<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
----------------
OR
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 789, Wade Hampton Boulevard, Greenville, S.C. 29602
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 268-8436
----------------------------
NOT APPLICABLE
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 March 31, 1994
----------------------------- -----------------------------
Common Stock 19,569,194
<PAGE> 2
PART I, ITEM 1
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1994 1993
----------- -----------
<S> <C> <C>
Investments:
Fixed Maturity Securities:
Available for Sale, at market, cost of $816,558
at 3/31/94 $ 803,339 $ 0
Held to Maturity, at cost, market of $353,163
at 3/31/94 and $921,169 at 12/31/93 320,163 857,673
Nonredeemable Preferred Stocks, at market,
cost of $44,325 at 3/31/94 and $44,359
at 12/31/93 47,599 48,123
Common Stocks, primarily at market, cost of
$39,843 at 3/31/94 and $16,156 at 12/31/93 43,418 20,268
Mortgage Loans 173,989 165,784
Investment Properties 89,119 84,530
Loans to Policyholders 91,703 86,942
Other Long-Term Investments 89,257 82,826
Short-Term Investments 9,348 13,355
----------- -----------
Total Investments 1,667,935 1,359,501
----------- -----------
Cash 65,355 29,487
Accrued Investment Income 17,365 12,736
Receivables 46,713 46,648
Receivable from Reinsurers 251,591 245,210
Deferred Acquisition Costs 327,635 288,635
Buildings and Equipment 65,448 63,499
Intangibles Related to Television Operations 48,047 48,418
Goodwill Related to Insurance Acquisitions 29,663 27,683
Other Assets 59,961 65,216
----------- -----------
911,778 827,532
----------- -----------
Total Assets $ 2,579,713 $ 2,187,033
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Liabilities
Policy Liabilities $ 1,646,625 $ 1,389,176
Notes, Mortgages and Other Debt 247,645 149,489
Accrued Income Taxes 10,072 12,054
Deferred Income Taxes 117,803 110,004
Accounts Payable and Accrued Expenses 68,029 61,932
Other Liabilities 32,506 30,533
----------- -----------
Total Liabilities 2,122,680 1,753,188
----------- -----------
Redeemable Preferred Stock
1994-B Series, $37.50 redemption value, 598,656
shares issued and outstanding 22,450 ---
Shareholders' Equity
Common Stock 145,578 143,939
Unearned Stock Compensation (4,056) (4,475)
Unrealized Investment Gains (Losses) (3,560) 5,177
Cumulative Foreign Currency
Translation Adjustment (1,533) (1,529)
Retained Earnings 298,154 290,733
----------- -----------
Total Shareholders' Equity 434,583 433,845
----------- -----------
Total Liabilities, Redeemable Preferred Stock
and Shareholders' Equity $ 2,579,713 $ 2,187,033
=========== ===========
</TABLE>
See Notes to Consolidated and Condensed Financial Statements.
2
<PAGE> 3
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1994 1993
-------- --------
<S> <C> <C>
REVENUES
Insurance Premiums & Policy Charges $ 66,795 $ 59,549
Broadcasting Revenues 21,247 19,660
Net Investment Income 28,501 26,576
Service Contract Revenue 1,520 2,570
Realized Investment Gains 1,558 7,199
-------- --------
Total Revenues 119,621 115,554
-------- --------
EXPENSES
Policyholder Benefits 47,742 37,834
Commissions 11,157 11,060
General Insurance Expenses 13,378 15,419
Amortization of Deferred Acquisition Costs 10,358 9,178
Broadcasting Expenses 16,179 15,485
Interest Expense 1,693 2,847
Other Expenses 2,979 2,548
-------- --------
Total Expenses 103,486 94,371
-------- --------
Income Before Income Taxes and Cumulative
Effect of Accounting Changes 16,135 21,183
Provision for Income Taxes 5,562 7,169
-------- --------
Income Before Cumulative Effect of
Accounting Changes 10,573 14,014
Cumulative Effect of Accounting Changes --- (11,940)
-------- --------
NET INCOME $ 10,573 $ 2,074
======== ========
EARNINGS PER SHARE: (Exhibit 11) $ .53 $ .11
======== ========
Dividends Per Common Share $ .155 $ .140
======== ========
Data on Provision for Income Taxes:
Taxes Currently Payable - Federal $ 3,336 $ 5,797
- State 204 161
Taxes Deferred Primarily Due to GAAP Adjustments
on Insurance Subsidiary -
- Federal 2,022 1,211
- State --- ---
-------- --------
$ 5,562 $ 7,169
======== ========
</TABLE>
Note: The provision for income taxes (current and deferred) is calculated on
current period operations based on the annual tax rate.
See Notes to Consolidated and Condensed Financial Statements.
3
<PAGE> 4
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1994 1993
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 10,573 $ 2,074
Adjustments to reconcile net income to net cash
provided (used) in operating activities:
Increase in policy liabilities 1,041 2,942
Increase (decrease) in accounts payable and
accrued liabilities 314 (4,050)
(Increase) decrease in receivables (3,135) (3,566)
Amortization of policy acquisition costs 10,358 9,178
Policy acquisition costs deferred (13,815) (14,902)
Realized investment (gains) losses (1,558) (7,199)
Depreciation and amortization 2,929 2,932
Amortization of bond premium and discount (1,235) (780)
Provision for deferred income taxes 2,022 1,211
All other operating activities, net 3,840 22,012
---------- ----------
NET CASH PROVIDED IN OPERATING ACTIVITIES 11,334 9,852
---------- ----------
INVESTING ACTIVITIES
Investment securities sold - available for sale 2,213 9,158
Investment securities matured or redeemed by issuer-
available for sale 29,914 ----
Investment securities matured or redeemed by issuer-
held to maturity 20,750 38,419
Cost of investment securities acquired - available
for sale (78,432) (4,059)
Cost of investment securities acquired - held to maturity ---- (77,486)
Mortgage loans made (6,594) (201)
Mortgage loan repayments 5,615 7,010
Purchase of investment properties, buildings and equipment (6,335) (5,689)
Sale of investment properties, buildings and equipment 3,688 11,251
Purchases of short-term investments (299,223) (40,020)
Sales of short-term investments 303,394 57,528
Net cash paid on purchases of insurance companies (53,492) ----
All other investment activities, net 756 (1,487)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (77,746) (5,576)
---------- ----------
FINANCING ACTIVITIES
Proceeds from borrowings 454,000 520,854
Principal payments on debt (359,793) (534,158)
Dividends paid (3,152) (4,961)
Stock issued for employee benefit and compensation
programs 2,058 1,427
Common stock offering ---- 8,543
Return of policyholders' account balances (7,174) (6,401)
Receipts credited to policyholders' account balances 16,341 16,406
---------- ----------
NET CASH PROVIDED IN FINANCING ACTIVITIES 102,280 1,710
---------- ----------
INCREASE IN CASH 35,868 5,986
Cash at beginning of year 29,487 32,180
---------- ----------
CASH AT END OF PERIOD $ 65,355 $ 38,166
========== ==========
</TABLE>
See Notes to Consolidated and Condensed Financial Statements.
4
<PAGE> 5
THE LIBERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
March 31, 1994
(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, 1994, but it does reflect all adjustments which
are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented.
The financial statements include the accounts of the Company
and all of its subsidiaries after elimination of all
significant intercompany balances and transactions.
2. FINANCIAL ACCOUNTING STANDARDS STATEMENT NO. 115 - ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES
In May 1993, the Financial Accounting Standards Board issued
FAS 115. The Company adopted the provisions of the new
standard for investments held as of or acquired after January
1, 1994. The Statement generally replaced the historical cost
accounting approach for certain debt securities with a fair
value approach. Under FAS 115, all affected debt and equity
securities are classified into one of three categories:
held-to-maturity, available-for-sale, or trading. These
classifications are important in that they affect the carrying
value of the security as well as the timing of gain or loss
recognition in the income statement.
In accordance with the Statement, prior period financial
statements have not been restated to reflect the change in
accounting principle. The opening balance of shareholders'
equity was increased by $11.4 million (net of adjustments to
deferred policy acquisition costs of $1.7 million and deferred
income taxes of $6.1 million) to reflect the net unrealized
gains on securities classified as available-for-sale
previously carried at amortized cost or cost. There was no
effect on net income as a result of the adoption of FAS 115.
In the three month period ended March 31, 1994, net unrealized
gains decreased by $20.1 million (net of adjustments to
deferred policy acquisition costs of $3.6 million and deferred
income taxes of $10.6 million). Approximately $5.0 million of
the net decrease was related to securities acquired through
the acquisitions of American Funeral Assurance Company and
North American National Corporation during February 1994. The
net decrease was attributable to a rise in interest rates
during the three month period.
5
<PAGE> 6
The adoption of FAS 115 primarily affected the Company's
accounting for its investment in fixed maturity securities
(bonds and redeemable preferred stocks). The Company has
classified approximately two-thirds of its bond portfolio as
available-for-sale with the remainder of the portfolio
classified as held-to-maturity; and has classified all of its
redeemable preferred stocks as available-for-sale. The
Company did not classify any affected securities under the
trading category. All equity securities (non-redeemable
preferred and common stocks) are carried as available-
for-sale but the accounting of these securities was not
affected by FAS 115 since the Company already carried these
securities at fair value. Accordingly, since FAS 115 did not
affect the accounting for equity securities the Company has
included all equity securities under the available-for-sale
category for periods presented prior to January 1, 1994 (the
effective adoption date) for presentational purposes. In
addition, the Company classified nearly two-thirds of its interest
in the trusts established for the assets supporting the coinsured
General Agency Marketing business as available-for-sale.
These assets held in trusts are included in other long-term
investments as reported per the Company's financial statements
and are accordingly being carried at fair value.
Management will determine the appropriate classification of
fixed maturity securities at the time of purchase and will
re-evaluate such designation as of each balance sheet date.
Fixed maturity securities are classified as held-to maturity
when the Company has the positive intent and ability to hold
the securities to maturity. Held-to-maturity securities are
stated at amortized cost.
Fixed maturity securities not classified as held-to-maturity
and all equity securities are classified as available-
for-sale. Available-for-sale securities are stated at fair
value, with the unrealized gains or losses, net of deferred
taxes and related amortization of deferred acquisition costs,
reported in a separate component of shareholders' equity.
The amortized cost of fixed maturity securities classified as
held-to-maturity or available-for-sale is adjusted for
amortization of premiums and accretion of discounts to
maturity, or in the case of mortgage-backed securities, over
the estimated life of the security. Such amortization is
included in net investment income.
6
<PAGE> 7
The following is a summary of available-for-sale securities and
held-to-maturity securities:
<TABLE>
<CAPTION>
Available for Sale
------------------
(In 000's) Gross Gross
Unrealized Unrealized Fair
March 31, 1994 Cost Gains Losses Value
-------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Fixed maturity securities:
US Treasury securities and
obligations of US government
corporations and agencies $ 24,940 $ 23 $ 673 $ 24,290
Obligations of states and
political subdivisions 51,219 234 1,770 49,683
Debt securities issued by
foreign governments 16,870 106 9 16,967
Corporate securities 358,378 6,740 10,990 354,128
Mortgage-backed securities 364,307 3,461 10,670 357,098
Other debt securities 844 352 23 1,173
-------- ------- ------- --------
Total fixed maturity
securities $816,558 $10,916 $24,135 $803,339
Equity securities 84,168 8,918 2,069 91,017
-------- ------- ------- --------
Total $900,726 $19,834 $26,204 $894,356
======== ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Held to Maturity
----------------
Gross Gross
Unrealized Unrealized Fair
March 31, 1994 Cost Gains Losses Value
-------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Fixed maturity securities:
US Treasury securities and
obligations of US government
corporations and agencies $ 17,086 $ 355 $ 133 $ 17,308
Obligations of states and
political subdivisions 454 146 0 600
Debt securities issued by
foreign governments --- --- --- ---
Corporate securities 81,206 16,653 161 97,698
Mortgage-backed securities 221,417 16,146 6 237,557
Other debt securities --- --- --- ---
-------- ------- ------ --------
Total $320,163 $33,300 $ 300 $353,163
======== ======= ====== ========
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
Available for Sale
------------------
(In 000's) Gross Gross
Unrealized Unrealized Fair
December 31, 1993 Cost Gains Losses Value
----------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Equity securities 60,515 9,411 1,535 68,391
</TABLE>
<TABLE>
<CAPTION>
Held to Maturity
----------------
Gross Gross
Unrealized Unrealized Fair
December 31, 1993 Cost Gains Losses Value
----------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Fixed maturity securities:
US Treasury securities and
obligations of US government
corporations and agencies $ 28,056 $ 834 $ 148 $ 28,742
Obligations of states and
political subdivisions 18,530 1,264 205 19,589
Debt securities issued by
foreign governments 23,418 702 103 24,017
Corporate securities 304,324 32,962 1,228 336,058
Mortgage-backed securities 482,521 29,699 804 511,416
Other debt securities 824 620 97 1,347
-------- ------- ------- --------
Total $857,673 $66,081 $ 2,585 $921,169
======== ======= ======= ========
</TABLE>
During the period ended March 31, 1994 and 1993,
available-for-sale securities with a fair value at the date of sale of
$2.2 million and $9.2 million, respectively were sold. The gross
realized gains on such sales totaled $0.9 million and $3.5 million,
respectively, and the gross realized losses totaled zero and $.2
million, respectively. The change to net unrealized gains (losses) on
available-for-sale securities included as a component of shareholders'
equity for the three months ended March 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
----- ----
<S> <C> <C>
Balance at beginning of the period $ 5,177 $ 3,901
Adjustment to beginning balance for
change in accounting method, net of adjustment
to deferred acquisition costs and deferred
taxes 11,357 ---
Change in unrealized gains (losses), net of
adjustment to deferred acquisition costs
and deferred taxes (20,094) 922
-------- -------
Balance at end of the period $ (3,560) $ 4,823
======== =======
</TABLE>
8
<PAGE> 9
The amortized cost and estimated fair value of fixed maturity
securities by contractual maturity and equity securities at March 31,
1994 are shown below. Expected maturities will differ from
contractual maturities because the issuers of the securities may have
the right to prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale
------------------
(In 000's) Gross Gross
Unrealized Unrealized Fair
March 31, 1994 Cost Gains Losses Value
-------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Contractual maturity of:
Less than one year $ 20,168 $ 23 $ 75 $ 20,116
One to five years 97,323 2,662 950 99,035
Five to ten years 171,995 2,770 5,691 169,074
Greater than ten years 162,765 2,000 6,749 158,016
-------- ------- ------- --------
$452,251 $ 7,455 $13,465 $446,241
Mortgage-backed securities 364,307 3,461 10,670 357,098
Equity securities 84,168 8,918 2,069 91,017
-------- ------- ------- --------
Total $900,726 $19,834 $26,204 $894,356
======== ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Held to Maturity
-----------------
Gross Gross
Unrealized Unrealized Fair
March 31, 1994 Cost Gains Losses Value
-------------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
Contractual maturity of:
Less than one year $ 12,939 $ 262 $ 18 $ 13,183
One to five years 46,520 7,360 93 53,787
Five to ten years 28,307 7,970 27 36,250
Greater than ten years 10,980 1,562 156 12,386
-------- ------- ------- --------
$ 98,746 $17,154 $ 294 $115,606
Mortgage-backed securities 221,417 16,146 6 237,557
-------- ------- ------- --------
Total $320,163 $33,300 $ 300 $353,163
======== ======= ======= ========
</TABLE>
9
<PAGE> 10
3. REDEEMABLE PREFERRED STOCK
On February 24, 1994, the Company issued 598,656 shares of Series
1994-B Voting Cumulative Preferred Stock having a total redemption
value of $22,449,600 or $37.50 per share in connection with the
acquisition of American Funeral Assurance Company. Additionally, on
April 1, 1994, the Company issued 668,207 shares of Series 1994-A
Voting Cumulative Preferred Stock having a total redemption value of
$23,387,245 or $35.00 per share in connection with the acquisition of
State National Capital Corporation.
The consolidated and condensed balance sheet at March 31, 1994
includes the issuance of the Preferred Stock 1994-B Series under the
caption "Redeemable Preferred Stock" but does not include the 1994-A
Series since the issuance was subsequent to March 31, 1994. Earnings
per share are computed based on the weighted average number of common
shares and common share equivalents outstanding during the respective
period. The Preferred Stock 1994-A Series and 1994-B Series are not
considered common equivalent shares. Accordingly, the dividends on
the Preferred Stock 1994-B Series of $122,000 for the period ended
March 31, 1994 have been deducted from net income to compute earnings
per share. There is no material difference between primary and fully
diluted earnings per share amounts.
Each share of Preferred Stock 1994-A Series and 1994-B Series is
entitled to one vote per share on any matters submitted to the vote of
the shareholders of the Company.
Dividends Dividends shall be paid on the Preferred Stock 1994-A
Series at the rate of 6% per annum and on the 1994-B Series at the
rate of 5.6% per annum. Dividends shall accrue daily, be cumulative
and shall be paid on or before the last day of each calendar quarter,
as declared by the Board of Directors. Both the Preferred Stock
1994-A Series and 1994-B Series are on a parity in rank with all other
series of preferred stock of the Company whether or not such series
exists now or is created in the future, with respect to payment of all
dividends and distributions, unless a series of preferred stock
expressly provides that it is junior or senior to the 1994-A Series
and 1994-B Series. No dividends or distributions on the Company's
common stock shall be declared or paid until all accumulated and
unpaid dividends on the Preferred Stock 1994-A Series and 1994-B
Series have been declared and set aside for payment.
Redemption Both the Company and the holders of the Preferred
Stock 1994-A Series and 1994-B Series have the right to redeem any or
all of the shares from time to time at any time beginning five years
and one month after the date of issue in exchange for cash or shares
of the Company's common stock. A shareholder is limited to giving
only one notice of redemption in any calendar year but the Company has
an unlimited right to give notices of redemption after the Preferred
Stock 1994-A Series and 1994-B Series become redeemable. There is no
sinking fund for the redemption of either Preferred Stock 1994-A
Series or 1994-B Series.
Regardless of whether a redemption is at the election of the Company
or the shareholder, the form of consideration for the redeemed shares
will be determined by the Company and may consist of cash, shares of
the Company's common stock or some combination of both. Generally the
amount of consideration on the Preferred Stock 1994-A Series will be
equivalent to $35.00 per share plus the amount of any accumulated and
unpaid dividends and on the 1994-B Series will be equivalent to $37.50
per share plus the amount of any accumulated and unpaid dividends.
10
<PAGE> 11
In addition to the redemption provisions, the Company and a
shareholder of either Preferred Stock 1994-A Series or 1994-B Series
may separately negotiate and agree on terms pursuant to which the
Company will repurchase any or all of the shares such shareholder
owns. There are no restrictions on the time, price paid by the
Company or other terms of such a negotiated repurchase.
Conversion Rights Each share of the Preferred Stock 1994-A Series
and 1994-B Series is convertible, at the option of the shareholder, at
any time into one share of the Company's common stock (plus a
corresponding attached right to acquire a share of the Company's
Series A Participating Cumulative Preferred Stock).
Liquidation Upon liquidation or dissolution of the Company,
shareholders of Preferred Stock 1994-A Series and 1994-B Series shall
be entitled to receive out of the net assets of the Company, after
payment of all liabilities but before any payment on the Company's
common stock, a distribution in the amount of $35.00 per share on the
1994-A Series and $37.50 per share on the 1994-B Series, plus the
amount of all accumulated and unpaid dividends.
4. ACQUISITIONS
(In 000's, except for per share data)
North American National Corporation, American Funeral Assurance
Company and State National Capital Corporation were acquired by the
Company on February 23, February 24, and April 1, respectively. The
following unaudited combined results of operations for the three
months ended March 31, 1994 and 1993 give effect to these acquisitions
as though they had occurred at the beginning of each period. None of
these acquisitions were individually material for financial reporting
purposes and accordingly the following pro forma financial data
reflects the effect of these acquisitions in the aggregate. Pro forma
results are not necessarily indicative of the results that actually
would have occurred had the Company owned these acquisitions during
these periods or which will be obtained in the future.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1994 1993
---- ----
<S> <C> <C>
Revenues $139,585 $146,345
======== ========
Net Income Before Cumulative Effect
of Accounting Changes $ 11,343 $ 15,083
======== ========
Net Income $ 11,343 $ 3,143
======== ========
Earnings Per Share:
Net Income Before Cumulative Effect
of Accounting Changes $ 0.54 $ 0.74
======== ========
Net Income $ 0.54 $ 0.13
======== ========
</TABLE>
11
<PAGE> 12
5. COMMITMENTS AND CONTINGENCIES
At March 31, 1994, the Company had made commitments as shown below:
<TABLE>
<CAPTION>
(In 000's)
<S> <C>
Buildings and equipment $12,134
Mortgage loans and bonds 12,378
Other ---
-------
$24,512
=======
</TABLE>
The Company is contingently liable for reinsurance ceded ($4.8 billion
at March 31, 1994) should any reinsurer be unable to meet the
obligations assumed. The Company is also contingently liable for $.7
million of debt incurred by Cosmos on an industrial development bond.
6. SUPPLEMENTAL INFORMATION ON INSURANCE OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1994 1993
-------- --------
(In millions)
<S> <C> <C>
Increase in net insurance in force $ 771 $ 224
======== ========
Net insurance in force $ 16,205 $ 15,795
======== ========
</TABLE>
12
<PAGE> 13
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)
Operations
Consolidated net income of $10.6 million for the first quarter of 1994
increased $8.5 million from last year's first quarter (see table below). The
increase in net income reflects that last year's first quarter included a
charge of $11.9 million related to the implementation of two accounting changes
- - -- FAS 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and FAS 112, "Employers' Accounting for Postemployment Benefits.
Income before the cumulative effect of accounting changes was down $3.4 million
due to: (1) a $5.0 million decrease in income before taxes; and (2) a $1.6
million decrease in income taxes. The decrease in income before taxes and the
cumulative effect of accounting changes was due to decreased earnings of $5.3
million from the Insurance Group, increased earnings of $0.9 million from
broadcasting operations coupled with an increased loss of $0.6 million in the
parent company.
<TABLE>
<CAPTION>
First Quarter
-----------------------------
1994 1993
-------- --------
(000's)
<S> <C> <C>
Income Before Income Taxes and the
Cumulative Effect of Accounting Changes 16,135 21,183
Income Taxes 5,562 7,169
-------- --------
Income Before the Cumulative Effect of
Accounting Changes $ 10,573 $ 14,014
Cumulative Effect of Accounting Changes --- (11,940)
-------- ---------
Net Income $ 10,573 $ 2,074
======== ========
</TABLE>
The $5.3 million decrease in the Insurance Group's income before taxes and the
cumulative effect of accounting changes was primarily a function of lower
realized gains of $4 million combined with a significant increase in life
claims throughout the key lines of business. The Company believes that the
majority of the negative claims experience was a statistical deviation that
should not repeat over the near-term. This negative claims deviation
overshadowed the strong results in the Pre-need Group which provided a pretax
earnings increase of $1.9 million -- approximately $.8 million came from the
acquisitions of North American National Corporation and American Funeral
Assurance Company which closed in late February and the remainder from Pierce
National. The Company has accounted for these acquisitions as purchases;
financing of the acquisitions is discussed under the "Capital, Liquidity and
Financing" section which follows. Other positive factors affecting the
Insurance Group's earnings included improving lapse experience in the home
service line of business and tightly controlled operating expenses.
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The $.9 million or 37% increase in pretax earnings from broadcasting operations
was largely due to the strong operating leverage provided by attractive revenue
growth on a controlled expense base. The increase in the parent company's loss
was a result of substantially greater realized investment gains last year
primarily on the sale of real estate properties. Excluding realized gains, the
parent company showed an improvement in its results due to lower interest
expense on bank debt reflecting lower interest rates coupled with strong real
estate land and lot sales.
Consolidated first quarter revenues of $119.6 million increased 4% over first
quarter 1993. This revenue growth consisted of: (1) a 4% increase in revenues
from the Insurance Group; and (2) a 8% increase in broadcasting revenues.
Revenue growth in the Insurance Group was a function of increases in premiums,
up $7.3 million or 12%, and net investment income, up $1.6 million or 6%, which
were offset to some degree by decreases in service contract revenues, down $1.1
million or 41%, and realized investment gains, down $4.0 million or 72%.
The strong growth in insurance premiums was mostly due to additional premiums
of $9.9 million from the Pre-need Group with Pierce National contributing $3.2
million of increase and the new acquisitions -- American Funeral and North
American -- contributing $6.7 million of the increase. The premium growth from
the Pre-need Group was partially offset by a decline in premiums in Liberty
Life due to the sale of its medicare supplement business in December of 1993.
Premiums in Liberty Life's mortgage protection line were basically in line with
last year despite the decline in its in force block due to the high level of
lapses experienced over the past year due to refinancings. Last year's
mortgage protection premiums included a $1.2 million reversal of premiums to
properly account for policy lapses. Revenues from service contracts, generated
by Liberty Insurance Services which provides administrative services to other
insurance companies for a fee, were down from last year due the loss of one of
its key clients.
Broadcasting benefitted primarily from local and national revenue increases of
7% and 6%, respectively, and were partially offset by a continued decline in
network compensation.
General expenses for the Insurance Group were down 13% for the quarter due
largely to lower expenses in Liberty Life reflecting cost reduction efforts.
The two new pre-need acquisitions added approximately $.5 million to general
expenses. The Insurance Group also realized an increase of 26% in policy
benefits and an increase of 13% in amortization of deferred acquisition costs
for the first quarter compared to last year. The increase in policy benefits
was due to the negative claims deviation as well as the new acquisitions.
Excluding the new acquisitions, policy benefits increased 10% for the quarter.
Part of the increase in amortization of deferred acquisition costs was also a
function of the new acquisitions; however, excluding these acquisitions,
amortization of deferred acquisition costs increased 9% and was primarily a
result of continued high lapses in the mortgage protection line.
Broadcasting expenses were up 4% for the quarter reflecting a continued focus
on expense control.
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Investments
As a result of the first quarter acquisitions of North American and American
Funeral, the Company experienced significant changes in its March 31, 1994
balance sheet compared to its December 31, 1993 balance sheet. These
acquisitions combined added $341.0 million to total assets, of which $283.6
million were in investments, and total liabilities of $263.9 million, of which
$245.4 million were related to policy labilities.
As of March 31, 1994, approximately 67% of the Company's $1.7 billion
consolidated invested assets were in bonds with an overall average credit
rating of AA. Less than 5% of the bond portfolio was rated below investment
grade.
Approximately 54% of the Company's $1.1 billion bond portfolio at March 31,
1994 was comprised of mortgage-backed securities compared to 60% at December
31, 1993. Certain mortgage-backed securities are subject to significant
prepayment risk due to the fact that in periods of declining interest rates
mortgages may be repaid more rapidly than scheduled as borrowers refinance
higher rate mortgages to take advantage of the lower current rates. As a
result, holders of mortgage-backed securities may receive large prepayments on
their investments which cannot be reinvested at interest rates comparable to
the rates on the prepaid mortgages. Mortgage-backed pass-through securities
and "sequential" CMO's, which comprised 34% of the book value of the Company's
mortgage-backed securities at March 31, 1994 compared to 22% at December 31,
1993, are sensitive to this prepayment risk.
The remaining 66% of the Company's mortgage-backed investment portfolio of
March 31, 1994 consisted of planned amortization class ("PAC") instruments
compared to 78% at December 31, 1993. These investments are designed to
amortize in a more predictable manner by shifting the primary risk of
prepayment of the underlying collateral to investors in other tranches of the
CMO.
Mortgage loans of $174.0 million comprised 10% of the consolidated investment
portfolio at March 31, 1994. They are commercial mortgages with a loan to
value ratio not exceeding 75% when made. Approximately 50% of these loans are
concentrated in North and South Carolina; and 84% are in the states of North
Carolina, South Carolina, Virginia, Florida, Georgia and Tennessee. Mortgage
loan delinquencies, defined as payments 60 or more days past due, have
historically been low and were 2.02% at the end of the first quarter of 1994
compared to 1.59% at the end of 1993 and to the latest industry rate of 4.54%.
Due to the overall low delinquency rate, the Company has not deemed it
necessary to establish a general loss reserve on the portfolio, but establishes
impairments on specific assets at the time that losses are probable and can be
reasonably estimated.
Investment real estate at March 31, 1994 of $89.1 million comprised 5% of the
consolidated investment portfolio compared to 6% at December 31, 1993. Four
key property types made up 91% of the Company's real estate investment assets:
residential land development (37%), business parks (23%), business property
rentals (27%) and shopping centers (4%).
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Of the Company's investment real estate, 76% is located in South Carolina and
Florida; and 95% is located in South Carolina, Florida, Georgia, and North
Carolina.
Capital, Financing and Liquidity
The Company's net cash flow from operating activities was $11.3 million for the
first quarter of 1994 compared to $9.9 million for the same period of 1993.
The Company's net cash used in investing activities was $77.7 million, and cash
flow provided from financing activities was $102.3 million. As a result of its
activities, the Company generated a $35.9 million increase in cash compared to
$6.0 million in the same period in 1993. The net cash used in investing
activities was primarily related to net cash paid on the purchase of North
American and American Funeral. The net cash provided from financing activities
was primarily from proceeds from borrowings net of principal payments on debt.
The proceeds from borrowings were used to partially finance acquisitions and to
repay an intercompany note.
At March 31, 1994, borrowings against the Company's revolving credit facility
and lines of credit amounted to $235.5 million, an increase from $145.5 million
outstanding at December 31, 1993. The increase was primarily a function of
borrowings related to the acquisitions -- North American of $51.9 million,
American Funeral of $5.6 million and State National of $.9 million -- and the
repayment of an intercompany note to Liberty Life.
The Company financed the $51.9 million purchase price of North American, which
closed on February 23, 1994, entirely with proceeds borrowed under its
revolving credit facility. Of the $28.1 million American Funeral purchase
price, approximately $22.5 million was financed with a new class of redeemable,
convertible preferred stock (1994-B Series) issued at the time of closing on
February 24, 1994; and the remaining $5.6 million was financed from the
Company's credit facility. The 1994-B Series preferred stock has a stated
value of $37.50 per share and will pay an annual dividend of 5.6%.
On April 1, 1994, the Company closed its acquisition of State National for
$27.5 million which was financed through a combination of cash of $.9 million,
Liberty Common Stock of 113,611 shares valued at $3.2 million and a new class
of redeemable, convertible preferred stock (1994-A Series) valued at $23.4
million. The stated value of the 1994-A Series preferred stock is $35.00 per
share with an annual dividend of 6%.
Both the 1994-A Series and 1994-B Series preferred stock will be convertible
into shares of the Company's common stock on a share for share basis. Both the
1994-A and 1994-B Series of preferred stock may be redeemed at the option of
either the holder of the stock or by the Company beginning five years and one
month after the effective dates of the acquisitions. The 1994-A Series and
1994-B Series preferred stock was only issued to State National and American
Funeral shareholders, respectively, in connection with the acquisitions of each
company and no additional shares of these Series were made available to the
public.
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On May 5, 1994, the Company closed the residential portion of the acquisition
of certain real estate assets of SCANA Development Corporation for
approximately $13 million. The Company also plans to close the remaining $36
million of the approximately $49 million total cash purchase price during May.
Financing of the acquisition will be through a combination of internal funds
and bank debt.
Other Company commitments are shown in Note 5 contained in the accompanying
financial statements. Additional detail as to commitments and financing is
contained in the Notes to the Consolidated Financial Statements in the
Company's 1993 Annual Report to Shareholders.
Further discussion of investments and valuation is contained in Notes 1 and 2
to the Consolidated Financial Statements in the Company's 1993 Annual Report to
Shareholders.
Accounting Developments
The Company adopted FAS 115, "Accounting for Certain Investments in Debt and
Equity Securities" effective January 1, 1994. As a result of adopting FAS 115,
the opening balance of shareholders' equity was increased by $11.4 million
related to the unrealized gain, net of adjustments to deferred acquisition
costs and deferred taxes, on the securities classified as available-for-sale
previously carried at amortized cost or cost. There was no effect on net
income as a result of the adoption of FAS 115. During the three month period
ended March 31, 1994, net unrealized gains decreased $20.1 million resulting in
an unrealized loss balance of $3.6 million at March 31, 1994. This significant
decrease reflects the impact of rising interest rates as well as the addition
of the new acquisitions - American Funeral and North American. All of the
fixed maturity and equity securities from these two acquisitions were
classified as available-for-sale. On a consolidated basis, the Company
classified approximately 66% of its bond portfolio as available-for-sale and
34% as held-to-maturity; and classified 100% of its redeemable preferred stocks
as available-for-sale. For additional information on FAS 115, see Note 2 to
the accompanying financial statements.
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) The filing of Form 8-K was not required during the first
quarter of 1994.
INDEX TO EXHIBITS
EXHIBIT 3.2 Restated By-Laws, as amended through May 9, 1994
EXHIBIT 11 Consolidated Earnings Per Share Computation
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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 13, 1994
- - -----------------------
(Registrant)
/s/ Martha G. Williams
- - -----------------------
Martha G. Williams
Vice President, General Counsel & Secretary
/s/ William S. Kleckley
- - ------------------------
William S. Kleckley
Vice President & Controller
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Exhibit 3.2
THE LIBERTY CORPORATION
BY-LAWS
ARTICLE I - SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the shareholders of
the Company shall be held on such day during the first one hundred and fifty
days of the calendar year as the Board of Directors may determine.
Section 2. Special Meetings. Special meetings of the shareholders may
be called at any time by a majority of the Board of Directors, the Chairman of
the Board, the Chief Executive Officer, the President, or upon request of
shareholders holding at least one-tenth of the outstanding stock of the Company
entitled to vote at such meeting.
Section 3. Place of Meetings. Each annual and special meeting of the
shareholders shall be held at the principal office of the Company, or at such
other place within or without the State of South Carolina as shall be
designated by the Board of Directors or the officer calling such meeting.
Section 4. Notice of Meetings. Written or printed notice stating the
place, day and hour of meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be mailed by or at
the direction of the Secretary, an Assistant Secretary or officer calling the
meeting, not less than ten nor more than fifty days before the date of the
meeting, to each shareholder of record, addressed to him at his address as it
appears on the stock books of the Company, as of the date set pursuant to
Section 4 of Article VI hereof.
Section 5. Proxies. At a meeting of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder and filed with the
Secretary of the Company, bearing date within eleven months prior to the
meeting unless a longer period is provided therein and is permitted by law.
Section 6. Quorum. A majority of the issued and outstanding shares of
the Company, present in person or by proxy and entitled to vote thereat, shall
constitute a quorum at a meeting of shareholders.
Section 7. Voting. Subject to the laws of the State of South Carolina
with respect to multiple ownership of stock and the provisions of the Articles
of Incorporation and Article VI hereof, each shareholder shall be entitled to
one vote for each share of stock standing in his name on the books of the
company. Only those whose names appear as shareholders on the books of the
Company, or their proxies or legal representatives, shall be entitled to vote
or to participate in any meeting of shareholders. A majority of the votes cast
at a duly called meeting at which a quorum is present shall decide any question
that may come before the meeting, except as otherwise provided by law, these
ByLaws or the Articles of Incorporation of the Company.
Section 8. Control Share Statute. Article 1 of Title 36, Chapter 2 of
the Code of Laws of South Carolina 1976 does not apply to control share
acquisition of shares of this Corporation (as defined in such Article).
ARTICLE II - DIRECTORS
Section 1. General Powers and Authority. The business and property of
the company shall be managed by the Board of Directors and they shall and may
exercise all powers and authority of the Company except as limited by law, the
Articles of Incorporation, or elsewhere by these By-Laws. They shall have
power
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and authority to make all necessary rules and regulations for their government
and for the regulation of the business of the Company which are not
inconsistent with the Articles of Incorporation and these By-Laws, and shall
have general management and control of the company. The Board of Directors may
delegate from time to time to any committee, officer or agent, such power and
authority as permitted by law.
Section 2. Number, Election and Terms. Except as otherwise fixed
pursuant to Article 4 of the Restated Articles of Incorporation relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation (the "Preferred Stock") to
elect additional directors under specified circumstances, the number of
directors shall be 16; provided however, that the number of directors may be
fixed from time to time at any number, not less than 9 nor more than 16, by
resolution adopted by the Board of Directors. The directors, other than those
who may be elected under specified circumstances by the holders of any class or
series of Preferred Stock, shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
of members as possible, as determined by the Board of Directors. One such
class shall hold office initially for a term expiring at the annual meeting of
shareholders to be held in 1986, another class shall hold office initially for
a term expiring at the annual meeting of shareholders to be held in 1987, and
another class shall hold office initially for a term expiring at the annual
meeting of shareholders to be held in 1988. At each annual meeting of
shareholders, the successors to the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of shareholders held in the third year following the year of their
election, and the successor to any director previously elected by the directors
pursuant to Section 3 below as a member of a class whose term is not expiring
at that meeting shall be elected by the shareholders for the remainder of the
full term of the class of directors in which the new directorship was created
or the vacancy occurred. The members of each class of directors shall hold
office until their successors are elected and qualified or until their earlier
resignation, disqualification, disability, death or removal from office.
Section 3. Newly Created Directorships and Vacancies. Except for any
directors who may be elected under specified circumstances by the holders of
any class or series of Preferred Stock, newly created directorships resulting
from any increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding sentence
shall hold office until the next shareholders' meeting at which directors of
any class are elected and until such director's successor shall have been
elected and qualified, or until his earlier resignation, disqualification,
disability, death or removal from office. At the time of any increase in the
number of directors, except in the case of directors elected in specified
circumstances by the holders of any class or series of Preferred Stock, the
Board of Directors shall specifically allocate the additional directorships
among the three classes so as to make the three classes as nearly equal in
number of members as possible. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director, but subject to this restriction, the Board of Directors shall effect
and allocate any decrease in the number of directors in a manner and at such
time or times so as to keep the three classes as nearly equal in number of
members as possible.
Section 4. Removal. Except for any directors who may be elected under
specified circumstances by the holders of any class or series of Preferred
Stock, any director may be removed from office, without cause, only by the
affirmative vote of the holders of 80% of the combined voting power of the then
outstanding shares of stock entitled to vote generally in the election of
directors, voting together as a single class.
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Section 5. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the date, time and place, either
within or without the State of South Carolina, for the holding of additional
regular meetings without other notice than such resolution.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Executive Committee, the Chairman of the Board,
the Vice Chairman of the Board, the Chief Executive Officer or upon request of
a majority of the Board, and may be held at such time and place, either within
or without the State of South Carolina, as may be specified in the notice
thereof. To the extent permitted by applicable law, special meetings of the
Board of Directors, or of any committee thereof, may be held by conference
telephone communication.
Section 7. Notice of Meetings. Notice of each special meeting of the
Board of Directors, stating the time, manner and place where the meeting is to
be held, shall be given by or at the direction of the Secretary or an Assistant
Secretary by mailing the same to each director at his residence or business
address not less than three days before such meeting, or by giving the same to
him personally or telegraphing or telephoning the same to him at his residence
or business address not later than the day before the day on which the meeting
is to be held. Any and all requirements for call and notice of meetings may be
dispensed with if all directors are present at the meeting or if those not
present at the meeting shall at any time waive or have waived notice thereof.
Section 8. Quorum and Manner of Action. A majority of the number of
directors then in office shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors. Except as otherwise
provided in the Restated Articles of Incorporation, the vote of a majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.
Section 9. Compensation. The directors shall receive such fees,
retainers, expenses and the like for attendance at meetings of the Board and
performance of their duties, as may be determined by the Board of Directors;
provided, however, that no salaried officer shall receive a fee or retainer for
attendance at such meetings or performance of such Board duties.
ARTICLE III - COMMITTEES
Section 1. Executive Committee. The Executive Committee shall consist
of not less than two members, all of whom shall be members of the Board of
Directors. Except as otherwise limited by law, the Executive Committee shall
be vested with full authority to act for and on behalf of the Board of
Directors in the management of the business and affairs of the Company and to
do all things, including actions specified by these By-Laws to be performed by
the Board of Directors, in the same manner and with the same authority and
effect as if such acts had been performed by the Board of Directors.
The members of the Executive Committee shall be elected by the Board
of Directors and shall serve at the pleasure of the Board of Directors. The
Board of Directors shall designate the chairman of such committee, or if for
any reason the Board shall fail to designate the chairman, then such committee
shall elect its own chairman. Meetings of each such committee shall be held at
such times and places as may be determined by its chairman or as may be agreed
upon by members of the committee. A quorum at any meeting of such committee
shall consist of a majority of the committee, and any action taken by such
committee shall require the assent of at least a majority of the members who
are present. Notice of meetings shall be given in the same manner as for
special meetings of the Board of Directors. Any action taken by the Executive
Committee shall be deemed to be action taken by the Board of Directors and
shall be binding on the
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Company, but the Board of Directors shall at all times have the power to
reverse and overrule any action taken by such committee, provided that the
exercise of such power by the Board of Directors shall not in any way abrogate
the obligations or duties owing by the Company to third parties who have acted
in reliance on the action taken by such committee. All proceedings by such
committee and all action taken by each such committee shall be reported to the
Board of Directors at the meeting of the Board of Directors next following such
proceedings or action.
Section 2. Other Committees. There shall be such other committees
consisting of directors, officers and employees of the company as the Board of
Directors, chairman of the Board, or the Chief Executive Officer of the Company
may appoint from time to time.
Section 3. Compensation. Members of committees shall receive such
fees, retainers and expenses for attendance at committee meetings and
performance of committee duties as may be determined by the Board of Directors;
provided, however, that no salaried officer of the Company shall receive a fee
or retainer for attendance at such meetings or performance of such committee
duties.
ARTICLE IV - OFFICERS
Section 1. Designation and Number. The officers of the Company shall
be a Chairman of the Board, a Chief Executive officer, a President, one or more
Vice-Presidents, a Secretary, a Treasurer, and a controller, with such
designation of rank, powers and duties as the Board of Directors may from time
to time designate and determine. Such other officers or assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors
with such duties and powers as the Board may from time to time designate and
determine. Any two or more of said offices may be held by one person at the
same time, except that the Chairman, Chief Executive Officer, or President may
not also be the Secretary or Treasurer.
Section 2. Election and Tenure. The officers of the Company shall be
elected annually at the first regular meeting of the Board of Directors held
after each annual meeting of shareholders, or at a special meeting called for
that purpose if for any reason officers should not be elected at such first
meeting, and shall hold office until the first regular meeting of the Board of
Directors held after the next annual meeting of shareholders and their
successors are duly elected and qualified; provided, however, that any officer
may be removed from office by the Board of Directors at any regular or special
meeting, and any vacancy in any office, however caused, may be filled
by the Board of Directors at any regular or special meeting.
Section 3. Duties of Officers. The Board of Directors shall, from
time to time, in its discretion, designate and prescribe the duties incident to
each office, and it may, at any time, expressly authorize any officer to
perform any duty or function which is usually performed by any other officer.
Section 4. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors or by a committee of the Board. No
officer shall be prevented from receiving such salary by reason of the fact
that he is also a director of the company.
ARTICLE V - INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the extent permitted by and subject to the laws of the State of
South Carolina, any present or former director, officer or employee of the
Company, or any person who, at the request of the company, express or implied,
may have served as a director or officer of another Company in which this
Company owns
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<PAGE> 5
shares or of which this Company is a creditor, shall be entitled to
reimbursement of expenses and other liabilities, including attorney's fees
actually and reasonably incurred by him and any amount owing or paid by him in
discharge of a judgment, fine, penalty of costs against him or paid by him in a
settlement approved by a court of competent jurisdiction, in any action or
proceeding, including any civil, criminal or administrative action, suit,
hearing or proceeding, to which he is a party by reason of being or having been
a director, officer or employee of this or such other Company.
To the extent permitted by and subject to the laws of the State of
South Carolina, the Company is authorized to purchase and maintain insurance on
behalf of any present or former director, officer, or employee of the Company,
or any person who, at the request of the company, express or implied, may have
served as a director or officer of another company in which this Company owns
shares or of which this company is a creditor, against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such together with such costs, fees, penalties, fines and the like
with respect thereto, all as set forth hereinabove.
This section is not intended to extend or to limit in any way the
rights and remedies provided with respect to indemnification of directors,
officers, employees, and other persons provided by the laws of the State of
South Carolina but is intended to express the desire of the shareholders of
this Company that indemnification be granted to such directors, officers,
employees and other persons to the fullest extent allowable by such laws.
ARTICLE VI - CAPITAL STOCK
Section 1. Form of Certificates. To the extent permitted by
applicable law, all certificates of stock, which shall be in such form as may
be prescribed by the Board of Directors, shall be signed by the Chairman, Vice
Chairman, Chief Executive Officer, President or a Vice President and by the
Treasurer or the Secretary or an Assistant Secretary, and shall be sealed with
the Company's seal or a facsimile thereof; provided, however, that if the
certificate is countersigned by a transfer agent or any assistant transfer
agent, or is registered by a registrar, other than the Company itself or an
employee of the Company, such certificates may be signed with the facsimile
signatures of the officers authorized to execute such certificates. All
certificates shall be consecutively numbered or otherwise identified.
Section 2. Stock Record. The name and address of the person to whom
certificates representing shares of the capital stock are issued, with the
certificate number, number of shares and date of issue, shall be entered on the
stock transfer books of the Company. All certificates surrendered to the
Company for transfer shall be canceled, and no new certificate shall be issued
until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the Company as the Board of Directors may prescribe.
Section 3. Transfer of Stock. Transfer of stock of the Company shall
be made on the books of the Company by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and upon the
surrender of the certificate or certificates for such shares properly endorsed,
with such evidence of the authenticity of such transfer, authorization and
other matters as the Company or its agents may reasonably require, and
accompanied by any necessary stock transfer tax stamps, or if the Board of
Directors shall by resolution so provide, transfer of stock may be made in any
other manner provided by law. The person in whose name shares stand on the
books of the Company shall be deemed by the Company to be the owner thereof for
all purposes.
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Section 4. Closing Stock Transfer Books and Fixing Record Date. The
Board of Directors shall have power to close the stock transfer books of the
Company for a period not exceeding fifty days preceding the date of any meeting
of shareholders, payment of dividends, allocation of rights, change, conversion
or exchange of capital stock, or the date of determining shareholders for any
other purpose. In lieu of closing the stock transfer books, in order to
determine the holders of record of the Company's stock who are entitled to
notice of meetings, to vote at a meeting or adjournment thereof or to receive
payment of any dividend or allotment of rights, or to exercise rights with
respect to any change, conversion or exchange of capital stock, or to give
consent, or to make a determination of the shareholders of record for any other
purpose, the Board of Directors of the Company may fix in advance a record date
for such determination of shareholders, which date shall not be more than fifty
days prior to the date of the action which requires such determination, nor, in
the case of a shareholders' meeting, shall it be less than ten days in advance
of such meeting.
ARTICLE VII - AMENDMENTS
Section 1. Amendment by Shareholders. These By-Laws may be added to,
amended or repealed, by the majority vote of the entire outstanding stock of
the Company at any regular meeting of the shareholders, or at any special
meeting, where such proposed action has been announced in the call and notice
of such meeting.
Section 2. Amendment by Board of Directors. Subject to the right of
the shareholders to adopt, amend or repeal by-laws, the Board of Directors
shall have the power to adopt, amend or repeal by-laws, by an affirmative vote
of a majority of all directors then holding office, provided that notice of the
proposal to adopt, amend or repeal the by-laws is included in the notice to the
directors with respect to the meeting at which such action takes place.
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<TABLE>
<CAPTION>
Exhibit 11
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE COMPUTATION
(Unaudited)
Three Months Ended
March 31,
------------------------
1994 1993
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<S> <C> <C>
PRIMARY SHARES
- - --------------
Common Shares Outstanding - End of Period 19,569,194 19,246,982
=========== ===========
Weighted Average Common Shares 19,521,828 19,184,799
Common Stock Options Outstanding During
Period (Weighted Average) 87,671 185,636
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Total Primary Shares 19,609,499 19,370,435
=========== ===========
FULLY DILUTED SHARES
- - --------------------
Weighted Average Common Shares 19,521,828 19,184,799
Common Stock Options Outstanding During
Period (Weighted Average) 87,839 204,609
Weighted Average Redeemable
Preferred Shares* 239,462 ---
----------- -----------
Total Fully Diluted Shares 19,849,129 19,389,408
=========== ===========
NET INCOME
- - ----------
Earnings $10,573,000 $ 2,074,000
=========== ===========
Primary Earnings per Share
(Earnings/Total Primary Shares) $ .53 $ .11
=========== ===========
Fully Diluted Earnings per Share
(Earnings/Total Fully Diluted Shares) $ .53 $ .11
=========== ===========
</TABLE>
*The Preferred Stock 1994-B Series is not considered a common stock equivalent
for purposes of the primary earnings per share computation.
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