SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended November 30, 1996
Commission File No. 1-6033
United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan
(Full title if the Plan)
United Air Lines, Inc.
(Employer sponsoring the Plan)
UAL Corporation
(Issuer of the shares held pursuant to the Plan)
1200 Algonquin Road, Elk Grove Township, Illinois
Mailing Address:
P.O. Box 66100, Chicago, Illinois 60666
(Address of principal executive offices)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of United Air Lines, Inc.:
We have audited the accompanying statement of net
assets available for plan benefits of the United
Air Lines, Inc. Ground Employees' 401(k) Retirement
Savings Plan as of November 30, 1996 and 1995, and
the related statement of changes in net assets
available for plan benefits for the years then
ended. These financial statements are the
responsibility of the Plan Administrator. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. 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 the Plan
Administrator, 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 plan benefits of the
United Air Lines, Inc. Ground Employees' 401(k)
Retirement Savings Plan as of November 30, 1996 and
1995, and the changes in its net assets available
for plan benefits for the years then ended in
conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 23, 1997
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the United Air Lines, Inc. Pension and Welfare Plans
Administration Committee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
United Air Lines, Inc.
Ground Employees' 401(k)
Retirement Savings Plan
By /s/ Douglas A. Hacker
Douglas A. Hacker
Member, United Air
Lines, Inc. Pension
and Welfare Plans
Administration Committee
Dated May 28, 1997
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
November 30
1996 1995
INVESTMENT IN MASTER TRUST
<S> <C> <C>
Magellan Fund $ 31,771 $ 22,021
Equity-Income Fund 16,271 4,421
Growth Company Fund 109,763 81,698
Government Securities Fund 1,171 629
OTC Portfolio 17,973 7,745
Overseas Fund 25,787 23,647
Balanced Fund 35,813 39,137
Asset Manager 6,116 3,192
Asset Manager: Growth 7,269 4,128
Asset Manager: Income 1,663 1,177
Retirement Money Market Portfolio 3,820 1,921
U. S. Bond Index Portfolio 669 471
U. S. Equity Index Portfolio 111,567 87,290
Blended Income Fund 201,349 188,516
Fixed Rate Investment Fund - 55,160
UAL Stock Fund 38,622 9,877
Participant Loan Fund 20,827 19,552
630,451 550,582
Due to Plan Participants (50,102) -
NET ASSETS AVAILABLE FOR PLAN $580,349 $550,582
BENEFITS
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1996
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $22,021 $ 4,421 $81,698 $ 629
CONTRIBUTIONS 982 (300) 215 42
TRANSFERS
BETWEEN FUNDS 5,003 9,188 10,339 506
TRANSFERS
BETWEEN PLANS (140) (109) (747) (8)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 6,380 526 4,264 83
Interest 5 1 8 -
Net appreciation
(depreciation)
in value of
investments (2,569) 2,154 13,848 (51)
3,816 2,681 18,120 32
PAYMENTS TO PLAN
PARTICIPANTS (2,772) (751) (8,181) (99)
PARTICIPANT LOANS (609) (171) (1,575) (9)
ADMINISTRATIVE
EXPENSES (11) (6) (31) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $28,290 $14,953 $99,838 $ 1,093
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1996
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 7,745 $23,647 $39,137 $ 3,192
CONTRIBUTIONS (148) 628 1,082 48
TRANSFERS
BETWEEN FUNDS 6,882 (1,608) (6,709) 2,058
TRANSFERS
BETWEEN PLANS (80) (120) (147) (19)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,552 583 1,658 173
Interest - - (2) -
Net appreciation
(depreciation)
in value of
investments 1,597 3,071 2,298 663
3,149 3,654 3,954 836
PAYMENTS TO PLAN
PARTICIPANTS (1,092) (2,367) (3,744) (435)
PARTICIPANT LOANS (250) (458) (343) (31)
ADMINISTRATIVE
EXPENSES (3) (7) (14) (2)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $16,203 $23,369 $33,216 $ 5,647
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1996
RETIREMENT US US
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 4,128 $ 1,177 $ 1,921 $ 471 $87,290
CONTRIBUTIONS 105 42 68 34 (1,143)
TRANSFERS
BETWEEN FUNDS 1,687 330 1,915 152 1,841
TRANSFERS
BETWEEN PLANS (80) (5) 2 (1) (328)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 68 86 132 46 -
Interest 1 - - - 1
Net appreciation
(depreciation)
in value of
investments 1,186 69 - (17) 24,598
1,255 155 132 29 24,599
PAYMENTS TO PLAN
PARTICIPANTS (513) (136) (463) (42) (7,434)
PARTICIPANT LOANS (105) (8) (98) (33) (1,493)
ADMINISTRATIVE
EXPENSES (3) - (2) - (32)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 6,474 $ 1,555 $ 3,745 $ 610 $103,300
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1996
FIXED
BLENDED RATE UAL PARTICIPANT
INCOME INVESTMENT STOCK LOAN
FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $188,516 $55,160 $ 9,877 $19,552 $550,582
CONTRIBUTIONS 3,125 1,244 (2,294) - 3,730
TRANSFERS
BETWEEN FUNDS 7,511 (55,280) 25,574 (9,389) -
TRANSFERS
BETWEEN PLANS 163 (9) (317) - (1,945)
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - - 15,551
Interest 12,701 436 13 1,538 14,702
Net appreciation
(depreciation)
in value of
investments - - 4,322 - 51,169
12,701 436 4,335 1,538 81,422
PAYMENTS TO PLAN
PARTICIPANTS (21,744) (1,513) (1,890) - (53,176)
PARTICIPANT LOANS (3,212) (38) (693) 9,126 -
ADMINISTRATIVE
EXPENSES (141) - (12) - (264)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $186,919 $ - $34,580 $20,827 $580,349
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1995
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $ - $51,140 $ -
CONTRIBUTIONS 680 177 4,952 46
TRANSFERS
BETWEEN FUNDS 19,000 3,777 6,149 550
TRANSFERS
BETWEEN PLANS (23) - (107) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 31 48 1,892 22
Interest - - - -
Net appreciation
in value of
investments 2,654 454 20,587 30
2,685 502 22,479 52
PAYMENTS TO PLAN
PARTICIPANTS (95) (11) (1,631) (12)
PARTICIPANT LOANS (223) (23) (1,268) (7)
ADMINISTRATIVE
EXPENSES (3) (1) (16) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $22,021 $ 4,421 $81,698 $ 629
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1995
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $30,503 $41,485 $ -
CONTRIBUTIONS 229 3,149 3,427 233
TRANSFERS
BETWEEN FUNDS 6,626 (9,938) (8,526) 2,687
TRANSFERS
BETWEEN PLANS 10 (59) (52) 4
RESULTS OF INVESTMENT
ACTIVITY
Dividends 121 515 1,632 52
Interest - - - -
Net appreciation
in value of
investments 804 939 3,448 387
925 1,454 5,080 439
PAYMENTS TO PLAN
PARTICIPANTS (13) (881) (1,678) (130)
PARTICIPANT LOANS (32) (574) (590) (40)
ADMINISTRATIVE
EXPENSES - (7) (9) (1)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 7,745 $23,647 $39,137 $ 3,192
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1995
RETIREMENT US US
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $ - $ - $ - $65,416
CONTRIBUTIONS 490 62 336 45 3,739
TRANSFERS
BETWEEN FUNDS 3,235 1,018 1,622 384 (1,992)
TRANSFERS
BETWEEN PLANS (36) - - - (31)
RESULTS OF INVESTMENT
ACTIVITY
Dividends - 29 72 21 -
Interest - - - - -
Net appreciation
in value of
investments 604 91 - 25 24,380
604 120 72 46 24,380
PAYMENTS TO PLAN
PARTICIPANTS (95) (18) (78) - (2,883)
PARTICIPANT LOANS (69) (5) (31) (4) (1,321)
ADMINISTRATIVE
EXPENSES (1) - - - (18)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 4,128 $ 1,177 $ 1,921 $ 471 $87,290
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1995
FIXED
BLENDED RATE UAL PARTICIPANT
INCOME INVESTMENT STOCK LOAN
FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $156,636 $94,088 $ 3,017 $18,582 $460,867
CONTRIBUTIONS 12,150 (1,224) - - 28,491
TRANSFERS
BETWEEN FUNDS 20,368 (39,741) 3,150 (8,369) -
TRANSFERS
BETWEEN PLANS 339 27 1 - 73
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - - 4,435
Interest 12,098 5,167 - 1,359 18,624
Net appreciation
in value of
investments - - 3,969 - 58,372
12,098 5,167 3,969 1,359 81,431
PAYMENTS TO PLAN
PARTICIPANTS (10,076) (2,388) (149) - (20,138)
PARTICIPANT LOANS (2,923) (760) (110) 7,980 -
ADMINISTRATIVE
EXPENSES (76) (9) (1) - (142)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $188,516 $55,160 $ 9,877 $19,552 $550,582
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
This description is for general information purposes only.
Participants should refer to their summary plan description
and individual employee benefit statement for detailed
benefit information.
a. General and Plan Participants
The United Air Lines, Inc. Ground Employees' 401(k)
Retirement Savings Plan (the "Plan") covers all employees
of United Air Lines, Inc. ("United") who are members of
the International Association of Machinists and Aerospace
Workers ("IAM"), have completed one year of service and
are at least 21 years of age. The Plan is contributory
and is subject to the Employee Retirement Income Security
Act of 1974, as amended.
b. Contributions and Vesting
Eligible employees may elect to contribute to the Plan,
in multiples of 1%, any percentage of their covered
pretax earnings, up to 15%, subject to a maximum of
$9,500 in 1996 and 1997. Lower limits may apply to
certain highly compensated participants if the Plan does
not pass certain nondiscrimination tests required by law.
Contributions and earnings are credited to separate
accounts maintained for each participant. The balance in
a participant's account is fully vested and
nonforfeitable at all times.
Participants may elect to invest in one or a combination
of the investment funds described in note (1)(d).
Additionally, they may subsequently change their
contribution rate, redesignate the allocation of
contributions or transfer existing balances among
investment funds, subject to the limits set forth in the
Plan.
Contributions include $203,763 and $136,107 for 1996 and
1995, respectively, which were transferred from other
qualified plans as rollovers under Internal Revenue Code
Sections 401(a) and 401(k).
c. Trustee and Recordkeeper
Fidelity Management Trust Company ("Fidelity") is the
Plan Trustee and Fidelity Institutional Retirement
Services Company is the recordkeeper of the Plan.
d. Master Trust Funds
The Fixed Rate Investment Fund was invested under various
group annuity contracts with the following insurance
company as of November 30, 1995:
<TABLE>
<CAPTION>
(In Thousands)
Investment
Balance as of
Annual November 30
Insurance Interest Contract
Company Rate Through 1995
<S> <C> <C> <C>
Prudential 8.89% 1995 $ 55,160
$ 55,160
</TABLE>
The Plan's fixed rate investments were stated at fair
value and represented amounts on deposit with the
insurance company plus net investment earnings. Interest
rates on the contracts are guaranteed fixed rates through
the end of the contracts. No further contributions can be
made to this fund.
Fidelity provides each participant with fifteen
investment options: Fidelity Magellan Fund; Fidelity
Equity-Income Fund; Fidelity Growth Company Fund;
Fidelity Government Securities Fund; Fidelity OTC
Portfolio; Fidelity Overseas Fund; Fidelity Balanced
Fund; Fidelity Asset Manager; Fidelity Asset Manager:
Growth; Fidelity Asset Manager: Income; Fidelity
Retirement Money Market Portfolio; Fidelity U.S. Bond
Index Portfolio; Fidelity U.S. Equity Index Portfolio;
Blended Income Fund and the UAL Stock Fund. These funds
are managed by Fidelity or Fidelity Investments (manager
of Fidelity Mutual Funds). The investments represent the
Plan's allocable share of the funds.
The Fidelity U.S. Equity Index Portfolio primarily
invests in the common stocks of the companies that make
up the S&P 500 Index. Assets are valued at market prices
quoted on the New York Stock Exchange ("NYSE").
Assets in the UAL Stock Fund are invested in UAL
Corporation common stock and are valued at market prices
quoted on the NYSE. Participants may invest in the UAL
Stock Fund through direct earnings deferrals.
The Blended Income Fund includes investment contracts
purchased by Fidelity from approved institutions that
meet its stringent credit standards at the time of
purchase. The fund may also include other high
quality, income-oriented investments. The contracts
held by the Blended Income Fund are fully benefit
responsive, and accordingly, have been included in the
financial statements at contract value. There are no
reserves against contract value for credit risk of the
contract issuers or otherwise. The fair value of the
investment contracts at November 30, 1996 was $203,889.
The average yield for the year ending November 30, 1996
was approximately 6.6%. The crediting interest rate
as of November 30, 1996 was approximately 6.3%. At
November 30, 1995, the contract value of the investment
contracts approximated the fair value.
The remaining investment options are public mutual funds
traded on the NYSE. Portfolio securities and other
assets are valued primarily on the basis of market
quotations or, if quotations are not readily available,
by a method which each fund's Board of Trustees believes
accurately reflects fair value. Foreign securities are
valued based on quotations from the primary market in
which they are traded and are translated from the local
currency into U.S. dollars using current exchange rates.
The Fidelity Magellan Fund invests primarily in
securities of domestic, foreign, and multinational
issuers in the form of common stocks, securities
convertible into common stocks, and, occasionally, debt
securities.
The Fidelity Equity-Income Fund invests primarily in
income-producing equity securities, both domestic and
foreign. It seeks to achieve income greater than that of
the S&P 500.
The Fidelity Growth Company Fund invests in common
stocks, securities convertible into common stocks, and,
occasionally, debt obligations from companies viewed as
having unusual opportunities to grow.
The Fidelity Government Securities Fund invests primarily
in fully guaranteed U.S. government bonds with any
maturity. The average maturity is approximately two to
five years.
The Fidelity OTC Portfolio primarily invests in stocks
traded in the "over-the-counter" market, which involves
the investment in securities of smaller, lesser-known
companies.
The Fidelity Overseas Fund normally invests at least 65%
of its total assets in common stock, securities
convertible to common stock and debt instruments of
foreign businesses and governments. Fidelity Investments
expects to invest most of the assets in developed
countries in these general geographic areas; the Americas
(other than the United States), the Far East and Pacific
Basin, and Western Europe.
The Fidelity Balanced Fund maintains a balance of high-
yielding securities, including foreign and domestic
stocks and bonds. At least 25% of the assets are
invested in fixed-income senior securities. All bonds in
the Fund's portfolio are rated BBB or better by Standard
& Poor's Corporation, or Baa or better by Moody's
Investors Service, Inc.
The Fidelity Asset Manager invests in stocks, bonds and
short-term instruments in both domestic and foreign markets
to achieve high total returns in the long run. The
allocation between these three types of investments is
generally 40%, 40%, and 20%, respectively, however it
may vary between the following ranges: stocks
- 10% to 60%; bonds - 20% to 60%; and short-term
instruments - 0% to 70%.
The Fidelity Asset Manager: Growth: invests in stocks,
bonds and short-term instruments in both domestic and
foreign markets to achieve long term maximum total
investment return. The allocation between these three
types of investments is generally 65%, 30%, and 5%,
respectively, however it may vary between the following
ranges: stocks - 0% to 100%; bonds - 0% to 100%; and
short-term instruments - 0% to 100%.
The Fidelity Asset Manager: Income: invests in stocks,
bonds and short-term instruments in both domestic and
foreign markets to achieve a high level of current
income, and capital appreciation. The allocation between
these three types of investments is generally 20%, 30%,
and 50%, respectively, however it may vary between the
following ranges: stocks - 0% to 35%; bonds - 20% to 45%;
and short-term instruments - 20% to 80%.
The Fidelity Money Market Trust: Retirement Money Market
Portfolio: invests in high quality, low risk domestic and
foreign money market instruments, primarily short-term
instruments with maturities of three months or less.
The Fidelity U.S. Bond Index Portfolio primarily invests
in securities included in the Lehman Brothers Aggregate
Bond Index in order to achieve comparable investment
results.
Fidelity is authorized to engage in the lending of
certain Plan assets. Securities lending is an investment
management enhancement that utilizes the existing
securities of the Funds to earn additional income. It
involves the loan of securities to various approved
brokers. In return for loaned securities, Fidelity
receives collateral in the form of cash and U.S.
government securities as a safeguard against possible
default of any borrower on return of the loan. Each loan
is collateralized to the extent of 100 percent of the
market value of securities on loan. The collateral is
marked-to-market on a daily basis to maintain the margin
requirement.
On July 12, 1994, UAL Corporation underwent a
recapitalization under Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, pursuant to which the
shareholders engaged in a recapitalization exchange with
UAL Corporation. Each share of Old Common Stock was
exchanged for a package consisting of one half of a share
of New Common Stock and $84.81 in cash. The cash
consideration received by the Trustee on behalf of Plan
participants was used to purchase additional shares of
New Common Stock or, at the direction of Plan
participants, was transferred to other investment funds.
Pursuant to the terms of the recapitalization,
participants' direct earnings deferrals and fund
transfers into the UAL Stock Fund were temporarily
suspended from July 12, 1994 to August 4, 1994 and from
January 12, 1995 to March 15, 1995. On May 20, 1996
(with a May 6, 1996 record date), UAL Common Stock
underwent a 4 for 1 stock split. Shares held in the UAL
Stock Fund were adjusted accordingly.
e. Withdrawals
Withdrawals from the Plan may be made as follows, as
applicable to the participant's eligibility, amount
requested, and existing balances:
Participants who have separated from service (for
reasons other than death) may elect payment in the
form of a lump sum, periodic distributions, irregular
partial distributions, or through the purchase of an
annuity. Distributions may also be directly rolled
over into an IRA or qualified plan. Participants are
able to defer the distribution of the account until
April 1 of the next calendar year after reaching age
70-1/2.
Distributions of accounts due to the death of a
participant may be taken by the participant's
beneficiary in the form of a lump sum payment or
through the purchase of an annuity, subject to the
limitations of Internal Revenue Code 401(a)(9). The
participant's surviving spouse, if any, is
automatically the beneficiary of the account, unless
the spouse waives this right.
In-service withdrawals for participants who are
actively employed or are absent due to reasons of
illness, layoff, or approved leave of absence who
maintain an employer-employee relationship with United
Air Lines, Inc. are permitted as follows:
- Hardship withdrawals from 401(k) account, subject
to restrictions described in the Plan
- After reaching age 59-1/2, subject to certain
requirements specified in the Plan, all or a
portion of the participant's 401(k) account may be
withdrawn
- Upon reaching age 70-1/2, minimum distributions
required under Internal Revenue Code
401(a)(9) must be taken no later than April 1
following the calendar year that the participant
has reached age 70-1/2. Effective January 1, 1997,
active participants that have reached age
70-1/2 may choose to defer distribution.
If a participant's account has never exceeded $3,500,
total distribution of the account will be made in a
lump sum payment upon termination of employment or
death.
Generally, withdrawals are allocated pro-rata to the
balances of each of the investment funds in the
participant's account. Alternatively, the participant
may specify which fund(s) that distribution is made
from. Distributions from UAL Stock Fund, may be made
in cash, or in whole shares of UAL Corporation common
stock, with fractional shares distributed in cash.
f. Plan Termination Provisions
If the Plan is terminated, all amounts credited to a
participant's account at the time of termination shall be
retained in the Trust and will be distributed in
accordance with the normal distribution rules of the
Plan.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Accounting
The financial statements are presented on the accrual
basis.
b. Investments
Assets of United's 401(k) Plans Master Trust are owned by
all participating United plans consisting of the
Management and Salaried Employees's 401(k) Retirement
Savings Plan, Ground Employees' 401(k) Retirement Savings
Plan, and the Flight Attendant Employees' 401(k)
Retirement Savings Plan.
c. Net Appreciation (Depreciation) in Value of Investments
Net appreciation (depreciation) in value of investments
includes realized and unrealized gains and losses.
Realized and unrealized gains and losses are calculated
as the difference between fair value at December 1, or
date of purchase if subsequent to December 1, and fair
value at date of sale or the current year-end. The
unrealized gain or loss on investments represents the
Plan's allocable share of the difference between fair
value at December 1, or date of purchase, and the fair
value at the date of sale or the current year-end plus,
where applicable, the change in the exchange rate between
the U.S. dollar and the foreign currency in which the
assets are denominated from December 1, or the date of
purchase, to the date of sale or the current year-end.
d. Plan Expenses
Administrative expenses represent administrative and
investment manager fees charged by Fidelity, accountant
fees, recordkeeping fees charged by Fidelity
Institutional Retirement Services Co. and some
administrative fees charged by United. Brokerage and
other investment fees are included in the cost of the
related security. United performs certain reporting and
supervisory functions for the Plan without charge.
e. Transfers between Plans
Transfers between plans reflects the change in employee
coverage and transfer of any related balances between
this Plan and other defined contribution plans sponsored
by United, including the United Air Lines, Inc.
Management and Salaried Employees' 401(k) Retirement
Savings Plan and the United Air Lines, Inc. Flight
Attendant Employees' 401(k) Retirement Savings Plan.
f. Participant Loans
Participants may borrow up to fifty percent of their
account balance, not to exceed $50,000. The minimum that
may be borrowed is $1,000. Loans are charged against
each investment fund in the ratio of the value of the
employee's interest in each fund to the total value of
the employee's interest in all funds and are held in the
Loan Fund. The loan is repaid through payroll deductions
on an after-tax basis for the term of the loan, which is
a minimum of six months to a maximum of sixty months and
is subject to a reasonable rate of interest (9.25% as of
March 31, 1997). The amount paid is reinvested in the
participant's account based on the investment allocations
at the time of repayment. Prepayment of the full balance
of the loan is allowed after six months from the date of
the loan without penalty. Participants are able to take
out another loan after twelve months from the date the
old loan is retired. Upon the employee's termination of
employment, a loan not paid in full within 60 days
becomes a taxable distribution. Loans in default may be
declared due and payable in full immediately, and the
Plan administrator may charge the participant's account
balances at any time thereafter for the amount of the
default. An administrative fee of $90 is charged to each
participant taking a loan and is automatically deducted
from the participant's account.
g. Reconciling Statement Balances
The investment balances on the Statement of Net Assets
Available For Plan Benefits do not all agree with the
fund balances on the Statement of Changes in Net Assets
Available for Plan Benefits as of November 30, 1996, due
to an accrual for the returns of excess annual additions
as required under Internal Revenue Code Section 415(c).
The Statement of Net Assets Available for Plan Benefits
can be reconciled to the Statement of Changes in Net
Assets Available for Plan Benefits as follows for the
year ended November 30, 1996:
<TABLE>
<CAPTION>
(I N T H O U S A N D S)
Per Per
Statement Statement
of Net Due to of Changes
Assets Plan in Net
Available Partici Assets
for Plan pants Available
Benefits for Plan
Benefits
<S> <C> <C> <C>
Magellan Fund $ 31,771 $ (3,481) $ 28,290
Equity-Income Fund 16,271 (1,318) 14,953
Growth Company
Fund 109,763 (9,925) 99,838
Government
Securities Fund 1,171 (78) 1,093
OTC Portfolio 17,973 (1,770) 16,203
Overseas Fund 25,787 (2,418) 23,369
Balanced Fund 35,813 (2,597) 33,216
Asset Manager 6,116 (469) 5,647
Asset Manager:
Growth 7,269 (795) 6,474
Asset Manager:
Income 1,663 (108) 1,555
Retirement Money
Market Portfolio 3,820 (345) 3,475
U. S. Bond Index
Portfolio 669 (59) 610
U. S. Equity Index
Portfolio 111,567 (8,267) 103,300
Blended Income
Fund 201,349 (14,430) 186,919
UAL Stock Fund 38,622 (4,042) 34,580
Participant Loan
Fund 20,827 - 20,827
Total
investments $630,451 $(50,102) $580,349
</TABLE>
3. TAX STATUS
The Plan obtained its latest determination letter on June
18, 1996. The Internal Revenue Service confirmed that the
Plan, as written, was in compliance with the requirements of
the Internal Revenue Code and that the trust was tax exempt.
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to
the incorporation of our report included in this Form 11-K
for the year ended November 30, 1996, into UAL's
previously filed Form S-8 and Post Effective Amendment No.
1 to Form S-8 Registration Statement (File No. 33-44552),
Form S-8 Registration Statement (File No. 33-57331) and
Form S-8 Registration Statement (File No. 333-03041) for
the United Air Lines, Inc. Ground Employees' 401(k)
Retirement Savings Plan.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
May 23, 1997
