United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-7784
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
CENTURYTEL, INC.
100 CENTURYTEL DRIVE
MONROE, LA 71203
Independent Auditors' Report
The Board of Directors
CenturyTel, Inc.:
We have audited the accompanying statements of net assets available for benefits
of CenturyTel, Inc. Dollars and Sense Plan as of December 31, 2001 and 2000, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2001. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of CenturyTel, Inc.
Dollars and Sense Plan as of December 31, 2001 and 2000, and the changes in net
assets available for benefits for the year ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of nonexempt
transactions, assets (held at end of year), and reportable transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG LLP
/s/ KPMG LLP
Shreveport, Louisiana
June 21, 2002
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
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PLAN ASSETS
Investments, at fair value $ 191,542,936 201,064,486
Cash 52,976 147,882
Contributions receivable - employer 202,776 572,288
Contributions receivable - participants 488,885 463,810
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NET ASSETS AVAILABLE FOR BENEFITS 192,287,573 202,248,466
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See accompanying notes to financial statements.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 2001
Additions to net assets:
Investment income (loss)
Net depreciation in fair value of investments:
Mutual funds $ (12,625,695)
Common stocks (7,149,594)
Dividend income 3,270,679
Interest income 778,673
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Net investment income (loss) (15,725,937)
---------------------------------------------------------------------------------------------
Contributions:
Participants 13,757,360
Employer 4,914,945
Transfer from CenturyTel, Inc. Employee Stock Ownership Plan 156,629
---------------------------------------------------------------------------------------------
Total contributions 18,828,934
---------------------------------------------------------------------------------------------
Total investment income (loss) and contributions 3,102,997
---------------------------------------------------------------------------------------------
Deductions from net assets:
Participant withdrawals 13,063,890
---------------------------------------------------------------------------------------------
Net decrease (9,960,893)
Net assets available for benefits:
Beginning of year 202,248,466
---------------------------------------------------------------------------------------------
End of year $ 192,287,573
=============================================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROVISIONS OF THE PLAN
Basis of Presentation
The CenturyTel, Inc. Dollars and Sense Plan (the Plan) was established on
May 1, 1986. The accompanying financial statements of the Plan have been
prepared on the accrual basis of accounting and present the net assets
available for benefits and changes in net assets available for benefits.
The Plan has made estimates in preparing the accompanying financial
statements in accordance with accounting principles generally accepted in
the United States of America. Actual results could differ from those
estimates.
The assets of the Plan are invested by the Trustee in various investment
programs (funds) which are described in Note 2.
The following description of the Plan provides only general information.
Participants should refer to the Plan Document for a more complete
description of the Plan's provisions.
Participation
Participation in the Plan is available to each employee of CenturyTel,
Inc. and its participating subsidiaries (the Company), other than those
who are classified as temporary employees or employees covered under a
collective bargaining agreement.
In order to participate in the Plan, an employee must execute a Salary
Deferral Agreement with the Company. In the Salary Deferral Agreement,
which is executed either on-line or by telephone, an employee agrees to a
deferral of between one percent and sixteen percent of compensation. The
percentage of compensation a participant elects to defer applies to the
participant's base pay plus certain incentive compensation received,
including certain cash bonuses, commissions, and lump sums granted in lieu
of pay increases. The amount of compensation deferred by each participant
is credited to an account (Elective Deferral Account) maintained for each
participant by the Trustee. The Elective Deferral Account is
self-directed.
Through August 31, 2001, as of the end of each payroll period, the Company
contributed to an account (Employer Match Account) for each participant a
contribution equal to 55% of each such participant's contribution during
such payroll period; however, this matching contribution applied only to
the first 6% of such participant's compensation contributed to the Plan.
Effective September 1, 2001, the Company contributes to the Employer Match
Account for each participant a contribution equal to 60% of each such
participant's contribution during such payroll period; however, this
matching contribution applies only to the first 6% of such participant's
compensation contributed to the Plan. The Board of Directors of the
Company may, at its discretion, elect at the end of each year to
contribute an additional amount to participants' accounts (Additional
Match Account). Company contributions may be made in cash or CenturyTel,
Inc. Common Stock (CenturyTel Common Stock). If made in cash, such cash is
applied by the Trustee to the purchase of CenturyTel Common Stock.
During 2001, the Company contributed CenturyTel common stock with a fair
value of $1,729,488 to the Plan and cash of $3,184,084 to the Plan, all of
which related to contributions made to the Employer Match Account. In
addition the Company contributed $1,373 to the Plan to reimburse the Plan
for lost interest on employee contributions that were not submitted to
the Trustee in a timely manner in accordance with the Department of Labor
regulations. For additional information see Note 7.
An employee is permitted to transfer to the Plan as a contribution his
interest in another plan qualified under Section 401(k) of the Internal
Revenue Code, as amended (the Code). Such contribution must qualify as a
"rollover" contribution described in Section 402(c) or 408 (d)(3) of the
Code. Such a rollover will be credited to a rollover account on behalf of
the participant (the Rollover/Transfer Account).
Additionally, an employee is permitted to transfer to the Plan as a
contribution a portion of his interest in the CenturyTel, Inc. Employee
Stock Ownership Plan("ESOP") pursuant to diversification rights under
such plan. To qualify for this transfer an employee must be 55 years
of age or older and been a participant in the ESOP for ten years. Such
contributions will be credited to an account on behalf of the participant
(the ESOP Diversification Account).
The interest of a participant in his Elective Deferral Account,
Rollover/Transfer Account, Employer Match Account, Additional Match
Account and ESOP Diversification Account is fully vested and
non-forfeitable at all times.
Reports to Participants
All participants are furnished with quarterly statements which set forth
the status of their accounts in the Plan.
Distributions
If the employment of a participant with the employer ceases because of
death, retirement, disability, termination of employment or for any other
reason, the participant's entire interest in the Plan may be distributed
to him or to his beneficiary in a lump sum or in periodic installments. If
the participant dies without designating a beneficiary, his beneficiary
shall be, in the order listed, (i) his spouse, (ii) his children, or (iii)
his estate.
Withdrawals
A participant who is an employee and over age 59 1/2 may make withdrawals
from his vested accounts prior to meeting normal distribution
requirements. In addition, a hardship withdrawal may be made from an
Elective Deferral Account or a Rollover/Transfer Account only as a result
of financial hardship related to unreimbursable educational expenses,
medical expenses which are not reimbursable by insurance, the need to pay
for the funeral expenses of a family member, purchase of a primary
residence, or the prevention of eviction or foreclosure from the
participant's principal residence. The determination of the existence of a
financial hardship and the amount required to be distributed to meet the
need created by the hardship shall be made uniformly and without
discrimination at the sole discretion of the Plan Administrator.
Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
change, suspend or terminate the Plan subject to the provisions of the
Employee Retirement Income Security Act of 1974.
Loans to Participants
The Plan has a provision whereby a participant can borrow from his
Elective Deferral Account or Rollover/Transfer Account. The maximum loan
is 50% of the account balance, up to $50,000. The loans are repaid through
payroll deductions and the interest rate is the prime rate published in
the Wall Street Journal on the last day of the previous quarter plus 1%.
The loan repayment period may not exceed five years except for loans for
the purchase of the participant's principal residence which may be for any
period not to exceed fifteen years.
Trustee
The Trustee of the Plan, as of December 31, 2001, was T. Rowe Price Trust
Company (T. Rowe Price). The Board of Directors of the Company may remove
the Trustee and appoint a successor trustee. The Company and the Trustee
have entered into a Trust Agreement which provides for the establishment
of a Trust for the purpose of holding and investing the contributions to
the Trust pursuant to the provisions of the Plan.
Administration
The Company has appointed a committee to administer the Plan. The
individuals who administer the Plan serve at the discretion of the Board
of Directors of the Company and may be removed by the Board of Directors
at any time. The administrative costs of the Plan are paid by the Company.
Market Value Determination
Investments in CenturyTel Common Stock are valued at the closing market
price on December 31, 2001 and 2000, respectively. Other investments in
the funds, which consist of shares of mutual funds, are valued by the
Trustee based on the market value at year-end of the underlying assets of
each fund. Purchases and sales of securities are recorded on a trade date
basis. Loans to participants are valued at principal amount outstanding
which approximates market value.
(2) DESCRIPTION OF THE FUNDS
The following is a description of each of the funds available to Plan
participants as of December 31, 2001:
(a) CenturyTel Common Stock Fund - consists of shares of CenturyTel
Common Stock ($88,937,673 and $92,607,866 at December 31, 2001 and
2000, respectively).
(b) T. Rowe Price Equity Index 500 Fund - consists primarily of
investments in the same stocks and in substantially the same
percentages as the S & P 500 Index ($29,973,518 and $35,793,036 at
December 31, 2001 and 2000, respectively).
(c) BGI Asset Allocation Fund - consists primarily of investments in
common stocks, U. S. Treasury bonds and money market instruments
($17,935,461 and $20,590,494 at December 31, 2001 and 2000,
respectively).
(d) Loan Fund - represents loans to participants from the participants'
investment accounts ($8,175,514 and $7,481,252 at December 31, 2001
and 2000, respectively).
(e) BGI LifePath Income Fund - consists primarily of investments in U.S.
and foreign equity and debt securities and money market instruments
and is managed for investors planning to retire (or begin to withdraw
substantial portions of their investment) in the near future
($488,586 and $544,967 at December 31, 2001 and 2000, respectively).
(f) BGI LifePath 2010 Fund - consists primarily of investments in U.S.
and foreign equity and debt securities and money market instruments
and is managed for investors planning to retire (or begin to withdraw
substantial portions of their investment) around the year 2010
($2,594,757 and $2,440,306 at December 31, 2001 and 2000,
respectively).
(g) BGI LifePath 2020 Fund - consists primarily of investments in U.S.
and foreign equity and debt securities and money market instruments
and is managed for investors planning to retire (or begin to withdraw
substantial portions of their investment) around the year 2020
($2,050,807 and $1,932,294 at December 31, 2001 and 2000,
respectively).
(h) BGI LifePath 2030 Fund - consists primarily of investments in U. S.
and foreign equity and debt securities and money market instruments
and is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) around the year
2030 ($1,522,522 and $1,515,156 at December 31, 2001 and 2000,
respectively).
(i) BGI LifePath 2040 Fund - consists primarily of investments in U. S.
and foreign equity and debt securities and money market instruments
and is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) around the year
2040 ($3,367,154 and $3,496,717 at December 31, 2001 and 2000,
respectively).
(j) Janus Fund - consists primarily of investments in U. S. and foreign
equity securities ($12,663,827 and $15,818,645 at December 31, 2001
and 2000, respectively).
(k) T. Rowe Price Summit Cash Reserves Fund - consists primarily of
investments in various money market instruments ($14,937,155 and
$13,884,584 at December 31, 2001 and 2000, respectively).
(l) T. Rowe Price Equity Income Fund - consists primarily of investments
in U. S. and foreign common stocks ($1,552,455 and $117,267 at
December 31, 2001 and 2000, respectively).
(m) Janus Overseas Fund - consists primarily of investments in foreign
equity securities ($456,115 and $301,872 at December 31, 2001 and
2000, respectively).
(n) T. Rowe Price Mid-Cap Growth Fund - consists primarily of investments
in common stocks of companies whose market capitalization falls
within the range of companies in the S&P MidCap 400 Index ($1,753,555
and $756,559 at December 31, 2001 and 2000, respectively).
(o) Morgan Stanley Dean Witter Small Company Growth Portfolio Fund -
consists primarily of investments in equity securities of small
companies ($845,719 and $471,278 at December 31, 2001 and 2000,
respectively).
(p) PIMCO Total Return Fund - consists primarily of investments in debt
securities ($4,288,118 and $3,312,193 at December 31, 2001 and 2000,
respectively).
Investments in CenturyTel Common Stock Fund, BGI Asset Allocation Fund,
Janus Fund, T. Rowe Price Summit Cash Reserves Fund, and T. Rowe Price
Equity Index 500 Fund were each greater than 5% of net assets available
for benefits at December 31, 2001.
A participant may instruct that his contribution be allocated among the
various funds. A participant may change his investment allocation
instructions and his contribution percentage at any time.
All amounts allocated to a participant's Employer Match Account are
invested in the CenturyTel Common Stock Fund. Participants who have not
attained age 55 have no power to transfer amounts in the Employer Match
Account to an investment fund other than the CenturyTel Common Stock Fund.
Participants who have attained age 55 may redirect the investment of the
balance in their Employer Match Account.
(3) INCOME TAXES
The Plan and related trust were designed to meet the necessary
requirements of Internal Revenue Code Section 401(a) and, accordingly, the
trust underlying the Plan is exempt from income taxation pursuant to
Internal Revenue Code Section 501(a). A favorable determination letter was
received in July 1996 related to the Plan. The Plan has been amended since
receiving the determination letter. However, the Plan administrator
believes that the Plan is designed and is currently being operated in
compliance with the applicable provisions of the Internal Revenue Code.
(4) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Barclays
Global Investors Funds, Inc. (Barclays), Janus Capital
Corporation (Janus), Morgan Stanley Dean Witter Investment Management,
Inc. (Morgan Stanley), Pacific Investment Management
Company (PIMCO) or T. Rowe Price. T. Rowe Price is the Trustee as
defined by the Plan. Therefore, Barclays, Morgan Stanley,
PIMCO, Janus and T. Rowe Price qualify as parties-in-interest.
Fees paid by the Company to T. Rowe Price for trustee, record
keeping and other services amounted to $277,715 for the year ended
December 31, 2001.
(5) CONCENTRATION OF INVESTMENTS
As of December 31, 2001 and 2000, 46.3% and 45.8%, respectively, of the
net assets available for benefits were invested in CenturyTel Common
Stock. Substantially all of the remaining net assets available for
benefits were invested in mutual funds managed by T. Rowe Price, Barclays,
Morgan Stanley, PIMCO, or Janus.
(6) COMPANY/PARTICIPANT DIRECTED FUNDS
The CenturyTel Common Stock Fund includes contributions from the Company
and participants. Participant contributions are directed solely by the
participants. Contributions from the Company are directed by the Company,
except for contributions made on behalf of participants who are age 55 or
older. Such contributions can be redirected by these participants to the
funds of their choice. All other funds are participant directed.
The following tables set forth information related to the CenturyTel
Common Stock Fund's assets available for benefits as of December 31, 2001
and 2000 and the changes in such assets for the year ended December 31,
2001.
December 31, 2001 2000
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PLAN ASSETS
Investments $ 88,937,673 92,607,866
Contributions receivable - employer 201,403 572,288
Contributions receivable - participant 154,114 154,991
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ASSETS AVAILABLE FOR BENEFITS $ 89,293,190 93,335,145
===============================================================================
For the year ended
December 31, 2001
--------------------------------------------------------------------------------------------
Additions to assets:
Investment income (loss)
Net depreciation in fair value of investments $ (7,149,594)
Dividend income 528,097
Interest income 302,058
--------------------------------------------------------------------------------------------
Net investment income (loss) (6,319,439)
--------------------------------------------------------------------------------------------
Contributions
Participants 4,177,051
Employer 4,913,572
Transfer from CenturyTel Inc. Employee Stock Ownership Plan and Trust 31,256
--------------------------------------------------------------------------------------------
Total contributions 9,121,879
--------------------------------------------------------------------------------------------
Total investment income (loss) and contributions 2,802,440
--------------------------------------------------------------------------------------------
Deductions from assets:
Participant withdrawals 4,414,722
--------------------------------------------------------------------------------------------
Net decrease prior to interfund transfers (1,612,282)
Interfund transfers (2,429,673)
--------------------------------------------------------------------------------------------
Net decrease (4,041,955)
Net assets available for benefits:
Beginning of year 93,335,145
--------------------------------------------------------------------------------------------
End of year $ 89,293,190
============================================================================================
(7) PROHIBITED TRANSACTIONS
During the year ended December 31, 2001, the Company failed to remit
employee contributions to the Trustee in a timely manner in accordance
with the Department of Labor regulations in the amount of $46,385.
(8) SUBSEQUENT EVENTS
On January 1, 2002, the maximum elective salary deferral was increased to
twenty-five percent from sixteen percent; however, the total amount
contributed to the Plan cannot exceed $11,000 for 2002. Additionally, on
January 1, 2002, the age eligibility required for company contribution
diversification was changed from age 55 or older to age 45 or older. On
May 20, 2002, the eligibility required for company contribution
diversification was changed from age 45 or older to age 45 or older or
three years of service.
Effective June 3, 2002, participants age 50 years or older are allowed to
make an additional contribution to the Plan each year in excess of the
otherwise prescribed limits. The amount of the allowable additional
contribution for a participant in 2002 is $1,000; this amount will
increase by $1,000 each year to a maximum of $5,000 in 2006 (which will
thereafter be adjusted to inflation).
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4d - Schedule of Nonexempt Transactions
For the Year Ended December 31, 2001
(b) Relationship to
(a) Identity of Party Plan, Employer or (c) Description of Transaction, (d) Cost of
Involved Other Party-In-Interest Including Rate of Interest Asset
-----------------------------------------------------------------------------------------------------
CenturyTel, Inc. Plan Sponsor 2001 employee contributions not
deposited to Plan in a timely
manner. Interest rate of 8.51% $ 1,373
It was noted that there were delays by the Plan Sponsor in submitting 2001
employee contributions in the amount of $46,385 to the Trustee. The Plan Sponsor
reimbursed the Plan for lost interest in the amount of $1,373 in June, 2002.
See accompanying independent auditors' report.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of issuer, borrower, Current
lessor or similar party Description of Investment Value
---------------------------------------------------------------------------------------------------------------------
Investment in CenturyTel Common Stock 2,711,514 shares at $32.80 per share $ 88,937,673 (Notes 1 & 2)
Loan Fund (interest rates ranged from
7.00% to 12.50%) - 8,175,514
Investment in Mutual Funds for
Qualified Employee Benefit Plans:
Managed by Barclays:
Asset Allocation Fund 1,885,958 shares at $9.51 per share 17,935,461 (Note 1)
LifePath Income Fund 45,705 shares at $10.69 per share 488,586
LifePath 2010 Fund 215,511 shares at $12.04 per share 2,594,757
LifePath 2020 Fund 148,287 shares at $13.83 per share 2,050,807
LifePath 2030 Fund 108,288 shares at $14.06 per share 1,522,522
LifePath 2040 Fund 221,232 shares at $15.22 per share 3,367,154
Managed by Janus:
Janus Overseas Fund 22,469 shares at $20.30 per share 456,115
Janus Fund 514,790 shares at $24.60 per share 12,663,827 (Note 1)
Managed by Morgan Stanley:
Small Co. Growth Portfolio Fund 90,355 shares at $9.36 per share 845,719
Managed by PIMCO:
PIMCO Total Return Fund 409,954 shares at $10.46 per share 4,288,118
Managed by T. Rowe Price:
Equity Income Fund 65,643 shares at $23.65 per share 1,552,455
Equity Index 500 Fund 971,904 shares at $30.84 per share 29,973,518 (Note 1)
Mid-Cap Growth Fund 44,506 shares at $39.40 per share 1,753,555
Summit Cash Reserves Fund 14,937,155 shares at $1.00 per share 14,937,155 (Note 1)
---------------------------------------------------------------------------------------------------------------------
$ 191,542,936
=====================================================================================================================
Barclays, Janus, Morgan Stanley, PIMCO and T. Rowe Price are considered
parties-in-interest. Additionally, CenturyTel, Inc., as sponsor of the Plan,
is considered a party-in-interest.
Notes: (1) These investments are greater than 5% of assets available
for benefits.
(2) Information on cost of investments is excluded as all investments
except CenturyTel Common Stock Fund are participant directed.
The CenturyTel Common Stock Fund is considered to be nonparticipant
directed. The cost of investment in CenturyTel Common Stock is
$66,275,176.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
For the Year Ended December 31, 2001
Current Value of
Redemption Asset at Date of
Purchase or Selling Lease Expense Cost of Acquisition or Net
Description of Transaction Price Price Rental Incurred Asset Disposition Gain (Loss)
------------------------------------------------------------------------------------------------------------------------------------
(Note 1)
Category (3) - A series of transactions
---------------------------------------
in excess of 5% of beginning of year
------------------------------------
Plan assets available for benefits
----------------------------------
Transactions in CenturyTel Common Stock 11,492,511 8,013,110 - - 6,371,409 (Note 2) 1,641,701
T. Rowe Price is considered a party-in-interest. Additionally, CenturyTel,
Inc., as sponsor of the Plan, is considered a party-in-interest.
Notes: (1) The purchase price denotes cost and current value of the
security on the transaction date.
(2) Current value is substantially the same as purchase price or
selling price of the security on the transaction date.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Retirement Committee has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
CenturyTel, Inc.
Dollars and Sense Plan
June 28, 2002 /s/ R. Stewart Ewing, Jr.
-------------------------
R. Stewart Ewing, Jr.
Retirement Committee Member
and Executive Officer of
Issuer of Plan Securities
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Index to Exhibit
Exhibit
Number
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23.1 Independent Auditors' Consent