Exhibit 99.1
Baker Reports Second Quarter Financial Results
PITTSBURGH, Aug. 15 /PRNewswire-FirstCall/ -- Michael Baker Corporation
(Amex: BKR) today reported its financial results for the second quarter and
first six months of 2003.
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For the quarter, Baker posted net income of $68,000, or $0.01 per diluted
share, on total contract revenues of $105 million. This compares with net
income of $3.5 million, or $0.41 per diluted share, on total contract revenues
of $105 million in second-quarter 2002. Significant items contributing to the
decline in quarter-over-quarter earnings include: a pre-tax charge of
$800,000 related to the impairment of the company's investment in Energy
Virtual Partners, Inc. (EVP); costs related to the infrastructure and
amortization of the company's new information systems; increased interest
costs associated with the financing of the company's debt; the overall mix of
project work in the Energy segment, which is yielding relatively lower
margins; delays in the commencement of certain public sector projects, as well
as a continued slowness in private sector contract activity, in the
Engineering business; and a higher than anticipated Federal tax rate due to
the mix of operating earnings for the quarter.
In March 2002, Baker invested $1.0 million in EVP as a means of enhancing
and expanding its OPCO(R) service offering in the Gulf of Mexico. EVP was a
development stage operation with a unique business model that has yet to gain
acceptance. EVP continues to evaluate its options, but its Board has voted to
liquidate by August 15 if a clear, feasible business strategy is not
developed.
Revenues in the Engineering business were unchanged from the year-ago
quarter, while operating income, before corporate overhead allocations,
declined 43 percent over the same period as a result of many of the factors
listed above. However, labor utilization rates in Engineering improved during
the second quarter relative to the first quarter of 2003.
Revenues in the Energy business were also unchanged from the second
quarter of 2002, while operating income, before corporate overhead
allocations, declined 30 percent due to the change in project mix mentioned
above. The largest factor in the project mix compared to the prior period was
an 88 percent decrease in OPCO-related revenue. As mentioned in previous
reports, the company recently received a significant onshore OPCO-style
contract with Huber Energy.
As addressed in the first quarter 2003 earnings report, Baker's short-term
liquidity was adversely impacted by changes in its billing process related to
the implementation of the new information systems. During the second quarter,
this was reflected in a slower rate of cash collections, which resulted in the
company's increased utilization of its credit facility. Accordingly, interest
expense was ($228,000) and interest income was $12,000 for the current
quarter, compared to interest expense of ($20,000) and interest income of
$79,000 in second quarter 2002.
At June 30, 2003, borrowings totaling $32.3 million were outstanding under
the $40 million facility. This increased level of borrowings at quarter-end
required the company to seek and obtain a waiver of several of its financial
ratio covenants. Due to the difficulty of accurately forecasting the amount
of borrowings at September 30, 2003, as well as the lower level of earnings
for the trailing four quarters, management is not certain that it will be in
compliance with the financial covenants in its bank agreement at September 30,
2003. Consequently, the Company's borrowings have been reflected as current
liabilities, but management anticipates that the credit facility will be
renegotiated in the near future, extending the maturity, and modifying
financial ratios as necessary to reflect the borrowings as long-term
liabilities.
For the first six months of 2003, the company recorded a net loss of
($29,000), or $0.00 per diluted share, on total contract revenues of
$204 million, as compared to net income of $5.2 million, or $0.61 per diluted
share, on total contract revenues of $201 million in the first six months of
2002.
Total backlog for the company was $647 million at June 30, 2003, compared
to $545 million at year-end 2002.
Commenting on the results, President and Chief Executive Officer Donald P.
Fusilli, Jr., said, "We are very disappointed with these results. The impact
of current market conditions -- particularly the budget constraints of our
state clients, the uncertain economic conditions that are delaying capital
investments by our private sector customers, and the continued change in
ownership of oil and gas properties in the Gulf of Mexico shelf -- are
severely hindering our growth agenda. Consequently, investments we have made
in the organization that have added to our cost structure are being challenged
so that they may be brought more in line with the present business
environment. We are also looking at options to manage our rising insurance
costs, especially medical and casualty. Nevertheless, we remain committed to
our business strategy and believe strongly that it will position us to create
improved value for our shareholders as economic and market conditions
improve." He added that the company will not be providing revised revenue or
earnings guidance for 2003 until it has completed its cost review and
management process.
Michael Baker Corporation has scheduled a conference call and webcast for
Tuesday, August 19 at 10:00 AM Eastern Daylight Time to discuss the quarterly
results. Please call 800-860-2442 at least 10 minutes prior to the start of
the call. To access the webcast, please visit the investor relations portion
of Baker's website at www.mbakercorp.com .
Michael Baker Corporation ( www.mbakercorp.com ) provides engineering and
energy expertise for public and private sector clients worldwide. The firm's
primary services include engineering design for the transportation and civil
infrastructure markets, operation and maintenance of oil and gas production
facilities, architecture, environmental services, and construction management
for building and transportation projects. Baker has more than 4,200 employees
in over 30 offices across the United States and internationally.
(The above information includes certain forward-looking statements
concerning future operations and performance of the Company. Forward looking
statements are subject to market, operating and economic risks and
uncertainties that may cause the Company's actual results in future periods to
be materially different from the performance suggested above. Factors that
may cause such differences include, among others: increased competition;
increased costs; changes in general market conditions; changes in industry
trends; changes in the regulatory environment; changes in anticipated levels
of government spending on infrastructure; and changes in loan relationships or
sources of financing. Such forward-looking statements are made pursuant to
the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995.)
FINANCIAL SUMMARY
(Unaudited)
Operating Results For the quarter ended June 30
(In thousands, except earnings per
share) 2003 2002
Total contract revenues $104,799 $104,760
Gross profit $15,019 $17,842
Income from operations $1,150 $6,156
Income before taxes $122 $6,225
Net income $68 $3,486
Basic weighted average shares
outstanding 8,312 8,346
Basic net income per share $0.01 $0.42
Diluted net income per share $0.01 $0.41
Operating Results For the six months ended June 30
(In thousands, except earnings per
share) 2003 2002
Total contract revenues $204,098 $200,681
Gross profit $28,465 $32,623
Income from operations $1,039 $9,316
(Loss)/income before taxes $(57) $9,370
Net (loss)/income $(29) $5,200
Basic weighted average shares
outstanding 8,329 8,316
Basic net income per share $- $0.63
Diluted net income per share $- $0.61
For the three For the six
Total Contract Revenues months ended months ended
(In millions) 6/30/03 6/30/02 6/30/03 6/30/02
Engineering $61.6 $61.9 $120.3 $120.2
Energy 43.2 42.9 83.8 80.5
Non-Core - - - -
Total $104.8 $104.8 $204.1 $200.7
Income from Operations
without Corporate Expenses Allocated For the three For the six months
months ended ended
(In millions) 6/30/03 6/30/02 6/30/03 6/30/02
Engineering $3.5 $6.1 $6.4 $10.4
Energy 2.3 3.3 3.5 5.0
Non-Core (0.1) (0.5) 0.2 (0.6)
Subtotal - segments 5.7 8.9 10.1 14.8
Corporate/Insurance (4.5) (2.7) (9.1) (5.5)
Total $1.2 $6.2 $1.0 $9.3
Backlog
(In thousands) At 6/30/03 At 12/31/02
Total $646,500 $545,200
Condensed Balance Sheet
(In thousands) At 6/30/03 At 12/31/02
ASSETS
Cash and cash equivalents $7,407 $9,885
Receivables 80,842 65,742
Costs in excess of billings 55,058 29,723
Prepaid expenses and other 5,206 6,220
Total current assets 148,513 111,570
Property, plant and equipment, net 18,433 17,459
Goodwill and other intangible
assets, net 9,376 9,519
Other assets 6,847 6,549
Total assets $183,169 $145,097
LIABILITIES & SHAREHOLDERS'
INVESTMENT
Current portion of long-term debt $33,257 $-
Accounts payable 23,037 20,373
Accrued compensation and insurance 24,418 20,977
Other accrued expenses 18,577 25,009
Billings in excess of costs 9,825 4,191
Total current liabilities 109,114 70,550
Other 3,163 3,128
Total liabilities 112,277 73,678
Common Stock 8,711 8,694
Additional paid-in capital 38,301 38,146
Retained earnings 27,382 27,411
Other comprehensive loss (495) (569)
Unearned compensation expense (54) -
Less - Treasury shares (2,953) (2,263)
Total shareholders' investment 70,892 71,419
Total liabilities &
shareholders' investment $183,169 $145,097
SOURCE Michael Baker Corporation
-0- 08/15/2003
/CONTACT: David Higie of Michael Baker Corporation, +1-412-269-6449/
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(BKR)
CO: Michael Baker Corporation
ST: Pennsylvania
IN: CST
SU: ERN MAV CCA