SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended November 30, 1994
Commission File No. 1-6033
United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan
(Full title if the Plan)
United Air Lines, Inc.
(Employer sponsoring the Plan)
UAL Corporation
(Issuer of the shares held pursuant to the Plan)
1200 Algonquin Road, Elk Grove Township, Illinois
Mailing Address:
P.O. Box 66100, Chicago, Illinois 60666
(Address of principal executive offices)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of United Air Lines, Inc.:
We have audited the accompanying statement of net assets
available for plan benefits of the United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan as of
November 30, 1994 and 1993, and the related statement of
changes in net assets available for plan benefits for the
years then ended. These financial statements are the
responsibility of the Plan Administrator. 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 the Plan
Administrator, 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 United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan as of
November 30, 1994 and 1993, and the changes in its net assets
available for plan benefits for the years then ended in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 26, 1995
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the United Air Lines, Inc. Pension and Welfare Plans Administration
Committee has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
United Air Lines, Inc.
Ground Employees' 401(k)
Retirement Savings Plan
Dated May 26, 1995 By /s/ Douglas A. Hacker
Douglas A. Hacker
Member, United Air
Lines, Inc. Pension
and Welfare Plans
Administration Committee
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
November 30
1994 1993
INVESTMENTS IN MASTER TRUST
Fixed Rate Investment Fund $ 94,088 $130,372
U.S. Equity Index Commingled Pool 65,416 66,016
UAL Stock Fund 3,017 3,187
Blended Income Fund 156,636 111,542
Growth Company Fund 51,140 34,624
Overseas Fund 30,503 14,513
Balanced Fund 41,485 32,779
Participant Loan Fund 18,582 15,372
NET ASSETS AVAILABLE FOR PLAN BENEFITS $460,867 $408,405
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1994
U.S. EQUITY
FIXED RATE INDEX UAL BLENDED
INVESTMENT COMMINGLED STOCK INCOME
FUND POOL FUND FUND
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 130,372 $ 66,016 $ 3,187 $111,542
CONTRIBUTIONS - 7,947 636 24,280
TRANSFERS BETWEEN FUNDS (38,017) (4,559) (300) 24,579
TRANSFERS BETWEEN PLANS 5 (25) (2) 7
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - -
Interest 8,108 - - 8,347
Net appreciation
(depreciation) in
value of investments - 708 (340) -
8,108 708 (340) 8,347
PAYMENTS TO PLAN
PARTICIPANTS (4,603) (3,106) (82) (9,225)
PARTICIPANT LOANS (1,750) (1,540) (81) (2,781)
ADMINISTRATIVE EXPENSES (27) (25) (1) (113)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 94,088 $ 65,416 $ 3,017 $156,636
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1994
GROWTH PARTICIPANT
COMPANY OVERSEAS BALANCED LOAN
FUND FUND FUND FUND TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 34,624 $ 14,513 $ 32,779 $ 15,372 $ 408,405
CONTRIBUTIONS 9,601 5,214 7,028 - 54,706
TRANSFERS
BETWEEN FUNDS 8,754 10,617 5,454 (6,528) -
TRANSFERS
BETWEEN PLANS (18) (27) 7 - (53)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 3,604 248 1,779 - 5,631
Interest - - - 1,127 17,582
Net appreciation
(depreciation)
in value of
investments (3,445) 1,012 (3,437) - (5,502)
159 1,260 (1,658) 1,127 17,711
PAYMENTS TO PLAN
PARTICIPANTS (853) (407) (1,418) - (19,694)
PARTICIPANT LOANS (1,109) (656) (694) 8,611 -
ADMINISTRATIVE
EXPENSES (18) (11) (13) - (208)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 51,140 $ 30,503 $ 41,485 $ 18,582 $ 460,867
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1993
U.S. EQUITY
FIXED RATE INDEX UAL BLENDED
INVESTMENT COMMINGLED STOCK INCOME
FUND POOL FUND FUND
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 199,448 $ 60,645 $ 497 $ 47,784
CONTRIBUTIONS 1 10,033 644 27,449
TRANSFERS BETWEEN FUNDS (70,299) (5,895) 1,869 39,568
TRANSFERS BETWEEN PLANS 222 215 10 265
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - -
Interest 11,680 - - 5,923
Net appreciation
in value of
investments - 6,455 418 -
11,680 6,455 418 5,923
PAYMENTS TO PLAN
PARTICIPANTS (4,882) (1,842) (67) (4,758)
PARTICIPANT LOANS (5,728) (3,548) (182) (4,577)
ADMINISTRATIVE
EXPENSES (70) (47) (2) (112)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 130,372 $ 66,016 $ 3,187 $111,542
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1993
GROWTH PARTICIPANT
COMPANY OVERSEAS BALANCED LOAN
FUND FUND FUND FUND TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 11,317 $ 3,765 $ 8,475 $ - $ 331,931
CONTRIBUTIONS 8,090 2,820 6,324 - 55,361
TRANSFERS
BETWEEN FUNDS 13,867 6,795 16,145 (2,050) -
TRANSFERS
BETWEEN PLANS 28 (28) (1) - 711
RESULTS OF INVESTMENT
ACTIVITY
Dividends 551 432 2,108 - 3,091
Interest - - - 411 18,014
Net appreciation
in value of
investments 2,580 1,475 1,391 - 12,319
3,131 1,907 3,499 411 33,424
PAYMENTS TO PLAN
PARTICIPANTS (441) (169) (594) - (12,753)
PARTICIPANT LOANS (1,351) (570) (1,055) 17,011 -
ADMINISTRATIVE
EXPENSES (17) (7) (14) - (269)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 34,624 $ 14,513 $ 32,779 $ 15,372 $ 408,405
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
GROUND EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
This description is for general information purposes only.
Participants should refer to their summary plan description and
individual employee benefit statement for detailed benefit information.
a. General and Plan Participants
The United Air Lines, Inc. Ground Employees' 401(k) Retirement
Savings Plan (the "Plan") covers all employees of United Air Lines,
Inc. ("United") who are members of the International Association of
Machinists and Aerospace Workers ("IAM"), have completed one year
of service and are at least 21 years of age. The Plan is
contributory and is subject to the Employee Retirement Income
Security Act of 1974.
b. Contributions and Vesting
Eligible employees may elect to contribute to the Plan, in
multiples of 1%, any percentage of their covered pretax earnings,
up to 15%, subject to a maximum of $9,240 in 1994 and 1995. Lower
limits may apply to certain highly compensated participants if the
Plan does not pass certain nondiscrimination tests required by law.
Contributions and earnings are credited to separate accounts
maintained for each participant. The balance in a participant's
account is fully vested and nonforfeitable at all times.
Participants may elect to invest in one or a combination of the
investment funds described in note (1)(d). 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.
Contributions include $44,465 and $109,036 for 1994 and 1993,
respectively, which were transferred from other qualified plans as
rollovers under IRS Code Sections 401(a) and 401(k).
c. Trustee and Recordkeeper
Fidelity Management Trust Company ("Fidelity") is the Plan Trustee
and Fidelity Institutional Retirement Services Company is the
recordkeeper of the Plan.
d. Master Trust Funds
The Fixed Rate Investment Fund is invested under various group
annuity contracts with the following insurance companies:
(In Thousands)
Annual Investment Balance as of
Insurance Interest Contract November 30
Company Rate Through 1994 1993
Provident 9.02% 1993 $ - $ 36,491
Massachusetts 8.58% 1994 36,993 36,910
Prudential 8.89% 1995 57,095 56,971
$ 94,088 $130,372
The Plan's fixed rate investments are stated at contract value and
represent amounts on deposit with the insurance companies plus net
investment earnings. Interest rates on the contracts are
guaranteed fixed rates through the end of the contracts. No
further contributions can be made to this fund. In the event of
early termination of the contracts, the contract value may be
reduced to reflect investment losses incurred by the insurance
companies as a result of such early termination.
Fidelity provides each participant with six investment options:
Fidelity U.S. Equity Index Commingled Pool; UAL Stock Fund; Blended
Income Fund; Fidelity Growth Company Fund; Fidelity Overseas Fund;
and the Fidelity Balanced Fund. These funds are managed by
Fidelity or Fidelity Investments (manager of Fidelity Mutual
Funds). The investments represent the Plan's allocable share of
the funds.
The Fidelity U.S. Equity Index Commingled Pool primarily invests in
the common stocks of the companies that make up the S&P 500 Index.
Assets are valued at market prices quoted on the New York Stock
Exchange ("NYSE").
Assets in the UAL Stock Fund are invested in UAL Corporation common
stock and are valued at market prices quoted on the NYSE.
Participants may invest in the UAL Stock Fund through direct
earnings deferrals. Transfers into the UAL Stock Fund from other
funds are permitted except from the Blended Income Fund.
On July 12, 1994, UAL Corporation underwent a recapitalization
under Section 368(a)(1)(E) of the Internal Revenue Code of 1986,
pursuant to which the shareholders engaged in a recapitalization
exchange with UAL Corporation. Each share of Old Common Stock was
exchanged for a package consisting of one half of a share of New
Common Stock and $84.81 in cash. The cash consideration received
by the Trustee on behalf of Plan participants was used to purchase
additional shares of New Common Stock or, at the direction of Plan
participants, was transferred to other investment funds. Pursuant
to the terms of the recapitalization, participants' direct earnings
deferrals and fund transfers into the UAL Stock Fund were
temporarily suspended from July 12, 1994 to August 4, 1994 and from
January 12, 1995 to March 15, 1995.
The Blended Income Fund includes investment contracts purchased by
Fidelity from approved institutions that meet its stringent credit
standards at the time of purchase. The Fund may also include other
high quality, income-oriented investments. Assets are valued at
contract value.
The remaining investment options are public mutual funds traded on
the NYSE. Portfolio securities and other assets are valued
primarily on the basis of market quotations or, if quotations are
not readily available, by a method which each fund's Board of
Trustees accurately believes reflects fair value. Foreign
securities are valued based on quotations from the primary market
in which they are traded and are translated from the local currency
into U.S. dollars using current exchange rates.
The Fidelity Growth Company Fund invests in common stocks,
securities convertible into common stocks, and occasionally debt
obligations from companies viewed as having unusual opportunities
to grow.
The Fidelity Overseas Fund normally invests at least 65% of its
total assets in common stock, securities convertible to common
stock and debt instruments of foreign businesses and governments.
Fidelity Investments expects to invest most of the assets in
developed countries in these general geographic areas; the Americas
(other than the United States), the Far East and Pacific Basin, and
Western Europe.
The Fidelity Balanced Fund maintains a balance of high-yielding
securities, including foreign and domestic stocks and bonds. At
least 25% of the assets are invested in fixed-income senior
securities. All bonds in the Fund's portfolio are rated BBB or
better by Standard & Poor's Corporation, or Baa or better by
Moody's Investors Service, Inc.
Fidelity is authorized to engage in the lending of certain Plan
assets from the Balanced Fund and the U.S. Equity Index Commingled
Pool. Securities lending is an investment management enhancement
that utilizes the existing securities of the Funds to earn
additional income. It involves the loan of securities to various
approved brokers. In return for loaned securities, Fidelity
receives collateral in the form of cash and U.S. government
securities as a safeguard against possible default of any borrower
on return of the loan. Each loan is collateralized to the extent
of 100 percent of the market value of securities on loan. The
collateral is marked-to-market on a daily basis to maintain the
margin requirement.
e. Withdrawals
Withdrawals from the Plan may be made as follows:
Termination of employment due to retirement or attainment of age
59-1/2 allows a participant to elect to withdraw a portion or
all of his account balance. Full distribution results in either
a lump sum payment or the purchase of an annuity. For the UAL
Stock Fund, distribution will be made in a combination of a
certificate for the whole shares with the remainder paid in cash
or all cash. Participants under age 70-1/2 may also elect to
have periodic withdrawals payable monthly, quarterly,
semi-annually or annually. Periodic withdrawals are made pro
rata from all funds and the UAL Stock Fund portion is paid in
cash. In the case of a retirement, the participant can leave
his account balance in the Plan until April 1 of the year
following the year he reaches age 70-1/2.
Termination of employment due to death results in either a lump
sum payment, the purchase of an annuity, or a combination of a
partial payment in cash and use of the balance to purchase an
annuity.
Termination of employment (for reasons other than retirement or
death) allows a participant to elect a partial, periodic or lump
sum payment. For the UAL Stock Fund, distribution will be made
in a combination of a certificate for the whole shares with the
remainder paid in cash or all cash.
Withdrawals are permitted in certain hardship cases as described
in the Plan.
Withdrawal of the balance of a participant must be made by the
April 1 of the calendar year following the year he reaches age
70-1/2. Any account balance resulting from contributions or
earnings thereafter must be withdrawn at the end of each
subsequent calendar year.
f. Plan Termination Provisions
If the Plan is terminated, all amounts credited to a participant's
account at the time of termination shall be retained in the Trust
until the participant's termination of employment and will then be
distributed by one or a combination of the following methods:
- by payment in a lump sum; or
- by purchase of a non-transferable annuity providing a
benefit in either a fixed or variable form of payment to
the extent offered by the insurance company.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Accounting
The financial statements are presented on the accrual basis.
b. Investments
Assets of United's 401(k) Plans Master Trust are owned by all
participating United plans consisting of the Management and
Salaried Employees's 401(k) Retirement Savings Plan, Ground
Employees' 401(k) Retirement Savings Plan, and the Flight Attendant
Employees' 401(k) Retirement Savings Plan.
c. 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 December 1, or date of purchase if subsequent to December
1, and fair value at date of sale or the current year-end. The
unrealized gain or loss on investments in the Overseas Fund
represents the Plan's allocable share of the difference between
fair value at December 1, or date of purchase, and the fair value
at the date of sale or the current year-end plus the change in the
exchange rate between the U.S. dollar and the foreign currency in
which the assets are denominated from December 1, or the date of
purchase, to the date of sale or the current year-end.
d. Plan Expenses
Administrative expenses represent administrative and investment
manager fees charged by Fidelity, accountant fees, recordkeeping
fees charged by Fidelity Institutional Retirement Services Co. and
some administrative fees charged by United. Brokerage and other
investment fees are included in the cost of the related security.
United performs certain reporting and supervisory functions for the
Plan without charge.
e. Transfers between Plans
Transfers between plans reflects the change in employee coverage
and transfer of any related balances between this Plan and other
defined contribution plans sponsored by United, including the
United Air Lines, Inc. Management and Salaried Employees' 401(k)
Retirement Savings Plan or the United Air Lines, Inc. Flight
Attendant Employees' 401(k) Retirement Savings Plan.
f. Participant Loans
Actively employed participants may borrow up to fifty percent of
their fund balance. The maximum loan amount is $50,000 and the
minimum that may be borrowed is $1,000. Loans are charged against
each investment fund in the ratio of the value of the employee's
interest in each fund to the total value of the employee's interest
in all funds and are held in the Loan Fund. The loan is repaid
through payroll deductions on an after-tax basis for the term of
the loan, which is a minimum of six months to a maximum of sixty
months and is subject to a reasonable rate of interest (10% as of
April 30, 1995). The amount paid is reinvested in the
participant's account based on the investment allocations at the
time of repayment. Prepayment of the full balance of the loan is
allowed after six months from the date of the loan without penalty.
Participants are able to take out another loan after twelve months
from the date the old loan is retired. Upon the employee's
termination of employment, a loan not paid in full within 60 days
become a taxable distribution. Loans in default may be declared
due and payable in full immediately, and the Plan administrator may
charge the participants' account balances at any time thereafter
for the amount of the default. An administrative fee of $90 is
charged to each participant taking a loan and is automatically
deducted from the participant's account.
3. TAX STATUS
The Plan obtained its latest determination letter on August 8, 1986.
The Internal Revenue Service stated that the Plan, as written, was in
compliance with the requirements of the Internal Revenue Code and that
the trust was tax exempt. The Plan has been amended since receiving
the determination letter and is currently in the process of being amended
to comply with the Tax Reform Act of 1986 and subsequent legislation
and final regulations thereunder. The Company will timely apply for a
determination letter from the Internal Revenue Service as to the
continued tax exemption of the trust and will make such amendments as
reasonably required by the IRS to obtain a favorable determination
letter.
4. SUBSEQUENT EVENT
In January 1995, Fidelity added nine investment options to the Plan.
They are the Fidelity Asset Manager-Income, Fidelity Asset Manager,
Fidelity Asset Manager-Growth, Fidelity Retirement Money Market
Portfolio, Fidelity Government Securities Fund, Fidelity U.S. Bond
Index Portfolio, Fidelity Equity-Income Fund, Fidelity Magellan Fund,
and Fidelity OTC Portfolio.
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 11-K for the
year ended November 30, 1994, into the Company's previously
filed Post Effective Amendment No. 1 to Form S-8 Registration
Statement (File No. 33-44552) for the United Air Lines, Inc.
Ground Employees' 401(k) Retirement Savings Plan.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
May 26, 1995
