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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 1934
For the quarterly period ended June 30, 2001
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[ ] 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
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THE LIBERTY CORPORATION
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(Exact name of registrant as specified in its charter)
South Carolina 57-0507055
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
Post Office Box 789, Wade Hampton Boulevard, Greenville, SC 29602
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(Address of principal executive offices)
Registrant's telephone number, including area code: 864/609-8256
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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 the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practicable date.
Number of shares Outstanding
Title of each class as of June 30, 2001
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Common Stock 19,575,393
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PART I, ITEM 1
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(In 000's) JUNE 30, December 31,
2001 2000
------------------- -----------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 21,608 $ 149,003
Receivables (net of allowance for doubtful accounts) 38,371 40,561
Program rights 3,681 5,561
Prepaid and other current assets 3,389 46,194
Deferred income taxes 8,656 15,109
256,428
------------------- -----------------
Total current assets 75,705 256,428
Property Plant and Equipment
Land 5,494 5,494
Buildings and improvements 34,164 33,152
Furniture and equipment 154,331 149,784
Less: Accumulated depreciation (108,154) (99,389)
------------------- -----------------
85,835 89,041
Intangibles (net of accumulated amortization) 495,256 501,693
Other assets 45,953 48,845
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Total assets $ 702,749 $ 896,007
=================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 17,209 $ 68,517
Program contract obligations 3,472 5,578
Accrued income taxes 2,468 138,297
212,392
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Total current liabilities 23,149 212,392
Deferred income taxes 91,498 92,797
Other liabilities 9,362 9,825
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Total liabilities 124,009 315,014
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Shareholders' Equity
Common Stock 98,733 99,033
Unearned Stock Compensation (4,135) --
Retained Earnings 484,194 481,270
Unrealized Investment Gains (52) 690
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Total Shareholders' Equity 578,740 580,993
------------------- -----------------
Total Liabilities and Shareholders' Equity $ 702,749 $ 896,007
=================== =================
See Notes to Consolidated and Condensed Financial Statements.
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THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
Three Months ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
(In 000's, except per share data) 2001 2000 2001 2000
------------- ------------ ----------- ------------
(Unaudited)
REVENUES
Station revenues (net of commissions) $ 44,727 $ 40,683 $ 84,237 $ 74,679
Cable advertising and other revenues 3,227 3,342 5,882 6,305
------------- ------------ ----------- ------------
NET REVENUES 47,954 44,025 90,119 80,984
EXPENSES
Operating expenses 26,098 23,112 51,873 44,979
Amortization of program rights 1,976 1,566 3,936 3,088
Depreciation and amortization of intangibles 7,431 4,933 15,283 9,592
Corporate, general, and administrative expenses 3,216 2,677 6,098 5,364
------------- ------------ ----------- ------------
TOTAL OPERATING EXPENSES 38,721 32,288 77,190 63,023
OPERATING INCOME 9,233 11,737 12,929 17,961
Net investment income 2,509 560 5,737 11,292
Interest expense -- 4,896 -- 8,391
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 11,742 7,401 18,666 20,862
Provision for income taxes 4,462 2,989 7,093 8,563
------------- ------------ ----------- ------------
INCOME FROM CONTINUING OPERATIONS 7,280 4,412 11,573 12,299
Income from discontinued operations (net of taxes) -- 10,978 -- 18,488
------------- ------------ ----------- ------------
NET INCOME $ 7,280 $ 15,390 $ 11,573 $ 30,787
============= ============ =========== ============
EARNINGS PER SHARE:
Basic earnings per common share from continuing operations $0.37 $0.22 $0.59 $0.62
Basic earnings per common share from discontinued operations -- 0.57 -- 0.96
------------- ------------ ----------- ------------
Basic earnings per common share $0.37 $0.79 $0.59 $1.58
Diluted earnings per common share from continuing operations $0.37 $0.22 $0.59 $0.62
Diluted earnings per common share from discontinued operations -- 0.56 -- 0.94
------------- ------------ ----------- ------------
Diluted earnings per common share $0.37 $0.78 $0.59 $1.56
Dividends Per Common Share $0.22 $0.22 $0.44 $0.44
See Notes to Consolidated and Condensed Financial Statements.
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THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
-----------------------------------------
(In 000's) 2001 2000
-----------------------------------------
(Unaudited)
OPERATING ACTIVITIES
Net Income $ 11,573 $ 12,299
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Gain on sale of operating assets 62 --
Realized investment (gains) losses (1,459) (8,631)
Depreciation 8,827 6,110
Amortization of intangibles 6,456 3,482
Amortization of program rights 3,936 3,088
Cash paid for program rights (3,979) (2,977)
Provision for deferred income taxes 5,154 2,203
Changes in operating assets and liabilities:
Receivables 2,190 (2,964)
Other assets 45,461 7,621
Accounts payable and accrued expenses (51,308) (1,304)
Accrued income taxes (135,829) 5,876
Other liabilities (463) (10,747)
All other operating activities, net (605) 5,817
Net cash (used in) provided by operating activities of discontinued operations -- (11,900)
------------------- ------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (109,984) 7,973
INVESTMENT ACTIVITIES
Purchase of property and equipment (5,699) (5,141)
Net cash paid for purchase of television stations -- (59,782)
Investment securities sold 1,245 11,245
Investment securities acquired -- (634)
Proceeds from sale of investment properties 843 2,869
Other (net) 16 --
Net cash provided by (used in) investing activities of discontinued operations -- (1,818)
------------------- ------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (3,595) (53,261)
FINANCING ACTIVITIES
Proceeds from borrowings -- 1,642,500
Principal payments on debt -- (1,603,500)
Dividends paid (8,649) (8,921)
Stock issued for employee benefit and compensation programs 4,475 145
Repurchase of common stock (9,642) (10,428)
Net cash provided by financing activities of discontinued operations -- 15,657
------------------- ------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (13,816) 35,453
(DECREASE) INCREASE IN CASH (127,395) (9,835)
Cash at beginning of period 149,003 11,870
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CASH AT END OF PERIOD $ 21,608 $ 2,035
=================== ==================
See Notes to Consolidated and Condensed Financial Statements.
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THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
June 30, 2001
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated and condensed financial statements
of The Liberty Corporation and Subsidiaries have been prepared in
accordance with generally accepted accounting principles 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 generally accepted accounting
principles 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, 2001, but it 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. The December 31, 2000 financial information was
derived from the Company's previously filed 2000 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, 2000.
Prior to September 29, 2000 the Company was engaged in the insurance
industry. On September 29, 2000 the Company's shareholders approved the
sale of the Company's insurance operations to the Royal Bank of Canada for
$648 million. The sale closed on November 1, 2000. Accordingly, these
entities have been treated as discontinued operations in the accompanying
financial statements (see Note 5 below).
2. STATION ACQUISITIONS
On February 29, 2000 the Company completed the acquisition of KCBD, the
NBC affiliate in Lubbock, TX in a cash transaction for $59.8 million. The
transaction was accounted for as a purchase, and accordingly, its results
of operations are included in the accompanying financial statements since
the date of acquisition. This purchase was funded using proceeds from the
Company's credit facility.
On December 1, 2000, the Company completed its acquisition of Civic
Communications. The agreed upon purchase price for all of the outstanding
common stock of Civic Communications was $204 million. At the time of the
closing, the Company agreed to pay a portion of the purchase price at a
future date. During the first quarter of 2001 the Company remitted the
$43.2 million of unpaid purchase price to the Civic Communications
stockholders. The Company used proceeds from the sale of its insurance
operations to fund the transaction. Civic Communications owned and
operated WLBT-TV, the NBC affiliate in Jackson, MS, KLTV-TV, the ABC
affiliate in Tyler, TX, and KTRE-TV, the satellite affiliate of KLTV in
Lufkin, TX.
3. REDEMPTION OF 1995-A SERIES PREFERRED STOCK
On August 25, 2000 the Company completed the redemption of all of the
outstanding shares of its Series 1995-A Cumulative Convertible Preferred
Stock. Shares were called for redemption at $35.00 per share plus accrued
dividends for the period from July 1, 2000 through the redemption date
(September 5, 2000). Prior to the redemption date, all shares of the
1995-A Series were converted in to common stock.
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Notes to Consolidated and Condensed
Financial Statements -- continued
4. COMPREHENSIVE INCOME
The components of comprehensive income, net of related income taxes, for
the three-month and six-month periods ended June 30, 2001 and 2000,
respectively, are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ---------------------------
2001 2000 2001 2000
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(In 000's)
Net Income $7,280 $ 15,390 $11,573 $30,787
Unrealized gains / (losses) on securities (369) (3,474) (742) (4,141)
------------- ---------- ------------- -------------
Comprehensive income (loss) $6,911 $ 11,916 $10,831 $26,646
============= ========== ============= =============
5. DISCONTINUED OPERATIONS
On June 19, 2000, the Company entered into a Purchase Agreement (the
"Purchase Agreement") with Royal Bank of Canada ("RBC"), a
Canadian-chartered bank, pursuant to which RBC was to acquire from the
Company all of the issued and outstanding shares of capital stock of
Liberty Life Insurance Company, Liberty Insurance Services Corporation,
The Liberty Marketing Corporation, LC Insurance Limited and Liberty
Capital Advisors, Inc., for a total of approximately $648 million,
consisting of a dividend from Liberty Life Insurance Company of up to $70
million and the balance in cash from Royal Bank of Canada. On September
29, 2000 the shareholders of the Company approved the purchase agreement
described above. Accordingly, these entities have been treated as
discontinued operations in the accompanying financial statements. The
transaction closed on November 1, 2000 with Liberty receiving $567.6
million in net cash proceeds and approximately $16 million in non-cash
assets.
Summarized disclosure of the Company's discontinued operations is as
follows:
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------------- ----------------
2000 2000
----------------- ----------------
Revenues $ 94,018 $ 185,864
Expenses 77,498 159,419
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Income before taxes from
discontinued operations 16,520 26,445
Income taxes 5,542 7,957
----------------- ----------------
Income from discontinued
operations $ 10,978 $ 18,488
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Notes to Consolidated and Condensed
Financial Statements -- continued
6. SEGMENT REPORTING
The Company operates primarily in the television broadcasting and cable
advertising businesses. The Company currently owns and operates fifteen
television stations, primarily in the Southeast and Midwest. Each of the
stations is affiliated with a major network, with eight NBC affiliates,
five ABC affiliates, and two CBS affiliates. The Company evaluates segment
performance based on income before income taxes, excluding unusual, or
non-operating items.
The following tables summarize financial information for continuing
operations by segment for the three and six-month periods ended 30, 2001
and 2000:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -----------------------------
2001 2000 2001 2000
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REVENUE
Broadcasting $ 44,727 $ 40,683 $ 84,237 $ 74,679
Cable advertising 3,086 2,785 5,300 5,270
Other 141 557 582 1,035
------------- ------------- ------------ -------------
TOTAL REVENUE $ 47,954 $ 44,025 $ 90,119 $ 80,984
============= ============= ============ =============
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES
Broadcasting $ 9,303 $ 14,764 $ 16,300 $ 24,113
Cable advertising 324 243 (80) 337
Corporate & other 2,115 (7,606) 2,446 (3,588)
------------- ------------- ------------ -------------
TOTAL INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES $ 11,742 $ 7,401 $ 18,666 $ 20,862
============= ============= ============ =============
There were no material changes in assets by segment from those disclosed
in the Company's 2000 annual report, other than for the corporate and
other segment. The corporate and other segment used its cash balances to
pay approximately $135 million of income taxes during the first quarter of
2001. It also remitted the $43.2 million of unpaid purchase price
(included in prepaid and other current assets on the December 31, 2000
balance sheet) that had been held in trust for the Civic Communications
stockholders (see Note 2).
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Notes to Consolidated and Condensed
Financial Statements -- continued
7. EARNINGS PER SHARE
The calculation of basic and diluted earnings per common share from
continuing operations is as follows:
(In 000's except per share data) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
2001 2000 2001 2000
----------- ------------- ------------ ------------
(Unaudited)
NUMERATOR - EARNINGS:
Income from continuing operations $ 7,280 $ 4,412 $ 11,573 $ 12,299
Preferred dividends -- (180) -- (365)
----------- ------------- ------------ ------------
Numerator for basic earnings per common
share from continuing operations $ 7,280 $ 4,232 $ 11,573 $ 11,934
Effect of dilutive securities -- 180 -- 365
----------- ------------- ------------ ------------
Numerator for diluted earnings per common
share from continuing operations $ 7,280 $ 4,412 $ 11,573 $ 12,299
=========== ============= ============ ============
DENOMINATOR - AVERAGE SHARES OUTSTANDING:
Denominator for basic earnings per common
share from continuing operations -
weighted average shares 19,607 19,186 19,590 19,198
Effect of dilutive securities:
Preferred stock -- 417 -- 420
Stock options 95 48 75 93
----------- ------------- ------------ ------------
Denominator for diluted earnings per common
share from continuing operations 19,702 19,651 19,665 19,711
=========== ============= ============ ============
Basic earnings per common share from
continuing operations $0.37 $0.22 $0.59 $0.62
Diluted earnings per common share from
continuing operations $0.37 $0.22 $0.59 $0.62
8. CREDIT FACILITY
On March 21, 2001, the Company entered into a $100 million unsecured
364-day revolving credit facility with a bank. 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. No draws
were made on this line of credit during the first six months of 2001.
9. NEW ACCOUNTING PRONOUNCEMENTS
During the second quarter of 2001 the Financial Accounting Standards Board
(FASB) issued Statement No. 141, Business Combinations, and Statement No.
142, Goodwill and Other Intangible Assets. Statement No. 141 requires that
the purchase method of accounting be used for business combinations
initiated after June 30, 2001. The Company does not believe that Statement
No. 141 will have a material effect on its financial statements.
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Notes to Consolidated and Condensed
Financial Statements -- continued
Statement No. 142 requires that goodwill and certain other identified
intangibles no longer be amortized to earnings, but instead be reviewed
for impairments. The amortization of goodwill and certain other identified
intangibles ceases upon adoption of the Statement, which for most
companies, will be January 1, 2002. The Company has not yet determined the
extent of the effect of Statement No. 142, but believes that it will have
a material impact on its financial statements as its reported amortization
expense will be significantly reduced in future periods.
10. RECLASSIFICATIONS
Certain reclassifications have been made in the previously reported
financial statements to make the prior year amounts comparable to those of
the current year.
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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, a cable advertising company, a video
production company and a professional broadcast equipment dealership. Eight of
the Company's television stations are affiliated with NBC, five with ABC, and
two with CBS.
Prior to September 29, 2000 the Company was also engaged in the insurance
industry. On September 29, 2000 the Company's shareholders approved the sale of
the Company's insurance operations to the Royal Bank of Canada for $648 million.
The sale closed on November 1, 2000. Accordingly, these entities have been
treated as discontinued operations in the accompanying financial statements (see
Note 5 of the Consolidated and Condensed Financial Statements).
SIGNIFICANT TRANSACTIONS AFFECTING COMPARABILITY BETWEEN PERIODS
On February 29, 2000 the Company completed the acquisition of KCBD, the NBC
affiliate in Lubbock, TX in a cash transaction for $59.8 million. The
transaction was accounted for as a purchase, and accordingly, its results of
operations are included in the accompanying financial statements since the date
of acquisition. This purchase was funded using proceeds from the Company's
credit facility.
On August 25, 2000 the Company completed the redemption of all of the
outstanding shares of its Series 1995-A Cumulative Convertible Preferred Stock.
Shares were called for redemption at $35.00 per share plus accrued dividends for
the period from July 1, 2000 through the Series 1995-A redemption date
(September 5, 2000). Prior to the redemption date, all shares of the 1995-A
Series were converted in to common stock.
On November 1, 2000, using proceeds from the sale of its insurance operations,
the Company repaid its revolving credit facility in full.
On December 1, 2000, the Company completed its acquisition of Civic
Communications. The agreed upon purchase price for all of the outstanding common
stock of Civic Communications was $204 million. The Company used proceeds from
the sale of its insurance operations to fund the transaction. Civic
Communications owned and operated WLBT-TV, the NBC affiliate in Jackson, MS,
KLTV-TV, the ABC affiliate in Tyler, TX, and KTRE-TV, the satellite affiliate of
KLTV in Lufkin, TX.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
Net revenues were $48.0 million for the second quarter of 2001, an increase of
$4.0 million over the $44.0 million reported for the second quarter of 2000. On
a pro forma basis, as if the Company operated all stations owned at the end of
the quarter for the entire period, net revenue decreased eight percent.
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Management's Discussions and Analysis continued
Operating expenses, which included amortization of program rights, were $28.1
million for the second quarter of 2001, an increase of $3.4 million over the
$24.7 million reported for the second quarter of 2000. The increase in operating
expense is attributable to the three station acquisitions made during 2000. On a
pro forma basis operating expenses decreased two percent.
Depreciation and amortization was $7.4 million for the second quarter of 2001,
an increase of $2.5 million over the $4.9 million reported for the second
quarter of 2000. The increase in depreciation and amortization expense is
directly attributable to the three station acquisitions made during 2000.
Corporate, general, and administrative expenses were $3.2 million for the second
quarter of 2001, an increase of $0.5 million over the $2.7 million reported for
the second quarter of 2000.
Net investment income was $2.5 million for the second quarter of 2001, an
increase of $1.9 million over the $0.6 million reported for the second quarter
of 2000. The increase in net investment income is due to realized gains in the
Company's equity and real estate portfolios.
The Company incurred no interest expenses during the second quarter of 2001 as
it repaid its credit facility in full during the fourth quarter of 2000 using
the proceeds from the sale of its insurance operations. The Company reported
$4.9 million of interest expense during the second quarter of 2000.
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
With the exception of net investment income, changes in income statement line
items on a year-to-date basis were substantially the same as those on a
quarterly basis. Please see the discussion of the three-month periods ended June
30, 2001 and 2000 above for details.
Net revenues were $90.0 million for the six-month period ended June 30, 2001, an
increase of $9.0 million over the $81.0 million reported for the six-month
period ended June 30, 2000. On a pro forma basis, as if the Company operated all
stations owned at June 30, 2001 for the entire period, net revenue decreased
seven percent.
Operating expenses, which included amortization of program rights, were $55.8
million for the six-month period ended June 30, 2001, an increase of $7.7
million over the $48.1 million reported for the six-month period ended June 30,
2000. On a pro forma basis, operating expenses were down two percent as compared
to the prior-year period.
Depreciation and amortization was $15.3 million for the six-month period ended
June 30, 2001, an increase of $5.7 million over the $9.6 million reported for
the six-month period ended June 30, 2000.
Corporate, general, and administrative expenses were $6.1 million for the
six-month period ended June 30, 2001, an increase of $0.7 million over the $5.4
million reported for the six-month period ended June 30, 2000.
Net investment income was $5.7 million for the six-month period ended June 30,
2001 a decrease of $5.6 million from the $11.3 million reported for the
six-month period ended June 30 2000. The decrease in net investment income was
due mainly to realized gains from the Company's equity portfolio recognized
during the first quarter of 2000 that were not present to the same extent during
2001.
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Management's Discussions and Analysis continued
The Company incurred no interest expenses during the first six months of 2001 as
it repaid its credit facility in full during the fourth quarter of 2000 using
the proceeds from the sale of its insurance operations. The Company reported
$8.4 million of interest expense during the six-month period ended June 30,
2000.
CASH FLOW INFORMATION
The Company has included operating cash flow and broadcast cash flow data
because management believes that such data are commonly used as measures of
performance among companies in the broadcast industry. The Company also believes
that these measures are frequently used by investors, analysts, valuation firms,
and lenders as some of the important determinants of underlying asset value.
Operating cash flow and broadcast cash flow should not be considered in
isolation, or as alternatives to operating income (as determined in accordance
with generally accepted accounting principles) as an indicator of the entity's
operating performance, or to cash flow from operating activities (as determined
in accordance with generally accepted accounting principles) as a measure of
liquidity. These measures are believed to be, but may not be, comparable to
similarly titled measures used by other companies.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2001 2000 2001 2000
------- ------- ------- -------
Operating income $ 9,233 $11,737 $12,929 $17,961
One time charges(1) -- 245 -- 449
------- ------- ------- -------
ADJUSTED OPERATING INCOME 9,233 11,982 12,929 18,410
Add:
Depreciation and amortization 7,431 4,933 15,283 9,592
Non-cash compensation 233 243 309 562
------- ------- ------- -------
OPERATING CASH FLOW 16,897 17,158 28,521 28,564
Corporate cash expenses 2,984 2,432 5,789 4,802
------- ------- ------- -------
BROADCAST CASH FLOW $19,881 $19,590 $34,310 $33,366
======= ======= ======= =======
(1) Adjusted to exclude charges in 2000 related to the phase-out and winding
up of the Company's direct mail operations
Broadcast cash flow was $19.9 million for the second quarter of 2001, compared
with $19.6 million for the prior-year second quarter. Broadcast cash flow was
$34.3 million for the first half of 2001, compared with $33.4 million for the
prior-year period. The increase in broadcast cash flow for both the current
quarter and year-to-date is attributable to the stations acquisitions completed
during the last quarter of 2000.
CAPITAL, FINANCING AND LIQUIDITY
At June 30, 2001 the Company had cash of $21.6 million and an unused line of
credit of $100 million. 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 operating requirements of its
stations and their anticipated capital expenditures, for both the next 12 months
and the foreseeable future thereafter.
CASH FLOWS
The Company's net cash flow used in operating activities of $110 million for the
first six months of 2001 compared to cash provided of $8.0 million for the same
period of 2000. The decrease in cash provided by operating activities is
attributable to the $135 million of taxes related to the sale of the Company's
insurance operations that were remitted to taxing authorities during the first
quarter of 2001. The Company's net cash used in investing activities was $3.6
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Management's Discussions and Analysis continued
million for the six month period ended June 30, 2001, as compared $53.3 million
for the same period of 2000. The decrease in net cash used in investing
activities is attributable to the acquisition of KCBD during the first half of
2000 with no corresponding acquisitions during the first half of 2001. Net cash
used in financing activities for the six months ended June 30, 2001 was $13.4
million compared to net cash provided by financing activities of $35.5 million
for the first six months of 2000. The decrease in net cash provided by financing
activities is due mainly to the absence of net borrowings in 2001 as compared to
2000, and the absence of net cash provided by discontinued operations.
NEW ACCOUNTING PRONOUNCEMENTS
During the second quarter of 2001 the Financial Accounting Standards Board
(FASB) issued Statement No. 141, Business Combinations, and Statement No. 142,
Goodwill and Other Intangible Assets. Statement No. 141 requires that the
purchase method of accounting be used for business combinations initiated after
June 30, 2001. The Company does not believe that Statement No. 141 will have a
material effect on its financial statements. Statement No. 142 requires that
goodwill and certain other identified intangibles no longer be amortized to
earnings, but instead be reviewed for impairments. The amortization of goodwill
and certain other identified intangibles ceases upon adoption of the Statement,
which for most companies, will be January 1, 2002. The Company has not yet
determined the extent of the effect of Statement No. 142, but believes that it
will have a material impact on its financial statements as its reported
amortization expense will be significantly reduced in future periods.
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, increasing
competition in the Company's markets; and future regulatory actions or
conditions, effecting either the television broadcasting industry as whole or
specific to the markets the Company serves. 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.
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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 8,
2001.
b. The following individuals were elected to serve for one-year terms:
Frank E. Melton, and John H. Mullin, III. The following individuals
were elected to serve for three-year terms: Edward E. Crutchfield,
John R. Farmer, and William O. McCoy.
c. Matters voted upon at the annual meeting were as follows:
Withheld/ Broker
For Against Abstentions Non-votes
-------------------------------------------------------------------------------------------
To elect as director:
Edward E. Crutchfield 14,598,801 -- 2,847,763 --
John R. Farmer 14,598,801 -- 2,847,763 --
William O. McCoy 14,598,801 -- 2,847,763 --
Frank E. Melton 14,594,051 -- 2,852,513 --
John H. Mullin III 14,598,801 -- 2,847,763 --
To approve Ernst & Young as independent
auditors: 17,341,788 69,138 35,638 --
d. There were no settlements between the registrant and any other
participants.
PART II, ITEM 6. EXHIBIT 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 filed a current report on Form 8-K dated May 8,
2001 with respect to the press release announcing its first
2001 operating results.
2. The Company filed a current report on Form 8-K dated May 8,
2001 with respect to The Liberty Corp. declaring a regular
quarterly dividend of 22 cents per share on its common stock,
payable on July 3, 2001 to shareholders of record on June 15,
2001.
INDEX TO EXHIBITS
EXHIBIT 10 $100 Million Credit Agreement Dated as of March 21, 2001
EXHIBIT 11 Consolidated Earnings Per Share Computation (included in Note
7 of Notes to Consolidated and Condensed Financial Statements)
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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 9, 2001
-----------------------
(Registrant)
/s/ Howard L. Schrott
---------------------
Howard L. Schrott
Chief Financial Officer
/s/ Martha G. Williams
----------------------
Martha G. Williams
Vice President, General Counsel and Secretary
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