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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.   20549
 FORM 10-K
 Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2006
 Commission file number 1-6627
 MICHAEL BAKER CORPORATION
  Pennsylvania
    
    25-0927646(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)Airside Business Park, 100 Airside Drive, Moon Township, PA
    
    15108(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (412) 269-6300
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Class
    
    Name of each exchange on which registeredCommon Stock, par value $1 per share
    
    American Stock Exchange
 o þ
 o þ
 þ o
 o
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 Parts of Form 10-K into whichDocument
    
    Document is incorporatedFinancial Section of Annual Report to Shareholders
for the year ended December 31, 2006
    
    I, IIProxy Statement to be distributed in connection with
the 2007 Annual Meeting of Shareholders
    
    III




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##### 



MICHAEL BAKER CORPORATION
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 TABLE CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    6Item 1B.
    
    Unresolved Staff Comments
    
    
    11Item 2.
    
    Properties
    
    
    11Item 3.
    
    Legal Proceedings
    
    
    11Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    12PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    12Item 6.
    
    Selected Financial Data
    
    
    13Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operation
    
    
    13Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 8.
    
    Financial Statements and Supplementary Data
    
    
    14Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    14Item 9A.
    
    Controls and Procedures
    
    
    14Item 9B.
    
    Other Information
    
    
    17PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    17Item 11.
    
    Executive Compensation
    
    
    18Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    18Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    18Item 14.
    
    Principal Accountant Fees and Services
    
    
    18PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    19Signatures
    
    
    22Schedule II  Valuation and Qualifying AccountsEX-10.1EX-10.2.CEX-10.2.DEX-10.3EX-13.1EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-99.1EX-99.2
  Note with respect to Forward-Looking Statements :




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PART I
 
 Item 1. Business.
 General
   Engineering News Record th th th th st th th nd th th st th th th th
 Strategy
  Growth
 Profitability
 Innovation
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Business Segments
   Engineering
   Energy
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Domestic and Foreign Operations
  Backlog
 (In millions)
    
    December 31, 2006
    
    
    December 31, 2005Engineering
    
    $
    1,057.1
    
    
    $
    1,109.2Energy
    
    
    235.4
    
    
    
    212.6Total
    
    $
    1,292.5
    
    
    $
    1,321.8
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Significant Customers
  Competitive Conditions
    Seasonality
  Personnel
  - 4 -




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Executive Officers
  Richard L. Shaw
 William P. Mooney
 H. James McKnight
 Monica L. Iurlano
 Craig O. Stuver
 Bradley L. Mallory
 John D. Whiteford
 James B. Richards
 David
G. Greenwood
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James
R. Johnson
  Available Information
 www.mbakercorp.com www.sec.gov
 
 Item 1A. Risk Factors.
  Changes and fluctuations in the government spending priorities could materially affect our future
revenue and growth prospects.
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Unpredictable economic cycles or uncertain demand for our engineering capabilities and related
services could cause our revenues to fluctuate or contribute to delays or the inability of
customers to pay our fees.
  Our ability to recruit, train, and retain professional personnel of the highest quality is a
competitive advantage. Our future inability to do so would adversely affect our
competitiveness.
  If we are unable to accurately estimate and control our contract costs, then we may incur losses on
our contracts, which could decrease our operating margins and significantly reduce or eliminate our
profits.
  Due to the nature of the work we perform to complete engineering and energy contracts, we are
subject to potential liability claims and contract disputes.
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If we miss a required performance standard, fail to timely complete, or otherwise fail to
adequately perform on a project, then we may incur a loss on that project, which may reduce or
eliminate our overall profitability.
  We are subject to procurement laws and regulations associated with our government
contracts. If we do not comply with these laws and regulations, we may be prohibited from
completing our existing government contracts or suspended from government contracting and
subcontracting for some period of time.
   We are subject to routine U.S. federal, state and local government audits related to our government
contracts. If audit findings are unfavorable, we could experience a reduction in our
profitability.
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Our inability to continue to win or renew government contracts could result in material reductions
in our revenues and profits.
   Our involvement in partnerships, ventures, and use of subcontractors exposes us to additional legal
and market reputation damages.
  We are engaged in highly competitive markets that pose challenges to continued revenue growth.
  Our international business operations are subject to unique risks and challenges that create
increased uncertainty in these markets.
   Our goodwill or other intangible assets could become impaired and result in a material reduction in
our profits.
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We use percentage-of-completion accounting methods for many of our projects. This method
may result in volatility in stated revenues and profits.
  Our government contracts may give the government the right to modify, delay, curtail or terminate
our contracts at their convenience at any time prior to their completion. Therefore, our
backlog is subject to unexpected adjustments, delays and cancellations.
  We are not insured for a significant portion of our claims exposure, which could materially and
adversely affect our operating income and profitability.
  Foreign governmental regulations could adversely affect our business.
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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   
 Item 3. Legal Proceedings.
  FEMA Housing Inspection Contract.
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Item 4. Submission of Matters to a Vote of Security Holders.
 (a)
    
    Our annual meeting of shareholders was held on November 29, 2006.(b)
    
    Each of managements nominees to the board of directors, as listed in Item 4(c) below, was
elected.   There was no solicitation in opposition to managements nominees.(c)
    
    Our shareholders elected each of our directors listed below to one-year terms or until their
respective successors have been elected. The votes cast by holders of our Common Stock
in approving the following directors were:
 Name of Director
    
    Votes for
    
    Votes withheldRobert N. Bontempo
    
    
    6,189,075
    
    
    
    1,785,697Nicholas P. Constantakis
    
    
    6,193,469
    
    
    
    1,781,303William J. Copeland
    
    
    6,086,944
    
    
    
    1,887,828Robert H. Foglesong
    
    
    6,890,080
    
    
    
    1,084,692Roy V. Gavert, Jr.
    
    
    6,407,420
    
    
    
    1,567,352John E. Murray, Jr.
    
    
    6,878,604
    
    
    
    1,096,168Pamela S. Pierce
    
    
    6,872,346
    
    
    
    1,102,426Richard L. Shaw
    
    
    6,859,886
    
    
    
    1,114,886
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Information
  Holders
  Dividends
  Sales of Unregistered Securities
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Purchases of Equity Securities
  
 Item 6. Selected Financial Data.
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operation.
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
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Item 8.   Financial Statements and Supplementary Data.
   
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.
  
 Item 9A. Controls and Procedures.
 Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
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Status of Remediation of Prior Year Material Weaknesses
  (1)
    
    We have emphasized certain key controls in an effort to mitigate significant risks and
strengthen our control environment.   In this regard, we have implemented a monitoring
function for tax compliance and the recording of related expenses, and increased
managements awareness of the financial reporting risks associated with the recording of
insurance reserves.(2)
    
    We have enhanced our documentation and review of accounting
estimates.   Specifically, we ensure that judgments related to estimates are reviewed
on a periodic basis and that amounts related to insurance reserves are properly recorded in
the financial statements.(3)
    
    We have enhanced our monitoring of balance sheet accounts by deploying account
reconciliation software that facilitates timely access to and reviews of reconciliations.
  Managements Report on Internal Control Over Financial Reporting
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Internal ControlIntegrated Framework
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
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Internal ControlIntegrated Framework Internal ControlIntegrated Framework
  /s/ Deloitte & Touche LLP
 
 Item 9B. Other Information.
   
 PART III
 
 Item 10.   Directors, Executive Officers and Corporate Governance.
  www.mbakercorp.com
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Item 11.  Executive Compensation.
  
 Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
  Equity Compensation Plan Information
  (a)
    
    (b)
    
    (c)Number of securitiesremaining available for futureNumber of securities to
    
    Weighted-average
    
    issuance under equitybe issued upon exercise
    
    exercise price of
    
    compensation plansof outstanding options,
    
    outstanding options,
    
    (excluding securities reflectedPlan Category
    
    warrants and rights
    
    warrants and rights
    
    in column (a))Equity
compensation plans
approved
by shareholders
    
    
    235,093
    
    
    $
    13.43
    
    
    
    940,257Equity compensation
plans not approved
by shareholders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    235,093
    
    
    $
    13.43
    
    
    
    940,257
 
 Item 13.  Certain
Relationships and Related Transactions, and Director Independence.
  
 Item 14.  Principal Accountant Fees and Services.
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PART IV
 
 Item 15.  Exhibits and Financial Statement Schedules.
 (a)(1)
    
    The following financial statements are incorporated in Item 8 of Part II of this Report by
reference to the consolidated financial statements within Exhibit 13.1 to this Form 10-K:Consolidated Statements of Income for each of the three years in the period ended December
31, 2006Consolidated Balance Sheets as of December 31, 2006 and 2005Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2006Consolidated Statements of Shareholders Investment for each of the three years in the
period ended December 31, 2006Notes to Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm
(Deloitte & Touche LLP)Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP)(a)(2)
    
    Financial statement schedule for the year ended December 31, 2006:Schedule II  Valuation and Qualifying AccountsReport of Independent Registered Public Accounting Firm (Deloitte & Touche LLP) on Financial
Statement Schedule for the years
ended December 31, 2006 and 2005 (included as Exhibit
99.1 to this Form 10-K)Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP) on
Financial Statement Schedule for the year
ended December 31, 2004 (included as Exhibit
99.2 to this Form 10-K)All other schedules are omitted because they are either not applicable or the required
information is shown in the consolidated financial statements or notes thereto.(a)(3)
    
    The following exhibits are included herewith as a part of this Report:
 Exhibit No.
    
    Description3.1
    
    Articles of Incorporation, as amended, filed as Exhibit 3.1 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by
reference.3.2
    
    By-laws, as amended, filed as Exhibit 3.2 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated herein by reference.4.1
    
    Rights Agreement dated November 16, 1999, between us and American Stock Transfer and
Trust Company, as Rights Agent, filed as Exhibit 4.1 to our Report on Form 8-K dated
November 16, 1999, and incorporated herein by reference.10.1
    
    2006 Incentive Compensation Plan (attachments excluded), filed herewith.*10.2
    
    Consulting Agreement dated April 25, 2001, by and between us and Richard L. Shaw, filed
as Exhibit 10.2(c) to our Quarterly Report on Form 10-Q for the period ended June 30, 2001,
and incorporated herein by reference.*
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Exhibit No.
    
    Description10.2(a)
    
    First Amendment to Consulting Agreement effective April 26, 2003, by and between us and
Richard L. Shaw, filed as Exhibit 10.2(a) to our Annual Report on Form 10-K for the year
ended December 31, 2003, and incorporated herein by reference.*10.2(b)
    
    Second Amendment to Consulting Agreement effective April 26, 2005, by and between us and
Richard L. Shaw, filed as Exhibit 10.2(a) to our Quarterly Report on Form 10-Q for the
period ended June 30, 2005, and incorporated herein by reference.*10.2(c)
    
    Third Amendment to Consulting Agreement effective April 26, 2006, by and between us and
Richard L. Shaw, filed herewith.*10.2(d)
    
    Fourth Amendment to Consulting Agreement effective April 26, 2007, by and between us and
Richard L. Shaw, filed herewith.*10.3
    
    Employment Agreement dated as of September 14, 2006, by and between us and Richard L.
Shaw, filed herewith.*10.4
    
    First Amended and Restated Loan Agreement dated September 17, 2004, by and between us
and Citizens Bank of Pennsylvania, PNC Bank, National Association and Fifth Third Bank,
filed as Exhibit 10.4(a) to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004, and incorporated herein by reference.10.5
    
    1995 Stock Incentive Plan amended effective April 23, 1998, filed as Exhibit 10.4 to
our Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated
herein by reference.*10.6
    
    1996 Nonemployee Directors Stock Incentive Plan, filed as Exhibit A to our definitive
Proxy Statement with respect to our 1996 Annual Meeting of Shareholders, and incorporated
herein by reference.*10.7
    
    Office Sublease Agreement dated August 6, 2001, by and between us and Airside Business
Park, L.P., filed as Exhibit 10.7 to our Annual Report on Form 10-K for the year ended
December 31, 2002 (exhibits omitted), and incorporated herein by reference.10.7(a)
    
    Third Amendment to Office Sublease Agreement dated February 19, 2003, by and between us
and Airside Business Park, L.P., filed as Exhibit 10.7(a) to our Annual Report on Form 10-K
for the year ended December 31, 2002, and incorporated herein by reference.10.8
    
    2003 Long-Term Incentive Compensation Plan, filed as Exhibit A to our April 24, 2003
Notice of Annual Meeting and Proxy Statement, and incorporated herein by reference.*13.1
    
    Selected Financial Data, Managements Discussion and Analysis of Financial Condition
and Results of Operations, Consolidated Financial Statements as of December 31, 2006 and
2005 and for each of the three years in the period ended December 31, 2006, Reports of
Independent Registered Public Accounting Firms, and Supplemental Financial Information,
filed herewith and to be included as the Financial Section of the Annual Report to
Shareholders for the year ended December 31, 2006.
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Exhibit No.
    
    Description21.1
    
    Subsidiaries, filed herewith.23.1
    
    Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP), filed
herewith.23.2
    
    Consent of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP),
filed herewith.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), filed
herewith.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), filed
herewith.32.1
    
    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.99.1
    
    Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP) on
financial statement schedule for the years ended December 31, 2006 and 2005, filed
herewith.99.2
    
    Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP) on
financial statement schedule for the year ended December 31, 2004, filed herewith.
 
 *
    
    Management contract or compensatory plan. - 21 -




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SIGNATURES
  MICHAEL BAKER CORPORATIONDated:  March 16, 2007
    By:
    /s/  Richard L. ShawRichard L. ShawChairman of the Board and
Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Richard L. Shaw

Richard L. Shaw
    
    Chairman of the Board and
Chief Executive Officer
    
    March 16, 2007/s/ William P. Mooney

William P. Mooney
    
    Executive Vice President and
Chief Financial Officer
    
    March 16, 2007/s/ H. James McKnight
    
    Executive Vice President,
    
    March 16, 2007H. James McKnight
    
    General Counsel and Secretary/s/ Craig O. Stuver

Craig O. Stuver
    
    Senior Vice President, Corporate Controller
and Treasurer (Chief
Accounting Officer)
    
    March 16, 2007/s/ Robert N. Bontempo
    
    Director
    
    March 16, 2007Robert N. Bontempo/s/ Nicholas P. Constantakis
    
    Director
    
    March 16, 2007Nicholas P. Constantakis/s/ William J. Copeland
    
    Director
    
    March 16, 2007William J. Copeland/s/ Robert H. Foglesong
    
    Director
    
    March 16, 2007Robert H. Foglesong/s/ Roy V. Gavert, Jr.
    
    Director
    
    March 16, 2007Roy V. Gavert, Jr./s/ John E. Murray, Jr.
    
    Director
    
    March 16, 2007John E. Murray, Jr./s/ Pamela S. Pierce
    
    Director
    
    March 16, 2007Pamela S. Pierce
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MICHAEL BAKER CORPORATION
Schedule II  Valuation and Qualifying Accounts
For the years ended December 31, 2006, 2005 and 2004
(In thousands)
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    Deductions 
    
    
    Balance atDescription
    
    beg. of year
    
    
    expense
    
    
    other accounts
    
    
    describe
    
    
    end of yearFor the year ended December 31, 2006:Income tax valuation allowance
    
    $
    6,150
    
    
    $
    1,642
    (a)
    
    $
    0
    
    
    $
    0
    
    
    $
    7,792Nigerian prepaid taxes
    
    $
    1,560
    
    
    $
    1,006
    (b)
    
    $
    0
    
    
    
    ($393
    )(c)
    
    $
    2,173Allowance for doubtful accounts
    
    $
    746
    
    
    $
    110
    
    
    $
    0
    
    
    
    ($89
    )(c)
    
    $
    767For the year ended December 31, 2005:Income tax valuation allowance
    
    $
    6,227
    
    
    
    ($77
    )(a)
    
    $
    0
    
    
    $
    0
    
    
    $
    6,150Nigerian prepaid taxes
    
    $
    1,198
    
    
    $
    362
    (b)
    
    $
    0
    
    
    $
    0
    
    
    $
    1,560Allowance for doubtful accounts
    
    $
    683
    
    
    $
    572
    
    
    $
    0
    
    
    
    ($509
    )(c)
    
    $
    746For the year ended December 31, 2004:Income tax valuation allowance
    
    $
    4,053
    
    
    $
    2,174
    (a)
    
    $
    0
    
    
    $
    0
    
    
    $
    6,227Nigerian prepaid taxes
    
    $
    970
    
    
    $
    228
    (b)
    
    $
    0
    
    
    $
    0
    
    
    $
    1,198Allowance for doubtful accounts
    
    $
    2,392
    
    
    $
    587
    
    
    $
    0
    
    
    
    ($2,296
    )(c)
    
    $
    683
 (a)
    
    Primarily relates to valuation of federal, state, and foreign net operating losses.(b)
    
    Relates to the inability to realize Nigerian prepaid income tax assets.(c)
    
    For the years ended December 31, 2006, 2005 and 2004,
the deduction amount primarily reflects accounts receivable balances written
off during the year as well as recoveries of allowances previously expensed.