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1
MICHAEL BAKER CORPORATION
RedChip Partners Investor ConferenceSeptember 19, 2002
Engineering & Energy
2
Engineering & EnergySafe HarborSafe Harbor
This presentation will contain information related to events which may occur in the future. These
forward-looking statements may include future business trends, revenue and earnings forecasts,
and acquisition and corporate finance activity. These statements are subject to market, regulatory, operating and other risks and uncertainties and, as
a result, actual results may vary. Such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
This presentation will contain information related to events which may occur in the future. These
forward-looking statements may include future business trends, revenue and earnings forecasts,
and acquisition and corporate finance activity. These statements are subject to market, regulatory, operating and other risks and uncertainties and, as
a result, actual results may vary. Such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
3
Engineering & EnergySummary / HighlightsSummary / Highlights
Record Earnings in 2001
Focused on Two Segments Energy and Engineering
Leader in Professional Services Oil & Gas Production O&M
Transportation and Civil Infrastructure Engineering
Positioned for Margin Growth, Led by Energy Segment
Debt-free, Leverageable Balance Sheet
Recent Addition to Russell 2000
Currently Valued at 5x EBITDA
Record Earnings in 2001
Focused on Two Segments Energy and Engineering
Leader in Professional Services Oil & Gas Production O&M
Transportation and Civil Infrastructure Engineering
Positioned for Margin Growth, Led by Energy Segment
Debt-free, Leverageable Balance Sheet
Recent Addition to Russell 2000
Currently Valued at 5x EBITDA
4
Engineering & EnergyDecade of PerformanceDecade of Performance
$150 $162 $165 $179$203
$228 $244
$39$43 $55
$69
$80
$121
$158
$93$127$115 $134
$43$42
$72 $45
$402
$199
$136$157
$349
$205$189
$283
$210$248
$179
$0
$100
$200
$300
$400
$500
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Dollars in Millions
Engineering Energy
Co
nti
nu
ing
Bu
sin
es
s R
ev
en
ue
5
Engineering & EnergyGlobal ReachGlobal Reach
Bangkok, ThailandBangkok, Thailand
Abu Dhabi, UAEAbu Dhabi, UAE
London, EnglandLondon, England
Caracas, VenezuelaCaracas, Venezuela
Mexico City, MexicoMexico City, Mexico
Lagos, NigeriaLagos, Nigeria
Pittsburgh, Pa. (HQ)Pittsburgh, Pa. (HQ)
6
Engineering & EnergyKey Customer RelationshipsKey Customer Relationships
Engineering Engineering Energy Energy
7
Engineering & EnergyFour-Point StrategyFour-Point Strategy
Maximize the growth potential of the Energy business
Optimize the overall performance of the Engineering business
Innovate by investing to enhance service delivery methods
Leverage the relationships and skills of the entire company
Maximize the growth potential of the Energy business
Optimize the overall performance of the Engineering business
Innovate by investing to enhance service delivery methods
Leverage the relationships and skills of the entire company
8
Engineering & EnergyCore Energy Service OfferingsCore Energy Service Offerings
Oil & Gas Operations & Maintenance Operations Engineering Competency-Based Training Supply Chain Management Total Asset Management
Oil & Gas Operations & Maintenance Operations Engineering Competency-Based Training Supply Chain Management Total Asset Management
9
Engineering & EnergyMarkets and ServicesMarkets and Services
HoustonHouston
LafayetteLafayette
LondonLondon
LagosLagos
CaracasCaracas
BangkokBangkok
AnchorageAnchorage
Supply Chain ManagementSupply Chain Management
O&M ServicesO&M Services
ManpowerManpower
TrainingTraining
RecruitingRecruiting
Major and Large Independent Oil & Gas Producers
Major and Large Independent Oil & Gas Producers
LOC
ATIO
N
LOC
ATIO
N
SE
RV
ICE
S
SE
RV
ICE
SCUSTOMERSCUSTOMERS Abu DhabiAbu DhabiOperations EngineeringOperations Engineering
Total Asset ManagementTotal Asset Management
10
Engineering & EnergyEnergy Differentiation of ServicesEnergy Differentiation of Services
OPCOSM
Integrated Services and Solutions for Global O&G Upstream Production Operations
Competency-Based Training and Nationalization Programs
OPCOSM
Integrated Services and Solutions for Global O&G Upstream Production Operations
Competency-Based Training and Nationalization Programs
11
Engineering & EnergyEnergy Growth DriversEnergy Growth Drivers
ClientBaker Fixed Fee Income Annual Performance Bonus Shared Cost Savings
Reduced Operating Costs Increased Revenues Better Efficiencies
OPCOSM
Value CreationShared Savings
Leveraged Economies of Scale
Flexibility Reliability Innovation Asset Utilization Information Regulatory Compliance Safety
12
Engineering & EnergyOur OPCO Potential MarketOur OPCO Potential Market
13
Engineering & EnergyOur OPCO-Served MarketOur OPCO-Served Market
14
Engineering & EnergyOPCO Diffusion CurveOPCO Diffusion Curve
Early AdoptersEarly Adopters Early MajorityEarly Majority Late MajorityLate Majority LaggardsLaggards
15
Engineering & EnergyTarget Business ModelTarget Business Model
72.0% 70.0%
40.0%
28.0%
60.0%
30.0%
0.0%
25.0%
50.0%
75.0%
100.0%
2000 2001 Targets
% o
f E
ne
rgy
To
tal C
on
tra
ct
Re
ve
nu
es
OPCO All Other Services (Dom. & Int'l.)
OPCO@ 11-15%Margins
All Others@ 5-8%Margins
16
Engineering & EnergyDeepwater OpportunitiesDeepwater Opportunities
Largest Supplier of Manpower to Deepwater GOM
Ops Engineering Support to New Facilities Worldwide
Largest Supplier of Manpower to Deepwater GOM
Ops Engineering Support to New Facilities Worldwide
17
Engineering & EnergyAlliancesAlliances
Supply Chain Management Supply Chain Management
Total Asset Management Total Asset Management
18
Engineering & EnergyThe Energy Value StepsThe Energy Value Steps
Ops. Eng.
Training
Contract Labor
OPCO
Supply Chain Management
Total Asset Management
VA
LU
E
TIME
19
Engineering & EnergyCore Engineering Service OfferingsCore Engineering Service Offerings
Transportation Engineering Services Highways Bridges (Structures) Program Management Asset Management
Civil InfrastructureServices DoD / Federal Markets Water/Waste Water Cold Region Pipelines Asset Management
Transportation Engineering Services Highways Bridges (Structures) Program Management Asset Management
Civil InfrastructureServices DoD / Federal Markets Water/Waste Water Cold Region Pipelines Asset Management
20
Engineering & EnergyFederal Budget ImpactFederal Budget Impact
1999 2000 2001 2002 2003 (E) 2004 (E)
? ?
Transportation Funding (Highways, Transit, Aviation)
Funding Redirects (Homeland Security, Emergency Response, FEMA, EPA, INS, etc.)
TEA-21 Reauthorization
• Baker Strengths: Highways, Bridges, Transit, Aviation
• Baker Strengths: CCMP, DoD, FEMA
21
Engineering & EnergyEngineering HighlightsEngineering Highlights
New Work Added $290mm in 2001
$176mm in 2002
Won $145mm (2001/2002) in Open-End Contracts
with Department of Defense/Federal Programs
Selected as General Engineering Consultant for
Hampton Roads Third Crossing $4.5 Billion Total Project Cost
Won $10.4mm GIS Contract for NYC DEP
Successful Entry into Texas Market
New Work Added $290mm in 2001
$176mm in 2002
Won $145mm (2001/2002) in Open-End Contracts
with Department of Defense/Federal Programs
Selected as General Engineering Consultant for
Hampton Roads Third Crossing $4.5 Billion Total Project Cost
Won $10.4mm GIS Contract for NYC DEP
Successful Entry into Texas Market
22
Engineering & EnergyAcquisition Growth OpportunitiesAcquisition Growth Opportunities
Geographic and Capacity Expansion Energy Opportunities Engineering Opportunities
Additional Capabilities Energy
Training Program Development Maintenance Management Systems
Engineering Water/Wastewater Asset Management
Geographic and Capacity Expansion Energy Opportunities Engineering Opportunities
Additional Capabilities Energy
Training Program Development Maintenance Management Systems
Engineering Water/Wastewater Asset Management
23
Engineering & EnergyTotal RevenuesTotal Revenues
$390.7$403.2
$506.0
$401.8
$348.7
$281.9
$0
$100
$200
$300
$400
$500
$600
1999 2000 2001 2002 Est.
Do
lla
rs i
n M
illi
on
s
Total Reported Revenues Engineering Energy
$400-$410m
24
Engineering & EnergyTotal RevenuesTotal Revenues
$97.8$104.8$102.7
$84.9
$102.7 $104.8
$0
$25
$50
$75
$100
$125
$150
2000 2001 2002
Do
lla
rs i
n M
illi
on
s
Total Reported Revenues Engineering Energy
Q2/Q2 Total Reported/Engineering/Energy RevenuesQ2/Q2 Total Reported/Engineering/Energy Revenues
$42.9
$61.9
$28.8
$56.1
$41.4
$61.3
25
Engineering & EnergyOperating Performance(in Thousands of $)
Operating Performance(in Thousands of $)
Adjusted for $1 Million Non-Recurring ChargeAdjusted for $1 Million Non-Recurring Charge
1999 2000 2001TOTAL CONTRACT REVENUES
Total Reported $506,012 $390,710 $403,222Less Non-Core 223,236 41,625 1,372
ENERGY 80,158 120,708 158,236ENGINEERING 202,618 228,377 243,614
Total Core 282,776 349,085 401,850
TOTAL OPERATING INCOME (Pre-Corp. O/H and I/C Ins. Premiums)Total Reported (511) 17,543 31,436% -.1% 4.5% 7.8%
ENERGY 4,252 9,759 12,842% 6.6% 8.1% 8.1%ENGINEERING 12,544 16,007 18,582% 6.2% 7.0% 7.6%
Total Core $17,796 $25,766 $31,424% 6.4% 7.4% 7.8%
26
Engineering & EnergyOperating Performance (Q2/Q2)(in Thousands of $)
Operating Performance (Q2/Q2)(in Thousands of $)
2000 2001 2002TOTAL CONTRACT REVENUES
Total Reported $97,962 $102,652 $104,760Less Non-Core 12,871 - -
ENERGY 28,786 41,399 42,877ENGINEERING 56,105 61,253 61,883
Total Core 84,891 102,652 104,760
TOTAL OPERATING INCOME (Pre-Corp. O/H and I/C Ins. Premiums)Total Reported 5,486 8,800 8,640% 5.6% 8.6% 8.2%
ENERGY 1,421 3,496 3,303% 4.9% 8.4% 7.7%ENGINEERING 3,787 5,462 6,147% 6.7% 8.9% 9.9%
Total Core $5,208 $8,958 $9,450% 6.1% 8.7% 9.0%
27
Engineering & EnergyCash Flow(in millions of $)
Cash Flow(in millions of $)
1999 2000 2001Net Income $(8.2) $5.4 $11.2
Depreciation & Amortization 7.4 7.1 5.2Other 1.9 (0.1) 3.2
Cash from Operations 1.1 12.4 19.6
Capital Expenditures (5.3) (2.9) (4.1)Acquisition/Investments (4.9) (9.0) 9.0Funding of Litigation Escrow - - (12.7)Share Repurchase - - (0.4)Proceeds from Sale of Assets/Stock Options - 15.0 0.3NET Borrowings (Repayments) 7.8 (10.1) (2.3)
NET Increase (Decrease) in Cash $(1.3) $5.4 $9.4
28
Engineering & EnergyBalance Sheet(in millions of $)
Balance Sheet(in millions of $)
1999 2000 2001ASSETSCash $3.7 $9.1 $18.5Short-Term Investment - 9.0 -A/R 77.4 67.7 67.6Cost in Excess of Billing 26.6 20.5 25.3
PPE 17.1 10.1 10.3Intangibles 14.6 10.8 9.8Other 15.6 10.2 20.1
$155.0 $137.4 $151.6LIABILITIESCurrent Portion LTD 3.5 2.2 -Trade A/P 28.9 25.7 21.9Accrued Other 62.9 59.1 68.2
Long-Term Debt 14.9 0.1 -
Owners’ Equity 44.8 50.3 61.5$155.0 $137.4 $151.6
29
Engineering & EnergyEPS GrowthEPS Growth
1999 2000 2001 2002 Est.Reported
EPS $(1.00) $.65 $1.33 $1.25 - $1.30
Pro Forma EPSCore Operating Income 17,796 25,766 31,424Less Corporate Overhead (7,664) (7,715) (11,058)Operating Income 10,132 18,051 20,366
Provisions for Income Tax (47% for 1999, 51% for 2001 and 45.5% for 2001) 4,764 (9,206) (9,267)
5,370 8,845 11,099
Pro Forma EPS $0.66 $1.07 $1.32 $1.25 - $1.30
30
Engineering & EnergyStock Performance (24 mos.)Stock Performance (24 mos.)
$7.13
$12.75
$8.93
$14.00$13.85
$11.55
$10.00
$12.26$12.70
$8.30
$8.25
$7.75
$8.13
$8.06
$7.75
$13.38$13.60
$15.20 $15.00
$14.00
$14.25$14.90
$15.48$15.00
$14.25
$13.75
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
Clo
sin
g S
ha
re P
ric
e
31
Engineering & EnergyOwnershipOwnership
Top Holders Shares
Baker ESOP 3,247,039
Lord Abbett & Co. 644,203
Wellington Management 485,000
Dimensional Fund Advisors 479,914
Goldman Sachs 409,400
Paradigm Capital Management 305,300
Corbyn Investment Management 263,737
Munder Capital Management 195,500
Dalton, Greiner 190,200
Tontine Management L.L.C. 146,800
Emerald Advisers 122,800
Fidelity Management 61,700
Top Holders Shares
Baker ESOP 3,247,039
Lord Abbett & Co. 644,203
Wellington Management 485,000
Dimensional Fund Advisors 479,914
Goldman Sachs 409,400
Paradigm Capital Management 305,300
Corbyn Investment Management 263,737
Munder Capital Management 195,500
Dalton, Greiner 190,200
Tontine Management L.L.C. 146,800
Emerald Advisers 122,800
Fidelity Management 61,700
32
Engineering & EnergyFinancial HighlightsFinancial Highlights
Eliminated Series B Super Voting Shares
Secured $40 Million Credit Facility
Added 7 New Institutional Holders
Added to Russell 2000®
Litigation Escrow Released
Eliminated Series B Super Voting Shares
Secured $40 Million Credit Facility
Added 7 New Institutional Holders
Added to Russell 2000®
Litigation Escrow Released
33
Engineering & EnergyConclusionConclusion
Energy Market Conditions Catalyst for Margin Growth
Transportation Infrastructure and DoD/Federal Markets Providing Opportunity
Debt-free, Leverageable Balance Sheet
Currently Valued at 5x EBITDA
Energy Market Conditions Catalyst for Margin Growth
Transportation Infrastructure and DoD/Federal Markets Providing Opportunity
Debt-free, Leverageable Balance Sheet
Currently Valued at 5x EBITDA
34
MICHAEL BAKER CORPORATION
RedChip Partners Investor ConferenceSeptember 19, 2002
Engineering & Energy