SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
Commission file number 33-14058
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Michael Baker Corporation Employee Stock Ownership Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Michael Baker Corporation
Airport Office Park, Building 3
420 Rouser Road
Coraopolis, PA 15108
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 1999 AND 1998
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits -
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 1999 and 1998
Notes to Financial Statements
Additional Information:*
Schedule of Assets Held for Investment Purposes -
December 31, 1999
Schedule of Reportable Transactions -
Year Ended December 31, 1999
* Other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the Michael Baker Corporation
Employee Stock Ownership Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Michael Baker Corporation Employee Stock Ownership Plan (the Plan) at
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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. These supplemental
schedules and fund information are the responsibility of the Plan's management.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
June 13, 2000
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
DECEMBER 31,
1999 1998
ASSETS
Investments, at fair value:
Investments in common stock of
Michael Baker Corporation $ 23,808,516 $ 36,559,633
Investments in mutual funds managed by
Putnam Investments, Inc. 77,592,519 54,339,202
Participant loans (market value approximates
cost) 249,998 118,029
------------ ------------
Total investments 101,651,033 91,016,864
------------ ------------
Receivables:
Securities sold/accrued interest 6,809 132,790
------------ ------------
Total receivables 6,809 132,790
------------ ------------
Total assets 101,657,842 91,149,654
------------ ------------
LIABILITIES
Accounts Payable 11,192 112,881
------------ ------------
Total liabilities 11,192 112,881
------------ ------------
Net assets available for benefits $101,646,650 $ 91,036,773
------------ ------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 6,195,680 $ 3,732,104
Net appreciation (depreciation)
in fair value of investments (1,665,087) 3,365,750
------------- -------------
Total investment income 4,530,593 7,097,854
------------- -------------
Participant contributions 9,205,299 6,985,999
Employer contributions 4,664,486 3,657,955
Other 2,470 --
------------- -------------
Total 13,872,255 10,643,954
------------- -------------
Total additions 18,402,848 17,741,808
------------- -------------
Deductions from net assets attributed to:
Participant withdrawals 7,101,485 6,256,322
Rollovers 683,482 --
Administrative fees 8,004 8,061
------------- -------------
Total deductions 7,792,971 6,264,383
------------- -------------
Net increase 10,609,877 11,477,425
------------- -------------
Net assets available for benefits:
Beginning of year 91,036,773 79,559,348
------------- -------------
End of year $101,646,650 $ 91,036,773
============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
GENERAL
The following description of the Michael Baker Employee Stock Ownership
Plan (the ESOP, or the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
The ESOP is a defined contribution plan that provides all eligible
employees of Michael Baker Corporation (the Company) with an opportunity to
accumulate additional retirement benefits as well as invest in Company
stock. The Plan is subject to provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA).
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings,
and charged with an allocation of certain administrative fees. Allocations
are based on participant earnings or account balances, as defined. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
CONTRIBUTIONS
Participants contribute to the ESOP through a Section 401(k) Employee
Salary Redirection Election, whereby the participants may choose to have a
percentage of their salaries (including commissions) withheld and
contributed to the ESOP up to the annual limitation established by the
Internal Revenue Service or 15 percent of the participant's salary. The
maximum amount of a participant's salary which may be eligible for
withholding for any Plan year cannot exceed $160,000. The ESOP also allows
participants to roll over funds from a previous employer's tax-qualified
plan or tax-qualified individual retirement account.
During 1998 and 1999, the Company acquired GeoResearch Inc. and Steen
Production Service, Inc., respectively. During 1999, the eligible
participants made rollover contributions to the Plan of approximately $1.6
million.
COMPANY MATCHING CONTRIBUTIONS
Under the provisions of the Plan, the Company will make a matching
contribution to the participants' accounts in an amount of 100 percent of
the first 5 percent and 50 percent of the next 1 percent of eligible salary
contributed by each participant. Salary amounts over the 6 percent limit
are not required to be matched by the Company. Effective January 1, 1999,
25 percent of the matching contribution is invested in the Company's Common
Stock or Series B Common Stock and 75 percent is invested in accordance
with the participants' investment elections for participant contributions.
From July 1, 1997, through December 31, 1998, 50 percent of the matching
contribution was invested in the Company's Common Stock or Series B Common
Stock and 50 percent was invested in accordance with the participants'
investment elections for participant contributions.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
The Board of Directors of the Company is authorized to make additional
discretionary contributions to the ESOP from time to time. However, no
discretionary contributions were made in 1999 or 1998.
VESTING
Participants are vested immediately in their contributions plus actual
earnings thereon. All amounts in the participants' ESOP accounts that are
attributable to the transfer of funds from a previously terminated
retirement plan, the rollover from a previous employer's tax-qualified
plan, and participant contributions are 100 percent vested and
nonforfeitable at all times.
All Company matching contributions will become 100 percent vested upon
attainment of 3 years of service with the Company or earlier, upon
attainment of normal retirement date, disability or death. If a participant
leaves employment with the Company before attaining a vested interest in
his or her Company contribution, the contributions are forfeited and will
reduce future Company matching contributions.
DISTRIBUTIONS
The Plan provides for distribution of benefits upon retirement, total and
permanent disability, death, or termination of employment for any other
reason. The amount of distribution the participant or his or her
beneficiary is entitled to is based on the vesting requirements discussed
above. All distributions will be made in the form of a single, lump-sum
distribution or in substantially equal annual installments over a period
not exceeding 5 years. Distributions may be made in cash and/or shares of
common stock, at the discretion of the participant.
PARTICIPANT LOANS
A participant may borrow money from the portion of his or her account
attributable to his or her own 401(k) plan contributions. Participant loans
may be obtained in the sole event of immediate and heavy financial need,
where the participant lacks other available resources. Loan amounts shall
not exceed the lesser of: (a) 50 percent of the participant's vested
interest in the participant's account, (b) $50,000 adjusted for
pre-existing loans, or (c) such amount as may be determined by the Plan
Administrator. All loans will be drawn against the participant's account
among the respective investment options as directed, and are secured by the
assets within the participant's accounts. Interest rates on outstanding
notes receivable ranged from 8.75 percent to 12.62 percent at December 31,
1999.
FORFEITED ACCOUNTS
At December 31, 1999 and 1998, forfeited nonvested accounts totaled $67,968
and $14,508, respectively. These accounts will be used to reduce future
employer contributions. Also, in 1999 and 1998, employer contributions were
reduced by $195,966 and $536,795, respectively, from forfeited nonvested
accounts.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
COMMON STOCK
The ESOP enables participating employees to acquire an equity interest in
Michael Baker Corporation (the Company); as such, contributions to the ESOP
can be invested in the Company's common stock (Common Stock and Series B
Common Stock).
The ESOP's investment in the Company's common stock comprises 2,370,262
(cost of $14,886,107) and 2,526,230 (cost of $15,455,695) shares of Common
Stock and 1,223,477 (cost of $7,436,107) shares of Series B Common Stock at
December 31, 1999 and 1998, respectively.
INVESTMENT OPTIONS
Each participant may direct Putnam Investments, Inc. (Putnam) to invest
certain portions of his or her account in investment funds managed by
Putnam. Investment funds available to participants are the Michael Baker
Common Stock Fund (invests in common stock of the Company), the Putnam New
Opportunities Fund (invests in long-term growth stocks within emerging
industries), Putnam International Growth Fund (invests in diversified
corporate stocks outside of North America), Putnam Voyager Fund (invests in
diversified corporate stocks), Putnam Growth & Income Fund (invests in
long-term growth stocks), George Putnam Fund of Boston (invests in
diversified capital growth and current income stocks and bonds), Putnam
Income Fund (invests in corporate bonds) and the Putnam Money Market Fund
(invests in short-term money market securities). Contributions by
participants cannot be further directed within the Michael Baker Common
Stock Fund. Additionally, effective October 1, 1999, the following six new
funds were added as investment options to the Plan: the Putnam Bond Index
Fund (investment objective is to achieve a return that approximates the
return of the Lehman Brothers Aggregate Bond Index), the Putnam Investors
Fund (invests in large capitalization stocks), the Putnam S&P 500 Index
(investment objective is to achieve a return that approximates the return
of the S&P 500 Composite Stock Price Index) and the Putnam Asset Allocation
Funds (includes the Growth Portfolio, which has a targeted portfolio
structure designed to seek maximum growth of an investment over time, the
Balanced Portfolio, which seeks total return for investors in their peak
accumulation years and the Conservative Portfolio, which invests primarily
in domestic fixed-income securities).
PLAN ADMINISTRATION AND FEES
The Company provides certain administrative and accounting services to the
ESOP at no cost. In addition, the Company pays the cost of services
provided to the ESOP by Putnam, legal counsel and independent accountants.
Certain reasonable distributions and loan processing fees charged by Putnam
are deducted from the respective participant account balances.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Putnam Investments, Inc. (Putnam) performs the recordkeeping function for
the ESOP and the records are maintained on a cash basis. The financial
statements included herein include all material adjustments to record the
financial statements on the accrual basis of accounting in accordance with
generally accepted accounting principles.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
Certain plan investments are shares of mutual funds managed by Putnam.
These transactions qualify as party-in-interest transactions.
INVESTMENTS
Investments are stated at fair value based upon quoted market values. The
investment in common stock of the Company is stated at publicly-traded
closing market values as of December 31, 1999 and 1998. As of December 31,
1999 and 1998, the ESOP owned approximately 42 percent and 44 percent,
respectively, of the outstanding shares of the Company's common stock;
therefore, such valuation might be subject to significant fluctuation in
the event of a substantial liquidation of such holdings by the ESOP. The
accompanying financial statements should be read in conjunction with the
consolidated financial statements of the Company, which are included as
Exhibit 13.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
The difference between the cost and current market value of investments
purchased since the beginning of the period and the increase or decrease in
such stated market value of investments held at the beginning of the period
reported is included in the increase (decrease) in net appreciation
(depreciation) in fair market value of investments in the Statements of
Changes in Net Assets Available for Benefits.
CONTRIBUTIONS
Employee and employer contributions are recorded in the period during which
the Company makes payroll deductions from Plan participant's earnings.
DISTRIBUTIONS
Distributions to participants are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
CONCENTRATION OF RISK
Investments are exposed to various risks, such as interest rate, market and
credit. Due to the level of risk associated with these investments and the
level of uncertainty related to changes in the value of these investments,
it is at least reasonably possible that changes in the near term could
materially affect participants' account balances and the amounts reported
in the statement of net assets available for benefits and the statements of
changes in net assets available for benefits.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
3. INVESTMENTS
The following presents the fair value of investments that represent 5
percent or more of the Plan's net assets at December 31, 1999:
DECEMBER 31,
1999 1998
Michael Baker Common stock $ 15,702,984* $ 24,630,743*
Michael Baker Series B common stock 8,105,532* 11,928,881*
Putnam Growth & Income Fund 17,530,241 17,930,008
George Putnam Fund of Boston 9,740,456 10,458,263
Putnam New Opportunities Fund 21,841,935 10,584,799
Putnam Voyager Fund 15,355,912 7,599,581
Putnam International Growth Fund 5,316,795 2,513,034
[FN]
*Nonparticipant-directed
</FN>
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $1,665,087 as follows:
Mutual funds $ 9,915,314
Common stock (11,580,401)
-------------
$ (1,665,087)
=============
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
DECEMBER 31,
1999 1998
Net Assets:
Common stock $ 23,804,133 $ 36,579,542
------------ ------------
$ 23,804,133 $ 36,579,542
============ ============
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1999
Changes in net assets:
Contributions $ 2,108,667
Rollovers (155,691)
Dividends and interest 6,000
Net appreciation(depreciation) (11,580,401)
Benefits paid to participants (2,119,458)
Transfers to participant-directed investments (1,034,301)
Fees (225)
-------------
$(12,775,409)
=============
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Plan's Form 5500 at December 31:
1999 1998
Net assets available for benefits per
the financial statements $101,646,650 $ 91,036,773
Amounts allocated to withdrawing
participants (982) (72,285)
------------- -------------
Net assets available for benefits per
the Form 5500 $101,645,668 $ 90,964,488
============= =============
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500 at December 31, 1999:
Distributions to participants per
the financial statements $ 7,101,485
Add - Distributions to employees authorized
but not paid as of December 31, 1999 982
Less - Distributions to employees authorized
but not paid as of December 31, 1998 (72,285)
-------------
Distributions to employees per Form 5500 $ 7,030,182
=============
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated December 30, 1994, that the Plan and related trust are
designed in accordance with the applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since receiving the determination
letter. However, the Plan Administrator and the Plan's counsel believe that
the Plan is designed and is currently being operated in compliance with
applicable requirements of the IRC.
7. PLAN TERMINATION
Although it has not expressed an intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
COST OF CURRENT
SHARES DESCRIPTION ASSET VALUE
- --------------------------------------------------------------------------------
*Michael Baker Corporation**
2,370,262 Common Stock $14,886,107 $ 15,702,984
*Michael Baker Corporation**
1,223,477 Common Stock - Series B 7,436,107 8,105,532
598,308 *George Putnam Fund of Boston 9,740,456
934,946 *Putnam Growth & Income Fund 17,530,241
277,479 *Putnam Income Fund 1,764,768
495,992 *Putnam Voyager Fund 15,355,912
240,127 *Putnam New Opportunities Fund 21,841,935
179,137 *Putnam International Growth Fund 5,316,795
5,036,730 *Putnam Money Market Fund 5,036,730
8,001 *Putnam Asset Allocation-Growth Portfolio 121,617
2,970 *Putnam Asset Allocation-Balanced Portfolio 38,490
10,840 *Putnam Asset Allocation-Conservative Portfolio 114,251
7,181 *Putnam Bond Index Fund 70,804
11,489 *Putnam Investors Fund 220,022
12,607 *Putnam S&P 500 Index Fund 440,498
N/A *Participant loans:
8.75% to 12.62%, due January 21,
2000 to September 12, 2014 249,998
------------
$101,651,033
============
<FN>
* Party-in-interest.
** Nonparticipant directed.
</FN>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
NUMBER NET
PARTY DESCRIPTION OF PURCHASE SELLING GAIN
INVOLVED OF ASSET TRANSACTIONS PRICE PRICE (LOSS)
- --------------------------------------------------------------------------------
Putnam *Michael Baker 258 $2,811,968 $ -- $ --
Investments, Corporation 384 $ -- $4,006,975 $512,704
Inc. Common Stock**
[FN]
* Party-in-interest.
** Nonparticipant directed.
</FN>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Senior
Vice President, Corporate Controller and Treasurer of Michael Baker Corporation,
the plan sponsor, has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 21, 2000 /s/ CRAIG O. STUVER
-------------------
Craig O. Stuver
Senior Vice President, Corporate
Controller and Treasurer of Michael
Baker Corporation, the Plan Sponsor