KWK 11-K 2013.12.31

11-K 1 kwk11-k20131231.htm 11-K KWK 11-K 2013.12.31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 11-K

FOR ANNUAL REPORTS OF EMPLOYEE STOCK

PURCHASE, SAVINGS AND SIMILAR PLANS

PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)



þ	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013



¨	TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-14837

Quicksilver Resources Inc. 401(k) Plan

(Full title of the plan)

Quicksilver Resources Inc.

801 Cherry Street, Suite 3700, Unit 19

Fort Worth, Texas 76102

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

QUICKSILVER RESOURCES INC. 401(k) PLAN

INDEX




Report of Independent Registered Public Accounting Firm	3

Financial Statements	4

Supplemental Schedule	13

Exhibit Index	14

Signatures	15

Consent of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator of the

Quicksilver Resources Inc. 401(k) Plan

We have audited the accompanying statements of net assets available for benefits of the Quicksilver Resources Inc. 401(k) Plan (the “Plan”) as of December 31, 2013 and 2012 and the related statements of changes in net assets available for benefits for each of the years in the two-year period ended December 31, 2013. The Plan's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in its net assets available for benefits for the year ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Form 5500, Schedule H, Line 4i - Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

/s/ WHITLEY PENN LLP

Fort Worth, Texas

June 19, 2014

QUICKSILVER RESOURCES INC. 401(k) PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS



	December 31,
	2013			2012
ASSETS
Investments at fair value	$	30,007,554		$	26,481,358
Receivables:
Employee contributions	570			—
Employer contributions	725,398			1,004,239
Notes receivable from participants	715,053			924,184
Total assets	31,448,575			28,409,781

LIABILITIES
Due to broker	36,000			—
Excess contributions payable	14,599			282
Total liabilities	50,599			282

Net assets available for benefits at fair value	31,397,976			28,409,499
Adjustment from fair value to contract value for fully benefit-responsive investment contracts	(10,586		)	(58,833		)
NET ASSETS AVAILABLE FOR BENEFITS	$	31,387,390		$	28,350,666

See accompanying notes to financial statements.

QUICKSILVER RESOURCES INC. 401(k) PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2013




Additions to net assets:
Net appreciation in fair value of investments	$	3,633,635
Employee contributions	2,110,930
Employer contributions	1,839,830
Interest and dividend income	1,151,759
Other additions	1,562
Total additions	8,737,716
Deductions from net assets:
Distributions to participants	5,688,504
Administrative expenses	12,488
Total deductions	5,700,992
Net increase in net assets available for benefits	3,036,724

Net assets available for benefits, January 1, 2013	28,350,666
Net assets available for benefits, December 31, 2013	$	31,387,390

See accompanying notes to financial statements.

QUICKSILVER RESOURCES INC. 401(k) PLAN

1. DESCRIPTION OF PLAN

The following description of the Quicksilver Resources Inc. 401(k) Plan (the “Plan”) provides only general information. The terms of the Plan are more fully described in the Plan document and the Plan’s summary plan description, which are available to each participant.

General – The Plan is a defined contribution plan established on January 1, 1999, and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The purpose of the Plan is to provide the U.S. employees of Quicksilver Resources Inc. (the “Company”) with benefits upon retirement, disability, death or other termination of employment.

Participation – U.S. employees of the Company who are at least 21 years of age are eligible to make salary deferral contributions as of the first payroll period following employment.

Contributions – Participants may contribute their compensation on a pretax basis up to the maximum amount allowed by the Internal Revenue Code (the “Code”) (which was $17,500 for 2013) and direct their contributions among 12 investment options. Participant contributions are voluntary. Subject to provisions of the Plan and applicable provisions of the Code and Treasury Regulations, an eligible employee may make a qualified rollover contribution into the Plan. The Plan also permits participants who are age 50 or older by the end of a calendar year to make supplemental contributions. In 2013, such contributions were limited to $5,500. Eligible participants are automatically enrolled in the Plan and have 4% of eligible compensation deducted and contributed to the Plan (unless the participant elects a different percentage or elects not to participate).

The Company matches 100% of employee contributions up to 4% of eligible compensation. The Company made matching employer contributions of approximately $1.1 million for 2013 which are included in employer contributions in the accompanying financial statements.

The Company also makes non-elective contributions, currently at 3% of eligible compensation, to the Plan each year for eligible Plan participants. Participants are generally eligible to share in the non-elective contributions for a Plan year if they are at least 21 years of age, have completed at least one year of service with the Company and at least 1,000 hours of service during the Plan year and remain employed by the Company as of December 31. The Company made non-elective contributions of approximately $0.7 million for 2013.

Participant Accounts – Each participant’s account is credited with the participant’s contributions and allocations of both the Company’s contributions and Plan earnings. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account balance.

Vesting – Active participants become 20% vested in non-elective contributions provided by the Company after one year of service and vest an additional 20% for each year of service thereafter. Participants become 100% vested after five years of service or upon death, retirement, or disability while employed. Participant contributions, matching employer contributions and earnings thereon are fully vested at all times. A participant who terminates employment prior to being fully vested will forfeit the amount of nonvested non-elective Company contributions and earnings thereon. All forfeitures are applied toward payment of administrative expenses of the Plan or toward reducing employer contributions. Unallocated forfeitures of $79,204 and $34,170 were available at December 31, 2013 and 2012, respectively, to pay administrative expenses or reduce employer contributions.

Notes Receivable From Participants – Loans are available to all participants and are made at the sole discretion of the Plan Administrator and are recorded as notes receivable from participants. A participant may not request a loan for less than $1,000 and the amount of the participant’s loan may not exceed the lesser of (a) 50% of the participant’s vested balance, or (b) $50,000 less the excess of the highest outstanding loan balance in the previous 12 months over the participant’s current outstanding loan balance. The loans are secured by the balance in the participant’s account and bear interest at a fixed rate for the life of the loan. The interest rate is determined to be the prime interest rate plus 1% at the time of loan funding. Loans must be repaid within five years of the loan, unless the loan qualifies as a home loan, in which case, the loan must be repaid within a reasonable amount of time as determined at the time the loan is made and is not to exceed 30 years. Interest rates for current outstanding loans range from 4.25% to 6.00%, but have a weighted average interest rate of 4.27%. Principal and interest are paid ratably through semi-monthly payroll deductions.

QUICKSILVER RESOURCES INC. 401(k) PLAN

Payment of Benefits – Upon termination of service, an eligible participant’s vested account balance may be paid in a lump sum (or through installments for required minimum distributions). Payment may be deferred until age 70¹/2 if the participant’s vested account balance exceeds $1,000. Employees may also make pre-retirement withdrawals from the vested portion of their accounts at or after age 59¹/2.


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting – The financial statements of the Plan are prepared in conformity with accounting principles generally accepted in the United States of America.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Payment of Benefits – Benefits to participants are recorded when paid.

Expenses – The Company pays substantially all of the trustee fees, brokerage fees and other expenses incident to the administration of the Plan. These costs are not included in the accompanying financial statements. Other expenses, including a setup fee and an annual maintenance fee for new loans, as well as a processing fee for withdrawals, may be deducted from the participants’ accounts.

Investments – Securities held by the Plan are stated at fair value with the increase or decrease in the value of securities held, plus any net income or loss, allocated to the participants’ accounts. Dividends are recorded on the ex-dividend date. Interest income is accrued as earned. Investments in mutual funds are reported at fair value which is based on quoted market prices.

Investments in the Quicksilver Resources Inc. Unitized Stock Fund (“Unitized Fund”) are indirect investments in the common stock of Quicksilver Resources Inc. The fair value of the Unitized Fund is based on the underlying common stock value adjusted for capital gains, and fees plus the cash portion of the Unitized Fund invested in money market funds.

The Morley Stable Value Fund (the “Fund”) is a stable value fund that is a common collective trust fund designed for retirement trusts. The Fund may invest in conventional, synthetic and separate account investment contracts issued by life insurance companies, banks and other financial institutions. Investments in the common collective trust fund are stated at fair value as determined by the issuer of the common collective investment trust fund based on the fair market value of the underlying investments. Underlying investments in benefit-responsive investment contracts are valued at fair market value of the underlying investments and then adjusted by the issuer to contract value. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. Contract value represents contributions made to the Fund, plus earnings, less participant withdrawals.

Investment Valuation and Income – The investments of the Plan are subject to market or credit risks customarily associated with equity and debt investments. Note 4 contains more information related to the Plan’s valuation methodologies. Net appreciation (depreciation) includes realized gains and losses on investments.

Notes Receivable from Participants – Participant loans are classified as notes receivable from participants, which are separate from Plan investments, and are measured at their unpaid principal balance.

QUICKSILVER RESOURCES INC. 401(k) PLAN


3.	INVESTMENTS

The Plan offers 12 investment options, including 10 mutual funds, indirect investments in Quicksilver Resources Inc. common stock through the Unitized Fund and a common collective trust fund (the Morley Stable Value Fund). Participants may designate the allocation of their contributions across the investment options. Invested funds of participants, including Company contributions, can be transferred between funds at the election of the participant, subject to certain limitations as defined in the Plan.

The fair value of investments that represent 5% or more of the Plan’s net assets at December 31, 2013 and 2012, are as follows:



	2013			2012
Loomis Sayles Investment Grade Bond Y Fund	$	5,597,625		$	7,067,364
Quicksilver Resources Inc. Unitized Stock Fund	3,422,327			2,601,428
American Beacon Large Cap Value Fund	3,382,931			2,674,239
Morley Stable Value Fund	3,247,847		3	3,137,433
Columbia Large Cap Index Z Fund	2,991,044			2,307,241
Laudus Investors US Large Cap Growth Fund	2,300,526			1,763,016
Dodge & Cox International Stock Fund	2,110,642			1,805,217
DFA US Micro Cap	1,998,561			*
Perkins Mid Cap Value T Fund	1,819,082			1,453,350

* Represents less than 5% of the Plan's net assets for the period indicated.

During 2013 the fair value of the Plan’s investments appreciated as follows:




Mutual funds	$	3,231,090
Common collective trust fund	23,032
Unitized fund	379,513

	$	3,633,635

Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.

QUICKSILVER RESOURCES INC. 401(k) PLAN


4.	FAIR VALUE MEASUREMENTS

The Plan is required to:


•	Define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establish a framework for measuring fair value;


•	Establish a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date;


•	Eliminate large position discounts for financial instruments quoted in active markets; and


•	Provide certain disclosures about instruments measured at fair value.

Determination of Fair Value

Valuation methodologies were applied to all of the assets and liabilities reported at fair value. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon models that primarily use as inputs market-based or independently-sourced market parameters, including yield curves, interest rates, volatilities, equity or debt prices, foreign exchange rates and credit curves. In addition to market information, models also incorporate transaction details such as maturity. Valuation adjustments, such as liquidity valuation adjustments, may be necessary when the Plan is unable to observe a recent market price for a financial instrument that trades in inactive (or less active) markets. Liquidity adjustments are not taken for positions classified within Level 1 (as defined below) of the fair value hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Valuation Hierarchy

There is a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:


•	Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.


•	Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the general classification of such instruments pursuant to the valuation hierarchy.

Quicksilver Resources Inc. Unitized Stock Fund – Level 1

This Unitized Fund is valued at the closing price of the Quicksilver Resources Inc. common stock reported on the New York Stock Exchange as adjusted for dividends, capital gains, and fees plus the cash portion of the Unitized Fund invested in money market funds.

Registered investment companies (mutual funds) – Level 1

These investments are public investment vehicles valued using the Net Asset Value (“NAV”) of the respective investment company using a quoted market price.

Common collective trust fund – Level 2

These investments are public investment vehicles valued using the NAV provided by the funds’ administrator. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

QUICKSILVER RESOURCES INC. 401(k) PLAN

The following tables present the financial instruments carried at fair value as of December 31, 2013 and 2012. The Plan has no assets classified within Level 3 of the valuation hierarchy.



	Fair Value Measurements as of December 31, 2013
	Level 1		Level 2		Total
Mutual funds:
Value funds	$	6,566,480	$	—	$	6,566,480
Bond funds	5,597,625		—		5,597,625
Growth funds	4,035,831		—		4,035,831
Blended funds	7,100,247		—		7,100,247
Total mutual funds	23,300,183		—		23,300,183
Unitized fund	3,422,327		—		3,422,327
Common collective trust fund	—		3,247,847		3,247,847
Cash	37,197		—		37,197
Total assets at fair value	$	26,759,707	$	3,247,847	$	30,007,554



	Fair Value Measurements as of December 31, 2012
	Level 1		Level 2		Total
Mutual funds:
Value funds	$	4,127,589	$	—	$	4,127,589
Bond funds	7,067,364		—		7,067,364
Growth funds	4,408,515		—		4,408,515
Blended funds	5,121,473		—		5,121,473
Total mutual funds	20,724,941		—		20,724,941
Unitized fund	2,601,428		—		2,601,428
Common collective trust fund	—		3,137,433		3,137,433
Cash	17,556		—		17,556
Total assets at fair value	$	23,343,925	$	3,137,433	$	26,481,358

QUICKSILVER RESOURCES INC. 401(k) PLAN


5.	PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, affected participants will become 100% vested in their accounts.


6.	TAX STATUS

The Internal Revenue Service ("IRS") issued a favorable determination letter dated May 14, 2010 for the Plan. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements. An application for an updated determination letter was submitted to the IRS for approval in January 2014.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes the Plan is no longer subject to income tax examination for years prior to 2010.


7.	PARTY-IN-INTEREST TRANSACTIONS

A portion of the Plan’s assets, approximately 11% at December 31, 2013 and 10% at December 31, 2012, are invested directly in Quicksilver Resources common stock through the Unitized Fund. Because the Company is the plan sponsor, transactions involving Quicksilver Resources common stock qualify as party-in-interest transactions. All of these party-in-interest transactions are exempt from the prohibited transaction rules.

QUICKSILVER RESOURCES INC. 401(k) PLAN


8.	RECONCILIATION OF FINANCIAL STATEMENTS AND FORM 5500

The following is a reconciliation of the net assets available for benefits per the financial statements to the Plan’s Form 5500:



	As of December 31,
	2013		2012
Net assets available for benefits per the financial statements	$	31,387,390	$	28,350,666
Adjustments from contract value to fair value for fully benefit-responsive investment contracts	10,586		58,833
Adjustment for amounts allocated to withdrawing participants	—		(15,007		)
Net assets available for benefits per the Form 5500	$	31,397,976	$	28,394,492

The following is a reconciliation of additions to net assets available for benefits per the financial statements to the Plan’s Form 5500:



	Year Ended
	December 31, 2013
Total additions per the financial statements	$	8,737,716
Change in net adjustment from contract value to fair value for fully benefit-responsive investment contracts	(48,247		)

Total additions per the Form 5500	$	8,689,469

Fully benefit-responsive investment contracts are recorded on the Form 5500 at fair value but are adjusted to contract value for financial statement presentation.

Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been requested and approved prior to December 31, but not yet paid as of that date. However, for financial statement purposes such amounts are not recorded as a withdrawal until paid. The following is a reconciliation of participant withdrawals per the financial statements to the Form 5500:



	Year Ended
	December 31, 2013
Participant withdrawals per the financial statements	$	5,688,504
Adjustment for amounts allocated to withdrawing participants in prior year	(15,007		)

Participant withdrawals per the Form 5500	$	5,673,497

SUPPLEMENTAL SCHEDULE

QUICKSILVER RESOURCES INC. 401(k) PLAN

FORM 5500, SCHEDULE H, LINE 4i –

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

AS OF DECEMBER 31, 2013

EIN 75-2756163

Plan # 001




(a)	(b)	(c)	(e)
	Identity of issue, borrower, lessor, or similar party	Description of investment including maturity date, rate of interest, collateral, par or maturity value	Current value
*	Cash, non-interest bearing	Cash, non-interest bearing	$	37,197
	American Beacon Large Cap Value Fund	Mutual Fund	3,382,931
	Columbia Acorn Z Fund	Mutual Fund	922,815
	Columbia Large Cap Index Z Fund	Mutual Fund	2,991,044
	DFA US Micro Cap Fund	Mutual Fund	1,998,561
	Dodge & Cox International Stock Fund	Mutual Fund	2,110,642
	Eagle Small Cap Growth Fund	Mutual Fund	812,490
	MFS International Value R3	Mutual Fund	1,364,467
	Laudus Investors US Large Cap Growth Fund	Mutual Fund	2,300,526
	Loomis Sayles Investment Grade Bond Y Fund	Mutual Fund	5,597,625
	Perkins Mid Cap Value T Fund	Mutual Fund	1,819,082
	Morley Stable Value Fund	Common Collective Trust Fund	3,247,847
*	Quicksilver Resources Inc. Unitized Stock Fund	Company Stock	3,422,327
*	Participant loans	Interest rates of 4.25% to 6.00%, maturing through June 5, 2022	715,053
			$	30,722,607



*	Represents a party-in-interest, as defined by ERISA.

Note: Column (d) is excluded from the presentation, as all investing activity is participant-directed; therefore, no disclosure of cost information is required.

QUICKSILVER RESOURCES INC. 401(k) PLAN

EXHIBIT INDEX




Exhibit No.		Description

*23.1		Consent of Independent Registered Public Accounting Firm



*	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Quicksilver Resources Inc. 401(k) Plan Administrative and Investment Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: June 19, 2014




401(k) Plan Administrative and Investment Committee

By:		/s/ Anne D. Self
		Anne D. Self, Chair of the
		401(k) Plan Administrative and Investment Committee

EXHIBIT INDEX




Exhibit No.		Description

*23.1		Consent of Independent Registered Public Accounting Firm



*	Filed herewith