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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.
Management and Salaried 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. Management and Salaried
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. Management
and Salaried 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.
Management and Salaried
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.
----------------------
MANAGEMENT AND SALARIED 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 $ 80,978 $ 56,760
Equity-Income Fund 43,815 39,851
Growth Company Fund 161,627 147,023
Government Securities Fund 6,622 2,205
OTC Portfolio 34,787 29,254
Overseas Fund 36,897 36,567
Balanced Fund 69,386 58,457
Asset Manager 13,385 11,747
Asset Manager: Growth 20,191 16,971
Asset Manager: Income 3,307 2,521
Retirement Money Market 12,680 7,565
Portfolio
U. S. Bond Index Portfolio 5,597 2,458
U.S. Equity Index Portfolio 236,757 194,677
Stated Return Fund 191 -
Blended Income Fund 200,372 194,639
UAL Stock Fund 48,816 51,796
Participant Loan Fund 18,016 15,902
-------- --------
NET ASSETS AVAILABLE FOR PLAN $993,424 $868,393
BENEFITS ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 56,760 $ 39,851 $147,023 $ 2,205
-------- -------- -------- -------
CONTRIBUTIONS
Employer 57 24 39 2
Employee 6,245 3,533 10,577 288
------- -------- -------- -------
6,302 3,557 10,616 290
------- -------- -------- -------
TRANSFERS
BETWEEN FUNDS 8,452 (1,313) (10,743) 4,129
------- -------- -------- -------
TRANSFERS
BETWEEN PLANS (247) 135 (154) (22)
------- ------- -------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 4,346 2,402 15,383 238
Interest - 54 - -
Net appreciation
(depreciation)
in value of
investments 9,473 2,108 9,182 116
------- ------ ------- -------
13,819 4,564 24,565 354
------- ------- ------- -------
PAYMENTS TO PLAN
PARTICIPANTS (3,264) (2,651) (8,207) (318)
------- ------- ------- --------
PARTICIPANT LOANS (830) (317) (1,454) (16)
------- ------- ------- --------
ADMINISTRATIVE
EXPENSES (14) (11) (19) -
------- ------- ------- --------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
end of year $ 80,978 $ 43,815 $161,627 $ 6,622
======= ======== ======== =======
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 29,254 $ 36,567 $ 58,457 $ 11,747
------- ------- -------- -------
CONTRIBUTIONS
Employer 19 12 8 10
Employee 3,342 3,193 3,654 808
------- ------- ------- -------
3,361 3,205 3,662 818
------- ------- ------- -------
TRANSFERS
BETWEEN FUNDS (1,054) (4,389) 1,217 26
------- ------- ------- -------
TRANSFERS
BETWEEN PLANS (31) (76) 41 (56)
------- ------- ------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 3,187 1,838 9,319 1,102
Interest - - - -
Net appreciation
(depreciation)
in value of
investments 2,149 1,930 1,076 451
------ ----- ----- ------
5,336 3,768 10,395 1,553
------ ----- ------ ------
PAYMENTS TO PLAN
PARTICIPANTS (1,754) (1,816) (3,892) (590)
------- ------- ------- -------
PARTICIPANT LOANS (321) (358) (483) (111)
------- ------- ------- -------
ADMINISTRATIVE
EXPENSES (4) (4) (11) (2)
------- ------- ------- -------
NET ASSETS
AVAILABLE
FOR PLAN BENEFITS,
end of year $ 34,787 $ 36,897 $ 69,386 $ 13,385
======== ======== ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 16,971 $ 2,521 $ 7,565 $ 2,458 $194,677
-------- ------- ------- ------- -------
CONTRIBUTIONS
Employer 23 2 10 3 27
Employee 2,119 226 1,031 400 9,813
------- ------- ------- ------ -------
2,142 228 1,041 403 9,840
------- ------- ------- ------ -------
TRANSFERS
BETWEEN FUNDS (286) 632 5,264 2,853 (582)
------- ------- ------- ------ -------
TRANSFERS
BETWEEN PLANS (134) (8) (15) (2) 116
------- ------- ------- ------ -------
RESULTS OF
INVESTMENT ACTIVITY
Dividends 1,851 196 532 249 -
Interest 16 - 48 26 -
Net appreciation
(depreciation)
in value of
investments 662 70 - 109 45,689
------- ------- ------- ------- -------
2,529 266 580 384 45,689
------- ------- ------- ------- -------
PAYMENTS TO PLAN
PARTICIPANTS (877) (312) (1,534) (486) (10,814)
------- ------- -------- ------- --------
PARTICIPANT LOANS (150) (20) (217) (13) (2,140)
------- ------- -------- ------- --------
ADMINISTRATIVE
EXPENSES (4) - (4) - (29)
------- ------- -------- ------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 20,191 $ 3,307 $ 12,680 $ 5,597 $236,757
======== ======= ======== ======= ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 - $194,639 $ 51,796 $ 15,902 $868,393
-------- -------- ------- ------ -------
CONTRIBUTIONS
Employer - 673 62 - 971
Employee - 12,156 3,816 - 61,201
-------- -------- ------- ------ -------
- 12,829 3,878 - 62,172
-------- -------- ------- ------ -------
TRANSFERS
BETWEEN FUNDS (55) (6,439) 10,645 (8,357) -
-------- -------- ------- ------- -------
TRANSFERS
BETWEEN PLANS 237 39 (122) - (299)
-------- -------- ------- ------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - - 40,643
Interest 9 12,587 67 1,334 14,141
Net appreciation
(depreciation)
in value of
investments - - (13,959) - 59,056
-------- -------- -------- -------- -------
9 12,587 (13,892) 1,334 113,840
-------- -------- -------- -------- -------
PAYMENTS TO PLAN
PARTICIPANTS - (11,257) (2,635) (19) (50,426)
-------- -------- --------- --------- --------
PARTICIPANT LOANS - (1,944) (782) 9,156 -
-------- -------- --------- -------- --------
ADMINISTRATIVE
EXPENSES - (82) (72) - (256)
-------- -------- --------- -------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 191 $200,372 $ 48,816 $ 18,016 $993,424
======== ======== ======== ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 42,927 $ 23,553 $ 137,108 $ 1,893
-------- ------- -------- -------
CONTRIBUTIONS
Employer 23 11 20 -
Employee 2,876 1,944 7,495 18
-------- ------- ------- --------
2,899 1,955 7,515 18
-------- ------- ------- --------
TRANSFERS
BETWEEN FUNDS 3,671 8,711 (9,368) 269
-------- ------- -------- --------
TRANSFERS
BETWEEN PLANS (12) (9) 8 3
-------- ------- -------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,444 1,667 5,486 130
Interest 2 13 8 -
Net appreciation
(depreciation)
in value of
investments 8,166 5,790 13,926 2
------- -------- -------- --------
9,612 7,470 18,790 132
------- -------- -------- --------
PAYMENTS TO PLAN
PARTICIPANTS (1,797) (1,608) (5,721) (103)
------- -------- -------- --------
PARTICIPANT LOANS (531) (213) (1,288) (7)
------- -------- -------- --------
ADMINISTRATIVE
EXPENSES (9) (9) (21) -
------- ------- ------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 56,760 $ 39,851 $147,023 $ 2,205
======== ======== ======== =======
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 22,691 $ 34,398 $ 48,194 $ 9,425
-------- ------- -------- --------
CONTRIBUTIONS
Employer 10 8 4 7
Employee 1,498 2,389 2,114 645
------- ------- ------- --------
1,508 2,397 2,118 652
------- ------- ------- --------
TRANSFERS
BETWEEN FUNDS 3,697 (1,808) 955 433
------- ------- ------- --------
TRANSFERS
BETWEEN PLANS (8) (11) (19) (16)
------- ------- ------- --------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,865 2,117 4,912 789
Interest 1 1 - -
Net appreciation
(depreciation)
in value of 673 1,584 4,883 967
investments -------- ------- ------- --------
2,539 3,702 9,795 1,756
-------- ------- ------- --------
PAYMENTS TO PLAN
PARTICIPANTS (939) (1,660) (2,128) (465)
-------- ------- ------- --------
PARTICIPANT LOANS (231) (446) (447) (36)
-------- ------- ------- --------
ADMINISTRATIVE
EXPENSES (3) (5) (11) (2)
-------- ------- ------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 29,254 $ 36,567 $ 58,457 $ 11,747
======== ======== ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $ 12,539 $ 2,314 $ 5,489 $ 2,290 $148,005
-------- ------ ------- -------- --------
CONTRIBUTIONS
Employer 13 1 6 1 11
Employee 1,275 151 543 12 5,724
------ ------ ------ ------- -------
1,288 152 549 13 5,735
------ ------ ------ ------- -------
TRANSFERS
BETWEEN FUNDS 1,493 (35) 2,276 193 5,297
------ ------ ------ ------- -------
TRANSFERS
BETWEEN PLANS (8) - 1 (2) (14)
------ ------ ------- ------- -------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends 1,043 165 391 155 -
Interest - - 9 (1) 1
Net appreciation
(depreciation)
in value of
investments 1,879 68 - 7 43,239
------ ------ ------ ------- --------
2,922 233 400 161 43,240
------ ------ ------ ------- --------
PAYMENTS TO PLAN
PARTICIPANTS (1,126) (122) (1,067) (195) (5,810)
------- ------ ------- ------- --------
PARTICIPANT LOANS (133) (21) (81) (3) (1,751)
------- ------ ------- ------- --------
ADMINISTRATIVE
EXPENSES (3) - (2) - (24)
------- ------ ------- ------- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $ 16,971 $ 2,521 $ 7,565 $ 2,458 $194,677
======== ======= ======= ======= ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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 $199,006 $ 30,276 $ 14,864 $ 735,002
-------- --------- -------- ---------
CONTRIBUTIONS
Employer 438 27 - 580
Employee 9,522 1,872 - 38,078
-------- --------- -------- ---------
9,960 1,899 - 38,658
-------- --------- -------- ---------
TRANSFERS
BETWEEN FUNDS (15,228) 7,150 (7,706) -
-------- ---------- -------- ---------
TRANSFERS
BETWEEN PLANS 506 (31) - 388
-------- -------- --------- ---------
RESULTS OF
INVESTMENT
ACTIVITY
Dividends - - - 20,164
Interest 12,859 12 1,144 14,049
Net appreciation
(depreciation)
in value of
investments - 14,161 - 94,715
------- -------- --------- ---------
12,859 14,173 1,143 128,927
------- -------- --------- ---------
PAYMENTS TO PLAN
PARTICIPANTS (10,560) (1,062) - (34,363)
-------- -------- --------- ---------
PARTICIPANT LOANS (1,813) (569) 7,570 -
-------- -------- --------- ---------
ADMINISTRATIVE
EXPENSES (92) (39) - (220)
-------- -------- --------- ---------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
end of year $194,639 $ 51,796 $ 15,902 $868,393
======== ======== ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
UNITED AIR LINES, INC.
----------------------
MANAGEMENT AND SALARIED 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. Management and Salaried
Employees' 401(k) Retirement Savings Plan (the "Plan")
covers management and salaried employees on the first
day of the calendar month following the date of hire
and meteorologist employees of United Air Lines, Inc.
("United") who 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 $2,129,843 and $1,311,134 for
1998 and 1997, respectively, which were transferred
from other qualified plans as rollovers under Internal
Revenue Code Sections 402(c) and 408(d).
Effective December 1, 1995, the Plan was amended to
provide that salaried employees who are hired on or
after February 1, 1994, are eligible to receive a company
contribution equivalent to two percent after
completing two years of credited service. Eligible
employees are one hundred percent vested in the company
contribution at the time made.
Contributions on the Statement of Changes in Net Assets
Available for Plan Benefits for the years ended
November 30, 1998 and 1997, have been reduced by an
accrual for the returns of excess annual additions of
$2,399,052.66 and $12,051,745.07, for the
respective plan years, as required under Internal
Revenue Code Section 415(c).
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 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 $200,758 and $196,365 (in
thousands), respectively. The average yield for the
year 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 market-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' 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 Company 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. 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 amount 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 July
16, 1996. The Internal Revenue Service has determined
that the Plan, as written, is designed in accordance with
applicable sections of the Internal Revenue Code.
4.
SUBSEQUENT EVENT
----------------
Effective 1/1/99, Salaried Administration employees
hired on or after 2/1/94 no longer receive the 2%
contribution to the 401(k) plan but will participate in
the Management and Salaried Defined Benefit Plan.
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-
38613), and Form S-8 Registration Statement (File No.
333-63185) for the United Air Lines, Inc. Management
and Salaried Employees' 401(k) Retirement Savings
Plan.
Arthur Andersen LLP
Chicago, Illinois
May 27, 1999