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.
UNION RETIREMENT SAVINGS PLAN AND TRUST
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. Union Retirement Savings Plan and Trust 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.
Union Retirement Savings Plan and Trust 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 schedule of assets (held
at end of year) 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 audits of the basic financial statements and, in our opinion, is 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.
UNION RETIREMENT SAVINGS PLAN AND TRUST
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
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PLAN ASSETS
Investments, at fair value $ 10,458,453 9,468,857
Contributions receivable - employer 33,027 16,790
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NET ASSETS AVAILABLE FOR BENEFITS $ 10,491,480 9,485,647
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See accompanying notes to financial statements.
CENTURYTEL, INC.
UNION RETIREMENT SAVINGS PLAN AND TRUST
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 $ 370,590
Common stocks 251,368
Dividend and other income 161,118
Interest income 26,279
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Net investment income 809,355
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Contributions:
Participants 431,680
Employer 218,087
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Total contributions 649,767
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Total investment income and contributions 1,459,122
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Deductions from net assets:
Participant withdrawals 453,289
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Net increase 1,005,833
Net assets available for benefits:
Beginning of year 9,485,647
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End of year $ 10,491,480
===============================================================================
See accompanying notes to financial statements.
CENTURYTEL, INC.
UNION RETIREMENT SAVINGS PLAN AND TRUST
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. Union Retirement Savings Plan and Trust (the Plan)
was established on April 1, 1992. 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, 2004 and
2003 and changes in net assets available for benefits for the year ended
December 31, 2004. 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 whose
compensation and conditions of employment are covered by a collective
bargaining agreement between the Communications Workers of America, Local
4370 and CenturyTel of Ohio, Inc. The Plan sponsor is CenturyTel, Inc.
(the Company), the parent company of CenturyTel of Ohio, Inc.
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 his base pay;
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 compensation a participant elects to defer applies to
the participant's base pay not in excess of $205,000 for 2004 (as
adjusted in accordance with Federal Law) excluding 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.
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).
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% 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. 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). During 2004, the
Company contributed $218,087 to the Plan, of which $185,060 related to
contributions made to the Employer Match Account and $33,027 related
to contributions made to the Additional Match 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 and
the Additional Match Account become fully vested after three years of
service. A participant with less than three years of service has no
vested interest in these accounts.
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 may be utilized first to satisfy any
restorations for the year. Then any remaining forfeitures shall be
utilized to reduce Company contributions.
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
Prior to September 1, 2000, participants were allowed to make voluntary
after-tax contributions to the Plan. A participant who is an employee may
make withdrawals from his after-tax investment account and may withdraw
the entire balance.
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. 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, the vested interest in
an Employer Match Account or the vested interest in an Additional Match
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 $50,000 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 vested 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, Inc. Common Stock (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.
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 agreement.
(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 ($3,151,394 and $2,890,066 at December 31, 2004 and
2003, respectively).
(b) Loan Fund - represents loans to participants from the participants'
investment accounts ($474,938 and $401,995 at December 31, 2004 and
2003, respectively).
(c) American Funds Amcap, R4 - consists primarily of investments in
U.S. common stocks ($81,912 at December 31, 2004).
(d) Fidelity Diversified International Fund - consists primarily of
investments in foreign common stocks ($106,500 at December 31,
2004.
(e) Oakmark Equity and Income Fund, Class I - consists primarily of
investments in U.S. equity and debt securities ($52,114 at December
31, 2004).
(f) Morgan Stanley Institutional Fund Small Company Growth Portfolio B
- consists primarily of investments in common stocks of small
companies ($115,873 and $83,586 at December 31, 2004 and 2003,
respectively).
(g) PIMCO Total Return Fund - consists primarily of investments in
debt securities ($1,005,909 and $702,865 at December 31, 2004
and 2003, respectively).
(h) 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 ($32,327 at December 31, 2004).
(i) 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 ($18,515 at December 31, 2004).
(j) 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 ($205,721 at December 31, 2004).
(k) 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 ($22,768 at December 31, 2004).
(l) 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 ($8,386 at December 31, 2004).
(m) 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 ($3,279 at December 31, 2004).
(n) T. Rowe Price Equity Income Fund - consists primarily of
investments in U. S. and foreign common stocks ($150,923 and
$82,723 at December 31, 2004 and 2003, respectively).
(o) 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 ($3,793,593 and $3,755,919 at December 31, 2004 and
2003, respectively).
(p) 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 ($107,370 and $79,062 at December 31, 2004 and
2003, respectively).
(q) T. Rowe Price Summit Cash Reserves Fund - consists primarily of
investments in various money market instruments ($1,126,931 and
$1,127,716 at December 31, 2004 and 2003, respectively).
Investments in CenturyTel Common Stock Fund, PIMCO Total Return Fund, T.
Rowe Price Equity Index 500 Fund, and T. Rowe Price Summit Cash Reserves
Fund and were each greater than 5% of assets available for benefits at
December 31, 2004.
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 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 $16,130 for the year ended December 31,
2004.
(5) CONCENTRATION OF INVESTMENTS
As of December 31, 2004 and 2003, 30.0% and 30.5%, respectively, of the
assets available for benefits were invested in CenturyTel Common Stock.
Substantially all of the remaining assets available for benefits were
invested in mutual funds managed by Capital, Fidelity, Harris, Morgan
Stanley, PIMCO, or T. Rowe Price.
CENTURYTEL, INC.
UNION RETIREMENT SAVINGS PLAN AND TRUST
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
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Investment in CenturyTel Common Stock 88,847 shares at $35.47 per share $ 3,151,394 (Note 1)
Loan Fund (interest rates ranged
from 5.0% to 12.50%) - 474,938
Investment in Mutual Funds for
Qualified Employee Benefit Plans:
Managed by Capital Research and
Management Company:
American Funds Amcap, R4 4,476 shares at $18.30 per share 81,912
Managed by Fidelity Investments:
Fidelity Diversified International 3,719 shares at $28.64 per share 106,500
Managed by Harris Associates:
Oakmark Equity and Income Fund, Class I 2,218 shares at $23.50 per share 52,114
Managed by Morgan Stanley:
Institutional Small Company
Growth Portfolio B 9,640 shares at $12.02 per share 115,873
Managed by PIMCO:
PIMCO Total Return Fund 94,275 shares at $10.67 per share 1,005,909 (Note 1)
PIMCO Small Cap Value 1,093 shares at $29.57 per share 32,327
Managed by T. Rowe Price:
Retirement Income Fund 1,510 shares at $12.26 per share 18,515
Retirement 2010 Fund 14,652 shares at $14.04 per share 205,721
Retirement 2020 Fund 1,529 shares at $14.89 per share 22,768
Retirement 2030 Fund 541 shares at $15.50 per share 8,386
Retirement 2040 Fund 211 shares at $15.57 per share 3,279
Equity Income Fund 5,676 shares at $26.59 per share 150,923
Equity Index 500 Fund 116,511 shares at $32.56 per share 3,793,593 (Note 1)
Mid-Cap Growth Fund 2,153 shares at $49.88 per share 107,370
Summit Cash Reserves Fund 1,126,931 shares at $1.00 per share 1,126,931 (Note 1)
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$ 10,458,453
===============================================================================================================
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
are participant directed.
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.
Union Retirement Savings Plan and Trust
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.
UNION RETIREMENT SAVINGS PLAN AND TRUST
Index to Exhibits
Exhibit
Number
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23.1 Consent of Independent Registered Public Accounting Firm