NOTE 5 - EMPLOYEE BENEFIT PLANS

Defined Benefit Pension and Other Postretirement Benefit Plans. The Company’s net periodic benefit cost includes the following components (in millions):


	Pension Benefits				Other Postretirement Benefits
	Three Months Ended September 30,				Three Months Ended September 30,
	2014		2013		2014		2013
Service cost	$	24	$	29	$	5	$	14
Interest cost		50		48		22		29
Expected return on plan assets		(45)		(41)		(1)		(1)
Amortization of unrecognized (gain) loss and prior service cost (credit)		3		8		(19)		2
Settlement gain		(1)		(1)		—		—

Total	$	31	$	43	$	7	$	44


	Pension Benefits				Other Postretirement Benefits
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Service cost	$	73	$	94	$	14	$	42
Interest cost		151		142		66		85
Expected return on plan assets		(134)		(121)		(2)		(2)
Amortization of unrecognized (gain) loss and prior service cost (credit)		8		41		(58)		7
Curtailment loss		—		2		—		—
Settlement gain		(1)		(2)		—		—

Total	$	97	$	156	$	20	$	132

During the three and nine months ended September 30, 2014, the Company contributed $160 million and $278 million, respectively, to its tax-qualified defined benefit pension plans.

Settlement and Plan Remeasurement. During September 2014, the Company recognized a settlement gain of $1 million in earnings resulting from certain lump-sum payments under a separate defined benefit pension plan. Application of settlement accounting required the Company to remeasure the assets and liabilities of this plan in the third quarter of 2014. The Company remeasured the pension plan’s liabilities using an average weighted discount rate of 4.28% compared to the year-end 2013 discount rate of 5.09%. As a result of the settlement, the projected benefit obligation of the plan increased by $53 million and Other comprehensive gain decreased by an actuarial loss of $67 million. These items will also result in an increase of approximately $1 million in the expected net periodic benefit cost for the remainder of 2014. The Company recognizes the earnings impacts of its pension plans in Salaries and related costs in the statements of consolidated operations.

Share-Based Compensation. In February 2014, UAL granted share-based compensation awards pursuant to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan. These share-based compensation awards include approximately 0.3 million shares of restricted stock and 0.5 million restricted stock units (“RSUs”) that vest pro-rata over three years on the anniversary of the grant date. The time-vested RSUs are cash-settled based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. In addition, the Company granted 0.6 million performance-based RSUs that will vest based on the Company’s return on invested capital for the three years ending December 31, 2016. If this performance condition is achieved, cash payments will be made after the end of the performance period based on the 20-day average closing price of UAL common stock immediately prior to the vesting date. The Company accounts for the RSUs as liability awards. The table below presents information related to share-based compensation (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Share-based compensation expense (a)	$	23	$	32	$	69	$	72

	September 30, 2014		December 31, 2013
Unrecognized share-based compensation	$	62	$	44

(a) Includes $3 million of expense recognized in merger integration-related costs for the nine months ended September 30, 2014. Includes $(2) million and $9 million of (benefit) expense recognized in merger integration-related costs for the three and nine months ended September 30, 2013, respectively.

Profit Sharing Plans. Substantially all employees participated in profit sharing plans, which depending on the work group, pay from 5% to 20% of total pre-tax earnings, excluding special items and share-based compensation expense, to eligible employees when pre-tax profit, excluding special items, profit sharing expense and share-based compensation program expense, exceeds $10 million. Eligible U.S. co-workers in each participating work group received a profit sharing payout using a formula based on the ratio of each qualified co-worker’s annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups. The international profit sharing plan paid eligible non-U.S. co-workers the same percentage of eligible pay that is calculated under the U.S. profit sharing plan for management and administrative employees. Profit sharing expense is recorded as a component of Salaries and related costs in the consolidated statements of operations.