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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.
Flight Attendant 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. Flight Attendant
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. Flight Attendant 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.
Flight Attendant 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.
FLIGHT ATTENDANT 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 $ 37,784 $ 24,337
Equity-Income Fund 28,838 13,650
Growth Company Fund 122,535 99,574
Government Securities Fund 998 1,059
OTC Portfolio 24,554 15,236
Overseas Fund 44,059 36,521
Balanced Fund 40,910 31,972
Asset Manager 5,254 3,606
Asset Manager: Growth 11,059 6,362
Asset Manager: Income 1,340 383
Retirement Money Market Portfolio 5,268 3,656
U. S. Bond Index Portfolio 1,591 742
U. S. Equity Index Portfolio 123,790 89,866
Stated Return Fund 132,868 138,477
Blended Income Fund 40,804 36,888
UAL Stock Fund 29,338 14,356
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $650,990 $516,685
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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 $ 24,337 $ 13,650 $ 99,574 $ 1,059
CONTRIBUTIONS 5,001 3,328 13,779 109
TRANSFERS
BETWEEN FUNDS 2,949 7,493 (4,395) (211)
TRANSFERS
BETWEEN PLANS (5) (7) (32) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 848 992 3,974 42
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 4,967 3,709 10,945 4
5,815 7,493 14,919 46
PAYMENTS TO PLAN
PARTICIPANTS (311) (323) (1,304) (5)
ADMINISTRATIVE
EXPENSES (2) (4) (6) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 37,784 $ 28,838 $122,535 $ 998
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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 $ 15,236 $ 36,521 $ 31,972 $ 3,606
CONTRIBUTIONS 3,348 5,889 4,394 752
TRANSFERS
BETWEEN FUNDS 4,214 (2,007) (1,289) 196
TRANSFERS
BETWEEN PLANS (1) (7) (6) (7)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,386 2,234 3,257 306
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 522 1,770 3,223 426
1,908 4,004 6,480 732
PAYMENTS TO PLAN
PARTICIPANTS (151) (340) (637) (25)
ADMINISTRATIVE
EXPENSES - (1) (4) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 24,554 $ 44,059 $ 40,910 $ 5,254
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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. 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 $ 6,362 $ 383 $ 3,656 $ 742 $ 89,866
CONTRIBUTIONS 1,768 137 634 182 5,413
TRANSFERS
BETWEEN FUNDS 1,472 768 853 577 2,825
TRANSFERS
BETWEEN PLANS - - - - (20)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 545 33 263 78 -
Interest - - - - -
Net appreciation
(depreciation)
in value of
investments 1,108 26 - 17 26,688
1,653 59 263 95 26,688
PAYMENTS TO PLAN
PARTICIPANTS (195) (7) (137) (5) (979)
ADMINISTRATIVE
EXPENSES (1) - (1) - (3)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 11,059 $ 1,340 $ 5,268 $ 1,591 $123,790
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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
STATED BLENDED UAL
RETURN INCOME STOCK
FUND FUND FUND TOTAL
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $138,477 $ 36,888 $ 14,356 $516,685
CONTRIBUTIONS - 7,378 2,947 55,059
TRANSFERS
BETWEEN FUNDS (13,263) (5,360) 5,178 -
TRANSFERS
BETWEEN PLANS (21) 108 (1) 1
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - 13,958
Interest 9,648 2,550 - 12,198
Net appreciation
(depreciation)
in value of
investments - - 7,060 60,465
9,648 2,550 7,060 86,621
PAYMENTS TO PLAN
PARTICIPANTS (1,965) (727) (185) (7,296)
ADMINISTRATIVE
EXPENSES (8) (33) (17) (80)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $132,868 $ 40,804 $ 29,338 $650,990
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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 $ 17,091 $ 4,631 $ 68,308 $ 261
CONTRIBUTIONS 5,576 1,893 13,270 106
TRANSFERS
BETWEEN FUNDS (576) 5,355 4,758 664
TRANSFERS
BETWEEN PLANS 1 - (21) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 4,364 422 3,512 27
Interest - - - -
Net appreciation
(depreciation)
in value of
investments (1,604) 1,653 11,748 6
2,760 2,075 15,260 33
PAYMENTS TO PLAN
PARTICIPANTS (513) (300) (1,991) (5)
ADMINISTRATIVE
EXPENSES (2) (4) (10) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 24,337 $ 13,650 $ 99,574 $ 1,059
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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 $ 6,051 $ 26,565 $ 27,962 $ 2,157
CONTRIBUTIONS 2,165 5,782 5,133 717
TRANSFERS
BETWEEN FUNDS 4,877 394 (3,663) 311
TRANSFERS
BETWEEN PLANS - - (1) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,249 637 1,290 96
Interest (1) 1 1 -
Net appreciation
(depreciation)
in value of
investments 1,120 4,017 2,170 382
2,368 4,655 3,461 478
PAYMENTS TO PLAN
PARTICIPANTS (225) (874) (911) (56)
ADMINISTRATIVE
EXPENSES - (1) (9) (1)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 15,236 $ 36,521 $ 31,972 $ 3,606
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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 $ 3,407 $ 331 $ 1,120 $ 352 $ 66,960
CONTRIBUTIONS 1,290 109 420 144 4,065
TRANSFERS
BETWEEN FUNDS 720 (59) 2,067 235 775
TRANSFERS
BETWEEN PLANS - - - - (1)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 53 19 111 40 -
Interest - - - - 1
Net appreciation
(depreciation)
in value of
investments 980 16 - 3 19,287
1,033 35 111 43 19,288
PAYMENTS TO PLAN
PARTICIPANTS (86) (33) (61) (32) (1,217)
ADMINISTRATIVE
EXPENSES (2) - (1) - (4)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 6,362 $ 383 $ 3,656 $ 742 $ 89,866
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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
STATED BLENDED UAL
RETURN INCOME STOCK
FUND FUND FUND TOTAL
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $145,925 $ 33,301 $ 5,614 $410,036
CONTRIBUTIONS (4) 8,417 2,001 51,084
TRANSFERS
BETWEEN FUNDS (15,289) (5,948) 5,379 -
TRANSFERS
BETWEEN PLANS (18) 71 (30) 1
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - 11,820
Interest 9,520 2,222 1 11,745
Net appreciation
(depreciation)
in value of
investments - - 1,643 41,421
9,520 2,222 1,644 64,986
PAYMENTS TO PLAN
PARTICIPANTS (1,642) (1,096) (251) (9,293)
ADMINISTRATIVE
EXPENSES (15) (79) (1) (129)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $138,477 $ 36,888 $ 14,356 $516,685
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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. Flight Attendant Employees' 401 (k)
Retirement Savings Plan ("Plan") covers all employees of United
classified as flight attendants and who are members of the
Association of Flight Attendants. Eligible employees are eligible
to become participants on their date of hire. 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 earnings, up to
25% of each paycheck, 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. Participants are immediately vested in their salary
deferral contributions.
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 $185,400 and $326,534 for 1997 and 1996,
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
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 Stated Return Fund is invested in Connecticut General's
general portfolio. The investment in and interest earned on the
Stated Return Fund are guaranteed against loss by Connecticut
General. Interest is credited monthly to the participant's
account and is net of administrative expenses. The rate of
interest for any period of time is determined by Connecticut
General and may be changed from time to time. Any such change
will be declared in advance and will become effective as of the
first day of the month immediately following the date the notice
is given. The net rate for 1997 was 7.40%. However, no further
contributions can be made to this fund.
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 were $40,718 and $37,353 (in thousands),
respectively. The average yield for the years 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. 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.
Withdrawals of balances attributable to the United Air Lines,
Inc. Flight Attendant Employees' Savings Plan or "the Prior
Plan" are normally made in the form of a single life annuity, if
the participant is unmarried, or a 50% contingent annuity with
the spouse as the contingent annuitant, if the participant is
married. Spousal consent is required if the participant elects
to take a distribution in the form of a lump sum payment,
periodic distributions, or other forms of annuities.
Withdrawals of balances from the 401(k) account may be made
in the form of a lump sum, periodic distributions, irregular
partial distributions, or through the purchase of an annuity
other than a life annuity. Spousal consent is not required for
distribution of 401(k) balances. Participants who have
terminated employment are able to defer the distribution of
balances attributable to "the Prior Plan" and the 401(k) 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 in lump sum
form only:
- Discretionary withdrawals of post-tax contributions and
earnings
- 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. Certain
restrictions on withdrawals may apply for participants domiciled
in, or residents of, non-U.S. locations.
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 &
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 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. Ground Employees' 401(k) Retirement Savings
Plan and the United Air Lines, Inc. Management and Salaried
Employees' 401(k) Retirement Savings Plan.
3. TAX STATUS
The Plan obtained its latest determination letter on August 23, 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.
4. SUBSEQUENT EVENT
Effective April 1, 1998, flight attendant employees may obtain a loan
against their 401(k) account. 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.
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. 33-44553), Form S-8
Registration Statement (File No. 33-62749), and Form S-8 Registration
Statement (File No. 333-52249), for the United Air Lines, Inc. Flight
Attendant Employees' 401(k) Retirement Savings Plan.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
May 27, 1998
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