10-Q

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

Commission File Number 1-5846

THE LIBERTY CORPORATION

(Exact name of registrant as specified in its charter)

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

135 South Main Street, Greenville, SC 29601

(Address of principal executive offices)

Registrant’s telephone number, including area code: 864/241-5400

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

Indicate 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 March 31, 2005
Common Stock		18,342,051

TABLE OF CONTENTS

EX-10.1

EX-10.2

EX-31

EX-32

PART I, ITEM 1
FINANCIAL STATEMENTS

THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS

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

See Notes to Consolidated and Condensed Financial Statements.

2

THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

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

See Notes to Consolidated and Condensed Financial Statements.

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THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2005			2004
(In 000’s)	(Unaudited)
OPERATING ACTIVITIES
Net income	$	3,447		$	4,620
Adjustments 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	)		1,143
Depreciation		4,690			4,433
Amortization of intangibles		53			59
Provision for bad debts		420			63
Amortization of program rights		1,876			1,735
Cash paid for program rights		(1,984	)		(1,902	)
Provision for (Benefit from) deferred income taxes		(294	)		2,300
Changes in operating assets and liabilities:
Receivables		4,856			6,294
Other 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	)		301
All other operating activities		(226	)		(363	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,587			10,308
INVESTING ACTIVITIES
Purchase of property, plant, and equipment		(2,944	)		(3,110	)
Proceeds from sale of property, plant, and equipment		97			41
Investments acquired		—			(500	)
Investments sold		2,285			—
Proceeds from sale of investment properties		—			1,015
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(562	)		(2,554	)
FINANCING ACTIVITIES
Proceeds from borrowings		132,000			55,000
Principal payments on debt		(40,000	)		—
Dividends paid		(6,414	)		(5,055	)
Proceeds from the exercise of stock options		661			3,553
Repurchase of common stock		(8,285	)		(18,031	)
NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES		77,962			35,467
INCREASE (DECREASE) IN CASH		79,987			43,221
Cash at beginning of period		16,389			62,177
CASH AT END OF PERIOD	$	96,376		$	105,398

See Notes to Consolidated and Condensed Financial Statements.

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THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
March 31, 2005
(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 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 INCOME
	The 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 Ended
	March 31,
(In 000’s)	2005			2004
Net income	$	3,447		$	4,620
Unrealized gains (losses) on securities		(47	)		(19	)
Comprehensive income	$	3,400		$	4,601

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3.	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 table summarizes financial information by segment for the three month periods ended March 31, 2005 and 2004:

	Three Months Ended
	March 31,
(In 000’s)	2005			2004
Revenues (net of commissions)
Television station	$	43,526		$	44,600
Cable advertising		2,968			3,193
Other		30			38
Total net revenues	$	46,524		$	47,831
Income (loss) before income taxes
Broadcasting	$	8,784		$	11,577
Cable advertising		44			193
Corporate 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 BENEFITS
	The Company has a postretirement plan that provides medical and life insurance benefits for qualified retired employees. The postretirement medical plan is generally contributory with retiree contributions adjusted annually to limit employer contributions to predetermined amounts. The postretirement life plan provides free insurance coverage for retirees and is insured with an unaffiliated company.
	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.

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Net periodic postretirement benefit cost included the following components:

	Three Months Ended
	March 31,
(In 000’s)	2005		2004
Service cost	$	7	$	6
Amortization of prior service cost		2		1
Amortization of actuarial net gain		3		5
Interest cost		30		34
Net periodic postretirement benefit cost	$	42	$	46

5.	EARNINGS PER SHARE
	The calculation of basic and diluted earnings per common share from continuing operations is as follows:

	Three Months Ended
	March 31,
(In 000’s except per share data)	2005		2004
Numerator – Earnings:
Net income	$	3,447	$	4,620
Effect of dilutive securities		—		—
Numerator for basic and diluted earnings per common share	$	3,447	$	4,620
Denominator – Average Shares Outstanding:
Denominator for basic earnings per common share – weighted average shares		18,041		18,739
Effect of dilutive securities:
Stock options		90		171
Denominator for diluted earnings per common share		18,131		18,910
Basic earnings per common share	$	0.19	$	0.25
Diluted 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.

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6.	EQUITY COMPENSATION
	In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation”, the Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and related interpretations in accounting for its equity compensation plans and does not recognize compensation expense for its stock-based compensation plans other than for awards of restricted shares. Expense is recognized over the vesting period of the restricted shares.
	Under APB No. 25, because the exercise price of the 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
	Ended March 31,
(In 000’s, except per share amounts)	2005			2004
Stock-based compensation cost included in net income (net of taxes)	$	835		$	234
Net income:
As reported	$	3,447		$	4,620
Pro forma compensation expense (net of taxes)		(197	)		(202	)
Pro forma net income	$	3,250		$	4,418
Basic earnings per share:
As reported	$	0.19		$	0.25
Pro forma		0.18			0.24
Diluted earnings per share:
As reported	$	0.19		$	0.24
Pro forma		0.18			0.23

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7.	COMMON STOCK
	The 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:

	Common
	Shares			Common
(In 000’s)	Outstanding			Stock
Balance as of 12/31/04		18,469		$	49,273
Stock issued for employee benefit and performance incentive compensation programs		60			2,384
Income tax benefit resulting from employee exercise of options					898
Stock 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 FACILITY
	In March 2001, the Company entered into a $100 million unsecured 364-day revolving credit facility with a bank. The Company renewed the facility on substantially similar terms in each of the years 2002, 2003, 2004, and during the first quarter of 2005. At the end of the term of the facility, any outstanding principal and interest will come due, unless the bank, in its sole discretion, otherwise extends the facility. The facility provides that the funds drawn may be used for working capital, dividends, and other general corporate purposes, capital expenditures, purchases of common stock, acquisitions, and investments. The Company had $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.

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9.	PROVISION FOR INCOME TAXES
	It 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 CONTINGENCIES
	In November of 2000, the Company sold its insurance operations to a third party. Under the purchase agreement, subject to certain limitations, the Company agreed to indemnify the buyer for damages (as defined in the purchase agreement) relating to certain tax matters, pre-existing litigation and regulatory proceedings. The indemnification relating to the tax matters is in effect until the expiration of the relevant statutes of limitation. The indemnifications relating to the other matters are in effect until the final resolution of such matters. The Company believes that the likelihood of it being required to make payments as a result of 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 PRONOUNCEMENTS
	On December 16, 2004, the Financial Accounting Standards Board issued Statement No. 123 (Revised 2004), Share-Based Payment (“Statement No. 123(R)”), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. On April 14, 2005 the Securities and Exchange Commission announced the adoption of a rule that amends the compliance dates for Statement 123(R). The new rule allows companies to implement Statement 123 (R) at the beginning of their next fiscal year that begins after June 15, 2005, which for the Company is the first quarter of 2006. Early adoption is permitted.
	Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.
	Statement 123(R) permits public companies to adopt its requirements using one of two methods:

1.   A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of

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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.

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PART I, ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)

The Liberty Corporation is a holding company with operations primarily in the television broadcasting industry. The 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.

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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.

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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.

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PART I, ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information, as disclosed in Part II, Item 7A of the 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 4
CONTROLS 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.

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PART II, ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

	Total				Total Number of		Maximum Number
	Number of				Shares (or Units)		of Shares that May
	Shares (or		Average Price		Purchased as Part of		Yet Be Purchased
	Units)		Paid per Share		Publicly Announced		Under the Plans or
Period	Purchased		(or Unit)		Plans or Programs		Programs
January 1 –31, 2005		—	$	—		—		3,024,700
February 1 – 28, 2005		2,038	$	44.26		—		4,000,000
March 1 – 31, 2005		184,600	$	44.39		184,600		3,815,400
Total		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 Plan
EXHIBIT 10.2	Form of Restricted Stock Agreement
EXHIBIT 11	Consolidated Earnings Per Share Computation (included in Note 5 of Notes to Consolidated and Condensed Financial Statements)
EXHIBIT 31	Rule 13a-14(a)/15d-14(a) Certifications
EXHIBIT 32	Section 1350 Certifications

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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. Schrott
Howard L. Schrott
Chief Financial Officer
/s/ Martha G. Williams
Martha G. Williams
Vice President, General Counsel and Secretary

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EX-10.1

Exhibit 10.1

Description of
The Liberty Corporation
Management Bonus Plan

Liberty has an unwritten Management Bonus Plan (the “Plan”) which provides for the payment of annual cash bonus awards to key employees based upon the achievement of predetermined levels of financial performance of Liberty. The key employees eligible for the Plan include members of the corporate staff as well as regional managers and key station employees. The Plan is designed to provide increasing bonus payments as the company’s financial performance increases. The following is a description of the Plan.

Early each calendar year, the Compensation Committee of the Board of Directors takes the following actions to establish the bonus plan for the year:

First, they assign each participant a target bonus equal to a percentage of his or her base salary. The target bonus reflects the Compensation Committee’s judgment regarding a competitive bonus and the extent to which the participant could contribute to the achievement of Liberty’s financial goals. Currently, the target bonuses for the named executive officers are as follows:

Position	% of annual salary
Chairman & CEO:		50
President:		46
CFO:		39
VP & General Counsel:		39
Controller :		29

Target bonuses for other participants vary from 15-38% of annual salary.

Second, they establish the budgeted financial performance targets for the year. For some participants with direct responsibility for operation of one or more divisions/stations, the annual performance targets are a blend of both company-wide and division/station financial performance targets. The financial performance measures (whether for Liberty or a division/station of Liberty) are: revenue, EBITDA and broadcast operating profit.

Third, they determine a minimum threshold of performance before a participant is entitled to a bonus; currently this threshold is 90% of the targets. If actual performance exceeds the threshold, an executive officer will be eligible to receive a bonus in the range of 50% to 200% of his or her target bonus, depending upon a comparison of actual performance for the year to the budgeted performance for the year. In order to receive a bonus equal to 200% of the target bonus, financial performance must equal or exceed 125% of the budgeted performance for the year.

After the end of each year the Compensation Committee reviews the company’s financial performance to determine the tentative bonus for each participant. Each participant’s tentative bonus is then subject to a modest adjustment (up or down), depending upon the participant’s performance review for the year (i.e., whether or not the participant achieved his or her personal performance goals for the year). Bonuses are paid in lump sum cash payments, typically within three months after the end of the year.

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EX-10.2

Exhibit 10.2

[YEAR] AWARD
RESTRICTED SHARES GRANT AGREEMENT
FOR [OFFICER or DIRECTOR] WITH 20% ANNUAL VESTING
(No performance goal or other special vesting condition)

The Liberty Corporation (the Company), a South Carolina corporation, hereby grants to

                                        
(the Holder)

                     fully paid and nonassessable shares of the Common Stock of the Company.

1. This award of restricted shares has been granted pursuant to the Company’s Performance Incentive Compensation Program, (Amended and Restated November 2000) (the Program) and is subject to all the terms, conditions and provisions of the Program.

(a)	A copy of the Program is attached hereto as Exhibit A and made a part of this Agreement as if fully set out herein.
(b)	This award of restricted shares is not intended to constitute a Qualifying Award under Section 10 of the Program and is therefore not required to satisfy the conditions of Section 10 of the Program and Section 162(m) of the Internal Revenue Code of 1986, as amended.

2. Except as provided below, restricted shares awarded pursuant to this Agreement shall vest in the Holder in accordance with the following vesting conditions.

(a)   Subject to the other terms of this Agreement, the vesting as to the following amounts of restricted shares shall be conditioned upon continuation of the Holder’s employment by (or service as a non-employee director of) the Company or any of its subsidiaries until the applicable vesting dates:

Percentage or Number of Shares	Vesting Date
20%	___, 200_
40%	___, 200_
60%	___, 200_
80%	___, 200_
100%	___, 200_

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(b)

To the extent that the shares remain non-vested under paragraph 2(a) above, such shares shall be deemed to be subject to a Restriction Period. The Restriction Period shall terminate when and to the extent that such shares vest in the Holder in accordance with the vesting terms specified in paragraph 2(a) above or in accordance with the accelerated vesting provided by paragraph 3 below or, to the extent so provided for a Change in Control Event, any accelerated vesting provided in paragraph 5 below or otherwise provided by the Compensation Committee pursuant to Section 12 of the Program. Restricted shares that are subject to a Restriction Period (and the right to vote such shares and receive dividends thereon during the Restriction Period) may not be assigned, transferred, pledged or otherwise encumbered or disposed of except to the Company as provided in paragraph 4 below.

(c)

Except as provided in paragraph 4 below, during the Restriction Period: (i) the certificates representing the restricted shares (and any certificates representing any additional restricted shares issued during the Restriction Period pursuant to paragraph 7 below) may, in the Company’s discretion, bear a restrictive legend referring to the restrictions imposed by this Agreement, (ii) the Company shall retain possession of the certificates for restricted shares awarded pursuant to the Program and this Agreement, (iii) the Holder shall execute and then deliver to the Company a stock power in blank with respect to such shares, and (iv) the Holder shall be entitled to full dividend and voting rights in respect of such shares. After the end of the applicable Restriction Period, the restrictions imposed under the Program and this Agreement shall cease to apply to the shares previously subject to such Restriction Period and the certificates for such shares shall be delivered to the Holder.

3. In the event of termination of employment (or service as a non-employee director) by reason of death, disability or retirement at normal retirement age as provided in the Company’s (or applicable subsidiary’s) Retirement Plan (or its retirement policy for non-employee directors), the restrictions imposed under paragraph 2(a) above in respect of any shares then subject to a Restriction Period shall terminate as of the date of such termination of employment (or service as a non-employee director).

4. In the event of termination of employment (or service as a non-employee director) other than as provided in paragraph 3 above or 5 below, the Holder shall forfeit all rights in respect of any shares subject to a Restriction Period as of the date of such termination of employment (or service as a non-employee director).

5. In the event of a Change in Control Event described in Section 12 of the Program occurs, then notwithstanding any contrary terms and conditions to vesting contained, therein, the restrictions imposed by paragraph 2(a) shall immediately terminate upon such occurrence.

6. Whenever the Holder is entitled to a distribution of restricted shares pursuant to this Award, the Company may require the Holder to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements. The Holder may elect with respect to any such distribution to surrender or authorize the Company to withhold shares of Common Stock (a Stock Surrender Withholding Election), valued at current fair market value on the date of surrender or withholding of the shares, in

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satisfaction of any such withholding requirements, subject to the Program’s conditions for making such a Stock Surrender Withholding Election.

(a)

The Holder may elect to have withheld any amount which exceeds the amount required by applicable law and governmental regulations to be withheld but not in excess of the Holder’s total estimated federal, state and local tax obligations associated with such distribution, including any applicable FICA taxes. Any shares of Common Stock used to satisfy that portion of the Holder’s tax obligations associated with such distribution in excess of the amount required by applicable law and governmental regulations to be withheld must have been held by the Holder, free of any vesting restrictions imposed under the Program, for at least six months.

(b)

Any cash payments of dividends that become payable during the Restriction Period to an employee (but not to a non-employee director) with respect to the restricted shares shall be net of an amount sufficient to satisfy any federal, state and local withholding tax requirements with respect to such dividends.

7. In the event of a merger, reorganization, consolidation, recapitalization, stock dividend, spin-off, stock split or other change in corporate structure or other distribution of stock or property (except for regular cash dividends) affecting the Company’s Common Stock during the Restriction Period, such adjustments shall be made in the number of restricted shares subject to this Agreement as may be determined appropriate by the Compensation Committee. Any resulting restricted shares shall be subject to all of the terms and conditions of this Agreement.

8. This Agreement shall bind and inure to the benefit of the Company and any assignees or successors in interest of the Company and the Holder and his/her heirs, personal representatives and successors in interest (subject to applicable restrictions on any transfer, etc. by the Holder).

     Dated at Greenville, South Carolina, as of this [DATE].

	The Liberty Corporation
By:
	Chief Executive Officer
	Holder

The Restriction Period for the following certificate(s) and shares terminated on the date indicated and the following certificate(s) and shares are hereby released to the Holder:

		Authorized Signature	No. of Shares
Date	Certificate No. & No. of Shares	& Date Released	Still Restricted

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EX-31

EXHIBIT 31

CERTIFICATIONS

I, Hayne Hipp, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Liberty Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2005

/s/ Hayne Hipp

Hayne Hipp

Chairman and Chief Executive Officer

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EXHIBIT 31

CERTIFICATIONS

I, Howard L. Schrott, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Liberty Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2005

/s/ Howard L. Schrott

Howard L. Schrott

Chief Financial Officer

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EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Liberty Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Hayne Hipp	/s/ Howard L. Schrott
Hayne Hipp	Howard L. Schrott
Chief Executive Officer	Chief Financial Officer
May 3, 2005	May 3, 2005

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