<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-5846
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THE LIBERTY CORPORATION
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(Exact name of registrant as specified in its charter)
South Carolina 57-0507055
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
Post Office Box 789, Wade Hampton Boulevard, Greenville, SC 29602
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(Address of principal executive offices)
Registrant's telephone number, including area code: 803/268-8436
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NOT APPLICABLE
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(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, 1995
------------------- -----------------------------
Common Stock 19,879,089
Page 1 of 14 sequentially numbered pages.
The Exhibit Index is on Page 12.
<PAGE> 2
PART I, ITEM 1
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1995 DECEMBER 31, 1994
-------------- -----------------
(Unaudited)
<S> <C> <C>
Investments:
Fixed Maturity Securities:
Available for Sale, at market, cost of $977,289 at 3/31/95 and $947,522 at 12/31/94 $ 950,343 $ 883,029
Held to Maturity, at cost, market of $313,939 at 3/31/95 and $311,129 at 12/31/94 293,879 299,118
Equity Securities, primarily at market, cost of $77,763 at 3/31/95 and $78,116 at
12/31/94. 80,370 78,208
Mortgage Loans 199,233 203,381
Investment Real Estate 139,203 135,545
Loans to Policyholders 97,367 96,160
Other Long-Term Investments 32,900 31,624
Short-term Investments 18,523 7,264
--------- ---------
Total Investments 1,811,818 1,734,329
--------- ---------
Cash 41,480 51,400
Accrued Investment Income 18,735 18,708
Receivables 37,476 37,879
Receivable from Reinsurers 261,366 258,969
Deferred Acquisition Costs 359,856 358,535
Buildings and Equipment 78,864 66,360
Intangibles Related to Television Operations 77,147 46,934
Goodwill Related to Insurance Acquisitions 39,950 40,308
Other Assets 60,454 54,522
--------- ---------
Total Assets $2,787,146 $2,667,944
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Liabilities
Policy Liabilities $1,811,544 $1,784,303
Notes, Mortgages and Other Debt 152,099 131,647
Long Term Debt 100,000 100,000
Accrued Income Taxes 8,981 4,418
Deferred Income Taxes 118,357 112,707
Accounts Payable and Accrued Expenses 61,395 66,608
Other Liabilities 32,242 26,856
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Total Liabilities 2,284,618 2,226,539
--------- ---------
Redeemable Preferred Stock
1994-A Series, $35.00 redemption value, shares issued and outstanding - 668,207
in 1995 and 1994 23,387 23,387
1994-B Series, $37.50 redemption value, shares issued and outstanding - 597,701
in 1995 and 598,101 in 1994 22,414 22,429
Shareholders' Equity
Common Stock 153,845 152,956
Series 1995-A Convertible Preferred Stock, $35.00 redemption value,
599,985 shares issued and outstanding 21,000 ---
Unearned Stock Compensation (4,915) (5,319)
Unrealized Investment Gains (Losses) (21,144) (53,109)
Cumulative Foreign Currency Translation Adjustment (1,307) (1,491)
Retained Earnings 309,248 302,552
--------- ---------
Total Shareholders' Equity 456,727 395,589
--------- ---------
Total Liabilities, Redeemable Preferred Stock and Shareholders' Equity $2,787,146 $2,667,944
========= =========
</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)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
REVENUES
Insurance Premiums & Policy Charges $ 83,106 $ 66,795
Broadcasting Revenues 24,753 21,247
Net Investment Income 35,240 28,501
Service Contract Revenue 2,260 1,520
Realized Investment Gains (Losses) (1,874) 1,558
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Total Revenues 143,485 119,621
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EXPENSES
Policyholder Benefits 62,648 47,742
Commissions 12,621 11,157
General Insurance Expenses 16,419 13,378
Amortization of Deferred Acquisition Costs 10,677 10,358
Broadcasting Expenses 18,037 16,179
Interest Expense 3,498 1,693
Other Expenses 3,505 2,979
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Total Expenses 127,405 103,486
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Income Before Income Taxes 16,080 16,135
Provision for Income Taxes 5,542 5,562
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NET INCOME $ 10,538 $ 10,573
======= =======
EARNINGS PER SHARE: (Exhibit 11) $ .49 $ .53
Dividends Per Common Share $ .155 $ .155
</TABLE>
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)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 10,538 $ 10,573
Adjustments to reconcile net income to net cash provided (used) in
operating activities:
Increase in policy liabilities 11,476 1,041
Increase (decrease) in accounts payable and accrued liabilities (6,059) 314
(Increase) decrease in receivables 1,399 (3,135)
Amortization of policy acquisition costs 10,677 10,358
Policy acquisition costs deferred (14,236) (13,815)
Realized investment (gains) losses 1,874 (1,558)
Gain on sale of operating assets (1,080) ---
Depreciation and amortization 4,080 2,929
Amortization of bond premium and discount (593) (1,235)
Provision for deferred income taxes (324) 2,022
All other operating activities, net 1,863 3,840
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NET CASH PROVIDED BY OPERATING ACTIVITIES 19,615 11,334
-------- --------
INVESTMENT ACTIVITIES
Investment securities sold - available for sale 54,484 2,213
Investment securities matured or redeemed by issuer - available for sale 7,394 29,914
Investment securities matured or redeemed by issuer - held to maturity 9,133 20,750
Cost of investment securities acquired - available for sale (95,472) (78,432)
Mortgage loans made (2,429) (6,594)
Mortgage loan repayments 5,969 5,615
Purchase of investment real estate, buildings and equipment (12,546) (6,335)
Sale of investment real estate, buildings and equipment 6,540 3,688
Purchase of short-term investments (19,970) (299,223)
Sales of short-term investments 8,724 303,394
Net cash paid on purchase of television station (6,619) ---
Net cash paid on purchases of insurance companies --- (53,492)
All other investment activities, net (689) 756
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (45,481) (77,746)
-------- --------
FINANCING ACTIVITIES
Proceeds from borrowings 758,500 454,000
Principal payments on debt (750,161) (359,793)
Dividends paid (3,841) (3,152)
Stock issued for employee benefit and compensation programs 818 2,058
Retirement of common stock (1) ---
Return of policyholders' account balances (8,949) (7,174)
Receipts credited to policyholders' account balances 19,580 16,341
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,946 102,280
-------- --------
INCREASE IN CASH (9,920) 35,868
Cash at beginning of year 51,400 29,487
-------- --------
CASH AT END OF PERIOD $ 41,480 $ 65,355
======== ========
</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, 1995
(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, 1995, but
it does reflect all adjustments (which are of a normal
and recurring nature) considered, in the opinion of
management, necessary for a fair presentation of the
results for the interim periods presented. 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, 1994.
2. FINANCIAL ACCOUNTING STANDARDS STATEMENT NO. 114 -
ACCOUNTING BY CREDITORS FOR IMPAIRMENTS OF A LOAN
On January 1, 1995, the Company adopted Financial
Accounting Standards Board Statement No. 114, "Accounting
by Creditors for Impairments of a Loan" ("SFAS No. 114")
and Financial Accounting Standards Board Statement No.
118, "Accounting by Creditors for Impairments of a
Loan--Income Recognition and Disclosures" ("SFAS No.
118"). Under the new standards, the Company established
an allowance for estimated credit losses related to the
commercial mortgage loans that were identified for
evaluation in accordance with SFAS No. 114. This
allowance for credit losses is based on discounted cash
flows using the loan's initial effective interest rate or
the fair value of the collateral for certain collateral
dependent loans. Prior to 1995, the Company did not have
an allowance for credit losses related to mortgage loans.
Instead, the Company used a direct write-off method on
impaired loans through a specific identification
approach.
The allowance for credit losses is maintained at a level
believed adequate to absorb estimated probable credit
losses. Management will periodically evaluate the
adequacy of the allowance based on known and inherent
risks in the portfolio, adverse situations that may
affect the borrower's ability to repay (including the
timing of future payments), estimated value of any
underlying collateral, current economic conditions, and
other relevant factors. This evaluation is inherently
subjective as it requires material estimates, including
the timing of future cash flows expected to be received
on impaired loans, which may be susceptible to
significant change.
The following table presents the initial allowance for
credit losses related to mortgage loans established as of
January 1, 1995 and changes in the allowance for credit
losses for the quarter ended March 31, 1995:
<TABLE>
<CAPTION>
(In 000's)
----------
<S> <C>
Balance at January 1, $ 591
Provision for Credit 38
Charge-offs ----
Recoveries (26)
----
Balance at March 31, 1995 $ 603
====
</TABLE>
5
<PAGE> 6
At March 31, 1995, the recorded investment in commercial
mortgage loans that are considered to be impaired under
SFAS No. 114 was $9.2 million. Included in this amount
is $3.9 million of impaired commercial loans for which
the related allowance for credit losses is $.4 million
and $5.3 million of impaired commercial loans that did
not require an allowance for credit losses as a result of
write-downs of the loans or the fair value of the
collateral exceeding the recorded investment in the loan.
The average recorded investment in impaired commercial
loans during the quarter ended March 31, 1995 was
approximately $8.9 million. For the quarter ended March
31, 1995, the Company recognized interest income on these
impaired commercial loans of $.1 million, all of which
was recognized using the cash basis method of income
recognition.
In conjunction with establishing an allowance for credit
losses for loans impaired under SFAS No. 114, the Company
has also established an allowance for credit losses to
cover its residential mortgage loan portfolio in
accordance with SFAS No. 5. The Company's residential
loan portfolio was evaluated collectively for impairment
purposes based on historical portfolio delinquency rates.
At March 31, 1995, the recorded investment in residential
loans covered by this allowance for credit losses was
$19.3 million for which the related allowance for credit
losses is $.2 million.
3. CONVERTIBLE PREFERRED STOCK
On February 28, 1995, the Company issued 599,985 shares
of Series 1995-A Voting Cumulative Convertible Preferred
Stock having a total redemption value of $20,999,475 or
$35.00 per share in connection with the acquisition of
WLOX television. The shares have preference in
liquidation, and each share is entitled to one vote on
any matters submitted to a vote of the shareholders of
the Company. Each share of preferred stock is
convertible at the option of the holder into one share of
common stock. The Company has 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, common stock, or a combination of
both. Generally, the amount of consideration on the
1995-A Series will be equivalent to $35.00 per share plus
the amount of any accumulated and unpaid dividends.
There is no sinking fund for the redemption of the
preferred stock.
Dividends shall be paid on the preferred stock at the
rate of 5% per annum. Dividends accrue daily, are
cumulative, and are payable quarterly. The 1995-A Series
preferred stock is on a parity in rank with all other
series of preferred stock of the Company whether or not
such series exist now or are 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 1995-A Series. No
dividends or distributions on the Company's common stock
shall be declared or paid until all accumulated and
unpaid dividends on the 1995-A Series have been declared
and set aside for payment.
4. ACQUISITIONS
On February 28, 1995, the Company completed the
acquisition of WLOX-TV in Biloxi, Mississippi. The
purchase price of $41 million was funded with a
combination of cash, convertible preferred stock (See
Note 3), and notes payable.
6
<PAGE> 7
5. COMMITMENTS AND CONTINGENCIES
At March 31, 1995, the Company had made commitments as
shown below:
<TABLE>
<CAPTION>
(In 000's)
<S> <C>
Buildings and equipment $1,520
Investment real estate 9,513
Mortgage loans and bonds 7,923
Other 5,057
------
$24,013
======
</TABLE>
6. SUPPLEMENTAL INFORMATION ON INSURANCE OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
(In millions) 1995 1994
---- ----
<S> <C> <C>
Increase in net insurance in force 166 711
====== ======
Net insurance in force 17,030 16,205
====== ======
</TABLE>
7
<PAGE> 8
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)
OPERATIONS
Consolidated first quarter net income of $10.5 million was level with 1994's
first quarter (see table below). Although operating earnings increased $2.1
million over 1994's first quarter, net income was flat due to realized
investment losses (after-tax) totaling $1.2 million in first quarter 1995
versus realized investment gains of $.9 million in first quarter 1994, a swing
of $2.1 million.
<TABLE>
<CAPTION>
First Quarter
-------------
1995 1994
---- ----
<S> <C> <C>
Income Before Income Taxes $16,080 $16,135
Income Taxes 5,542 5,562
------ ------
Net Income $10,538 $10,573
====== ======
</TABLE>
Excluding realized gains and losses, the Company's insurance operations saw an
increase in pre-tax income of $3.2 million, broadcasting had an increase of
$1.5 million, and the Parent Company had an increased loss of $1.5 million.
Pre-tax earnings for insurance operations benefited from the 1994 acquisitions
of State National Capital Corporation, American Funeral Assurance Company, and
North American National Corporation. The Company's Home Service division
results reflected lower benefit expense than it experienced in first quarter
1994; however, this was offset by a $1.5 million increase in benefits in the
Mortgage Protection division. The increase in benefit expense in mortgage
protection represented a significant increase over the benefit levels in recent
prior quarters and the Company believes that the extraordinarily high level of
benefits experienced in the first quarter will not continue in the future. The
Company is studying the cause of the high level of benefits to identify the
source of the deviation and determine steps to be implemented to limit the
likelihood of similar future deviations. The decision in 1994 to exit the
general agency marketing division resulted in a $.5 million improvement in
earnings compared to the first quarter 1994. The pre-need business had a
pretax earnings decrease of $.4 million -- primarily related to an adverse
claims deviation of $.4 million in one of the companies acquired in 1994, and
realized investment losses. The Company believes that the claims deviation in
pre-need reflects the inherent variability of claims, and is not indicative of
a negative trend. The two 1994 acquisitions contributed approximately a $.7
million increase compared to the prior year's first quarter, with Pierce
National Life Insurance Company experiencing a decrease of $1.1 million due to
realized investment losses of $1.0 million. Other factors affecting the
earnings of the insurance operations were continued favorable lapse experience
and expense controls which resulted in favorable comparisons for amortization
of deferred acquisition costs and general expenses.
The $1.5 million (46%) increase in pretax earnings from broadcasting operations
was largely due to a significant increase in national revenues coupled with
higher network compensation. On February 28, 1995, the Company completed the
acquisition of WLOX-TV in Biloxi, Mississippi. This acquisition did not have a
material effect on first quarter earnings.
The $1.5 million increase in the parent company's before-tax loss was a result
of higher interest expense due to the impact of rising interest rates on the
Company's borrowings, partially offset by income from real estate land and lot
sales.
8
<PAGE> 9
Consolidated revenues increased $23.9 million (20%) for the quarter due to a
$19.2 million (20%) increase in revenues from the insurance operations, a $3.5
million (17%) increase in broadcasting revenues, and an increase of $1.1
million in the parent company. Excluding the impact of realized investment
gains and losses, consolidated revenues increased $27.3 million (23%).
Insurance premiums increased $16.3 million (24%) in the first quarter due
primarily to additional premiums of $13.4 million from the pre-need group, with
the 1994 acquisitions -- American Funeral and North American -- contributing an
increase of $8.9 million and Pierce National contributing an incremental $4.5
million. Premiums in Liberty Life increased by $2.6 million primarily due to
the impact of State National being included during the first quarter of 1995,
but not included in 1994.
The $6.7 million (24%) increase in net investment income for the quarter was
also primarily due to the acquisitions. The pre-need acquisitions contributed
an increase of $3.5 million and the home service acquisition contributed
approximately $.6 million.
Realized investment losses of $1.9 million were due to the Company's efforts to
restructure the investment portfolio and take advantage of available market
conditions to sell securities with yields lower than those currently available.
Broadcasting revenues for the quarter, up $3.5 million (17%), benefited
primarily from a $1.0 million increase in national revenues, a $1.6 million
increase in local revenues, as well as increased network compensation of $1.2
million. Revenues related to Cosmos' cable operations, which began last year,
were up $.5 million. The acquisition of WLOX-TV contributed $1.1 million of
the revenue increase.
The $14.9 million (31%) increase in policy benefits was primarily due to the
new acquisitions, as well as the unfavorable claims experience in mortgage
protection and in one of the pre-need companies acquired in 1994. The total
variance caused by the deviations was $1.9 million . Additionally, the $1.5
million (13%) increase in commissions and the $3.0 million (23%) increase in
general expenses were also due to the acquisitions.
The 3% increase in amortization of deferred acquisition costs was also a
function of the new acquisitions; offset by continued reduction of deferred
acquisition costs amortization due to improvement in lapses in both home
service and mortgage protection.
Broadcasting expenses were up 11% for the quarter due to the additional
expenses associated with its cable operations as well as a month of expenses
related to the WLOX operation.
INVESTMENTS
As of March 31, 1995, approximately 68% of the Company's $1.8 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.
9
<PAGE> 10
Approximately 57% of the Company's $1.2 billion bond portfolio at March 31,
1995, was comprised of mortgage-backed securities compared to 54% at December
31, 1994. Certain mortgage-backed securities are subject to significant
prepayment risk due to changes in interest rates. 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. In a rising interest
rate environment refinancings are significantly curtailed and the payments to
the holders of the securities decline, limiting the ability of the holder to
reinvest at the higher interest rates. Mortgage-backed pass-through
securities and sequential collateralized mortgage obligations ("CMO's"), which
comprised 16% of the book value of the Company's mortgage-backed securities at
March 31, 1995, and 17% at December 31, 1994, are sensitive to prepayment or
extension risk.
The remaining 84% of the Company's mortgage-backed investment portfolio at
March 31, 1995, consisted of planned amortization class ("PAC") instruments
compared to approximately 83% at December 31, 1994. These investments are
designed to amortize in a more predictable manner by shifting the primary
prepayment and extension risk of the underlying collateral to investors in
other tranches of the CMO.
Mortgage loans of $199.2 million comprised 11% of the consolidated investment
portfolio at March 31, 1995. Substantially all of these mortgage loans are
commercial mortgages with a loan to value ratio not exceeding 75% when made.
These loans are concentrated in the southeast primarily in the states of North
Carolina, South Carolina, Georgia, Florida, Virginia, and Tennessee.
Investment real estate at March 31, 1995, of $139.2 million comprised 8% of the
consolidated investment portfolio compared to 8% at December 31, 1994. Four
key property types made up approximately 90% of the Company's real estate
investment assets: residential land development, business parks, business
property rentals and shopping centers.
The majority of the Company's investment real estate is located in South
Carolina, Florida, Georgia, and North Carolina.
FINANCIAL POSITION
As a result of the first quarter acquisition of WLOX-TV, the Company's
consolidated assets increased approximately $41.0 million. Based on a
preliminary appraisal of the assets acquired, approximately $11.8 million has
been classified as buildings and equipment with the remainder classified as
intangibles related to television operations. Additionally, the Company s
notes, mortgages and other debt increased by approximately $20.0 million, and
convertible preferred stock was issued totaling $21.0 million.
The Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" on January 1, 1994, As of March 31, 1995, the Company
reported an unrealized loss of $21.1 million on fixed maturity securities
available for sale and equity securities. This compares with an unrealized
loss of $53.1 million at December 31, 1994. Fixed maturities held to maturity
had an unrealized gain of $20.1 million which is not reported in the balance
sheet, since these securities continue to be carried at cost under SFAS No.
115.
10
<PAGE> 11
CAPITAL, FINANCING AND LIQUIDITY
The Company's net cash flow from operating activities was $19.6 million for the
first three months of 1995 compared to $11.3 million for the same period of
1994. The Company's net cash used in investing activities was $45.5 million,
and cash flow provided from financing activities was $15.9 million. As a
result of its activities, the Company had a $9.9 million decrease in cash
compared to an increase of $35.9 million in the same period in 1994. The net
cash used in investing activities was primarily related to net cash paid on the
purchase of WLOX-TV and the purchase of various investment real estate
properties. 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 the acquisition of WLOX.
As discussed in the Company's annual report on Form 10K for the year ended
December 31, 1994, the Company refinanced its credit facility on March 21,
1995.
At March 31, 1995, the Company's borrowings and notes payable amounted to
$252.1 million, an increase from the $231.6 million outstanding at December 31,
1994. The increase was primarily a function of borrowings and notes payable
related to the WLOX acquisition. The total purchase price of $41.0 million was
funded by borrowing approximately $5.7 million against the credit facility,
issuing notes payable totaling $13.5 million, and issuing a new class of
convertible preferred stock totaling $21.0 million. The preferred stock has a
stated value of $35.00 per share and will pay an annual dividend of 5%. The
preferred stock is convertible at any time by the holder into one share of the
Company's common stock. Additionally, the Company may redeem the preferred
stock at any time beginning five years and one month after the date of issuance
for cash, common stock of the Company, or a combination of them both. The
1995-A Series Cumulative Convertible Preferred Stock was only issued to WLOX
shareholders in connection with the acquisition of the company and no
additional shares of this Series were made available to the public.
The Company has historically entered into various interest rate swaps and caps
to help minimize the impact of a potential significant rise in short term
interest rates. Currently the Company is utilizing interest rate caps (which
are more fully described in the Company's 1994 Annual Report to Shareholders),
but has not been party to interest rate swaps since the last agreements
terminated in October 1993. The Company has not used interest rate swaps or
any other derivative financial instruments to manage its interest rate exposure
on interest sensitive universal-life type products. At the Company's election,
interest rates for these products can be re-set quarterly.
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 annual report on Form 10K for the year ended December 31, 1994.
Further discussion of investments and valuation is contained in Notes 1 and 2
to the Consolidated Financial Statements in the company's annual report on Form
10K for the year ended December 31, 1994.
11
<PAGE> 12
ACCOUNTING DEVELOPMENTS
The Company adopted Statement of Financial Accounting Standard No. 114,
"Accounting by Creditors for Impairments of a Loan" ("SFAS No. 114"), on
January 1, 1995. This standard requires the Company to recognize impairments
of loans by establishing a valuation allowance that will result in
corresponding future charges to income. The allowance for credit losses is
based on discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateral dependent loans.
Prior to adopting this standard, The Company did not have an allowance for
credit losses related to mortgage loans. Instead, the Company used a direct
write-off method on impaired loans through a specific identification approach.
The impact of recognizing the initial allowance for credit losses was $.6
million for the first quarter of 1995. For additional information on SFAS No.
114, 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 1995.
INDEX TO EXHIBITS
EXHIBIT 11 Consolidated Earnings Per Share Computation
EXHIBIT 27 Financial Data Schedule (Electronic Filing Only)
12
<PAGE> 13
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 5, 1995
- -------------------------
(Registrant)
/s/ H. Ray Eanes
- -------------------------
H. Ray Eanes
Senior Vice President Finance & Treasurer
/s/ John P. Smith
- -------------------------
John P. Smith
Corporate Controller
13
<PAGE> 1
EXHIBIT 11
THE LIBERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE COMPUTATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
---- ----
<S> <C> <C>
PRIMARY SHARES
--------------
Common shares outstanding - end of period 19,879,089 19,569,194
Weighted average common shares outstanding 19,852,637 19,521,828
Weighted average common stock options outstanding 73,498 87,671
Preferred stock considered a common stock equivalent 206,662 ---
---------- ----------
Total primary shares 20,132,797 19,609,499
========== ==========
FULLY DILUTED SHARES
--------------------
Weighted average common shares outstanding 19,852,637 19,521,828
Weighted average common stock options outstanding 99,853 87,839
Preferred stock considered a common stock equivalent 206,662 ---
Assumed conversion of redeemable preferred stock not considered a
common stock equivalent 1,266,148 239,642
---------- ----------
Total fully diluted shares 21,425,300 19,849,129
========== ==========
NET INCOME
----------
Earnings $10,538,000 $10,573,000
========== ==========
PREFERRED STOCK DIVIDENDS ON REDEEMABLE
----------------------------------------
PREFERRED STOCK
-------------------
Dividends $ 665,000 $ 122,000
========== ==========
Primary earnings per share (net income minus preferred dividends
divided by total primary shares) $ .49 $ .53
Fully diluted earnings per share (net income divided by total $ .49 $ .53
fully diluted shares)
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LIBERTY CORPORATION FOR THE QUARTER ENDED MARCH 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 950,343
<DEBT-CARRYING-VALUE> 293,879
<DEBT-MARKET-VALUE> 313,939
<EQUITIES> 80,370
<MORTGAGE> 199,233
<REAL-ESTATE> 139,203
<TOTAL-INVEST> 1,811,818
<CASH> 41,480
<RECOVER-REINSURE> 261,366
<DEFERRED-ACQUISITION> 359,856
<TOTAL-ASSETS> 2,787,146
<POLICY-LOSSES> 1,757,044
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 26,221
<POLICY-HOLDER-FUNDS> 28,279
<NOTES-PAYABLE> 252,099
<COMMON> 153,845
45,801
21,000
<OTHER-SE> 281,882
<TOTAL-LIABILITY-AND-EQUITY> 2,787,146
83,106
<INVESTMENT-INCOME> 35,240
<INVESTMENT-GAINS> (1,874)
<OTHER-INCOME> 27,013
<BENEFITS> 62,648
<UNDERWRITING-AMORTIZATION> 10,677
<UNDERWRITING-OTHER> 29,040
<INCOME-PRETAX> 16,080
<INCOME-TAX> 5,542
<INCOME-CONTINUING> 10,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,538
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
