-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GbFd2zY/IdINOzjIMgnjIxQFEAImYVYK03Fp+vvKti/6kPIW+l7/d+gPNTuXxApv G59Jo/35P4h8p4wC6eLwrQ== 0000009263-97-000011.txt : 19971117 0000009263-97-000011.hdr.sgml : 19971117 ACCESSION NUMBER: 0000009263-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAKER MICHAEL CORP CENTRAL INDEX KEY: 0000009263 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 250927646 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06627 FILM NUMBER: 97718116 BUSINESS ADDRESS: STREET 1: 420 ROUSE ROAD STREET 2: AIRPORT OFFICE PARK BLDG 3 CITY: CORAOPOLIS STATE: PA ZIP: 15108 BUSINESS PHONE: 4122696300 MAIL ADDRESS: STREET 1: P O BOX 12259 CITY: PITTSBURGH STATE: PA ZIP: 15231-0259 FORMER COMPANY: FORMER CONFORMED NAME: EUTHENICS SYSTEMS CORP DATE OF NAME CHANGE: 19750527 FORMER COMPANY: FORMER CONFORMED NAME: BAKER MICHAEL JR INC DATE OF NAME CHANGE: 19720526 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 Commission file number 1-6627
MICHAEL BAKER CORPORATION -------------------------- (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0927646 ------------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Airport Office Park, Building 3, 420 Rouser Road, Coraopolis, PA 15108 - ---------------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (412) 269-6300 -------------- (Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
As of September 30, 1997: ------------------------- Common Stock 6,877,358 shares Series B Common Stock 1,343,983 shares
FORM 10-Q PART I PAGE 1 MICHAEL BAKER CORPORATION PART I. FINANCIAL INFORMATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. The statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal and recurring nature unless specified otherwise. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report and Form 10-K. FORM 10-Q PART I PAGE 2 MICHAEL BAKER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the three months ended --------------------------------- SEPT. 30, 1997 Sept. 30, 1996 - ------------------------------------------------------------------------------ (In thousands, except per share amounts) Total contract revenues $116,627 $114,710 Cost of work performed 103,214 102,340 - ------------------------------------------------------------------------------ Gross profit 13,413 12,370 General and administrative expenses 10,656 10,121 - ------------------------------------------------------------------------------ Income from operations 2,757 2,249 Other income/(expense): Interest expense (8) (15) Interest income 140 65 Other, net 53 34 - ------------------------------------------------------------------------------ Income before income taxes 2,942 2,333 Provision for income taxes 1,412 1,073 - ------------------------------------------------------------------------------ NET INCOME $1,530 $1,260 ============================================================================== NET INCOME PER SHARE $0.18 $0.15 ============================================================================== The accompanying notes are an integral part of this financial statement.
FORM 10-Q PART I PAGE 3 MICHAEL BAKER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
For the nine months ended -------------------------------- SEPT. 30, 1997 Sept. 30, 1996 - ----------------------------------------------------------------------------- (In thousands, except per share amounts) Total contract revenues $316,196 $301,725 Cost of work performed 278,993 266,735 - ----------------------------------------------------------------------------- Gross profit 37,203 34,990 General and administrative expenses 31,539 29,748 - ----------------------------------------------------------------------------- Income from operations 5,664 5,242 Other income/(expense): Interest expense (42) (61) Interest income 407 281 Other, net 656 212 - ----------------------------------------------------------------------------- Income before income taxes 6,685 5,674 Provision for income taxes 3,209 2,610 - ----------------------------------------------------------------------------- Net income 3,476 3,064 ============================================================================= Net income per share $0.42 $0.36 ============================================================================= The accompanying notes are an integral part of this financial statement.
FORM 10-Q PART I PAGE 4 MICHAEL BAKER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS SEPT. 30, 1997 Dec. 31, 1996 - ----------------------------------------------------------------------------- (In thousands) CURRENT ASSETS Cash $13,002 $10,480 Receivables 80,879 69,621 Cost of contracts in progress and estimated earnings, less billings 17,056 16,276 Prepaid expenses and other 5,878 6,370 - ----------------------------------------------------------------------------- Total current assets 116,815 102,747 - ----------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT, NET 11,030 12,265 OTHER ASSETS Goodwill and other intangible assets, net 6,770 7,242 Other assets 4,725 3,828 - ----------------------------------------------------------------------------- Total other assets 11,495 11,070 - ----------------------------------------------------------------------------- TOTAL ASSETS $139,340 $126,082 ============================================================================= LIABILITIES AND SHAREHOLDERS' INVESTMENT - ----------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable $38,756 34,960 Accrued employee compensation 7,939 6,596 Accrued insurance 5,878 5,425 Other accrued expenses 18,225 19,045 Excess of billings on contracts in progress over cost and estimated earnings 14,167 9,304 - ----------------------------------------------------------------------------- Total current liabilities 84,965 75,330 - ----------------------------------------------------------------------------- SHAREHOLDERS' INVESTMENT Common Stock, par value $1, authorized 44,000,000 shares, issued 7,084,518 and 7,055,784 shares at Sept. 30, 1997 and December 31, 1996, resp. 7,085 7,056 Series B Common Stock, par value $1, authorized 6,000,000 shares, issued 1,343,983 and 1,348,632 shares at Sept. 30, 1997 and Dec. 31, 1996, resp. 1,344 1,349 Additional paid-in capital 36,814 36,694 Retained earnings 10,389 6,913 Less 207,160 and 207,560 shares of Common Stock in treasury, at cost, at Sept. 30, 1997 and Dec. 31, 1996, respectively (1,257) (1,260) - ------------------------------------------------------------------------------ Total shareholders' investment 54,375 50,752 - ------------------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $139,340 $126,082 ============================================================================== The accompanying notes are an integral part of this financial statement.
FORM 10-Q PART I PAGE 5 MICHAEL BAKER CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
For the nine months ended ------------------------------ SEPT. 30, 1997 Sept. 30, 1996 - ----------------------------------------------------------------------------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $3,476 $3,064 Adjustments to reconcile net income to net cash provided by/(used in) operating activities: Depreciation and amortization 3,265 3,673 Deferred income taxes 1,731 1,094 Changes in assets and liabilities: Increase in receivables and contracts in progress (7,176) (15,776) Increase in accounts payable and accrued expenses 4,772 5,753 Increase in other net assets (1,992) (1,434) - ----------------------------------------------------------------------------- Total adjustments 600 (6,690) - ----------------------------------------------------------------------------- Net cash provided by/(used in) operating activities 4,076 (3,626) - ----------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (1,554) (3,118) - ----------------------------------------------------------------------------- Net cash used in investing activities (1,554) (3,118) - ----------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long-term debt 0 (12) - ----------------------------------------------------------------------------- Net cash used in financing activities 0 (12) - ----------------------------------------------------------------------------- Net increase/(decrease) in cash 2,522 (6,756) Cash at beginning of year 10,480 14,303 - ----------------------------------------------------------------------------- CASH AT END OF PERIOD $13,002 $7,547 ============================================================================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA Interest paid $40 $57 Income taxes paid $490 $324 ============================================================================= The accompanying notes are an integral part of this financial statement.
FORM 10-Q PART I PAGE 6 MICHAEL BAKER CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1997 (UNAUDITED) NOTE 1 - LONG-TERM DEBT AND BORROWING ARRANGEMENTS In June 1997, the Company entered into an unsecured credit agreement (the Agreement") with Mellon Bank, N.A. (the "Bank"). The Agreement provides for a commitment of $25 million through May 31, 2000. The commitment includes the sum of the principal amount of revolving credit loans outstanding and the aggregate face value of outstanding letters of credit. Significant changes in terms from the previous agreement with the Bank included the release of all security in Company assets previously held, a reduction in the borrowing rate to the Bank's prime rate or other indexed rates that may be lower, and a reduction in the commitment fees to 3/8% per year based on the unused portion of the commitment. As of September 30, 1997, no loans were outstanding; however, letters of credit totaling $5,955,000 were outstanding under the Agreement. NOTE 2 - EARNINGS PER SHARE Earnings per share computations are based upon weighted averages of 8,327,289 and 8,401,760 shares outstanding for the three-month periods, and 8,279,965 and 8,403,296 for the nine-month periods, ended September 30, 1997 and 1996, respectively. NOTE 3 - CONTINGENCIES The Company has been named as a defendant or co-defendant in legal proceedings wherein substantial damages are claimed. Such proceedings are not uncommon to the Company's business. After consultations with counsel, management believes that the Company has recognized adequate provisions for these proceedings and their ultimate resolutions will not have a material adverse effect on the consolidated financial position or annual results of operations of the Company. FORM 10-Q PART I PAGE 7 MICHAEL BAKER CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1997 (Unaudited) NOTE 3 - CONTINGENCIES (Cont.) In the Company's ordinary course of business, many of its public contracts are subject to recurring audits by the Defense Contract Audit Agency ("DCAA") and other governmental entities. DCAA has commenced an audit of certain contracts for the years 1992 through 1995. DCAA has not yet issued its preliminary audit report and, at this time, management is unable to determine the significance, if any, of this matter. The only significant legal proceeding relates to a lawsuit brought in 1987 in the Supreme Court of the State of New York, Bronx County, by the Dormitory Authority of the State of New York against a number of parties, including the Company and one of its wholly-owned subsidiaries, that asserts breach of contract and alleges damages of $13,000,000. The Company, which was not a party to the contract underlying the lawsuit, contends that there is no jurisdiction with respect to the Company and that it cannot be held liable for any conduct of the subsidiary. Both the Company and the subsidiary are contesting liability issues and have filed cross-claims and third-party claims against other entities involved in the project. FORM 10-Q PART I PAGE 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS TOTAL CONTRACT REVENUES Total contract revenues were $116.6 million for the third quarter of 1997, compared to $114.7 million for the same period in 1996. The Energy and Transportation units achieved the most significant increases in total contract revenues for the third quarter of 1997, totaling $3.1 million and $2.5 million, respectively. An expansion of revenues from its offshore platform operations primarily accounted for the increase in the Energy unit. Activity on several heavy and highway construction contracts on which work commenced in 1997, contributed to the third quarter increase in the Transportation unit. The third quarter 1997 decrease of $1.8 million for the Buildings unit was attributed to the completion or near completion of several construction projects that provided significant revenues during the third quarter of 1996. Total contract revenues were $316.2 million for the first nine months of 1997, compared to $301.7 million for the same period in 1996. With the exception of the Environmental unit, total contract revenues increased in all business units for the first nine months of 1997 relative to the first nine months of 1996. The Civil and Energy units had the largest increases of $7.6 million and $8.2 million, respectively. Civil's increase resulted from higher 1997 revenues from new operations and maintenance ("O&M") contracts on which work commenced during the fourth quarter of 1996 or in 1997, and from an increase in revenues on existing O&M contracts. Energy's improvement is mainly attributable to new, recurring O&M contracts that were added during the second and third quarters of 1996. GROSS PROFIT The Company's gross profit of $13.4 million for the third quarter of 1997 represents an 8% improvement over the gross profit of $12.4 million from its 1996 third quarter. As a percentage of total contract revenues, gross profit increased to 11.5% in the third quarter of 1997 from 10.8% in the third quarter of 1996. The most significant contributors to these overall improvements were the Civil and Transportation units due to changes in contract mix in these units' engineering divisions. In addition, these two units also benefitted during the third quarter of 1997 from lower casualty insurance costs due to a reassessment of their exposures relative to their reserves. FORM 10-Q PART I PAGE 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GROSS PROFIT (Cont.) Gross profit for the first nine months of 1997 increased by 6% to $37.2 million from $35.0 million in the first nine months of 1996. As a percentage of total contract revenues, gross profit increased slightly to 11.8% for the first nine months of 1997 from 11.6% for the comparable 1996 period. In addition to the reasons cited in the preceding paragraph, the Transportation unit's percentage increase for the first nine months of 1997 was also attributable to higher than expected profitability on a construction project completed in the second quarter of 1997. The Civil unit realized higher profit margins on both new and existing O&M projects during 1997. The Energy unit's profit percentage decreased primarily due to lower margins associated with its contracts in Nigeria. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative ("G&A") expenses increased to $10.7 million for the third quarter of 1997 from $10.1 million in the third quarter of 1996. Expressed as a percentage of total contract revenues, G&A expenses remained relatively constant at approximately 9% for the third quarter of both years. G&A expenses increased to $31.5 million for the first nine months of 1997 from $29.7 million for the same period in 1996. G&A expenses were just under 10% of total contract revenues in both years' nine-month periods. OTHER INCOME Other income for the first nine months of 1997 included a first-quarter gain of $0.5 million from the sale of an investment in preferred stock. INCOME TAXES The Company had provisions for income taxes of 48% for the first nine months of 1997 and 46% for the comparable period in 1996. The higher 1997 provision rate reflects increases in foreign income and withholding taxes. FORM 10-Q PART I PAGE 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NEW ACCOUNTING STANDARD In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which changes the computation and presentation of earnings per share ("EPS"). SFAS 128 must be adopted for interim and annual periods ending after December 15, 1997. Early adoption is prohibited, although previously reported EPS amounts will have to be restated upon adoption. The Company will adopt SFAS 128 in the fourth quarter of 1997. Based upon management's computations, adoption of the new standard will not have a material effect on previously reported EPS amounts for the third quarter or first nine months of 1997 and all of 1996. CONTRACT BACKLOG The funded backlog of work to be performed reached a record high of $410 million as of September 30, 1997, compared to funded backlog of $333 million at December 31, 1996. Funded backlog represents that portion of work supported by signed contracts and for which the procuring agency has appropriated and allocated the funds to pay for the work. Total backlog, which incrementally includes that portion of contract value for which options are still to be exercised reached a record high of $663 million for the Company as of September 30, 1997, as compared to $544 million as of December 31, 1996. During the first nine months of 1997, all of the Company's business units added to their total backlog and thereby contributed to the record high. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $4.1 million for the first nine months of 1997, compared to net cash used in operating activities of $3.6 million for the same period in 1996. The 1997 improvement in cash generated by operating activities is attributable to the collection of retention amounts totaling $3.0 million on a significant construction project during the first nine months of 1997, and to slower receivable collections in the first nine months of 1996 related to the Civil unit's significant engineering project in Mexico. Net cash used in investing activities was $1.6 million for the first nine months of 1997, compared to $3.1 million for the first nine months of 1996. These amounts solely comprise purchases of property, plant and equipment for both periods. The 1997 decrease is attributable to higher expenditures for building improvements and office equipment related to the Buildings unit's 1996 relocation from Pittsburgh to Coraopolis, PA, and higher vehicle and equipment purchases during the first nine months of 1996 to meet the requirements of new O&M projects in the Civil unit. FORM 10-Q PART I PAGE 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (Cont.) Working capital increased during the first nine months of 1997 to $31.9 million at September 30, 1997, from $27.4 million at December 31, 1996. The current ratio was 1.37:1 at the end of the first nine months of 1997, compared to 1.36:1 at year-end 1996. In June 1997, the Company entered into an unsecured credit agreement with Mellon Bank, N.A. The agreement provides for a commitment of $25 million, which covers borrowings and letters of credit, through May 31, 2000. As of September 30, 1997, no loans were outstanding; however, letters of credit totaling approximately $6.0 million were outstanding under the agreement. The Company is required to provide bid and performance bonding on certain construction contracts. In October 1997, the Company's available bonding line was increased from $350 million to $500 million by Travelers Casualty & Surety Company of America (formerly Aetna Casualty & Surety Company of America). Management believes that its bonding line will be sufficient to meet its bid and performance needs for at least the next year. Short and long-term liquidity is dependent upon appropriations of public funds for infrastructure and other government-funded projects, capital spending levels in the private sector, and the demand for the Company's services in the oil and gas markets. Additional external factors such as price fluctuations in the energy industry and the effects of interest rates on private construction projects could affect the Company. At this time, management believes that its funds generated from operations and its existing credit facility will be sufficient to meet its operating and capital expenditure requirements for at least the next year. FORM 10-Q PART II PAGE 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (b) Reports on Form 8-K During the quarter ended September 30, 1997, the Company filed no reports on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MICHAEL BAKER CORPORATION Dated: November 14, 1997 By: /s/ J. Robert White ------------------------- J. Robert White Executive Vice President, Chief Financial Officer and Treasurer
EX-27 2
5 1000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 13,002 0 80,879 0 17,056 116,815 0 0 139,340 84,965 0 0 0 8,429 36,814 139,340 316,196 316,196 278,993 278,993 0 0 42 6,685 3,209 3,476 0 0 0 3,476 .42 .42
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