<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year end December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number: 1-8444
USAir, Inc. Employee Savings Plan
US Airways Group, Inc.
(Issuer of securities held pursuant to the plan noted above)
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-5306
(Registrant's Telephone Number)
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Financial Statements
and Supplemental Schedules
December 31, 1996 and 1995
(With Independent Auditors'
Report Thereon)
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Table of Contents
-----------------
Page
----
Independent Auditors' Report 1
Financial Statements
Statements of Net Assets Available for Plan
Benefits as of December 31, 1996 and 1995 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1996 and 1995 3
Notes to Financial Statements 4 - 16
Schedule I - Item 27a
Schedule of Assets Held for Investment Purposes
as of December 31, 1996 17 - 18
Schedule II - Item 27d
Schedule of Reportable Transactions for the year
ended December 31, 1996 19
Signature 20
Exhibit 23
Consent of Independent Auditors 21
<PAGE>
Independent Auditors' Report
The Plan Administrator and Participants
USAir, Inc. Employee Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the USAir, Inc. Employee Savings
Plan (the "Plan") as of December 31, 1996 and 1995, 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, 1996
and 1995, 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
schedules of assets held for investment purposes as of December
31, 1996 and reportable transactions for the year ended December
31, 1996 are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are
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 schedules have been subjected to the auditing
procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
KPMG PEAT MARWICK LLP
Washington, D.C.
June 6, 1997
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1996 1995
---- ----
Assets
Investments:
At fair value:
Shares of registered investment
companies:
Fidelity Magellan Fund $ 121,586,246 $ 104,203,088
Fidelity Equity Income Fund 56,562,899 38,481,770
Fidelity Spartan U.S. Equity
Index Portfolio 27,479,868 16,463,720
US Airways Common Stock Fund 23,008,375 10,082,465
Fidelity Retirement Government
Money Market Portfolio 19,048,082 16,461,676
Fidelity Intermediate Bond Fund 18,242,617 16,288,373
Capital Growth Mix Portfolio 11,950,090 6,287,203
Moderation Mix Portfolio 3,863,640 1,993,755
Neuberger & Berman Guardian Fund 3,228,231 -
Income Mix Portfolio 666,200 341,109
Participant loans 12,476,007 7,992,865
----------- -----------
298,112,255 218,596,024
At contract value:
Fixed Income Fund 20,064,169 17,385,300
----------- -----------
Total investments 318,176,424 235,981,324
Receivables:
Participant Contributions 1,626,193 -
Employer contributions 4,371,041 -
----------- -----------
Total receivables 5,997,234 -
----------- -----------
Total assets 324,173,658 235,981,324
----------- -----------
Liabilities:
Accrued expenses 57,339 13,839
----------- -----------
Total liabilities 57,339 13,839
----------- -----------
Net assets available for plan benefits $ 324,116,319 $ 235,967,485
=========== ===========
See accompanying Notes to Financial Statements.
2
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
Years ended December 31,
1996 1995
---- ----
Additions to net assets attributable to:
Net appreciation in fair value
of investments $ 14,357,485 $ 36,612,538
Investment income 24,718,033 11,199,051
Interest income on participant
loans 868,431 477,534
Participant contributions 40,611,694 34,357,479
Employer contributions 15,836,188 10,728,702
Rollover contributions 512,679 702,970
----------- -----------
Total additions 96,904,510 94,078,274
Deductions from net assets attributable to:
Benefits paid to participants 8,704,143 6,909,272
Administrative expenses 66,141 47,817
----------- -----------
Total deductions 8,770,284 6,957,089
----------- -----------
Net increase 88,134,226 87,121,185
Net assets available for plan benefits:
Beginning of year 235,967,485 148,133,300
Transfer from USAir, Inc. 401(K)
Savings Plan 14,608 664,320
Transfer from other plans - 48,680
----------- -----------
End of year $ 324,116,319 $ 235,967,485
=========== ===========
See accompanying Notes to Financial Statements.
3
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the USAir, Inc. Employee Savings
Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution plan intended to be a
qualified cash or deferred compensation arrangement under
Section 401(k) of the Internal Revenue Code ("IRC"), as
amended, and to qualify under Section 401(a) of the IRC. The
Plan was established on January 1, 1993 for certain employees
of US Airways, Inc. ("US Airways" or the "Company"), formerly
USAir, Inc. All non-contract employees and certain other
employees who are covered by a collective bargaining
agreement which provides for their participation in the Plan,
who are at least 18 years of age, have completed 90 days of
service and who are not covered by another 401(k) plan
sponsored by US Airways (except for those individuals not
covered by the United States income tax laws) are eligible to
participate in the Plan. Effective December 31, 1995, the
assets and liabilities related to US Airways ground school
training instructors were transferred to the Plan from the
USAir, Inc. 401(k) Savings Plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of
1974, as amended.
US Airways, the plan administrator, is responsible for the
content and issuance of the Plan's financial statements. US
Airways Group, Inc. ("US Airways Group"), formerly USAir
Group, Inc., is the issuer of securities held pursuant to the
Plan.
(this space intentionally left blank)
4
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(b) Contributions
Eligible US Airways employees electing to participate in the
Plan make contributions to the Plan via payroll deductions.
Each year Plan participants may contribute up to 13 percent
of pretax annual compensation, as defined in the Plan, unless
the participant is classified as a highly compensated
employee, as defined by the IRC. The contribution percentage
may not exceed a certain percent of pre-tax annual
compensation, as determined by the plan administrator, if the
participant is a highly compensated employee. The amount of
contribution that may be made by a participant to the Plan
shall be a whole percentage of a participant's compensation.
Participant contributions for both 1996 and 1995 did not
exceed the statutory limit of $9,500 and $9,240 per year,
respectively. The Company matches 50% of a participant's
contribution each pay period up to a maximum of two percent
of the participant's compensation.
If US Airways' parent company, US Airways Group, Inc.,
achieves certain pre-tax margin levels, the Company also
makes an annual profit sharing contribution to the Plan on
behalf of each participant. In March 1997, the Company made
a $3.9 million profit sharing payment to participant accounts
related to the 1996 plan year. This contribution is included
in the Employer contribution receivable in the December 31,
1996 statement of net assets for plan benefits. No profit
sharing contribution was made for the plan year ended
December 31, 1995.
(c) Vesting
Participants are immediately vested in their contributions,
plus actual earnings thereon. The Company's matching and
profit sharing contributions, plus actual earnings thereon,
become 100 percent vested after two years of continuous
service.
(d) Investment Options
The Company selects the number and type of investment options
available. Fidelity Institutional Retirement Services
Company, the Plan's Recordkeeper, is responsible for
maintaining an account balance for each participant. Each
participant instructs the Recordkeeper how to allocate their
participant and company contributions. Participants may
invest their contributions in any combination among the
investment options available in increments of five percent.
If a participant fails to instruct the Recordkeeper on how to
allocate the contributions, then their contributions will be
invested in a cash equivalent fund, such as the Fidelity
Government Money Market Portfolio.
5
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
The Recordkeeper values account balances daily. Each account
balance is based on the value of the underlying investments
in each account. Generally, participants may elect to change
how future contributions are allocated or may transfer
current account balances among investment options.
As of December 31, 1996, the Company offered eleven
investment options in the form of eight individual investment
options and three diversified portfolio mixes, which are pre-
selected combinations of mutual funds. The Neuberger &
Berman Guardian Fund was added as an investment option during
1996. The eleven options available to participant are as
follows:
Fidelity Magellan Fund - The Fund primarily invests in common
stocks and securities of both well-known and lesser known
companies with potentially above-average growth potential.
Securities may be of foreign, domestic and multinational
companies.
Fidelity Equity Income Fund - The Fund normally invests at
least 80% of its assets in income-producing common and
preferred stocks with the remaining 20% generally invested in
debt securities, like bonds.
Fidelity Spartan U.S. Equity Index Portfolio - The Portfolio
seeks growth and income by matching the composition and total
return of the Standard & Poor's Daily Stock Price Index of 500
common stocks.
US Airways Common Stock Fund - A fund comprised primarily of US
Airways Group, Inc. common stock purchased on the open market
or directly from Group at market prices. A small percentage of
the fund is invested in short-term liquid investments. Company
contributions cannot be invested in this Fund, in accordance
with the Plan document. In addition, officers of the Company
are not permitted to invest their contributions in this Fund.
Fidelity Retirement Government Money Market Portfolio -
Investments are made in obligations issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities.
Fidelity Intermediate Bond Fund - Investments are made
primarily in investment-grade fixed income securities,
including bonds, notes, mortgage securities, government and
government agency obligations and convertible securities. The
average maturity ranges from three to ten years.
6
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
Capital Growth Mix Portfolio - A diversified portfolio mix
comprised of 80% equity securities and 20% fixed income
securities. The equity securities are invested 25% in the
Fidelity Equity Income Fund, approximately 19% in the Fidelity
OTC Portfolio, approximately 37% in the Fidelity Magellan Fund
and approximately 19% in the Fidelity Overseas Fund. The fixed
income securities are invested in the Fidelity Intermediate
Bond Fund.
Moderation Mix Portfolio - A diversified portfolio mix
comprised of 60% equity securities and 40% fixed income
securities. The equity securities are invested approximately
33% in the Fidelity Equity Income Fund, approximately 33% in
the Fidelity Spartan U.S. Equity Index Portfolio, 25% in the
Fidelity Magellan Fund and approximately 9% in the Fidelity
Overseas Fund. The fixed income securities are invested
approximately 38% in the Fidelity Short-Term Bond Fund and
approximately 62% in the Fidelity Intermediate Bond Fund.
Neuberger and Berman Guardian Fund - The Fund primarily
invests in stocks of established, high-quality companies
considered to be undervalued.
Income Mix Portfolio - A diversified portfolio mix comprised of
20% equity securities and 80% fixed income securities. The
equity securities are invested 50% in the Fidelity Equity
Income Fund and 50% in the Fidelity Spartan U.S. Equity Index
Portfolio. The fixed income securities are invested
approximately 19% in the Fidelity Retirement Government Money
Market Portfolio, approximately 44% in the Fidelity Short-Term
Bond Fund and approximately 37% in the Fidelity Intermediate
Bond Fund.
Fixed Income Fund - This fund buys high-quality investment
contracts, a type of investment product offered to retirement
and savings plans by insurance companies, banks, and other
financial institutions. Money transferred out of the Fixed
Income Fund cannot be invested in the Fidelity Retirement
Government Money Market Portfolio, the Fidelity Intermediate
Bond Fund or the Income Mix Portfolio for a period of 90 days
because these funds are considered competitive by the insurance
industry.
7
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(e) Participant Withdrawals
All participants can borrow from their account, but may have
only one loan outstanding at any given point in time.
Participants may borrow from their accounts a minimum of
$1,000 up to a maximum amount equal to the lesser of $50,000
(reduced by the highest outstanding loan balance from the
Plan or any other plan maintained by the Company during the
preceeding twelve month period) or 50 percent of their vested
separate account balance as of the date of the loan. Loan
transactions are treated as transfers between the investment
funds and the participant loans receivable. Loan terms
cannot exceed 5 years, except for the purchase of a primary
residence. The loans are secured by the balance in the
participant's account and bear interest at a rate
commensurate with local prevailing market rates for loans
made under similar circumstances. Principal and interest are
paid ratably through payroll deductions.
Upon approval by the plan administrator, a participant may
withdraw his or her contributions 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 Plan.
(f) Payment of Benefits
Upon termination of service due to death, disability,
retirement or other termination of employment, distributions
to a participant or beneficiary is made as soon as reasonably
practicable. If the participant's account balance is less
than $3,500, a lump sum distribution is automatic upon
separation. If the participant's account balance is greater
than $3,500, the distribution can be deferred or provided in
cash as a lump sum.
(g) Forfeited Accounts
Forfeited nonvested accounts are used by the Company to
reduce future employer contributions. During 1996, employer
contributions were reduced by $30,540 from forfeited
nonvested accounts.
(h) Administrative Expenses
Certain administrative expenses of the Plan are paid by US
Airways.
8
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
2. Summary of Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting. Certain prior year amounts
were reclassified to conform with current year presentation.
(b) Investment Valuation and Income Recognition
The assets of the US Airways Common Stock Fund, Capital
Growth Mix Portfolio, Moderation Mix Portfolio, Income Mix
Portfolio, and Fixed Income Fund are commingled with certain
assets of other defined contribution plans sponsored by US
Airways. The Plan's Recordkeeper separately identifies the
assets of each plan participant who has an interest in the
commingled funds.
Fair values for assets were determined by quoted market
values, when available. The Plan presents in its statement
of changes in net assets the net appreciation (depreciation)
in the fair value of its investments, which consists of the
realized gains or losses and unrealized appreciation
(depreciation) on those investments. The Plan's investments
in guaranteed investment contracts ("GICs") are stated at
contract value (See Note 4). Purchases and sales of
investments are recorded on a trade-date basis.
The value of a participant's investment in the USAir Common
Stock Fund, is represented by units credited to the
participant's account. The unit values were determined by the
trustee. The units and unit values (rounded to the nearest
whole unit and cent) of the USAir Common Stock Fund as of the
close of each quarter during 1996 was as follows:
1996 Number of Units Unit Value
- ----------- --------------- ----------
March 31 443,315 $ 28.84
June 30 545,911 28.32
September 30 587,299 25.97
December 31 628,304 36.62
(c) Payment of Benefits
Benefits are recorded as deductions when paid.
9
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(d) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual
results may differ from those estimates.
(this space intentionally left blank)
10
<PAGE>
<TABLE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
3. Investment Activity
The following table represents the investment funds' and participant loans' activities for the years ended
December 31, 1996 and 1995:
<CAPTION>
Fidelity
Retirement Fidelity Fidelity Fidelity
Fixed Government Fidelity Intermediate Equity Spartan U.S.
Income Money Market Magellan Bond Income Equity Index
Fund 1) Portfolio 1) Fund 1) Fund 1) Fund 1) Portfolio 1)
---------- ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $14,518,568* $13,201,723* $ 63,197,753* $12,590,760* $25,201,519* $ 9,619,797*
Investment income 1,072,103 847,490 5,839,110 924,761 2,138,722 376,865
Net appreciation in fair value - - 18,939,844 820,726 6,484,475 3,593,223
Interest income on participant loans - - - - - -
Contributions 3,178,236 4,029,806 20,558,828 3,834,066 6,962,894 3,284,831
Net exchanges between investment funds (572,802) (874,950) (2,033,891) (1,346,123) (1,357,922) (2,002)
Administrative expenses (13,356) (733) (21,768) (364) (626) (132)
Benefits paid to participants (812,467) (784,227) (2,637,983) (552,767) (1,039,895) (457,539)
Transfers from (to) other plans 15,018 42,567 361,195 17,314 92,603 48,677
---------- ---------- ----------- ---------- ---------- ----------
Net Change in Investment Funds 2,866,732 3,259,953 41,005,335 3,697,613 13,280,251 6,843,923
---------- ---------- ----------- ---------- ---------- ----------
Balance at December 31, 1995 17,385,300* 16,461,676* 104,203,088* 16,288,373* 38,481,770* 16,463,720*
Investment income 1,095,159 894,714 17,507,187 1,160,151 3,380,438 617,322
Net appreciation (depreciation)
in fair value - - (4,871,657) (525,448) 5,637,069 3,828,328
Interest income on participant loans - - - - - -
Contributions 2,707,469 3,747,625 22,394,933 3,516,929 8,007,462 4,251,081
Net exchanges between investment funds (348,862) (1,348,361) (14,174,497) (1,581,398) 2,383,233 3,037,996
Administrative expenses (16,225) (1,816) (27,618) (325) (1,215) (160)
Benefits paid to participants (758,202) (736,524) (3,444,651) (613,510) (1,315,113) (716,710)
Transfers from (to) other plans (470) 30,768 (539) (2,155) (10,745) (1,709)
---------- ---------- ----------- ---------- ---------- ----------
Net Change in Investment Funds 2,678,869 2,586,406 17,383,158 1,954,244 18,081,129 11,016,148
---------- ---------- ----------- ---------- ---------- ----------
Balance at December 31, 1996 $20,064,169* $19,048,082* $121,586,246* $18,242,617* $56,562,899* $27,479,868*
========== ========== =========== ========== ========== ==========
(table continued on next page)
11
</TABLE>
<PAGE>
<TABLE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
<CAPTION>
US Airways Neuberger
Capital Moderation Common & Berman Income
Growth Mix Mix Stock Guardian Mix
Portfolio 1) Portfolio 1) Fund 1) Fund Portfolio 1)
---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 2,502,587 $ 653,112 $ 2,113,113 $ - $ 91,740
Investment income - - - - -
Net appreciation in fair value 978,012 253,732 5,514,678 - 27,848
Interest income on participant loans - - - - -
Contributions 2,307,726 654,899 860,628 - 117,503
Net exchanges between investment funds 712,197 450,551 1,636,731 - 114,791
Administrative expenses (1,147) (182) (5,309) - (35)
Benefits paid to participants (245,879) (21,993) (76,666) - (21,051)
Transfers from (to) other plans 33,707 3,636 39,290 - 10,313
---------- --------- ---------- --------- ---------
Net Change in Investment Funds 3,784,616 1,340,643 7,969,352 - 249,369
---------- --------- ---------- --------- ---------
Balance at December 31, 1995 6,287,203 1,993,755 10,082,465* - 341,109
Investment income - - - 63,062 -
Net appreciation (depreciation)
in fair value 1,235,889 374,286 8,397,594 240,243 41,181
Interest income on participant loans - - - - -
Contributions 3,244,030 1,056,078 1,303,143 625,525 146,426
Net exchanges between investment funds 1,427,088 515,805 3,483,697 2,307,519 141,261
Administrative expenses (2,222) (365) (8,714) (1,175) (155)
Benefits paid to participants (241,898) (75,919) (249,243) (6,943) (3,622)
Transfers from (to) other plans - - (567) - -
---------- --------- ---------- --------- ---------
Net Change in Investment Funds 5,662,887 1,869,885 12,925,910 3,228,231 325,091
---------- --------- ---------- --------- ---------
Balance at December 31, 1996 $11,950,090* $3,863,640 $23,008,375* $3,228,231 $ 666,200
========== ========= ========== ========= =========
(table continued on next page)
12
</TABLE>
<PAGE>
<TABLE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
<CAPTION>
Participant
Loans Other Total
---------- --------- ----------
<S> <C> <C> <C>
Balance at December 31, 1994 $4,452,036 $ (9,408) $148,133,300
Investment income - - 11,199,051
Net appreciation in fair value - - 36,612,538
Interest income on participant loans 477,534 - 477,534
Contributions - (266) 45,789,151
Net exchanges between investment funds 3,273,420 - -
Administrative expenses - (4,165) (47,817)
Benefits paid to participants (258,805) - (6,909,272)
Transfers from (to) other plans 48,680 - 713,000
---------- --------- -----------
Net Change in Investment Funds 3,540,829 (4,431) 87,834,185
---------- --------- -----------
Balance at December 31, 1995 7,992,865* (13,839) 235,967,485
Investment income - - 24,718,033
Net appreciation (depreciation)
in fair value - - 14,357,485
Interest income on participant loans 868,431 - 868,431
Contributions - 5,959,860 56,960,561
Net exchanges between investment funds 4,156,519 - -
Administrative expenses - (6,151) (66,141)
Benefits paid to participants (541,808) - (8,704,143)
Transfers from (to) other plans - 25 14,608
---------- --------- -----------
Net Change in Investment Funds 4,483,142 5,953,734 88,148,834
---------- --------- -----------
Balance at December 31, 1996 $12,476,007* $5,939,895 $324,116,319
========== ========= ===========
* Investment balance represents greater than five percent of net assets available for plan benefits.
1) Party in interest
13
</TABLE>
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
4. Investment Contracts with Insurance Companies
The Plan had an interest in a portfolio of GICs with certain
insurance companies of $20,064,169 and $17,385,300 at
December 31, 1996 and 1995, respectively. The GICs are
benefit responsive because they provide reasonable access by
Plan participants to invested funds. Therefore, in
accordance with the American Institute of Certified Public
Accountant's Statement of Position 94-4, the interest in
these contracts is disclosed in the financial statements at
contract value which equals contributions made, plus accrued
interest at the specified rate, less plan withdrawals and
administrative expenses. The portfolio's contract value at
December 31, 1996 and 1995 was $79,111,397 and $73,426,290.
The average portfolio crediting interest rate was
approximately 5.8% and 5.7% at December 31, 1996 and 1995,
respectively. The portfolio average yield was approximately
6.1% and 6.5% for the years ended December 31, 1996 and 1995,
respectively.
For GICs with variable rates (approximately 33% of the
portfolio, as measured by contract values), crediting rates
are reset either quarterly or bi-annually. Crediting rates
are determined based upon the yields to maturity of the
underlying assets, net of certain origination fees.
No valuation reserves were recognized related to the
portfolio as all insurance companies in the portfolio had
received an investment grade rating from nationally
recognized rating agencies as of December 31, 1996 and 1995.
The fair value of the portfolio was $79,347,056 and
$74,818,203 at December 31, 1996 and 1995.
5. Plan Termination
Although it has not expressed any intent to do so, the
Company reserves the right to terminate the Plan at any time.
Upon termination of the Plan, participants will become 100
percent vested in their accounts. In addition 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.
14
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(b) All participant accounts must be disposed of in the
forms of payment available under the Plan, unless the
participant's spouse consents to another form of
distribution.
6. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for
plan benefits per the financial statements to the Form 5500:
December 31,
-------------------
1996 1995
---- ----
Net assets available for plan
benefits per the financial
statements $324,116,319 $235,967,485
Amounts allocated to withdrawing
participants (168,355) (117,925)
----------- -----------
Net assets available for plan
benefits per the Form 5500 $323,947,964 $235,849,560
=========== ===========
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
Year Ended
December 31, 1996
-----------------
Benefits paid to participants per the
financial statements $ 8,704,143
Add: Amounts allocated to withdrawing
participants at December 31, 1996 168,355
Less: Amounts allocated to withdrawing
participants at December 31, 1995 (117,925)
---------
Benefits paid to participants per the
Form 5500 $ 8,754,573
=========
Amounts allocated to withdrawing participants are recorded on
the Form 5500 for benefit claims that have been processed and
approved for payment prior to December 31 but not yet paid as
of that date.
15
<PAGE>
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
7. Tax Status
The Internal Revenue Service has determined and informed the
Company by a letter dated July 22, 1995, that the Plan and
related trust are designed in accordance with applicable
sections of the IRC.
8. Transfer from USAir, Inc. 401(k) Savings Plan
Transfer from USAir, Inc. 401(k) Savings Plan represents a
rollover contribution which was due from the aforementioned
plan as a result of a record keeping error, and will be
corrected in 1997.
(this space intentionally left blank)
16
<PAGE>
<TABLE>
Schedule I
USAIR, INC. Page 1 of 2
EMPLOYEE SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
----------------------------------------------------------
December 31, 1996
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Fidelity Magellan Fund* Shares in registered $ 111,017,870 $ 121,586,246
investment company
Fidelity Equity Shares in registered 45,418,880 56,562,899
Income Fund* investment company
Fidelity Spartan U.S. Equity Shares in registered 20,528,985 27,479,868
Index Portfolio* investment company
US Airways Common Stock Fund* Common stock of employer's 15,187,399 23,008,375
parent company, US Airways
Group, Inc., and short-
term investments
Fidelity Retirement Shares in money 19,048,082 19,048,082
Government Money market fund
Market Portfolio*
Fidelity Intermediate Shares in registered 18,556,887 18,242,617
Bond Fund* investment company
Capital Growth Mix Shares in registered 10,130,611 11,950,090
Portfolio* investment companies
(table continued on next page)
17
</TABLE>
<PAGE>
<TABLE>
Schedule I
USAIR, INC. Page 2 of 2
EMPLOYEE SAVINGS PLAN
Item 27a - Assets Held for Investment Purposes
----------------------------------------------
(Continued)
December 31, 1996
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Moderation Mix Portfolio* Shares in registered $ 3,320,324 $ 3,863,640
investment companies
Neuberger & Berman Shares in registered 3,007,900 3,228,231
Guardian Fund investment company
Income Mix Portfolio* Shares in registered 615,251 666,200
investment companies
Participant Loans Interest rates range - 12,476,007
from 7% to 10%
per annum
Fixed Income Fund* Guaranteed investment 20,064,169 20,064,169
contract, interest rates
range from 4.05% to 8.28%
per annum
----------- -----------
Total Investments $ 266,896,358 $ 318,176,424
=========== ===========
*Party in interest.
18
</TABLE>
<PAGE>
<TABLE>
Schedule II
USAIR, INC.
EMPLOYEE SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
----------------------------------------------
Year Ended December 31, 1996
Aggregate transactions during the year ended December 31, 1996, with securities of the same issue,
accounting for greater than five percent of the value of Plan assets at the beginning of the period
were as follows:
<CAPTION>
Total Number of Total Number Realized
Purchases Purchases Sales of Sales Gain(Loss)
--------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Magellan Fund* $52,934,164 254 $30,679,349 253 $1,150,462
Fidelity Equity 20,290,701 254 7,846,641 246 981,901
Income Fund*
Fidelity Spartan U.S. 11,782,584 254 4,594,763 235 555,052
Equity Index Portfolio*
US Airways Common Stock 32,093,358 254 27,565,042 241 2,755,122
Fund*
Fidelity Retirement 21,041,845 254 18,455,439 251 -
Government Money
Market Portfolio*
* Party in interest
19
</TABLE>
<PAGE>
Signature
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report to be
signed on their behalf by the undersigned thereunto duly
authorized.
USAir, Inc.
Employee Savings Plan
By: /s/ James A. Hultquist
----------------------
James A. Hultquist
Controller
US Airways Group, Inc.
June 30, 1997
20
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
US Airways Group, Inc.:
We consent to the use of our report dated June 6, 1997, on the
statements of net assets available for plan benefits as of
December 31, 1996 and 1995, and the related statements of changes
in net assets available for plan benefits for the years then
ended for the USAir, Inc. Employee Savings Plan (the "Plan")
included in the Annual Report on Form 11-K relating to the Plan
filed by US Airways Group, Inc. for the years ended December 31,
1996 and 1995, and to the incorporation by reference of such
report in the Registration Statement, as amended, on Form S-8
pertaining to the Plan (File No. 33-44835).
KPMG Peat Marwick LLP
Washington, D.C.
June 30, 1997
21
