UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
11-K
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year
ended December 31, 2006
or
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition
period from
to
.
Commission
file number 001-06033
A.
Full title of the plan and the address of the plan, if different from that
of
the issuer named below:
Mileage
Plus, Inc. Investment Plus Plan
Mileage
Plus, Inc. - WHQZM
Human
Resources - 401(K)
1200
East Algonquin Rd.
Elk
Grove Village, Illinois 60007
B.
Name of the issuer of the securities held pursuant to the plan and the address
of its principal executive office:
UAL
Corporation
77
West Wacker Drive
Chicago,
IL 60601
(312)
997-8000
MILEAGE
PLUS, INC. INVESTMENT PLUS PLAN
TABLE
OF CONTENTS
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Page
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REP REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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1
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F FINANCIAL STATEMENTS:
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Statements
of Net Assets Available for Benefits as of December 31, 2006
and
2005
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2
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Statements of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2006
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3
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Notes to Financial Statements as of December 31, 2006 and 2005,
and for
the Year Ended December 31, 2006
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4
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SUPPLEMENTAL
SCHEDULE:
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| Form 5500 - Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2006 | 11 | |
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SIGNATURE
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EXHIBIT
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The
following exhibit is filed herewith: Exhibit 23 Consent of
Independant
Registered Public Accounting Firm
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NOTE:
All other schedules required by Section 2520.103-10 of the
Department of
Labor's Rules and Regulations for Reporting and Disclosure
under the
Employee Retirement Income Security Act of 1974 have been omitted
because
they are not applicable.
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Trustees and Participants of the Mileage
Plus, Inc. Investment Plus Plan
We
have
audited the accompanying statements of net assets available for benefits
of the
Mileage Plus, Inc. Investment Plus Plan (the “Plan”) as of December 31, 2006 and
2005, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2006. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the
financial statements are free of material misstatement. The Plan is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of
expressing an opinion on the effectiveness of the Plan's internal control
over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects,
the
net assets available for benefits of the Plan as of December 31, 2006 and
2005,
and the changes in net assets available for benefits for the year ended December
31, 2006 in conformity with accounting principles generally accepted in the
United States of America.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held at end of year) as of December 31, 2006 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 schedule is the
responsibility of the Plan's management. Such schedule has been subjected
to the auditing procedures applied in our audit of the basic 2006 financial
statements and, in our opinion, is fairly stated in all material respects
when
considered in relation to the basic financial statements taken as a
whole.
As
further described in Note 2, the Plan has adopted FSP AAG INV-1 and SOP 94-4-1
for the years ended December 31, 2006 and 2005.
/s/
Deloitte & Touche LLP
Chicago,
Illinois
1
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MILEAGE
PLUS, INC. INVESTMENT PLUS PLAN
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||||||||
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||||||||
| STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF | ||||||||
| DECEMBER 31,2006 AND 2005 | ||||||||
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2006
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2005
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ASSETS:
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Investments:
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Investments,
at fair value (Notes 2 and 3)
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$ |
8,981,356
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$ |
7,179,779
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Plan
interest in Master Trust, at fair value (Note 4)
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1,271,655
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1,409,432
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Total
investments
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10,253,011
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8,589,211
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Receivables:
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Participant
contributions
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-
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12,239
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Employer
contributions
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95,875
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9,644
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Total
receivables
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95,875
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21,883
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Accrued
Expenses:
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(35,000 | ) |
-
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Net
assets available for benefits, at fair value
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10,313,886
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8,611,094
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Adjustment
from fair value to contract value for
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||||||||
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fully
benefit-responsive investment contracts
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12,700
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14,705
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NET
ASSETS AVAILABLE FOR BENEFITS
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$ |
10,326,586
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$ |
8,625,799
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See
notes to financial statements.
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2
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MILEAGE
PLUS, INC. INVESTMENT PLUS PLAN
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||||
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STATEMENT
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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FOR
THE YEAR ENDED DECEMBER 31, 2006
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ADDITIONS:
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Contributions:
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Participant
contributions
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$ |
351,684
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Employer
contributions
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4,010,024
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Rollover
contributions
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659
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Total
contributions
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4,362,367
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Investment
gain:
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Net
appreciation in value of investments (Note 3)
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526,495
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Dividends
and interest
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509,991
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Plan
interest in Master Trust's investment income
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62,428
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Net
investment gain
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1,098,914
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Total
additions
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5,461,281
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DEDUCTIONS:
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Benefits
paid to participants
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(3,715,704 | ) | ||
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Administrative
expenses
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(44,790 | ) | ||
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Total
deductions
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(3,760,494 | ) | ||
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INCREASE
IN NET ASSETS
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1,700,787
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NET
ASSETS AVAILABLE FOR BENEFITS:
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Beginning
of year
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8,625,799
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End
of year
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$ |
10,326,586
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See
notes to financial statements.
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3
MILEAGE
PLUS, INC. INVESTMENT PLUS PLAN
NOTES
TO FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2006 AND 2005, AND FOR THE YEAR ENDED DECEMBER 31,
2006
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1.
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DESCRIPTION
OF PLAN
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The
following description of the Mileage Plus, Inc. Investment Plus Plan (the
“Plan”) is for general information purposes only. Participants should refer to
the Plan document for more complete information.
General
and Plan Participants—The Plan is a defined contribution plan
covering all employees of Mileage Plus, Inc. (“MPI” or the “Company”), a
wholly owned subsidiary of United Air Lines, Inc. (“United”). The
Plan is subject to the provisions of the Employee Retirement Income Security
Act
of 1974 (“ERISA”).
Trustee
and Recordkeeper—Fidelity Management Trust Company (“Fidelity”) is
the Plan trustee and Fidelity Investments Institutional Operations Company,
Inc.
("FIIOC") is the recordkeeper of the Plan.
Bankruptcy
of Plan Sponsor— On December 9, 2002, the Company filed a
voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Illinois, Eastern Division. On February 1, 2006, United and its parent
UAL Corporation (“UAL”) emerged from bankruptcy protection. Pursuant to the Plan
of Reorganization Company contributions of shares of UAL common stock were
made
to certain Plan participants, as discussed below.
Equity
Distribution—The Bankruptcy Court’s approval of the Plan of
Reorganization provided certain employees, including employees of Mileage
Plus,
Inc., with shares of new UAL stock upon exit from bankruptcy. These equity
distributions directly reflect the economic contributions that employees
of
United made during the restructuring. The distribution for employees is in
direct proportion to the labor savings each employee group provided during
the
bankruptcy reorganization process.
Salaried
and Management (“SAM “) employees actively employed by MPI as of December 31,
2005 excluding employees who participate in the Management Employee Incentive
Plan (“MEIP”) are eligible for the equity distribution. Active, furloughed,
retired and deceased employees represented by the International Association
of
Machinists and Aerospace Workers, District 141 (“IAM”) employed by MPI with
considered earnings for the period from May 1, 2003 through December 31,
2005
were eligible for the equity distribution.
UAL
shares were deposited directly into employees’ defined contribution 401(k)
retirement accounts. Three equity distributions occurred in 2006 for a value
of
$3,674,484. An additional equity distribution, related to the
2006 Plan year, was made on April 25, 2007, for a value of $95,875, and is
included within Employer contributions receivable in the Statement of Net
Assets
Available for Benefits at December 31, 2006. Contributions to the Plan resulting
from the equity distributions are included within Employer contributions
in the
Statement of Changes in Net Assets Available for Benefits for the year ended
December 31, 2006.
Contributions—Eligible
employees may elect to contribute to the Plan, in multiples of 1%, any
percentage of their covered pretax earnings, up to 30%, subject to a maximum
of
$15,000 in 2006. In addition, employees can contribute, in multiples of 1%,
an
additional 1% to 90% of their earnings on a net pre-tax basis. Lower
limits may apply to certain highly compensated participants if the Plan does
not
pass certain nondiscrimination tests required by law. Section 415(c) of the
Internal Revenue Code limits the total amount of contributions from all
qualified defined contribution retirement plans to the lesser of 100% of
annual
taxable earnings or $44,000. MPI contributes 3% of participant compensation,
as
defined in the Plan, beginning after the first year of employment and every
payroll thereafter. In 2006, the Company made cash contributions of
$249,309 to the Plan. Participant contributions, Company contributions,
and earnings are credited to separate accounts maintained for each
participant.
Participants
age 50 or older at any time during the Plan year can make additional pre-tax
catch-up contributions to the Plan. This catch-up contribution is available
only
to the extent the participant has contributed the maximum amount of 401(k)
contributions permitted under the Plan and the participant has not exceeded
the
annual catch-up contribution limit. For calendar year 2006, the maximum catch-up
amount is $5,000. Thereafter, it will be subject to cost of living increases
(in
$500 increments) as announced by the IRS.
Participant
Accounts—Individual accounts are maintained for each Plan
participant. Each participant’s account is credited with the participant’s
contribution, the Company’s contribution, and Plan earnings, and charged with
withdrawals and an allocation of Plan losses and administrative expenses.
Allocations are based on account balances, as defined. The benefit to which
a
participant is entitled is the benefit that can be provided from the
participant’s vested account.
Investments—Participants
may elect to invest in one or a combination of the investment funds offered
by
the Plan. Additionally, they may subsequently change their contribution rate,
redesignate the allocation of contributions, or transfer existing balances
among
investment funds, subject to the limits set forth in the Plan. Investment
options offered by the Plan during the year were:
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·
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Fidelity
Magellan Fund
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·
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Fidelity
Equity-Income Fund
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·
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Fidelity
Growth Company Fund
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·
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Fidelity
Government Income Fund
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·
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Fidelity
OTC Portfolio
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·
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Fidelity
Overseas Fund
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·
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Fidelity
Balanced Fund
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·
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Fidelity
Asset Manager
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·
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Fidelity
Asset Manager: Growth
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·
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Fidelity
Asset Manager: Income
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·
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Fidelity
Retirement Money Market Portfolio
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·
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Fidelity
U.S. Bond Index Portfolio
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·
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Fidelity
U.S. Equity Index Portfolio
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·
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Fidelity
U.S. Equity Index CL 2 Portfolio
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·
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Blended
Income Fund
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·
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UAL
Stock Fund (started March 1, 2006)
|
These
funds are managed by Fidelity or Fidelity Investments (manager of Fidelity
Mutual Funds).
4
Vesting—Participants
are vested immediately in their employee contributions and earnings thereon
and
are vested in employer contributions and earnings thereon as
follows:
|
Years
of
|
|
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||||
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Service
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Vested
|
|||||
|
Completed
|
Percentage
|
|||||
|
1
|
|
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20%
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|
||
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2
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|
40%
|
||||
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3
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60%
|
|
||||
|
4
|
|
80%
|
||||
|
5
|
100%
|
|
||||
A
year of
service means any calendar year commencing with the year in which an employee
was hired in which the participant has completed at least six months of service.
Retirement, death, or disability results in full vesting, regardless of years
of
service. Additionally, the Plan provides for accelerated vesting in the case
of
a partial plan termination (Note 7).
Participant
Loans—Participants may borrow from their fund
accounts up to a maximum of $50,000, or 50% of their vested account balance,
whichever is less. The minimum that may be borrowed is $1,000. Loans are
charged
against each investment fund in the ratio of the value of the participant’s
interest in each fund to the total value of the participant’s interest in all
funds and are held in the Loan Fund. The loan is secured by the participant
account balance and is repaid through payroll deductions on an after-tax
basis
for the term of the loan, which is a minimum of 12 months to a maximum of
60
months and is subject to a reasonable rate of interest (interest rates ranged
from 8.25% to 9.25% at December 31, 2006). The amount paid is reinvested in
the participant’s account based on the investment allocations at the time of the
repayment. Prepayment of the full balance of the loan is allowed from the
date
of origination without penalty. Participants are able to take out another
loan
immediately after an old loan is retired. Upon the employee’s termination of
employment, a loan not paid in full within 60 days becomes a taxable
distribution. Loans in default may be declared due and payable in full
immediately, and the Plan administrator may charge the participant’s account
balances at any time thereafter for the amount of the default. An initiation
fee
of $35 and a quarterly maintenance fee of $3.75 are charged to each participant
taking a loan and are automatically deducted from the participant’s
account.
Payment
of Benefits—Withdrawals from the Plan may be made at the
participant’s request upon termination of employment, but no later than April 1
following the year the participant reaches age 70-1/2, and are made by
lump-sum payment of the vested portion of the participant’s account
balance. Terminated participants are cashed out only if the account
balance does not exceed $1,000.
Forfeited
Accounts—Forfeitures represent the nonvested account balance of a
participant who either withdrew from the Plan and incurred five consecutive
one-year breaks in service or, after withdrawing, returned to the Plan within
five years and chose not to reinstate a previously withdrawn account balance.
According to the Plan document, unused forfeitures can be used to offset
employer contributions or Plan expenses. Forfeited nonvested accounts totaled
$79,244 and $44,369 at December 31, 2006 and 2005, respectively. During the
year ended December 31, 2006 there were no forfeitures used to offset
employer contribution and plan expenses.
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2.
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SIGNIFICANT
ACCOUNTING POLICIES
|
Basis
of Accounting—The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
Use
of Estimates—The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein. Actual
results
could differ from those estimates. The Plan utilizes various investment
instruments, including mutual funds and investment contracts. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit, and overall market volatility. Due to the level of risk associated
with
certain investment securities, it is reasonably possible that changes in
the
values of investment securities will occur in the near term and such changes
could materially affect the amounts reported in the financial
statements.
New
Accounting Pronouncement—As described in Financial Accounting
Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of
Fully Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and Defined-Contribution
Health and Welfare and Pension Plans (the "FSP"), investment contracts held
by a defined-contribution plan are required to be reported at fair value.
However, contract value is the relevant measurement attribute for that portion
of the net assets available for benefits of a defined-contribution plan
attributable to fully benefit-responsive investment contracts because contract
value is the amount participants would receive if they were to initiate
permitted transactions under the terms of the Plan. As required by the FSP,
the
Statement of Net Assets Available for Benefits reconciles from fair value
to
contract value for these investment contracts. Prior year balances have been
reclassified accordingly. The Statement of Changes in Net Assets Available
for
Benefits is prepared on a contract value basis.
Investment
Valuation and Income Recognition—The Plan’s investments are stated
at fair value. Quoted market prices are used to value investments.
Shares of mutual funds are valued at the net asset value of shares held by
the
Plan at year-end. Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date. See Note 5 for details regarding the valuation of
the
Blended Income Fund, which is in the United Air Lines, Inc. 401(k) Plans
Master
Trust (the “Trust”) (Note 4).
Net
Appreciation (Depreciation) in Value of Investments—Net
appreciation (depreciation) in value of investments includes realized and
unrealized gains and losses. Realized and unrealized gains and losses are
calculated as the difference between fair value at January 1, or date of
purchase if subsequent to January 1, and fair value at date of sale or the
current year-end.
Administrative
Expenses—The Company pays all administrative fees incurred in
connection with the operation of the Plan, except for a record keeping fee,
which is charged by Fidelity Institutional Retirement Services Company and
is
deducted from each participant’s account. Brokerage and other investment fees
are included as a reduction of the investment return for such
investments.
Payment
of Benefits—Benefit payments to participants are recorded upon
distribution. There were no amounts allocated to accounts of persons who
have
elected to withdraw from the plan but had not yet been paid.
5
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3.
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INVESTMENTS
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Fair
value of investments of the Plan other than the Plan’s interest in the Trust
(Note 4) as of December 31, 2006 and 2005, are as
follows:
|
2006
|
2005
|
|||||||
| FIDELITY MUTUAL FUNDS: | ||||||||
|
|
||||||||
|
Magellan
Fund
|
$ |
916,695
|
* | $ |
848,798
|
* | ||
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Equity
Income Fund
|
476,154
|
463,100
|
* | |||||
|
Growth
Company Fund
|
1,410,610
|
* |
1,485,696
|
* | ||||
|
Government
Income Fund
|
90,385
|
140,405
|
||||||
|
OTC
Portfolio
|
199,172
|
193,521
|
||||||
|
Overseas
Fund
|
685,284
|
* |
486,289
|
* | ||||
|
Balanced
Fund
|
1,069,986
|
* |
976,794
|
* | ||||
|
Asset
Manager
|
283,702
|
318,430
|
||||||
|
Asset
Manager: Growth
|
518,600
|
* |
527,064
|
* | ||||
|
Asset
Manager: Income
|
106,727
|
93,086
|
||||||
|
Retirement
Money Market Portfolio
|
166,848
|
152,267
|
||||||
|
U.S.
Bond Index Portfolio
|
148,709
|
222,374
|
||||||
|
U.S.
Equity Indx CL 2
|
851,091
|
* |
967,165
|
* | ||||
|
UAL
Stock Fund
|
1,835,430
|
* |
-
|
|||||
|
UAL
Stock Purchase Acct
|
1,095
|
-
|
||||||
|
Participant
Loan Fund
|
220,868
|
304,790
|
||||||
|
TOTAL
INVESTMENTS:
|
$ |
8,981,356
|
$ |
7,179,779
|
||||
*
Denotes
investment that represents 5% or more of the Plan's net assets available
for
benefits as of December 31, 2006 and 2005, respectively. The Plan's
interest in the Trust was also more than 5%
of the
Plan's net assets
available
for benefits as of December
31, 2006 and 2005.
During
2006,
the Plan’s investments other than the Plan’s interest in the Trust (including
gains and losses on investments bought and sold, as well as held during the
year) appreciated (depreciated) in
value
as
follows:
|
FIDELITY
MUTUAL
FUNDS:
|
||||
|
Magellan
Fund
|
$ | (171,171) | ||
|
Equity
Income Fund
|
49,929
|
|||
|
Growth
Company Fund
|
128,465
|
|||
|
Government
Income Fund
|
(1,601) | |||
|
OTC
Portfolio
|
15,487
|
|||
|
Overseas
Fund
|
49,053
|
|||
|
Balanced
Fund
|
38,592
|
|||
|
Asset
Manager
|
682
|
|||
|
Asset
Manager: Growth
|
37,854
|
|||
|
Asset
Manager: Income
|
(1,620) | |||
|
U.S.
Bond Index Portfolio
|
(2,113) | |||
|
U.S.
Equity Index Portfolio
|
-
|
|||
|
U.S.
Equity Indx CL 2
|
126,229
|
|||
|
UAL
Stock Fund
|
256,709
|
|||
|
TOTAL
|
$ |
526,495
|
||
6
|
|
4.
|
INVESTMENT
IN MASTER TRUST
|
A
portion
of the Plan’s investments (the Blended Income Fund) are in the Trust, which was
established for the investment of assets of the Plan and several other United
sponsored retirement plans. Although assets of the plans are commingled in
the
Trust, the Trustee maintains separate records for each of the plans. The
assets
of the Trust are held by Fidelity. At December 31, 2006 and 2005, the
Plan’s interest in the net assets of the Trust was approximately 0.03% and
0.05%, respectively. The Plan interest in the Blended Income Fund at
December 31, 2006 and 2005, was 0.23% and 0.26%, respectively. Investment
income relating to the Trust is proportionate to the Plan’s interest based upon
each Plan’s participant direction. The Plan’s share of investment in the Blended
Interest Fund was greater than 5% of the Plan’s net assets at December 31,
2006 and 2005. Assets of the Trust are reported at fair
value and are allocated to the following plans as of December 31, 2006 and
2005, as follows (in thousands):
|
|
December
31, 2006
|
December
31, 2005
|
||||||||||||||
|
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
Ground
Employee 401(k) Plan
|
$ |
1,597,050
|
40.25 | % | $ |
1,059,430
|
37.43 | % | ||||||||
|
Management
and Administrative 401(k) Plan
|
1,013,323
|
25.54
|
703,701
|
24.87
|
||||||||||||
|
Flight
Attendant 401(k) Plan
|
1,356,221
|
34.18
|
1,065,524
|
37.65
|
||||||||||||
|
Mileage
Plus, Inc. Investment Plus Plan
|
1,272
|
0.03
|
1,409
|
0.05
|
||||||||||||
|
|
||||||||||||||||
|
Total
|
$ |
3,967,866
|
100.00 | % | $ |
2,830,064
|
100.00 | % | ||||||||
7
Investments
of the entire Trust, at fair value, are as follows (in thousands):
|
|
|
|||||||
|
2006
|
2005
|
|||||||
|
FIDELITY
MUTUAL
FUNDS:
|
||||||||
|
Magellan
Fund
|
$ |
223,701
|
* | $ |
211,915
|
* | ||
|
Equity-Income
Fund
|
181,009
|
128,141
|
||||||
|
Growth
Company Fund
|
611,851
|
* |
567,703
|
* | ||||
|
Government
Income Fund
|
27,777
|
31,449
|
||||||
|
OTC
Portfolio
|
153,858
|
146,599
|
* | |||||
|
Overseas
Fund
|
309,001
|
* |
187,690
|
* | ||||
|
Balanced
Fund
|
346,152
|
* |
265,535
|
* | ||||
|
Asset
Manager 50%
|
34,677
|
33,833
|
||||||
|
Asset
Manager 70%
|
52,993
|
50,800
|
||||||
|
Asset
Manager 20%
|
17,033
|
14,809
|
||||||
|
Spartan
International Growth
|
67,533
|
2,206
|
||||||
|
Retirement
Money Market Portfolio
|
100,018
|
77,868
|
||||||
|
U.S.
Bond Index Portfolio
|
44,578
|
43,737
|
||||||
|
U.S.
Equity Indx CL 2
|
365,754
|
* |
353,137
|
* | ||||
|
Other
Receivables
|
886
|
-- | ||||||
|
BrokerageLink
|
24,711
|
-- | ||||||
|
Stated
Return Fund
|
96,983
|
103,720
|
||||||
|
Blended
Income Fund
|
556,228
|
* |
549,074
|
* | ||||
|
UAL
Stock Fund
|
384,655
|
* | -- | |||||
|
UAL
Stock Purchase Acct
|
6
|
-- | ||||||
|
Vanguard
Target
Retirement Income
|
2,201
|
276
|
||||||
|
Vanguard
Target
Retirement 2005
|
15,900
|
1,010
|
||||||
| Vanguard Target Retirement 2015 | 102,941 | 1,858 | ||||||
|
Vanguard
Target
Retirement 2025
|
84,747
|
1,396
|
||||||
|
Vanguard
Target
Retirement 2035
|
42,556
|
713
|
||||||
|
Vanguard
Target
Retirement 2045
|
14,668
|
967
|
||||||
|
Participant
Loan Fund
|
105,449
|
55,628
|
||||||
|
Total
investments, at fair value
|
$ |
3,967,866
|
$ |
2,830,064
|
||||
|
Adjustment
from
fair value to contract value for fully benefit-responsive
investment
contracts
|
6,773
|
6,729
|
||||||
| Total investments | $ | 3,974,639 | $ | 2,836,793 | ||||
*
Represents an investment greater than 5% of Trust net assets.
Trust
investment gain (loss) for the year ended December 31, 2006, is as follows
(in thousands):
|
FIDELITY
MUTUAL FUNDS:
|
||||
|
Magellan
Fund
|
$ | (40,113) | ||
|
Equity-Income
Fund
|
14,796
|
|||
|
Growth
Company Fund
|
52,782
|
|||
|
Government
Income Fund
|
(260) | |||
|
OTC
Portfolio
|
12,928
|
|||
|
Overseas
Fund
|
15,116
|
|||
|
Balanced
Fund
|
10,389
|
|||
|
Asset
Manager 50%
|
146
|
|||
|
Asset
Manager 70%
|
3,837
|
|||
|
Asset
Manager 20%
|
(235) | |||
|
Spartan
International Growth
|
6,525
|
|||
|
U.S.
Bond Index Fund
|
87
|
|||
|
U.S.
Equity Index CL 2
|
51,711
|
|||
| BrokerageLink | 692 | |||
|
UAL
Stock Fund
|
64,407
|
|||
|
Vanguard
Target Retirement Income
|
43
|
|||
|
Vanguard
Target Retirement 2005
|
546
|
|||
|
Vanguard
Target Retirement 2015
|
5,629
|
|||
|
Vanguard
Target Retirement 2025
|
5,886
|
|||
|
Vanguard
Target Retirement 2035
|
3,311
|
|||
|
Vanguard
Target Retirement 2045
|
1,039
|
|||
|
Net
appreciation
|
209,262
|
|||
|
Dividends
|
143,175
|
|||
|
Interest
|
29,835
|
|||
|
TRUST
INVESTMENT GAIN
|
$ |
382,272
|
||
8
|
|
5.
|
GUARANTEED
INVESTMENT CONTRACT (“GIC’S”) AND SYNTHETIC
GIC’S
|
The
Master Trust holds investments in two types of stable value investment
contracts: a traditional GIC as part of the Stated Return Fund and synthetic
GICs held by the Blended Income Fund. The contracts are fully benefit
responsive and, as such, reported at fair value and reconciled to contract
value
in the Statements of Net Assets Available for Benefits for the year ended
December 31, 2006 and 2005. The Plan only invests in the Blended Income
Fund.
Synthetic
GICs
The
Blended Income Fund holds investments in synthetic GIC’s comprised of a
portfolio of U.S. Government and other high quality (rated A- or above) debt
securities and “wrap” contracts with four counterparties. The wrap
contracts provide additional assurance that participants will be able to
withdraw funds at contract value in the event that market value declines below
contract value followed by significant participant withdrawals. The fair
value of the Blended Income Fund equals to the sum of the market value of the
underlying investments plus the fair value of the wrap rebid, which is
calculated by discounting the difference between the contractual wrap rebid
fee
and the market value of the rebid fee over the remaining duration of the
contract. The fair value of the wrap rebid was $(7,287) and $0 at December
31, 2006 and 2005, respectively.
|
|
Interest
crediting rates are determined by comparing contract value and the
estimated future market value, which is determined
by compounding the portfolio’s current yield to
maturity over the remaining duration of the fund. The crediting rate
is equal to the discount rate that equates market value and contract
value
over the remaining duration of the fund. The minimum crediting rate
under the Blended Income Fund is 0%. The average yield credited to
participants at December 31, 2006 and 2005, were 4.53% and 4.21%,
respectively. Crediting rates are reviewed quarterly for
resetting.
|
|
|
The
fair value of the investment contracts in the Blended Income Fund
held by
the Trust at December 31, 2006 and 2005 was $556,228,173 and
$549,074,327, respectively. The average yield for the Blended Income
Fund
for the year ended December 31, 2006 and 2005, was 4.57% and 4.42%,
respectively.
|
The
wrap
contracts limit the ability of the Plan to transact at contract value upon
the
occurrence of certain events. These events include: (i) the Plan’s failure to
qualify under Section 401(a) or 401(k) of the Internal Revenue Code;
(ii) the establishment of a defined contribution plan that competes with the
Plan for employee contributions; (iii) any substantive modification of the
Plan
or the administration of the Plan that is not consented to by the contract
issuer; (iv) complete or partial termination of the Plan; (v) any change in
law,
regulation or administrative ruling applicable to the Plan that could have
a
material adverse effect on the fund's cash flow; (vi) merger or consolidation
of
the Plan with another plan, the transfer of Plan assets to another plan, or
the
sale, spin-off or merger of a subsidiary or division of the Plan sponsor; (vii)
any communication given to participants by the Plan sponsor or any other Plan
fiduciary that is designed to induce or influence participants not to invest
in
the Funds or to transfer assets out of the Blended Income Fund; (viii) exclusion
of a group of previously eligible employees from eligibility in the Plan; (ix)
any early retirement program, group termination, group layoff, facility closing,
or similar program; and (x) any transfer of assets from the Blended Income
Fund
directly to a competing option.
|
|
6.
|
EXEMPT
PARTY-IN-INTEREST
TRANSACTIONS
|
Certain
trust investments are shares of mutual funds managed by Fidelity. Fidelity
is
the trustee as defined by the Plan and, therefore, these transactions qualify
as
party-in-interest transactions. Fees paid by the Plan for investment management
services were included as a reduction of the return earned on each fund. The
administrative fees paid by the Plan for 2006 were $9,790.
The
Plan
invested in shares of UAL common stock starting March 1, 2006. UAL is the parent
company of United Airlines, Inc. and, as such, investment activities in UAL
common stock qualifies as exempt party-in-interest transactions.
|
|
7.
|
PLAN
TERMINATION
|
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to terminate the Plan subject to the provisions set forth in ERISA. If
the
Plan is terminated, all amounts credited to a participant’s account at the time
of termination shall be retained in the Trust and will be distributed in
accordance with the normal distribution rules of the Plan and
ERISA.
In
2006
Mileage Plus, Inc. closed two call centers – Tucson on April 29, 2006 and
Huntington on August 25, 2006, and furloughed 253 employees (approximately
54%
of participants in the plan). Due to the percentage of furloughs, management
determined that the Mileage Plus, Inc. Investment Plus 401(k) Plan incurred
a
partial termination. With the partial termination, 52 affected participants
from these sites and one corporate employee became 100% vested in all employer
contributions. Previously forfeited employer contributions totaling $11,490
and
calculated investment return using the weighted average method totaling $480
were withdrawn from the forfeiture account and returned to 36 affected
participants on April 11, 2007. For the remaining 17 participants who were
impacted by the partial termination but did not take a distribution from the
plan, their employer contribution balances are now marked as 100%
vested.
|
|
8.
|
FEDERAL
INCOME TAX STATUS
|
The
Internal Revenue Service has determined and informed MPI by letter dated
September 5, 2003, that the Plan and related trust are designed in
accordance with applicable regulations of the Internal Revenue Code (“IRC”). The
Plan has been amended since receiving the determination letter. However,
the Plan administrator and the Plan’s counsel believe that the Plan is
currently designed and operated in compliance with the applicable requirements
of the IRC and the Plan and related trust continue to be tax exempt. Therefore,
no provision for income taxes has been recorded in the Plan’s financial
statements.
9
|
|
9.
|
RECONCILIATION
TO FORM 5500
|
At
December 31,
2006 and 2005, investment contracts that are fully benefit-responsive are
reported at contract value in the Plan financial statements. However,
these investment contracts are reported
at
fair
value in the Form 5500. The reconciliation between the financial
statements and the Form 5500 is as follows:
|
2006
|
2005
|
|||||||
|
Net
assets available for plan benefits per financial
statements
|
$ |
10,326,586
|
$ |
8,625,799
|
||||
|
Adjustment
from
contract value to fair value for fully benefit-responsive
investment
contracts
|
(12,700 | ) | (14,705 | ) | ||||
|
Net
assets available for plan benefits per Form 5500
|
$ |
10,313,886
|
$ |
8,611,094
|
||||
|
Year
Ended
|
||||
|
December
31, 2006
|
||||
|
Plan
interest in Master Trust investment income per financial
statements
|
$ |
62,428
|
||
|
Net
change in adjustment from contract value to fair value for fully
benefit-responsive investment contracts
|
2,005 | |||
|
Plan
interest in Master Trust investment income per Form 5500
|
$ |
64,433
|
||
|
|
10.
|
PLAN
AMENDMENTS
|
During
2006, the Plan was amended twice, primarily to maximize the amount the Company
could contribute to the Plan due to the Equity Distribution (Note 1) and to
specify that contributions of Equity
are
available for hardship
withdrawal and age 59-1/2 in-service withdrawal. The amendments also
clarified the accelerated vesting provisions upon termination or partial
termination of
the
Plan,
indicating that
upon
termination or partial termination of the Plan, the accounts
of affected participants will vest in full. Finally, the amendments
changed the
default investment option from a specified
fund to
a fund
selected from
time
to time by the Plan Administrator.
|
|
11.
|
SUBSEQUENT
EVENT
|
The
Plan was amended effective April 1, 2007, to permit the payment of
administrative expenses from the Plan's forfeiture account.
10
SUPPLEMENTAL
SCHEDULE
|
MILEAGE
PLUS, INC. INVESTMENT PLUS PLAN
|
|
||||||
|
|
|
|
|||||
|
SCHEDULE
H, LINE 4i—SCHEDULE OF ASSETS
|
|
||||||
|
(HELD
AT END OF YEAR)
|
|
||||||
|
AS
OF DECEMBER 31, 2006
|
|||||||
|
|
|
|
|||||
|
|
|
|
|||||
|
|
Identity
of Issue/Description of Investment
|
Current
Value
|
|||||
|
|
|
|
|||||
|
|
|
|
|||||
|
|
|
|
|||||
|
(A)
|
FIDELITY
MUTUAL FUNDS:
|
|
|||||
|
Fidelity
Magellan Fund
|
$ |
916,695
|
|||||
|
Fidelity
Equity Income Fund
|
476,154
|
||||||
|
Fidelity
Growth Company Fund
|
1,410,610
|
||||||
|
Fidelity
Government Income Fund
|
90,385
|
||||||
|
Fidelity
Over the Counter Portfolio Fund
|
199,172
|
||||||
|
Fidelity
Overseas Fund
|
685,284
|
||||||
|
Fidelity
Balanced Fund
|
1,069,986
|
||||||
|
Fidelity
Asset Manager Fund
|
283,702
|
||||||
|
Fidelity
Asset Manager Growth Fund
|
518,600
|
||||||
|
Fidelity
Asset Manager Income Fund
|
106,727
|
||||||
|
Fidelity
Retirement Money Market Fund
|
166,848
|
||||||
|
Fidelity
U.S. Bond Index Fund
|
148,709
|
||||||
|
Fidelity
U.S. Equity Indx CL 2
|
851,091
|
||||||
|
(A)
|
|
UAL
Stock Fund
|
1,835,430
|
||||
|
(A)
|
UAL
Stock Purchase Acct
|
1,095
|
|||||
|
(A)
|
|
Participant
Loan Fund (interest rates from 5% to 8%, maturing 2006 through
2010)
|
220,868
|
||||
|
|
|||||||
|
|
|||||||
|
TOTAL:
|
$ |
8,981,356
|
|||||
| (A) | Indicates a party in interest | ||||||
11
SIGNATURES
The
Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed
on its
behalf by the undersigned hereunto duly authorized.
|
Mileage
Plus, Inc. Investment Plus Plan
|
|
|
Date:
June 29, 2007
|
/s/
M. Lynn Hughitt
M.
Lynn Hughitt
Member
Retirement
and Welfare Administration Committee, the Plan Administrator
|
EXHIBIT
INDEX
Exhibit
No.
Description
23 Consent
of
Independent Registered Public Accounting Firm
Exhibit
23
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in Registration Statement No.
333-132111 on Form S-8 of our report dated June 29, 2007, relating to the
financial statements and financial statement schedule of the Mileage Plus,
Inc.
Investment Plus Plan (which report expresses an unqualified opinion and contains
an explanatory paragraph related to the adoption of FASB Staff Position AAG
INV-1 and SOP 94-4-1) appearing in this Annual Report on Form 11-K of the
Mileage Plus, Inc. Investment Plus Plan for the year ended December 31,
2006.
/s/
Deloitte & Touche LLP
Chicago,
Illinois
June
29,
2007