Atmos Energy 1998 Annual Report Download - page 43

1998 1997
Weighted average assumptions
for end of year disclosure:
Discount rate 7.0% 7.5%
Rate of compensation increase 4.0% 4.0%
Expected return on plan assets 9.0% 9.0%
The plan assets consist primarily of investments in common
stocks, interest bearing securities and interests in commingled
pension trust funds.
The projected benefit obligation, accumulated benefit obliga-
tion, and fair value of plan assets for the pension plan with accu-
mulated benefit obligations in excess of plan assets were $36.8
million, $31.4million, and none, respectively, as of September 30,
1998, and $30.8million, $26.0million, and none, respectively, as of
September 30,1997.
Net periodic pension cost for the combined pension benefit
plans for 1998,1997 and 1996 included the following components:
1998 1997 1996
(In thousands)
Components of net periodic
pension cost:
Service cost $ 5,761 $ 6,903 $ 6,786
Interest cost 17,901 17,234 16,288
Expected return on assets (23,249) (19,730) (18,695)
Amortization of:
Transition obligation/(asset) (146) (335) (354)
Prior service cost 1,660 1,731 1,048
Actuarial (gain)/loss (1,091)390 279
Net periodic pension cost 836 6,193 5,352
Curtailment (gain)/loss and
special termination benefits (1,840) 4,758 56
Total pension cost accruals $ (1,004) $ 10,951 $ 5,408
Employee Stock Ownership Plan Atmos sponsors an 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 pur-
suant 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 match-
ing 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 partici-
pant’s salary reduction. For the 1998 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 $1.8million,
$2.1million, and $1.9million for 1998,1997 and 1996, respectively.
The directors may also approve discretionary contributions, subject
to the provisions of the Internal Revenue Code of 1986 and appli-
cable regulations of the Internal Revenue Service. The Company
recorded a charge of $1.5million for a discretionary contribution
in the year ended September 30,1996. No discretionary contribu-
tions were made for 1997 and 1998. Company contributions to
the plan are expensed as incurred. The Company’s ESOP has been
amended effective January 1,1999 to provide for deferral of a
portion of a participant’s salary of up to 21%. In addition, among
other changes to the ESOP as of January 1,1999, participants will
be provided with automatic matching contributions of 100% of
each participant’s salary reduction up to 4% of the participant’s
salary, and will be provided the option of taking out loans against
their ESOP accounts, subject to certain restrictions.
401(k) savings plan The Company sponsors a 401(k) savings plan
for the United Cities Division employees. The plan allows partici-
pants to make contributions toward retirement savings. Each par-
ticipant 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 employ-
ee’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 addi-
tional contribution made by the Company will be through the
issuance of the Company’s common stock. The Company con-
tributed $648,000 for the year ended September 30,1998,
$694,000 for the nine months ended September 30,1997, and
$826,000 for the year ended December 31,1996. This 401(k) sav-
ings plan will be merged into the ESOP effective January 1,1999,
and the United Cities Division employees will receive the same
benefits as other Atmos employees.
11 OTHER POSTRETIREMENT BENEFITS
Atmos sponsors two postretirement plans other than pensions.
Each provides health care benefits to retired employees. One pro-
vides benefits to the United Cities Division retirees and the other
provides medical benefits to all other retired Atmos employees.
Substantially all of the Company’s employees become eligible
39
ATMOS ENERGY CORPORATION