NOTE 9 EMPLOYEE BENEFIT PLANS

We maintain a domestic noncontributory defined benefit pension plan covering certain U.S. employees who meet certain age and service requirements. In July 2003, we revised the Helmerich & Payne, Inc. Employee Retirement Plan ("Pension Plan") to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen.

The following table provides a reconciliation of the changes in the pension benefit obligations and fair value of Pension Plan assets over the two-year period ended September 30, 2013 and a statement of the funded status as of September 30, 2013 and 2012:

	2013			2012

	(in thousands)
Accumulated Benefit Obligation	$	102,680		$	112,062
Changes in projected benefit obligations
Projected benefit obligation at beginning of year	$	112,062		$	104,911
Interest cost		4,339			4,498
Actuarial (gain) loss		(9,320	)		5,990
Benefits paid		(4,401	)		(3,337	)

Projected benefit obligation at end of year	$	102,680		$	112,062

Change in plan assets
Fair value of plan assets at beginning of year	$	86,718		$	67,284
Actual return on plan assets		12,369			14,495
Employer contribution		2,132			8,276
Benefits paid		(4,401	)		(3,337	)

Fair value of plan assets at end of year	$	96,818		$	86,718

Funded status of the plan at end of year	$	(5,862	)	$	(25,344	)

The amounts recognized in the Consolidated Balance Sheets are as follows (in thousands):



Accrued liabilities	$	(145	)	$	(95	)
Noncurrent liabilities-other		(5,717	)		(25,249	)

Net amount recognized	$	(5,862	)	$	(25,344	)

The amounts recognized in Accumulated Other Comprehensive Income at September 30, 2013 and 2012, and not yet reflected in net periodic benefit cost, are as follows (in thousands):



Net actuarial loss	$	(19,210	)	$	(37,172	)
Prior service cost		—			(1	)

Total	$	(19,210	)	$	(37,173	)

The amount recognized in Accumulated Other Comprehensive Income and not yet reflected in periodic benefit cost expected to be amortized in next year's periodic benefit cost is a net actuarial loss of $0.9 million.

The weighted average assumptions used for the pension calculations were as follows:

	Years Ended September 30,

	2013			2012			2011
Discount rate for net periodic benefit costs		4.06	%		4.33	%		4.48	%
Discount rate for year-end obligations		4.80	%		4.06	%		4.33	%
Expected return on plan assets		7.06	%		7.16	%		8.00	%

We contributed $2.1 million to the Pension Plan in fiscal 2013 to fund distributions in lieu of liquidating pension assets. We estimate contributing at least $0.1 million in fiscal 2014 to meet the minimum contribution required by law and may make additional contributions in fiscal 2014 if needed to fund unexpected distributions.

Components of the net periodic pension expense (benefit) were as follows:

	Years Ended September 30,

	2013			2012			2011
	(in thousands)
Interest cost	$	4,339		$	4,498		$	4,519
Expected return on plan assets		(6,099	)		(5,463	)		(5,050	)
Amortization of prior service cost		1			2			—
Recognized net actuarial loss		2,372			3,567			2,976
Settlement/curtailment		—			—			28

Net pension expense (benefit)	$	613		$	2,604		$	2,473

The following table reflects the expected benefits to be paid from the Pension Plan in each of the next five fiscal years, and in the aggregate for the five years thereafter (in thousands).

Years Ended September 30,

2014		2015		2016		2017		2018		2019 - 2023		Total
$	5,314	$	5,903	$	6,494	$	5,979	$	7,612	$	36,529	$	67,831

Included in the Pension Plan is an unfunded supplemental executive retirement plan.

INVESTMENT STRATEGY AND ASSET ALLOCATION

Our investment policy and strategies are established with a long-term view in mind. The investment strategy is intended to help pay the cost of the Plan while providing adequate security to meet the benefits promised under the Plan. We maintain a diversified asset mix to minimize the risk of a material loss to the portfolio value that might occur from devaluation of any single investment. In determining the appropriate asset mix, our financial strength and ability to fund potential shortfalls are considered. Plan assets are invested in portfolios of diversified public-market equity securities and fixed income securities. The Plan does not directly hold securities of the Company.

The expected long-term rate of return on Plan assets is based on historical and projected rates of return for current and planned asset classes in the Plan's investment portfolio after analyzing historical experience and future expectations of the return and volatility of various asset classes.

The target allocation for 2014 and the asset allocation for the Pension Plan at the end of fiscal 2013 and 2012, by asset category, follows:

	Target Allocation			Percentage of Plan Assets At September 30,

Asset Category	2014			2013			2012
U.S. equities		55	%		58	%		55	%
International equities		15			13			12
Fixed income		27			27			25
Real estate and other		3			2			8

Total		100	%		100	%		100	%

PLAN ASSETS

The fair value of Plan assets at September 30, 2013 and 2012, summarized by level within the fair value hierarchy described in Note 8, are as follows:

	Fair Value as of September 30, 2013

	Total		Level 1		Level 2		Level 3
	(in thousands)
Short-term investments	$	1,983	$	1,983	$	—	$	—
Mutual funds:
Domestic stock funds		44,129		44,129		—		—
Bond funds		23,749		23,749		—		—
International stock funds		12,519		12,519		—		—

Total mutual funds		80,397		80,397		—		—
Domestic common stock		12,998		12,998		—		—
Foreign equity stock		1,153		1,153		—		—
Oil and gas properties		287		—		—		287

Total	$	96,818	$	96,531	$	—	$	287

	Fair Value as of September 30, 2012

	Total		Level 1		Level 2		Level 3
	(in thousands)
Short-term investments	$	7,233	$	7,233	$	—	$	—
Mutual funds:
Domestic stock funds		36,209		36,209		—		—
Bond funds		21,458		21,458		—		—
International stock funds		10,069		10,069		—		—

Total mutual funds		67,736		67,736		—		—
Domestic common stock		10,543		10,543		—		—
Foreign equity stock		907		907		—		—
Oil and gas properties		299		—		—		299

Total	$	86,718	$	86,419	$	—	$	299

The Plan's financial assets utilizing Level 1 inputs are valued based on quoted prices in active markets for identical securities. The Plan has no assets utilizing Level 2. The Plan's assets utilizing Level 3 inputs consist of oil and gas properties. The fair value of oil and gas properties is determined by Wells Fargo Bank, N.A., based upon actual revenue received for the previous twelve-month period and experience with similar assets.

The following table sets forth a summary of changes in the fair value of the Plan's Level 3 assets for the years ended September 30, 2013 and 2012:

	Oil and Gas Properties

	Years Ended September 30,
	2013			2012
	(in thousands)
Balance, beginning of year	$	299		$	275
Unrealized gains (losses) relating to property still held at the reporting date		(12	)		24

Balance, end of year	$	287		$	299

DEFINED CONTRIBUTION PLAN

Substantially all employees on the United States payroll may elect to participate in the 401(k)/Thrift Plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first five percent of the participant's compensation subject to certain limitations. The annual expense incurred for this defined contribution plan was $28.3 million, $26.7 million and $21.0 million in fiscal 2013, 2012 and 2011, respectively.