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.
UNION GROUP INCENTIVE 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 statement of net assets available for benefits
of CenturyTel, Inc. Union Group Incentive Plan as of December 31, 2001, 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 audit.
We conducted our audit 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 audit provides 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.
Union Group Incentive Plan as of December 31, 2001, 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 audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) for 2001 is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the 2001 basic financial
statements taken as a whole.
KPMG LLP
/s/ KPMG LLP
Shreveport, Louisiana
June 21, 2002
Independent Auditors' Report
Administrative Committee
CenturyTel, Inc. Union Group Incentive Plan:
We have audited the accompanying statement of net assets available for benefits
of the CenturyTel, Inc. Union Group Incentive Plan (the "Plan") as of December
31, 2000. This financial statement is the responsibility of the Plan's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statement presents fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2000, in conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
/s/ DELOITTE & TOUCHE LLP
July 6, 2001
CENTURYTEL, INC.
UNION GROUP INCENTIVE 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 $ 23,835,597 21,015,275
Contributions receivable - employer 38,891 42,420
Contributions receivable - participants 101,165 135,842
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NET ASSETS AVAILABLE FOR BENEFITS $ 23,975,653 21,193,537
===============================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
UNION GROUP INCENTIVE 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 appreciation (depreciation) in fair value of investments:
Mutual funds $ (1,130,461)
Common stocks 5,221
Dividend and other income 917,519
Interest income 113,401
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Net investment income (loss) (94,320)
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Contributions:
Participants 3,253,173
Employer 1,032,896
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Total contributions 4,286,069
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Total investment income (loss) and contributions 4,191,749
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Deductions from net assets:
Participant withdrawals 1,409,633
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Net increase 2,782,116
Net assets available for benefits:
Beginning of year 21,193,537
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End of year $ 23,975,653
===============================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
UNION GROUP INCENTIVE 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. Union Group Incentive Plan (the "Plan") was
established on June 1, 1983. The accompanying financial statements of the
Plan have been prepared on the accrual basis of accounting and present the
net assets available for benefits as of December 31, 2001 and 2000 and
changes in net assets available for benefits for the year ended December
31, 2001. 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 eligible employee of
CenturyTel, Inc. (the "Company") whose compensation and conditions of
employment are covered by certain collective bargaining agreements.
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 his base pay. The
amount of compensation deferred by each participant is credited to an
account (Elective Deferral Account) maintained for each participant by the
Trustee.
As of the end of each payroll period, the Company contributes to an
account (Employer Match Account) for each participant a contribution equal
to 55% or 66% (as defined by the applicable collective bargaining
agreement) of each such participant's contribution during such payroll
period; however, this matching contribution applies only to the first 6%
of such participant's base compensation contributed to the Plan by the
employee.
During 2001 the Company contributed $1,032,896 to the Employer Match
Account.
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).
The interest of a participant in his Elective Deferral Account and his
Rollover/Transfer Account is fully vested and non-forfeitable at all
times.
The interest of a participant in his Employer Match Account vests as
follows:
Years of Service Percentage Vested
---------------- -----------------
Less than 1 0%
1 20
2 40
3 60
4 80
5 100
In the event of death, disability, or upon reaching age 65, the Employer
Match Account becomes fully vested.
Reports to Participants
Participants are furnished with quarterly statements which set forth the
status of their accounts in the Plan.
Forfeitures
A participant's non-vested account balances shall be forfeited as of the
date upon which the participant's employment has terminated with the
Company. Forfeiture amounts shall be utilized first to satisfy any
restorations for the year and any remaining forfeitures shall be applied
to offset future employer contributions or pay plan expenses.
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 vested 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 investment accounts prior to normal distribution
requirements being met. 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, the prevention of
eviction or foreclosure from the Participant's principal residence, or for
the purchase of 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.
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 vested 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, Inc. Common Stock (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.
Plan Termination
Although it has not expressed any intention to do so, the Company has the
right under the Plan to change, suspend or terminate the Plan at any time,
subject to the provisions set forth in the Employee Retirement Income
Security Act of 1974. However, the Company is required to comply with all
relevant provisions of the applicable labor agreements.
(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) T. Rowe Price Equity Index 500 Fund - consists of investments in the
same stocks and in substantially the same percentages as the S & P
500 Index ($3,692,293 and $4,259,037 at December 31, 2001 and 2000,
respectively).
(b) CenturyTel Common Stock Fund - consists of shares of CenturyTel
Common Stock ($221,291 and $15,705 at December 31, 2001 and 2000,
respectively).
(c) Loan Fund - represents loans to participants from the participants'
investment accounts ($1,366,015 and $873,043 at December 31, 2001
and 2000, respectively).
(d) T. Rowe Price Summit Cash Reserves Fund - consists primarily of
investments in various money market instruments ($5,207,044 and
$4,342,133 at December 31, 2001 and 2000, respectively).
(e) T. Rowe Price Equity Income Fund - consists primarily of investments
in U. S. and foreign common stocks ($7,946,349 and $7,179,352 at
December 31, 2001 and 2000, respectively).
(f) Janus Overseas Fund - consists primarily of investments in foreign
equity securities ($232,473 and $145,246 at December 31, 2001 and
2000, respectively).
(g) Janus Fund - consists primarily of investments in U. S. and foreign
equity securities ($779,351 and $515,551 at December 31, 2001 and
2000, respectively).
(h) 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 ($590,265
and $314,582 at December 31, 2001 and 2000, respectively).
(i) Morgan Stanley Dean Witter Small Company Growth Portfolio Fund -
consists primarily of investments in common stocks of small companies
($416,529 and $337,041 at December 31, 2001 and 2000, respectively).
(j) PIMCO Total Return Fund - consists primarily of investments in debt
securities ($3,225,940 and $2,850,197 at December 31, 2001 and 2000,
respectively).
(k) BGI Asset Allocation Fund - consists primarily of investments in
common stocks, U. S. Treasury bonds and money market instruments
($39,026 and $72,093 at December 31, 2001 and 2000, respectively).
(l) 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 ($19,607
and $1,251 at December 31, 2001 and 2000, respectively).
(m) 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 ($43,177 and $90,215 at December 31, 2001 and 2000,
respectively).
(n) 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
($30,960 and $13,999 at December 31, 2001 and 2000, respectively).
(o) 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
($11,780 and $587 at December 31, 2001 and 2000, respectively).
(p) 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 ($13,497 and $5,243 at December 31, 2001 and 2000,
respectively).
Investments in T. Rowe Price Equity Index 500 Fund, Loan Fund, T. Rowe
Price Summit Cash Reserves Fund, T. Rowe Price Equity Income Fund and
PIMCO Total Return Fund were each greater than 5% of assets available for
benefits at December 31, 2001 and 2000.
A participant may instruct that all contributions to his accounts be
allocated among the various funds. A participant may change his investment
allocation instructions and contribution percentage at any time.
(3) INCOME TAXES
The Plan and related trust are 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 March 1996 related to the Plan. The Plan has been amended and restated
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 T. Rowe
Price, Barclays Global Investors Funds, Inc. (Barclays), Morgan Stanley
Dean Witter Investment Management Inc. (Morgan Stanley), Janus Capital
Corporation (Janus), or Pacific Investment Management Company (PIMCO).
T. Rowe Price is the Trustee as defined by the Plan. Therefore, T. Rowe
Price, Barclays, Morgan Stanley, Janus and PIMCO qualify as parties-in-
interest. Fees paid by the Company to T. Rowe Price for trustee, record
keeping and other services amounted to $56,990 for the year ended
December 31, 2001.
(5) CONCENTRATION OF INVESTMENTS
Substantially all of the assets available for benefits were invested in
mutual funds managed by T. Rowe Price, Janus, Barclays, Morgan Stanley or
PIMCO. The remaining assets available for benefits are invested in
CenturyTel Common Stock.
(6) SUBSEQUENT EVENTS
On January 1, 2002, the individual participant 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.
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; the amount will increase
by $1,000 each year to a maximum of $5,000 in 2006 (which will thereafter
be adjusted for inflation).
CENTURYTEL, INC.
UNION GROUP INCENTIVE 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
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Investment in CenturyTel Common Stock 6,747 shares at $32.80 per share $ 221,291
Loan Fund (interest rates ranged
from 7.0% to 12.5%) - 1,366,015 (Note 1)
Investment in Mutual Funds for
Qualified Employee Benefit Plans:
Managed by Barclays:
Asset Allocation Fund 4,104 shares at $9.51 per share 39,026
LifePath Income Fund 1,834 shares at $10.69 per share 19,607
LifePath 2010 Fund 3,586 shares at $12.04 per share 43,177
LifePath 2020 Fund 2,239 shares at $13.83 per share 30,960
LifePath 2030 Fund 838 shares at $14.06 per share 11,780
LifePath 2040 Fund 887 shares at $15.22 per share 13,497
Managed by Janus:
Janus Overseas Fund 11,452 shares at $20.30 per share 232,473
Janus Fund 31,681 shares at $24.60 per share 779,351
Managed by Morgan Stanley:
Small Co. Growth Portfolio Fund 44,501 shares at $9.36 per share 416,529
Managed by PIMCO:
PIMCO Total Return Fund 308,407 shares at $10.46 per share 3,225,940 (Note 1)
Managed by T. Rowe Price:
Equity Income Fund 335,998 shares at $23.65 per share 7,946,349 (Note 1)
Equity Index 500 Fund 119,724 shares at $30.84 per share 3,692,293 (Note 1)
Mid-Cap Growth Fund 14,981 shares at $39.40 per share 590,265
Summit Cash Reserve Fund 5,207,044 shares at $1.00 per share 5,207,044 (Note 1)
----------------------------------------------------------------------------------------------------------------
$ 23,835,597
================================================================================================================
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
are participant directed.
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.
Union Group Incentive 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.
UNION GROUP INCENTIVE PLAN
Index to Exhibits
Exhibit
Number
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23.1 Independent Auditors' Consent - KPMG LLP
23.2 Independent Auditors' Consent - Deloitte & Touche LLP