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 ___________
US Airways, Inc. 401(k) 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.
401(k) Savings Plan
Financial Statements
and Supplemental Schedule
December 31, 1999 and 1998
(With Independent Auditors'
Report Thereon)
US Airways, Inc.
401(k) Savings Plan
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 - 11
Supplemental Schedule I
Schedule of Assets Held for Investment Purposes
At End of Year 12 - 13
Signature 14
Exhibit 23
Consent of Independent Auditors 15
Independent Auditors' Report
The Plan Administrator and Participants
US Airways, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the US Airways, Inc. 401(k)
Savings Plan (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
US Airways, Inc.
401(k) Savings Plan
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1999 1998
---- ----
Assets
Investments (See Notes 3 and 4) $ 1,210,181,136 $ 1,072,790,192
Receivables:
Participant contributions 1,629,956 1,629,532
Employer contributions 122,258 114,658
------------- -------------
Total receivables 1,752,214 1,744,190
------------- -------------
Total assets 1,211,933,350 1,074,534,382
------------- -------------
Liabilities
Accrued expenses 67,704 64,848
------------- -------------
Total liabilities 67,704 64,848
------------- -------------
Net assets available for
plan benefits $ 1,211,865,646 $ 1,074,469,534
============= =============
See accompanying Notes to Financial Statements.
2
US Airways, Inc.
401(k) Savings Plan
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) $ 4,410,759 $ 72,923,196
Dividends 63,238,817 32,943,075
Interest 2,437,389 2,297,811
Interest income on participant
loans 3,128,198 2,707,277
------------- -------------
Total investment income 73,215,163 110,871,359
------------- -------------
Participant contributions 87,506,772 80,591,535
Employer contributions 6,758,873 6,026,531
Rollover contributions 2,536,013 400,860
------------- -------------
Total contributions 96,801,658 87,018,926
------------- -------------
Total additions 170,016,821 197,890,285
------------- -------------
Deductions from net assets
attributable to:
Benefits paid to participants 32,368,496 23,718,856
Administrative expenses 267,247 264,923
------------- -------------
Total deductions 32,635,743 23,983,779
------------- -------------
Net increase 137,381,078 173,906,506
Net assets available for plan benefits:
Beginning of year 1,074,469,534 900,563,163
Transfer from (to) the US Airways,
Inc. Employee Savings Plan 15,034 (135)
------------- -------------
End of year $1,211,865,646 $1,074,469,534
============= =============
See accompanying Notes to Financial Statements.
US Airways, Inc.
401(k) Savings Plan
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the US Airways, Inc. 401(k)
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 effective September 1, 1988 to provide retirement
income to employees of US Airways, Inc. (US Airways or the
Company). In general, employees of US Airways, who are
covered by a collective bargaining agreement which provides
for their participation in the Plan, with at least 90 days of
service, are eligible to participate except for those
individuals not covered under the United States income tax
laws and those individuals who are participants in another
401(k) plan sponsored by US Airways. Effective April 1, 1999,
the Plan was amended to include Shuttle, Inc. flight
attendants. 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, Inc. (US Airways Group), is the issuer of
certain common stock securities held pursuant to the Plan.
(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 15 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 1999 and 1998 could
not exceed the statutory limit of $10,000 per year.
The Company makes a 50% matching contribution each payroll
period, up to a maximum of two percent of the participant's
4
US Airways, Inc.
401(k) Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
compensation for those participants who are represented by
the International Association of Machinists and Aerospace
Workers (the IAM).
(c) Vesting
Participants are immediately vested in their contributions,
plus actual earnings thereon. The Company's matching
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.
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.
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, 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.
(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
preceding 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 participant loans receivable. Loan terms cannot
exceed five years, except for loans obtained for the purchase
of a primary residence. The loans are secured by the balance
5
US Airways, Inc.
401(k) Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
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 are made as soon as
reasonably practicable. If the participant's account balance
is less than $5,000, a lump sum distribution is automatic
upon separation. If the participant's account balance is
greater than $5,000, the distribution can be deferred or
provided in cash as a lump sum distribution.
(g) Forfeited Accounts
At December 31, 1999 forfeited nonvested accounts totaled
$6,699. These accounts will be used to reduce future
employer contributions. Also, in 1999, employer
contributions were reduced by $1,551 from forfeited nonvested
accounts.
(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
6
US Airways, Inc.
401(k) Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
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 the 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 intentionally left blank)
7
US Airways, Inc.
401(k) Savings Plan
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 $ 444,820,365 $ 335,334,685
US Airways Common Stock
Fund 177,823,125 213,193,003
Fidelity Equity Income Fund 163,268,767 166,665,398
Fidelity Spartan U.S. Equity
Index Portfolio 135,253,002 111,140,435
Fidelity Capital Growth Mix
Portfolio 75,043,119 56,326,673
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 $4,410,759 and
$72,923,196, respectively, as follows:
Year Ended December 31,
-----------------------
1999 1998
---- ----
Shares in Registered
Investment Companies $ 80,815,099 $106,881,958
US Airways Common Stock Fund (74,800,560) (33,375,486)
US Government Securities and
US Investment Grade Fixed
Income Securities (1,603,780) (583,276)
---------- -----------
$ 4,410,759 $ 72,923,196
========== ===========
4. Investment Contracts with Insurance Companies
The Plan had an interest in a portfolio of GICs with certain
insurance companies of $43,509,576 and $39,820,570 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
8
US Airways, Inc.
401(k) Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
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, 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 and applicable collective
bargaining agreements. 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.
9
US Airways, Inc.
401(k) 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.
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 $1,211,865,646 $1,074,469,534
Amounts allocated to
Withdrawing participants (55,351) (425,235)
------------- -------------
Net assets available for
Plan benefits per
the Form 5500 $1,211,810,295 $1,074,044,299
============= =============
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 $32,368,496
Add: Amounts allocated to withdrawing
participants at December 31, 1999 55,351
Less: Amounts allocated to withdrawing
participants at December 31, 1998 (425,235)
----------
Benefits paid to participants per the
Form 5500 $31,998,612
==========
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.
10
US Airways, Inc.
401(k) Savings Plan
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. Transfers to and from the US Airways, Inc. Employee Savings
Plan
Transfers to and from the US Airways, Inc. Employee Savings
Plan represent changes in the participants' class or craft,
thereby changing the plan for which they are qualified to
participate.
10. Subsequent Event
US Airways Group, US Airways' parent corporation, 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)
11
<TABLE>
Supplemental Schedule I
US Airways, Inc. Page 1 of 2
401(k) Savings Plan
<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 $444,820,365
investment company
US Airways Common Stock Common stock of employer's 177,823,125
Fund* parent company, US Airways
Group, Inc., and short-
term investments
Fidelity Equity Shares in registered 163,268,767
Income Fund* investment company
Fidelity Spartan U.S. Shares in registered 135,253,002
Equity Index Portfolio* investment company
Capital Growth Mix Shares in registered 75,043,119
Portfolio* investment companies
Fidelity Retirement Shares in money 56,483,802
Government Money market fund
Market Portfolio*
Fixed Income Fund* Guaranteed Investment 43,509,576
Contracts, interest rates
range from 5.35% to 7.11%
per annum
(table continued on next page)
* Party in interest.
See accompanying Independent Auditors' Report.
12
</TABLE>
<TABLE>
Supplemental Schedule I
US Airways, Inc. Page 2 of 2
401(k) Savings Plan
<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>
Participant Loans* Interest rates range 37,251,626
from 7% to 11% per annum
MAS Domestic Fixed Income US Government securities 19,791,101
Portfolio Institutional and US investment grade
fixed income securities
Moderation Mix Portfolio* Shares in registered 18,658,425
investment companies
Neuberger & Berman Shares in registered 16,291,565
Guardian Trust investment companies
Putnam International Shares in registered 12,693,421
Growth A Fund investment companies
T. Rowe Price Small Cap Shares in registered 5,581,180
Stock Fund investment companies
Income Mix Portfolio* Shares in registered 3,712,062
investment companies
-------------
Total Investments $1,210,181,136
=============
* Party in interest.
See accompanying Independent Auditors' Report.
13
</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.
US Airways, Inc.
401(k) Savings Plan
By: /s/ Anita P. Beier
----------------------
Anita P. Beier
Controller
US Airways Group, Inc.
June 28, 2000
14
