    
    
    $
    
    
    
    $
    4.00
    
    
    $
    
 See Notes to Consolidated and Condensed Financial Statements. 3




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##### 



THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS Six Months Ended June 30,(In 000s)
    
    2004
    
    2003(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    7,686
    
    
    $
    10,147Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Loss on sale of operating assets
    
    
    28
    
    
    
    8Realized investment losses
    
    
    6,215
    
    
    
    1,410Depreciation
    
    
    9,449
    
    
    
    8,699Amortization of intangibles
    
    
    90
    
    
    
    123Amortization of program rights
    
    
    3,516
    
    
    
    3,460Cash paid for program rights
    
    
    (3,721
    )
    
    
    (3,441
    )Provision for deferred income taxes
    
    
    2,428
    
    
    
    1,313Changes in operating assets and liabilities:Receivables
    
    
    2,454
    
    
    
    3,065Other assets
    
    
    (1,234
    )
    
    
    1,350Accounts payable and accrued expenses
    
    
    (1,230
    )
    
    
    (2,589
    )Accrued income taxes
    
    
    (1,877
    )
    
    
    Unearned revenue
    
    
    1,778
    
    
    
    2,448Other liabilities
    
    
    248
    
    
    
    228All other operating activities
    
    
    (531
    )
    
    
    (414
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    25,299
    
    
    
    25,807INVESTING ACTIVITIESPurchase of property, plant, and equipment
    
    
    (5,817
    )
    
    
    (11,941
    )Proceeds from sale of property, plant, and equipment
    
    
    67
    
    
    
    Investments acquired
    
    
    (500
    )
    
    
    (5,500
    )Investments sold
    
    
    11,257
    
    
    
    Proceeds from sale of investment properties
    
    
    1,055
    
    
    
    1,871Other
    
    
    
    
    
    
    45NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    6,062
    
    
    
    (15,525
    )FINANCING ACTIVITIESProceeds from borrowings
    
    
    55,000
    
    
    
    Dividends paid
    
    
    (84,429
    )
    
    
    (9,219
    )Stock issued for employee benefit and compensation programs
    
    
    4,087
    
    
    
    1,213Repurchase of common stock
    
    
    (32,389
    )
    
    
    (12,321
    )NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES
    
    
    (57,731
    )
    
    
    (20,327
    )DECREASE IN CASH
    
    
    (26,370
    )
    
    
    (10,045
    )Cash at beginning of period
    
    
    62,177
    
    
    
    67,917CASH AT END OF PERIOD
    
    $
    35,807
    
    
    $
    57,872
 See Notes to Consolidated and Condensed Financial Statements. 4




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##### 



THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
June 30, 2004
(Unaudited)  1.
    
    BASIS OF PRESENTATIONThe 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, 2004, 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 Companys 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, 2003 financial information was derived from the Companys
previously filed 2003 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, 2003.2.
    
    COMPREHENSIVE INCOMEThe components of comprehensive income, net of related income taxes, for the
three and six month periods ended June 30, 2004 and 2003, respectively, are
as follows: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In 000s)
    
    2004
    
    2003
    
    2004
    
    2003Net income
    
    $
    3,066
    
    
    $
    6,792
    
    
    $
    7,686
    
    
    $
    10,147Unrealized gains
(losses) on
securities
    
    
    (23
    )
    
    
    23
    
    
    
    (42
    )
    
    
    92Comprehensive income
    
    $
    3,043
    
    
    $
    6,815
    
    
    $
    7,644
    
    
    $
    10,239
 5




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##### 



3.
    
    SEGMENT REPORTINGThe 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 six month periods ended June 30, 2004 and 2003: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In 000s)
    
    2004
    
    2003
    
    2004
    
    2003Revenues (net of commissions)Broadcasting
    
    $
    51,138
    
    
    $
    48,062
    
    
    $
    95,738
    
    
    $
    88,941Cable advertising
    
    
    3,883
    
    
    
    3,490
    
    
    
    7,076
    
    
    
    6,471Other
    
    
    16
    
    
    
    109
    
    
    
    54
    
    
    
    183Total net revenues
    
    $
    55,037
    
    
    $
    51,661
    
    
    $
    102,868
    
    
    $
    95,595Income before income taxesBroadcasting
    
    $
    15,588
    
    
    $
    15,061
    
    
    $
    27,165
    
    
    $
    24,254Cable advertising
    
    
    589
    
    
    
    455
    
    
    
    782
    
    
    
    353Corporate and other
    
    
    (11,272
    )
    
    
    (4,648
    )
    
    
    (15,650
    )
    
    
    (8,371
    )Total income before income
taxes
    
    $
    4,905
    
    
    $
    10,868
    
    
    $
    12,297
    
    
    $
    16,236
  There were no material changes in assets by segment from those disclosed in
the Companys 2003 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.4.
    
    EMPLOYEE BENEFITSThe 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.The information presented in this footnote does not reflect the Medicare
Prescription Drug Improvement and Modernization Act of 2003 (the Act)
signed into law December 8, 2003. Specifically, the measures of Net
Periodic Postretirement Benefit cost shown do not reflect this Act.
Specific authoritative guidance on the accounting treatment of the Act is
pending and upon issuance, may require a change in previously reported
information. 6




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##### 



Net periodic postretirement benefit cost included the following components: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In 000s)
    
    2004
    
    2003
    
    2004
    
    2003Service cost
    
    $
    6
    
    
    $
    7
    
    
    $
    13
    
    
    $
    14Amortization of prior service cost
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Amortization of actuarial net gain
    
    
    5
    
    
    
    
    
    
    
    10
    
    
    
    Interest cost
    
    
    34
    
    
    
    27
    
    
    
    67
    
    
    
    55Net periodic postretirement benefit
cost
    
    $
    46
    
    
    $
    35
    
    
    $
    91
    
    
    $
    70
  5.
    
    EARNINGS PER SHAREThe calculation of basic and diluted earnings per common share from
continuing operations is as follows: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In 000s except per share data)
    
    2004
    
    2003
    
    2004
    
    2003Numerator  Earnings:Net income
    
    $
    3,066
    
    
    $
    6,792
    
    
    $
    7,686
    
    
    $
    10,147Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Numerator for basic and diluted
earnings per common share
    
    $
    3,066
    
    
    $
    6,792
    
    
    $
    7,686
    
    
    $
    10,147Denominator  Average Shares
Outstanding:Denominator for basic earnings
per common share  weighted
average shares
    
    
    18,526
    
    
    
    19,095
    
    
    
    18,633
    
    
    
    19,169Effect of dilutive securities:Stock options
    
    
    137
    
    
    
    134
    
    
    
    154
    
    
    
    114Denominator for diluted earnings
per common share
    
    
    18,663
    
    
    
    19,229
    
    
    
    18,787
    
    
    
    19,283Basic earnings per common share
    
    $
    0.17
    
    
    $
    0.36
    
    
    $
    0.41
    
    
    $
    0.53Diluted earnings per common share
    
    $
    0.16
    
    
    $
    0.35
    
    
    $
    0.41
    
    
    $
    0.53
 7




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##### 



6.
    
    EQUITY COMPENSATIONIn 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 Companys
employee stock options at least equals the market price of the
underlying stock on the date of the grant, no compensation expense is
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 Companys
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 Companys pro forma information is as follows: For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,(In 000s, except per share amounts)
    
    2004
    
    2003
    
    2004
    
    2003Stock-based compensation cost
included in net income (net of
taxes)
    
    $
    515
    
    
    $
    226
    
    
    $
    749
    
    
    $
    733Net income:As reported
    
    $
    3,066
    
    
    $
    6,792
    
    
    $
    7,686
    
    
    $
    10,147Pro forma compensation expense (net
of taxes)
    
    
    (202
    )
    
    
    (204
    )
    
    
    (405
    )
    
    
    (359
    )Pro forma net income
    
    $
    2,864
    
    
    $
    6,588
    
    
    $
    7,281
    
    
    $
    9,788Basic earnings per share:As reported
    
    $
    0.17
    
    
    $
    0.36
    
    
    $
    0.41
    
    
    $
    0.53Pro forma
    
    
    0.15
    
    
    
    0.35
    
    
    
    0.39
    
    
    
    0.51Diluted earnings per share:As reported
    
    $
    0.16
    
    
    $
    0.35
    
    
    $
    0.41
    
    
    $
    0.53Pro forma
    
    
    0.15
    
    
    
    0.34
    
    
    
    0.39
    
    
    
    0.51
 8




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##### 



7.
    
    COMMON STOCKThe following table summarizes the Common Stock activity from the
date of the Companys most recently audited annual financial
statements to the end of the period covered by this report: CommonShares
    
    Common(In 000s)
    
    Outstanding
    
    StockBalance as of 12/31/03
    
    
    18,931
    
    
    $
    71,788Stock issued for employee benefit and
performance incentive compensation
programs
    
    
    512
    
    
    
    21,630Income tax benefit resulting from
employee exercise of options
    
    
    
    
    
    
    1,098Stock Repurchased
    
    
    (672
    )
    
    
    (32,389
    )Balance as of 6/30/04
    
    
    18,771
    
    
    $
    62,127
  During the first quarter of 2004 the Company funded the accrued 2003
discretionary contribution to its employee retirement and savings
plan. Half of this funding, approximately $1.6 million, was in the
form of approximately 32,000 shares of Liberty common stock.8.
    
    CREDIT FACILITYOn March 21, 2001, the Company entered into a $100 million unsecured
364-day revolving credit facility with a bank. On February 2,
2004, the Company renewed the facility through May 18, 2005, on
substantially similar terms. On March 24, 2004, the Company made its
first and only draw on the line in the amount of $55.0 million.
Interest is payable quarterly at 1.75%.9.
    
    IMPAIRMENT OF INVESTMENTSDuring the second quarter of 2004, the Company recorded a $5.3
million impairment on one of its strategic investments, a developer
of digital entertainment to be viewed at existing movie theaters. The
Company fully reserved this investment due to the investee companys
current inadequate cash balances and inability to secure financing
from additional investors.10.
    
    RECLASSIFICATIONSCertain reclassifications have been made in the previously reported
financial statements to make the prior year amounts comparable to those
of the current year. 9




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##### 



PART I, ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited) The Liberty Corporation is a holding company with operations primarily in the
television broadcasting industry. The Companys 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 Companys television stations are affiliated with NBC,
five with ABC, and two with CBS. SEASONALITY OF TELEVISION REVENUES The Companys 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 June 30, 2004 Compared to Three Months Ended June 30, 2003 Total net revenue increased $3.4 million, on a year-over-year basis. Station
net revenue increased $3.1 million for the same period. Cable and other net
revenue increased $0.3 million on increases in local and political revenue.
While station local and national revenue were both up four percent, the most
significant portion of the year-over-year increase was from political revenue.
Political revenue for the second quarter of 2004 was $3.9 million as compared
to $2.0 million in the second quarter of 2003. The Companys core local and
national revenues were up due mainly to increases in the automotive, retail,
and financial services categories, while most of the other categories tracked
by the Company were flat compared with their 2003 levels. Operating expenses, which include amortization of program rights, were $34.2
million for the second quarter of 2004, an increase of $2.2 million, seven
percent, over the $32.0 million reported for the second quarter of 2003. The
increase in operating expenses is due mainly to increased medical insurance
costs, programming costs, and planned annual increases in employee
compensation. Corporate expenses were $5.9 million in the second quarter of 2004, an increase
of $2.3 million as compared to the $3.6 million reported for the second quarter
of 2003. The increase in corporate expenses is due to annual increases in
employee compensation coupled with the $1.6 million charge taken related to the
settlement of all outstanding issues associated with the terminated GNS Media
(GNS) transaction. During 2003, the Company announced that it was in
negotiations with GNS for the purpose of entering into certain agreements
associated with GNSs proposed purchase of a television station. Those
negotiations were subsequently terminated. 10




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Net investment income for the second quarter of 2004 was a loss of $4.7
million. Interest earned on cash balances and notes receivable, and a $0.7
million gain on sale of an investment in the Companys venture capital
portfolio were offset by a $5.3 million impairment of one of the Companys
strategic investments, a developer of digital entertainment to be viewed at
existing movie theaters. The Company fully reserved this investment due to the
investee companys current inadequate cash balances and inability to secure
financing from additional investors. Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003 Total net revenue increased $7.3 million on a year-over-year basis. Station
net revenue increased $6.8 million for the same period. Cable and other net
revenue increased $0.5 million on increases in local and political revenue.
While station local and national revenue were both up five percent, the most
significant portion of the year-over-year increase was from political revenue.
Political revenue for the first half of 2004 was $6.5 million as compared to
$2.7 million in the first half of 2003. The Companys core local and national
revenues increased as the automotive, retail, financial services, and
telecommunications categories were up modestly to significantly, while most of
the other categories tracked by the Company were flat to off slightly from
their 2003 levels. Operating expenses, which include amortization of program rights, were $66.2
million for the first half of 2004, an increase of $3.2 million, five percent,
over the $63.0 million reported for the first half of 2003. The increase in
operating expenses is due mainly to increases in medical insurance costs,
programming costs, increased payroll related costs associated with higher
levels of local sales commissions as a direct result of higher local sales
revenue, and planned annual increases in employee compensation. Corporate expenses were $9.2 million in the first half of 2004, an increase of
$2.4 million as compared to the $6.8 million reported for the first half of
2003. The increase in corporate expenses is due to annual increases in
employee compensation coupled with the $1.6 million charge taken related to the
settlement of all outstanding issues associated with the terminated GNS Media
(GNS) transaction. During 2003, the Company announced that it was in
negotiations with GNS for the purpose of entering into certain agreements
associated with GNSs proposed purchase of a television station. Those
negotiations were subsequently terminated. Net investment income for the first half 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 Companys 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 Companys strategic investments taken
during the second quarter of 2004. Capital, Financing and Liquidity At June 30, 2004, the Company had cash of $35.8 million, outstanding debt of
$55.0 million, and $45.0 million available under its $100 million credit
facility. During the first quarter of 2004, the Company declared a special
dividend of $4.00 per share in addition to its normal recurring quarterly
dividend of $0.25 per share. The accrued dividends of $79.3 million were paid
during the second quarter of 2004 using a significant portion of the Companys
cash balances. 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
quarter. 11




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The Company anticipates that its primary sources of cash, those being current
cash balances, operating cash flow, and the available line of credit will be
sufficient to finance the Companys operating requirements and anticipated
capital expenditures, for both the next 12 months and the foreseeable future
thereafter. Cash Flows The Companys net cash flow provided by operating activities was $25.3 million
for the first six months of 2004 compared to $25.8 million for the same period
of the prior year. The Companys net cash provided by in investing activities
was $6.1 million for the six month period ended June 30, 2004, as compared to
net cash used in investing activities of $15.5 million for the same period of
2003. The increase in net cash provided by investing activities is attributable
to lower levels of fixed asset purchases related to digital television
broadcasting during 2004 and the cash realized on the sale of investments in
the Companys venture capital and strategic investment portfolios. Net cash
used in financing activities for the six months ended June 30, 2004 was $57.7
million compared to $20.3 million for the first six months of 2003. During
2004, the Company completed the first draw of $55.0 million on its previously
unused $100 million line of credit. Excluding the effect of these borrowings,
the increase in net cash used in financing activities is due mainly to the
special dividend of $4.00 per share paid during the second quarter of 2004, and
to higher levels of repurchase activity in the Companys stock buy-back program
during 2004 as compared to 2003. 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 the Company, is or
may be viewed as forward-looking. The words expect, believe, anticipate
or similar expressions identify forward-looking statements. Although the
Company 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: 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 the Companys
products; and adverse litigation results. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a
result of new information, future developments, or otherwise. 12




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##### 



PART I, ITEM 4
CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. 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 Companys
disclosure controls and procedures are effective in providing reasonable
assurance that material information relating to the Company required to be
included in the Companys periodic SEC filings was made known to them during
the period covered by this report. There have been no significant changes in
the Companys internal controls or in other factors that could significantly
affect internal controls subsequent to this evaluation. 13




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##### 



PART II, ITEM 2e.
CHANGES IN 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
    
    ProgramsApril 1  30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,636,700May 1  31, 2004
    
    
    130,100
    
    
    $
    45.90
    
    
    
    130,100
    
    
    
    3,506,600June 1  30, 2004
    
    
    178,900
    
    
    $
    46.88
    
    
    
    178,900
    
    
    
    3,327,700Total
    
    
    309,000
    
    
    $
    46.47
    
    
    
    309,000
    
    
    
    3,327,700
 On February 4, 2003 Libertys Board of Directors extended to February 28, 2004
the Companys authorization to purchase from time to time up to 4,000,000
shares of stock in the open market or directly negotiated transactions. On February 3, 2004 Libertys Board of Directors extended to February 28, 2005
the Companys 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 4.
Submission Of Matters To A Vote Of Security Holders a. The annual meeting of shareholders of the registrant was held May
4, 2004. b. The following individuals were elected to serve for three-year
terms: Edward Crutchfield, John R. Farmer, and William O. McCoy. The
following individuals are currently serving as incumbent directors:
Hayne Hipp, J. Thurston Roach, William B. Timmerman, Frank E. Melton,
John H. Mullin, III and Eugene E. Stone, IV. c. Matters voted upon at the annual meeting were as follows: Withheld/
    
    BrokerFor
    
    Against
    
    Abstentions
    
    Non-VotesTo elect as director:Edward Crutchfield
    
    
    14,408,035
    
    
    
    
    
    
    
    2,317,203John R. Farmer
    
    
    14,437,792
    
    
    
    
    
    
    
    2,287,446William O. McCoy
    
    
    14,371,887
    
    
    
    
    
    
    
    2,353,351To ratify the
selection of Ernst &
Young as independent
public accountants:
    
    
    16,463,128
    
    
    
    212,636
    
    
    
    49,474To consider and act
upon a shareholder
proposal requesting
that the Board of
Directors of the
Company redeem the
rights issued
pursuant to the
Companys
Shareholder Rights
Plan
    
    
    8,756,775
    
    
    
    6,613,402
    
    
    
    120,584
    
    
    
    1,234,477
 14




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##### 



PART II, ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K  a.
    
    A list of the exhibits filed with this report is included in
the Index to Exhibits filed herewith.b.  1.
    
    The Company furnished a current report on Form 8-K
dated May 4, 2004 with respect to the press release announcing
its first quarter 2004 operating results.2.
    
    The Company furnished a current report on Form 8-K
dated May 4, 2004 with respect to the Company declaring a regular
quarterly dividend of 25 cents per share on its common stock,
payable on July 2, 2004 to shareholders of record on June 15,
2004. INDEX TO EXHIBITS 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
 15




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##### 



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
    
    Date: August 3, 2004(Registrant)/s/ Howard L. SchrottHoward L. SchrottChief Financial Officer/s/ Martha G. WilliamsMartha G. WilliamsVice President, General Counsel and Secretary
 16