Exhibit 99.1
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, 1995
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
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Index
- --------------------------------------------------------
Report of Independent Accountants
Financial Statements:
Statements of Financial Condition With Fund Information -
December 31, 1995 and 1994
Statements of Income and Changes in Participants'
Equity With Fund Information - For the Periods
Ended December 31, 1995 and 1994 and January 2, 1994
Notes to Financial Statements
Additional Information:*
Schedule of Assets Held for Investment Purposes -
December 31, 1995
* Other schedules required by Section 2520.103-1 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable. The Schedule of reportable
transactions (transactions in excess of 5 percent of the current value of
plan assets at the beginning of the year) has not been provided since such
information has not been provided by the Trustee.
Report of Independent Accountants
March 15, 1996
To the Participants and Administrator
of the Michael Baker Employee Stock
Ownership Plan
In our opinion, the accompanying statements of financial condition and the
related statements of income and changes in participants' equity present
fairly, in all material respects, the financial position of the Michael Baker
Employee Stock Ownership Plan (the ESOP) at December 31, 1995 and 1994, and the
results of operations and the changes in participants' equity for the years
then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the ESOP's Administrator;
our responsibility is to express an opinion on these statements based on our
audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audits 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. The financial statement of the ESOP for the period
ended January 2, 1994, was audited by other independent public accountants
whose report dated February 15, 1994, expressed an unqualified opinion on that
statement.
Our audits were performed 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 of reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are additional information required by the Employee
Retirement Income Security Act of 1974 (ERISA). The fund information in the
statement of financial condition and the statement of income and changes in
participants' equity is presented for purposes of additional analysis rather
than to present the financial condition and income and changes in participants'
equity of each fund. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audit 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.
The plan has not presented the schedule of reportable transactions
(transactions in excess of 5 percent of the current value of plan assets at the
beginning of the year). Disclosure of this information is required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under
ERISA.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information
December 31, 1995
December 31, 1995
--------------------------------
Dreyfus/
Laurel Prime Premier
Money Market Balanced
Fund Fund
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $ - $ -
Series B common stock - -
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) 3,433,306 -
Premier Balanced Fund (703,452 shares
with a cost of $7,227,448) - 8,610,252
Dreyfus Disciplined Stock Fund (453,587
shares with a cost of $8,554,746) - -
Dreyfus Bond Market Index Fund (41,414
shares with a cost of $398,830) - -
Participants' notes receivable (market
value approximates cost) - -
---------- ----------
Total investments 3,433,306 8,610,252
Contributions receivable from Michael Baker
Corporation - -
Temporary investments 43,980 160,505
---------- ----------
Participants' equity $3,477,286 $8,770,757
=========== ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information (Continued)
December 31, 1995
December 31, 1995
-----------------------------------------
Dreyfus Dreyfus
Disciplined Bond Market
Stock Index
Fund Fund
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $ - $ -
Series B common stock - -
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) - -
Premier Balanced Fund (703,452 shares
with a cost of $7,227,448) - -
Dreyfus Disciplined Stock Fund (453,587
shares with a cost of $8,554,746) 10,332,704 -
Dreyfus Bond Market Index Fund (41,414
shares with a cost of $398,830) - 420,352
Participants' notes receivable (market
value approximates cost) - -
----------- ----------
Total investments 10,332,704 420,352
Contributions receivable from Michael Baker
Corporation - -
Temporary investment 446,230 34,213
----------- ----------
Participants' equity $10,778,934 $ 454,565
=========== ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information (Continued)
December 31, 1995
December 31, 1995
-----------------------------------------
Michael
Baker Participant
Common Loan
Stock Fund Fund Combined
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $11,055,430 $ - $11,055,430
Series B common stock 6,129,240 - 6,129,240
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) - - 3,433,306
Premier Balanced Fund (703,452 shares
with a cost of $7,227,448) - - 8,610,252
Dreyfus Disciplined Stock Fund (453,587
shares with a cost of $8,554,746) - - 10,332,704
Dreyfus Bond Market Index Fund (41,414
shares with a cost of $398,830) - - 420,352
Participants' notes receivable (market
value approximates cost) - 48,440 48,440
----------- -------- ----------
Total investments 17,184,670 48,440 40,029,724
Contributions receivable from Michael Baker
Corporation 233,654 - 233,654
Temporary investments 276,391 - 961,319
---------- --------- ----------
Participants' equity $17,694,715 $48,440 $41,224,697
=========== ======== ============
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information
December 31, 1994
December 31, 1994
--------------------------------
Dreyfus/
Laurel Prime Premier
Money Market Balanced
Fund Fund
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $ - $ -
Series B common stock - -
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) 3,202,063 -
Premier Balanced Fund (651,295 shares
with a cost of $6,573,414) - 6,369,667
Dreyfus Disciplined Stock Fund (382,116
shares with a cost of $7,027,651) - -
Dreyfus Bond Market Index Fund (22,443
shares with a cost of $214,360) - -
Participants' notes receivable (market
value approximates cost) - -
--------- --------
Total investments 3,202,063 6,369,667
Contributions receivable from Michael Baker
Corporation - -
Temporary investments 56,995 78,360
--------- ----------
Participants' equity $3,259,058 $6,448,027
========== ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information (Continued)
December 31, 1994
December 31, 1994
--------------------------------
Dreyfus Dreyfus
Disciplined Bond Market
Stock Index
Fund Fund
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $ - $ -
Series B common stock - -
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) - -
Premier Balanced Fund (651,295 shares
with a cost of $6,573,414) - -
Dreyfus Disciplined Stock Fund (382,116
shares with a cost of $7,027,651) 6,614,436 -
Dreyfus Bond Market Index Fund (22,443
shares with a cost of $214,360) - 204,234
Participants' notes receivalbe (market
value approximates cost) - -
---------- ----------
Total investments 6,614,436 204,234
Contributions receivable from Michael Baker
Corporation - -
Temporary investments 270,497 2,746
---------- ----------
Participants' equity $6,884,933 $206,980
========== =========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Financial Condition With Fund Information (Continued)
December 31, 1994
December 31, 1994
-----------------------------------------
Michael
Baker Participant
Common Loan
Stock Fund Fund Combined
Assets
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common stock $5,850,919 $ - $5,850,919
Series B common stock 4,592,728 - 4,592,728
Investments in trust funds managed by
Mellon Bank N.A.:
Dreyfus/Laurel Prime Money Market
Fund (market value approximates
cost) - - 3,202,063
Premier Balanced Fund (651,295 shares
with a cost of $6,573,414) - - 6,369,667
Dreyfus Disciplined Stock Fund (382,116
shares with a cost of $7,027,651) - - 6,614,436
Dreyfus Bond Market Index Fund (22,443
shares with a cost of $214,360) - - 204,234
Participants' notes receivable (market
value approximates cost) - 22,605 22,605
-------- -------- ---------
Total investments 10,443,647 22,605 26,856,652
Contributions receivable from Michael Baker
Corporation 223,054 - 223,054
Temporary investments 650,294 - 1,058,892
---------- -------- ------------
Participants' equity $11,316,995 $ 22,605 $28,138,598
=========== ========= ============
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information
Period Ended December 31, 1995
- -------------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1995
-------------------------------
Dreyfus/
Laurel Prime Premier
Money Market Balanced
Fund Fund
Contributions:
Participants' $ 546,251 $1,167,216
Employer's - -
Interest income 199,747 342,998
Net appreciation in market value
of investments - 1,649,624
Interfund transfers - net (27,937) (131,436)
----------- ----------
Total additions 718,063 3,028,402
Distributions to participants (499,835) (705,672)
----------- ----------
Total deductions (499,835) (705,672)
----------- ----------
Net increase in participants'
equity during the period 218,228 2,322,730
Participants' equity at beginning
of period 3,259,058 6,448,027
----------- ----------
Participants' equity at end of period $3,477,286 $8,770,757
============ ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information (Continued)
Period Ended December 31, 1995
- -------------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1995
-------------------------------
Dreyfus Dreyfus
Disciplined Market
Stock Index
Fund Fund
Contributions:
Participants' $ 1,598,206 $ 181,499
Employer's - -
Interest income 353,018 18,956
Net appreciation in market
value of investments 2,589,252 30,232
Interfund transfers - net 123,123 50,592
----------- ----------
Total additions 4,663,599 281,279
----------- ----------
Distributions to participants (769,598) (33,694)
----------- ----------
Total deductions (769,598) (33,694)
------------ ----------
Net increase in participants'
equity during the period 3,894,001 247,585
Participants' equity at beginning
of period 6,884,933 206,980
----------- ----------
Participants' equity at end of period $10,778,934 $ 454,565
============ ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information (Continued)
Period Ended December 31, 1995
- -------------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1995
-------------------------------
Michael
Baker Participants
Common Stock Loan
Fund Fund Total
Contributions:
Participants' $1,088,589 $ - $4,581,761
Employer's 2,918,272 - 2,918,272
Interest income 23,442 - 938,163
Net appreciation in market
value of investments 3,244,162 - 7,513,270
Interfund transfers - net (40,177) 25,835 -
---------- --------- ----------
Total additions 7,234,288 25,835 15,951,466
---------- --------- ----------
Distributions to participants (856,568) - (2,865,367)
----------- --------- ----------
Total deductions (856,568) - (2,865,367)
----------- ---------- ---------
Net increase in participants'
equity during the period 6,377,720 25,835 13,086,099
Participants' equity at beginning
of period 11,316,995 22,605 28,138,598
----------- ----------- ----------
Participants' equity at end of period $17,694,715 $ 48,440 $41,224,697
=========== ======== ==========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information
Period Ended December 31, 1994
- -------------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1994
-------------------------------
Dreyfus/
Laurel Prime Premier
Money Market Balanced
Fund Fund
Contributions:
Participants' $561,630 $1,337,985
Employer's - -
Interest income 140,732 65,471
Interfund transfers - net (263,699) (222,595)
----------- ----------
Total additions 438,663 1,180,861
----------- ----------
Distributions to participants (261,534) (572,205)
Net depreciation in market value
of investments - (75,296)
----------- -----------
Total deductions (261,534) (647,501)
------------ -----------
Net increase (decrease) in participants'
equity during the period 177,129 533,360
Participants' equity at beginning
of period 3,081,929 5,914,667
----------- -----------
Participants' equity at end of period $3,259,058 $6,448,027
=========== ===========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information (Continued)
Period Ended December 31, 1994
- -----------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1994
-------------------------------
Dreyfus Dreyfus
Disciplined Bond Market
Stock Index
Fund Fund
Contributions:
Participants' $1,440,191 $ 112,085
Employer's - -
Interest income 65,905 1,374
Interfund transfers - net 59,745 162,424
----------- ----------
Total additions 1,565,841 275,883
----------- ----------
Distributions to participants (424,582) (61,615)
Net depreciation in market value
of investments (62,203) (7,288)
----------- ----------
Total deductions (486,785) (68,903)
------------ ----------
Net increase (decrease) in participants'
equity during the period 1,079,056 206,980
Participants' equity at beginning 5,805,877 -
of period ----------- -----------
Participants' equity at end of period $6,884,933 $ 206,980
============ ============
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund
Information (Continued)
Period Ended December 31, 1994
- -------------------------------------------------------------------
Changes in Participants' Equity
Period Ended December 31, 1994
-------------------------------
Michael
Baker Participants
Common Stock Loan
Fund Fund Total
Contributions:
Participants' $1,208,942 $ - $4,660,833
Employer's 3,163,405 - 3,163,405
Interest income 14,307 - 287,789
Interfund transfers - net 241,520 22,605 -
------------ --------- ---------
Total additions 4,628,174 22,605 8,112,027
------------ -------- ---------
Distributions to participants (1,249,644) - (2,569,580)
Net depreciation in market value
of investments (17,279,596) - (17,424,383)
----------- ---------- ---------
Total deductions (18,529,240) - (19,993,963)
------------ ---------- ---------
Net increase (decrease) in participants'
equity during the period (13,901,066) 22,605 (11,881,936)
Participants' equity at beginning
of period 25,218,061 - 40,020,534
----------- ---------- -----------
Participants' equity at end of period $11,316,995 $ 22,605 $28,138,598
=========== ========== ===========
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participant's Equity With Fund Information
Period Ended January 2, 1994
- ---------------------------------------------------------------------------
Changes in Participants' Equity
Period Ended January 2, 1994
---------------------------------
Laurel Prime Laurel Laurel
Money Market I Balanced Stock
Fund Fund Fund
Participants' equity at beginning
of period $2,849,974 (a) $4,371,375 (b) $4,158,952 (c)
Contributions:
Participants' 612,357 1,097,400 1,195,727
Employer's -- -- --
Investment Income 90,047 200,538 119,096
Interfund transfers-net (266,439) 113,057 31,027
Unrealized appreciation in market
value of investments -- 474,774 575,540
----------- ---------- ------------
Total additions and interest
income 435,965 1,885,769 1,921,390
----------- ---------- ------------
Distributions to participants (258,054) (270,343) (218,250)
Unrealized depreciation in market
value of investments -- -- --
---------- ----------- -----------
Total deductions (258,054) (270,343) (218,250)
---------- ------------ -----------
Net increase (decrease) in
participants' equity 177,911 1,615,426 1,703,140
---------- ------------ -----------
Participants' equity transferred
to the Laurel Funds 3,027,885 5,986,801 5,862,092
---------- ------------ ----------
Contributions - Participants 53,313 97,000 98,346
Interest income 731 -- --
---------- ------------ ----------
Total additions and interest
income 54,044 97,000 98,346
---------- ----------- ----------
Distributions to participants -- (59,322) (11,022)
Realized gain (loss) and increase
(decrease) in unrealized depreciation
in market value of investments -- (109,812) (143,539)
----------- ----------- ------------
Total deductions -- (169,134) (154,561)
Net increase (decrease) in
participants' equity 54,044 (72,134) (56,215)
----------- ---------- -----------
Participants' equity at end
of period $3,081,929 (d) $5,914,667 (e) $5,805,877 (f)
=========== =========== ==========
(a) Invested in Short-Term Fixed Income Fund
(b) Invested in Managed Growth and Income Fund
(c) Invested in Stock Market Growth Fund
(d) Invested in Laurel Prime Money Market I
(e) Invested in Laurel Balanced Portfolio
(f) Invested in Laurel Stock Portfolio
See Note 1 describing change in fund names.
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Income and Changes in Participants' Equity With Fund Information
Period Ended January 2, 1994 (Continued)
- ----------------------------------------------------------------------------
Changes in Participants' Equity
Period Ended January 2, 1994
-----------------------------------
Michael
Baker
Common Stock
Fund Total
Participants' equity at beginning $29,285,513 $40,665,814
of period
Contributions:
Participants' 1,442,665 4,348,149
Employer's 2,965,578 2,965,578
Investment Income 18,187 427,868
Interfund transfers - net 122,355 --
Unrealized appreciation in market
value of investments -- 1,050,314
----------- ------------
Total additions and interest income 4,548,785 8,791,909
------------ ------------
Distributions to participants (884,914) (1,631,561)
Unrealized depreciation in market value
of investments (7,731,323) (7,731,323)
----------- -----------
Total deductions (8,616,237) (9,362,884)
------------ -----------
Net increase (decrease) in
participants' equity (4,067,452) (570,975)
----------- -----------
Participants' equity transferred
to the Laurel Funds 25,218,061 40,094,839
------------ -----------
Contributions - Participants -- 248,659
Interest income -- 731
------------ -----------
Total additions and interest income -- 249,390
------------ ----------
Distributions to participants -- (70,344)
Realized gain (loss) and increase
(decrease) in unrealized depreciation
in market value of investments -- (253,351)
----------- -----------
Total deductions -- (323,695)
Net increase (decrease) in participants'
equity -- (74,305)
----------- -----------
Participants' equity at end of period $25,218,061 $40,020,534
============= ==============
See Note 1 describing change in fund names.
The accompanying notes are an integral part of these financial statements.
Michael Baker Corporation
Employee Stock Ownership Plan
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Notes to Financial Statements
- ------------------------------------------------------------
1. DESCRIPTION OF THE 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
provision.
The ESOP is an individual account stock bonus plan under which a participant's
distributions are based on the amount contributed to that participant's
account, including any transferred amounts from the prior retirement plan and
any gains or losses and income and expense that may be allocated to the
participant's account. The Plan is subject to provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
On March 11, 1994, the Internal Revenue Service (IRS) approved the change in
the Plan's fiscal year from a 52/53-week period to a calendar year. The change
was effective for the Plan's 1993 year ending January 2, 1994. Since the
approval from the IRS was received subsequent to issuance of the Plan's fiscal
1993 financial statements and since January 1 and January 2, 1994, were
nonbusiness days, the Plan's 1993 financial statements were not revised.
Dates when used herein: 1995, 1994 and 1993 refer to the periods ended December
31, 1995 and 1994 and January 2, 1994, respectively.
COMMON STOCK
The primary purpose of the ESOP is to enable participating employees to acquire
an equity interest in Michael Baker Corporation (the Company). Consistent with
this purpose, contributions to the ESOP can be invested in the Company's common
stock (Common Stock and Series B Common Stock, on a pro rata basis as
available). Investments into the Michael Baker Common Stock Fund cannot be
specifically directed to either Regular Common or Series B Common Stock. At
times, common stock may not be available at a price acceptable to the ESOP
Committee (see Note 3), or it may be appropriate to retain some of the ESOP's
funds in a more liquid form so that the funds may be available for the payment
of benefits. In such cases, a portion of the ESOP's assets may be invested in
temporary investments, such as short-term corporate obligations or short-term
obligations of the U.S. government.
The ESOP's investment in the Company's common stock comprises 2,211,086 (cost
of $11,966,196) and 1,560,245 (cost of $8,891,947) shares of Common Stock and
1,225,848 (cost of $7,440,333) and 1,224,727 (cost of $7,618,605) shares of
Series B Common Stock at December 31, 1995 and 1994, respectively.
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, effective July 1, 1993) withheld and
contributed to the ESOP. The percentage may not exceed 15 percent of the
participant's salary. The ESOP also allows participants to roll over funds
from a previous employer's qualified 401(k) plan.
Michael Baker Corporation
Employee Stock Ownership Plan
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Notes to the Financial Statements
- ---------------------------------------------------------------------------
INVESTMENT OPTIONS
Each participant may direct Mellon Bank N.A. (the Trustee) to invest certain
portions of his or her account in investment funds managed by the Trustee.
Prior to December 1993, investment fund options available to employees prior to
December 1993 included the Michael Baker Common Stock Fund (invested
exclusively in common stock of the Company), the Short-Term Fixed Income Fund
(invested in short-term fixed income securities), the Managed Growth and Income
Fund (invested in diversified corporate stocks and bonds) and the Stock Market
Growth Fund (invested in diversified corporate stocks).
Effective December 1993, the investment fund options available to employees
included the Michael Baker Common Stock Fund (invested exclusively in common
stock of the Company), managed by the Trustee; the Laurel Prime Money Market I
Portfolio (invested in short-term, income-producing securities); the Laurel
Balanced Portfolio (invested in common stocks and bonds in proportions
consistent with their expected returns and risks as determined by the
portfolio's adviser); and the Laurel Stock Portfolio (invested in diversified
corporate stocks). All amounts previously invested in the Short-Term Fixed
Income Fund, the Managed Growth and Income Fund and Stock Market Growth Fund
were transferred into the respective investment funds based on each employee's
fund account balances at the transfer date. Mellon Bank N.A. serves as the
Adviser, Custodian, Fund Accountant and Transfer Agent for the aforementioned
Laurel investment funds.
Effective January 3, 1994, the Laurel Bond Market Index Portfolio (investing in
U.S. government and Securities and Exchange Commission (SEC)-registered
obligations of domestic corporations, foreign governments and supranational
organizations) was added to the available election options.
Effective October 17, 1994, the Laurel Prime Money Market I Portfolio, Laurel
Balanced Portfolio, Laurel Stock Portfolio and the Laurel Bond Market Index
Portfolio were changed to the Dreyfus/Laurel Prime Money Market Fund, Premier
Balanced Fund, Dreyfus Disciplined Stock Fund and Dreyfus Bond market Index
Fund, respectively. The funds were renamed to reflect the merger of Mellon
Bank and the Dreyfus Family of Funds. The funds were renamed but operations
continue substantially unchanged.
Effective April 1, 1996, the Plan agreement will be amended as a result of a
change in trustees from Mellon Bank N.A. to Putnam Investments, Inc., (Putnam).
As a result of this change, investment funds available to participants are the
Michael Baker Common Stock Fund (invested exclusively in common stock of the
Company), the Putnam New Opportunities Fund (invested in long-term growth
stocks within emerging industries), Putnam Overseas Growth Fund (invested in
diversified corporate stocks outside of North America), Putnam Voyager Fund
(invested in diversified corporate stocks), Putnam Fund for Growth and Income
(invested in long-term growth stocks), George Putnam Fund of Boston (invested
in diversified capital growth and current income stocks and bonds), Putnam
Income Fund (invested in corporate bonds) and the Putnam Money Market Fund
(invested in corporate bonds) and the Putnam Money Market Fund (invested in
short-term money market securities).
Michael Baker Corporation
Employee Stock Ownership Plan
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Notes to Financial Statements
- -----------------------------------------------------------
COMPANY MATCHING CONTRIBUTIONS AND VESTING OF BENEFITS
Under the provisions of the Plan, the Company will make a matching contribution
to the participants' accounts in an amount not less than 50 percent of the
first 5 percent of the salary contributed by each participant. Salary amounts
over the 5 percent limit will not be matched by the Company. All matching
contributions can be invested only in the Michael Baker Common Stock Fund.
During 1995, 1994 and 1993, the Company matched participants' contributions
on a dollar-for-dollar basis for the first 5 percent of participants' salaries.
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 1995, 1994 and 1993.
All amounts in the participants' ESOP accounts that are attributable to the
transfer of funds from a terminated prior retirement plan, the rollover from
a previous employer's qualified 401(k) plan, participant contributions under
Salary Redirection Election and PAYSOP contributions are 100 percent vested
and nonforfeitable at all times.
All Company matching contributions to the participants' Salary Redirection
Election and discretionary contributions on behalf of the participants will
become 100 percent vested upon attainment of 3 years of service with the
Company or, if 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 matching contribution, the
contributions are forfeited and 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, based on the vesting requirements, is discussed above. A
participant may retire at age 65, or at age 55 if he or she has completed at
least 3 years of service. All distributions will be made in the form of a
single lump-sum distribution or in substantially equal installments over a
period not exceeding the life expectancy of the participant, or the joint life
expectancy of the participant and beneficiary, as the participant or his or her
beneficiary may elect. Distributions may be made in cash or shares of common
stock, at the discretion of the ESOP Committee.
PARTICIPANT LOANS
Effective January 3, 1994, 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 are limited to the lower of $50,000 or 50 percent of the employee's
deferred amount. 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 range from 12.62 percent to 13.5 percent.
Michael Baker Corporation
Employee Stock Ownership Plan
Period Ended December 31, 1995 and 1994 and January 2, 1994
Notes to Financial Statements
- ---------------------------------------------------------------
PLAN TERMINATION
Although it has not expressed any 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 set forth in the Employee Retirement Income
Security Act of 1974 (ERISA).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Trustee 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 place the financial statements on the
accrual basis of accounting in accordance with generally accepted accounting
principles.
The investment in common stock of the Company is stated at publicly-traded
market values as of December 31, 1995 and 1994. The ESOP owns approximately
41 percent 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.
INVESTMENTS
The difference between the cost and current market value of investment
purchases 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 unrealized appreciation
in market value of investments in the statements of changes in Plan equity.
A significant portion of the investments of the ESOP is publicly-traded
shares of the Company's Common Stock and, therefore, have a published market
price. The accompanying financial statements should be read in conjunction
with the consolidated financial statements appearing within Exhibit 13.1, which
has been incorporated by reference into various items of Michael Baker
Corporation's Annual Report on Form 10-K.
DISTRIBUTIONS
Distributions to participants are recorded when paid.
3. PLAN ADMINISTRATOR AND TRUSTEE
The ESOP is administered by a committee consisting of nine employees who
are ESOP participants and the Chief Executive Officer and the Chief
Financial Officer of the Company, who serve as nonvoting members. The
Committee is responsible for the general day-to-day administration of the
ESOP, such as determining eligibility, participant allocation procedures
and distribution of benefits.
Under the trust agreement, the Trustee will invest the contributions to the
ESOP and make distributions of ESOP assets as directed by the ESOP Committee.
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 the ESOP's Trustee, legal counsel and independent
accountants.
Michael Baker Corporation
Employee Stock Ownership Plan
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Notes to the Financial Statements
- -------------------------------------------------------------------------
4. QUALIFICATIONS OF THE PLAN
By determination letter from the IRS dated December 30, 1994, the Company
was notified that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements. This determination letter is applicable for amendments adopted
through October 27, 1993. The Plan has been amended since receiving the
determination letter; however, the Plan Administrator and the Plan's counsel
believe that the Plan is currently designed and being operated in compliance
with applicable requirements of the Code. Therefore, they believe the Plan
was qualified and the related trust was tax-exempt as of the financial
statement date.
5. DISTRIBUTIONS TO PARTICIPANTS
At December 31, 1995 and 1994, the Plan had distributions to employees that had
been authorized but not paid of $314,453 and $550,118, respectively. The
following table is a reconciliation of participant's equity at December 31,
1995 and 1994 per the financial statements to the Plan's Form 5500,
respectively.
December 31
1995 1994
Participants' equity per the
financial statements $41,224,697 $28,138,598
----------- -----------
Amounts allocated to withdrawing
participants:
Michael Baker Common Stock Fund (110,060) (134,969)
Dreyfus/Laurel Prime Money Market Fund (115,740) (119,042)
Dreyfus Premier Balanced Fund (52,745) (177,955)
Dreyfus Disciplined Stock Fund (31,039) (101,912)
Dreyfus Bond Market Index Fund (4,869) (16,240)
----------- -----------
(314,453) (550,118)
----------- -----------
Participants' equity per Form 5500 $40,910,244 $27,588,480
=========== ===========
Michael Baker Corporation
Employee Stock Ownership Plan
Periods Ended December 31, 1995 and 1994 and January 2, 1994
Notes to the Financial Statements
- -------------------------------------------------------------------
The following is a reconciliation of distributions to employees per the
financial statements to the Plan's Form 5500 for the period ended December 31,
1995:
December 31,
1995
Distributions to employees per the
financial statements $2,865,367
Distributions to employees
authorized but not paid as of
December 31, 1995 314,453
----------
Distributions to employees per
Form 5500 $3,179,820
===========
Michael Baker Corporation
Employee Stock Ownership Plan
Schedule of Assets Held for Investment Purposes - Form 5500, Item 27a
December 31, 1995
Additional Information - Schedule I
- ---------------------------------------------------------------------
Cost of Current
Shares Description asset value
*Michael Baker Corporation
2,211,086 Common Stock - Regular $11,966,196 $11,055,430
*Michael Baker Corporation
1,225,848 Common Stock - Series B 7,440,333 6,129,240
*Dreyfus/Laurel Prime Money
3,433,306 Market Fund 3,433,306 3,433,306
703,452 *Premier Balanced Fund 7,227,448 8,610,252
453,587 *Dreyfus Disciplined Stock Fund 8,554,746 10,332,704
41,414 *Dreyfus Bond Market Index Fund 398,830 420,352
Participant notes receivable;
12.62% to 13.50%,
due January 31, 1997, to
September 30, 1999 48,440 48,440
---------- ---------
$39,069,299 $40,029,724
============ ===========
* Party-in-interest.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Chairman of the Plan Administrative Committee appointed by the Board of
Directors of Michael Baker Corporation has duly caused this annual report to
be signed by the undersigned thereunto duly authorized.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: March 28, 1996 By:/s/ Susan E. Rezek
--------------------------
Susan E. Rezek
Chairman of the Plan
Administrative Committee
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Michael Baker Corporation
Employee Stock Ownership Plan Committee:
We have audited the accompanying statement of income and changes in
participants' equity of the Michael Baker Corporation Employee Stock Ownership
Plan for the year ended January 2, 1994. This financial statement is the
responsibility of the plan administrator. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit 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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the income and changes in participants' equity of the
Michael Baker Corporation Employee Stock Ownership Plan for the year ended
January 2, 1994, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
February 15, 1994
Consent of Independent Accountants
We hereby consent to the use of this Form 11-K of our report dated March 15,
1996, appearing on page 1 of the Annual Report of the Michael Baker
Corporation Employee Stock Ownership Plan as an exhibit to the registrant's
Form 10-K for the year ended December 31, 1995. We also consent to the
incorporation by reference of our report in this Form 11-K into the
registrant's Registration Statement on Form S-8 (no. 33-14058).
/s/ Price Waterhouse LLP
------------------------
Price Waterhouse LLP
Pittsburgh, Pennsylvania
March 28, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------
As independent public accountants, we hereby consent to the use in this
Form 11-K of our report dated February 15, 1994 on the statement of income
and changes in participants' equity of the Michael Baker Corporation Employee
Stock Ownership Plan (the "Plan") for the year ended January 2, 1994 as an
exhibit to the registrant's Form 10-K for the year ended December 31, 1995. We
also consent to the incorporation of our report included in this Form 11-K
into the registrant's previously filed registration statement on Form S-8
(Registration No. 33-14058), including the prospectus therein, pertaining to
the Michael Baker Corporation Employee Stock Ownership Plan. It should be
noted that we have not audited any financial statements of the Plan subsequent
to January 2, 1994 or performed any audit procedures subsequent to the date
of our report.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 28, 1996