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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 1 - 6033
A. 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)
B. 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 statements 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, 1998 and
1997, and the related statements of changes in net
assets available for plan benefits for the years
then ended. These financial statements are the
responsibility of the Plan 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,
1998 and 1997, and the changes in its net assets
available for plan benefits for the years then
ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 26, 1999
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 AirLines, Inc.
Flight AttendantEmployees'
401(k) Retirement Savings Plan
------------------------------
Dated May 27, 1999 By /s/ Douglas A. Hacker
---------------------
Douglas A. Hacker
Member, United Air
Lines, Inc. Pension
and Welfare Plans
Administration Committee
UNITED AIR LINES, INC.
----------------------
FLIGHT ATTENDANT EMPLOYEES' 401(K) RETIREMENT SAVINGS PLAN
----------------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
(In Thousands)
November 30
------------------------
1998 1997
------------------------
INVESTMENT IN MASTER TRUST
Magellan Fund $ 60,025 $ 37,784
Equity-Income Fund 36,565 28,838
Growth Company Fund 147,348 122,535
Government Securities Fund 3,896 998
OTC Portfolio 32,321 24,554
Overseas Fund 47,608 44,059
Balanced Fund 50,193 40,910
Asset Manager 8,616 5,254
Asset Manager: Growth 15,596 11,059
Asset Manager: Income 1,377 1,340
Retirement Money Market 9,706 5,268
Portfolio
U.S. Bond Index Portfolio 3,444 1,591
U.S. Equity Index Portfolio 161,391 123,790
Stated Return Fund 132,029 132,868
Blended Income Fund 48,637 40,804
UAL Stock Fund 26,517 29,338
Participant Loan Fund 10,273 -
-------- --------
NET ASSETS AVAILABLE FOR PLAN $795,542 $650,990
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
------------------------------------------
1998
------------------------------------------
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
---- ---- ---- ----
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
beginning ofyear $ 37,784 $ 28,838 $122,535 $ 998
-------- --------- ------- -------
CONTRIBUTIONS 7,367 4,655 14,305 225
-------- -------- ------- -------
TRANSFERS
BETWEEN FUNDS 6,264 859 (7,167) 2,539
-------- -------- ------- --------
TRANSFERS
BETWEEN PLANS 266 (66) 470 23
-------- ------- ------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 2,907 1,728 12,925 109
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 7,051 1,629 8,701 53
-------- -------- ------- --------
9,958 3,357 21,626 162
-------- -------- ------- --------
PAYMENTS TO PLAN
PARTICIPANTS (1,600) (1,067) (4,396) (50)
-------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (14) (11) (25) (1)
-------- -------- ------- --------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
end of year $ 60,025 $ 36,565 $147,348 $ 3,896
======== ======== ======== ========
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 1998
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
--------- ---- ---- -------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 24,554 $ 44,059 $ 40,910 $ 5,254
-------- -------- -------- --------
CONTRIBUTIONS 3,904 5,518 4,703 970
-------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS 71 (4,777) (1,370) 1,793
-------- -------- -------- --------
TRANSFERS
BETWEEN PLANS 74 118 25 (15)
-------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 2,893 2,174 6,528 554
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 1,957 2,502 905 201
-------- -------- --------- -------
4,850 4,676 7,433 755
-------- -------- --------- -------
PAYMENTS TO PLAN
PARTICIPANTS (1,128) (1,979) (1,498) (139)
-------- -------- -------- -------
ADMINISTRATIVE
EXPENSES (4) (7) (10) (2)
-------- -------- -------- -------
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
end of year $ 32,321 $ 47,608 $ 50,193 $ 8,616
======== ======== ======== ========
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
-------------------------------------------------
1998
-------------------------------------------------
RETIREMENT U.S. U.S.
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
--------- -------- --------- --------- ---------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
beginning of
year $ 11,059 $ 1,340 $ 5,268 $ 1,591 $123,790
-------- ------- -------- -------- --------
CONTRIBUTIONS 2,367 181 756 374 7,149
-------- ------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS 606 (110) 3,989 1,334 4,161
-------- ------- -------- -------- --------
TRANSFERS
BETWEEN PLANS 70 (30) - 2 282
-------- ------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,183 127 379 158 -
Interest - - - - -
Net
appreciation
(depreciation)
in value of
investments 745 27 - 52 30,007
-------- ------- -------- -------- --------
1,928 154 379 210 30,007
-------- ------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (430) (158) (684) (67) (3,978)
-------- ------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (4) - (2) - (20)
-------- ------- -------- -------- ---------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 15,596 $ 1,377 $ 9,706 $ 3,444 $ 161,391
======== ======= ======== ======== =========
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
-------------------------------------------------
1998
-------------------------------------------------
STATED BLENDED UAL
RETURN INCOME STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
---- ---- ---- ----- -----
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
beginning of year $132,868 $ 40,804 $ 29,338 - $650,990
-------- -------- -------- --------- ---------
CONTRIBUTIONS 68 8,174 4,399 - 65,115
-------- ------- -------- -------- ---------
TRANSFERS
BETWEEN FUNDS (7,914) (1,352) 2,424 (1,350) -
------- ------- -------- -------- ---------
TRANSFERS
BETWEEN PLANS (255) 737 203 - 1,904
------- ------- -------- -------- ---------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - - 31,665
Interest 10,015 2,855 - 366 13,236
Net appreciation
(depreciation) in
value investments - - (8,531) - 45,299
------- ------- ------- -------- ---------
10,015 2,855 (8,531) 366 90,200
------- ------- ------- -------- ---------
PAYMENTS TO PLAN
PARTICIPANTS (2,734) (2,532) (1,273) 11,257 (12,456)
------- ------- -------- -------- ---------
ADMINISTRATIVE
EXPENSES (19) (49) (43) - (211)
------- ------- -------- -------- ---------
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
end of year $132,029 $ 48,637 $ 26,517 $ 10,273 $795,542
======= ======== ======== ======== ========
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
----------------------
1997
----------------------
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
---- ---- ---- ----
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
beginning of year $ 24,337 $ 13,650 $ 99,574 $ 1,059
-------- -------- -------- -------
CONTRIBUTIONS 5,001 3,328 13,779 109
------- ------- -------- -------
TRANSFERS
BETWEEN FUNDS 2,949 7,493 (4,395) (211)
------- ------- -------- -------
TRANSFERS
BETWEEN PLANS (5) (7) (32) -
------- ------- -------- -------
RESULTS OF INVESTMENT
ACTIVITY
Dividends 848 992 3,974 42
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 4,967 3,709 10,945 4
------- ------- -------- -------
5,815 4,701 14,919 46
------- ------- -------- -------
PAYMENTS TO PLAN
PARTICIPANTS (311) (323) (1,304) (5)
ADMINISTRATIVE
EXPENSES (2) (4) (6) -
------- ------- -------- -------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 37,784 $ 28,838 $122,535 $ 998
======== ======== ======== =======
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
----------------------
1997
----------------------
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
--------- ---- ---- -------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 15,236 $ 36,521 $ 31,972 $ 3,606
-------- -------- -------- -------
CONTRIBUTIONS 3,348 5,889 4,394 752
-------- -------- -------- -------
TRANSFERS
BETWEEN FUNDS 4,214 (2,007) (1,289) 196
-------- -------- -------- -------
TRANSFERS
BETWEEN PLANS (1) (7) (6) (7)
-------- -------- -------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,386 2,234 3,257 306
Interest - - - -
Net appreciation
(depreciation)
in value
investments 522 1,770 3,223 426
-------- -------- --------- -------
1,908 4,004 6,480 732
-------- -------- --------- -------
PAYMENTS TO PLAN
PARTICIPANTS (151) (340) (637) (25)
-------- -------- --------- -------
ADMINISTRATIVE
EXPENSES - (1) (4) -
-------- -------- --------- -------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
end of year $ 24,554 $ 44,059 $ 40,910 $ 5,254
======== ======== ======== =======
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
----------------------
1997
----------------------
RETIREMENT U.S. U.S.
ASSET ASSET MONEY BOND EQUITY
MANAGER: MANAGER: MARKET INDEX INDEX
GROWTH INCOME PORTFOLIO PORTFOLIO PORTFOLIO
------ ------ --------- --------- ---------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
beginning of
year $ 6,362 $ 383 $ 3,656 $ 742 $ 89,866
------- ------ ------- ------- --------
CONTRIBUTIONS 1,768 137 634 182 5,413
------- ------ ------- ------- --------
TRANSFERS
BETWEEN FUNDS 1,472 768 853 577 2,825
------- ------ ------- ------- --------
TRANSFERS
BETWEEN PLANS - - - - (20)
------- ------ ------- ------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 545 33 263 78 -
Interest - - - - -
Net appreciation
(depreciation)
in values of
investments 1,108 26 - 17 26,688
------- ------ ------- ------- --------
1,653 59 263 95 26,688
------- ------ ------- ------- --------
PAYMENTS TO PLAN
PARTICIPANTS (195) (7) (137) (5) (979)
------- ------- ------- ------- --------
ADMINISTRATIVE
EXPENSES (1) - (1) - (3)
NET ASSETS ------- ------- ------- ------- --------
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 11,059 $ 1,340 $ 5,268 $ 1,591 $123,790
======= ======= ======= ======= ========
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
----------------------
1997
----------------------
STATED BLENDED UAL
RETURN INCOME STOCK
FUND FUND FUND TOTAL
------- ------- ------- -------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $138,477 $ 36,888 $ 14,356 $516,685
-------- -------- -------- --------
CONTRIBUTIONS - 7,378 2,947 55,059
-------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS (13,263) (5,360) 5,178 -
-------- -------- -------- --------
TRANSFERS
BETWEEN PLANS (21) 108 (1) 1
-------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - 13,958
Interest 9,648 2,550 - 12,198
Net appreciation
(depreciation)
in value
of investments - - 7,060 60,465
-------- -------- -------- --------
9,648 2,550 7,060 86,621
-------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (1,965) (727) (185) (7,296)
-------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (8) (33) (17) (80)
-------- -------- -------- --------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
end of year $132,868 $ 40,804 $ 29,338 $650,990
======== ======== ======== ========
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 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 1997 and $10,000 in 1998. 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 salary deferral
contributions. 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 25% of annual taxable earnings or $30,000.
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 $969,298 and $185,400 for 1998
and 1997, respectively, which were transferred from
other qualified plans as rollovers under Internal
Revenue Code Sections 402(c) and 408(d).
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 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 1998 was 8.00%. 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 salary 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 values of the
investment contracts at November 30, 1998 and 1997 were
$48,656 and $40,718 (in thousands), respectively. The
average yield for the years ending November 30, 1998
and 1997 was approximately 6.6%. The crediting
interest rates as of November 30, 1998 and 1997 were
approximately 5.7 % and 6.5%, respectively.
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.
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.
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 who have terminated employment 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 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, 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. 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.
f. Participant Loans
-----------------
Effective April 1, 1998, participants may borrow up to
fifty percent of their account balance, not to exceed
$50,000. 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 (8.75% as of December 31, 1998). 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
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 administrative fee of $90 is charged to each
participant taking a loan and is automatically deducted
from the participant's account.
g. Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of net assets available for plan benefits and disclosure of
contigent assets and liabilities at the date of the financial
statements and the reported amounts of changes in net
assets available for plan benefits during the reporting
period. Actual results could differ from those estimates.
3. TAX STATUS
----------
The Plan obtained its latest determination letter on August
23, 1996. The Internal Revenue Service has determined
Plan, as written, is designed in accordance with applicable
sections of the Internal Revenue Code.
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,
1998, into UAL's previously filed Form S-8 and Post
Effective Amendment No. 1 to Form S-8 Registration
Statement (File No. 33-44553), Form S-8
Registration Statement (File No. 33-62749),
Form S-8 Registration Statement (File No. 333-
52249), and Form S-8 Registration Statement (File
No. 333-63179) for the United Airlines, Inc.
Flight Attendant Employees' 401(k) Retirement
Savings Plan.
Arthur Andersen LLP
Chicago, Illinois
May 27, 1999