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, 1998
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
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 1998 AND 1997
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
INDEX
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits with Fund Information -
December 31, 1998 and 1997
Statement of Changes in Net Assets Available for
Benefits With Fund Information - Year Ended
December 31, 1998
Statement of Changes in Net Assets Available for
Benefits With Fund Information - Year Ended
December 31, 1997
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
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, 1998 and 1997, 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 financial
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 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
for Investment Purposes 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. The fund information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for benefits of each fund. These supplemental
schedules and fund information are the responsibility of the Plan's management.
The supplemental schedules and 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/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
June 18, 1999
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31,
1998 1997
ASSETS
<S> <C> <C>
Investments, at quoted market value:
Investments in common stock of
Michael Baker Corporation:
Common Stock $ 24,630,743 $ 25,237,651
Series B Common Stock 11,928,881 11,950,477
Temporary investments 9 14,368
Investments in mutual funds managed by
Putnam Investments, Inc.:
Putnam Growth & Income Fund 17,930,008 15,337,754
George Putnam Fund of Boston 10,458,263 10,022,348
Putnam New Opportunities Fund 10,584,799 6,387,797
Putnam Money Market Fund 3,636,459 3,074,872
Putnam Voyager Fund 7,599,581 4,508,376
Putnam Income Fund 1,617,058 1,194,617
Putnam International Growth Fund 2,513,034 1,549,483
Participant loans (market value approximates
cost) 118,029 29,296
------------- --------------
Total investments 91,016,864 79,307,039
------------- --------------
Receivables:
Contributions receivable from Michael Baker
Corporation -- 310,996
Securities sold/accrued interest 132,790 209
------------- --------------
Total receivables 132,790 311,205
------------- --------------
Total assets 91,149,654 79,618,244
------------- --------------
LIABILITIES
Accrued liabilities 112,881 58,896
------------- --------------
Total liabilities 112,881 58,896
------------- --------------
Net assets available for benefits $ 91,036,773 $ 79,559,348
------------- --------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Michael Putnam
Baker Growth &
Common Stock Income
Fund Fund
ADDITIONS
<S> <C> <C>
Contributions:
Participants' $ 434,752 $ 1,362,736
Employer's 1,939,210 389,754
Dividends/interest income -- 1,594,321
Net appreciation (depreciation)
in fair value of investments (41,282) 777,601
Interfund transfers - net (662,944) (207,978)
------------ ------------
Total additions 1,669,736 3,916,434
------------ ------------
DEDUCTIONS
Distributions to participants 2,233,540 1,322,222
Fees 463 1,958
------------ ------------
Total deductions 2,234,003 1,324,180
------------ ------------
Net increase (decrease) (564,267) 2,592,254
Net assets available for benefits:
Beginning of year 37,143,809 15,337,754
------------ ------------
End of year $36,579,542 $17,930,008
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
George Putnam
Putnam New
Fund of Opportunities
Boston Fund
ADDITIONS
<S> <C> <C>
Contributions:
Participants' $ 506,814 $ 2,125,259
Employer's 158,310 625,011
Dividends/interest income 984,982 320,814
Net appreciation (depreciation)
in fair value of investments 53,278 1,543,715
Interfund transfers - net (569,359) 116,124
------------ ------------
Total additions 1,134,025 4,730,923
------------ ------------
DEDUCTIONS
Distributions to participants 696,528 532,441
Fees 1,582 1,480
------------ ------------
Total deductions 698,110 533,921
------------ ------------
Net increase (decrease) 435,915 4,197,002
Net assets available for benefits:
Beginning of year 10,022,348 6,387,797
------------ ------------
End of year $10,458,263 $10,584,799
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Putnam
Money Putnam
Market Voyager
Fund Fund
ADDITIONS
<S> <C> <C>
Contributions:
Participants' $ 282,297 $ 1,460,424
Employer's (114,889) 430,528
Dividends/interest income 169,040 499,394
Net appreciation (depreciation)
in fair value of investments -- 832,669
Interfund transfers - net 987,598 261,409
------------ ------------
Total additions 1,324,046 3,484,424
------------ ------------
DEDUCTIONS
Distributions to participants 761,559 392,244
Fees 900 975
------------ ------------
Total deductions 762,459 393,219
------------ ------------
Net increase (decrease) 561,587 3,091,205
Net assets available for benefits:
Beginning of year 3,074,872 4,508,376
------------ ------------
End of year $ 3,636,459 $ 7,599,581
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Putnam
Putnam International
Income Growth
Fund Fund
ADDITIONS
<S> <C> <C>
Contributions:
Participants' $ 261,675 $ 552,042
Employer's 80,995 149,036
Dividends/interest income 87,523 71,309
Net appreciation (depreciation)
in fair value of investments (38,699) 238,468
Interfund transfers - net 154,807 143,415
------------ ------------
Total additions 546,301 1,154,270
------------ ------------
DEDUCTIONS
Distributions to participants 123,595 190,281
Fees 265 438
------------ ------------
Total deductions 123,860 190,719
------------ ------------
Net increase (decrease) 422,441 963,551
Net assets available for benefits:
Beginning of year 1,194,617 1,549,483
------------ ------------
End of year $ 1,617,058 $ 2,513,034
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Participant
Loans Other Total
ADDITIONS
<S> <C> <C> <C>
Contributions:
Participants' $ -- $ -- $ 6,985,999
Employer's -- -- 3,657,955
Dividends/interest income 4,721 -- 3,732,104
Net appreciation (depreciation)
in fair value of investments -- -- 3,365,750
Interfund transfers - net 87,924 (310,996) --
--------- ---------- --------------
Total additions 92,645 (310,996) 17,741,808
--------- ---------- --------------
DEDUCTIONS
Distributions to participants 3,912 -- 6,256,322
Fees -- -- 8,061
--------- ---------- --------------
Total deductions 3,912 -- 6,264,383
--------- ---------- --------------
Net increase (decrease) 88,733 (310,996) 11,477,425
Net assets available for benefits:
Beginning of year 29,296 310,996 79,559,348
---------- ---------- -------------
End of year $ 118,029 $ -- $ 91,036,773
========== ========== =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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>
- --------------------------------------------------------------------------------
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.
</FN>
</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.
</FN>
</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.
</FN>
</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.
</FN>
</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.
</FN>
</TABLE>
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1998 AND 1997
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 a 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).
The ESOP's investment in the Company's common stock comprises 2,526,230
(cost of $15,455,695) and 2,588,477 (cost of $14,709,722) shares of Common
Stock and 1,223,475 (cost of $7,436,097) and 1,225,689 (cost of $7,448,445)
shares of Series B Common Stock at December 31, 1998 and 1997,
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 up to the annual limitation established by the
Internal Revenue Service. The maximum amount of a participant's salary
which may be eligible for withholding for any Plan year cannot 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. Investment funds available to participants are the Michael Baker
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1998 AND 1997
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Common Stock Fund (invests 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 & 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). 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 are not required to be
matched by the Company. Effective January 1, 1999, 25 percent of the
matching contribution is invested in the Company's Common Stock or Series B
Common Stock and 75 percent is invested in accordance with the
participants' investment elections for participant contributions. From July
1, 1997 through December 31, 1998, 50 percent of the matching contribution
was invested in the Company's Common Stock or Series B Common Stock and 50
percent was invested in accordance with the participants' investment
elections for participant contributions. Prior to July 1, 1997, matching
contributions could be invested only in the Company's Common Stock or
Series B Common Stock.
During 1998, the Company matched participants' contributions on a 100
percent basis for the first 5 percent of the participants' salaries
contributed to the Plan plus an additional 50 percent of the participants'
contributions to the Plan in excess of 5 percent of the participants'
salaries but not in excess of 6 percent of the participants' salaries.
During 1997, 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 1998 or 1997.
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 percent vested and nonforfeitable at all times.
All Company matching contributions will become 100 percent vested upon
attainment of 3 years of service with the Company or earlier, upon
attainment of normal retirement date, disability or death. If a
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1998 AND 1997
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 are
limited to the lower of $50,000 or 50 percent of the employee's pre-tax and
rollover contributions. Effective November 1, 1998, the Plan agreement was
amended such that loan amounts shall not exceed the smallest of the
following: (a) the greater of $10,000 or 50 percent 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 range from 8.75 percent to 12.82 percent.
FORFEITED ACCOUNTS
At December 31, 1998 and 1997, forfeited nonvested accounts totaled $14,508
and $260,064, respectively. These accounts will be used to reduce future
employer contributions. Also, in 1998 and 1997, employer contributions were
reduced by $536,795 and $96,046, respectively, from forfeited nonvested
accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Putnam Investments, Inc. 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, 1998 and 1997. As of
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1998 AND 1997
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998 and 1997, the ESOP owned approximately 44 percent and 45
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 included as Exhibit 13.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
INVESTMENTS
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 increase (decrease) in net appreciation
(depreciation) in fair market value of investments in the Statements of
Changes in Net Assets Available for Benefits.
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 estimates and
assumptions that affect the reported amounts of assets, liabilities, and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
3. 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 distributions 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, 1998 AND 1997
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 Plan's Form 5500:
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Net assets available for benefits
per the financial statements $91,036,773 $79,559,348
------------ ------------
Amounts allocated to withdrawing
participants:
Michael Baker Common Stock Fund (40,552) (77,741)
Putnam Money Market Fund (1,743) (8,751)
Putnam New Opportunities Fund (9,251) (75,815)
George Putnam Fund of Boston (11) (19,733)
Putnam Growth & Income Fund (8,737) (48,916)
Putnam Income Fund (2,194) (9,350)
Putnam Voyager Fund (9,797) (52,118)
Putnam International Growth Fund -- (18,058)
------------ -----------
(72,285) (310,482)
------------ -----------
Net assets available for benefits
per Form 5500 $90,964,488 $79,248,866
============ ============
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500:
December 31, 1998
Distributions to participants per the
financial statements $6,256,322
Add -- Distributions to employees
authorized but not paid as of
December 31, 1998 72,285
Less -- Distributions to employees
authorized but not paid as of
December 31, 1997 (310,482)
-----------
Distributions to employees per Form 5500 $6,018,125
===========
</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
<PAGE>
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DECEMBER 31, 1998 AND 1997
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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, 1998
Additional Information - Schedule I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Cost of Current
Shares Description asset value
<S> <C> <C> <C>
*Michael Baker Corporation
2,526,230 Common Stock $15,455,695 $24,630,743
*Michael Baker Corporation
1,223,475 Common Stock - Series B 7,436,097 11,928,881
N/A *Putnam Temporary Investments 9 9
579,726 *George Putnam Fund of Boston 9,628,846 10,458,263
875,061 *Putnam Growth & Income Fund 16,206,483 17,930,008
233,679 *Putnam Income Fund 1,634,491 1,617,058
346,696 *Putnam Voyager Fund 6,510,872 7,599,581
181,154 *Putnam New Opportunities Fund 8,471,070 10,584,799
130,683 *Putnam International Growth Fund 2,233,580 2,513,034
3,636,459 *Putnam Money Market Fund 3,636,459 3,636,459
N/A *Participant loans:
8.75% to 12.82%, due March 9,
1999 to November 26, 2008. 118,029 118,029
---------- -----------
$71,331,631 $91,016,864
=========== ===========
<FN>
* Party-in-interest
</FN>
</TABLE>
<PAGE>
Michael Baker Corporation
Employee Stock Ownership Plan
Schedule of Reportable Transactions - Form 5500, Item 27(d)
December 31, 1998
Additional Information-Schedule II
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number Net
Party Description Of Purchase Selling Gain
Involved Of asset Transactions Price Price (Loss)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Putnam Michael Baker 232 $3,481,477 $ -- $ --
Investments, Corporation 309 $ -- $4,005,064 $1,208,728
Inc. Common Stock
Putnam Putnam Growth 248 $3,840,840 $ -- $ --
Investments, & Income Fund 280 $ -- $2,026,186 $ 219,300
Inc.
Putnam Putnam 259 $3,835,024 $ -- $ --
Investments, New 263 $ -- $1,181,900 $ 125,120
Inc. Opportunities
Fund
</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 30, 1999 By: /s/ J. Robert White
-------------------
J. Robert White
Executive Vice President,
Chief Financial Officer,
and Treasurer of Michael
Baker Corporation, the Plan Sponsor
<PAGE>
Exhibit 23
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; No. 333-05987; and No.
333-59941) of Michael Baker Corporation of our report dated June 18, 1999,
relating to the financial statements, which appears in this Form 11-K.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
June 29, 1999
