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, 2000
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
2
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 2000 AND 1999
3
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 2000 AND 1999
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Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2000 and 1999 3
Notes to Financial Statements 4-10
Additional Information:*
Schedule of Assets (Held at End of Year)
December 31, 2000 11
Schedule of Reportable Transactions
Year Ended December 31, 2000 12
* 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.
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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, 2000 and 1999, 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 of America. 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 of America, 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 at End of Year) 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 are the
responsibility of the Plan's management. The supplemental schedules 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
Pittsburgh, PA
June 20, 2001
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2000 AND 1999
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2000 1999
ASSETS
Investments, at fair value:
Investments in common stock of
Michael Baker Corporation $ 26,688,174 $ 23,808,516
Investments in mutual funds 72,438,934 77,592,519
Participant loans (market value approximates cost) 328,618 249,998
------------ ------------
Total investments 99,455,726 101,651,033
------------ ------------
Receivables:
Securities sold/accrued interest -- 6,809
------------ ------------
Total receivables -- 6,809
------------ ------------
Total assets 99,455,726 101,657,842
------------ ------------
LIABILITIES
Accounts payable 2,667 11,192
------------ ------------
Total liabilities 2,667 11,192
------------ ------------
Net assets available for benefits $ 99,453,059 $101,646,650
============ ============
The accompanying notes are an integral part of these financial statements.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2000 AND 1999
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2000 1999
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 6,246,320 $ 6,195,680
Net depreciation in fair value of investments (10,416,883) (1,665,087)
------------- -------------
Total investment (loss) income (4,170,563) 4,530,593
------------- -------------
Participant contributions 9,552,169 9,205,299
Employer contributions 4,668,605 4,664,486
Other -- 2,470
------------- -------------
Total 14,220,774 13,872,255
------------- -------------
Total additions 10,050,211 18,402,848
------------- -------------
Deductions from net assets attributed to:
Participant withdrawals 8,356,853 7,101,485
Transfers out of Plan 3,860,832 683,482
Administrative fees 26,117 8,004
------------- -------------
Total deductions 12,243,802 7,792,971
------------- -------------
Net (decrease) increase (2,193,591) 10,609,877
------------- -------------
Net assets available for benefits:
Beginning of year 101,646,650 91,036,773
------------- -------------
End of year $ 99,453,059 $ 101,646,650
============= =============
The accompanying notes are an integral part of these financial statements.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
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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 or
losses, 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 and overtime) withheld
and contributed to the ESOP up to the annual limitation established by the
Internal Revenue Service or 18% and 15% of the participant's salary in
2000 and 1999, respectively. The maximum amount of a participant's salary
which may be eligible for withholding for any Plan year cannot exceed
$170,000. 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% of the
first 5% and 50% of the next 1% of eligible salary contributed by each
participant. Salary amounts over the 6% limit are not required to be
matched by the Company. The Company's matching contributions are invested
in not less than 25% of Michael Baker Corporation Common Stock or Series B
Common Stock with the remaining 75% invested in accordance with the
participants' investment elections for participant contributions.
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 2000 or 1999.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
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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% vested and nonforfeitable at
all times.
All Company matching contributions will become 100% 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% 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 9.5% to 10.5% at December 31,
2000.
FORFEITED ACCOUNTS
At December 31, 2000 and 1999, forfeited nonvested accounts totaled
$89,621 and $67,968, respectively. These accounts will be used to reduce
future employer contributions. Also, in 2000 and 1999, employer
contributions were reduced by $296,245 and $195,966, respectively, from
forfeited nonvested accounts.
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 2,220,159
shares (cost of $14,065,803) and 2,370,262 shares (cost of $14,886,107) at
December 31, 2000 and 1999, respectively.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
The ESOP's investment in the Company's Series B Common Stock comprises
1,223,477 shares (cost of $7,436,107) at both December 31, 2000 and 1999.
INVESTMENT OPTIONS
Each participant may direct Putnam Investments, Inc. (Putnam) to invest
certain portions of his or her account in investment funds. 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), the
Putnam International Growth Fund (invests in diversified corporate stocks
outside of North America), the Putnam Voyager Fund (invests in diversified
corporate stocks), the Putnam Money Market Fund (invests in short-term
money market securities), the Putnam Investors Fund (invests in large
capitalization stocks), the Putnam S&P 500 Index Fund (invests with the
objective of achieving 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 invests with the goal of seeking
maximum growth of an investment over time, the Balanced Portfolio, which
invests with the goal of seeking a total return for investors in their
peak accumulation years and the Conservative Portfolio, which invests
primarily in domestic fixed-income securities). Contributions by
participants cannot be further directed within the Michael Baker Common
Stock Fund. Additionally, effective December 1, 2000, the following new
funds were added as investment options to the Plan: the AIM Balance Fund
(invests in equity and fixed-income securities), the MFS Massachusetts
Investors Trust (invests primarily in common stock, seeking current income
and long-term growth of capital and income), the PIMCO Total Return Fund
(invests in debt securities, seeking a total return consistent with the
preservation of capital) and the Franklin Small Cap Growth Fund (invests
in equity securities, of small companies, seeking long-term capital
growth). These new investment funds replaced The George Putnam Fund of
Boston, the Putnam Fund for Growth & Income, the Putnam Income Fund and
the Putnam Bond Index Fund, which were discontinued as investment options.
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 distribution and loan processing fees charged by Putnam
are deducted from the respective participant account balances.
TRANSFERS OUT OF PLAN
In connection with the sale of Baker Heavy & Highway and Baker Support
Services, Inc. during 2000, $3.9 million was transferred out of the Plan
to other qualifying plans.
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 adjustments to reflect the
financial statements on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
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, 2000 and 1999. As of December 31,
2000 and 1999, the ESOP owned approximately 40% and 42%, 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 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 net 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.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
INVESTMENTS
The following presents the fair value of investments that represent 5% or
more of the Plan's net assets:
DECEMBER 31,
2000 1999
Michael Baker Common Stock $17,206,232 * $15,702,984 *
Michael Baker Series B Common Stock 9,481,942 * 8,105,532 *
Putnam Growth & Income Fund -- 17,530,241
George Putnam Fund of Boston -- 9,740,456
Putnam New Opportunities Fund 18,251,044 21,841,935
Putnam Voyager Fund 13,721,862 15,355,912
Putnam International Growth Fund 6,200,048 5,316,795
AIM Balanced Fund 8,481,429 --
MFS Massachusetts Investors Trust 15,546,456 --
*Includes nonparticipant-directed investments.
During 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $10,416,883 as follows:
Mutual funds $(14,312,270)
Common stock 3,895,387
------------
$(10,416,883)
============
4. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to investments having nonparticipant-
directed components is as follows:
December 31,
2000 1999
Net assets:
Common stock $ 26,685,507 $ 23,804,133
------------ ------------
$ 26,685,507 $ 23,804,133
============ ============
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
Net assets available for benefits as of December 31, 1999 $ 23,804,133
Changes in net assets:
Contributions 2,053,174
Rollovers (468,524)
Net appreciation 3,895,387
Benefits paid to participants (1,663,340)
Transfers to participant-directed investments (935,124)
Fees (199)
------------
Net assets available for benefits as of December 31, 2000 $ 26,685,507
============
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, 2000:
2000 1999
Net assets available for benefits per the
financial statements $ 99,453,059 $ 101,646,650
Amounts allocated to withdrawing participants -- (982)
------------ -------------
Net assets available for benefits per the Form 5500 $ 99,453,059 $ 101,645,668
============ =============
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500 at December 31, 2000:
Distributions to participants per the
financial statements $ 8,356,853
Add - Distributions to employees authorized
but not paid as of December 31, 2000 --
Less - Distributions to employees authorized
but not paid as of December 31, 1999 (982)
-----------
Distributions to employees per Form 5500 $ 8,355,871
===========
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated June 21, 2000, 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.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
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% vested in their accounts.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2000
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COST OF CURRENT
SHARES DESCRIPTION ASSET VALUE
2,220,159 *Michael Baker Corporation**
Common Stock $14,065,803 $ 17,206,232
1,223,477 *Michael Baker Corporation**
Common Stock - Series B 7,436,107 9,481,942
*AIM Balanced Fund 8,481,429
*MFS Massachusetts Investors Trust 15,546,456
*PIMCO Total Return Fund 2,317,795
*Putnam Voyager Fund 13,721,862
*Putnam New Opportunities Fund 18,251,044
*Putnam International Growth Fund 6,200,048
*Putnam Money Market Fund 4,581,452
*Putnam Asset Allocation -
Growth Portfolio 350,675
*Putnam Asset Allocation -
Balanced Portfolio 668,137
*Putnam Asset Allocation -
Conservative Portfolio 335,889
*Franklin Small Cap Growth Fund 175,208
*Putnam Investors Fund 765,022
*Putnam S&P 500 Index Fund 1,043,917
*Participant loans:
9.5% to 10.5%, due April 17, 2001
to January 15, 2016 328,618
------------
$ 99,455,726
============
* Party-in-interest.
** Includes nonparticipant-directed investments.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------
NUMBER NET
PARTY DESCRIPTION OF PURCHASE SELLING GAIN
INVOLVED OF ASSET TRANSACTIONS PRICE PRICE (LOSS)
Putnam *Michael Baker 264 $2,658,815 $ $
Investments, Inc. Corporation Common Stock** 421 $ $3,672,809 $152,726
* Party-in-interest.
** Nonparticipant directed.
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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 29, 2001 By: /s/ Craig O. Stuver
-----------------------------------
Craig O. Stuver
Senior Vice President,
Corporate Controller and Treasurer
of Michael Baker Corporation,
the Plan Sponsor