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Previous: UAL CORP /DE/, 11-K, 1998-05-27 |
Next: UAL CORP /DE/, 11-K, 1998-05-27 |
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)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 1 - 6033
A. United Air Lines, Inc.
Management and Salaried Employees' 401(k) Retirement
Savings Plan
(Full title of the Plan)
United Air Lines, Inc.
(Employer sponsoring the Plan)
B. 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. Management and
Salaried Employees' 401(k) Retirement Savings Plan as of November
30, 1997 and 1996, 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. Management and
Salaried Employees' 401(k) Retirement Savings Plan as of November
30, 1997 and 1996, 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 22, 1998
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.
Management and Salaried
Employees' 401(k)
Retirement Savings Plan
Dated May 27, 1998 By /s/ Douglas A. Hacker
Douglas A. Hacker
Member, United Air
Lines, Inc. Pension
and Welfare Plans
Administration Committee
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
November 30
1997 1996
INVESTMENT IN MASTER TRUST
<S> <C> <C>
Magellan Fund $ 56,760 $ 42,927
Equity-Income Fund 39,851 23,553
Growth Company Fund 147,023 137,108
Government Securities Fund 2,205 1,893
OTC Portfolio 29,254 22,691
Overseas Fund 36,567 34,398
Balanced Fund 58,457 48,194
Asset Manager 11,747 9,425
Asset Manager: Growth 16,971 12,539
Asset Manager: Income 2,521 2,314
Retirement Money Market Portfolio 7,565 5,489
U. S. Bond Index Portfolio 2,458 2,290
U. S. Equity Index Portfolio 194,677 148,005
Blended Income Fund 194,639 199,006
UAL Stock Fund 51,796 30,276
Participant Loan Fund 15,902 14,894
NET ASSETS AVAILABLE FOR PLAN BENEFITS $868,393 $735,002
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1997
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 $ 42,927 $ 23,553 $137,108 $ 1,893
CONTRIBUTIONS
Employer 23 11 20 -
Employee 2,876 1,944 7,495 18
2,899 1,955 7,515 18
TRANSFERS
BETWEEN FUNDS 3,671 8,711 (9,368) 269
TRANSFERS
BETWEEN PLANS (12) (9) 8 3
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,444 1,667 5,486 130
Interest 2 13 8 -
Net appreciation
in value of
investments 8,166 5,790 13,926 2
9,612 7,470 18,790 132
PAYMENTS TO PLAN
PARTICIPANTS (1,797) (1,608) (5,721) (103)
PARTICIPANT LOANS (531) (213) (1,288) (7)
ADMINISTRATIVE
EXPENSES (9) (9) (21) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 56,760 $ 39,851 $147,023 $ 2,205
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1997
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 22,691 $ 34,398 $ 48,194 $ 9,425
CONTRIBUTIONS
Employer 10 8 4 7
Employee 1,498 2,389 2,114 645
1,508 2,397 2,118 652
TRANSFERS
BETWEEN FUNDS 3,697 (1,808) 955 433
TRANSFERS
BETWEEN PLANS (8) (11) (19) (16)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,865 2,117 4,912 789
Interest 1 1 - -
Net appreciation
in value of
investments 673 1,584 4,883 967
2,539 3,702 9,795 1,756
PAYMENTS TO PLAN
PARTICIPANTS (939) (1,660) (2,128) (465)
PARTICIPANT LOANS (231) (446) (447) (36)
ADMINISTRATIVE
EXPENSES (3) (5) (11) (2)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 29,254 $ 36,567 $ 58,457 $ 11,747
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1997
RETIREMENT U.S.
ASSET ASSET MONEY BOND
MANAGER: MANAGER: MARKET INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 12,539 $ 2,314 $ 5,489 $ 2,290
CONTRIBUTIONS
Employer 13 1 6 1
Employee 1,275 151 543 12
1,288 152 549 13
TRANSFERS
BETWEEN FUNDS 1,493 (35) 2,276 193
TRANSFERS
BETWEEN PLANS (8) - 1 (2)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,043 165 391 155
Interest - - 9 (1)
Net appreciation
in value of
investments 1,879 68 - 7
2,922 233 400 161
PAYMENTS TO PLAN
PARTICIPANTS (1,126) (122) (1,067) (195)
PARTICIPANT LOANS (133) (21) (81) (3)
ADMINISTRATIVE
EXPENSES (3) - (2) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 16,971 $ 2,521 $ 7,565 $ 2,458
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
Year ended November 30
1997
U.S.
EQUITY BLENDED UAL PARTICIPANT
INDEX INCOME STOCK LOAN
PORTFOLIO FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $148,005 $199,006 $ 30,276 $ 14,894 $735,002
CONTRIBUTIONS
Employer 11 438 27 - 580
Employee 5,724 9,522 1,872 - 38,078
5,735 9,960 1,899 - 38,658
TRANSFERS
BETWEEN FUNDS 5,297 (15,228) 7,150 (7,706) -
TRANSFERS
BETWEEN PLANS (14) 506 (31) - 388
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - - 20,164
Interest 1 12,859 12 1,144 14,049
Net appreciation
in value of
investments 43,239 - 14,161 - 94,715
43,240 12,859 14,173 1,143 128,927
PAYMENTS TO PLAN
PARTICIPANTS (5,810) (10,560) (1,062) - (34,363)
PARTICIPANT LOANS (1,751) (1,813) (569) 7,570 -
ADMINISTRATIVE
EXPENSES (24) (92) (39) - (220)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $194,677 $194,639 $ 51,796 $ 15,902 $868,393
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED 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 $ 29,207 $ 6,160 $ 96,820 $ 826
CONTRIBUTIONS
Employer 4 1 6 -
Employee 4,098 1,264 8,331 139
4,103 1,265 8,337 139
TRANSFERS
BETWEEN FUNDS 6,284 13,011 14,713 1,063
TRANSFERS
BETWEEN PLANS 111 90 594 1
RESULTS OF INVESTMENT
ACTIVITY
Dividends 8,403 736 5,028 122
Interest 3 1 2 -
Net appreciation
(depreciation)
in value of
investments (3,257) 3,128 17,095 (53)
5,149 3,865 22,125 69
PAYMENTS TO PLAN
PARTICIPANTS (1,505) (740) (4,349) (196)
PARTICIPANT LOANS (413) (91) (1,108) (8)
ADMINISTRATIVE
EXPENSES (9) (7) (24) (1)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 42,927 $ 23,553 $137,108 $ 1,893
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED 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 $ 7,798 $ 28,518 $ 49,485 $ 5,103
CONTRIBUTIONS
Employer 1 2 1 2
Employee 1,452 2,762 3,221 599
1,453 2,764 3,222 601
TRANSFERS
BETWEEN FUNDS 10,266 (129) (7,261) 2,981
TRANSFERS
BETWEEN PLANS 74 86 107 2
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,851 681 2,144 263
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 1,964 3,970 3,177 1,021
3,815 4,651 5,321 1,284
PAYMENTS TO PLAN
PARTICIPANTS (590) (1,234) (2,377) (463)
PARTICIPANT LOANS (123) (253) (289) (81)
ADMINISTRATIVE
EXPENSES (2) (5) (14) (2)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 22,691 $ 34,398 $ 48,194 $ 9,425
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED 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 U.S. U.S.
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 $ 6,840 $ 1,597 $ 2,878 $ 1,204 $112,127
CONTRIBUTIONS
Employer 2 - 2 - 3
Employee 1,219 145 678 187 5,683
1,221 145 680 187 5,686
TRANSFERS
BETWEEN FUNDS 2,742 648 2,087 907 3,784
TRANSFERS
BETWEEN PLANS 74 6 (2) 2 158
RESULTS OF INVESTMENT
ACTIVITY
Dividends 109 120 178 132 -
Interest 1 3 6 - 3
Net appreciation
(depreciation)
in value of
investments 1,983 100 - (26) 32,272
2,093 223 184 106 32,275
PAYMENTS TO PLAN
PARTICIPANTS (324) (274) (267) (4,878)
(110)
PARTICIPANT LOANS (104) (30) (69) (6) (1,118)
ADMINISTRATIVE
EXPENSES (3) (1) (2) - (29)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 12,539 $ 2,314 $ 5,489 $ 2,290 $148,005
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED 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 $182,007 $ 66,254 $ 10,913 $ 14,864 $622,601
CONTRIBUTIONS
Employer 97 - 2 - 123
Employee 11,026 - 1,259 - 42,064
11,123 - 1,261 - 42,187
TRANSFERS
BETWEEN FUNDS 6,876 (66,420) 15,733 (7,285) -
TRANSFERS
BETWEEN PLANS 384 (8) 266 - 1,945
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - - 19,767
Interest 12,514 520 (5) 1,122 14,170
Net appreciation
(depreciation)
in value of
investments - - 3,143 - 64,517
12,514 520 3,138 1,122 98,454
PAYMENTS TO PLAN
PARTICIPANTS (11,606) (313) (713) - (29,939)
PARTICIPANT LOANS (2,151) (33) (316) 6,193 -
ADMINISTRATIVE
EXPENSES (141) - (6) - (246)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $199,006 $ - $ 30,276 $ 14,894 $735,002
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
MANAGEMENT AND SALARIED 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 for
detailed benefit information.
a. General and Plan Participants
The United Air Lines, Inc. Management and Salaried Employees' 401(k)
Retirement Savings Plan (the "Plan") covers management and salaried
employees on the first day of the calendar month following the date
of hire and meteorologist employees of United Air Lines, Inc.
("United") who 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 1997 and $10,000 in 1998. 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 $1,311,134 and $1,481,719 for 1997 and 1996,
respectively, which were transferred from other qualified plans as
rollovers under Internal Revenue Code Sections 401(a) and 401(k).
Effective December 1, 1995, the Plan was amended to provide that
salaried employees who are hired on or after February 1, 1994, are
eligible to receive a two percent company contribution after
completing two years of credited service. Eligible employees are
one hundred percent vested in the company contribution at the time
made.
Contributions on the Statement of Changes in Net Assets Available
for Plan Benefits for the years ended November 30, 1997 and 1996,
are reflected net of the accrual for the returns of excess annual
additions in the amounts of ($12,051,745) and ($5,051,668), for the
respective plan years, as required under Internal Revenue Code
Section 415(c).
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
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 salary
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 values
of the investment contracts at November 30, 1997 and 1996 was
$196,365 and $202,587 (in thousands), respectively. The average
yield for the year ending November 30, 1997 and 1996 was
approximately 6.6%. The crediting interest rates as of November 30,
1997 and 1996 were approximately 6.5% and 6.3%, respectively.
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 salary
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 who have
terminated employment 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 (in regards to
salaried employees) 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' 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 Company
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. Ground 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 (9.5% as of March 31, 1998). 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.
3. TAX STATUS
The Plan obtained its latest determination letter on July 16, 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, 1997, into UAL's previously filed Form S-8 and Post
Effective Amendment No. 1 to Form S-8 Registration Statement (File No.
33-38613) for the United Air Lines, Inc. Management and Salaried
Employees' 401(k) Retirement Savings Plan.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
May 27, 1998
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