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, 1998
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:
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES 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 CENTURY PARK DRIVE
MONROE, LA 71203
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
CenturyTel, Inc.:
We have audited the accompanying statements of assets available for benefits
with fund information of Century Telephone Enterprises, Inc. Retirement Savings
Plan for Bargaining Unit Employees and Trust as of December 31, 1998 and 1997,
and the related statement of changes in assets available for benefits with fund
information for the year ended December 31, 1998. 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 generally accepted auditing
standards. 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 assets available for benefits of Century Telephone
Enterprises, Inc. Retirement Savings Plan for Bargaining Unit Employees and
Trust as of December 31, 1998 and 1997, and the changes in assets available for
benefits for the year ended December 31, 1998, in conformity with 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
for investment purposes 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. The fund information in the
statements of assets available for benefits and the statement of changes in
assets available for benefits is presented for purposes of additional analysis
rather than to present the assets available for plan benefits and changes in
assets available for plan benefits of each fund. The supplemental schedules and
fund information 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 11, 1999
2
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING UNIT
EMPLOYEES AND TRUST
Statements of Assets
Available for Benefits With Fund Information
<TABLE>
<CAPTION>
CenturyTel Money Bond
Combined S & P 500 Common Market Index Loan Sweep
December 31, 1998 Funds Stock Fund Stock Fund Fund Fund Fund Account
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PLAN ASSETS
Investments, at fair value $ 8,371,864 3,451,872 3,723,575 502,765 363,594 330,058 -
Cash 50,932 - 43,550 - - - 7,382
Contributions
receivable-employer 47,393 24,034 15,187 4,651 3,521 - -
Contributions
receivable-participants 31,854 16,631 10,195 2,782 2,246 - -
- -------------------------------------------------------------------------------------------------------------------
ASSETS AVAILABLE
FOR BENEFITS $ 8,502,043 3,492,537 3,792,507 510,198 369,361 330,058 7,382
===================================================================================================================
December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
PLAN ASSETS
Investments, at fair value $ 5,188,430 2,562,203 1,720,215 372,605 296,326 237,081 -
Cash 30,867 - 23,855 - - - 7,012
Contributions
receivable-employer 34,051 18,081 10,140 3,285 2,545 - -
- -------------------------------------------------------------------------------------------------------------------
ASSETS AVAILABLE
FOR BENEFITS $ 5,253,348 2,580,284 1,754,210 375,890 298,871 237,081 7,012
===================================================================================================================
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING UNIT
EMPLOYEES AND TRUST
Statement of Changes in Assets
Available for Benefits With Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
S & P 500 CenturyTel Money Bond
Combined Stock Common Market Index Loan Sweep
Funds Fund Stock Fund Fund Fund Fund Account
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to assets:
Investment income
Net appreciation in
fair value of investments $ 2,397,880 542,458 1,847,316 - 8,106 - -
Other income 240,442 198,684 - 22,071 19,687 - -
Interest income 32,633 - 1,785 - - 30,477 371
Dividends - Common Stock of
CenturyTel, Inc. 13,624 - 13,624 - - - -
- ------------------------------------------------------------------------------------------------------------------
Net investment income 2,684,579 741,142 1,862,725 22,071 27,793 30,477 371
- ------------------------------------------------------------------------------------------------------------------
Contributions
Participants 408,183 215,537 127,497 36,281 28,868 - -
Company 205,784 106,757 63,863 20,021 15,143 - -
- ------------------------------------------------------------------------------------------------------------------
Total contributions 613,967 322,294 191,360 56,302 44,011 - -
- ------------------------------------------------------------------------------------------------------------------
Total additions 3,298,546 1,063,436 2,054,085 78,373 71,804 30,477 371
- ------------------------------------------------------------------------------------------------------------------
Deductions from assets:
Participant withdrawals 47,385 8,572 7,916 13,754 9,509 7,634 -
Other, net 2,466 1,110 1,112 159 69 - 16
- ------------------------------------------------------------------------------------------------------------------
Total deductions 49,851 9,682 9,028 13,913 9,578 7,634 16
- ------------------------------------------------------------------------------------------------------------------
Net increase prior to
interfund transfers 3,248,695 1,053,754 2,045,057 64,460 62,226 22,843 355
Interfund transfers - (141,501) (6,760) 69,848 8,264 70,134 15
- ------------------------------------------------------------------------------------------------------------------
Net increase 3,248,695 912,253 2,038,297 134,308 70,490 92,977 370
Assets available for benefits:
Beginning of year 5,253,348 2,580,284 1,754,210 375,890 298,871 237,081 7,012
- ------------------------------------------------------------------------------------------------------------------
End of year $ 8,502,043 3,492,537 3,792,507 510,198 369,361 330,058 7,382
==================================================================================================================
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING
UNIT EMPLOYEES AND TRUST
Notes to Financial Statements
December 31, 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROVISIONS OF THE PLAN
Basis of Presentation
The Century Telephone Enterprises, Inc. Retirement Savings Plan for
Bargaining Unit Employees 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 assets available for
benefits and changes in assets available for benefits. The Plan has made
estimates in preparing the accompanying financial statements in accordance
with 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).
In order to participate in the Plan, an employee must execute a Salary
Deferral Agreement with the Company. In the Salary Deferral Agreement, an
employee agrees to a deferral of between one percent and ten percent of his
base pay on a pre-tax basis, or between one percent and sixteen percent of
his base pay on an after-tax basis. An employee may elect a deferral of his
base pay using a combination of pre-tax and after-tax elections provided the
total deferral does not exceed sixteen percent and the before-tax deferral
does not exceed ten percent. The amount of compensation deferred by each
participant is credited to a pre-tax account and/or an after-tax account
(Participant Contribution Accounts) maintained for each participant by the
Trustee.
As of the end of each payroll period, the Company contributes to an account
(Employer Match Contribution Account) for each participant a contribution
equal to 50% 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 Company may make additional match contributions to participants'
accounts (Additional Match Contribution Account) in an amount determined by
the Company.
During 1998 the Company contributed $205,784 to the Plan, of which $171,674
related to contributions made to the Employer Contribution Account and
$34,110 related to contributions made to the Additional 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" amount described in Section 402(a)(5) of the Code, or a
"rollover" contribution described in Section 408(d)(3) of the Code. Such a
rollover will be credited to a rollover account on behalf of the participant
(the Participant Rollover Account).
5
<PAGE>
The interest of a participant in his Participant Contribution Account and
his Participant Rollover Account is fully vested and non-forfeitable at all
times.
The interest of a participant in his Employer Match Contribution Account and
Additional Match Contribution Account becomes fully vested after five years
of service. A participant with less than five 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 shall be utilized to reduce Company
contributions or may be added to additional match contributions as directed
by the administrator.
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. 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 may make two withdrawals within any twelve
month period 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 one withdrawal
from his vested investment accounts prior to normal distribution
requirements being met. Any additional withdrawals may be made from a
Participant Contribution Account or a Participant Rollover 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 or the prevention of eviction or
foreclosure from the Participant's principal residence, or for the purchase
of the employee'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
Participant Contribution Account or Participant Rollover 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 plus 3%. 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
ten years.
Trustee
The Trustee of the Plan, as of December 31, 1998, was Merrill Lynch Trust
Company, FSB (Merrill Lynch). 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.
6
<PAGE>
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 quote on December 31, 1998 and 1997,
respectively. Other investments in the funds, which consist of units of
mutual funds, are valued by the Trustee based on the market value at
year-end of the underlying assets of each fund. 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. The Company, however, is required to maintain the Plan
under the terms of the labor agreement.
(2) DESCRIPTION OF THE FUNDS
The following is a description of each of the funds available to Plan
participants:
(a) S & P 500 Stock Fund - consists primarily of investments in the same
stocks and in substantially the same percentages as the S & P 500 Index
(40.6% and 48.8% of assets at December 31, 1998 and 1997, respectively).
(b) CenturyTel Common Stock Fund - consists primarily of shares of
CenturyTel Common Stock (43.8% and 32.7% of assets at December 31, 1998
and 1997, respectively).
(c) Money Market Fund - consists primarily of short-term investments in
various money market instruments (5.9% and 7.1% of assets at December
31, 1998 and 1997, respectively).
(d) Bond Index Fund - consists primarily of investments in government and
corporate bonds (4.3% and 5.6% of assets at December 31, 1998 and 1997,
respectively).
(e) Loan Fund - represents loans to participants from the participants'
investment accounts (3.9% and 4.5% of assets at December 31, 1998 and
1997, respectively).
A participant may instruct that all contributions to his accounts be
allocated among the various funds. A participant may change his investment
allocation instructions at any time, however, the participant can only
change his contribution percentage on a quarterly basis.
(3) INCOME TAXES
The Plan and related trust 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 1995
related to the Plan.
7
<PAGE>
(4) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Barclays
Global Fund Advisors (Barclays). Merrill Lynch is the Trustee as defined by
the Plan. Therefore, Barclays and Merrill Lynch qualify as
parties-in-interest. Fees paid by the Company to Merrill Lynch for trustee,
record keeping and other services amounted to $16,831 for the year ended
December 31, 1998.
(5) CONCENTRATION OF INVESTMENTS
As of December 31, 1998, 43.8% 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
Barclays.
(6) STOCK SPLIT
On February 23, 1999, CenturyTel, Inc.'s Board of Directors declared a
three-for-two common stock split effected as a 50% stock dividend in March
1999. Number of shares and per share data included in this report for the
CenturyTel Common Stock Fund have been restated to reflect this stock split.
(7) YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Year 2000 issue concerns the inability of computer systems and certain
other equipment to properly recognize and process data that uses two digits
rather than four to designate particular years. The Company has initiated a
Year 2000 Project Plan (the "Project") to assess whether its systems that
process date sensitive information will perform satisfactorily leading up to
and beyond January 1, 2000. The goal of the Project is to correct, prior to
January 1, 2000, any Year 2000-related problem with critical systems, the
failure of which could have a material adverse effect on the Company's
operations. The Project includes steps to (i) identify each critical system
element that requires date code remediation, (ii) establish a plan to
remediate such systems, (iii) implement all required remediations and (iv)
selectively test the remediated systems.
One component of the Project involves the review of third-party vendors and
includes identifying critical third-parties and determining their plans and
progress in addressing the Year 2000 issue. One critical third-party for the
Plan is Merrill Lynch, which handles record keeping and administrative
duties as Trustee. Current information received from Merrill Lynch indicates
that their system that supports the Plan has been fully renovated, has
completed production testing and is undergoing certification testing which
is anticipated to be completed mid-year 1999.
Failure by the Company to timely and effectively remediate its systems, or
the failure of critical vendors and suppliers to remediate affected systems,
could have a material adverse impact on the Plan. Because the impact of Year
2000 issues on the Company is materially dependent on the mitigation efforts
of parties outside the Company's control, the Company cannot assess with
certainty the magnitude of any such potential adverse impact on the Plan.
However, the Company believes that the Project, along with the efforts of
Merrill Lynch, is expected to significantly reduce the level of uncertainty
about the Year 2000 issue, and in particular, about the Year 2000 readiness
of the Plan's critical third-parties.
8
<PAGE>
Schedule I
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING
UNIT EMPLOYEES AND TRUST
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Current
Identity of issuer, borrower, Description Current Value Per
lessor or similar party of Investment Cost Value Unit/Share
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment in CenturyTel
Common Stock 81,752 units/ 45.55
82,746* shares $ 1,445,592 3,723,575 (Note 1) 45.00*
Loan Fund (interest rates
ranged from 9% to 12%) - 330,058 330,058 -
Merrill Lynch
Money Market Account 50,932 units 50,932 50,932 1.00
Investments in Mutual
Funds for Qualified
Employee Benefit Plans
Managed by Barclays:
S & P 500 Stock Fund 140,263 units 2,256,201 3,451,872 (Note 1) 24.61
Money Market Fund 502,765 units 502,765 502,765 (Note 1) 1.00
Bond Index Fund 36,323 units 352,853 363,594 10.01
- -----------------------------------------------------------------------------------------
$ 4,938,401 8,422,796
=========================================================================================
</TABLE>
The above data is based on information which has been certified as accurate and
complete by the trustee, Merrill Lynch. Barclays and Merrill Lynch are
considered parties-in-interest. Additionally, CenturyTel, Inc., as sponsor of
the Plan, is considered a party-in-interest.
Note (1) These investments are greater than 5% of assets available for benefits.
* Adjusted to reflect stock split. See Note 6.
9
<PAGE>
Schedule II
CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING
UNIT EMPLOYEES AND TRUST
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(Note 1)
Category (3) - A series of transactions
- ---------------------------------------
in excess of 5% of beginning of period
--------------------------------------
Plan assets available for benefits
----------------------------------
Investments in CenturyTel Common Stock
(68 purchases, 45 sales) $ 723,477 563,147 - - 261,479 (Note 2) 301,668
Investments in Mutual Funds for
Qualified Employee Benefit Plans
Managed by Barclays:
S & P 500 Stock Fund
(59 purchases, 42 sales) 841,522 494,311 - - 326,141 (Note 2) 168,170
Money Market Fund
(57 purchases, 46 sales) 799,748 669,587 - - 669,587 (Note 2) -
</TABLE>
The above data is based on information which has been certified as accurate and
complete by the trustee, Merrill Lynch. Barclays and Merrill Lynch are
considered parties-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.
10
<PAGE>
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.
Century Telephone Enterprises, Inc.
Retirement Savings Plan For Bargaining
Unit Employees and Trust
/S/ David Thiels
June 25, 1999 ---------------------------
David Thiels
Vice President and Treasurer
11
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CENTURY TELEPHONE ENTERPRISES, INC.
RETIREMENT SAVINGS PLAN FOR BARGAINING UNIT
EMPLOYEES AND TRUST
Index to Exhibit
Exhibit
Number
- --------------------------------------------------------------------------
23.1 Independent Auditors' Consent
12
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
CenturyTel, Inc.:
We consent to incorporation by reference in the registration statement (No.
33-46562) on Form S-8 of CenturyTel,Inc. of our report dated June 11, 1999, with
respect to the statements of assets available for benefits with fund information
of Century Telephone Enterprises, Inc. Retirement Savings Plan for Bargaining
Unit Employees and Trust as of December 31, 1998 and 1997, and the related
statement of changes in assets available for benefits with fund information for
the year ended December 31, 1998, and related financial statement schedules as
of and for the year ended December 31, 1998, which report appears in the
December 31, 1998 annual report on Form 11-K of Century Telephone Enterprises,
Inc. Retirement Savings Plan for Bargaining Unit Employees and Trust.
KPMG LLP
/S/ KPMG LLP
Shreveport, Louisiana
June 25, 1999
