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USAIR, INC.
401(k) SAVINGS PLAN
Financial Statements and Schedule
December 31, 1992 and 1991
(With Independent Auditors' Report Thereon)
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USAIR, INC.
401(k) SAVINGS PLAN
Table of Contents
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Page
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Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 1992 and 1991 2
Statements of Changes in Net Assets Available for
Plan Benefits for the years ended
December 31, 1992 and 1991 3
Notes to Financial Statements 4-7
Schedule I - Item 27a
Schedule of Assets Held for Investment Purposes
as of December 31, 1992 8
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Independent Auditors' Report
The Plan Administrator and Participants
USAir, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan benefits of
the USAir, Inc. 401 (k) Savings Plan (the Plan) as of December 31, 1992 and 1991, and the
related statements of changes in net assets available for plan benefits for the years then
ended. These financial statements are the responsibility of the Plan's management. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for plan benefits of the Plan as of December 31, 1992 and
1991, and the changes in net assets available for plan benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial statements
taken as a whole. The supplemental schedule of assets held for investment purposes as of
December 31, 1992 is presented for the purpose of additional analysis and is not a required
part of the basic financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
January 7, 1994
1
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USAIR, INC.
401(k) SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
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December 31, 1992 and 1991
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Assets:
Beneficial interest in USAir, Inc.
master trust fund (note 2) $202,350,650 $143,236,568
Employee contributions receivable 1,357,530 1,597,625
Loans receivable 4,556,966 2,284,904
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208,265,146 147,119,097
Liabilities:
Benefits payable - 706,079
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Net assets available for plan benefits $208,265,146 $146,413,018
=========== ===========
See accompanying notes to financial statements.
2
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USAIR, INC.
401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
December 31, 1992 and 1991
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Additions to net assets attributable to:
Net investment gain from master trust $ 12,936,419 $ 23,106,991
Interest income on employee loans 268,485 151,920
Employee contributions 51,510,415 43,456,704
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Total additions 64,715,319 66,715,615
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Deductions from net assets attributable to:
Employee distributions 2,663,101 3,598,952
Administrative expenses 200,090 191,593
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Total deductions 2,863,191 3,790,545
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Net increase in net assets available
for plan benefits 61,852,128 62,925,070
Net assets available for plan benefits:
Beginning of year 146,413,018 83,487,948
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End of year $208,265,146 $146,413,018
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See accompanying notes to financial statements.
3
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USAIR, INC.
401(k) SAVINGS PLAN
Notes to Financial Statements
-----------------------------
December 31, 1992 and 1991
(1) Description of Plan
The following brief description of the USAir, Inc. 401(k) Savings Plan (the Plan) is provided
for general information purposes only. Participants should refer to the Plan document for
more complete information.
(a) General
The Plan is a defined contribution plan intended to be a qualified cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code, as amended (the
Code) and to qualify under Section 401(a) of the Code. All employees of USAir,
Inc. (USAir or the Company) are eligible to participate except for those individuals
not covered under the United States income tax laws or those individuals who are
participants in another 401(k) plan. The Plan is subject to the provisions of the
Employee Retirement Income Act of 1974 (ERISA).
(b) Plan Contributions
USAir employees electing to participate in the Plan make contributions to the Plan
via payroll deductions. The amount of contribution that may be made by a
participant to the Plan shall be a whole percentage of a participant's compensation.
Compensation includes base pay, overtime, shift premiums and shift differentials, up
to a limit of $200,000. The percentage of compensation contributed may not exceed
15 percent if the participant's compensation for the preceding year was less than
$50,000. If the preceding year's compensation was greater than $50,000, the
percentage may not exceed 5 percent. Contributions for 1992 and 1991 could not
exceed the statutory limits of $8,728 and $8,475, respectively. The Plan does not
provide for any employer contributions.
(c) Investment Options
The Company selects the number and type of investment options available. The
investment options are held and administered as separate, common funds by Fidelity
Investments.
Each participant elects the percentage, in increments of 10 percent, in which his/her
account balance is invested in the various investment funds. The participant may
transfer his/her investments from one investment fund to another investment fund.
A separate account is established and maintained in the name of each participant
and reflects the participant's contributions invested in, and the earnings and losses
attributed to, each investment fund less administrative expenses. Participants are
4
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USAIR, INC.
401(k) SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
allocated a share of each fund's net investment earnings based upon their account
balance as a percentage of the total fund balance. Net investment earnings are
allocated to participants on a monthly basis. Participants are immediately vested in
their contributions plus earnings thereon.
(d) Loans and Hardship Withdrawals
All participants can borrow from their account but may have only one loan
outstanding at a given point in time. Loans are to be repaid, with interest, within
five years unless the loan is used by the participant to acquire a principal residence.
Loans are limited to 50 percent of the participant's separate account balance as of
the date of the loan.
Upon approval from the Company, a participant may withdraw his or her contribu-
tions from the account if it is determined that the withdrawal is necessary to meet
an immediate and heavy financial need of the participant under the deemed hardship
standards set forth in the Code.
(e) Distributions
Distribution to a participant or beneficiary is made as soon as reasonably practicable
after the participant's separation from service with the Company due to death,
retirement, or other termination of employment. The distribution can be deferred
or provided in cash as a lump sum distribution. If the balance due to the participant
or beneficiary is less than $3,500, a lump sum distribution is automatic upon
separation.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on an accrual basis and
present the net assets available for plan benefits and changes in those net assets.
(b) Master Trust
The assets of the Plan were maintained in a master trust with the assets of another
defined contribution plan sponsored by USAir, Inc. The trustee, Fidelity Manage-
ment Trust Company, maintains the master trust under the terms of an agreement
with the Plan. The Plan's share of assets and changes in its share of the master trust
have been reported to the Plan by the trustee as having been determined through the
use of fair values of all assets. Fair values for assets were determined by quoted
market values, when available.
5
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USAIR, INC.
401(k) SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(3) Investment Options
The following table presents the activity for each investment option for the Plan's beneficial interest
in the master trust, for the years ended December 31, 1992 and 1991:
<CAPTION>
Fidelity U.S. Fidelity U.S. Fidelity Fidelity Fidelity Fidelity U.S.
Government Government Magellan Intermediate Equity Equity Index
Money Market Reserves Fund Fund Bond Fund Income Fund Fund
------------ ------------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991 $ - $ 20,194,745 $26,242,456 $ 8,021,510 $13,220,950 $ 3,706,558
---------- ----------- ---------- ---------- ---------- ----------
Net investment gain from
master trust 1,003,977 339,600 13,455,374 1,511,128 4,430,961 1,380,178
Employee contributions 4,739,946 1,917,697 17,887,776 4,073,255 6,561,870 2,491,848
Employee distributions (754,300) (132,693) (930,599) (306,844) (452,304) (148,329)
Administrative expenses (8,207) (3,845) (106,114) (6,977) (14,555) (2,167)
Net exchanges between
investment funds 22,306,055 (22,305,622) 2,244,144 233,496 (799,731) (271,574)
Net loan activity and
loan interest (393,171) (9,882) (163,991) (65,006) (125,597) (36,976)
---------- ----------- ---------- ---------- ---------- ----------
Net change in investmennt
option 26,894,300 (20,194,745) 32,386,590 5,439,052 9,600,644 3,412,980
---------- ----------- ---------- ---------- ---------- ----------
Balance, December 31, 1991 26,894,300 - 58,629,046 13,460,562 22,821,594 7,119,538
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Net investment gain from
master trust 978,844 - 5,367,822 888,979 3,953,691 696,633
Employee contributions 6,130,394 - 24,462,142 4,386,453 7,789,026 2,986,824
Employee distributions (774,318) - (1,270,885) (338,483) (464,389) (148,223)
Administrative expenses (8,712) - (105,613) (5,071) (12,250) (722)
Net exchanges between
investment funds (5,772,964) - 1,132,226 (977,931) 1,358,909 270,299
Net loan activity and
loan interest (438,309) - (685,766) (232,703) (309,249) (98,695)
---------- ----------- ---------- ---------- ---------- ----------
Net change in investmennt
option 114,935 - 28,899,926 3,721,244 12,315,738 3,706,116
---------- ----------- ---------- ---------- ---------- ----------
Balance, December 31, 1992 $27,009,235 $ - $87,528,972 $17,181,806 $35,137,332 $10,825,654
========== =========== ========== ========== ========== ==========
6
<CAPTION>
Total
USAir Non- (Beneficial
Common Pilots Teamsters Contract USAir Interest in
Stock Fund 1986 GIC 1986 GIC 1986 GIC GIC Master Trust)
---------- -------- --------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991 $ - $ 650,315 $ 514,894 $ 89,714 $ 8,575,628 $ 81,216,770
--------- -------- -------- ------- ---------- -----------
Net investment gain from
master trust - 36,208 25,701 4,830 919,034 23,106,991
Employee contributions - - - - 5,590,120 43,262,512
Employee distributions - (788) (42,120) (9,160) (473,720) (3,250,857)
Administrative expenses - (110) (229) (60) (49,329) (191,593)
Net exchanges between
investment funds - (682,425) (492,253) (85,324) (146,766) -
Net loan activity and
loan interest - (3,200) (5,993) - (103,439) (907,255)
--------- -------- -------- ------- ---------- -----------
Net change in investmennt
option - (650,315) (514,894) (89,714) 5,735,900 62,019,798
--------- -------- -------- ------- ---------- -----------
Balance, December 31, 1991 - - - - 14,311,528 143,236,568
--------- -------- -------- ------- ---------- -----------
Net investment gain from
master trust (196,340) - - - 1,246,790 12,936,419
Employee contributions 560,279 - - - 5,435,392 51,750,510
Employee distributions (7,168) - - - (365,714) (3,369,180)
Administrative expenses (5,003) - - - (62,719) (200,090)
Net exchanges between
investment funds 3,975,882 - - - 13,579 -
Net loan activity and
loan interest (26,458) - - - (212,397) (2,003,577)
--------- -------- -------- ------- ---------- -----------
Net change in investmennt
option 4,301,192 - - - 6,054,931 59,114,082
--------- -------- -------- ------- ---------- -----------
Balance, December 31, 1992 $4,301,192 $ - $ - $ - $20,366,459 $202,350,650
========= ======== ======== ======= ========== ===========
6 (continued)
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USAIR, INC.
401(k) SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(4) Concentration of Credit Risk
The Plan's beneficial interest in the master trust includes certain investments in guaranteed
investment contracts (GICs). The issuers of the GICs are all insurance companies. The
Plan's ultimate realization of amounts invested in GICs is dependent on the continued
financial stability of the insurance companies that are issuers of the GICs. The Plan's
beneficial interest in amounts invested in GICs is $20,366,459 and $14,311,528 at Decem-
ber 31, 1992 and 1991, respectively.
(5) Federal Tax Status
Although the Plan has not requested a letter of determination from the Internal Revenue
Service as to its qualification, the Company and its general counsel believe the Plan meets
the requirement of Section 401 of the Internal Revenue Code, as amended and is therefore
believed to be exempt from federal income taxes.
(6) Plan Termination
The Company reserves the right to terminate the Plan at any time. Upon termination of
the Plan, the following actions shall be taken for the benefit of participants:
(a) As of the termination date, each investment fund shall be valued. In determining the
net worth of the investment funds there shall be included as a liability such amounts
as shall be necessary to pay all expenses in connection with the termination of the
investment funds and the liquidation and distribution of the property of the funds,
as well as other expenses, whether or not accrued, and shall include as an asset all
accrued income.
(b) All participant accounts shall then be disposed of, to, or for each participant in single
lump-sum payments. All distributions shall be made in cash.
7
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Schedule I
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USAIR, INC.
401(k) SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
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December 31, 1992
<CAPTION>
Identity Description Cost Current Value
-------- ----------- ---- -------------
<S> <C> <C> <C>
Participant loans Interest rates range from $ - $ 4,556,966
six percent to 12.5 ============ ============
percent per annum
8
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CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
USAir Group, Inc.:
We consent to the use of our reports dated February 26, 1993 included in the
Annual Report on Form 10-K filed by USAir Group, Inc. and USAir, Inc. for the
year ended December 31, 1992, incorporated herein by reference. Our reports
covering the December 31, 1992 consolidated financial statements refer to a
change in the method of accounting for postretirement benefits other than
pensions.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Washington, D.C.
January 28, 1994
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