UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year end December 31, 1999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
US Airways, Inc. Employee Savings Plan
(Full title of the plan)
US Airways Group, Inc.
(Issuer of securities held pursuant to the plan noted above)
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
Commission file number: 1-8444
US Airways, Inc.
Employee Savings Plan
Financial Statements
and Supplemental Schedule
December 31, 1999 and 1998
(With Independent Auditors'
Report Thereon)
US Airways, Inc.
Employee Savings Plan
Table of Contents
-----------------
Page
----
Independent Auditors' Report 1
Financial Statements
Statements of Net Assets Available for Plan
Benefits as of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1999 and 1998 3
Notes to Financial Statements 4 - 11
Supplemental Schedule I
Schedule of Assets Held for Investment Purposes
At End of Year 12 - 13
Signature 14
Exhibit 23
Consent of Independent Auditors 15
Independent Auditors' Report
The Plan Administrator and Participants
US Airways, Inc. Employee Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the US Airways, Inc. Employee
Savings Plan (the Plan), as of December 31, 1999 and 1998, 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's management. 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 management, 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 Plan as of December 31, 1999
and 1998, and the changes in net assets available for plan
benefits for the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedule
of assets held for investment purposes as of December 31, 1999 is
presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
McLean, VA KPMG LLP
June 23, 2000
US Airways, Inc.
Employee Savings Plan
Statements of Net Assets Available for Plan Benefits
----------------------------------------------------
December 31,
--------------------
1999 1998
---- ----
Assets
Investments (See Notes 3 and 4) $ 763,266,590 $ 616,101,132
Receivables:
Participant contributions 2,077,274 1,708,145
Employer contributions 536,765 31,994,880
----------- -----------
Total receivables 2,614,039 33,703,025
----------- -----------
Total assets 765,880,629 649,804,157
----------- -----------
Liabilities
Accrued expenses 31,384 27,203
----------- -----------
Total liabilities 31,384 27,203
----------- -----------
Net assets available for plan benefits $ 765,849,245 $ 649,776,954
=========== ===========
See accompanying Notes to Financial Statements.
US Airways, Inc.
Employee Savings Plan
Statements of Changes in Net Assets Available for Plan Benefits
---------------------------------------------------------------
Years ended December 31,
------------------------
1999 1998
---- ----
Additions to net assets attributable to:
Net appreciation in fair value
of investments (See Note 3) $ 31,921,590 $ 59,028,762
Dividends 44,216,876 21,688,882
Interest 1,509,214 1,385,995
Interest income on participant
loans 2,186,547 1,812,876
----------- -----------
Total investment income 79,834,227 83,916,515
----------- -----------
Participant contributions 51,506,111 45,158,894
Employer contributions 13,388,933 43,682,580
Rollover contributions 1,422,990 349,777
----------- -----------
Total contributions 66,318,034 89,191,251
----------- -----------
Total additions 146,152,261 173,107,766
----------- -----------
Deductions from net assets attributable to:
Benefits paid to participants 29,936,055 24,384,025
Administrative expenses 122,875 119,050
----------- -----------
Total deductions 30,058,930 24,503,075
----------- -----------
Net increase 116,093,331 148,604,691
Net assets available for plan benefits:
Beginning of year 649,776,954 501,172,128
Transfer from (to) US Airways, Inc.
401(k) Savings Plan (15,034) 135
Transfer from (to) US Airways, Inc.
Supplemental Executive Defined (6,006) -
Contribution Plan
----------- -----------
End of year $ 765,849,245 $ 649,776,954
=========== ===========
See accompanying Notes to Financial Statements.
3
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
1. Description of Plan
The following description of the US Airways, Inc. Employee
Savings Plan (the Plan), provides only general information.
Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution plan intended to be a
qualified cash or deferred compensation arrangement under
Section 401(k) of the Internal Revenue Code (IRC), as
amended, and to qualify under Section 401(a) of the IRC. The
Plan was established on January 1, 1993 for certain employees
of US Airways, Inc. (US Airways or the Company). All non-
contract employees and certain other employees who are
covered by a collective bargaining agreement which provides
for their participation in the Plan, who are at least 18
years of age, have completed 90 days of service and who are
not covered by another 401(k) plan sponsored by US Airways,
except for those individuals not covered by the United States
income tax laws, are eligible to participate in the Plan.
The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
US Airways, the plan administrator, is responsible for the
content and issuance of the Plan's financial statements. US
Airways Group, Inc. (US Airways Group) is the issuer of
certain common stock securities held pursuant to the Plan.
(b) Contributions
Eligible US Airways employees electing to participate in the
Plan make contributions to the Plan via payroll deductions.
Each year Plan participants may contribute up to 13 percent
of pre-tax annual compensation, as defined in the Plan,
unless the participant is classified as a highly compensated
employee, as defined by the IRC. The contribution percentage
may not exceed a certain percentage of pre-tax annual
compensation, as determined by the plan administrator, if the
participant is a highly compensated employee. The amount of
contribution that may be made by a participant to the Plan
shall be a whole percentage of a participant's compensation.
Individual participant contributions for 1999 and 1998 could
not exceed the statutory limit of $10,000 per year. The
Company makes a 50% matching contribution each pay period up
to a maximum of two percent of the participant's
compensation.
4
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
If US Airways' parent company, US Airways Group, achieves
certain pre-tax margin levels, the Company also makes an
annual profit sharing contribution to the Plan on behalf of
each participant. In March 1999, the Company made profit
sharing contributions in the amount of $31.5 million to
participant accounts related to the 1998 plan year. These
contributions are included in the Employer contribution
receivable in the December 31, 1998 statement of net assets
available for plan benefits. The Company did not make any
profit sharing contributions related to the 1999 plan year.
(c) Vesting
Participants are immediately vested in their contributions,
plus actual earnings thereon. The Company's matching and
profit sharing contributions, plus actual earnings thereon,
become 100 percent vested after two years of continuous
service.
(d) Investment Options
The Company selects the number and type of investment options
available. Fidelity Institutional Retirement Services
Company, the Plan's Recordkeeper, is responsible for
maintaining an account balance for each participant.
Fidelity Management Trust Company is the Plan Trustee. Each
participant instructs the Recordkeeper how to allocate their
participant and Company contributions. Participants may
invest their contributions in any combination among the
investment options available in increments of five percent.
If a participant fails to instruct the Recordkeeper on how to
allocate the contributions, then their contributions will be
invested in a cash equivalent fund.
The Recordkeeper values account balances daily. Each account
balance is based on the value of the underlying investments
in each account. Generally, participants may elect to change
how future contributions are allocated or may transfer
current account balances among investment options.
As of December 31, 1999, the Company offered thirteen
investment options in the form of ten individual investment
options and three diversified portfolio mixes, which are pre-
selected combinations of mutual funds.
(e) Participant Withdrawals
All participants can borrow from their account, but may have
only one loan outstanding at any given point in time.
Participants may borrow from their accounts a minimum of
$1,000 up to a maximum amount equal to the lesser of $50,000
5
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
(reduced by the highest outstanding loan balance from the
Plan or any other plan maintained by the Company during the
preceding twelve month period) or 50 percent of their vested
separate account balance as of the date of the loan. Loan
transactions are treated as transfers between the investment
funds and the participant loans receivable. Loan terms
cannot exceed five years, except for loans obtained for the
purchase of a primary residence. The loans are secured by
the balance in the participant's account and bear interest at
a rate commensurate with local prevailing market rates for
loans made under similar circumstances. Principal and
interest are paid ratably through payroll deductions.
Upon approval by the plan administrator, a participant may
withdraw his or her contributions from the account if it is
determined that the withdrawal is necessary to meet an
immediate and heavy financial need of the participant under
the deemed hardship standards set forth in the Plan.
(f) Payment of Benefits
Upon termination of service due to death, disability,
retirement or other termination of employment, distributions
to a participant or beneficiary is made as soon as reasonably
practicable. If the participant's account balance is less
than $5,000, a lump sum distribution is automatic upon
separation. If the participant's account balance is greater
than $5,000, the distribution can be deferred or provided in
cash as a lump sum.
(g) Forfeited Accounts
At December 31, 1999 forfeited nonvested accounts totaled
$252,725. These accounts will be used to reduce future
employer contributions. Also, in 1999, employer
contributions were reduced by $129,403 from forfeited
nonvested accounts.
(h) Administrative Expenses
Certain administrative expenses of the Plan are paid by US
Airways.
2. Summary of Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
6
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
(b) Investment Valuation and Income Recognition
The assets of the US Airways Common Stock Fund, Capital
Growth Mix Portfolio, Moderation Mix Portfolio, Income Mix
Portfolio, and Fixed Income Fund are commingled with certain
assets of other defined contribution plans sponsored by US
Airways. The Plan's Recordkeeper separately identifies the
assets of each plan participant who has an interest in the
commingled funds.
Fair values for assets were determined by quoted market
values, when available. The Plan presents in its statement
of changes in net assets the net appreciation (depreciation)
in the fair value of its investments, which consists of the
realized gains or losses and unrealized appreciation
(depreciation) on those investments. The Plan's investments
in guaranteed investment contracts (GICs) are stated at
contract value (See Note 4). Purchases and sales of
investments are recorded on a trade-date basis. Interest and
dividend income are recorded on the accrual basis.
(c) Payment of Benefits
Benefits are recorded as deductions when paid.
(d) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
3. Investments
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3
(SOP 99-3),"Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters."
SOP 99-3 simplifies the disclosure for certain investments
and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the Plan year ending
December 31, 1999. Accordingly, information previously
required to be disclosed about participant-directed fund
investment programs is not presented in the Plan's 1999
financial statements. Certain 1998 amounts have been
reclassified to conform with 1999 classifications.
7
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
The following table presents the fair value of individual
investments which exceeded 5% of the Plan's net assets:
December 31,
-------------------
1999 1998
---- ----
Investments:
Fidelity Magellan Fund $ 325,372,415 $ 234,965,965
Fidelity Equity Income Fund 103,913,861 97,477,842
Fidelity Spartan U.S. Equity
Index Portfolio 97,154,090 73,632,385
Fidelity Retirement
Government Money Market
Portfolio 43,262,002 -
US Airways Common Stock
Fund 43,147,749 59,441,382
During 1999 and 1998, the Plan's investments (including gains
and losses on investments bought and sold, as well as held
during the year) appreciated in value by $31,921,590 and
$59,028,762, respectively, as follows:
Year Ended December 31,
-----------------------
1999 1998
---- ----
Shares in Registered
Investment Companies $ 54,552,302 $ 70,277,055
US Airways Common Stock Fund (20,721,116) (10,694,553)
US Government Securities and
US Investment Grade Fixed
Income Securities (1,909,596) (553,740)
---------- ----------
$ 31,921,590 $ 59,028,762
========== ==========
4. Investment Contracts with Insurance Companies
The Plan had an interest in a portfolio of GICs with certain
insurance companies of $28,080,598 and $24,265,211 at
December 31, 1999 and 1998, respectively. The GICs are
benefit responsive because they provide reasonable access by
Plan participants to invested funds. Therefore, in
accordance with the American Institute of Certified Public
Accountant's Statement of Position 94-4, "Application of Fair
8
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
Value and Contract Value Reporting for Defined Contribution
Plan Investments," the interest in these contracts is
disclosed in the financial statements at contract value which
equals contributions made, plus accrued interest at the
specified rate, less plan withdrawals and administrative
expenses. The portfolio's contract value at December 31,
1999 and 1998 was $99,218,456 and $90,475,438, respectively.
The average portfolio crediting interest rate was
approximately 5.8% and 5.9% at December 31, 1999 and 1998,
respectively. The portfolio average yield was approximately
5.9% and 6.2% for the years ended December 31, 1999 and 1998,
respectively.
For GICs with variable rates (approximately 77% of the
portfolio, as measured by contract values), crediting rates
are reset either quarterly or bi-annually. Crediting rates
are determined based upon the yields to maturity of the
underlying assets, net of certain origination fees.
No valuation reserves were recognized related to the
portfolio as all insurance companies in the portfolio had
received an investment grade rating from nationally
recognized rating agencies as of December 31, 1999 and 1998.
The fair value of the portfolio was $98,524,949 and
$90,895,034 at December 31, 1999 and 1998, respectively.
5. Related Party Transactions
Certain Plan investments are shares of mutual funds managed
by Fidelity Management Trust Company. Fidelity Management
Trust Company is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest.
6. Plan Termination
Although it has not expressed any intent to do so, the
Company reserves the right to terminate the Plan at any time
subject to the provisions of ERISA and applicable collective
bargaining agreements. Upon termination of the Plan,
participants will become 100 percent vested in their
accounts. In addition the following actions shall be taken
for the benefit of participants:
(a) As of the termination date, each investment fund shall be
valued. In determining the net worth of the investment funds
there shall be included as a liability such amounts as shall
be necessary to pay all expenses in connection with the
termination of the investment
9
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
funds and the liquidation and distribution of the
property of the funds, as well as other expenses,
whether or not accrued, and shall include as an asset
all accrued income.
(b) All participant accounts must be disposed of in the
forms of payment available under the Plan, unless the
participant's spouse consents to another form of
distribution.
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for
plan benefits per the financial statements to the Form 5500:
December 31,
-------------------
1999 1998
---- ----
Net assets available for plan
benefits per the financial
statements $765,849,245 $649,776,954
Amounts allocated to withdrawing
participants (56,309) (119,498)
----------- -----------
Net assets available for plan
benefits per the Form 5500 $765,792,936 $649,657,456
=========== ===========
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
Year Ended
December 31, 1999
-----------------
Benefits paid to participants per the
financial statements $29,936,055
Add: Amounts allocated to withdrawing
participants at December 31, 1999 56,309
Less: Amounts allocated to withdrawing
participants at December 31, 1998 (119,498)
----------
Benefits paid to participants per the
Form 5500 $29,872,866
==========
10
US Airways, Inc.
Employee Savings Plan
Notes to Financial Statements
-----------------------------
(Continued)
Amounts allocated to withdrawing participants are recorded on
the Form 5500 for benefit claims that have been processed and
approved for payment prior to December 31 but not yet paid as
of that date.
8. Tax Status
The Internal Revenue Service has determined and informed the
Company by a letter dated July 22, 1995, that the Plan and
related trust are designed in accordance with applicable
sections of the IRC. The Plan has been amended since
receiving the determination letter. However, the Plan
administrator and the Plan's legal counsel believe that the
Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
9. Transfers from and to the US Airways, Inc. 401(k) Savings
Plan and to the US Airways, Inc. Supplemental Executive
Defined Contribution Plan
Transfers from and to the US Airways, Inc. 401(k) Savings
Plan and to the US Airways, Inc. Supplemental Executive
Defined Contribution Plan represent:
(a) corrections of insignificant recordkeeping errors, and
(b) changes in participants' class or craft, thereby changing
the plan for which they are qualified to participate.
10. Subsequent Events
Effective January 1, 2000, profit sharing contributions will
only be made on behalf of eligible employees who are covered
by a collective bargaining agreement between US Airways and
the International Association of Machinists covering fleet
service agents and between US Airways and the Transport
Workers Union.
US Airways Group, US Airways parent corporation, has entered
into an agreement and plan of merger with a subsidiary of UAL
Corporation, United Airlines' parent corporation.
Consummation of the merger is subject to various conditions
including, but not limited to, the receipt of regulatory
approvals and approval by the stockholders of US Airways
Group. At this time, US Airways cannot predict the outcome
of the regulatory and other approvals necessary for the
consummation of the merger, nor can US Airways predict
what effect, if any, the merger might have on the Plan.
11
Supplemental Schedule I
US Airways, Inc. Page 1 of 2
Employee Savings Plan
Schedule of Assets Held for Investment Purposes At End of Year
--------------------------------------------------------------
December 31, 1999
Identity Description Current
of Issue of Investment Value
-------- ------------- -------
Fidelity Magellan Fund* Shares in registered $ 325,372,415
investment company
Fidelity Equity Shares in registered 103,913,861
Income Fund* investment company
Fidelity Spartan U.S. Equity Shares in registered 97,154,090
Index Portfolio* investment company
Fidelity Retirement Shares in money 43,262,002
Government Money market fund
Market Portfolio*
US Airways Common Stock Fund* Common stock of employer's 43,147,749
parent company, US Airways
Group, Inc., and short-
term investments
Capital Growth Mix Shares in registered 37,497,650
Portfolio* investment companies
Participant Loans* Interest rates range 28,139,687
from 7% to 10% per anum
(table continued on next page)
* Party in interest.
See accompanying Independent Auditors' Report.
12
Supplemental Schedule I
US Airways, Inc. Page 2 of 2
Employee Savings Plan
Schedule of Assets Held for Investment Purposes At End of Year
--------------------------------------------------------------
(Continued)
December 31, 1999
Identity Description Current
of Issue of Investment Value
-------- ------------- -------
Fixed Income Fund* Guaranteed Investment 28,080,598
Contracts, interest rates
range from 5.35% to 7.11%
per annum
MAS Domestic Fixed Income US Government securities 22,889,682
Portfolio Institutional and US investment grade
fixed income securities
Moderation Mix Portfolio* Shares in registered 12,014,579
investment companies
Neuberger & Berman Shares in registered 10,568,154
Guardian Trust investment companies
Putnam International Shares in registered 6,981,749
Growth A Fund investment companies
T. Rowe Price Small Cap Shares in registered 2,225,014
Stock Fund investment companies
Income Mix Portfolio* Shares in registered 2,019,360
investment companies
-----------
Total Investments $ 763,266,590
===========
* Party in interest.
See accompanying Independent Auditors' Report.
13
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
US Airways, Inc.
Employee Savings Plan
By: /s/ Anita P. Beier
----------------------
Anita P. Beier
Controller
US Airways Group, Inc.
June 28, 2000
14