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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.
Ground 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. Ground 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. Ground 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 Air Lines, Inc.
Ground Employees' 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.
----------------------
GROUNDS 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 $ 47,883 $ 37,400
Equity-Income Fund 23,853 24,58
Growth Company Fund 106,203 106,170
Government Securities Fund 2,797 1,100
OTC Portfolio 21,064 20,180
Overseas Fund 20,931 23,468
Balanced Fund 42,067 39,020
Asset Manager 6,490 6,454
Asset Manager: Growth 9,758 8,846
Asset Manager: Income 1,653 1,639
Retirement Money Market 6,898 4,768
Portfolio
U.S. Bond Index Portfolio 2,305 1,033
U. S. Equity Index Portfolio 151,366 134,042
Stated Return Fund 2 -
Blended Income Fund 173,561 177,841
UAL Stock Fund 67,311 62,544
Participant Loan Fund 20,810 21,199
-------- --------
NET ASSETS AVAILABLE FOR PLAN $704,592 $670,290
BENEFITS ======== ========
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
----------------------
1998
----------------------
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
---- ---- ---- ----
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 37,400 $ 24,586 $106,170 $ 1,100
-------- -------- -------- --------
CONTRABUTIONS 2,567 1,210 4,868 183
-------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS 3,793 (1,818) (11,329) 1,670
-------- -------- -------- --------
TRANSFERS
BETWEEN PLANS (137) (120) (515) (2)
-------- -------- -------- --------
RESULTS OF INVESTMENT
ACTIVITY
Dividends 2,874 1,446 10,927 104
Interest - - 43 -
Net appreciation
(depreciation)
in value of
investments 5,808 1,289 6,121 61
-------- -------- -------- --------
8,682 2,735 17,091 165
-------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (3,687) (2,555) (8,686) (294)
-------- -------- -------- --------
PARTICIPANT LOANS (724) (178) (1,377) (25)
-------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (11) (7) (19) -
-------- -------- -------- --------
ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 47,883 $ 23,853 $106,203 $ 2,797
======== ======== ======== ========
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
----------------------
1998
----------------------
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
--------- ---- ---- -------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 20,180 $ 23,468 $ 39,020 $ 6,454
-------- -------- -------- -------
CONTRIBUTIONS 1,345 1,451 1,572 301
-------- -------- -------- -------
TRANSFERS
BETWEEN FUNDS (1,820) (4,034) (873) (398)
-------- -------- -------- -------
TRANSFERS
BETWEEN PLANS (76) (92) (148) 33
-------- -------- -------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 2,066 1,209 5,967 606
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 1,369 1,354 733 222
-------- -------- -------- -------
3,435 2,563 6,700 828
-------- -------- -------- -------
PAYMENTS TO PLAN
PARTICIPANTS (1,747) (2,085) (3,811) (649)
-------- -------- -------- -------
PARTICIPANT LOANS (250) (337) (384) (78)
-------- -------- -------- -------
ADMINISTRATIVE
EXPENSES (3) (4) (8) (1)
-------- -------- -------- -------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 21,064 $ 20,931 $ 42,067 $ 6,490
======== ======== ======== =======
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
----------------------
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 $ 8,846 $ 1,639 $ 4,768 $ 1,033 $134,042
-------- -------- ------- -------- --------
CONTRIBUTIONS 785 79 336 45 4,242
-------- -------- ------- -------- --------
TRANSFERS
BETWEEN FUNDS (186) 170 2,376 1,169 (3,067)
-------- -------- ------- -------- --------
TRANSFERS
BETWEEN PLANS (33) (4) (3) (1) (694)
-------- -------- ------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 946 117 330 98 -
Interest - - - - 10
Net appreciation
(depreciation)
in value of
investments 329 31 (42) 37 30,275
-------- -------- ------- -------- --------
1,275 148 288 135 30,285
-------- -------- ------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (814) (364) (735) (64) (11,770)
-------- -------- ------- -------- --------
PARTICIPANT LOANS (113) (15) (130) (12) (1,649)
-------- -------- ------- -------- --------
ADMINISTRATIVE
EXPENSES (2) - (2) - (23)
-------- -------- ------- -------- --------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 9,758 $ 1,653 $ 6,898 $ 2,305 $151,366
======== ======== ======= ======== ========
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
----------------------
1998
----------------------
STATED BLENDED UAL PARTICIPANT
RETURN INCOME STOCK LOAN
FUND FUND FUND FUND TOTAL
---- ---- ---- ---- -----
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
beginning of year $ - $ 177,841 $ 62,544 $ 21,199 $670,290
CONTRIBUTIONS - 8,951 1,606 - 29,541
------- -------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS - (2,991) 27,715 (10,377) -
------- -------- -------- -------- --------
TRANSFERS
BETWEEN PLANS 2 367 (183) - (1,606)
------- -------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - - 26,690
Interest - 11,490 1 1,679 13,223
Net appreciation
(depreciation)
in value of
investments - - (17,507) - 30,080
------- -------- -------- -------- --------
- 11,490 (17,506) 1,679 69,993
------- -------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS - (20,107) (5,647) (19) (63,034)
------- -------- -------- -------- --------
PARTICIPANT LOANS - (1,927) (1,129) 8,328 -
------- -------- -------- -------- --------
ADMINISTRATIVE
EXPENSES - (63) (89) - (232)
------- -------- -------- -------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 2 $173,561 $ 67,311 $ 20,810 $704,952
======= ======== ======== ======== ========
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
----------------------
1997
----------------------
EQUITY- GROWTH GOVERNMENT
MAGELLAN INCOME COMPANY SECURITIES
FUND FUND FUND FUND
---- ---- ---- ----
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 28,290 $ 14,953 $ 99,838 $ 1,093
------- ------- ------- -------
CONTRIBUTIONS 3,327 1,395 10,763 (74)
------- ------- ------- -------
TRANSFERS
BETWEEN FUNDS 3,119 5,347 (7,185) 119
------- ------- ------- -------
TRANSFERS
BETWEEN PLANS (28) 1 (148) (4)
------- ------- ------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 991 1,085 4,160 89
Interest 9 2 - -
Net appreciation
(depreciation)
in value of
investments 5,535 3,623 10,023 2
-------- ------- ------- -------
6,535 4,710 14,183 91
-------- ------- ------- -------
PAYMENTS TO PLAN
PARTICIPANTS (3,324) (751) (9,741) (121)
--------- ------- ------ -------
PARTICIPANT LOANS (510) (205) (1,518) (4)
--------- ------- ------- -------
ADMINISTRATIVE
EXPENSES (9) (7) (22) -
--------- ------- ------- -------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 37,400 $ 24,586 $106,170 $ 1,100
======== ======== ========= ========
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
----------------------
1997
----------------------
OTC OVERSEAS BALANCED ASSET
PORTFOLIO FUND FUND MANAGER
--------- ---- ---- -------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
beginning of year $ 16,203 $ 23,369 $ 33,216 $ 5,647
-------- -------- -------- --------
CONTRIBUTIONS 1,763 2,685 2,497 455
-------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS 2,188 (2,310) 349 (114)
-------- -------- -------- --------
TRANSFERS
BETWEEN PLANS (8) (22) (62) 5
-------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,389 1,575 3,444 468
Interest - - (45) -
Net apprreciation
(depreciation)
in value
of investments 579 1,138 3,364 559
------- -------- -------- --------
1,968 2,668 6,808 1,027
------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (1,675) (2,432) (3,354) (512)
-------- -------- -------- --------
PARTICIPANT LOANS (256) (484) (424) (53)
------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (3) (6) (10) (1)
------- -------- -------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 20,180 $ 23,468 $ 39,020 $ 6,454
======== ======== ======== ========
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
----------------------
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 $ 6,474 $ 1,555 $ 3,475 $ 610 $130,300
------- ------- ------- ------- --------
CONTRIBUTIONS 961 126 331 65 8,804
------- ------- ------- ------- --------
TRANSFERS
BETWEEN FUNDS 697 43 1,930 362 3,130
------- ------- ------- ------- --------
TRANSFERS
BETWEEN PLANS (1) (2) (47) - (100)
------- ------- ------- ------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 570 124 282 62 -
Interest - - - - 2
Net
appreciation
(depreciation)
in value of
investments 1,039 44 - 7 30,617
------- ------- ------- ------- -------
1,609 168 282 69 30,619
------- ------- ------- ------- -------
PAYMENTS TO PLAN
PARTICIPANTS (754) (211) (1,085) (63) (10,027)
------- ------- ------- ------- --------
PARTICIPANT
LOANS (137) (40) (116) (10) (1,659)
------- ------- ------- ------- --------
ADMINISTRATIVE
EXPENSES (3) - (2) - (25)
------- ------- ------- ------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 8,846 $ 1,639 $ 4,768 $ 1,033 $134,042
======== ======= ======= ======= ========
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
----------------------
1997
----------------------
BLENDED UAL PARTICIPANT
INCOME STOCK LOAN
FUND FUND FUND TOTAL
---- ---- ---- -----
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
beginning of
year $186,919 $ 34,580 $ 20,827 $580,349
-------- -------- -------- --------
CONTRIBUTIONS 14,483 2,672 - 50,253
-------- -------- -------- --------
TRANSFERS
BETWEEN FUNDS (11,842) 14,279 (10,112) -
-------- -------- -------- --------
TRANSFERS
BETWEEN PLANS 21 6 - (389)
-------- -------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - 14,239
Interest 12,470 9 1,644 14,091
Net appreciation
(depreciation)
in value
of investments - 15,807 - 72,337
-------- -------- -------- --------
12,470 15,816 1,644 100,667
-------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (21,532) (3,928) - (60,367)
-------- -------- -------- --------
PARTICIPANT LOANS (2,591) (833) 8,840 -
-------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (87) (48) - (233)
-------- -------- -------- --------
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
end of year $177,841 $ 62,544 $ 21,199 $670,290
======== ======== ======== ========
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
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, as amended.
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
$9,500 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.
The balance in a participant's account is fully vested
and nonforfeitable at all times. 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 $1,347,836 and $612,247 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 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
as 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
as 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 value of the
investment contracts at November 30, 1998 and 1997 were
$179,856 and $185,372 (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. At
November 30, 1998 and 1997, 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. 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. Participants who
have terminated employment are able to defer the
distribution of the 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, or approved leave of absence who maintain an
employer-employee relationship with United Air Lines,
Inc. are permitted as follows:
- 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.
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 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 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.
Management and Salaried Employees' 401(k) Retirement
Savings Plan and the United Air Lines, Inc. Flight
Attendant Employees' 401(k) Retirement Savings Plan.
f. Participant Loans
-----------------
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 contingent 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 June
18, 1996. The Internal Revenue Service has determined that
the 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. 33-44552),
Form S-8 Registration Statement (File No. 33-57331),
Form S-8 Registration Statement (File No. 333-03041), and
Form S-8 Registration Statment (File No. 333-63181)
for the United Air Lines, Inc. Ground Employees' 401(k)
Retirement Savings Plan.
Arthur Andersen LLP
Chicago, Illinois
May 27, 1999