<PAGE>
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, 1997
Commission file number 1-6627
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
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Financial Statements and Additional Information
December 31, 1997 and 1996
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Financial Statements
December 31, 1997 and 1996
- -------------------------------------------------------
Index
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits -
December 31, 1997 and 1996
Statement of Changes in Net Assets Available for
Benefits With Fund Information - Year Ended
December 31, 1997
Statement of Changes in Net Assets Available for
Benefits With Fund Information - Year Ended
December 31, 1996
Notes to Financial Statements
Additional Information:*
Schedule of Assets Held for Investment Purposes -
Form 5500, Item 27(a)
Schedule of Reportable Transactions -
Form 5500, Item 27(d)
* 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.<PAGE>
Report of Independent Accountants
April 30, 1998
To the Participants and Administrator
of the Michael Baker 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 Employee Stock Ownership Plan (the Plan) at
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Plan's management; 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.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not
a required part of the basic financial statements but is additional
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the statement of changes in net assets available for benefits.
Schedules I and II and the Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Michael Putnam
Baker Growth &
Common Stock Income
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 304,808 $ 1,109,350
Employer's 2,448,866 155,227
Dividends/interest income -- 1,972,919
Net appreciation (depreciation)
in fair value of investments 13,026,758 912,037
Interfund transfers - net (871,309) 517,786
------------ -----------
Total additions 14,909,123 4,667,319
------------ -----------
Deductions:
Distributions to participants 2,243,478 1,119,148
Fees 549 1,755
------------ -----------
Total deductions 2,244,027 1,120,903
------------ -----------
Net increase (decrease) 12,665,096 3,546,416
Net assets available for benefits:
Beginning of year 24,478,713 11,791,338
------------ -----------
End of year $37,143,809 $15,337,754
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
George Putnam
Putnam New
Fund of Opportunities
Boston Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 474,177 $ 1,827,420
Employer's 69,209 246,460
Dividends/interest income 945,804 137,414
Net appreciation (depreciation)
in fair value of investments 855,433 835,863
Interfund transfers - net (345,029) 220,158
----------- ------------
Total additions 1,999,594 3,267,315
----------- ------------
Deductions:
Distributions to participants 948,591 218,205
Fees 3,358 295
----------- ------------
Total deductions 951,949 218,500
----------- ------------
Net increase (decrease) 1,047,645 3,048,815
Net assets available for benefits:
Beginning of year 8,974,703 3,338,982
----------- ------------
End of year $10,022,348 $ 6,387,797
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Putnam
Money Putnam
Market Voyager
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 279,602 $ 1,280,366
Employer's 33,280 164,750
Dividends/interest income 166,782 263,856
Net appreciation (depreciation)
in fair value of investments -- 449,361
Interfund transfers - net (196,833) 427,775
----------- ------------
Total additions 282,831 2,586,108
----------- ------------
Deductions:
Distributions to participants 491,564 147,004
Fees 523 344
----------- ------------
Total deductions 492,087 147,348
----------- ------------
Net increase (decrease) (209,256) 2,438,760
Net assets available for benefits:
Beginning of year 3,284,128 2,069,616
----------- ------------
End of year $ 3,074,872 $ 4,508,376
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Putnam
Putnam International
Income Growth
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 230,734 $ 412,350
Employer's 30,936 55,875
Dividends/interest income 63,942 88,033
Net appreciation (depreciation)
in fair value of investments 14,988 50,407
Interfund transfers - net 169,387 397,435
----------- ------------
Total additions 509,987 1,004,100
----------- ------------
Deductions:
Distributions to participants 61,879 68,805
Fees 126 20
----------- ------------
Total deductions 62,005 68,825
----------- ------------
Net increase (decrease) 447,982 935,275
Net assets available for benefits:
Beginning of year 746,635 614,208
----------- ------------
End of year $ 1,194,617 $ 1,549,483
============ ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Participant
Loans Other Total
Additions:
<S> <C> <C> <C>
Contributions:
Participants' $ -- $ 193,981 $ 6,112,788
Employer's -- 117,015 3,321,618
Dividends/interest income 3,785 -- 3,642,535
Net appreciation (depreciation)
in fair value of investments -- -- 16,144,847
Interfund transfers - net (19,271) (300,099) --
----------- ----------- ------------
Total additions (15,486) 10,897 29,221,788
----------- ----------- ------------
Deductions:
Distributions to participants -- -- 5,298,674
Fees -- -- 6,970
----------- ----------- ------------
Total deductions -- -- 5,305,644
----------- ----------- ------------
Net increase (decrease) (15,486) 10,897 23,916,144
Net assets available for benefits:
Beginning of year 44,782 300,099 55,643,204
----------- ----------- ------------
End of year $ 29,296 $ 310,996 $79,559,348
============ =========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Michael Dreyfus/Laurel
Baker Prime Money
Common Stock Market
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 513,196 $ 119,472
Employer's 3,208,781 --
Dividends/interest income 276 41,979
Net appreciation (depreciation)
in market value of investments 4,610,960 --
Interfund transfers - net (303,416) 102,309
------------ ------------
Total additions 8,029,797 263,760
------------ ------------
Deductions:
Distributions to participants 1,011,910 213,895
Fees 235 --
----------- ------------
Total deductions 1,012,145 213,895
----------- ------------
Net increase (decrease) 7,017,652 49,865
Transfer from Mellon to Putnam
(Note 1) -- (3,527,151)
Net assets available for benefits:
Beginning of year 17,461,061 3,477,286
------------ ------------
End of year $24,478,713 $ --
============ =============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Dreyfus
Premier Disciplined
Balanced Stock
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 335,999 $ 486,900
Employer's -- --
Dividends/interest income 434,097 443,089
Net appreciation (depreciation)
in market value of investments -- --
Interfund transfers - net (239,141) 180,106
------------ ------------
Total additions 530,955 1,110,095
------------ ------------
Deductions:
Distributions to participants 290,512 322,437
Fees -- --
------------ ------------
Total deductions 290,512 322,437
------------ ------------
Net increase (decrease) 240,443 787,658
Transfer from Mellon to Putnam
(Note 1) (9,011,200) (11,566,592)
Net assets available for benefits:
Beginning of year 8,770,757 10,778,934
------------ -------------
End of year $ -- $ --
============ =============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Dreyfus Putnam
Bond Growth &
Market Index Income
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 58,271 $ 827,363
Employer's -- --
Dividends/interest income (12,582) 945,122
Net appreciation (depreciation)
in market value of investments -- 499,701
Interfund transfers - net 70,050 (1,595,842)
----------- ------------
Total additions 115,739 676,344
----------- ------------
Deductions:
Distributions to participants 12,848 451,512
Fees -- 86
----------- ------------
Total deductions 12,848 451,598
----------- ------------
Net increase (decrease) 102,891 224,746
Transfer from Mellon to Putnam
(Note 1) (557,456) 11,566,592
Net assets available for benefits:
Beginning of year 454,565 --
----------- ------------
End of year $ -- $11,791,338
=========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
George Putnam
Putnam New
Fund of Opportunities
Boston Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 416,460 $ 1,386,648
Employer's -- --
Dividends/interest income 744,618 25,595
Net appreciation (depreciation)
in market value of investments 242,783 (103,031)
Interfund transfers - net (1,037,678) 2,125,032
------------ ------------
Total additions 366,183 3,434,244
------------ ------------
Deductions:
Distributions to participants 402,629 95,196
Fees 51 66
------------ ------------
Total deductions 402,680 95,262
------------ ------------
Net increase (decrease) (36,497) 3,338,982
Transfer from Mellon to Putnam
(Note 1) 9,011,200 --
Net assets available for benefits:
Beginning of year -- --
------------ ------------
End of year $ 8,974,703 $ 3,338,982
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Putnam
Money Putnam
Market Voyager
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 333,200 $ 965,526
Employer's -- --
Dividends/interest income 133,673 128,401
Net appreciation (depreciation)
in market value of investments -- (99,125)
Interfund transfers - net (448,463) 1,085,514
------------ ------------
Total additions 18,410 2,080,316
------------ ------------
Deductions:
Distributions to participants 261,298 10,677
Fees 135 23
------------ ------------
Total deductions 261,433 10,700
------------ ------------
Net increase (decrease) (243,023) 2,069,616
Transfer from Mellon to Putnam
(Note 1) 3,527,151 --
Net assets available for benefits:
Beginning of year -- --
------------ ------------
End of year $ 3,284,128 $ 2,069,616
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Putnam
Putnam International
Income Growth
Fund Fund
Additions:
<S> <C> <C>
Contributions:
Participants' $ 169,146 $ 260,009
Employer's -- --
Dividends/interest income 33,956 8,064
Net appreciation (depreciation)
in market value of investments 10,783 32,430
Interfund transfers - net (14,086) 316,803
---------- ------------
Total additions 199,799 617,306
---------- ------------
Deductions:
Distributions to participants 10,618 3,091
Fees 2 7
---------- ------------
Total deductions 10,620 3,098
---------- ------------
Net increase (decrease) 189,179 614,208
Transfer from Mellon to Putnam
(Note 1) 557,456 --
Net assets available for benefits:
Beginning of year -- --
----------- ------------
End of year $ 746,635 $ 614,208
=========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Benefits With Fund
Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Participant
Loans Other Total
Additions:
<S> <C> <C> <C>
Contributions:
Participants' $ -- $ 184,130 $ 6,056,320
Employer's -- 115,969 3,324,750
Dividends/interest income 3,876 -- 2,930,164
Net appreciation (depreciation)
in market value of investments -- -- 5,194,501
Interfund transfers - net (7,534) (233,654) --
-------- ---------- ------------
Total additions (3,658) 66,445 17,505,735
-------- ---------- ------------
Deductions:
Distributions to participants -- -- 3,086,623
Fees -- -- 605
-------- ---------- ------------
Total deductions -- -- 3,087,228
-------- ---------- ------------
Net increase (decrease) (3,658) 66,445 14,418,507
Transfer from Mellon to Putnam
(Note 1) -- -- --
Net assets available for benefits:
Beginning of year 48,440 233,654 41,224,697
-------- ---------- ------------
End of year $44,782 $ 300,099 $55,643,204
======== ========== ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
December 31, 1997 and 1996
Notes to Financial Statements
- -----------------------------------------------------------------------------
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 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 expenses 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).
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). At times, however, 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 short-term investment funds, 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 2,588,477 (cost
of $14,709,722) and 2,613,566 (cost of $14,016,656) shares of Common Stock and
1,225,689(cost of $7,448,445) and 1,225,689 (cost of $7,448,445) shares of
Series B Common Stock at December 31, 1997 and 1996, 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) withheld and contributed to the
ESOP. The maximum amount of a participant's salary which may be eligible for
withholding for any Plan year can not exceed $160,000. Additionally, 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 tax-
qualified plan or tax-qualified individual retirement account.
INVESTMENT OPTIONS
Each participant may direct Putnam Investments, Inc. (Putnam) to invest
certain portions of his or her account in investment funds managed by Putnam.
Effective April 1, 1996, the Plan agreement was amended as a result of a
change in trustees from Mellon Bank N.A. (Mellon) to Putnam. Approximately
$44,420,000 in Plan assets (including the Michael Baker Common Stock Fund) was
transferred from Mellon to Putnam, which replaced Mellon as investment manager.
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
December 31, 1997 and 1996
Notes to Financial Statements
- -----------------------------------------------------------------------------
As a result of this change, investment funds available to participants are
the Michael Baker Common Stock Fund (invests exclusively in common stock of
the Company), the Putnam New Opportunities Fund (invests in long-term growth
stocks within emerging industries), Putnam International Growth Fund (invests
in diversified corporate stocks outside of North America), Putnam Voyager
Fund (invests in diversified corporate stocks), Putnam Growth and Income Fund
(invests in long-term growth stocks), George Putnam Fund of Boston (invests in
diversified capital growth and current income stocks and bonds), Putnam Income
Fund (invests in corporate bonds) and the Putnam Money Market Fund (invests in
short-term money market securities).
Prior to April 1, 1996, the investment fund options available to employees
included the Michael Baker Common Stock Fund (invested exclusively in common
stock of the Company), managed by Mellon; the Dreyfus/Laurel Prime Money
Market Fund (invested in short-term, income producing securities); the Premier
Balanced Fund (invested in common stocks and bonds in proportions consistent
with their expected returns and risks as determined by the portfolio's
adviser); the Dreyfus Disciplined Stock Fund (invested in diversified
corporate stocks); and the Dreyfus Bond Market Index Fund (investing in U.S.
government and Securities and Exchange Commission (SEC)-registered obligations
of domestic corporations, foreign governments and supranational organizations).
During this time, Mellon served as the Adviser, Custodian, Fund Accountant and
Transfer Agent for the aforementioned investment funds.
Contributions by participants cannot be further directed within The Michael
Baker Common Stock Fund.
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.
Effective July 1, 1997, 50 percent of the matching contribution is invested in
the Company's Common Stock or Series B Common Stock and 50 percent is invested
in accordance with the participants investment election for employee
contributions. Prior to July 1, 1997, matching contributions could be
invested only in the Company's Common Stock or Series B Common Stock. During
1997 and 1996, the Company matched participants' contributions on a 100
percent basis for the first 5 percent of participants' salaries contributed to
the Plan.
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 1997 or 1996.
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
under 401(k) and PAYSOP options are 100 percent vested and nonforfeitable at
all times.
All Company matching discretionary contributions will become 100 percent
vested upon attainment of 3 years of service with the Company or, if earlier,<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
December 31, 1997 and 1996
Notes to Financial Statements
- ------------------------------------------------------------------------------
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, based on the vesting requirements, is discussed above. All
distributions will be made in the form of a single lump-sum distribution or in
substantially equal 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 are limited to
the lower of $50,000 or 50 percent of the employee's pre-tax and rollover
contributions. 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 7.0 percent to 13.5 percent.
FORFEITED ACCOUNTS
At December 31, 1997 and 1996, forfeited nonvested accounts totaled $260,064
and $105,878, respectively. These accounts will be used to reduce future
employer contributions. Also, in 1997 and 1996, employer contributions were
reduced by $96,046 and $38,672, respectively, from forfeited nonvested
accounts.
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 record 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
closing market values as of December 31, 1997 and 1996. As of December 31,
1997 and 1996, the ESOP owns approximately 45 percent and 46 percent,
respectively, of the outstanding shares of the Company's common stock;
therefore, such valuation might be subject to significant fluctuation in the
event of a substantial liquidation of such holdings by the ESOP. The
accompanying financial statements should be read in conjunction with the
consolidated financial statements of the Company, which are incorporated by
reference as Exhibit 13.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
December 31, 1997 and 1996
Notes to Financial Statements
- -----------------------------------------------------------------------------
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 net appreciation
(depreciation) fair market value of investments in the statements of changes
in net assets available for benefits.
DISTRIBUTIONS
Distributions to participants are recorded when paid.
3. PLAN ADMINISTRATION AND FEES
Prior to December 1997, the ESOP Committee was a named fiduciary responsible
for Plan administration (via the benefits administrator). Effective December
11, 1997, the role of the ESOP Committee was revised to serve in an advisory
capacity to the Board of Directors of the Company with respect to design and
operation of the Plan while retaining no discretionary authority or
responsibility with respect to such functions. The Committee retained the
duty to establish the funding policy of the Plan and review the Plan's
investment performance.
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. Effective
April 1, 1996, certain reasonable distribution and loan processing fees
charged by Putnam are deducted from the respective participant account
balances.
4. PLAN TERMINATION
Although it has not expressed an intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
December 31, 1997 and 1996
Notes to Financial Statements
- -----------------------------------------------------------------------------
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 Form 5500:
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Net assets available for benefits
per the financial statements $79,559,348 $55,643,204
------------ ------------
Amounts allocated to withdrawing
participants:
Michael Baker Common Stock Fund (77,741) (94,277)
Putnam Money Market Fund (8,751) (8,063)
Putnam New Opportunities Fund (75,815) (894)
George Putnam Fund of Boston (19,733) --
Putnam Growth and Income Fund (48,916) --
Putnam Income Fund (9,350) --
Putnam Voyager Fund (52,118) --
Putnam International Growth Fund (18,058) --
----------- ------------
(310,482) (103,234)
----------- ------------
Net assets available for benefits
per Form 5500 $79,248,866 $55,539,970
============ ============
</TABLE>
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31, 1997
<S> <C>
Distributions to participants per the
financial statements $5,298,674
Add -- Distributions to employees
authorized but not paid as of
December 31, 1997 310,482
Less -- Distributions to employees
authorized but not paid as of
December 31, 1996 (103,234)
----------
Distributions to employees per
Form 5500 $5,505,922
===========
</TABLE>
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated December 30, 1994, that the Plan and related trust are designed
in accordance with the applicable sections of the Internal Revenue Code (IRC).
The Plan has been amended since receiving the determination letter. However,
the Plan Administrator and the Plan's counsel believe that the Plan is
designed and is currently being operated in compliance with applicable
requirements of the IRC.
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Schedule of Assets Held for Investment Purposes - Form 5500, Item 27a
December 31, 1997
Additional Information - Schedule I
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of Current
Shares Description asset value
*Michael Baker Corporation
2,588,477 Common Stock $14,709,722 $25,237,651
*Michael Baker Corporation
1,225,689 Common Stock - Series B 7,448,445 11,950,477
14,367 *Putnam Temporary Investments 14,367 14,367
557,416 *George Putnam Fund of Boston 9,092,302 10,022,348
784,941 *Putnam Growth & Income Fund 14,169,666 15,337,754
168,019 *Putnam Income Fund 1,170,741 1,194,617
236,660 *Putnam Voyager Fund 4,173,225 4,508,376
131,301 *Putnam New Opportunities Fund 5,692,826 6,387,797
92,950 *Putnam International Growth Fund 1,484,754 1,549,483
3,074,872 *Putnam Money Market Fund 3,074,872 3,074,872
N/A *Participant loans:
7.0% to 13.5%, due March 27,
1998 to March 22, 2002 29,296 29,296
----------- -----------
$61,060,216 $79,307,038
============ ===========
</TABLE>
* Party-in-interest
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Schedule of Reportable Transactions - Form 5500, Item 27(d)
December 31, 1997
Additional Information - Schedule II
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Number Net
Party Description Of Purchase Selling Cost of Gain
Involved Of asset Transactions Price Price Asset (Loss)
- --------- --------- ------------- -------- ------- ------- ------
Putnam Michael Baker 218 $3,379,969 -- $3,379,969 --
Investments, Corporation 330 -- $3,743,285 $2,667,257 $1,076,028
Inc. Common Stock
Putnam George Putnam 181 $1,782,301 -- $1,782,301 --
Investments, Fund of Boston 212 -- $1,590,089 $1,454,342 $ 135,747
Inc.
Putnam Putnam Growth 250 $4,270,760 -- $4,270,760 --
Investments, and Income 204 -- $1,636,380 $1,446,903 $ 189,477
Inc. Fund
Putnam Putnam 216 $2,423,225 -- $2,423,225 --
Investments, Voyager Fund 139 -- $ 433,827 $ 420,262 $ 13,565
Inc.
Putnam Putnam 230 $2,938,252 -- $2,938,252 --
Investments, New 153 -- $ 725,301 $ 684,318 $ 40,983
Inc. Opportunities
Fund
Putnam Putnam Money 328 $1,519,635 -- $1,519,635 --
Investments, Market Fund 185 -- $1,728,891 $1,728,891 --
Inc.
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Executive Vice President, Chief Financial Officer 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 24, 1998 By: /s/ J. Robert White
-----------------------------------
J. Robert White
Executive Vice President,
Chief Financial Officer,
and Treasurer of Michael
Baker Corporation, the Plan Sponsor
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-69306; No. 33-62887; and No. 33-05987) of
Michael Baker Corporation of our report dated April 30, 1998, appearing
within this Annual Report on Form 11-K.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Pittsburgh, Pennsylvania
June 23, 1998
