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FORM 10-Q SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 (Mark One)

þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
March 31, 2005oro
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to


Commission File Number 1-5846THE LIBERTY
CORPORATION(Exact name of registrant as specified in its charter)


South Carolina
    
    57-0507055(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    identification No.)


135 South Main Street, Greenville, SC 29601(Address of principal executive offices)



Registrants telephone number, including area code: 864/241-5400Indicate 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 þIndicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No oIndicate 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 March 31, 2005Common Stock
    
    
    18,342,051




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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 5PART II, ITEM 6INDEX TO EXHIBITSSIGNATURESEX-10.1EX-10.2EX-31EX-32    Table of Contents  
 PART I, ITEM 1FINANCIAL STATEMENTS THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS March 31,
    
    
    December 31,2005
    
    
    2004(In 000s)
    
    (Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    96,376
    
    
    $
    16,389Receivables (net of allowance for doubtful accounts)
    
    
    36,300
    
    
    
    41,576Program rights
    
    
    3,346
    
    
    
    4,766Prepaid and other current assets
    
    
    5,989
    
    
    
    6,077Income taxes receivable
    
    
    373
    
    
    
    Deferred income taxes
    
    
    2,806
    
    
    
    2,453Total current assets
    
    
    145,190
    
    
    
    71,261Property, plant, and equipmentLand
    
    
    5,636
    
    
    
    5,636Buildings and improvements
    
    
    44,486
    
    
    
    44,073Furniture and equipment
    
    
    175,054
    
    
    
    172,993Less: Accumulated depreciation
    
    
    (138,422
    )
    
    
    (134,133
    )86,754
    
    
    
    88,569Intangible assets subject to amortization (net of
$588 and $701 accumulated amortization in 2005 and
2004, respectively)
    
    
    406
    
    
    
    234FCC licenses
    
    
    241,866
    
    
    
    241,866Goodwill
    
    
    101,387
    
    
    
    101,387Investments and other assets
    
    
    23,881
    
    
    
    24,522Total assets
    
    $
    599,484
    
    
    $
    527,839LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    13,521
    
    
    $
    21,396Dividends payable
    
    
    76,260
    
    
    
    4,510Program contract obligations
    
    
    3,263
    
    
    
    4,791Accrued income taxes
    
    
    
    
    
    
    3,573Total current liabilities
    
    
    93,044
    
    
    
    34,270Unearned revenue
    
    
    15,499
    
    
    
    15,965Deferred income taxes
    
    
    60,246
    
    
    
    60,187Other liabilities
    
    
    6,789
    
    
    
    7,097Revolving credit facility
    
    
    112,000
    
    
    
    20,000Total liabilities
    
    
    287,578
    
    
    
    137,519Shareholders equityCommon stock
    
    
    44,270
    
    
    
    49,273Unearned stock compensation
    
    
    (16,043
    )
    
    
    (17,396
    )Retained earnings
    
    
    283,858
    
    
    
    358,575Unrealized investment losses
    
    
    (179
    )
    
    
    (132
    )Total shareholders equity
    
    
    311,906
    
    
    
    390,320Total liabilities and shareholders equity
    
    $
    599,484
    
    
    $
    527,839
 See Notes to Consolidated and Condensed Financial Statements. 2




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THE LIBERTY CORPORATION AND SUBSIDIARIESCONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS Three Months EndedMarch 31,2005
    
    
    2004(In 000s, except per share data)
    
    (Unaudited)REVENUESTelevision station revenues (net of commissions)
    
    $
    43,526
    
    
    $
    44,600Cable advertising and other revenues (net of commissions)
    
    
    2,998
    
    
    
    3,231Net revenues
    
    
    46,524
    
    
    
    47,831EXPENSESOperating expenses (exclusive of depreciation and
amortization shown separately below)
    
    
    31,391
    
    
    
    30,239Amortization of program rights
    
    
    1,876
    
    
    
    1,735Depreciation and amortization of intangibles
    
    
    4,743
    
    
    
    4,492Corporate, general, and administrative expenses
    
    
    4,468
    
    
    
    3,303Total operating expenses
    
    
    42,478
    
    
    
    39,769Operating income
    
    
    4,046
    
    
    
    8,062Net investment income (loss)
    
    
    1,734
    
    
    
    (650
    )Interest expense
    
    
    (192
    )
    
    
    (20
    )Income before income taxes
    
    
    5,588
    
    
    
    7,392Provision for income taxes
    
    
    2,141
    
    
    
    2,772NET INCOME
    
    $
    3,447
    
    
    $
    4,620BASIC EARNINGS PER COMMON SHARE:
    
    $
    0.19
    
    
    $
    0.25DILUTED EARNINGS PER COMMON SHARE:
    
    $
    0.19
    
    
    $
    0.24Dividends per common share
    
    $
    0.25
    
    
    $
    0.25Special dividend per common share
    
    $
    4.00
    
    
    $
    4.00
 See Notes to Consolidated and Condensed Financial Statements. 3




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THE LIBERTY CORPORATION AND SUBSIDIARIESCONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS Three Months Ended March 31,2005
    
    
    2004(In 000s)
    
    (Unaudited)OPERATING ACTIVITIESNet income
    
    $
    3,447
    
    
    $
    4,620Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Gain on sale of operating assets
    
    
    (28
    )
    
    
    (17
    )Realized investment (gains) losses
    
    
    (1,635
    )
    
    
    1,143Depreciation
    
    
    4,690
    
    
    
    4,433Amortization of intangibles
    
    
    53
    
    
    
    59Provision for bad debts
    
    
    420
    
    
    
    63Amortization of program rights
    
    
    1,876
    
    
    
    1,735Cash paid for program rights
    
    
    (1,984
    )
    
    
    (1,902
    )Provision for (Benefit from) deferred income taxes
    
    
    (294
    )
    
    
    2,300Changes in operating assets and liabilities:Receivables
    
    
    4,856
    
    
    
    6,294Other assets
    
    
    1,012
    
    
    
    (282
    )Accounts payable and accrued expenses
    
    
    (6,151
    )
    
    
    (4,882
    )Accrued income taxes
    
    
    (2,675
    )
    
    
    (2,728
    )Unearned revenue
    
    
    (466
    )
    
    
    (466
    )Other liabilities
    
    
    (308
    )
    
    
    301All other operating activities
    
    
    (226
    )
    
    
    (363
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    2,587
    
    
    
    10,308INVESTING ACTIVITIESPurchase of property, plant, and equipment
    
    
    (2,944
    )
    
    
    (3,110
    )Proceeds from sale of property, plant, and equipment
    
    
    97
    
    
    
    41Investments acquired
    
    
    
    
    
    
    (500
    )Investments sold
    
    
    2,285
    
    
    
    Proceeds from sale of investment properties
    
    
    
    
    
    
    1,015NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (562
    )
    
    
    (2,554
    )FINANCING ACTIVITIESProceeds from borrowings
    
    
    132,000
    
    
    
    55,000Principal payments on debt
    
    
    (40,000
    )
    
    
    Dividends paid
    
    
    (6,414
    )
    
    
    (5,055
    )Proceeds from the exercise of stock options
    
    
    661
    
    
    
    3,553Repurchase of common stock
    
    
    (8,285
    )
    
    
    (18,031
    )NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES
    
    
    77,962
    
    
    
    35,467INCREASE (DECREASE) IN CASH
    
    
    79,987
    
    
    
    43,221Cash at beginning of period
    
    
    16,389
    
    
    
    62,177CASH AT END OF PERIOD
    
    $
    96,376
    
    
    $
    105,398
 See Notes to Consolidated and Condensed Financial Statements. 4




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THE LIBERTY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
March 31, 2005
(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, 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 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, 2004 financial information was derived from the Companys 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.2.
    COMPREHENSIVE INCOMEThe components of comprehensive income, net of related income taxes, for the three month
periods ended March 31, 2005 and 2004, respectively, are as follows: Three Months EndedMarch 31,(In 000s)
    
    2005
    
    
    2004Net income
    
    $
    3,447
    
    
    $
    4,620Unrealized gains
(losses) on securities
    
    
    (47
    )
    
    
    (19
    )Comprehensive income
    
    $
    3,400
    
    
    $
    4,601
 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 month periods
ended March 31, 2005 and 2004: Three Months EndedMarch 31,(In 000s)
    
    2005
    
    
    2004Revenues (net of commissions)Television station
    
    $
    43,526
    
    
    $
    44,600Cable advertising
    
    
    2,968
    
    
    
    3,193Other
    
    
    30
    
    
    
    38Total net revenues
    
    $
    46,524
    
    
    $
    47,831Income (loss) before income taxesBroadcasting
    
    $
    8,784
    
    
    $
    11,577Cable advertising
    
    
    44
    
    
    
    193Corporate and other
    
    
    (3,240
    )
    
    
    (4,378
    )Total income before income taxes
    
    $
    5,588
    
    
    $
    7,392
  There were no material changes in assets by segment from those disclosed in the Companys
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.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 EndedMarch 31,(In 000s)
    
    2005
    
    
    2004Service cost
    
    $
    7
    
    
    $
    6Amortization of prior service cost
    
    
    2
    
    
    
    1Amortization of actuarial net gain
    
    
    3
    
    
    
    5Interest cost
    
    
    30
    
    
    
    34Net periodic postretirement benefit cost
    
    $
    42
    
    
    $
    46
  5.
    EARNINGS PER SHAREThe calculation of basic and diluted earnings per common share from continuing operations is as
follows: Three Months EndedMarch 31,(In 000s except per share data)
    
    2005
    
    
    2004Numerator  Earnings:Net income
    
    $
    3,447
    
    
    $
    4,620Effect of dilutive securities
    
    
    
    
    
    
    Numerator for basic and diluted
earnings per common share
    
    $
    3,447
    
    
    $
    4,620Denominator  Average Shares
Outstanding:Denominator for basic earnings per
common share  weighted average shares
    
    
    18,041
    
    
    
    18,739Effect of dilutive securities:Stock options
    
    
    90
    
    
    
    171Denominator for diluted earnings
per common share
    
    
    18,131
    
    
    
    18,910Basic earnings per common share
    
    $
    0.19
    
    
    $
    0.25Diluted earnings per common share
    
    $
    0.19
    
    
    $
    0.24
 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 period ended March 31, 2005 and 2004, the Company had
approximately 51,000 and 28,000  weighted average options which were not included in the diluted earnings per common share
calculation as their effect was anti-dilutive. 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 MonthsEnded March 31,(In 000s, except per share amounts)
    
    2005
    
    
    2004Stock-based compensation cost included in
net income (net of taxes)
    
    $
    835
    
    
    $
    234Net income:As reported
    
    $
    3,447
    
    
    $
    4,620Pro forma compensation expense (net of
taxes)
    
    
    (197
    )
    
    
    (202
    )Pro forma net income
    
    $
    3,250
    
    
    $
    4,418Basic earnings per share:As reported
    
    $
    0.19
    
    
    $
    0.25Pro forma
    
    
    0.18
    
    
    
    0.24Diluted earnings per share:As reported
    
    $
    0.19
    
    
    $
    0.24Pro forma
    
    
    0.18
    
    
    
    0.23
 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 12/31/04
    
    
    18,469
    
    
    $
    49,273Stock issued for
employee benefit and
performance incentive
compensation programs
    
    
    60
    
    
    
    2,384Income tax benefit
resulting from employee
exercise of options
    
    
    
    
    
    
    898Stock repurchased
    
    
    (187
    )
    
    
    (8,285
    )Balance as of 3/31/05
    
    
    18,342
    
    
    $
    44,270
  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.
    CREDIT FACILITYIn 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 $112 million and $20 million of debt
outstanding at March 31, 2005 and December 31, 2004, respectively. As of March 31,
2005 the weighted average interest rate on outstanding borrowings was 3.82%.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. 9




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9.
    PROVISION FOR INCOME TAXESIt is the Companys 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 managements 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 Companys effective tax rate in a given
financial statement period could be materially affected.10.
    COMMITMENTS AND CONTINGENCIESIn 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 any 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.11.
    NEW ACCOUNTING PRONOUNCEMENTSOn 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 10




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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 25s 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 its 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




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PART I, ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
(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 March 31, 2005 Compared to Three Months Ended March 31, 2004 Total net revenue decreased $1.3 million on a year-over-year basis. Station net revenue decreased
$1.1 million for the same period. Cable and other net revenue decreased $0.2 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 up $0.8 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 $0.8 million, on a year-over-year basis due mainly to softness in the
telecommunications category. Political revenue for the first quarter of 2005 was $0.4 million as
compared to $2.6 million in the first quarter of 2004. This is consistent with the Companys
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. Operating expenses (including amortization of program rights) increased $1.3 million Operating
expenses increased due mainly to planned annual increases in employee compensation, higher
commissions paid to the Companys sales staff as a result of increased local revenues, amortization
expense related to restricted stock grants made during 2004, and increases in medical insurance
costs. While the Company would expect continued increases in employee compensation related to
annual increases in base pay and similar increases in medical insurance costs in future periods,
higher levels of commissions paid to the Companys sales staff will be dependent upon the
realization of increased revenues. 12




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Corporate expenses were $4.5 million in the first quarter of 2005, an increase of $1.2 million as
compared to the $3.3 million reported for the first quarter of 2004. The increase in corporate
expenses is due mainly
to planned annual increases in employee compensation, amortization expense related to restricted
stock grants made during 2004, increased legal fees, and additional accounting and professional
fees related to Sarbanes-Oxley Section 404 compliance initiatives. The Company expects continued
increases in employee base compensation of similar amounts in future periods. The Company expects
decreased expenses related to its Sarbanes-Oxley Section 404 compliance initiatives after the first
quarter of 2005. Net investment income was $1.7 million for the first quarter of 2005, as a result of a gain from
the liquidation of an investment in the Companys venture capital portfolio. Capital, Financing and Liquidity At March 31, 2005, the Company had cash of $96.4 million, outstanding debt of $112.0 million, and
$38.0 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 Companys 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. 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 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 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 provided by operating activities was $2.6 million for the first three months
of 2005 compared to $10.3 million for the same period of the prior year. The Companys net cash
used in investing activities was $0.6 million for the first three months of 2005, as compared to
$2.6 million for the same period of 2004. The decrease in net cash used in investing activities is
attributable to the cash realized on the sale of investments in the Companys venture capital
portfolio during 2005 that was not present during 2004. Net cash provided by financing activities
for the first three months of 2005 was $78.0 million compared to $35.5 million for the first three
months of 2004. During 2005, the Company had net borrowings of $92.0 million under its credit
facility, compared to $55.0 million during 2004. As noted above, the Company drew down the funds
in anticipation of funding the special dividend. 13




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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. 14




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##### Table of Contents



PART I, ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in the information, as disclosed in Part II, Item 7A of the
Companys 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 4CONTROLS AND PROCEDURES 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-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 Companys disclosure controls and procedures are effective to ensure that information
required to be disclosed in the Companys reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms, and are also effective to ensure that information required to be disclosed in the
Companys reports filed or submitted under the Exchange Act is accumulated and communicated to the
Companys 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 Companys internal control
over financial reporting that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting. 15




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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
    
    
    
    ProgramsJanuary 1 31, 2005
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    3,024,700February 1  28, 2005
    
    
    
    2,038
    
    
    
    $
    44.26
    
    
    
    
    
    
    
    
    
    4,000,000March 1  31, 2005
    
    
    
    184,600
    
    
    
    $
    44.39
    
    
    
    
    184,600
    
    
    
    
    3,815,400Total
    
    
    
    186,638
    
    
    
    $
    44.39
    
    
    
    
    184,600
    
    
    
    
    3,815,400
 During the quarter the Company acquired 2,038 shares as satisfaction of withholding tax obligations
for restricted stock that vested during the period, in accordance with provisions of the Companys
Performance Incentive Compensation plan. On February 8, 2005 Libertys Board of Directors extended to February 28, 2006 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 5.OTHER INFORMATION The Compensation Committee of the Board of Directors established performance bonus standards for
The Liberty Corporation Management Bonus Plan for the year 2005. A description of the arrangement
is included as exhibit 10.1 
 PART II, ITEM 6.EXHIBITS 
 INDEX TO EXHIBITS EXHIBIT 10.1
    
    Description of The Liberty Corporation Management Bonus PlanEXHIBIT 10.2
    
    Form of Restricted Stock AgreementEXHIBIT 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
 16




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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: May 3, 2005(Registrant)/s/ Howard L. SchrottHoward L. SchrottChief Financial Officer/s/ Martha G. WilliamsMartha G. WilliamsVice President, General Counsel and Secretary
 17