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, 2004
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
Report of Independent Registered Public Accounting Firm
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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, 2004 and 2003, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and 2003, and the changes in net
assets available for benefits for the year ended December 31, 2004, in
conformity with U.S. generally accepted accounting principles.
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 15, 2005
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
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PLAN ASSETS
Investments, at fair value $ 229,390,632 209,225,844
Cash 128,623 211,299
Contributions receivable - employer 832,231 415,050
Contributions receivable - participants - 7,928
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NET ASSETS AVAILABLE FOR BENEFITS $ 230,351,486 209,860,121
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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, 2004
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Additions to net assets:
Investment income:
Net appreciation in fair value of investments:
Mutual funds $ 8,006,512
Common stocks 6,765,366
Dividend and other income 3,652,975
Interest income 477,797
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Net investment income 18,902,650
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Contributions:
Participants 13,868,472
Employer 5,984,923
Transfer from CenturyTel, Inc. Employee
Stock Ownership Plan 867,476
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Total contributions 20,720,871
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Total investment income and contributions 39,623,521
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Deductions from net assets:
Participant withdrawals 19,132,156
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Net increase 20,491,365
Net assets available for benefits:
Beginning of year 209,860,121
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End of year $ 230,351,486
===============================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Notes to Financial Statements
December 31, 2004 and 2003
(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 U.S. generally accepted accounting
principles. 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 eligible
compensation; however, the total amount contributed to the Plan cannot
exceed $13,000 for 2004 (as adjusted from year to year in accordance with
Federal Law). The percentage of eligible compensation a participant elects
to defer applies to the participant's W-2 earnings not in excess of
$205,000 for 2004 (as adjusted in accordance with Federal Law) excluding
overtime, special bonuses, severance pay, disability pay, reimbursements or
other expense allowances, fringe benefits, moving expenses, deferred
compensation, and welfare benefits. The amount of eligible 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
2004, the Company contributed CenturyTel common stock with a fair value of
$5,152,692 to the Employer Match Account. In addition, the Company
contributed $832,231 in cash (paid in 2005) to the Additional Match
Account.
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 2004 was $3,000; 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 2004, transfers to the Plan from
the ESOP aggregated $867,476.
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 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, 2004, 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, 2004 and 2003, respectively. Other investments in the
funds, which consist primarily 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, 2004:
(a) CenturyTel Common Stock Fund - consists of shares of CenturyTel
Common Stock ($85,901,952 and $84,989,069 at December 31, 2004 and
2003, respectively).
(b) Loan Fund - represents loans to participants from the participants'
investment accounts ($8,978,637 and $8,446,500 at December 31, 2004
and 2003, respectively).
(c) American Funds Amcap, R4 - consists primarily of investments in U.S.
common stocks ($13,854,410 at December 31, 2004).
(d) Fidelity Diversified International Fund - consists primarily of
investments in foreign common stocks ($3,445,118 at December
31, 2004).
(e) Oakmark Equity and Income Fund, Class I - consists primarily of
investments in U.S. equity and debt securities ($17,950,326 at
December 31, 2004).
(f) Morgan Stanley Institutional Fund Small Company Growth Portfolio B -
consists primarily of investments in equity securities of small
companies ($5,339,651 and $3,488,255 at December 31, 2004 and 2003,
respectively).
(g) PIMCO Low Duration III Institutional Fund - consists primarily of
investments in debt securities with an average duration between one
and three years ($267,817 at December 31, 2004).
(h) PIMCO Total Return Fund - consists primarily of investments in debt
securities ($8,309,724 and $8,962,587 at December 31, 2004 and 2003,
respectively).
(i) PIMCO NFJ Small Cap Value Institutional Fund - consists primarily of
investments in common stocks of companies with market capitalizations
between $100 million and $1.8 billion that have below average P/E
ratios relative to their industries and U.S. depositary receipts
($2,162,102 at December 31, 2004).
(j) T. Rowe Price Retirement 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 ($2,100,380 at December 31, 2004).
(k) T. Rowe Price Retirement 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 ($3,197,255 at December 31, 2004).
(l) T. Rowe Price Retirement 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 ($3,434,024 at December 31, 2004).
(m) T. Rowe Price Retirement 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 ($3,065,821 at December 31, 2004).
(n) T. Rowe Price Retirement 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 ($4,152,665 at December 31, 2004).
(o) T. Rowe Price Equity Income Fund - consists primarily of investments
in U. S. and foreign common stocks ($8,587,147 and $5,526,603 at
December 31, 2004 and 2003, respectively).
(p) 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 ($32,851,698 and $30,542,256 at
December 31, 2004 and 2003, respectively).
(q) 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
($11,532,013 and $7,135,700 at December 31, 2004 and 2003,
respectively).
(r) T. Rowe Price Summit Cash Reserves Fund - consists primarily of
investments in various money market instruments ($14,259,892 and
$15,071,835 at December 31, 2004 and 2003, respectively).
Investments in CenturyTel Common Stock Fund, American Fund Amcap R4,
Oakmark Equity and Income Fund - Class I, T. Rowe Price Equity Index 500
Fund, T. Rowe Price Mid-Cap Growth Fund, and T. Rowe Price Summit Cash
Reserves Fund were each greater than 5% of net assets available for
benefits at December 31, 2004.
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 October 2003 related to the Plan.
(4) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Capital
Research and Management Company (Capital), Fidelity Investments (Fidelity),
Harris Associates (Harris), Morgan Stanley 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,
Capital, Fidelity, Harris, Morgan Stanley, PIMCO, 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 $258,470 for the
year ended December 31, 2004.
(5) CONCENTRATION OF INVESTMENTS
As of December 31, 2004 and 2003, 37.3% and 40.5%, 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 Capital, Fidelity, Harris, Morgan
Stanley, PIMCO, or T. Rowe Price.
(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 contributions
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, 2004 and 2003
and the changes in such assets for the year ended December 31, 2004.
December 31, 2004 2003
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PLAN ASSETS
Investments $ 85,901,952 84,989,069
Contributions receivable - employer 832,231 415,050
Contributions receivable - participants - 102
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ASSETS AVAILABLE FOR BENEFITS $ 86,734,183 85,404,221
===============================================================================
For the year ended
December 31, 2004
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Additions to assets:
Investment income:
Net appreciation in fair value of investments $ 6,765,365
Dividend and other income 570,324
Interest income 162,352
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Net investment income 7,498,041
-------------------------------------------------------------------------------
Contributions:
Participants 2,790,763
Employer 5,984,923
Transfer from CenturyTel, Inc. Employee Stock
Ownership Plan and Trust 329,368
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Total contributions 9,105,054
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Total investment income and contributions 16,603,095
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Deductions from assets:
Participant withdrawals 5,535,429
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Net increase prior to interfund transfers 11,067,666
Interfund transfers (9,737,704)
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Net increase 1,329,962
Net assets available for benefits:
Beginning of year 85,404,221
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End of year $ 86,734,183
===============================================================================
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
Identity of issuer, borrower, Current
lessor or similar party Description of Investment Value
--------------------------------------------------------------------------------------------------------------------
Investment in CenturyTel Common Stock 2,421,820 shares at $35.47 per share $ 85,901,952 (Notes 1 & 2)
Loan Fund (interest rates ranged from
4.75% to 12.50%) 8,978,637
Investment in Mutual Funds for
Qualified Employee Benefit Plans:
Managed by Capital Research and
Management Company:
American Funds Amcap, R4 757,072 shares at $18.30 per share 13,854,410 (Note 1)
Managed by Fidelity Investments:
Fidelity Diversified International 120,290 shares at $28.64 per share 3,445,118
Managed by Harris Associates:
Oakmark Equity & Income Fund, Class I 763,844 shares at $23.50 per share 17,950,326 (Note 1)
Managed by Morgan Stanley:
Institutional Fund Small Company
Growth Portfolio B 444,230 shares at $12.02 per share 5,339,651
Managed by PIMCO:
PIMCO Low Duration III Fund 26,728 shares at $10.02 per share 267,817
PIMCO Total Return Fund 778,793 shares at $10.67 per share 8,309,724
PIMCO Small Cap Value 73,118 shares at $29.57 per share 2,162,102
Managed by T. Rowe Price:
Retirement Income Fund 171,320 shares at $12.26 per share 2,100,380
Retirement 2010 Fund 227,725 shares at $14.04 per share 3,197,255
Retirement 2020 Fund 230,626 shares at $14.89 per share 3,434,024
Retirement 2030 Fund 197,795 shares at $15.50 per share 3,065,821
Retirement 2040 Fund 266,709 shares at $15.57 per share 4,152,665
Equity Income Fund 322,946 shares at $26.59 per share 8,587,147
Equity Index 500 Fund 1,008,959 shares at $32.56 per share 32,851,698 (Note 1)
Mid-Cap Growth Fund 231,195 shares at $49.88 per share 11,532,013 (Note 1)
Summit Cash Reserves Fund 14,259,892 shares at $1.00 per share 14,259,892 (Note 1)
--------------------------------------------------------------------------------------------------------------------
$ 229,390,632
====================================================================================================================
Capital, Fidelity, Harris, 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
$64,208,663.
See accompanying report of independent registered public accounting firm.
CENTURYTEL, INC.
DOLLARS AND SENSE PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
For the Year Ended December 31, 2004
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 $8,000,828 $13,853,315 - - $11,662,168 (Note 2) $2,191,147
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.
See accompanying report of independent registered public accounting firm.
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, 2005 /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 Consent of Independent Registered Public Accounting Firm