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, 1999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Supplemental Retirement Plan of Piedmont Aviation, Inc.
(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
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Financial Statements
and Supplemental Schedule
December 31, 1999 and 1998
(With Independent Auditors'
Report Thereon)
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Table of Contents
-----------------
Page
----
Independent Auditors' Report 1
Financial Statements
Statements of Net Assets Available for Plan
Benefits as of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1999 and 1998 3
Notes to Financial Statements 4 - 10
Supplemental Schedule I
Schedule of Assets Held for Investment Purposes
At End of Year 11 - 12
Signature 13
Exhibit 23
Consent of Independent Auditors 14
Independent Auditors' Report
The Plan Administrator and Participants
Supplemental Retirement Plan of Piedmont Aviation, Inc.:
We have audited the accompanying statements of net assets
available for plan benefits of the Supplemental Retirement Plan
of Piedmont Aviation, Inc. (the Plan), as of December 31, 1999
and 1998, 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, 1999
and 1998, 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, 1999 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. This
supplemental schedule is the responsibility of the Plan's
management. 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.
McLean, VA KPMG LLP
June 23, 2000
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1999 1998
---- ----
Assets
Investments (See Notes 3 and 4) $ 56,242,241 $ 56,967,399
----------- -----------
Net assets available for plan benefits $ 56,242,241 $ 56,967,399
=========== ===========
See accompanying Notes to Financial Statements.
2
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
Years ended December 31,
------------------------
1999 1998
---- ----
Additions to net assets attributable to:
Net appreciation in fair value of
Investments (See Note 3) $ 646,071 $ 3,455,385
Dividends 2,480,947 1,385,999
Interest 821,958 919,564
----------- -----------
Total investment income 3,948,976 5,760,948
----------- -----------
Total additions 3,948,976 5,760,948
----------- -----------
Deductions from net assets attributable to:
Benefits paid to participants 4,674,134 3,660,495
----------- ----------
Total deductions 4,674,134 3,660,495
----------- ----------
Net increase (decrease) (725,158) 2,100,453
Net assets available for plan benefits:
Beginning of year 56,967,399 54,866,946
----------- -----------
End of year $ 56,242,241 $ 56,967,399
=========== ===========
See accompanying Notes to Financial Statements.
3
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the Supplemental Retirement Plan
of Piedmont Aviation, Inc. (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 qualify
as a profit sharing plan under Section 401(a) of the Internal
Revenue Code (IRC), as amended. Certain former employees of
Piedmont Aviation, Inc. (Piedmont) are covered by the Plan.
In November 1987, Piedmont was acquired by US Airways Group,
Inc. (US Airways Group). In August 1989, Piedmont was merged
into US Airways, Inc. (US Airways or the Company), a wholly
owned subsidiary of US Airways Group. As part of the merger,
the Plan was frozen as to additional contributions effective
July 31, 1989, with the exception of rollover contributions
from the terminated Piedmont Aviation, Inc. Pilot Variable
Annuity Trust. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as
amended.
US Airways, the plan administrator, is responsible for the
content and issuance of the Plan's financial statements.
US Airways Group is the issuer of certain common stock
securities held pursuant to the Plan.
(b) Vesting
Participants are fully vested in their contributions, plus
actual earnings thereon.
(c) 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.
The Recordkeeper values account balances daily. Each account
balance is based on the value of the underlying investments
in each account. Generally, participants may transfer
current account balances among investment options.
4
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
As of December 31, 1999, the Company offered thirteen
investment options in the form of ten individual investment
options and three diversified portfolio mixes, which are pre-
selected combinations of mutual funds.
(d) Participant Withdrawals
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 (i) alleviate
a financial hardship; (ii) reduce non-mortgage debt; or (iii)
make improvements to the participant's residence which are
determined by the plan administrator to be necessary.
(e) Payment of Benefits
Upon termination of service due to death, disability,
retirement or other termination of employment, a participant
may elect to receive one of the following: (i) a lump-sum
equal to the value of his/her account; (ii) to apply such
amount to the purchase of an immediate noncashable and
nontransferable contract from a legal reserve life insurance
company providing any one of several annuities (as elected by
the participant); or (iii) installment payments.
(f) Administrative Expenses
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.
5
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
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. Interest and
dividend income are recorded on the accrual basis.
(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 the plan
administrator to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
3. Investments
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3
(SOP 99-3), "Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters."
SOP 99-3 simplifies the disclosure for certain investments
and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the Plan year ending
December 31, 1999. Accordingly, information previously
required to be disclosed about participant-directed fund
investment programs is not presented in the Plan's 1999
financial statements. Certain 1998 amounts have been
reclassified to conform with 1999 classifications.
(this space left intentionally blank)
6
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
The following table presents the fair value of individual
investments which exceeded 5% of the Plan's net assets:
December 31,
-------------------
1999 1998
---- ----
Investments:
Fidelity Magellan Fund $ 14,675,425 $ 11,131,717
Fixed Income Fund 13,641,849 14,521,971
Fidelity Equity Income Fund 7,941,603 9,213,647
Fidelity Spartan U.S. Equity
Index Portfolio 6,662,457 6,095,147
US Airways Common Stock Fund 5,361,545 8,676,300
During 1999 and 1998, the Plan's investments (including gains
and losses on investments bought and sold, as well as held
during the year) appreciated in value by $646,071 and
$3,455,385, respectively, as follows:
Year Ended December 31,
-----------------------
1999 1998
---- ----
Shares in Registered Investment
Companies $ 3,258,618 $ 4,631,279
US Airways Common Stock Fund (2,561,387) (1,161,461)
US Government Securities and
US Investment Grade Fixed
Income Securities (51,160) (14,433)
---------- ----------
$ 646,071 $ 3,455,385
========== ==========
4. Investment Contracts with Insurance Companies
The Plan had an interest in a portfolio of GICs with certain
insurance companies of $13,641,849 and $14,521,971 at
December 31, 1999 and 1998, 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
7
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
specified rate, less plan withdrawals and administrative
expenses. The portfolio's contract value at December 31,
1999 and 1998 was $99,218,456 and $90,475,438, respectively.
The average portfolio crediting interest rate was
approximately 5.8% and 5.9% at December 31, 1999 and 1998,
respectively. The portfolio average yield was approximately
5.9% and 6.2% for the years ended December 31, 1999 and 1998,
respectively.
For GICs with variable rates (approximately 77% 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, 1999 and 1998.
The fair value of the portfolio was $98,524,949 and
$90,895,034 at December 31, 1999 and 1998, respectively.
5. Related Party Transactions
Certain Plan investments are shares of mutual funds managed
by Fidelity Management Trust Company. Fidelity Management
Trust Company is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest.
6. Plan Termination
Although it has not expressed any intent to do so, the
Company reserves the right to terminate the Plan at any time
subject to the provisions of ERISA. Upon termination of the
Plan, US Airways shall provide for the assets under the Plan
to be distributed in the forms of payment available under the
Plan to the participants, beneficiaries or other successors
in interest, the balance of their account at the time of
termination.
(this space intentionally left blank)
8
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
7. 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,
-------------------
1999 1998
---- ----
Net assets available for plan
benefits per the financial
statements $56,242,241 $56,967,399
Amounts allocated to withdrawing
participants - (36,047)
----------- -----------
Net assets available for plan
benefits per the Form 5500 $56,242,241 $56,931,352
=========== ===========
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
Year Ended
December 31, 1999
-----------------
Benefits paid to participants per the
financial statements $4,674,134
Add: Amounts allocated to withdrawing
participants at December 31, 1999 -
Less: Amounts allocated to withdrawing
participants at December 31, 1998 (36,047)
---------
Benefits paid to participants per the
Form 5500 $4,638,087
==========
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.
9
Supplemental Retirement Plan of
Piedmont Aviation, Inc.
Notes to Financial Statements
-----------------------------
(Continued)
8. 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.
9. Subsequent Event
US Airways Group has entered into an agreement and plan of
merger with a subsidiary of UAL Corporation, United Airlines'
parent corporation. Consummation of the merger is subject to
various conditions including, but not limited to, the receipt
of regulatory approvals and approval by the stockholders of
US Airways Group. At this time, US Airways cannot predict
the outcome of the regulatory and other approvals necessary
for the consummation of the merger, nor can US Airways
predict what effect, if any, the merger might have on the
Plan.
(this space intentionally left blank)
10
<TABLE>
Supplemental Schedule I
Supplemental Retirement Plan of Page 1 of 2
Piedmont Aviation, Inc.
<CAPTION>
Schedule of Assets Held for Investment Purposes At End of Year
--------------------------------------------------------------
December 31, 1999
Identity Description Current
of Issue of Investment Value
-------- ------------- -------
<S> <C> <C>
Fidelity Magellan Fund* Shares in registered $ 14,675,425
investment company
Fixed Income Fund* Guaranteed Investment Contracts, 13,641,849
interest rates range from
5.35% to 7.11% per anum
Fidelity Equity Shares in registered 7,941,603
Income Fund* investment company
Fidelity Spartan U.S. Equity Shares in registered 6,662,457
Index Portfolio* investment company
US Airways Common Stock Fund* Common stock of employer's 5,361,545
parent company, US Airways
Group, Inc., and short-
term investments
Capital Growth Mix Shares in registered 2,779,215
Portfolio* investment companies
Moderation Mix Portfolio* Shares in registered 2,041,353
investment companies
(table continued on next page)
* Party in interest.
See accompanying Independent Auditors' Report.
11
</TABLE>
<TABLE>
Supplemental Schedule I
Supplemental Retirement Plan of Page 2 of 2
Piedmont Aviation, Inc.
<CAPTION>
Schedule of Assets Held for Investment Purposes At End of Year
--------------------------------------------------------------
(Continued)
December 31, 1999
Identity Description Current
of Issue of Investment Value
-------- ------------- -------
<S> <C> <C>
Neuberger & Berman Shares in registered 846,957
Guardian Trust investment companies
Putnam International Shares in registered 776,172
Growth A Fund investment companies
Fidelity Retirement Shares in money 734,753
Government Money market fund
Market Portfolio*
MAS Domestic Fixed Income US Government securities 628,081
Portfolio Institutional and US investment grade
fixed income securities
Income Mix Portfolio* Shares in registered 98,562
investment companies
T. Rowe Price Small Cap Shares in registered 54,269
Stock Fund investment companies
-----------
Total Investments $ 56,242,241
===========
* Party in interest.
See accompanying Independent Auditors' Report.
12
</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 their behalf by the undersigned hereunto duly
authorized.
Supplemental Retirement Plan
of Piedmont Aviation, Inc.
By: /s/ Anita P. Beier
----------------------
Anita P. Beier
Controller
US Airways Group, Inc.
June 28, 2000
13
