Atmos Energy 1999 Annual Report Download - page 60

Atmos
Energy
Corporation
56
salary reduction agreement with the Company pursuant to which the
participant’s salary is reduced by an amount not more than 21%.
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. Matching contributions to the
ESOP were expensed as incurred and amounted to $2.4 million, $1.8
million, and $2.1 million for 1999, 1998 and 1997, respectively. The
directors may also approve discretionary contributions, subject to the
provisions of the Internal Revenue Code of 1986 and applicable regu-
lations of the Internal Revenue Service. No discretionary contributions
were made for 1999 and 1998.
401(k) Savings Plan Prior to January 1, 1999, the Company spon-
sored a 401(k) savings plan for the United Cities Division employees.
The Company made fixed matching contributions of $102,000 for
the three months ended December 31, 1998, $648,000 for the nine
months ended September 30, 1998, and $694,000 for the year
ended December 31, 1997. In addition, a discretionary matching
contribution of $227,000 was made for 1998. The 401(k) savings
plan was merged into the ESOP effective January 1, 1999, and the
United Cities Division employees subsequently receive the same
benefits as other Atmos employees.
9) OTHER POSTRETIREMENT BENEFITS
Prior to January 1, 1999, Atmos sponsored two postretirement
plans other than pensions. Each provided health care benefits to
retired employees. One provided benefits to the United Cities Division
retirees and the other provided medical benefits to all other retired
Atmos employees.
Effective January 1, 1999, the United Cities plan was merged into
the Atmos plan and began providing benefits to future retirees that are
essentially the same as provided to other Atmos employees. The obliga-
tions as of September 30, 1999 and 1998 reflect this plan change.
Substantially all of the Company’s employees become eligible for
these benefits if they reach retirement age while working for the
Company and attain certain specified years of service. In addition,
participant contributions are required under the plan.
The Company records the accrued postretirement cost primarily
in deferred credits and other liabilities. The following table sets forth
the total liability currently recognized for the postretirement plan
other than pensions:
1999 1998
(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year $ 64,494 $ 53,295
Service cost 2,150 1,659
Interest cost 4,360 3,809
Plan participants’ contributions 763 382
Curtailments/special termination benefits — 2,125
Plan amendments — 1,888
Actuarial (gain) loss (10,195) 6,210
Benefits paid (4,740) (4,874)
Benefit obligation at end of year 56,832 64,494
Change in plan assets:
Fair value of plan assets at
beginning of year 6,380 5,614
Actual return on plan assets 377 295
Employer contribution 7,184 4,963
Plan participants’ contribution 763 382
Benefits paid (4,740) (4,874)
Fair value of plan assets at end of year 9,964 6,380
Funded status (46,868) (58,114)
Unrecognized transition obligation 21,732 23,243
Unrecognized prior service cost 3,094 3,614
Unrecognized net (gain) loss (2,300) 8,571
Accrued postretirement cost $ (24,342) $ (22,686)
1999 1998 1997
Weighted average
assumptions for end
of year disclosure:
Discount rate 7.5% 7.0% 7.5%
Expected return on
plan assets 5.3% 5.3% 5.3%
Initial trend rate 9.0% 9.0% 7.5%
Ultimate trend rate 5.0% 4.5% 5.0%
Number of years from
initial to ultimate trend 5 6 3