<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 1-6627
<TABLE>
<CAPTION>
MICHAEL BAKER CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
<S> <C>
PENNSYLVANIA 25-0927646
---------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Airport Office Park, Building 3, 420 Rouser Road, Coraopolis, PA 15108
- ---------------------------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
(412) 269-6300
-------------------
(Registrant's telephone number,
including area code)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
As of September 30, 1995:
------------------------------
<S> <C>
Common Stock 7,006,074 shares
Series B Common Stock 1,357,478 shares
</TABLE>
<PAGE>
PART I
FORM 10-Q
PAGE 1
MICHAEL BAKER CORPORATION
PART I. FINANCIAL INFORMATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. The statements reflect all adjustments which are, in the opinion
of management, necessary for a fair presentation of the results for the
periods presented. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and the
notes thereto, included in the Company's latest annual report and Form 10-K.
<PAGE>
PART I
FORM 10-Q
PAGE 2
<TABLE>
MICHAEL BAKER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
===========================================================================
<CAPTION>
For the three months ended
----------------------------
Sept. 30, 1995 Sept. 30, 1994
----------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
Total contract revenues $90,620 $119,473
Cost of work performed 80,158 109,231
-----------------------------------------------------------------------------
Gross profit 10,462 10,242
General and administrative expenses 8,373 9,830
----------------------------------------------------------------------------
Income from operations 2,089 412
Other income/(expense):
Interest expense (57) (201)
Interest income 32 34
Other, net (15) 107
---------------------------------------------------------------------------
Income before income taxes 2,049 352
Provision for income taxes 1,020 165
-----------------------------------------------------------------------------
Net income $1,029 $187
===========================================================================
Net income per share $0.12 $0.02
==========================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
PART I
FORM 10-Q
PAGE 3
<TABLE>
MICHAEL BAKER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
============================================================================
<CAPTION>
For the nine months ended
---------------------------
Sept. 30, 1995 Sept. 30, 1994
-----------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
Total contract revenues $266,110 $323,351
Cost of work performed 234,879 292,177
----------------------------------------------------------------------------
Gross profit 31,231 31,174
General and administrative expenses 26,349 30,317
-----------------------------------------------------------------------------
Income from operations 4,882 857
Other income/(expense):
Interest expense (316) (471)
Interest income 81 49
Other, net 84 69
-----------------------------------------------------------------------------
Income before income taxes 4,731 504
Provision for income taxes 2,355 236
---------------------------------------------------------------------------
Net income $2,376 $268
===========================================================================
Net income per share $0.28 $0.03
===========================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
PART I
FORM 10-Q
PAGE 4
<TABLE>
MICHAEL BAKER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
=========================================================================
ASSETS Sept. 30, 1995 Dec. 31, 1994
----------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Current Assets
Cash and cash equivalents $5,735 $3,605
Receivables
Trade 52,242 53,498
Retentions under contracts 9,971 16,120
Cost of contracts in progress, plus estimated
earnings recorded, less billings thereon 19,269 24,246
Prepaid expenses and other 11,487 10,670
----------------------------------------------------------------------------
Total current assets 98,704 108,139
-----------------------------------------------------------------------------
Property, Plant and Equipment,
at cost
Land 693 693
Buildings and improvements 5,950 5,790
Equipment 29,314 27,619
----------------------------------------------------------------------------
35,957 34,102
Less - Accumulated depreciation 21,969 19,132
----------------------------------------------------------------------------
Total property, plant and equipment, net 13,988 14,970
-----------------------------------------------------------------------------
Other Assets
Goodwill, net of accum. amort. of $1,577,000 and
$1,359,000 at Sept. 30, 1995 and Dec. 31, 1994,
respectively 4,740 4,958
Other intangible assets, net of accum. amort. of
$1,488,000 and $3,100,000 at Sept. 30, 1995 and
Dec. 31, 1994, respectively 2,604 3,013
Other assets 3,211 3,714
---------------------------------------------------------------------------
Total other assets 10,555 11,685
-----------------------------------------------------------------------------
Total assets $123,247 $134,794
============================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
PART I
FORM 10-Q
PAGE 5
<TABLE>
MICHAEL BAKER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
==========================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT Sept. 30, 1995 Dec. 31, 1994
----------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Current Liabilities
Current portion of long-term debt $12 $2,539
Accounts payable 27,071 42,876
Accrued employee compensation 5,589 4,224
Accrued insurance 8,503 8,167
Other accrued expenses 21,564 19,304
Excess of billings on contracts in progress over
cost and estimated earnings recorded thereon 12,000 8,638
----------------------------------------------------------------------------
Total current liabilities 74,739 85,748
-----------------------------------------------------------------------------
Other Liabilities
Long-term debt 1,401 3,960
Other -- 355
----------------------------------------------------------------------------
Total liabilities 76,140 90,063
-----------------------------------------------------------------------------
Shareholders' Investment
Common Stock, par value $1, authorized 44,000,000
shares, issued 7,006,074 and 7,001,435 shares at
Sept. 30, 1995 and Dec. 31, 1994, respectively 7,006 7,002
Series B Common Stock, par value $1, authorized
6,000,000 shares, issued 1,357,478 and 1,362,117
shares at Sept. 30, 1995 and Dec. 31, 1994,
respectively 1,358 1,362
Paid-in surplus 36,534 36,534
Retained earnings/(accumulated deficit) 2,209 (167)
---------------------------------------------------------------------------
Total shareholders' investment 47,107 44,731
---------------------------------------------------------------------------
Total liab. and shareholders' investment $123,247 $134,794
===========================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
PART I
FORM 10-Q
PAGE 6
<TABLE>
MICHAEL BAKER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
============================================================================
For the nine months ended
---------------------------------
Sept. 30, 1995 Sept. 30, 1994
-----------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Cash Flows from Operating Activities
Net income $2,376 $268
Adjustments to reconcile net income to net cash provided
by/(used in)operating activities:
Depreciation and amortization 3,937 3,762
Deferred income taxes 327 (2,541)
Changes in assets and liabilities:
Dec/(inc) in receivables, contracts in progress
and advanced billings 15,745 (8,999)
(Dec)/inc in accts. payable and accrd. exps. (13,836) 783
Increase in other net assets (448) (457)
----------------------------------------------------------------------------
Total adjustments 5,725 (7,452)
----------------------------------------------------------------------------
Net cash provided by/(used in) operating act 8,101 (7,184)
-----------------------------------------------------------------------------
Cash Flows from Investing Activities
Additions to property, plant and equipment (2,521) (4,366)
------------------------------------------------------------------------
Net cash used in investing activities (2,521) (4,366)
----------------------------------------------------------------------------
Cash Flows from Financing Activities
(Repay. of)/proceeds from revolving credit loans (2,035) 11,000
Repayments of long-term debt (1,415) (512)
----------------------------------------------------------------------------
Net cash (used in)/prov. by financing act. (3,450) 10,488
----------------------------------------------------------------------------
Net increase/(decrease) in cash and cash equivalents 2,130 (1,062)
Cash and cash equivalents at beginning of year 3,605 5,103
----------------------------------------------------------------------------
Cash and cash equivalents at end of period $5,735 $4,041
===========================================================================
Supplemental Disclosure of Cash Flow Data
Interest paid $520 $477
Income taxes paid $518 $3,160
===========================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
/TABLE
<PAGE>
PART I
FORM 10-Q
PAGE 7
MICHAEL BAKER CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995
(Unaudited)
NOTE 1 - LONG-TERM DEBT AND BORROWING ARRANGEMENTS
In April 1995, the Company entered into an amended secured credit agreement
(the "Agreement") with Mellon Bank, N.A. Under its terms, the Agreement
provides for a decreasing commitment amount through May 31, 1996. The
initial commitment of $17,500,000 was reduced to $15,500,000 as of September
30, 1995, and will be further reduced by $1,000,000 at the end of each
calendar quarter, such that the ultimate commitment that will be in effect
for the period March 31, 1996 through May 31, 1996 shall be $13,500,000.
Under the Agreement, the commitment includes the sum of the principal amount
of revolving credit loans outstanding and the aggregate face value of certain
outstanding letters of credit. The Company believes that the commitment
available will be adequate to meet its borrowing and letter of credit
requirements for the term of the Agreement. The Company intends to renew the
Agreement at its conclusion and believes that it will have the ability to do
so.
As of September 30, 1995, there were no borrowings outstanding under the
Agreement; however, the Company had outstanding letters of credit totaling
$4,001,000. An additional letter of credit totaling $2,800,000 was
outstanding at September 30, 1995, but was not covered by the Agreement.
NOTE 2 - EARNINGS PER SHARE
Earnings per share computations are based upon weighted average shares of
8,371,838 and 8,363,552 shares for the three-month period, and 8,366,314 and
8,363,552 for the nine-month period ended September 30, 1995 and 1994,
respectively.
The Company's 1995 Stock Incentive Plan, which was approved at the annual
meeting of shareholders on May 24, 1995, had no dilutive effect on earnings
per share for either of the three or nine-month periods ended September 30,
1995. Stock options are included as share equivalents using the treasury
stock method. The Company had no other securities included in the computation
of fully diluted earnings per share.
<PAGE>
PART I
FORM 10-Q
PAGE 8
MICHAEL BAKER CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995
(Unaudited)
NOTE 3 - LITIGATION
The Company has been named as a defendant or co-defendant in legal
proceedings wherein substantial damages are claimed. Such proceedings are
not uncommon to the Company's business. After consultations with counsel,
management believes that the Company has recognized adequate provisions for
these proceedings and their ultimate resolutions will not have a material
adverse effect on the consolidated financial position or annual results of
operations of the Company. The most significant of these proceedings are
discussed below.
In 1987, a lawsuit was brought in the Supreme Court of the State of New York,
Bronx County, by the Dormitory Authority of the State of New York against a
number of parties, including the Company and one of its wholly owned
subsidiaries, that asserts breach of contract and alleges damages of $13
million. The Company, which was not a party to the contract underlying the
lawsuit, contends that there is no jurisdiction with respect to the Company
and that it cannot be held liable for any conduct of the subsidiary. Both
the Company and the subsidiary are contesting liability issues and have filed
cross-claims and third-party claims against other entities involved in the
project.
In September 1991, the Company, through a newly formed subsidiary, Baker
Mellon Stuart Construction, Inc. ("BMSCI"), acquired certain assets and
contracts from Federal Street Construction Co., Inc. ("FSC"), which
thereafter continued to perform services under various contracts that were
not acquired by BMSCI. On May 11, 1992, a public body that had contracted
with FSC in 1989 to construct a $38 million project filed a lawsuit in state
court in Illinois against FSC and its surety alleging various claims in
connection with the contract. This contract was not acquired by BMSCI, but
the plaintiff also named the Company, BMSCI and another subsidiary as
defendants based upon a legal theory of successor liability by virtue of the
sale of certain assets and contracts to BMSCI by FSC. Based upon facts known
to management at this time and consultations with defense counsel, in manage-
ment's opinion, the Company has valid defenses.
<PAGE>
PART I
FORM 10-Q
PAGE 9
REVIEW BY INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, the Company's independent accountants, has performed
a limited review of the financial information for the three-month and
nine-month periods ended September 30, 1995, contained in this report. As a
result of such review, no material adjustments or additional disclosures with
respect to such financial information were recommended by Price Waterhouse
LLP.
With respect to the unaudited condensed consolidated financial information of
Michael Baker Corporation and subsidiaries as of and for the three-month and
nine-month periods ended September 30, 1995, Price Waterhouse LLP reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
dated October 18, 1995, appearing herein, states that they did not audit and
they do not express an opinion on the unaudited condensed consolidated
financial information. Price Waterhouse LLP has not carried out any
significant or additional tests beyond those which would have been necessary
if their report had not been included. Accordingly, the degree of reliance on
their report on such information should be restricted in light of the limited
nature of the review procedures applied. Price Waterhouse LLP is not subject
to the liability provisions of Section 11 of the Securities Act of 1933 for
their report on the unaudited consolidated financial information because that
report is not a "report" or a "part" of the registration statement prepared
or certified by Price Waterhouse LLP within the meaning of Sections 7 and 11
of the Act. <PAGE>
PART I
FORM 10-Q
PAGE 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total Contract Revenues
Total contract revenues were $90,620,000 for the third quarter of fiscal
1995, compared to $119,473,000 for the same period in fiscal 1994, a decrease
of $28,853,000. This decrease was caused by the General Buildings business
unit which experienced a reduction in total contract revenues of $28,936,000.
This reduction resulted primarily from lower volumes in its construction
division as well as from the substantial completion of Baker Support
Services' military housing renovation business, which was discontinued in
1993.
Total contract revenues were $266,110,000 for the first nine months of fiscal
1995 compared to $323,351,000 for the same period in fiscal 1994, a decrease
of $57,241,000. On a nine-month basis, the General Buildings business unit
accounted for $50,587,000 of this decrease for the same reasons as stated
above.
Gross Profit
The Company's gross profit of $10,462,000 for the third quarter of 1995
represents a slight improvement over its prior year third quarter gross
profit of $10,242,000; however, as a percentage of total contract revenues,
gross profit climbed to 11.5% in the third quarter of 1995, compared to 8.6%
in the third quarter of 1994. With the exception of the Civil business unit,
each of the Company's business units reported third quarter improvements in
their gross profits as a percentage of total contract revenues. The Civil
unit's decrease resulted from charges taken on several projects in its
engineering and Baker Support Services operations and maintenance divisions
during the third quarter of 1995.
The most significant percentage improvement resulted from the General
Buildings business unit. This unit's construction division showed an
improvement in its third quarter gross profit percentage through a
combination of having completed certain lower profitability jobs since the
prior year and a favorable contract settlement which offset its cost of work
performed by $350,000 for the third quarter of 1995. Also affecting this
unit's third quarter 1995 improvement was the reversal of reserves totaling
$250,000 that were established in 1993 to provide for estimated losses on the
completion of certain Baker Support Services military housing renovation
contracts. The amount of reserves reversed was determined by management to be
excess based on the risk remaining on the final two military housing contracts
that were not yet completed at September 30, 1995.
<PAGE>
PART I
FORM 10-Q
PAGE 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross Profit (Cont.)
Gross profit for the first nine months of 1995 was $31,231,000 versus
$31,174,000 for the first nine months of 1994.
General and Administrative Expenses
General and administrative ("G&A") expenses decreased by $1,457,000 to
$8,373,000 for the third quarter of 1995 from $9,830,000 in the third quarter
of 1994. This reduction is primarily attributable to the previously-announced
cost reduction programs at Baker/MO and in the construction divisions of the
Company's General Buildings and Transportation business units. These cost
reductions were effected during 1994 and early 1995 to better align each of
the divisions with its expected revenues, and are expected to result in an
annual reduction in G&A expenses of approximately $5 million.
G&A expenses decreased by $3,968,000 to $26,349,000 for the first nine months
of 1995 versus $30,317,000 for the same period in fiscal 1994.
Income Taxes
The Company had a provision for income taxes of 49.8% for the first nine
months of 1995 compared to 46.8% for the first nine months of 1994. The
difference between these percentages and the 34% statutory tax rate is
primarily attributable to state and foreign income taxes and the
nondeductibility of certain normal business expenses. The 1995 provision rate
increased due to a reduction of foreign tax benefits. Another difference in
the rates relates to certain states having established limitations on the
amount of net operating losses that may be carried forward to benefit future
years. Furthermore, certain states do not allow taxable losses generated by
subsidiaries to be offset by taxable income generated by other subsidiaries
within the Company's consolidated group.<PAGE>
PART I
FORM 10-Q
PAGE 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTRACT BACKLOG
The funded backlog of work to be performed was $355.9 million as of September
30, 1995, compared to funded backlog of $290.2 million at June 30, 1995 and
$283.3 million at December 31, 1994. "Funded" backlog represents that
portion of work supported by signed contracts and for which the procuring
agency has appropriated and allocated the funds to pay for the work.
Total backlog, which includes that portion of contract value for which
options are still to be exercised (such additive amount defined as "unfunded"
backlog), was $561.4 million as of September 30, 1995, $522.4 million as of
June 30, 1995, and $468.3 million at December 31, 1994. Among the more
significant new work added during the third quarter of 1995 were a $55 million
contract for the General Buildings unit to construct an airport terminal in
Buffalo, New York, and a six-year, $11 million military housing maintenance
contract plus a five-year, $6 million contract extension to provide military
base operation and maintenance services for the Civil unit.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $8,101,000 for the first nine
months of 1995, compared to net cash used in operating activities of
$7,184,000 for the same period in 1994. The most significant source of cash
from operating activities during 1995 was a reduction of $15,745,000 in
accounts receivable and other contract-related assets. This reduction
reflects a cash flow improvement from the first nine months of 1994 by
$24,744,000, due to the combination of lower 1995 business volumes and
significant cash collections related to claims resolutions on certain
construction contracts. The most significant use of cash from operating
activities was a decrease in accounts payable and other accrued expenses by
$13,836,000. This decrease adversely affected cash flow relative to the
comparable 1994 period by $14,619,000, and is primarily attributable to the
lower volume of business and a change in the Company's construction contract
mix toward more self-performed work in 1995 relative to the fourth quarter
of 1994. Self-performed work requires payments to the Company's employees as
the work is performed, while subcontracted work requires payments to
subcontractors only after the Company receives related payments from its
customers.
Net cash used in investing activities was $2,521,000 for the first nine
months of 1995, compared to $4,366,000 for the first nine months of 1994.
This amount solely comprises capital expenditures for both periods. During
the first nine months of 1994, non-recurring capital expenditures totaling
$974,000 related to the completion of renovations to the Company's office
building in Beaver, Pennsylvania, were incurred. The remainder of the
<PAGE>
PART I
FORM 10-Q
PAGE 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (Cont.)
current year reduction reflects management's concerted effort to more closely
monitor capital expenditures in 1995.
Net cash used in financing activities was $3,450,000 for the first nine
months of 1995 compared to net cash provided by financing activities of
$10,488,000 in 1994. The 1995 usage resulted from the repayment of all
borrowings on the Company's revolving credit facility during the first nine
months of 1995.
The Company's working capital increased slightly during the first nine months
of 1995 to $23,965,000 at September 30, 1995, from $22,391,000 at December
31, 1994. The current ratio increased to 1.32:1 at September 30, 1995,
compared to 1.26:1 at December 31, 1994. These improvements reflect the
result of the Company being in an invested position of $3,657,000 at
September 30, 1995, as compared with a net borrowed position at the end of
1994.
In April 1995, the Company entered into an amended secured credit agreement
with Mellon Bank, N.A. This agreement provides for a decreasing commitment
amount, which covers loans and letters of credit, through May 31, 1996. The
initial commitment of $17,500,000 was reduced to $15,500,000 as of September
30, 1995, and will be further reduced by $1,000,000 at the end of each
calendar quarter. As of September 30, 1995, there were no borrowings
outstanding under the credit agreement. During the third quarter of 1995, the
Company reduced the outstanding letters of credit by approximately $2,900,000
to $4,001,000 by securing its insurance program through a bonding arrangement.
Management believes that the credit agreement will be adequate to meet its
borrowing and letter of credit requirements through May 31, 1996.
The Company is required to provide bid and performance bonding on certain
construction contracts, and has a $350 million bonding line available through
Aetna Casualty and Surety Company. Management believes that its bonding line
will be sufficient to meet its bid and performance needs for the foreseeable
future.
A significant portion of the Company's cash flow is dependent upon
appropriations of public funds and the timing of payments under long-term
contracts. The Company's short and long-term liquidity will be affected by
the narrow margins on construction work in backlog, and its ability to
sustain profitable operations and to control costs during periods of lower
<PAGE>
PART I
FORM 10-Q
PAGE 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (Cont.)
volumes. Management has already reduced overhead significantly and will
reduce it further if business conditions require such actions. Additional
external factors such as price fluctuations in the energy industry and the
effects of interest rates on private construction projects could affect the
Company. At this time, management believes that funds generated from
operations and existing short-term and potential long-term borrowing
capabilities will be sufficient to meet its operating requirements for the
next year.
<PAGE>
PART I
FORM 10-Q
PAGE 15
Independent Accountant's Review Report
October 18, 1995
To the Shareholders and Board of Directors of
Michael Baker Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Michael Baker Corporation (a Pennsylvania Corporation) and subsidiaries (the
Company) as of September 30, 1995, and the related condensed consolidated
statements of income and of cash flows for the 3-month and 9-month periods
then ended. This financial information is the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial information as of
September 30, 1995, and for the 3-month and 9-month periods then ended, for
it to be in conformity with generally accepted accounting principles.
The condensed consolidated statements of income and cash flows for the
9-month period ended September 30, 1994, represent the combination of the
condensed statements for the 3-month period ended September 30, 1994, reviewed
by us, and the condensed statements for the 6-month period ended June 30,
1994, reviewed by other independent accountants whose report dated July 19,
1994, stated that they were not aware of any material modifications that
should be made to such interim financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994, and the
related consolidated statements of income, of changes in shareholders'
investment and of cash flows for the year then ended (not presented herein),
and in our report dated February 17, 1995, except as to Note 6, which is as
of April 13, 1995, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1994,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
<PAGE>
PART II
FORM 10-Q
PAGE 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following exhibits are included herewith as a part of this
Report:
<TABLE>
<S> <C>
Exhibit No. Description
----------- ------------
15 Letter regarding unaudited interim financial information
</TABLE>
(b) Reports on Form 8-K
During the third quarter ended September 30, 1995, the Company
filed no reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
MICHAEL BAKER CORPORATION
Dated: November 6, 1995 By: /s/ J. Robert White
---------------------
J. Robert White
Executive Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,735
<SECURITIES> 0
<RECEIVABLES> 52,242
<ALLOWANCES> 0
<INVENTORY> 19,269
<CURRENT-ASSETS> 98,704
<PP&E> 35,957
<DEPRECIATION> 21,969
<TOTAL-ASSETS> 123,247
<CURRENT-LIABILITIES> 74,739
<BONDS> 1,401
<COMMON> 8,364
0
0
<OTHER-SE> 38,743
<TOTAL-LIABILITY-AND-EQUITY> 123,247
<SALES> 266,110
<TOTAL-REVENUES> 266,110
<CGS> 234,879
<TOTAL-COSTS> 234,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 316
<INCOME-PRETAX> 4,731
<INCOME-TAX> 2,355
<INCOME-CONTINUING> 2,376
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,376
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
Exhibit No. 15
November 6, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Michael Baker Corporation (the Company) has included our
report dated October 18, 1995 (issued pursuant to the provisions of Statement
on Auditing Standards No. 71) in the Company's Form 10-Q to be filed on or
about November 6, 1995. We are also aware of our responsibilities under the
Securities Act of 1933.
Yours very truly,
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
