Atmos Energy 1997 Annual Report Download - page 42

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ATMOS ENERGY CORPORATION
Net periodic pension cost (credit) for the Greeley Gas Division plan for 1997, 1996 and
1995 included the following components:
(In thousands) 1997 1996 1995
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Service cost.............................................................................. $ 485 $ 453 $ 328
Interest cost on projected
benefit obligation ................................................................ 1,277 1,185 1,208
Actual return on plan assets.................................................... (2,724) (2,390) (2,530)
Net amortization and deferral................................................. 1,167 810 1,217
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Net periodic pension cost....................................................... $ 205 $ 58 $ 223
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Accumulated plan benefits were computed using the Projected Unit Credit funding
method. The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligations were 7.5%
and 4.0% in both 1997 and 1996. The expected long-term rate of return on plan assets
was 9.0%, 9.5% and 10.0% in 1997, 1996 and 1995, respectively. Plan assets consist pri-
marily of corporate bonds, equity securities, mutual funds, partnership interests, and
other miscellaneous investments.
The following table sets forth the United Cities Division plan’s funded status at September
30, 1997 and 1996:
(In thousands) 1997 1996
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Actuarial present value of benefit obligations:
Accumulated benefit obligation,including vested
benefits of $60,086 and $45,528 in 1997
and 1996, respectively................................................................... $(66,873) $ (54,130)
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Projected benefit obligation.............................................................. (75,159) (69,652)
Plan assets at fair value ..................................................................... 86,162 71,978
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Funded status .................................................................................... 11,003 2,326
Unrecognized net asset being
recognized over 15 years .............................................................. 142 191
Unrecognized prior service cost........................................................ 1,750 1,143
Unrecognized net (gain) loss ............................................................. (15,785) (1,819)
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Prepaid (accrued) pension cost ......................................................... $ (2,890) $ 1,841
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Net periodic pension cost (credit) for the United Cities Division plan for 1997, 1996 and
1995 included the following components:
(In thousands) 1997 1996 1995
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Service cost ............................................................................. $ 3,157 $ 3,116 $ 3,451
Interest cost on projected benefit obligation ........................ 5,050 4,720 4,296
Actual return on plan assets ................................................... (17,461) (7,936) (10,365)
Net amortization and deferral ................................................ 11,420 2,372 5,772
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Net periodic pension cost....................................................... $ 2,166 $ 2,272 $ 3,154
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The weighted-average discount rates used in determining the actuarial present value of the
projected benefit obligations of the United Cities Division retirement plan was 7.5% at
September 30, 1997 and December 31, 1996. The rate of increase in future compensation
levels reflected in such determination was 5.5% for the years ended September 30, 1997
and December 31, 1996. The expected long-term rate of return on plan assets was 9.0%
for the years ended September 30, 1997, and December 31, 1996 and 1995. The plan
assets consist primarily of marketable equity securities, corporate and government debt
securities, and deposits with insurance companies. Prepaid pension cost is included in
deferred charges and other assets.
Effective October 1, 1987, the Company adopted a nonqualified Supplemental Executive
Benefits Plan (“Supplemental Plan”) which provides additional pension, disability and
death benefits to the officers and certain other employees of the Company. Expense recog-
nized in connection with the Supplemental Plan during fiscal 1997, 1996, and 1995 was
$3,491,000, $2,708,000 and $2,158,000, respectively. The Supplemental Plan was amend-
ed and restated in May 1997 and amended again in August 1997 and November 1997.
Atmos sponsors an Employee Stock Ownership Plan (“ESOP”) for employees other than
those in the United Cities Division. Full time employees who have completed one year of
service, as defined in the plan, are eligible to participate. Each participant enters into a
salary reduction agreement with the Company pursuant to which the participant’s salary
is reduced by an amount not less than 2% nor more than 10%. Taxes on the amount by
which the participant’s salary is reduced are deferred pursuant to Section 401(k) of the
Internal Revenue Code. The amount of the salary reduction is contributed by the
Company to the ESOP for the account of the participant. The Company may make a
matching contribution for the account of the participant in an amount determined each
year by the Board of Directors, which amount must be at least equal to 25% of all or a
portion of the participant’s salary reduction. For the 1997 plan year, the Board of
Directors elected to match 100% of each participant’s salary reduction contribution up to 4%
of the participant’s salary. Matching contributions to the ESOP amounted to $2,077,000,
$1,944,000, and $1,977,000 for 1997, 1996 and 1995, respectively. The Directors may
also approve discretionary contributions, subject to the provisions of the Internal Revenue
Code of 1986 and applicable regulations of the Internal Revenue Service. The Company
recorded a charge of $1,500,000 for a discretionary contribution in the year ended
September 30, 1996. Company contributions to the plan are expensed as incurred.
The Company sponsors a 401(k) savings plan for the United Cities Division employees. The
plan allows participants to make contributions toward retirement savings. Each partici-
pant may contribute up to 15% of qualified compensation. For employee contributions
up to 6% of the participant’s qualified compensation, the Company will contribute 30%
of the employee’s contribution. The Company may also contribute up to an additional
20% of the employee’s contribution based on certain criteria specified in the plan.
Effective January 1, 1995, any additional contribution made by the Company will be
through the issuance of the Company’s common stock. The Company contributed
$694,000 for the nine months ended September 30, 1997, and $826,000 and $478,000 for
the years ended December 31, 1996 and 1995, respectively.
ELEVEN Other postretirement benefits
Atmos sponsors two defined benefit postretirement plans other than pensions. Each provides
health care benefits to retired employees. One provides benefits to the United Cities Division.
The other Atmos plan offers medical benefits to all other retired Atmos employees.