8. Interim Pension and Other Postretirement Benefit Plan Information

9 Months Ended

Jun. 30, 2011

Disclosure Interim Pension and Other Postretirement Benefit Plans

8. Interim Pension and Postretirement Benefit Plans

8. Interim Pension and Other Postretirement Benefit Plan Information

The components of our net periodic pension cost for our pension and other postretirement benefit plans for the three and nine months ended June 30, 2011 and 2010 are presented in the following table. Most of these costs are recoverable through our gas distribution rates; however, a portion of these costs is capitalized into our gas distribution rate base. The remaining costs are recorded as a component of operation and maintenance expense.

In August 2010, the Board of Directors of Atmos Energy approved a proposal to close the Pension Account Plan (PAP) to new participants, effective October 1, 2010. Employees participating in the PAP as of October 1, 2010 were allowed to make a one-time election to migrate from the PAP into our defined contribution plan with enhanced features, effective January 1, 2011. Participants who chose to remain in the PAP will continue to earn benefits and interest allocations with no changes to their existing benefits. During the election period, a limited number of participants chose to join the new plan, which resulted in an immaterial curtailment gain and a revaluation of the net periodic pension cost for the remainder of fiscal 2011. The curtailment gain was recorded in our second fiscal quarter. The revaluation of the net periodic pension cost resulted in an increase in the discount rate, effective January 1, 2011 to 5.68 percent, which will reduce our net periodic pension cost by approximately $1.8 million for the remainder of the fiscal year. All other actuarial assumptions remained unchanged.

			Three Months Ended June 30
			Pension Benefits				Other Benefits
			2011		2010		2011		2010
			(In thousands)
Components of net periodic pension cost:
	Service cost		$	4,257	$	3,993	$	3,601	$	3,360
	Interest cost			7,055		6,524		3,204		3,018
	Expected return on assets			(6,285)		(6,320)		(681)		(615)
	Amortization of transition asset			-		-		377		377
	Amortization of prior service cost			(106)		(193)		(362)		(375)
	Amortization of actuarial loss			2,748		2,822		87		93
		Net periodic pension cost	$	7,669	$	6,826	$	6,226	$	5,858
			Nine Months Ended June 30
			Pension Benefits				Other Benefits
			2011		2010		2011		2010
			(In thousands)
Components of net periodic pension cost:
	Service cost		$	12,894	$	11,982	$	10,803	$	10,077
	Interest cost			21,034		19,569		9,610		9,051
	Expected return on assets			(18,533)		(18,960)		(2,045)		(1,845)
	Amortization of transition asset			-		-		1,133		1,134
	Amortization of prior service cost			(323)		(582)		(1,087)		(1,125)
	Amortization of actuarial loss			8,990		8,469		260		282
	Curtailment gain			(40)		-		-		-
		Net periodic pension cost	$	24,022	$	20,478	$	18,674	$	17,574

The assumptions used to develop our net periodic pension cost for the three and nine months ended June 30, 2011 and 2010 are as follows:

	Pension				Other
	Account Plan				Pension Benefits				Other Benefits
	2011		2010		2011		2010		2011		2010
Discount rate	5.68	%	5.52	%	5.39	%	5.52	%	5.39	%	5.52	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%
Expected return on plan assets	8.25	%	8.25	%	8.25	%	8.25	%	5.00	%	5.00	%

The discount rate used to compute the present value of a plan's liabilities generally is based on rates of high-grade corporate bonds with maturities similar to the average period over which the benefits will be paid. Generally, our funding policy has been to contribute annually an amount in accordance with the requirements of the Employee Retirement Income Security Act of 1974. In accordance with the Pension Protection Act of 2006 (PPA), we determined the funded status of our plans as of January 1, 2011. Based upon this valuation, we willbe required to contribute less than $2 millionto our pension plans during fiscal 2011.

We contributed $8.7 million to our other post-retirement benefit plans during the nine months ended June 30, 2011. We expect to contribute a total of approximately $12 million to these plans during fiscal 2011.

For our Supplemental Executive Retirement Plans, we own equity securities that are classified as available-for-sale securities. These securities are reported at market value with unrealized gains and losses shown as a component of accumulated other comprehensive income (loss). We regularly evaluate the performance of these investments on a fund by fund basis for impairment, taking into consideration the fund's purpose, volatility and current returns. If a determination is made that a decline in fair value is other than temporary, the related fund is written down to its estimated fair value and the other-than-temporary impairment is recognized in the income statement.

Assets for the supplemental plans are held in separate rabbi trusts and comprise the following:

				Gross		Gross
		Amortized		Unrealized		Unrealized
		Cost		Gain		Loss		Fair Value
		(In thousands)
As of June 30, 2011:
	Domestic equity mutual funds	$	27,593	$	7,627	$	-	$	35,220
	Foreign equity mutual funds		4,597		1,416		-		6,013
	Money market funds		2,812		-		-		2,812
		$	35,002	$	9,043	$	-	$	44,045
As of September 30, 2010:
	Domestic equity mutual funds	$	29,540	$	5,698	$	-	$	35,238
	Foreign equity mutual funds		4,753		976		-		5,729
	Money market funds		499		-		-		499
		$	34,792	$	6,674	$	-	$	41,466