UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year end December 31, 1997
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
US Airways, Inc. Employee Savings Plan
(Full title of the 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)
Commission file number: 1-8444
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Financial Statements
and Supplemental Schedules
December 31, 1997 and 1996
(With Independent Auditors'
Report Thereon)
US AIRWAYS, 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, 1997 and 1996 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1997 and 1996 3
Notes to Financial Statements 4 - 16
Supplemental Schedule I - Item 27a
Schedule of Assets Held for Investment Purposes
as of December 31, 1997 17 - 18
Supplemental Schedule II - Item 27d
Schedule of Reportable Transactions for the year
ended December 31, 1997 19
Signature 20
Exhibit 23
Consent of Independent Auditors 21
Independent Auditors' Report
The Plan Administrator and Participants
US Airways, Inc. Employee Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the US Airways, Inc. Employee
Savings Plan (the Plan), as of December 31, 1997 and 1996, 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, 1997
and 1996, 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, 1997 and reportable transactions for the year ended December
31, 1997 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. These
supplemental schedules are the responsibility of the Plan's
management. 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.
Washington, D.C. KPMG Peat Marwick LLP
June 12, 1998
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1997 1996
---- ----
Assets
Investments:
At fair value:
Shares of registered investment
companies:
Fidelity Magellan Fund $ 161,041,085 $ 121,586,246
Fidelity Equity Income Fund 84,790,998 56,562,899
US Airways Common Stock Fund 64,168,628 23,008,375
Fidelity Spartan U.S. Equity
Index Portfolio 48,158,122 27,479,868
Fidelity Retirement Government
Money Market Portfolio 22,235,950 19,048,082
Fidelity Intermediate Bond Fund 19,712,629 18,242,617
Capital Growth Mix Portfolio 18,243,306 11,950,090
Neuberger & Berman Guardian
Trust 10,197,742 3,228,231
Moderation Mix Portfolio 6,848,490 3,863,640
Income Mix Portfolio 947,772 666,200
Participant loans 17,977,523 12,476,007
----------- -----------
454,322,245 298,112,255
At contract value:
Fixed Income Fund 21,720,295 20,064,169
----------- -----------
Total investments 476,042,540 318,176,424
Receivables:
Participant Contributions 1,904,834 1,626,193
Employer contributions 23,252,633 4,371,041
----------- -----------
Total receivables 25,157,467 5,997,234
----------- -----------
Total assets 501,200,007 324,173,658
----------- -----------
Liabilities
Accrued expenses 27,879 57,339
----------- -----------
Total liabilities 27,879 57,339
----------- -----------
Net assets available for plan benefits $ 501,172,128 $ 324,116,319
=========== ===========
See accompanying Notes to Financial Statements.
2
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
Years ended December 31,
1997 1996
---- ----
Additions to net assets attributable to:
Net appreciation in fair value
of investments $ 85,917,672 $ 14,357,485
Investment income 20,187,558 24,718,033
Interest income on participant
loans 1,252,231 868,431
Participant contributions 44,563,080 40,611,694
Employer contributions 35,093,613 15,836,188
Rollover contributions 493,145 512,679
----------- -----------
Total additions 187,507,299 96,904,510
Deductions from net assets attributable to:
Benefits paid to participants 10,359,375 8,704,143
Administrative expenses 94,594 66,141
----------- -----------
Total deductions 10,453,969 8,770,284
----------- -----------
Net increase 177,053,330 88,134,226
Net assets available for plan benefits:
Beginning of year 324,116,319 235,967,485
Transfer from US Airways, Inc.
401(k) Savings Plan 2,007 14,608
Transfer from US Airways, Inc.
Employee Pension Plan 472 -
----------- -----------
End of year $ 501,172,128 $ 324,116,319
=========== ===========
See accompanying Notes to Financial Statements.
3
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the US Airways, Inc. Employee
Savings Plan (the Plan), formerly the USAir, Inc. Employee
Savings 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). 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. 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. (Group) is the issuer of certain common
stock securities held pursuant to the Plan.
(this space intentionally left blank)
4
US AIRWAYS, 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 pre-tax 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 percentage 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.
Individual participant contributions for 1997 and 1996 could
not exceed the statutory limit of $9,500 per year. 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 1998 and 1997, the
Company made profit sharing contributions in the amounts of
$22.7 million and $3.9 million, respectively, to participant
accounts related to the 1997 and 1996 plan years. These
contributions are included in the Employer contribution
receivable in the December 31, 1997 and 1996 statement of net
assets available for plan benefits.
(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.
(this space intentionally left blank)
5
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(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.
Fidelity Management Trust Company is the Plan Trustee. 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
Retirement Government Money Market Portfolio.
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, 1997, 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 eleven options
available to participants 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.
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. Effective November 28, 1997
participants who exchange out of this fund to other investment
options cannot exchange into the fund for a period of 30
calendar days.
6
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
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.
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.
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.
Neuberger & Berman Guardian Trust - The fund primarily invests
in stocks of established, high-quality companies considered to
be undervalued.
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.
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.
7
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
Fixed Income Fund - The 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.
(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 five 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 1997 and 1996,
employer contributions were reduced by $19,072 and $30,540,
respectively, from forfeited nonvested accounts.
8
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
(h) Administrative Expenses
Certain administrative expenses of the Plan are paid by US
Airways.
2. Summary of Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
(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 US Airways
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 US Airways Common Stock Fund as of
the close of each quarter during 1997 and 1996 were as
follows:
1997 Number of Units Unit Value
- ----------- --------------- ----------
March 31 585,078 $ 38.44
June 30 583,149 52.69
September 30 664,790 61.08
December 31 708,341 90.59
(table continued on next page)
9
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
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.
(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
<TABLE>
US AIRWAYS, 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, 1997 and 1996:
<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, 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*
Investment income 1,294,848 1,132,554 10,273,683 1,214,058 4,514,591 1,002,792
Net appreciation (depreciation)
in fair value (38,836) 32,000 22,620,342 179,489 14,301,319 9,803,411
Interest income on participant loans - - - - - -
Contributions 2,786,838 5,227,097 22,589,568 3,346,181 10,513,108 6,486,548
Net exchanges between investment funds (1,524,595) (2,359,840) (12,258,152) (2,819,789) 707,053 4,453,076
Administrative expenses (20,259) (3,082) (33,919) (466) (2,384) (452)
Benefits paid to participants (838,855) (859,763) (3,734,751) (448,573) (1,796,604) (1,066,380)
Transfers from (to) other plans (3,015) 18,902 (1,932) (888) (8,984) (741)
---------- ---------- ----------- ---------- ---------- ----------
Net Change in Investment Funds 1,656,126 3,187,868 39,454,839 1,470,012 28,228,099 20,678,254
---------- ---------- ----------- ---------- ---------- ----------
Balance at December 31, 1997 $21,720,295 $22,235,950 $161,041,085* $19,712,629 $84,790,998* $48,158,122*
========== ========== =========== ========== ========== ==========
(table continued on next page)
11
</TABLE>
<TABLE>
US AIRWAYS, 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) Trust Portfolio 1)
---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 6,287,203 $1,993,755 $10,082,465 $ - $ 341,109
Investment income - - - 63,062 -
Net appreciation 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
Investment income - - - 755,032 -
Net appreciation in fair value 2,622,429 1,038,795 35,237,380 34,838 86,505
Interest income on participant loans - - - - -
Contributions 4,261,001 1,602,417 1,983,393 1,935,901 220,179
Net exchanges between investment funds (266,255) 560,117 4,384,874 4,377,763 7,028
Administrative expenses (4,556) (1,018) (13,451) (6,740) (353)
Benefits paid to participants (320,369) (215,461) (430,183) (127,214) (31,787)
Transfers from (to) other plans 966 - (1,760) (69) -
---------- --------- ---------- ---------- ---------
Net Change in Investment Funds 6,293,216 2,984,850 41,160,253 6,969,511 281,572
---------- --------- ---------- ---------- ---------
Balance at December 31, 1997 $18,243,306 $6,848,490 $64,168,628* $10,197,742 $ 947,772
========== ========= ========== ========== =========
(table continued on next page)
12
</TABLE>
<TABLE>
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
<CAPTION>
Participant
Loans Other Total
---------- ---------- -----------
<S> <C> <C> <C>
Balance at December 31, 1995 $ 7,992,865 $ (13,839) $235,967,485
Investment income - - 24,718,033
Net appreciation 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 income - - 20,187,558
Net appreciation in fair value - - 85,917,672
Interest income on participant loans 1,252,231 - 1,252,231
Contributions - 19,197,607 80,149,838
Net exchanges between investment funds 4,738,720 - -
Administrative expenses - (7,914) (94,594)
Benefits paid to participants (489,435) - (10,359,375)
Transfers from (to) other plans - - 2,479
---------- ---------- -----------
Net Change in Investment Funds 5,501,516 19,189,693 177,055,809
---------- ---------- -----------
Balance at December 31, 1997 $17,977,523 $25,129,588* $501,172,128
========== ========== ===========
* Investment balance represents greater than five percent of net assets available for plan benefits.
1) Party in interest.
13
</TABLE>
US AIRWAYS, 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 $21,720,295 and $20,064,169 at
December 31, 1997 and 1996, 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, "Application of Fair
Value and Contract Value Reporting for Defined Contribution
Plan Investments," 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,
1997 and 1996 was $85,983,442 and $79,111,397. The average
portfolio crediting interest rate was approximately 6.0% and
5.8% at December 31, 1997 and 1996, respectively. The
portfolio average yield was approximately 6.1% for the years
ended December 31, 1997 and 1996.
For GICs with variable rates (approximately 49% 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, 1997 and 1996.
The fair value of the portfolio was $85,243,181 and
$79,347,056 at December 31, 1997 and 1996.
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14
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
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.
(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,
-------------------
1997 1996
---- ----
Net assets available for plan
benefits per the financial
statements $501,172,128 $324,116,319
Amounts allocated to withdrawing
participants (229,144) (168,355)
----------- -----------
Net assets available for plan
benefits per the Form 5500 $500,942,984 $323,947,964
=========== ===========
(this space intentionally left blank)
15
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
-----------------------------
(Continued)
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
Year Ended
December 31, 1997
-----------------
Benefits paid to participants per the
financial statements $10,359,375
Add: Amounts allocated to withdrawing
participants at December 31, 1997 229,144
Less: Amounts allocated to withdrawing
participants at December 31, 1996 (168,355)
----------
Benefits paid to participants per the
Form 5500 $10,420,164
==========
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.
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. The Plan has been amended since
receiving the determination letter. However, the Plan
administrator and the Plan's legal counsel believe that the
Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
8. Transfer from the US Airways, Inc. 401(k) Savings Plan and
the US Airways, Inc. Employee Pension Plan
Transfers from the US Airways, Inc. 401(k) Savings Plan and
the US Airways, Inc. Employee Pension Plan represent:
(a) corrections of recordkeeping errors, and
(b) changes in participants' class or craft, thereby changing
the plan for which they are qualified to participate.
(this space intentionally left blank)
16
<TABLE>
Supplemental Schedule I
US AIRWAYS, INC. Page 1 of 2
EMPLOYEE SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
----------------------------------------------------------
December 31, 1997
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Fidelity Magellan Fund* Shares in registered $ 132,074,249 $ 161,041,085
investment company
Fidelity Equity Shares in registered 61,993,578 84,790,998
Income Fund* investment company
US Airways Common Stock Fund* Common stock of employer's 33,036,910 64,168,628
parent company, US Airways
Group, Inc., and short-
term investments
Fidelity Spartan U.S. Equity Shares in registered 33,267,832 48,158,122
Index Portfolio* investment company
Fidelity Retirement Shares in money 22,235,950 22,235,950
Government Money market fund
Market Portfolio*
Fidelity Intermediate Shares in registered 19,785,437 19,712,629
Bond Fund* investment company
Capital Growth Mix Shares in registered 14,558,863 18,243,306
Portfolio* investment companies
(table continued on next page)
17
</TABLE>
<TABLE>
Supplemental Schedule I
US AIRWAYS, INC. Page 2 of 2
EMPLOYEE SAVINGS PLAN
Item 27a - Assets Held for Investment Purposes
----------------------------------------------
(Continued)
December 31, 1997
<CAPTION>
Identity Description Current
of Issue of Investment Cost Value
-------- ------------- ---- -------
<S> <C> <C> <C>
Neuberger & Berman Shares in registered 10,205,874 10,197,742
Guardian Trust investment company
Moderation Mix Portfolio* Shares in registered 5,482,187 6,848,490
investment companies
Income Mix Portfolio* Shares in registered 843,204 947,772
investment companies
Participant Loans Interest rates range - 17,977,523
from 7% to 9.5%
per annum
Fixed Income Fund* Guaranteed Investment 21,720,295 21,720,295
Contract, interest rates
range from 4.05% to 8.28%
per annum
----------- -----------
Total Investments $ 355,204,379 $ 476,042,540
=========== ===========
*Party in interest.
18
</TABLE>
<TABLE>
Supplemental Schedule II
US AIRWAYS, INC.
EMPLOYEE SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
----------------------------------------------
Year Ended December 31, 1997
Aggregate transactions during the year ended December 31, 1997, 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* $57,472,009 253 $40,683,893 253 $4,268,263
Fidelity Equity 32,490,315 253 18,548,798 249 2,633,181
Income Fund*
Fidelity Spartan U.S. 31,854,430 253 20,969,344 252 1,853,762
Equity Index Portfolio*
US Airways Common Stock 104,213,301 253 98,258,675 251 11,894,885
Fund*
Fidelity Retirement 45,112,435 256 41,917,040 252 -
Government Money
Market Portfolio*
Fixed Income Fund* 36,039,954 255 34,383,828 246 -
Neuberger & Berman
Guardian Trust 15,557,775 251 8,622,864 229 263,062
* Party in interest
19
</TABLE>
Signature
Pursuant to the requirements of the Securities 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 its behalf by the undersigned hereunto duly authorized.
US Airways, Inc.
Employee Savings Plan
By: /s/ James A. Hultquist
----------------------
James A. Hultquist
Controller
US Airways Group, Inc.
June 26, 1998
20
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
US Airways Group, Inc.:
We consent to the use of our report dated June 12, 1998, on the
statements of net assets available for plan benefits as of
December 31, 1997 and 1996, and the related statements of changes
in net assets available for plan benefits for the years then
ended for the US Airways, 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,
1997 and 1996, 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 26, 1998
21
