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, 2002
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, 2002 and 2001, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2002. 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, 2002 and 2001, and the changes in net
assets available for benefits for the year ended December 31, 2002, 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 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 6, 2003
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
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PLAN ASSETS
Investments, at fair value $ 174,839,395 191,542,936
Cash 4,512 52,976
Contributions receivable - employer 890 202,776
Contributions receivable - participants 2,139 488,885
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NET ASSETS AVAILABLE FOR BENEFITS $ 174,846,936 192,287,573
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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, 2002
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Additions to net assets:
Investment income (loss):
Net depreciation in fair value of investments:
Mutual funds $ (16,530,714)
Common stocks (9,040,894)
Dividend income 2,254,920
Interest income 713,217
-------------------------------------------------------------------------------------
Net investment income (loss) (22,603,471)
-------------------------------------------------------------------------------------
Contributions:
Participants 14,451,121
Employer 5,136,524
Transfer from CenturyTel, Inc. Employee Stock Ownership Plan 1,948,255
-------------------------------------------------------------------------------------
Total contributions 21,535,900
-------------------------------------------------------------------------------------
Total investment income (loss) and contributions (1,067,571)
-------------------------------------------------------------------------------------
Deductions from net assets:
Participant withdrawals 16,373,066
-------------------------------------------------------------------------------------
Net decrease (17,440,637)
Net assets available for benefits:
Beginning of year 192,287,573
-------------------------------------------------------------------------------------
End of year $ 174,846,936
=====================================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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 twenty-five percent of compensation;
however, the total amount contributed to the plan cannot exceed $11,000
for 2002 (as adjusted from year to year in accordance with Federal Law).
The percentage of compensation a participant elects to defer applies to
the participant's W-2 earnings not in excess of $200,000 for 2002 (as
adjusted in accordance with Federal Law) excluding overtime, Christmas
bonuses, severance pay, disability pay, reimbursements or other expense
allowances, fringe benefits, moving expenses, deferred compensation, and
welfare benefits. 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.
As of the end of each payroll period, the Company contributes to an
account (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
2002, the Company contributed CenturyTel common stock with a fair value of
$5,136,524 to the Plan, all of which related to contributions made to the
Employer Match Account.
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 was $1,000; this amount will
increase by $1,000 each year to a maximum of $5,000 in 2006 (which will
thereafter be adjusted annually).
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 have 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). During 2002, transfers to the Plan
from the ESOP aggregated $1,948,255.
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. A participant may make withdrawals from his
Rollover/Transfer Account at any time. 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 principal 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 $50,000 reduced by the excess, if any, of the highest outstanding loan
balance during the previous year over the outstanding balance on the date
of the new loan or 50% of the account balance. 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, 2002, 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.
Investment Valuation and Income Recognition
Investments in CenturyTel Common Stock are valued at the closing market
price on December 31, 2002 and 2001, 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. Interest income is recorded on the
accrual basis.
(2) DESCRIPTION OF THE FUNDS
The following is a description of each of the funds which had outstanding
balances and were available to Plan participants as of December 31, 2002:
(a) CenturyTel Common Stock Fund - consists of shares of CenturyTel
Common Stock ($78,919,299 and $88,937,673 at December 31, 2002 and
2001, 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 ($23,631,045 and $29,973,518 at
December 31, 2002 and 2001, respectively).
(c) BGI Asset Allocation Fund - consists primarily of investments in
common stocks, U. S. Treasury bonds and money market instruments
($14,905,732 and $17,935,461 at December 31, 2002 and 2001,
respectively).
(d) Loan Fund - represents loans to participants from the participants'
investment accounts ($8,026,490 and $8,175,514 at December 31, 2002
and 2001, 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
($865,533 and $488,586 at December 31, 2002 and 2001, 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
($2,095,792 and $2,594,757 at December 31, 2002 and 2001,
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
($1,951,048 and $2,050,807 at December 31, 2002 and 2001,
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
($1,406,820 and $1,522,522 at December 31, 2002 and 2001,
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
($2,724,447 and $3,367,154 at December 31, 2002 and 2001,
respectively).
(j) Janus Fund - consists primarily of investments in U. S. and foreign
equity securities ($9,781,267 and $12,663,827 at December 31, 2002
and 2001, respectively).
(k) T. Rowe Price Summit Cash Reserves Fund - consists primarily of
investments in various money market instruments ($15,059,796 and
$14,937,155 at December 31, 2002 and 2001, respectively).
(l) T. Rowe Price Equity Income Fund - consists primarily of investments
in U. S. and foreign common stocks ($3,012,599 and $1,552,455 at
December 31, 2002 and 2001, respectively).
(m) Janus Overseas Fund - consists primarily of investments in foreign
equity securities ($689,877 and $456,115 at December 31, 2002 and
2001, 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 ($2,816,912
and $1,753,555 at December 31, 2002 and 2001, respectively).
(o) Morgan Stanley Dean Witter Small Company Growth Portfolio Fund -
consists primarily of investments in equity securities of small
companies ($1,291,038 and $845,719 at December 31, 2002 and 2001,
respectively).
(p) PIMCO Total Return Fund - consists primarily of investments in debt
securities ($7,661,700 and $4,288,118 at December 31, 2002 and 2001,
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, 2002.
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 45 or three years of service 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 45 or
three years of service 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 $267,875 for the year ended December 31, 2002.
(5) CONCENTRATION OF INVESTMENTS
As of December 31, 2002 and 2001, 45.1% and 46.3%, 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 45 or
older or have three years of service. 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, 2002
and 2001 and the changes in such assets for the year ended December 31,
2002.
December 31, 2002 2001
--------------------------------------------------------------------------------
PLAN ASSETS
Investments $ 78,919,299 88,937,673
Contributions receivable - employer 890 201,403
Contributions receivable - participant 427 154,114
--------------------------------------------------------------------------------
ASSETS AVAILABLE FOR BENEFITS $ 78,920,616 89,293,190
================================================================================
For the year ended
December 31, 2002
--------------------------------------------------------------------------------
Additions to assets:
Investment income (loss):
Net depreciation in fair value of investments $ (9,040,894)
Dividend and other income 560,165
Interest income 267,256
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Net investment income (loss) (8,213,473)
------------------------------------------------------------------------------
Contributions:
Participants 3,736,638
Employer 5,136,524
Transfer from CenturyTel Inc. Employee Stock
Ownership Plan and Trust 526,433
------------------------------------------------------------------------------
Total contributions 9,399,595
------------------------------------------------------------------------------
Total investment income (loss)
and contributions 1,186,122
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Deductions from assets:
Participant withdrawals 5,839,729
------------------------------------------------------------------------------
Net decrease prior to interfund transfers (4,653,607)
Interfund transfers (5,718,967)
------------------------------------------------------------------------------
Net decrease (10,372,574)
Net assets available for benefits:
Beginning of year 89,293,190
------------------------------------------------------------------------------
End of year $ 78,920,616
==============================================================================
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Identity of issuer, borrower, Current
lessor or similar party Description of Investment Value
--------------------------------------------------------------------------------------------------------------
Investment in CenturyTel Common Stock 2,686,157 shares at $29.38 per share $ 78,919,299 (Notes 1 & 2)
Loan Fund (interest rates ranged from
4.75% to 12.50%) - 8,026,490
Investment in Mutual Funds for
Qualified Employee Benefit Plans:
Managed by Barclays:
Asset Allocation Fund 1,817,772 shares at $ 8.20 per share 14,905,732 (Note 1)
LifePath Income Fund 86,294 shares at $10.03 per share 865,533
LifePath 2010 Fund 193,696 shares at $10.82 per share 2,095,792
LifePath 2020 Fund 164,091 shares at $11.89 per share 1,951,048
LifePath 2030 Fund 121,697 shares at $11.56 per share 1,406,820
LifePath 2040 Fund 222,041 shares at $12.27 per share 2,724,447
Managed by Janus:
Janus Overseas Fund 45,120 shares at $15.29 per share 689,877
Janus Fund 548,893 shares at $17.82 per share 9,781,267 (Note 1)
Managed by Morgan Stanley:
Small Co. Growth Portfolio Fund 177,829 shares at $7.26 per share 1,291,038
Managed by PIMCO:
PIMCO Total Return Fund 718,060 shares at $10.67 per share 7,661,700
Managed by T. Rowe Price:
Equity Income Fund 152,228 shares at $19.79 per share 3,012,599
Equity Index 500 Fund 998,354 shares at $23.67 per share 23,631,045 (Note 1)
Mid-Cap Growth Fund 90,751 shares at $31.04 per share 2,816,912
Summit Cash Reserves Fund 15,059,796 shares at $1.00 per share 15,059,796 (Note 1)
--------------------------------------------------------------------------------------------------------------
$ 174,839,395
==============================================================================================================
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 $67,173,676.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
For the Year Ended December 31, 2002
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 10,670,652 11,648,367 - - 10,144,897 (Note 2) 1,503,470
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 27, 2003 /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 Exhibits
Exhibit
Number
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23.1 Independent Auditors' Consent
99 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.