Retirement and Post-Retirement Employee Benefit Plans

We have both funded and unfunded noncontributory defined benefit plans that together cover most of our employees. We also maintain post-retirement plans that provide health care benefits to retired employees. Finally, we sponsor defined contribution plans that cover substantially all employees. These plans are discussed in further detail below.

As a rate regulated entity, we generally recover our pension costs in our rates over a period of up to 15 years. The amounts that have not yet been recognized in net periodic pension cost that have been recorded as regulatory assets are as follows:



	Defined Benefits Plans			Supplemental Executive Retirement Plans		Postretirement Plans			Total
	(In thousands)
September 30, 2013
Unrecognized transition obligation	$	—		$	—	$	628		$	628
Unrecognized prior service credit	(91		)	—		(5,961		)	(6,052		)
Unrecognized actuarial loss	108,621			31,466		35,961			176,048
	$	108,530		$	31,466	$	30,628		$	170,624
September 30, 2012
Unrecognized transition obligation	$	—		$	—	$	1,709		$	1,709
Unrecognized prior service credit	(232		)	—		(7,411		)	(7,643		)
Unrecognized actuarial loss	187,050			43,995		63,402			294,447
	$	186,818		$	43,995	$	57,700		$	288,513

Defined Benefit Plans

Employee Pension Plans

As of September 30, 2013, we maintained two defined benefit plans: the Atmos Energy Corporation Pension Account Plan (the Plan) and the Atmos Energy Corporation Retirement Plan for Mississippi Valley Gas Union Employees (the Union Plan) (collectively referred to as the Plans). The assets of the Plans are held within the Atmos Energy Corporation Master Retirement Trust (the Master Trust).

The Plan is a cash balance pension plan that was established effective January 1999 and covers most of the employees of Atmos Energy’s regulated operations. Opening account balances were established for participants as of January 1999 equal to the present value of their respective accrued benefits under the pension plans which were previously in effect as of December 31, 1998. The Plan credits an allocation to each participant’s account at the end of each year according to a formula based on the participant’s age, service and total pay (excluding incentive pay).

The Plan also provides for an additional annual allocation based upon a participant’s age as of January 1, 1999 for those participants who were participants in the prior pension plans. The Plan credited this additional allocation each year through December 31, 2008. In addition, at the end of each year, a participant’s account is credited with interest on the employee’s prior year account balance. A special grandfather benefit also applied through December 31, 2008, for participants who were at least age 50 as of January 1, 1999 and who were participants in one of the prior plans on December 31, 1998. Participants are fully vested in their account balances after three years of service and may choose to receive their account balances as a lump sum or an annuity. In August 2010, the Board of Directors of Atmos Energy approved a proposal to close the Plan to new participants effective October 1, 2010. Additionally, employees participating in the Plan as of October 1, 2010 were allowed to make a one-time election to migrate from the Plan into our defined contribution plan, which was enhanced, effective January 1, 2011.

The Union Plan is a defined benefit plan that covers substantially all full-time union employees in our Mississippi Division. Under this plan, benefits are based upon years of benefit service and average final earnings. Participants vest in the plan after five years and will receive their benefit in an annuity.

Generally, our funding policy is to contribute annually an amount in accordance with the requirements of the Employee Retirement Income Security Act of 1974, including the funding requirements under the Pension Protection Act of 2006 (PPA). However, additional voluntary contributions are made from time to time as considered necessary. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.

During fiscal 2013 and 2012 we contributed $32.7 million and $46.5 million in cash to the Plans to achieve a desired level of funding while maximizing the tax deductibility of this payment. Based upon market conditions subsequent to September 30, 2013, the current funded position of the Plans and the new funding requirements under the PPA, we anticipate contributing between $15 million and $25 million to the Plans in fiscal 2014. Further, we will consider whether an additional voluntary contribution is prudent to maintain certain PPA funding thresholds.

We manage the Master Trust’s assets with the objective of achieving a rate of return net of inflation of approximately four percent per year. We make investment decisions and evaluate performance on a medium-term horizon of at least three to five years. We also consider our current financial status when making recommendations and decisions regarding the Master Trust’s assets. Finally, we strive to ensure the Master Trust’s assets are appropriately invested to maintain an acceptable level of risk and meet the Master Trust’s long-term asset investment policy adopted by the Board of Directors.

To achieve these objectives, we invest the Master Trust’s assets in equity securities, fixed income securities, interests in commingled pension trust funds, other investment assets and cash and cash equivalents. Investments in equity securities are diversified among the market’s various subsectors in an effort to diversify risk and maximize returns. Fixed income securities are invested in investment grade securities. Cash equivalents are invested in securities that either are short term (less than 180 days) or readily convertible to cash with modest risk.

The following table presents asset allocation information for the Master Trust as of September 30, 2013 and 2012.



	Targeted Allocation Range	Actual Allocation September 30
Security Class	Targeted Allocation Range	2013		2012
Domestic equities	35%-55%	46.5	%	42.6	%
International equities	10%-20%	16.1	%	13.9	%
Fixed income	10%-30%	14.9	%	18.6	%
Company stock	5%-15%	12.6	%	12.0	%
Other assets	5%-15%	9.9	%	12.9	%

At September 30, 2013 and 2012, the Plan held 1,169,700 shares of our common stock, which represented 12.6 percent and 12.0 percent of total Master Trust assets. These shares generated dividend income for the Plan of approximately $1.6 million and $1.6 million during fiscal 2013 and 2012.

Our employee pension plan expenses and liabilities are determined on an actuarial basis and are affected by numerous assumptions and estimates including the market value of plan assets, estimates of the expected return on plan assets and assumed discount rates and demographic data. We review the estimates and assumptions underlying our employee pension plans annually based upon a September 30 measurement date. The development of our assumptions is fully described in our significant accounting policies in Note 2. The actuarial assumptions used to determine the pension liability for the Plans were determined as of September 30, 2013 and 2012 and the actuarial assumptions used to determine the net periodic pension cost for the Plans were determined as of September 30, 2012, 2011 and 2010. These assumptions are presented in the following table:



	Pension Liability				Pension Cost
	2013		2012		2013		2012		2011
Discount rate	4.95	%	4.04	%	4.04	%	5.05	%	5.39	%	⁽¹⁾
Rate of compensation increase	3.50	%	3.50	%	3.50	%	3.50	%	4.00	%
Expected return on plan assets	7.25	%	7.75	%	7.75	%	7.75	%	8.25	%


⁽¹⁾	The discount rate for the Pension Account Plan increased from 5.39% to 5.68% effective January 1, 2011 due to a curtailment gain recorded in fiscal 2011.

The following table presents the Plans’ accumulated benefit obligation, projected benefit obligation and funded status as of September 30, 2013 and 2012:



	2013			2012
	(In thousands)
Accumulated benefit obligation	$	446,133		$	468,440
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	480,031		$	429,432
Service cost	17,754			15,084
Interest cost	19,334			21,568
Actuarial (gain) loss	(29,822		)	46,197
Benefits paid	(25,073		)	(24,553		)
Divestitures	(6,425		)	(7,697		)
Benefit obligation at end of year	455,799			480,031
Change in plan assets:
Fair value of plan assets at beginning of year	343,144			280,204
Actual return on plan assets	52,496			48,656
Employer contributions	32,745			46,534
Benefits paid	(25,073		)	(24,553		)
Divestitures	(6,425		)	(7,697		)
Fair value of plan assets at end of year	396,887			343,144
Reconciliation:
Funded status	(58,912		)	(136,887		)
Unrecognized prior service cost	—			—
Unrecognized net loss	—			—
Net amount recognized	$	(58,912	)	$	(136,887	)

Net periodic pension cost for the Plans for fiscal 2013, 2012 and 2011 is recorded as operating expense and included the following components:



	Fiscal Year Ended September 30
	2013			2012			2011
	(In thousands)
Components of net periodic pension cost:
Service cost	$	17,754		$	15,084		$	14,384
Interest cost	19,334			21,568			22,264
Expected return on assets	(22,955		)	(21,474		)	(24,817		)
Amortization of prior service credit	(141		)	(141		)	(429		)
Recognized actuarial loss	19,066			14,451			9,498
Curtailment gain	—			—			(40		)
Net periodic pension cost	$	33,058		$	29,488		$	20,860

The following table sets forth by level, within the fair value hierarchy, the Master Trust’s assets at fair value as of September 30, 2013 and 2012. As required by authoritative accounting literature, assets are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The methods used to determine fair value for the assets held by the Master Trust are fully described in Note 2. Assets at September 30, 2012 include $7.7 million that were transferred to the purchaser of our Missouri, Illinois and Iowa operations during the first quarter of fiscal 2013. In addition to the assets shown below, the Master Trust had net accounts receivable of $0.4 million and $0.5 million at September 30, 2013 and 2012 which materially approximates fair value due to the short-term nature of these assets.



	Assets at Fair Value as of September 30, 2013
	Level 1		Level 2		Level 3		Total
	(In thousands)
Investments:
Common stocks — domestic equities	$	143,543	$	—	$	—	$	143,543
Money market funds	—		12,266		—		12,266
Registered investment companies:
Domestic funds	30,200		—		—		30,200
International funds	47,036		—		—		47,036
Common/collective trusts — domestic funds	—		57,627		—		57,627
Government securities:
Mortgage-backed securities	—		18,446		—		18,446
U.S. treasuries	4,117		663		—		4,780
Corporate bonds	—		35,012		—		35,012
Limited partnerships	—		47,417		—		47,417
Real estate	—		—		155		155
Total investments at fair value	$	224,896	$	171,431	$	155	$	396,482



	Assets at Fair Value as of September 30, 2012
	Level 1		Level 2		Level 3		Total
	(In thousands)
Investments:
Common stocks — domestic equities	$	114,799	$	—	$	—	$	114,799
Money market funds	—		21,010		—		21,010
Registered investment companies:
Domestic funds	19,984		—		—		19,984
International funds	36,714		—		—		36,714
Common/collective trusts — domestic funds	—		52,155		—		52,155
Government securities
Mortgage-backed securities	—		19,509		—		19,509
U.S. treasuries	7,597		487		—		8,084
Corporate bonds	—		35,960		—		35,960
Limited partnerships	140		41,786		—		41,926
Real estate	—		—		155		155
Total investments at fair value	$	179,234	$	170,907	$	155	$	350,296

The fair value of our Level 3 real estate assets was determined using a real estate appraisal obtained from an independent third party that consisted of several unobservable inputs such as comparable land sales values per square foot in the range of $0.94 to $2.98 and comparable building sales values per square foot in the range of $23.13 to $30.42.

Supplemental Executive Retirement Plans

We have three nonqualified supplemental plans which provide additional pension, disability and death benefits to our officers, division presidents and certain other employees of the Company.

The first plan is referred to as the Supplemental Executive Benefits Plan (SEBP) and covers our officers, division presidents and certain other employees of the Company who were employed on or before August 12, 1998. The SEBP is a defined benefit arrangement which provides a benefit equal to 75 percent of covered compensation under which benefits paid from the underlying qualified defined benefit plan are an offset to the benefits under the SEBP.

In August 1998, we adopted the Supplemental Executive Retirement Plan (SERP) (formerly known as the Performance-Based Supplemental Executive Benefits Plan), which covers all officers or division presidents selected to participate in the plan between August 12, 1998 and August 5, 2009, any corporate officer who may be appointed to the Management Committee after August 5, 2009 and any other employees selected by our Board of Directors at its discretion. The SERP is a defined benefit arrangement which provides a benefit equal to 60 percent of covered compensation under which benefits paid from the underlying qualified defined benefit plan are an offset to the benefits under the SERP.

Effective August 5, 2009, we adopted a new defined benefit Supplemental Executive Retirement Plan (the 2009 SERP), for corporate officers (other than such officer who is appointed as a member of the Company’s Management Committee), division presidents or any other employees selected at the discretion of the Board. Under the 2009 SERP, a nominal account has been established for each participant, to which the Company contributes at the end of each calendar year an amount equal to ten percent of the total of each participant’s base salary and cash incentive compensation earned during each prior calendar year, beginning December 31, 2009. The benefits vest after three years of service and attainment of age 55 and earn interest credits at the same annual rate as the Company’s Pension Account Plan (currently 4.69%).

On April 1, 2013, due to the retirement of certain executives, we recognized a settlement loss of $3.2 million associated with the supplemental plans and revalued the net periodic pension cost for the remainder of fiscal 2013. The revaluation of the net periodic pension cost resulted in an increase in the discount rate, effective April 1, 2013, to 4.21 percent, which reduced our net periodic pension cost by approximately $0.1 million for the remainder of the fiscal year.

On October 2, 2013, due to the retirement of one of our executives, we recognized a settlement loss of $4.5 million associated with our Supplemental Executive Benefits Plan. In association with the retirement, on October 2, 2013, we made a $16.8 million benefit payment from the SEBP.

Similar to our employee pension plans, we review the estimates and assumptions underlying our supplemental plans annually based upon a September 30 measurement date using the same techniques as our employee pension plans. The actuarial assumptions used to determine the pension liability for the supplemental plans were determined as of September 30, 2013 and 2012 and the actuarial assumptions used to determine the net periodic pension cost for the supplemental plans were determined as of September 30, 2012, 2011 and 2010. These assumptions are presented in the following table:



	Pension Liability				Pension Cost
	2013		2012		2013			2012		2011
Discount rate	4.95	%	4.04	%	4.04	%	⁽¹⁾	5.05	%	5.39	%
Rate of compensation increase	3.50	%	3.50	%	3.50	%		3.50	%	4.00	%


⁽¹⁾	The discount rate for the supplemental plans increased from 4.04% to 4.21% effective April 1, 2013 due to a settlement loss recorded in fiscal 2013.

The following table presents the supplemental plans’ accumulated benefit obligation, projected benefit obligation and funded status as of September 30, 2013 and 2012:



	2013			2012
	(In thousands)
Accumulated benefit obligation	$	109,817		$	121,815
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	130,186		$	112,115
Service cost	3,039			2,108
Interest cost	4,755			5,142
Actuarial (gain) loss	(6,451		)	15,459
Benefits paid	(4,375		)	(4,638		)
Settlements	(10,074		)	—
Benefit obligation at end of year	117,080			130,186
Change in plan assets:
Fair value of plan assets at beginning of year	—			—
Employer contribution	14,449			4,638
Benefits paid	(4,375		)	(4,638		)
Settlements	(10,074		)	—
Fair value of plan assets at end of year	—			—
Reconciliation:
Funded status	(117,080		)	(130,186		)
Unrecognized prior service cost	—			—
Unrecognized net loss	—			—
Accrued pension cost	$	(117,080	)	$	(130,186	)

Assets for the supplemental plans are held in separate rabbi trusts. At September 30, 2013 and 2012, assets held in the rabbi trusts consisted of available-for-sale securities of $44.5 million and $41.8 million, which are included in our fair value disclosures in Note 14.

Net periodic pension cost for the supplemental plans for fiscal 2013, 2012 and 2011 is recorded as operating expense and included the following components:



	Fiscal Year Ended September 30
	2013		2012		2011
	(In thousands)
Components of net periodic pension cost:
Service cost	$	3,039	$	2,108	$	2,768
Interest cost	4,755		5,142		5,825
Amortization of transition asset	—		—		—
Amortization of prior service cost	—		—		—
Recognized actuarial loss	2,918		2,118		2,239
Settlements	3,160		—		—
Net periodic pension cost	$	13,872	$	9,368	$	10,832

Estimated Future Benefit Payments

The following benefit payments for our defined benefit plans, which reflect expected future service, as appropriate, are expected to be paid in the following fiscal years:



	Pension Plans		Supplemental Plans
	(In thousands)
2014	$	40,640	$	22,940
2015	36,230		6,363
2016	34,752		6,226
2017	33,612		6,440
2018	33,273		6,913
2019-2023	156,367		34,260

Postretirement Benefits

We sponsor the Retiree Medical Plan for Retirees and Disabled Employees of Atmos Energy Corporation (the Atmos Retiree Medical Plan). This plan provides medical and prescription drug protection to all qualified participants based on their date of retirement. The Atmos Retiree Medical Plan provides different levels of benefits depending on the level of coverage chosen by the participants and the terms of predecessor plans; however, we generally pay 80 percent of the projected net claims and administrative costs and participants pay the remaining 20 percent of this cost.

As of September 30, 2009, the Board of Directors approved a change to the cost sharing methodology for employees who had not met the participation requirements by that date for the Atmos Retiree Medical Plan. Starting on January 1, 2015, the contribution rates that will apply to all non-grandfathered participants will be determined using a new cost sharing methodology by which Atmos Energy will limit its contribution to a three percent cost increase in claims and administrative costs each year. If medical costs covered by the Atmos Retiree Medical Plan increase more than three percent annually, participants will be responsible for the additional costs.

Generally, our funding policy is to contribute annually an amount in accordance with the requirements of ERISA. However, additional voluntary contributions are made annually as considered necessary. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. We expect to contribute between $25 million and $30 million to our postretirement benefits plan during fiscal 2014.

We maintain a formal investment policy with respect to the assets in our postretirement benefits plan to ensure the assets funding the postretirement benefit plan are appropriately invested to maintain an acceptable level of risk. We also consider our current financial status when making recommendations and decisions regarding the postretirement benefits plan.

We currently invest the assets funding our postretirement benefit plan in diversified investment funds which consist of common stocks, preferred stocks and fixed income securities. The diversified investment funds may invest up to 75 percent of assets in common stocks and convertible securities. The following table presents asset allocation information for the postretirement benefit plan assets as of September 30, 2013 and 2012.



	Actual Allocation September 30
Security Class	2013		2012
Diversified investment funds	96.8	%	97.0	%
Cash and cash equivalents	3.2	%	3.0	%

Similar to our employee pension and supplemental plans, we review the estimates and assumptions underlying our postretirement benefit plan annually based upon a September 30 measurement date using the same techniques as our employee pension plans. The actuarial assumptions used to determine the pension liability for our postretirement plan were determined as of September 30, 2013 and 2012 and the actuarial assumptions used to determine the net periodic pension cost for the postretirement plan were determined as of September 30, 2012, 2011 and 2010. The assumptions are presented in the following table:



	Postretirement Liability				Postretirement Cost
	2013		2012		2013		2012		2011
Discount rate	4.95	%	4.04	%	4.04	%	5.05	%	5.39	%
Expected return on plan assets	4.60	%	4.70	%	4.70	%	5.00	%	5.00	%
Initial trend rate	8.00	%	8.00	%	8.00	%	8.00	%	8.00	%
Ultimate trend rate	5.00	%	5.00	%	5.00	%	5.00	%	5.00	%
Ultimate trend reached in	2020		2019		2019		2018		2016

The following table presents the postretirement plan’s benefit obligation and funded status as of September 30, 2013 and 2012:



	2013			2012
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	308,315		$	263,694
Service cost	18,800			16,353
Interest cost	12,964			13,861
Plan participants’ contributions	3,815			3,649
Actuarial (gain) loss	(13,801		)	28,815
Benefits paid	(14,458		)	(13,197		)
Divestitures	(3,487		)	(4,860		)
Benefit obligation at end of year	312,148			308,315
Change in plan assets:
Fair value of plan assets at beginning of year	77,072			53,065
Actual return on plan assets	13,432			12,912
Employer contributions	26,552			22,139
Plan participants’ contributions	3,815			3,649
Benefits paid	(14,458		)	(13,197		)
Divestitures	—			(1,496		)
Fair value of plan assets at end of year	106,413			77,072
Reconciliation:
Funded status	(205,735		)	(231,243		)
Unrecognized transition obligation	—			—
Unrecognized prior service cost	—			—
Unrecognized net loss	—			—
Accrued postretirement cost	$	(205,735	)	$	(231,243	)

Net periodic postretirement cost for fiscal 2013, 2012 and 2011 is recorded as operating expense and included the components presented below.



	Fiscal Year Ended September 30
	2013			2012			2011
	(In thousands)
Components of net periodic postretirement cost:
Service cost	$	18,800		$	16,353		$	14,403
Interest cost	12,964			13,861			12,813
Expected return on assets	(3,988		)	(2,607		)	(2,727		)
Amortization of transition obligation	1,081			1,511			1,511
Amortization of prior service credit	(1,450		)	(1,450		)	(1,450		)
Recognized actuarial loss	4,196			2,648			347
Net periodic postretirement cost	$	31,603		$	30,316		$	24,897

Assumed health care cost trend rates have a significant effect on the amounts reported for the plan. A one-percentage point change in assumed health care cost trend rates would have the following effects on the latest actuarial calculations:



	One-Percentage Point Increase		One-Percentage Point Decrease
	(In thousands)
Effect on total service and interest cost components	$	4,399	$	(3,682	)
Effect on postretirement benefit obligation	$	36,680	$	(30,940	)

We are currently recovering other postretirement benefits costs through our regulated rates under accrual accounting as prescribed by accounting principles generally accepted in the United States in substantially all of our service areas. Other postretirement benefits costs have been specifically addressed in rate orders in each jurisdiction served by our Kentucky/Mid-States, West Texas, Mid-Tex and Mississippi Divisions as well as our Kansas jurisdiction and Atmos Pipeline – Texas or have been included in a rate case and not disallowed. Management believes that this accounting method is appropriate and will continue to seek rate recovery of accrual-based expenses in its ratemaking jurisdictions that have not yet approved the recovery of these expenses.

The following tables set forth by level, within the fair value hierarchy, the Retiree Medical Plan’s assets at fair value as of September 30, 2013 and 2012. The methods used to determine fair value for the assets held by the Retiree Medical Plan are fully described in Note 2. Assets at September 30, 2012 include $1.5 million that were transferred to the purchaser of our Missouri, Illinois and Iowa operations during the first quarter of fiscal 2013.



	Assets at Fair Value as of September 30, 2013
	Level 1		Level 2		Level 3		Total
	(In thousands)
Investments:
Money market funds	$	—	$	3,356	$	—	$	3,356
Registered investment companies:
Domestic funds	9,614		—		—		9,614
International funds	93,443		—		—		93,443
Total investments at fair value	$	103,057	$	3,356	$	—	$	106,413



	Assets at Fair Value as of September 30, 2012
	Level 1		Level 2		Level 3		Total
	(In thousands)
Investments:
Money market funds	$	—	$	2,360	$	—	$	2,360
Registered investment companies:
Domestic funds	7,756		—		—		7,756
International funds	68,452		—		—		68,452
Total investments at fair value	$	76,208	$	2,360	$	—	$	78,568

Estimated Future Benefit Payments

The following benefit payments paid by us, retirees and prescription drug subsidy payments for our postretirement benefit plans, which reflect expected future service, as appropriate, are expected to be paid in the following fiscal years:



	Company Payments		Retiree Payments		Subsidy Payments		Total Postretirement Benefits
	(In thousands)
2014	$	25,547	$	3,899	$	—	$	29,446
2015	16,628		4,915		—		21,543
2016	19,260		6,049		—		25,309
2017	21,216		7,304		—		28,520
2018	22,550		8,677		—		31,227
2019-2023	116,617		58,595		—		175,212

Defined Contribution Plans

As of September 30, 2013, we maintained three defined contribution benefit plans: the Atmos Energy Corporation Retirement Savings Plan and Trust (the Retirement Savings Plan), the Atmos Energy Corporation Savings Plan for MVG Union Employees (the Union 401K Plan) and the Atmos Energy Holdings, LLC 401K Profit-Sharing Plan (the AEH 401K Profit-Sharing Plan).

The Retirement Savings Plan covers substantially all employees in our regulated operations and is subject to the provisions of Section 401(k) of the Internal Revenue Code. Effective January 1, 2007, employees automatically become participants of the Retirement Savings Plan on the date of employment. Participants may elect a salary reduction up to a maximum of 65 percent of eligible compensation, as defined by the Plan, not to exceed the maximum allowed by the Internal Revenue Service. New participants are automatically enrolled in the Plan at a salary reduction amount of four percent of eligible compensation, from which they may opt out. We match 100 percent of a participant’s contributions, limited to four percent of the participant’s salary, in our common stock. However, participants have the option to immediately transfer this matching contribution into other funds held within the plan. Participants are eligible to receive matching contributions after completing one year of service. Participants are also permitted to take out loans against their accounts subject to certain restrictions. In August 2010, the Board of Directors of Atmos Energy approved a proposal to close the Pension Account Plan to new participants effective October 1, 2010. New employees participate in our defined contribution plan, which was enhanced, effective January 1, 2011. Employees participating in the Pension Account Plan as of October 1, 2010 were allowed to make a one-time election to migrate from the Plan into the Retirement Savings Plan, effective January 1, 2011. Under the enhanced plan, participants receive a fixed annual contribution of four percent of eligible earnings to their Retirement Savings Plan account. Participants will continue to be eligible for company matching contributions of up to four percent of their eligible earnings and will be fully vested in the fixed annual contribution after three years of service.

The Union 401K Plan covers substantially all Mississippi Division employees who are members of the International Chemical Workers Union Council, United Food and Commercial Workers Union International (the Union) and is subject to the provisions of Section 401(k) of the Internal Revenue Code. Employees of the Union automatically become participants of the Union 401K plan on the date of union membership. We match 50 percent of a participant’s contribution in cash, limited to six percent of the participant’s eligible contribution. Participants are also permitted to take out loans against their accounts subject to certain restrictions.

Matching contributions to the Retirement Savings Plan and the Union 401K Plan are expensed as incurred and amounted to $10.4 million, $10.5 million, and $10.2 million for fiscal years 2013, 2012 and 2011. The Board of Directors may also approve discretionary contributions, subject to the provisions of the Internal Revenue Code and applicable Treasury regulations. No discretionary contributions were made for fiscal years 2013, 2012 or 2011. At September 30, 2013 and 2012, the Retirement Savings Plan held 4.9 percent and 4.9 percent of our outstanding common stock.

The AEH 401K Profit-Sharing Plan covers substantially all AEH employees and is subject to the provisions of Section 401(k) of the Internal Revenue Code. Participants may elect a salary reduction up to a maximum of 75 percent of eligible compensation, as defined by the Plan, not to exceed the maximum allowed by the Internal Revenue Service. The Company may elect to make safe harbor contributions up to four percent of the employee’s salary which vest immediately. The Company may also make discretionary profit sharing contributions to the AEH 401K Profit-Sharing Plan. Participants become fully vested in the discretionary profit-sharing contributions after three years of service. Participants are also permitted to take out loans against their accounts subject to certain restrictions. Discretionary contributions to the AEH 401K Profit-Sharing Plan are expensed as incurred and amounted to $1.1 million, $1.2 million and $1.3 million for fiscal years 2013, 2012 and 2011.