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, 1996
Commission File No. 1 - 6033
United Air Lines, Inc.
Flight Attendant Employees' 401(k) Retirement Savings Plan
(Full title of 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. Flight Attendant Employees' 401(k)
Retirement Savings Plan as of November 30, 1996 and
1995, 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. Flight Attendant Employees'
401(k) Retirement Savings Plan as of November 30,
1996 and 1995, 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 23, 1997
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.
Flight Attendant Employees'
401(k) Retirement Savings Plan
By /s/ Douglas A. Hacker
Douglas A. Hacker
Member, United Air
Lines, Inc. Pension
and Welfare Plans
Administration Committee
Dated May 28, 1997
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
November 30
1996 1995
INVESTMENT IN MASTER TRUST
Magellan Fund $ 24,337 $ 17,091
Equity-Income Fund 13,650 4,631
Growth Company Fund 99,574 68,308
Government Securities Fund 1,059 261
OTC Portfolio 15,236 6,051
Overseas Fund 36,521 26,565
Balanced Fund 31,972 27,962
Asset Manager 3,606 2,157
Asset Manager: Growth 6,362 3,407
Asset Manager: Income 383 331
Retirement Money Market Portfolio 3,656 1,120
U.S. Bond Index Portfolio 742 352
U. S. Equity Index Portfolio 89,866 66,960
Stated Return Fund 138,477 145,925
Blended Income Fund 36,888 33,301
UAL Stock Fund 14,356 5,614
NET ASSETS AVAILABLE FOR PLAN $516,685 $410,036
BENEFITS
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1996
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $17,091 $ 4,631 $68,308 $ 261
CONTRIBUTIONS 5,576 1,893 13,270 106
TRANSFERS
BETWEEN FUNDS (576) 5,355 4,758 664
TRANSFERS
BETWEEN PLANS 1 - (21) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 4,364 422 3,512 27
Interest - - - -
Net appreciation
(depreciation)
in value of
investments (1,604) 1,653 11,748 6
2,760 2,075 15,260 33
PAYMENTS TO PLAN
PARTICIPANTS (513) (300) (1,991) (5)
ADMINISTRATIVE
EXPENSES (2) (4) (10) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $24,337 $13,650 $99,574 $ 1,059
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1996
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 6,051 $26,565 $27,962 2,157
CONTRIBUTIONS 2,165 5,782 5,133 717
TRANSFERS
BETWEEN FUNDS 4,877 394 (3,663) 311
TRANSFERS
BETWEEN PLANS - - (1) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 1,249 637 1,290 96
Interest (1) 1 1 -
Net appreciation
(depreciation)
in value of
investments 1,120 4,017 2,170 382
2,368 4,655 3,461 478
PAYMENTS TO PLAN
PARTICIPANTS (225) (874) (911) (56)
ADMINISTRATIVE
EXPENSES - (1) (9) (1)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $15,236 $36,521 $31,972 $ 3,606
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1996
RETIREMENT US US
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 3,407 $ 331 $ 1,120 $ 352 $66,960
CONTRIBUTIONS 1,290 109 420 144 4,065
TRANSFERS
BETWEEN FUNDS 720 (59) 2,067 235 775
TRANSFERS
BETWEEN PLANS - - - - (1)
RESULTS OF INVESTMENT
ACTIVITY
Dividends 53 19 111 40 -
Interest - - - - 1
Net appreciation
(depreciation)
in value of
investments 980 16 - 3 19,287
1,033 35 111 43 19,288
PAYMENTS TO PLAN
PARTICIPANTS (86) (33) (61) (32) (1,217)
ADMINISTRATIVE
EXPENSES (2) - (1) - (4)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 6,362 $ 383 $ 3,656 $ 742 $89,866
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1996
STATED BLENDED UAL
RETURN INCOME STOCK
FUND FUND FUND TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $145,925 $33,301 $ 5,614 $410,036
CONTRIBUTIONS (4) 8,417 2,001 51,084
TRANSFERS
BETWEEN FUNDS (15,289) (5,948) 5,379 -
TRANSFERS
BETWEEN PLANS (18) 71 (30) 1
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - 11,820
Interest 9,520 2,222 1 11,745
Net appreciation
(depreciation)
in value of
investments - - 1,643 41,421
9,520 2,222 1,644 64,986
PAYMENTS TO PLAN
PARTICIPANTS (1,642) (1,096) (251) (9,293)
ADMINISTRATIVE
EXPENSES (15) (79) (1) (129)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $138,477 $36,888 $14,356 $516,685
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1995
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $ - $37,475 $ -
CONTRIBUTIONS 2,029 517 10,469 66
TRANSFERS
BETWEEN FUNDS 13,610 3,617 3,706 173
TRANSFERS
BETWEEN PLANS - - (11) -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 16 48 1,382 11
Interest - - - -
Net appreciation
in value of
investments 1,484 478 15,996 17
1,500 526 17,378 28
PAYMENTS TO PLAN
PARTICIPANTS (47) (29) (705) (6)
ADMINISTRATIVE
EXPENSES (1) - (4) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $17,091 $ 4,631 $68,308 $ 261
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1995
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $26,223 $24,310 $ -
CONTRIBUTIONS 588 6,416 6,197 452
TRANSFERS
BETWEEN FUNDS 4,846 (6,941) (5,444) 1,516
TRANSFERS
BETWEEN PLANS - (2) 3 -
RESULTS OF INVESTMENT
ACTIVITY
Dividends 82 446 1,052 24
Interest - - - -
Net appreciation
in value of
investments 540 860 2,251 181
622 1,306 3,303 205
PAYMENTS TO PLAN
PARTICIPANTS (5) (435) (403) (16)
ADMINISTRATIVE
EXPENSES - (2) (4) -
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 6,051 $26,565 $27,962 $ 2,157
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1995
RETIREMENT US US
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ - $ - $ - $ - $48,083
CONTRIBUTIONS 796 52 216 72 3,316
TRANSFERS
BETWEEN FUNDS 2,145 255 882 256 (1,797)
TRANSFERS
BETWEEN PLANS - - - - (2)
RESULTS OF INVESTMENT
ACTIVITY
Dividends - 6 36 11 -
Interest - - - - -
Net appreciation
in value of
investments 489 18 - 13 17,920
489 24 36 24 17,920
PAYMENTS TO PLAN
PARTICIPANTS (23) - (14) - (557)
ADMINISTRATIVE
EXPENSES - - - - (3)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 3,407 $ 331 $ 1,120 $ 352 $66,960
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
(In Thousands)
Year ended November 30
1995
STATED BLENDED UAL
RETURN INCOME STOCK
FUND FUND FUND TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $150,149 $27,881 $ 1,487 $315,608
CONTRIBUTIONS - 9,064 991 41,241
TRANSFERS
BETWEEN FUNDS (12,430) (5,039) 645 -
TRANSFERS
BETWEEN PLANS (24) 65 1 30
RESULTS OF INVESTMENT
ACTIVITY
Dividends - - - 3,114
Interest 10,063 2,013 - 12,076
Net appreciation
in value of
investments - - 2,526 42,773
10,063 2,013 2,526 57,963
PAYMENTS TO PLAN
PARTICIPANTS (1,823) (656) (36) (4,755)
ADMINISTRATIVE
EXPENSES (10) (27) - (51)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $145,925 $33,301 $ 5,614 $410,036
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
FLIGHT ATTENDANT 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. Flight Attendant Employees'
401 (k) Retirement Savings Plan ("Plan") covers all
employees of United classified as flight attendants and
who are members of the Association of Flight
Attendants. Eligible employees are eligible to become
participants on their date of hire. The Plan is
contributory and is subject to the Employee Retirement
Income Security Act of 1974, as amended.
b. Contributions and Vesting
Eligible employees may elect to contribute to the Plan,
in multiples of 1%, any percentage of their covered
earnings, up to 25% of each paycheck, subject to a
maximum of $9,500 in 1996 and 1997. 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. Participants are immediately vested in
their employee contributions.
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 $326,534 and $279,848 for 1996
and 1995, respectively, which were transferred from
other qualified plans as rollovers under Internal
Revenue 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
Fidelity provides each participant with fifteen
investment options: Fidelity Magellan Fund; Fidelity
Equity-Income Fund; Fidelity Growth Company Fund;
Fidelity Government Securities Fund; Fidelity OTC
Portfolio; Fidelity Overseas Fund; Fidelity Balanced
Fund; Fidelity Asset Manager; Fidelity Asset Manager:
Growth; Fidelity Asset Manager: Income; Fidelity
Retirement Money Market Portfolio; Fidelity U.S. Bond
Index Portfolio; Fidelity U.S. Equity Index Portfolio;
Blended Income Fund and the UAL Stock 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 Stated Return Fund is invested in Connecticut
General's general portfolio. The investment in and
interest earned on the Stated Return Fund are
guaranteed against loss by Connecticut General.
Interest is credited monthly to the participant's
account and is net of administrative expenses. The
rate of interest for any period of time is determined
by Connecticut General and may be changed from time to
time. Any such change will be declared in advance and
will become effective as of the first day of the month
immediately following the date the notice is given.
The net rate for 1996 and 1995 was 7.00%. However, no
further contributions can be made to this fund.
The Fidelity U.S. Equity Index Portfolio 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.
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. The contracts
held by the Blended Income Fund are fully benefit
responsive, and accordingly, have been included in the
financial statements at contract value. There are no
reserves against contract value for credit risk of the
contract issuers or otherwise. The fair value of the
investment contracts at November 30, 1996 was $37,353.
The average yield for the year ending November 30, 1996
was approximately 6.6%. The crediting interest rate
as of November 30, 1996 was approximately 6.3%. At
November 30, 1995, the contract value of the investment
contracts approximated the fair 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 believes accurately 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 Magellan Fund invests primarily in
securities of domestic, foreign, and multinational
issuers in the form of common stocks, securities
convertible into common stocks, and, occasionally, debt
securities.
The Fidelity Equity-Income Fund invests primarily in
income-producing equity securities, both domestic and
foreign. It seeks to achieve income greater than that
of the S&P 500.
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 Government Securities Fund invests
primarily in fully guaranteed U.S. government bonds
with any maturity. The average maturity is
approximately two to five years.
The Fidelity OTC Portfolio primarily invests in stocks
traded in the "over-the counter" market, which involves
the investment in securities of smaller, lesser-known
companies.
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.
The Fidelity Asset Manager invests in stocks, bonds and
short-term instruments in both domestic and foreign
markets to achieve high total returns in the long run.
The allocation between these three types of investments
is generally 40%, 40%, and 20%, respectively, however
it may vary between the following ranges: stocks - 10%
to 60%; bonds - 20% to 60%; and short-term instruments
- 0% to 70%.
The Fidelity Asset Manager: Growth: invests in stocks,
bonds and short-term instruments in both domestic and
foreign markets to achieve long term maximum total
investment return. The allocation between these three
types of investments is generally 65%, 30%, and 5%,
respectively, however it may vary between the following
ranges: stocks - 0% to 100%; bonds - 0% to 100%; and
short-term instruments - 0% to 100%.
The Fidelity Asset Manager: Income: invests in stocks,
bonds and short-term instruments in both domestic and
foreign markets to achieve a high level of current
income, and capital appreciation. The allocation
between these three types of investments is generally
20%, 30%, and 50%, respectively, however it may vary
between the following ranges: stocks - 0% to 35%; bonds
- 20% to 45%; and short-term instruments - 20% to 80%.
The Fidelity Money Market Trust: Retirement Money
Market Portfolio: invests in high quality, low risk
domestic and foreign money market instruments,
primarily short-term instruments with maturities of
three months or less.
The Fidelity U.S. Bond Index Portfolio primarily
invests in securities included in the Lehman Brothers
Aggregate Bond Index in order to achieve comparable
investment results.
Fidelity is authorized to engage in the lending of
certain Plan assets. 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.
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. On May
20, 1996 (with a May 6, 1996 record date), UAL Common
Stock underwent a 4 for 1 stock split. Shares held in
the UAL Stock Fund were adjusted accordingly.
e. Withdrawals
Withdrawals from the Plan may be made as follows, as
applicable to the participant's eligibility, amount
requested, and existing balances:
Participants who have separated from service (for
reasons other than death) may elect payment in the
form of a lump sum, periodic distributions, irregular
partial distributions, or through the purchase of an
annuity. Distributions may also be directly rolled
over into an IRA or qualified plan.
Withdrawals of balances attributable to the United Air
Lines, Inc. Flight Attendant Employees' Savings Plan
or "the Prior Plan" are normally made in the form of a
single life annuity, if the participant is unmarried,
or a 50% contingent annuity with the spouse as the
contingent annuitant, if the participant is married.
Spousal consent is required if the participant elects
to take a distribution in the form of a lump sum
payment, periodic distributions, or other forms of
annuities. Withdrawals of balances from the 401(k)
account may be made in the form of a lump sum,
periodic distributions, irregular partial
distributions, or through the purchase of an annuity
other than a life annuity. Spousal consent is not
required for distribution of 401(k) balances.
Participants are able to defer the distribution of
balances attributable to "the Prior Plan" and the
401(k) account until April 1 of the next calendar
year after reaching age 70-1/2.
Distributions of accounts due to the death of a
participant may be taken by the participant's
beneficiary in the form of a lump sum payment or
through the purchase of an annuity, subject to the
limitations of Internal Revenue Code 401(a)(9). The
participant's surviving spouse, if any, is
automatically the beneficiary of the account, unless
the spouse waives this right.
In-service withdrawals for participants who are
actively employed or are absent due to reasons of
illness, layoff, or approved leave of absence who
maintain an employer-employee relationship with United
Air Lines, Inc. are permitted as follows in lump sum
form only:
- Discretionary withdrawals of post-tax contributions
and earnings
- Hardship withdrawals from 401(k) account, subject
to restrictions described in the Plan
- After reaching age 59-1/2, subject to certain
requirements specified in the Plan, all or a
portion of the participant's 401(k) account may be
withdrawn
- Upon reaching age 70-1/2, minimum distributions
required under Internal Revenue Code
401(a)(9) must be taken no later than April 1
following the calendar year that the
participant has reached age 70-1/2. Effective
January 1, 1997, active participants that have
reached age 70-1/2 may choose to defer
distribution.
If a participant's account has never exceeded $3,500,
total distribution of the account will be made in a
lump sum payment upon termination of employment or
death.
Generally, withdrawals are allocated pro-rata to the
balances of each of the investment funds in the
participant's account. Alternatively, the participant
may specify which fund(s) that distribution is made
from. Distributions from UAL Stock Fund, may be made
in cash, or in whole shares of UAL Corporation common
stock, with fractional shares distributed in cash.
Certain restrictions on withdrawals may apply for
participants domiciled in, or residents of, non-U.S.
locations.
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 and will be distributed in
accordance with the normal distribution rules of the
Plan.
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 & Salaried Employees' 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 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,
where applicable, 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. Ground
Employees' 401(k) Retirement Savings Plan and the United
Air Lines, Inc. Management and Salaried Employees' 401(k)
Retirement Savings Plan.
3. TAX STATUS
The Plan obtained its latest determination letter on
August 23, 1996. The Internal Revenue Service confirmed
that the Plan, as written, was in compliance with the
requirements of the Internal Revenue Code and that the
trust was tax exempt.
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,
1996, into UAL's previously filed Form S-8 and Post
Effective Amendment No. 1 to Form S-8 Registration
Statement (File No. 33-44553) and Form S-8
Registration Statement (File No. 33-62749) for the
United Air Lines, Inc. Flight Attendant Employees'
401(k) Retirement Savings Plan.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
May 23, 1997
