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, 2001
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
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 2001 AND 2000
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 2001 AND 2000
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PAGE
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2001 and 2000 3
Notes to Financial Statements 4-9
Additional Information:*
Schedule of Assets (Held at End of Year)
December 31, 2001 10
Schedule of Reportable Transactions
Year Ended December 31, 2001 11
* 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.
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, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets
(Held at End of Year) and Reportable Transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
------------------------------
Pittsburgh, PA
July 26, 2002
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000
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2001 2000
ASSETS
Investments, at fair value:
Investments in common stock of
Michael Baker Corporation $ 49,517,528 $ 26,688,174
Investments in mutual funds 67,399,289 72,438,934
Participant loans (market value approximates cost) 388,974 328,618
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Total investments 117,305,791 99,455,726
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Total assets 117,305,791 99,455,726
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LIABILITIES
Accounts payable -- 2,667
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Total liabilities -- 2,667
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Net assets available for benefits $117,305,791 $ 99,453,059
============ ============
The accompanying notes are an integral part of these financial statements.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2001 AND 2000
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2001 2000
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 1,425,653 $ 6,246,320
Net appreciation (depreciation) in fair value of investments 10,044,226 (10,416,883)
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Total investment income (loss) 11,469,879 (4,170,563)
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Participant contributions 10,187,194 9,552,169
Employer contributions 4,513,439 4,668,605
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Total contributions 14,700,633 14,220,774
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Total additions 26,170,512 10,050,211
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Deductions from net assets attributed to:
Participant withdrawals 8,314,583 8,356,853
Transfers out of Plan -- 3,860,832
Administrative fees 3,197 26,117
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Total deductions 8,317,780 12,243,802
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Net increase (decrease) 17,852,732 (2,193,591)
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Net assets available for benefits:
Beginning of year 99,453,059 101,646,650
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End of year $ 117,305,791 $ 99,453,059
============= =============
The accompanying notes are an integral part of these financial statements.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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1. DESCRIPTION OF PLAN
GENERAL
The following description of the Michael Baker Employee Stock Ownership
Plan (the ESOP, or the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
The ESOP is a defined contribution plan that provides all eligible
employees of Michael Baker Corporation (the Company) with an opportunity
to accumulate additional retirement benefits as well as invest in Company
stock. The Plan is subject to provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA).
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings or
losses, and charged with an allocation of certain administrative fees.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
CONTRIBUTIONS
Participants contribute to the ESOP through a Section 401(k) Employee
Salary Redirection Election, whereby participants may choose to have a
percentage of their salaries (including commissions and overtime) withheld
and contributed to the ESOP up to the lower of 18% of the participant's
salary or the annual limitation established by the Internal Revenue
Service in both 2001 and 2000. The maximum amount of a participant's
salary which may be eligible for withholding for any Plan year cannot
exceed $170,000. The ESOP also allows participants to roll over funds from
a previous employer's tax-qualified plan or tax-qualified individual
retirement account. Effective January 1, 2002, the Plan participants may
choose to contribute up to the lower of 50% of their salaries or the
annual limitation established by the Internal Revenue Service.
COMPANY MATCHING CONTRIBUTIONS
Under the provisions of the Plan, the Company will make a matching
contribution to the participants' accounts in an amount of 100% of the
first 5% and 50% of the next 1% of eligible salary (including commissions
but excluding overtime) contributed by each participant. Contribution
amounts over the 6% limit are not required to be matched by the Company.
The Company's matching contributions are invested in not less than 25% of
Michael Baker Corporation Common Stock or Series B Common Stock with the
remaining 75% invested in accordance with the participants' investment
elections for participant contributions.
The Board of Directors of the Company is authorized to make additional
discretionary contributions to the ESOP from time to time. However, no
discretionary contributions were made in 2001 or 2000.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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VESTING
Participants are vested immediately in their contributions plus actual
earnings thereon. All amounts in the participants' ESOP accounts that are
attributable to the transfer of funds from a previously terminated
retirement plan, the rollover from a previous employer's tax-qualified
plan, and participant contributions are 100% vested and nonforfeitable at
all times.
All Company matching contributions will become 100% vested upon attainment
of 3 years of service with the Company or earlier, upon attainment of
normal retirement date, disability or death. If a participant leaves
employment with the Company before attaining a vested interest in his or
her Company contribution, the contributions are forfeited and will reduce
future Company matching contributions.
DISTRIBUTIONS
The Plan provides for distribution of benefits upon retirement, total and
permanent disability, death, or termination of employment for any other
reason. The amount of distribution the participant or his or her
beneficiary is entitled to is based on the vesting requirements discussed
above. All distributions will be made in the form of a single, lump-sum
distribution or in substantially equal annual installments over a period
not exceeding 5 years. Distributions may be made in cash and/or shares of
common stock, at the discretion of the participant.
PARTICIPANT LOANS
A participant may borrow money from the portion of his or her account
attributable to his or her own 401(k) plan contributions. Participant
loans may be obtained in the sole event of immediate and heavy financial
need, where the participant lacks other available resources. Loan amounts
shall not exceed the lesser of: (a) 50% of the participant's account
attributable to his or her own contributions, including rollovers, (b)
$50,000 adjusted for pre-existing loans, or (c) such amount as may be
determined by the plan administrator. All loans will be drawn against the
participant's account among the respective investment options as directed,
and are secured by the assets within the participant's accounts. Interest
rates on outstanding notes receivable ranged from 9.5% to 10.5% at
December 31, 2000 and 6% to 10.5% at December 31, 2001.
FORFEITED ACCOUNTS
At December 31, 2001 and 2000, forfeited nonvested accounts totaled
$68,168 and $89,621, respectively. These accounts will be used to reduce
future employer contributions. Also, in 2001 and 2000, employer
contributions were reduced by $829,880 and $296,245, respectively, from
forfeited nonvested accounts.
COMMON STOCK
The ESOP enables participating employees to acquire an equity interest in
Michael Baker Corporation (the Company); as such, contributions to the
ESOP can be invested in the Company's common stock (Common Stock and
Series B Common Stock).
The ESOP's investment in the Company's Common Stock comprises 2,038,031
shares (cost of $14,232,668) and 2,220,159 shares (cost of $14,065,803) at
December 31, 2001 and 2000, respectively.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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The ESOP's investment in the Company's Series B Common Stock comprises
1,217,221 shares (cost of $7,401,968) and 1,223,477 shares (cost of
$7,436,107) at December 31, 2001 and 2000, respectively.
INVESTMENT OPTIONS
Each participant may direct Putnam Investments, Inc. (Putnam) to invest
certain portions of his or her account in investment funds. Investment
funds available to participants are the Michael Baker Common Stock Fund
(invests in common stock of the Company), the Putnam New Opportunities
Fund (invests in long-term growth stocks within emerging industries), the
Putnam International Growth Fund (invests in diversified corporate stocks
outside of North America), the Putnam Voyager Fund (invests in diversified
corporate stocks), the Putnam Money Market Fund (invests in short-term
money market securities), the Putnam Investors Fund (invests in large
capitalization stocks), the Putnam S&P 500 Index Fund (invests with the
objective of achieving a return that approximates the return of the S&P
500 Composite Stock Price Index), the AIM Balance Fund (invests in equity
and fixed-income securities), the MFS Massachusetts Investors Trust
(invests primarily in common stock, seeking current income and long-term
growth of capital and income), the PIMCO Total Return Fund (invests in
debt securities, seeking a total return consistent with the preservation
of capital), the Franklin Small Cap Growth Fund (invests in equity
securities of small companies, seeking long-term capital growth) and the
Putnam Asset Allocation Funds (includes the Growth Portfolio, which
invests with the goal of seeking maximum growth of an investment over
time, the Balanced Portfolio, which invests with the goal of seeking a
total return for investors in their peak accumulation years and the
Conservative Portfolio, which invests primarily in domestic fixed-income
securities).
PLAN ADMINISTRATION AND FEES
The Company provides certain administrative and accounting services to the
ESOP at no cost. In addition, the Company pays the cost of services
provided to the ESOP by Putnam, legal counsel and independent accountants.
Certain reasonable distribution and loan processing fees charged by Putnam
are deducted from the respective participant account balances.
TRANSFERS OUT OF PLAN
In connection with the sale of Baker Heavy & Highway and Baker Support
Services, Inc. during 2000, $3.9 million was transferred out of the Plan
to other qualifying plans.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Putnam Investments, Inc. (Putnam) performs the recordkeeping function for
the ESOP and the records are maintained on a cash basis. The financial
statements included herein include all adjustments to reflect the
financial statements on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America.
Certain plan investments are shares of mutual funds managed by Putnam.
These transactions qualify as party-in-interest transactions.
INVESTMENTS
Investments are stated at fair value based upon quoted market values.
Purchases and sales of securities are recorded on a trade-date basis. The
investment in common stock of the Company is
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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stated at publicly-traded closing market values as of December 31, 2001
and 2000. As of December 31, 2001 and 2000, the ESOP owned approximately
39% and 40%, respectively, of the outstanding shares of the Company's
common stock; therefore, such valuation might be subject to significant
fluctuation in the event of a substantial liquidation of such holdings by
the ESOP.
The difference between the cost and current market value of investments
purchased since the beginning of the period and the increase or decrease
in such stated market value of investments held at the beginning of the
period reported is included in the net depreciation in fair market value
of investments in the statements of changes in net assets available for
benefits.
CONTRIBUTIONS
Employee and employer contributions are recorded in the period during
which the Company makes payroll deductions from Plan participants'
earnings.
DISTRIBUTIONS
Distributions to participants are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
CONCENTRATION OF RISK
Investments are exposed to various risks, such as interest rate, market
and credit. Due to the level of risk associated with these investments and
the level of uncertainty related to changes in the value of these
investments, it is at least reasonably possible that changes in the near
term could materially affect participants' account balances and the
amounts reported in the statement of net assets available for benefits and
the statements of changes in net assets available for benefits.
- 7 -
3. INVESTMENTS
The following presents the fair value of investments that represent 5% or
more of the Plan's net assets at the end of either December 31, 2001 or
2000:
DECEMBER 31,
2001 2000
Michael Baker Common Stock* $31,015,773 $17,206,232
Michael Baker Series B Common Stock* 18,501,755 9,481,942
Putnam New Opportunities Fund 14,883,585 18,251,044
Putnam Voyager Fund 11,543,018 13,721,862
Putnam International Growth Fund 5,825,878 6,200,048
AIM Balanced Fund 7,313,919 8,481,429
MFS Massachusetts Investors Trust 12,786,204 15,546,456
*Includes nonparticipant-directed investments
The Plan's investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated in value by
$10,044,226 and depreciated in value by $(10,416,883) for the respective
years ended December 31, as follows:
2001 2000
Mutual funds $(14,912,442) $(14,312,270)
Common stock 24,956,668 3,895,387
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$ 10,044,226 $(10,416,883)
============ ============
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to investments having
nonparticipant-directed components is as follows:
DECEMBER 31,
2001 2000
Net assets:
Common stock $49,517,528 $26,685,507
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$49,517,528 $26,685,507
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Net assets available for benefits as of December 31, 2000 $ 26,685,507
Changes in net assets:
Contributions 2,028,767
Interest and dividends 14,097
Net appreciation in fair value of investment 24,956,668
Benefits paid to participants (2,960,917)
Transfers to participant-directed investments (1,206,531)
Fees (63)
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Net assets available for benefits as of December 31, 2001 $ 49,517,528
=============
5. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated June 21, 2000, that the Plan and related trust are designed
in accordance with the applicable sections of the Internal Revenue Code
(IRC). The Plan has been amended since receiving the determination letter.
However, the plan administrator and the Plan's counsel believe that the
Plan is designed and is currently being operated in compliance with
applicable requirements of the IRC. In 2002, the Company filed for a new
determination letter for the Plan.
6. PLAN TERMINATION
Although it has not expressed an intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
7. SUBSEQUENT EVENTS
During the fourth quarter of 2001, the Company entered into discussions
with the ESOP Trustee concerning the possible exchange of its Series B
Common Stock for Common Stock. The Trustee retained a valuation
professional and subsequently agreed that the ESOP would be willing to
exchange each Series B share held by the ESOP for 1.018 shares of Common
Stock. This exchange was completed on February 28, 2002. Immediately
following this exchange, the Company's remaining Series B shares were
automatically converted into Common equivalents in accordance with
provisions of the Company's Articles of Incorporation.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2001
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COST OF CURRENT
IDENTITY OF ISSUER DESCRIPTION OF INVESTMENT ASSET VALUE
Michael Baker Corporation* Michael Baker Corporation
Common Stock** $14,232,668 $31,015,773
Michael Baker Corporation* Michael Baker Corporation
Common Stock - Series B** 7,401,968 18,501,755
AIM Management Group Inc. AIM Balanced Fund 7,313,918
MFS Investment Management Inc. MFS Massachusetts Investors Trust 12,786,204
PIMCO Funds Distributors LLC PIMCO Total Return Fund 3,702,743
Putnam Investments* Putnam Voyager Fund 11,543,018
Putnam Investments* Putnam New Opportunities Fund 14,883,585
Putnam Investments* Putnam International Growth Fund 5,825,878
Putnam Investments* Putnam Money Market Fund 5,559,759
Putnam Investments* Putnam Asset Allocation -
Growth Portfolio 598,757
Putnam Investments* Putnam Asset Allocation -
Balanced Portfolio 825,584
Putnam Investments* Putnam Asset Allocation -
Conservative Portfolio 393,362
Franklin Templeton Investments Franklin Small Cap Growth Fund 1,173,462
Putnam Investments* Putnam Investors Fund 1,096,706
Putnam Investments* Putnam S&P 500 Index Fund 1,696,313
Participant Loans* 6% to 10.5%, due February 22, 2002
to December 14, 2015 388,974
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$117,305,791
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* Party-in-interest.
** Includes nonparticipant-directed investments.
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MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2001
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NUMBER NET
PARTY DESCRIPTION OF PURCHASE SELLING GAIN
INVOLVED OF ASSET TRANSACTIONS PRICE PRICE (LOSS)
Putnam Michael Baker 241 $ 4,151,790 $ $
Investments, Inc.* Corporation Common Stock** 418 $ $5,639,340 $1,974,602
* Party-in-interest.
** Nonparticipant directed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Senior
Vice President, Corporate Controller and Treasurer of Michael Baker Corporation,
the plan sponsor, has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
MICHAEL BAKER CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Date: August 2, 2002 By: /s/ Craig O. Stuver
------------------------------
Craig O. Stuver
Senior Vice President, Corporate
Controller and Treasurer of Michael
Baker Corporation, the Plan Sponsor