The Liberty Corp. Reports Fourth-Quarter Results; Company Announces Business Process Analysis Results, Fourth-Quarter Charge and Consideration of Restructuring Options.GREENVILLE Greenville. 1 City (1990 pop. 45,226), seat of Washington co., W Miss., on Lake Ferguson, a deepwater harbor adjoining the Mississippi River; inc. 1886. , S.C.--(BUSINESS WIRE)--Feb. 2, 1999--The Liberty Corp. (NYSE NYSE See: New York Stock Exchange : LC) today reported financial results for fourth-quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 1998. Additionally the company announced that it had completed an in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis business process analysis expected to result in significant cost savings beginning this year. The company also announced it is considering a variety of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). alternatives that would more actively support the business objectives of its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. and enhance value for shareholders. Decisions coming from the analysis, the evolution of Liberty Life's strategy for its Agency marketing unit, and an accounting adjustment related to the current interest rate environment resulted in a special charge of $17.5 million in the fourth quarter. "We have excellent franchises in both insurance and broadcasting with creative plans for growth in both areas," said Hayne Hipp HIPP Help Increase the Peace Program HIPP Hifn Intelligent Packet Processing (Hifn, Inc.) HIPP Highlands & Islands Partnership Programme HIPP High Impact Polypropylene HIPP Handbook of Institutional Pharmacy Practice , president of Liberty Corp. "However, we believe we can significantly strengthen the value of those franchises through restructuring. Options are being explored that could potentially lead to a spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of one of the businesses, a joint venture with another company or other possibilities." Highlights from these announcements include: -- Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were 67 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. for the quarter and $2.62 for the year. This compares with operating earnings of 87 cents and $3.16 for fourth-quarter and year-end 1997, respectively. Negatively impacting operating earnings on a comparative basis for the quarter and year were the effects of the sale of Pierce Pierce may refer to: Places
non-recurring litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. expenses; and a change in an accounting estimate impacting the results of Liberty Life. -- In order to sustain and grow its businesses in today's competitive marketplace, Liberty undertook a fast-track process analysis beginning last September to better redistribute re·dis·trib·ute tr.v. re·dis·trib·ut·ed, re·dis·trib·ut·ing, re·dis·trib·utes To distribute again in a different way; reallocate. resources into areas of the company that are growing and to reduce costs where necessary. Known as Activity Value Analysis, this employee-driven process yielded substantial savings that will reduce overall operating costs operating costs npl → gastos mpl operacionales . The analysis and decision phases were completed by December, implementation began last month and completion is expected by the end of 1999. These efforts are expected to reduce annual cash expenses by at least $10 million when fully implemented. -- Liberty Life embarked on a reengineering of its Agency sales group in 1998. In October it launched "Agency Of the Future," a flexible but disciplined program to increase sales, lower lapses and slow agent turnover. Changes in Agency's marketing process, training programs, product development, and management and agent compensation are under way. Liberty believes AOF AOF Academy Of Finance (New York State Department of Education) AOF Afrique Occidentale Française (French) AOF Avon Old Farms (Avon, CT school) will position Agency as a more competitive provider of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to moderate-income families, a market where it enjoys a strong and successful presence. While the program is relatively new, early results show the strategy is on target: total new sales increased 9 percent in the second half of 1998 compared to the second half of 1997 and average agent productivity in 1998 increased 6 percent over 1997. -- Significant components of the $17.5 million in special charges include: amounts related to developing and implementing the Activity Value Analysis process; expensing of previously capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. cost of projects that are no longer expected to be implemented and projects where primary additional functionality is limited to compliance with year 2000; additional deferred acquisition cost amortization on universal life products from changes in interest rate assumptions; and a provision for additional taxes related to certain universal life products. Financial Results For the quarter ended Dec. 31, 1998, revenues were $141.1 million, a decrease of 14 percent from the prior-year period. On a pro-forma basis, adjusting to exclude the comparable 1997 revenues of Pierce National Life, fourth-quarter revenues increased $18.7 million, or 15 percent. Pro-forma insurance revenues increased 9 percent over the comparable prior-year period. Broadcasting revenues increased 31 percent (16 percent excluding the impact of 1998 acquisitions). Operating earnings of $13.2 million and operating earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of 67 cents declined 33 percent and 23 percent, respectively, from the prior-year quarter. On a pro-forma basis, adjusting for the sale of Pierce National, Liberty's 1998 first- quarter 2.4 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. and higher litigation-related expenses, operating earnings per diluted share increased 6 percent from the same period last year. For the quarter Liberty reported a net loss of $7.0 million, or 42 cents per share. The net loss for the quarter included the special charge of $17.5 million (95 cents per share) and realized investment losses of $2.7 million (14 cents per share). In the prior-year quarter net income was $18.5 million, or 82 cents per share, and included realized investment losses of $1.3 million, or 5 cents per share. For the year ended Dec. 31, 1998, revenues were $584.3 million, a 12 percent decrease from the prior year. Excluding Pierce National results from both periods, revenues increased 9 percent for the year. Operating earnings decreased 25 percent to $53.3 million. On a pro-forma basis, adjusting for the Pierce National sale, share repurchase and higher litigation-related expenses, earnings per diluted share increased 3 percent from the prior year. Net income for the year was $17.8 million, and included the fourth-quarter special charge of $17.5 million, a loss of $18.9 million on the sale of Pierce National and realized investment gains of $0.9 million. In 1997 net income was $75.0 million, including realized investment gains of $4.0 million. Cosmos cosmos (kŏz`məs), any plant of the tropical American genus Cosmos of the family Asteraceae (aster family). C. bipinnatus, Broadcasting, which owns and operates 11 television stations and a cable advertising sales company, posted fourth-quarter revenues of $48.5 million, an increase of $11.4 million, or 31 percent, over the prior-year quarter. Political revenues were strong in October and provided most of the revenue gains on a same-station basis. The 1998 acquisitions also contributed $5.4 million of revenue in the quarter. Cosmos completed the acquisition of WALB-TV, the NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. affiliate in Albany, Ga., on July 31; KGBT-TV, the CBS (Cell Broadcast Service) See cell broadcast. affiliate in Harlingen, Texas Harlingen is a city in Cameron County in the heart of the Rio Grande Valley of south Texas, United States. The city covers more than 34 mi² (88 km²) and is the second largest city in Cameron County and the third largest in the Rio Grande Valley after Brownsville and McAllen. , on Nov. 16; and WWAY-TV, the ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. affiliate in Wilmington, N.C., on Dec. 30. The results of the acquired stations are included in Cosmos's performance since their respective acquisition dates. Operating earnings for the quarter were $7.3 million, level with the prior-year quarter. Excluding a $1.3 million non-recurring tax benefit from the 1997 fourth quarter, earnings for the quarter increased 22 percent. Broadcasting cash flow was $20.3 million for the quarter and $62.0 million for the year, increases of 41 percent and 20 percent over the corresponding prior periods. Earnings from insurance operations for the quarter were $5.9 million, compared with $12.5 million in the prior-year quarter. The decline is attributable to the absence of Pierce National results, financing costs associated with the share repurchase, higher deferred acquisition cost amortization in Liberty Life and higher expenses. The higher deferred acquisition cost amortization relates primarily to changes in the assumptions used to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. deferred acquisition costs. Liberty implemented the changes effective in first-quarter 1998 with the shift to a new valuation system; however, the assumptions and system methodology were not finalized See finalization. until the fourth quarter. Primarily as a result of this change, fourth-quarter 1998 operating earnings include approximately $2.0 million of higher deferred acquisition cost amortization expense than the comparable prior-year period. For the year insurance operating earnings were $30.6 million compared to $49.2 million in 1997, a decline of $18.6 million. Substantially all of the decline can be attributed to the combined impact of the sale of Pierce National and the use of a portion of the proceeds to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. stock. Liberty also incurred higher litigation-related expense in 1998 on two specific cases. As previously disclosed in the third quarter, Liberty incurred costs in connection with the settlement and conclusion of litigation over an acquisition-related contract dispute. Expenses continue in connection with a previously disclosed suit against a software development company where Liberty is the plaintiff. Litigation-related costs incurred for these two cases decreased operating earnings by a total of $3.7 million in 1998. "1998 was a challenging year financially and operationally. We met the challenges, successfully positioning Liberty for growth in the years ahead," said Hayne Hipp. "On the broadcasting side, we acquired three TV stations, bringing our total to 11, and grew our cash flow by 20 percent. Cosmos Broadcasting's 'Right Stations, Right Markets' strategy is sound, and we believe we can find ways to unlock its enormous potential. "In our insurance operations, we built on our Financial Services Marketing franchise with a 14 percent increase in operating earnings. We used this as a springboard for LibertyDirect, our direct-marketing operation that is developing and marketing new products and expanding into new markets. We also launched a strategic repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. of our Agency group late in the year and have begun to see promising results," Hipp continued. "In our strategic outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , or third-party administration business, Liberty Insurance Services, we signed a policy-service contract with SunAmerica and a strategic marketing and referral agreement with Navisys Incorporated. We also began a multi-year, $51 million insurance administration services contract with Fortis," Hipp said. "To build value for our shareholders, we purchased 2.4 million shares of our common stock. While our financial results were down, primarily due to the sale of Pierce National Life, we had a very satisfactory year operationally. All three companies are well positioned for future growth." The Liberty Corporation is a holding company with operations in insurance and broadcasting. Annual revenues in 1998 were $584 million. The company is headquartered in Greenville, S.C. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements. This news release contains forward-looking statements and information that are based on the beliefs of Liberty, as well as assumptions based on information currently available to Liberty. Actual results and outcomes could differ materially from those contained in or implied by forward-looking statements for a variety of factors, including, but not limited to, the following: changes in general economic conditions, including the performance of financial markets and interest rates; competitive, regulatory, or tax changes that affect the cost of or demand for the company's products; and adverse litigation results. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise. -0-
THE LIBERTY CORPORATION
Consolidated Financial Highlights
(In $000s except per share amounts)
Three Months Ended Year Ended
December 31, % December 31, %
------------------- ---------------
1998 1997 Change 1998 1997 Change
------ ------ ------- ------ ----- ------
(Unaudited) (Unaudited)
Revenues
Insurance $92,622 $126,056 (27%) $424,803 $522,358 (19%)
Broadcasting 48,515 37,145 31% 159,461 137,898 16%
------- -------- -------- --------
TOTAL REVENUES $141,137 $163,201 (14%) $584,264 $660,256 7%
------- -------- -------- --------
------- -------- -------- --------
Income
Insurance $5,913 $12,505 (53%) $30,589 $49,184 (38%)
Broadcasting 7,251 7,235 -- 22,731 21,725 5%
------- -------- -------- --------
OPERATING
EARNINGS 13,164 19,740 (33%) 53,320 70,909 (25%)
Loss on sale of
subsidiary -- -- N/A (18,919) -- N/A
Realized investment
gains (losses) (2,654) (1,283) (75%) 861 4,042 (73%)
Special charges (17,501) -- N/A (17,501) -- N/A
------- -------- -------- --------
NET INCOME
(LOSS) $(6,991) $18,457 (46%) $17,761 $74,951 N/A
------- -------- -------- --------
------- -------- -------- --------
Per Share Amounts:
Operating earnings
per share $ 0.67 $ 0.87 (23%) $ 2.62 $ 3.16 (17%)
Loss on sale of
subsidiary -- -- N/A (0.94) -- N/A
Realized investment
gains (losses) (0.14) (0.05) (208%) 0.05 0.18 (73%)
Special charges (0.95) -- N/A (0.93) -- N/A
------- -------- -------- --------
EARNINGS (LOSS)
PER SHARE $ (0.42)$ 0.82 N/A $ 0.80 $ 3.34 (76%)
------- -------- -------- --------
------- -------- -------- --------
As of December 31, %
1998 1997 Change
---- ---- ------
Book Value Per Common
Equivalent Share:
Including the effects of SFAS 115 $ 27.46 $31.64 (13%)
Excluding the effects of SFAS 115 $ 26.07 $28.76 (9%)
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