<PAGE>
                       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, 1998
                          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)

       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 REGISTERED
    --------------                    -----------------------------------------
COMMON STOCK, PAR VALUE $1 PER SHARE          AMERICAN STOCK EXCHANGE

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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.      
            ----

The Registrant  estimates that as of March 31, 1999, the aggregate  market value
of shares of the  Registrant's  Common  Stock and Series B Common  Stock held by
non-affiliates  (excluding  for  purposes of this  calculation  only,  2,504,311
shares of Common  Stock and  1,224,553  shares of Series B Common  Stock held of
record or beneficially by the executive officers and directors of the Registrant
as a group and the Registrant's Employee Stock Ownership Plan) of the Registrant
was  $31,550,101 for the Common Stock and $664,426 for the Series B Common Stock
(calculated  for the Series B Common  Stock on the basis of the shares of Common
Stock into which Series B Common Stock is convertible).

As of March 31, 1999,  the Registrant had  outstanding  7,159,408  shares of its
Common Stock and 1,316,198 shares of its Series B Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                             Parts of Form 10-K into which
            Document                         Document is Incorporated
--------------------------------------------------------------------------------
             None
<PAGE>











































Note with respect to Forward Looking Statements:

This Annual Report on Form 10-K, and in particular the "Management's  Discussion
and  Analysis  of  Financial  Condition  and Results of  Operations"  section of
Exhibit 13.1 hereto,  which is incorporated by reference into Item 7 of Part II,
contains forward looking statements concerning future operations and performance
of the Registrant.  Forward looking statements are subject to market,  operating
and economic  risks and  uncertainties  that may cause the  Registrant's  actual
results in future periods to be materially different from any future performance
suggested herein. Factors that may cause such differences include, among others:
increased  competition,  increased costs,  changes in general market conditions,
and changes in anticipated levels of government spending on infrastructure. Such
forward  looking  statements are made pursuant to the Safe Harbor  Provisions of
the Private Securities Litigation Reform Act of 1995.


<PAGE>

                                     PART I

Item 1.   BUSINESS
          --------

Michael Baker Corporation  ("Baker" or "the Registrant") was founded in 1940 and
organized as a Pennsylvania  corporation in 1946.  Today,  through its operating
subsidiaries and joint ventures,  Baker provides engineering,  heavy and highway
construction,  construction  management,  and operations and technical  services
worldwide.

The  Registrant is organized  into the following  five  market-focused  business
units:  Buildings,  Civil,  Energy,  Environmental  and  Transportation.   These
business  units have  coincided  with the  Registrant's  reportable  segments in
previous  years;  however,  under the  Financial  Accounting  Standards  Board's
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise  and Related  Information,"  adopted by the Registrant in 1998,
two business units are required to be presented in greater detail.  Accordingly,
the  Registrant's  reportable  segments  now include the  Engineering  and Baker
Support Services, Inc. ("BSSI") divisions of the Civil unit, and the Engineering
and Construction (heavy and highway) divisions of the Transportation unit.

Information  regarding  the amounts of  revenues,  income  before  taxes,  total
assets,   capital  expenditures,   and  depreciation  and  amortization  expense
attributable to the Registrant's  reportable  segments is contained in Note 4 to
the consolidated financial statements, which are included within Exhibit 13.1 to
this Form 10-K. Such information is incorporated herein by reference.

According to the annual  listings  published in 1998 by Engineering  News Record
magazine,  Baker ranked 43rd among U.S. design firms, 18th among  transportation
design firms, 102nd among environmental  firms, 132nd among international design
firms and 150th among U.S.  construction  contractors.  Baker also ranked  104th
among  government  contractors  according  to a  listing  published  in  1998 by
Government Executive magazine. These rankings were based on 1997 revenues.

BUSINESS UNITS
--------------
BUILDINGS.   Through  March  1999,   the  Buildings  unit  comprised  a  general
construction, construction management and design-build division and a facilities
planning  and  design  division,   that  together  or  separately   pursued  the
design-build  market.  This unit offered a variety of services including design-
build,   construction   management,   planning,   program  management,   general
contracting,  architectural and interior design,  construction  inspection,  and
constructability  reviews.  The  Buildings  unit has  completed  a wide range of
projects, such as corporate headquarters, data centers, correctional facilities,
educational facilities, airports and entertainment facilities.

Following a  significant  1998 loss on a  construction  project in the Buildings
unit,  effective in April 1999,  the Buildings unit has been  restructured  such
that  its  low-bid,   high-risk,   general  construction  activities  have  been
discontinued,  and the  Registrant  will no  longer  propose  on these  types of
construction projects. Existing low-bid, high-risk construction projects will be
completed or sold. In the future, Baker will place increased emphasis on growing
its  construction  management-for-fee  business  (for  which  the  risk  to  the
Registrant  is  lower  than  general   construction),   and  will  partner  with
contractors to pursue larger design-build contracts in the buildings market. The
Registrant  will  continue the  facilities  planning and design  division of the
Buildings unit.

CIVIL. As previously stated, the Civil unit includes two divisions,  Engineering
and  BSSI.  This  unit has  combined  Baker's  military  infrastructure  work in
planning and operations and maintenance ("O&M") to improve its ability to market
to, and serve, the U.S. Department of Defense, a significant Baker client. The
<PAGE>

Engineering  division  provides  services  which  include  surveying,   mapping,
geographic   information  systems  ("GIS"),   planning,   design,   construction
management and total program management.  The BSSI division principally provides
O&M services on U.S. military bases. The Civil unit serves clients in the fields
of  telecommunications,   water  resources,   pipelines,  emergency  management,
resources management, water/wastewater systems and facilities O&M.

ENERGY.  The Energy unit  specializes  in  providing  a full range of  technical
services for operating energy production  facilities.  The unit's  comprehensive
services consist of training, personnel recruitment, pre-operations engineering,
field operations and maintenance, mechanical equipment maintenance and logistics
management.  The  Energy  unit  serves  both major and  independent  oil and gas
producing  companies,  as well as domestic  regulated  utilities and independent
power  producers.  This unit  operates in over a dozen foreign  countries,  with
major projects in the U.S., Venezuela, Thailand and Nigeria.

ENVIRONMENTAL. The Environmental unit provides environmental, health, and safety
related  engineering  and  consulting  services  in both the public and  private
markets.  This unit provides services which include site restoration,  strategic
regulatory analysis, compliance, and advanced management systems. Clients of the
Environmental  unit include commercial  entities,  Fortune 100 companies and the
Department  of Defense,  including the U.S. Army Corps of Engineers and the U.S.
Navy. Under the Navy's Comprehensive Long-term Environmental Action Navy (CLEAN)
program, this unit has been providing  environmental support services throughout
the mid-Atlantic states, the Caribbean and Europe since 1991.

TRANSPORTATION.  Through its two divisions,  Engineering and  Construction,  the
Transportation  unit provided  planning,  design,  construction  and  operations
support services to governmental  transportation  agencies throughout the nation
in 1998. Within the Engineering division, Baker serves the professional services
segment of the market providing planning,  design,  construction  management and
inspection,  and management consulting services to municipal,  state and federal
highway, toll road and transit agencies. This division is consistently among the
twenty largest  providers of such services and enjoys a national  reputation for
its work in developing highways,  bridges,  airports,  busways and other transit
facilities.  The  Construction  division  converts  design  plans into steel and
concrete  infrastructure as a general  contractor for highways,  bridges,  track
installation,  sewer,  water and other heavy civil  construction  projects.  The
primary  customers for this division are the same as the  Engineering  division,
but more  geographically  restricted  to  Pennsylvania,  Illinois,  New York and
Florida.  

In connection with the previously mentioned  restructuring of the Buildings unit
in April 1999, the Registrant  announced that its heavy and highway construction
business will be sold. The Registrant  initiated  activities related to the sale
of the heavy and  highway  business  during the second  quarter of 1999.  Normal
construction  bidding activity will continue during the period through the sale.
Following the sale of this business,  the  Transportation  Engineering  division
will partner with other contractors to pursue selected  design-build  contracts,
which are becoming a growing project  delivery method within the  transportation
marketplace. The Registrant will continue its transportation  engineering/design
division of the  Transportation  unit, which is poised to benefit  significantly
from the U.S. government's TEA-21 legislation signed during 1998.

DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
Approximately  91%, 90% and 88% of the Registrant's total contract revenues were
derived  from work  performed  within  the  United  States  for the years  ended
December 31, 1998, 1997 and 1996,  respectively.  Further financial  information
regarding the Registrant's domestic and foreign operations is contained in Notes
4 and 10 to the  consolidated  financial  statements,  which are included within
Exhibit  13.1 to this Form 10-K.  Such  information  is  incorporated  herein by
reference. Of the Registrant's domestic  revenues, the  majority  comprises
<PAGE>

engineering and construction  work performed in the Northeast region of the U.S.
The Registrant's  international  revenues are derived  primarily from its Energy
unit.

FUNDED AND UNFUNDED BACKLOG
---------------------------
The  Registrant's  funded  backlog,  which comprises that portion of uncompleted
work  represented  by signed  contracts and for which the  procuring  agency has
appropriated  and allocated  the funds to pay for the work,  was $448 million at
December 31, 1998 and $393 million at December 31, 1997.  Total  backlog,  which
incrementally  includes  that  portion of contract  value for which  options are
still to be exercised (unfunded backlog),  was $735 million at December 31, 1998
and $649  million at December  31,  1997.  With  reference  to the  Registrant's
restructuring  announced in April 1999, funded backlog related to the businesses
that will be continued by the Registrant was $300 million and $252 million,  and
total backlog was $587 million and $508  million,  as of year-end 1998 and 1997,
respectively.

There is not necessarily a direct correlation  between the foregoing figures and
the  Registrant's  annual total  contract  revenues.  In the case of  multi-year
contracts,  total contract revenues are spread over several years and correspond
to the timing of the contract  rather than the  Registrant's  fiscal year.  Many
multi-year contracts, particularly with agencies of the U.S. government, provide
for optional renewals on the part of the customer.  The Registrant's  experience
has been that these optional contract  renewals,  which are included in unfunded
backlog,  have generally  been  exercised.  Funded backlog  generally is highest
during the last quarter of the Registrant's fiscal year because that corresponds
to the first quarter of the U.S.  government's  fiscal year,  which is when many
government contract renewals occur.

SIGNIFICANT CUSTOMERS
---------------------
Contracts with various  branches of the U.S.  government  accounted for 27%, 24%
and 23% of the Registrant's total contract revenues for the years ended December
31, 1998, 1997 and 1996, respectively. In addition, an individual Buildings unit
construction  contract with Universal City  Development  Partners  accounted for
11.5% of the Registrant's  total contract  revenues in 1998.  Further  financial
information  regarding this contract is contained in Note 2 to the  consolidated
financial statements,  which are included within Exhibit 13.1 to this Form 10-K.
Such  information is incorporated  herein by reference.  No individual  contract
accounted for more than 10% of the Registrant's  total contract revenues in 1997
or 1996.

COMPETITIVE CONDITIONS
----------------------
The  Registrant's  business is highly  competitive with respect to all principal
services it offers.  Baker competes with numerous firms that provide some or all
of the services  provided by the Registrant.  The competitive  conditions in the
Registrant's  businesses  relate to the nature of the contracts  being  pursued.
Public-sector  contracts,  consisting mostly of contracts with federal and state
governmental  entities,  are generally  awarded  through a competitive  process,
subject to the contractors'  qualifications  and experience.  The Baker business
units employ extensive cost estimating,  scheduling and other techniques for the
preparation  of  these  competitive  bids.  Private-sector  contractors  compete
primarily on the bases of  qualifications,  quality of performance  and price of
services.  Such  private-sector  contracts are generally awarded on a negotiated
basis.

The  Registrant  believes  that the  principal  competitive  factors (in various
orders of importance) in the areas of services it offers are quality of service,
reputation, experience, technical proficiency and cost of service. The
<PAGE>

Registrant  believes  that it is  well  positioned  to  compete  effectively  by
emphasizing its full range of professional services.

SEASONALITY
-----------
Based upon the Registrant's  experience,  total contract revenues and net income
from  engineering  and  construction-related  services  tend to be lower for the
first quarter than for the remaining quarters due to winter weather  conditions,
particularly  for projects in the  Northeast  and Midwest  regions of the United
States.

PERSONNEL
---------
At December 31, 1998,  the  Registrant  employed  approximately  3,824  persons,
broken down by business unit as follows:

              Buildings unit-287                  Environmental unit-159
              Civil unit-1,472                    Transportation unit-1,026
              Energy unit-841                     Corporate staff-39

The  Registrant's  employees  are not  represented  by  labor  unions,  with the
exception  of  its  construction   personnel  which  are  generally  covered  by
collective  bargaining  agreements,  as are certain BSSI  employees in the Civil
unit.  The  majority  of  current  construction-related   collective  bargaining
agreements  do not  expire  until  the year  2005.  During  1999,  several  BSSI
collective  bargaining  agreements  are  scheduled  for  renegotiation,  but  no
significant  issues  are  expected.  Currently,  the  Registrant  considers  its
relationships with labor unions to be good.


Item 2.   PROPERTIES
          ----------

The principal  offices of the Registrant are located at the Airport Office Park,
410 and 420 Rouser Road, Coraopolis,  Pennsylvania 15108, at which approximately
165,000 square feet of office space is leased for use by the Registrant's Civil,
Buildings,  Environmental and  Transportation  units and, to a lesser extent, by
its corporate  staff.  The Registrant  owns a 75,000 square foot office building
located in Beaver County, Pennsylvania, which is situated on a 175 acre site and
utilized by the  Registrant's  Civil unit. The Beaver  building and property are
currently for sale.  Upon any such sale, the  Registrant  would expect to either
continue  leasing  this  building  from the new owner or relocate  the  affected
employees to the Coraopolis area.

The  Registrant  leases an aggregate  of  approximately  466,000  square feet of
office-related floor space, including its principal offices. The space leased by
business unit is as follows:

The Buildings unit leases approximately 75,000 square feet in:
              Rocky Hill, Connecticut            Annapolis, Maryland
              Orlando, Florida                   Coraopolis, Pennsylvania
              Chicago, Illinois                  Alexandria, Virginia

The Civil unit leases approximately 150,000 square feet in:
              Anchorage, Alaska                  Elmsford, New York
              Fairbanks, Alaska                  Coraopolis, Pennsylvania
              Phoenix, Arizona                   Dallas, Texas
              Rocky Hill, Connecticut            Salt Lake City, Utah
              Annapolis, Maryland                Alexandria, Virginia
              Bethesda, Maryland                 Virginia Beach, Virginia
              Jackson, Mississippi               Mexico City, Mexico
              Billings, Montana

<PAGE>

The Energy unit leases approximately 30,000 square feet in:
              Lafayette, Louisiana               Abu Dhabi, United Arab Emirates
              Houston, Texas                     Middlesex, United Kingdom

The Environmental unit leases approximately 46,000 square feet in:
              Merrillville, Indiana              Princeton, New Jersey
              Annapolis, Maryland                Coraopolis, Pennsylvania

The Transportation unit leases approximately 148,000 square feet in:
              Birmingham, Alabama                Cleveland, Ohio
              Phoenix, Arizona                   Columbus, Ohio
              Fort Smith, Arkansas               Coraopolis, Pennsylvania
              Rocky Hill, Connecticut            Gibsonia, Pennsylvania
              Tampa, Florida                     Harrisburg, Pennsylvania
              Chicago, Illinois                  Horsham, Pennsylvania
              Shreveport, Louisiana              Alexandria, Virginia
              Annapolis, Maryland                Richmond, Virginia
              Princeton, New Jersey              Virginia Beach, Virginia
              Brooklyn, New York                 Charleston, West Virginia
              Elmsford, New York

The Corporate staff utilizes approximately 17,000 square feet of leased space in
Coraopolis and Beaver, Pennsylvania.


Item 3.   LEGAL PROCEEDINGS 
          -----------------

The  Registrant  has  been  named  as  a  defendant  or  co-defendant  in  legal
proceedings wherein  substantial  damages are claimed.  Such proceedings are not
uncommon to the Registrant's business.  After consultations with counsel, except
as discussed  below,  management  believes that the  Registrant  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 Registrant.

The Registrant currently has two significant legal proceedings outstanding.  The
more  significant one relates to a contract for the construction of the CityWalk
project at the Universal  Studios theme park in Orlando,  Florida  between Baker
Mellon Stuart  Construction,  Inc. ("BMSCI"),  a wholly-owned  subsidiary of the
Registrant,   and  Universal  City  Development  Partners  ("UCDP").  BMSCI  was
providing  project-related  construction  services  to UCDP under the  contract.
During BMSCI's performance under the contract,  which began in 1997, the project
suffered delays due to substantial  changes in the design of the project and the
related drawings.

On March 5, 1999, UCDP terminated BMSCI's right to proceed with the project work
by alleging  default.  UCDP has also  notified  BMSCI of UCDP claims for damages
resulting  from the alleged  default,  including the cost to complete or correct
the work,  additional  maintenance or operation costs, and alleged lost revenues
or other damages.  UCDP simultaneously filed a lawsuit for breach of contract in
the Federal District Court in the Middle District of Florida ("Federal  Court").
The Registrant  will answer the complaint,  or file a motion to dismiss or other
responsive  pleading  in the  action.  On March 8, 1999,  BMSCI  filed a lawsuit
against  UCDP in the  Circuit  Court for the Ninth  Judicial  Circuit in and for
Orange County,  Florida  ("State Court")  alleging breach of contract,  wrongful
termination  and other  counts and seeking  damages,  interest,  court costs and
other  relief,  including  potential  counterclaims.  Discovery has not begun in
either case,  although the parties are  cooperating  in the initial  exchange of
documents  for the cases.  No other  scheduling  order or other case  management
documents have been filed.

<PAGE>

In addition, two of BMSCI's subcontractors have also filed suit against BMSCI in
connection  with the  project.  On November 24, 1998,  ADF  International  Inc.,
BMSCI's subcontractor for structural  steel/miscellaneous  metals, filed suit in
Federal  Court  against  BMSCI and its  surety  seeking  damages  for  breach of
contract  relating  to the  project.  BMSCI and its  surety  have  answered  the
complaint (and amended complaint) and BMSCI has filed a counterclaim.  Discovery
in the matter is  beginning,  and no trial date has been set.  On  February  10,
1999,  Martin K. Eby  Construction  Company,  Inc.,  BMSCI's  subcontractor  for
foundations,  also  filed  suit in Federal  Court  against  BMSCI and its surety
seeking  damages for breach of contract  relating to the project.  BMSCI and its
surety have answered the complaint. Discovery in the matter is beginning, and no
trial date has been set. BMSCI has held discussions with both ADF  International
Inc. and Martin K. Eby  Construction  Company,  Inc.  with the intent of jointly
pursuing the  subcontractors'  claims and those of BMSCI against UCDP, which may
be ultimately responsible for the claims arising from the project.

Additional  claims may be filed in  connection  with this matter.  Baker and its
counsel believe that BMSCI has valid claims against UCDP and its  subcontractors
and  intends  to  defend  these  claims  vigorously.   However,  an  unfavorable
resolution  of  these  matters  could  have a  material  adverse  effect  on the
Registrant's  consolidated  financial  position,  results of operations and cash
flow.

The other  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 Registrant and one of its
wholly-owned  subsidiaries,  that asserts breach of contract and alleges damages
of $13 million. The Registrant, which was not a party to the contract underlying
the  lawsuit,  contends  that  there  is no  jurisdiction  with  respect  to the
Registrant and that it cannot be held liable for any conduct of the  subsidiary.
Both the Registrant and the subsidiary are contesting  liability issues and have
filed cross-claims and third-party claims against the other entities involved in
the project.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

No matters were submitted to a vote of the Registrant's  security holders during
the fourth quarter of 1998.

<PAGE>
                                     PART II

Item 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
          -------------------------------------------------------------
          HOLDER MATTERS
          --------------

Information relating to the market for the Registrant's Common Stock and other
matters related to the holders thereof is set forth in the "Supplemental
Financial Information" section of Exhibit 13.1 to this Form 10-K.  Such
information is incorporated herein by reference.

The Registrant's present policy is to retain any earnings to fund the operations
and growth of the  Registrant.  The  Registrant  has not paid any cash dividends
since 1983 and has no plans to do so in the foreseeable future.

At March 31, 1999,  the Registrant had 1,444 holders of its Common Stock and 659
holders of its Series B Common Stock.

Item 6.   SELECTED FINANCIAL DATA
          -----------------------

A summary of selected  financial data for the Registrant,  including each of the
last five fiscal years for the period ended  December 31, 1998,  is set forth in
the "Selected  Financial  Data" section of Exhibit 13.1 to this Form 10-K.  Such
summary is incorporated herein by reference.

Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          ---------------------------------------------------------------
          RESULTS OF OPERATIONS
          ---------------------

A discussion of the Registrant's financial condition,  cash flows and results of
operations  is set  forth  in  the  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations"  section of Exhibit 13.1 to this
Form 10-K.  Such discussion is incorporated herein by reference.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          ----------------------------------------------------------

Based on the  Registrant's  current and long-term  debt  balances  totaling $4.0
million at December 31, 1998,  Baker has no material  exposure to interest  rate
risk. Less than 1% of the Registrant's  total assets and total contract revenues
as of and for the year  ended  December  31,  1998 were  denominated  in British
Pounds Sterling; accordingly, the Registrant has no material exposure to foreign
currency  exchange  risk.  These  materiality   assessments  are  based  on  the
assumption that either the interest rates or the foreign currency exchange rates
could  change  unfavorably  by 10%.  Based  on the  nature  of the  Registrant's
business,  it has no exposure to commodity  price risk. In  accordance  with the
foregoing, the Registrant has no interest rate swap or exchange agreements,  nor
does it have any foreign currency exchange contracts.

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

The  consolidated  financial  statements,  together  with the report  thereon of
PricewaterhouseCoopers  LLP, dated April 20, 1999, and  supplementary  financial
information  are set forth within Exhibit 13.1 to this Form 10-K. Such financial
statements and supplementary  financial  information are incorporated  herein by
reference.

<PAGE>

Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          ---------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

Not applicable.

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
          --------------------------------------------------

Directors and Executive Officers

The following  table sets forth certain  information  regarding the directors of
the Registrant.  Each director was elected by the  Registrant's  shareholders at
the 1998  Annual  Meeting  for a one year term to expire on the date of the next
annual meeting of shareholders or until his respective successor shall have been
elected and shall have qualified.  Except as otherwise indicated,  each director
has held the principal  occupation listed or another executive position with the
same entity for at least the past five years.
<TABLE>
<CAPTION>

                       Director                  Principal Occupation; Other
      Director           Since                        Directorships; Age
--------------------------------------------------------------------------------
<S>                      <C>       <C>
Robert N. Bontempo       1997      Associate Professor of International Business
                                   at Columbia  University since July 1994; 
                                   formerly Assistant Professor of International
                                   Business at Columbia  University from July 
                                   1989 to July 1994;  Fellow at the Center for 
                                   Advanced Study at Stanford University,  
                                   Summer 1992; formerly Personnel  Research  
                                   Analyst at IBM  Corporate Headquarters; 
                                   Age 40

William J. Copeland      1983      Retired; formerly Chairman of the  Board of 
                                   the  Registrant;  formerly  Vice Chairman of 
                                   the Board of PNC  Financial  Corp. and  
                                   Pittsburgh  National  Bank;  Director  or
                                   trustee   of  various investment companies
                                   affiliated with Federated Investors; Age 80

Roy V. Gavert, Jr.       1988      President and Chief Executive Officer of 
                                   Kiplivit North America, Inc. (manufacturing) 
                                   since July 1995; Managing Director of World 
                                   Class Processing, Inc.(manufacturing);
                                   principal of the Horton Company (manufacturer
                                   of valves for household appliances); formerly
                                   Managing Director of Gavert Wennerholm & Co.
                                   (venture capital); formerly Managing Director
                                   of Eagle Capital, Inc. (investment bank and 
                                   venture capital); formerly Executive Vice 
                                   President, Westinghouse Electric Corporation;
                                   Age 65

Charles I. Homan         1994      President and Chief Executive Officer since 
                                   October 1994; formerly Executive Vice 
                                   President from January 1990 to September 
                                   1994; formerly Senior Vice President from 
                                   April 1988 to December 1989; formerly
<PAGE>
                                   President of Michael Baker, Jr., Inc. (a 
                                   subsidiary) from May 1983 to September 1994; 
                                   Director of Citizens Banking Company; Age 55

Thomas D. Larson         1993      Self employed (consultant); formerly 
                                   Administrator, United States Federal Highway 
                                   Administration until January 1992; formerly 
                                   Secretary of the Pennsylvania Department of 
                                   Transportation; formerly Professor of
                                   Engineering, The Pennsylvania State 
                                   University; Age 70

John E. Murray, Jr.      1997      President and Professor of Duquesne 
                                   University since July 1988; formerly 
                                   University Distinguished Service Professor at
                                   University of Pittsburgh; formerly Dean of
                                   Villanova University School of Law; formerly 
                                   Acting Dean and Professor at Duquesne 
                                   University School of Law; Director of 
                                   Federated Investors; Age 66

Richard L. Shaw          1966      Chairman of the Board; formerly Chairman of 
                                   the Board, President and Chief Executive 
                                   Officer of the Registrant from September 1993
                                   through September 1994; formerly President 
                                   and Chief Executive Officer of the Registrant
                                   from April 1984 to May 1992; Director of L.B.
                                   Foster Company (manufacturing); Age 71

Konrad M. Weis           1991      Retired; formerly President and Chief 
                                   Executive Officer of Bayer USA Inc.
                                   (chemicals, health care and imaging
                                   technologies); Director of PNC Equity
                                   Management Corporation, Titan
                                   Pharmaceuticals, Inc. and Dravo Corporation; 
                                   Age 70

J. Robert White          1994      Executive Vice President, Chief Financial 
                                   Officer and Treasurer since July 1994;
                                   formerly Assistant Director of Investor 
                                   Relations for Westinghouse Electric 
                                   Corporation from prior to 1990 through June 
                                   1994; formerly Adjunct Professor of 
                                   Accounting and Finance at the University of 
                                   Pittsburgh and Carnegie Mellon University; 
                                   Age 56
</TABLE>


<PAGE>

Charles I. Homan and J. Robert White are both  directors and executive  officers
of the Registrant. With the exception of Messrs. Homan and White, who are listed
above,  the  following  represents  a  listing  of  executive  officers  of  the
Registrant as of December 31, 1998:

H. James McKnight - Age 54; Senior Vice President, General Counsel and Secretary
of the  Registrant  since 1995.  Mr.  McKnight  previously  served as counsel to
International  Technology Corporation from February 1995 through September 1995,
and was a self-employed consultant from 1992 through February 1995.

Glenn  S.  Burns  - Age 49;  Executive  Vice  President  of the  Registrant  and
President  of Baker  Mellon  Stuart  Construction,  Inc.,  a  subsidiary  of the
Registrant,  from  1995  until his  resignation  in  February  1999.  Mr.  Burns
previously  served as Vice  President,  General  Counsel  and  Secretary  of the
Registrant  from 1994 through 1995 and as  Assistant  General  Counsel from 1991
through 1994.

Donald P. Fusilli,  Jr. - Age 47;  Executive  Vice  President of the  Registrant
since 1991 and  President  of  Baker/MO  Services,  Inc.,  a  subsidiary  of the
Registrant,  since 1995. Mr. Fusilli  previously  served as General  Counsel and
Secretary of the Registrant  from 1986 through 1994. He has been employed by the
Registrant in various capacities since 1973.

John C. Hayward - Age 51;  Executive Vice President of the Registrant since 1995
and President of Michael  Baker Jr., Inc.  since 1994.  Mr.  Hayward  previously
served as Senior Vice  President of Michael  Baker Jr.,  Inc.  from 1989 through
1994. He has been employed by the Registrant in various capacities since 1974.

Philip A.  Shucet - Age 48;  Executive  Vice  President  of the  Registrant  and
President of Baker  Environmental,  Inc., a subsidiary of the Registrant,  since
1996. Mr. Shucet  previously served as Vice President of Michael Baker Jr., Inc.
from 1995 to 1996.  Mr.  Shucet has been  employed by the  Registrant in various
capacities since 1989.

Edward L. Wiley - Age 55;  Executive Vice President of the Registrant since 1995
and Executive  Vice  President of Michael Baker Jr., Inc.  since 1994. Mr. Wiley
previously  served as Senior Vice President of Michael Baker Jr., Inc. from 1989
through 1994. He has been employed by the Registrant in various capacities since
1968.

Executive  officers  of the  Registrant  serve at the  pleasure  of the Board of
Directors  and are  elected  by the Board or  appointed  annually  for a term of
office extending through the election or appointment of their successors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the  Securities  Exchange Act of 1934 (the "1934 Act") requires
the Registrant's directors and executive officers, and persons who own more than
ten percent of a registered class of the Registrant's equity securities, to file
with the Securities and Exchange  Commission (the "Commission")  initial reports
of  ownership  and  reports of changes in  ownership  of Common  Stock and other
equity  securities  of the  Registrant.  Such persons are required by Commission
regulations  to furnish the  Registrant  with copies of all Section  16(a) forms
which they file.  The  Registrant  believes  that all such  filing  requirements
applicable  to its executive  officers and directors  were complied with in 1998
except that a Form 5 filed by Philip A.  Shucet,  an officer of the  Registrant,
was deemed to be late because it inadvertently omitted certain information.
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

The  following  table  sets forth  certain  information  regarding  compensation
received  by the Chief  Executive  Officer  and the four  remaining  most highly
compensated  executive  officers of the Registrant for the last three  completed
fiscal years.
<TABLE>
<CAPTION>
Summary Compensation Table

                                                    Long-Term
                                                    Compensation
                                                    ------------
                                                    Shares of
                           Annual Compensation      Common Stock
Name and Principal         -------------------      Underlying   All Other
 Position               Year    Salary      Bonus   Options(2)   Compensation(1)
--------------------------------------------------------------------------------
<S>                     <C>     <C>         <C>       <C>        <C>
Charles I. Homan        1998    $385,300    $    --   58,362     $12,592
 President and Chief    1997    $341,600    $62,757   23,529     $12,092
 Executive Officer      1996    $319,400    $54,412   12,571     $11,455

Donald P. Fusilli, Jr.  1998    $201,200    $23,022   27,480     $10,000
 Executive Vice         1997    $188,200    $25,642    9,122     $ 8,700
 President-Energy       1996    $180,000    $24,750    5,236     $ 8,658

John C. Hayward         1998    $195,700    $22,569   26,738     $12,592
 Executive Vice         1997    $188,200    $15,643    9,122     $10,578
 President-             1996    $180,000    $15,000    5,236     $ 9,267
 Transportation

Edward L. Wiley         1998    $206,200    $11,068   28,161     $11,400
 Executive Vice         1997    $192,300    $36,314    9,122     $10,075
 President-Civil        1996    $180,000    $35,776    5,236     $ 9,351

J. Robert White         1998    $209,100    $    --   28,664     $10,827
 Executive Vice         1997    $192,300    $31,923    9,122     $ 8,030
 President, Chief       1996    $180,000    $30,001    5,236     $ 9,479
 Financial Officer
 and Treasurer
<FN>
(1)  Includes  matching  contributions  made by the Registrant  under its 401(k)
     plan paid on behalf of the following  individuals  in 1998,  1997 and 1996,
     respectively:  Mr. Homan, $10,000, $9,500 and $9,151; Mr. Fusilli, $10,000,
     $7,254 and $7,873;  Mr. Hayward,  $10,000,  $9,012 and $ 7,962;  Mr. Wiley,
     $10,000,  $8,802 and $8,211; and Mr. White, $6,777, $5,438 and $7,860. Also
     includes group life insurance  premiums paid by the Registrant on behalf of
     the following individuals in 1998, 1997 and 1996, respectively:  Mr. Homan,
     $2,592,  $2,592 and $2,304;  Mr. Fusilli,  $0, $1,446 and $785; Mr. Hayward
     $2,592,  $1,566, and $1,305; Mr. Wiley, $1,400,  $1,273 and $1,140; and Mr.
     White, $4,050, $2,592 and $1,619.

(2)  Stock  options  were  granted  February  27,  1996,  February  27, 1997 and
     February 27, 1998,  under the  Registrant's  1995 Stock  Incentive Plan. In
     addition  the  Registrant  also  granted  certain  performance  based stock
     options to the executive officers on April 23, 1998, which will vest in the
     first quarter of 2001 if the Registrant  achieves certain performance goals
     in the year 2000.
</FN>
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

Options Granted in 1998
                                                             Potential
                                                             Realizable Value
                   No. of    % of Total                      at Assumed Annual
                   Shares    Options                         Rates of Stock
                   Subject   Granted to                      Price Appreciation
                   to        Employees                       For Option Term
                   Options   in      Exercise    Expiration  ------------------
      Name         Granted   1998    Price/Share    Date        5%        10%
--------------------------------------------------------------------------------
<S>                <C>        <C>    <C>        <C>          <C>       <C>    
Charles I. Homan   18,361(1)   4.6%  $ 9.5313   27-Feb-08    $110,059  $278,912
                   40,001(2)  10.1%  $10.1250   23-Apr-08    $254,709  $645,482

Donald P. Fusilli,  6,977(1)   1.8%  $ 9.5313   27-Feb-08    $ 41,821  $105,984
Jr.                20,503(2)   5.2%  $10.1250   23-Apr-08    $130,554  $330,850

John C. Hayward     6,977(1)   1.8%  $ 9.5313   27-Feb-08    $ 41,821  $105,984
                   19,761(2)   5.0%  $10.1250   23-Apr-08    $125,829  $318,876

Edward L. Wiley     7,161(1)   1.8%  $ 9.5313   27-Feb-08    $ 42,924  $108,779
                   21,000(2)   5.3%  $10.1250   23-Apr-08    $133,719  $338,869

J. Robert White     7,163(1)   1.8%  $ 9.5313   27-Feb-08    $ 42,936  $108,809
                   21,501(2)   5.4%  $10.1250   23-Apr-08    $136,909  $346,954

<FN>
 (1)  All options were  granted  pursuant to the 1995 Stock  Incentive  Plan and
      vest in four equal annual installments beginning on the date of grant. The
      dollar amounts under the potential realizable value columns are the result
      of  calculations  at  assumed  annually  compounded  rates of stock  price
      appreciation  over the ten-year life of the options in accordance with the
      proxy regulations of the Securities and Exchange  Commission,  and are not
      intended  to  forecast  actual  future   appreciation,   if  any,  of  the
      Registrant's  Common  Stock.  The actual  value,  if any, an executive may
      realize  will depend on the excess of the market  price of the shares over
      the exercise price on the date the option is exercised.

(2)   These  options  were granted  April 23,  1998,  pursuant to the 1995 Stock
      Incentive  Plan. The options  become fully  exercisable on April 23, 2006,
      but will vest in the first  quarter of 2001 if certain  performance  goals
      are satisfied for the year 2000.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1998
                                         Number of           
                                         Securities          Value of
                                         Underlying          Unexercised
                                         Unexercised         In-the-Money
                      Shares             Options at          Options at
                     Acquired            December 31, 1998   December 31, 1998
                        On       Value   Exercisable/        Exercisable/
        Name         Exercise   Realized Unexercisable       Unexercisable(1)
--------------------------------------------------------------------------------
<S>                   <C>       <C>       <C>                 <C>
Charles I. Homan        --         --     53,282/68,680       $211,633/$51,986
Donald P. Fusilli, Jr.  --         --     22,832/31,606       $ 92,591/$20,578
John C. Hayward         --         --     22,132/30,864       $ 89,266/$20,578
Edward L. Wiley         --         --     21,828/32,241       $ 87,614/$20,608
J. Robert White       15,477    $67,525    6,351/32,742       $ 13,362/$20,608
<FN>

(1)   Based on the  exercise  price and fair market value of the Common Stock as
      of December 31, 1998.
</FN>
</TABLE>

Compensation of Directors

Compensation for non-employee directors is as follows: Annual retainer--$15,000;
Attendance  at each  regularly  scheduled  or  special  meeting  of the Board of
Directors--$1,000;  Attendance at a Board of Directors committee  meeting--$500;
Telephonic  attendance  at a Board  of  Directors  or  committee  meeting--$100;
Additional annual retainer for chairman of the Board of  Directors--$5,000;  and
Additional annual retainer for committee chairmen--$2,500.

Notwithstanding  anything to the contrary  set forth in any of the  Registrant's
previous filings under the Securities Act of 1933, as amended, or the Securities
and Exchange Act of 1934, as amended,  that might  incorporate  future  filings,
including this Form 10-K in whole or in part, the following report and the Stock
Performance Graphs shall not be incorporated by reference into any such filings.

Report of the Compensation Committee

Introduction

Decisions regarding  compensation of the Registrant's  executives  generally are
made by a three-member Compensation Committee of the Board.

All decisions of the  Compensation  Committee  relating to  compensation  of the
Registrant's executive officers are reviewed and approved by the full Board. Set
forth below is a report  submitted by Messrs.  Larson,  Murray and Weis in their
capacity as the  Board's  Compensation  Committee  addressing  the  Registrant's
compensation  policies  for  1998 as they  affected  executive  officers  of the
Registrant,  including Mr. Homan, the President and Chief Executive Officer, and
Messrs.  Fusilli,  Hayward,  Wiley and White, the four executive  officers other
than Mr. Homan who were, for 1998, the  Registrant's  most highly paid executive
officers.

Compensation Philosophy

The Registrant  applies a consistent  philosophy toward  compensation based upon
the following objectives: (i) to attract and retain executive officers and other
key employees of outstanding  ability,  and to motivate all employees to perform
to the full extent of their  abilities;  (ii) to ensure that pay is  competitive
<PAGE>
with other  leading  companies  in the  Registrant's  industry;  (iii) to reward
executive officers for corporate, group and individual performance;  and (iv) to
ensure  that total  compensation  to the  executive  officers  as a group is not
disproportionate when compared to the Registrant's total employee population.

Compensation

The  Compensation  Committee  retains  the  services  of  Hewitt  Associates,  a
compensation  consulting  firm,  to assist  the  Committee  in  connection  with
performance  of its duties.  Hewitt  Associates  provides  ongoing advice to the
Committee with respect to the  reasonableness  of compensation paid to executive
officers of the Registrant.

The  Registrant  applies a  compensation  program  consisting of base salary and
annual  incentive  compensation.  In determining Mr. Homan's salary as President
and Chief Executive Officer and the remaining  executive officers' base salaries
for  1998,  the  Compensation   Committee   reviewed  the  relationship  of  his
compensation  to that of other  executive  officers of the  Registrant  and, the
Registrant's current and projected growth and profitability performance.

Incentive  compensation  for Mr.  Homan  and the  other  executive  officers  is
determined based on the achievement of such predetermined  corporate performance
goals as  profitability  and  earnings  per share.  Each such  officer's  annual
performance is measured by reviewing  contribution  to overhead and profit,  new
work added,  cash flow return on investment,  human  resources  development  and
continuous improvement management goals.

The Chief Executive  Officer  recommends to the  Compensation  Committee  salary
adjustments for executive officers.  The committee reviews these recommendations
in light of the above  factors and with  reference to the Hewitt  Report and the
executive  salary studies  described above. A final comparison is made to verify
that  the  total  percentage  increase  in  compensation  paid to the  executive
officers  as  a  group  is  not  disproportionate  to  the  percentage  increase
applicable to other Registrant employee groups.

All  executive  employees  participate  in  an  annual  incentive  program.  The
components  of the plan are based upon  corporate  and  individual  performance.
Measures of corporate  performance  may include,  but are not limited to, one or
more financial measures such as earnings per share and profitability. Individual
performance is based on the  performance  rating  received as part of the annual
Performance  Management Process. The Performance Management Process is a program
which  emphasizes  performance  planning   (management/employee  goal  setting),
progress reviews and management feedback to employees. Primary objectives of the
program are to enhance the professional  development of the individual  employee
and to align  individual  performance  goals with those of the  Registrant.  The
rating is based upon factors  agreed to by the Chief  Executive  Officer and the
individual executive employees.

1995 Stock Incentive Plan

On December 15, 1994, the Board of Directors  approved the 1995 Stock  Incentive
Plan (the "Option  Plan"),  which was approved by the  shareholders  at the 1995
Annual  Meeting  and  provides  long-term  incentive  compensation  to  eligible
employees.  The Compensation  Committee retains the services of Buck Consultants
to assist the Committee in  evaluating  the Option Plan relative to practices of
other  publicly-traded  companies  engaging  in one or more  lines  of  business
comparable to those of the Registrant.

Stock  options  are  awarded  based  on the  Compensation  Committee's  judgment
concerning the position and  responsibilities  of the employee being considered,
the nature and value of his or her services,  his or her current contribution to
the success of the  Registrant,  and any other  factors  which the  Compensation
Committee may deem relevant. Stock option awards tie the interests of employees
to the  long-term  performance  of the  Registrant,  and  provide  an  effective
<PAGE>
incentive for employees to create shareholder value over the long term since the
full  benefit  of  the  compensation   package  cannot  be  realized  unless  an
appreciation in the Registrant's stock price occurs over a number of years.

In 1998, the Compensation  Committee  reviewed the Option Plan and, based on its
review, recommended to the Board of Directors that the Option Plan be amended to
increase by 1,000,000 the number of shares  available for grants  thereunder and
to increase the maximum  number of shares as to which  options may be granted to
any one employee  during any calendar  year from 30,000 to 100,000  shares.  The
Board of  Directors  approved  the  amendment  on  February  27,  1998,  and the
Shareholders  adopted the amendment on April 22, 1998 at the 1998 Annual Meeting
of  Shareholders.   The  Compensation  Committee  believes  these  changes  were
desirable in order to ensure that there are sufficient  options  available under
the Option Plan to continue to motivate and reward  employees and to ensure that
the grants are significant enough to provide meaningful inducement and reward to
key employees.

In addition, on April 23, 1998, the Compensation Committee adopted a proposal to
award a one-time  grant of stock  options to certain  employees,  the vesting of
which will be based upon the  Registrant  achieving  earnings for the year ended
December  31, 2000 (the  "Fiscal  Year 2000") equal to or in excess of $1.25 per
share of Common Stock (the "Vision 2000 Options").  The Vision 2000 Options will
vest and may be exercisable  immediately upon the  determination of the Board of
Directors,  based on the audited  financial  results of the  Registrant  for the
Fiscal Year 2000,  that the Registrant  has achieved  earnings of at least $1.25
per share for the Fiscal Year 2000.  In the event that the  Registrant  does not
achieve such  earnings,  the Vision 2000 Options will become  exercisable  eight
years from the date of the grant.  The exercise price of the Vision 2000 Options
will be the fair market value of the Common Stock on the date of the grant.  The
Vision 2000 Options were granted on April 23, 1998,  and have an exercise  price
equal to $10.125.

1996 Nonemployee Directors' Stock Incentive Plan

On February 27,  1996,  the Board of  Directors  approved  the 1996  Nonemployee
Directors'  Stock Incentive Plan,  which was approved by the shareholders at the
1996 Annual  Meeting.  This plan provides  long-term  incentive  compensation to
eligible  directors.  Under this plan, each member of the Board of Directors who
is not an employee of the Registrant or any of its  subsidiaries  is granted 500
restricted  shares and an option to purchase 1,000 shares of Common Stock on the
first business day following each Annual Meeting of Shareholders.

This report is submitted by the Compensation Committee of the Registrant's Board
of Directors.

      Thomas D. Larson    John E. Murray, Jr.     Konrad M. Weis

Compensation Committee Interlocks and Insider Participants

The members of the  Compensation  Committee in 1998,  Thomas D. Larson,  John E.
Murray,  Jr. and Konrad M. Weis,  are  nonemployee  directors.  During 1998,  no
executive officer of the Registrant served on a compensation committee (or other
board committee performing equivalent functions) or on the board of directors of
any entity  (other  than the  Registrant's  Board of  Directors)  related to any
member of the Registrant's Board of Directors.
<PAGE>

Stock Performance Graph

The graph below compares for the five-year period commencing  December 31, 1993,
the yearly percentage  change in the cumulative total shareholder  return on the
Registrant's  Common Stock with the cumulative total return of the S&P 500 Stock
Index,  the  Russell  2000 Stock Index and with a peer group  identified  by the
Registrant to best approximate the Registrant's diverse business groups.

The peer group was selected to include publicly-traded companies engaging in one
or more of the  Registrant's  lines of business:  engineering,  construction and
operations and maintenance.

The peer group consists of the following companies:  Aqua Alliance,  Inc. (f/k/a
Air and Water Technologies Corp.),  Dames & Moore Group,  Granite  Construction,
Inc.,  Harding Lawson Associates Group,  Inc., ICF Kaiser  International,  Inc.,
Jacobs Engineering Group,  Inc.,  Morrison Knudsen Corp.,  Perini Corp., Stone &
Webster,  Inc., STV Group,  Inc., Tetra Tech, Inc., Turner Corp., URS Corp., Roy
F. Weston, Inc. [Note: Guy F. Atkinson Registrant of California, a member of the
peer group in previous years, ceased operations during 1998.]

The following five year total shareholder return chart compares the Registrant's
total shareholder return on the Registrant's  Common Stock with that of the peer
group used for the year ended December 31, 1998.
<TABLE>
<CAPTION>

                COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
                 Among Michael Baker Corporation, S&P 500 Index,
                     Russell 2000 Index and The Peer Group*

                                         Cumulative Total Return
--------------------------------------------------------------------------------
                                  12/93   12/94  12/95   12/96  12/97   12/98
--------------------------------------------------------------------------------
<S>                               <C>     <C>    <C>     <C>    <C>     <C>
Michael Baker Corporation         100      34     45      58     89      89
Peer Group                        100      80     97      96    111     152
S&P 500                           100     101    139     171    229     294
Russell 2000                      100      98    126     147    180     179
<FN>
*     Assumes $100  invested at the close of trading on December 31, 1993 in the
      Registrant's  Common Stock, the S&P 500 Index, the Russell 2000 Index, and
      the peer group and assumes the reinvestment of dividends.
</FN>
</TABLE>

<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------

The  following  table  sets  forth  certain  information  as to  the  beneficial
ownership  of the  Registrant's  Common  Stock and Series B Common Stock held by
each  person  known  by  the  Board  of  Directors  of  the  Registrant  to  own
beneficially more than 5% of the outstanding  shares of Common Stock or Series B
Common  Stock of the  Registrant,  by each  director,  by each of the  executive
officers  named in the Summary  Compensation  Table (the  "Summary  Compensation
Table"),  and by all directors and  executive  officers as a group.  The Michael
Baker  Corporation  Employee  Stock  Ownership Plan and Trust (the "ESOP") holds
72.4% of the voting power of the Registrant's  outstanding Common Capital Stock.
Information contained in this Item 12 is as of the most recent practicable date,
which is December 31,  1998,  for  beneficial  owners of more than 5%, March 31,
1999 as to  shares  held by the  ESOP,  and as to the  directors  and  executive
officers.  The information in the table concerning beneficial ownership is based
upon  information  furnished  to the  Registrant  by or on behalf of the persons
named in the table.
<TABLE>
<CAPTION>

                                Common Stock              Series B Common Stock
                              -------------------------   ----------------------
                              Number of                   Number of
                              Shares and                  Shares and
                              Nature of                   Nature of
                              Beneficial                  Beneficial
            Name              Ownership(1)      Percent   Ownership(1)   Percent
--------------------------------------------------------------------------------
<S>                           <C>                 <C>     <C>               <C>
Michael Baker Corporation      2,475,158          34.6     1,223,475        93.0
Employee Stock Ownership
Plan and Trust(1)
   Michael Baker
   Corporation
   P.O. Box 12259
   Pittsburgh, PA 15231-0259
Goldman Sachs(2)                 882,800          12.4       None             --
   85 Broad Street
   New York, New York 10004
Lord Abbett & Co.                787,690          11.0       None             --
   767 Fifth Avenue
   New York, New York 10153
Dimensional Fund Advisors        456,114           6.4       None             --
Inc.(3)
   1299 Ocean Avenue
   11th Floor
   Santa Monica, CA 90401
Robert N. Bontempo                 3,000(7)          *        None            --
William J. Copeland                5,500(7)          *        None            --
Donald P. Fusilli, Jr.            40,581(5)(7)       *         8,169(6)        *
Roy V. Gavert, Jr.                 4,500(7)          *        None            --
John C. Hayward                   39,907(5)(7)       *         9,934(6)        *
Charles I. Homan                  95,460(4)(5)(7)  1.3        21,234(4)(6)   1.6
Thomas D. Larson                   6,425(4)(7)       *        None            --
John E. Murray, Jr.                3,000(7)          *        None            --
Richard L. Shaw                   12,705(7)          *        None            --
Konrad M. Weis                    12,000(4)(7)       *        None            --
J. Robert White                   17,985(5)(7)       *         1,532(6)       --
Edward L. Wiley                   48,654(4)(5)(7)    *        15,349(6)      1.2
All Directors and                352,639(4)(5)(7)  4.9        62,978(6)      4.8
Executive Officers as a group 
 (17) persons
<PAGE>

<FN>
* Less than 1%.
</FN>
<FN>
(1)  Under regulations of the Securities and Exchange  Commission,  a person who
     has or shares  voting or  investment  power with  respect to a security  is
     considered a beneficial owner of the security. Voting power is the power to
     vote or direct the voting of shares,  and investment  power is the power to
     dispose of or direct the disposition of shares.  Unless otherwise indicated
     in the other  footnotes  below,  each person has sole voting power and sole
     investment  power as to all  shares  listed  opposite  his  name.  The ESOP
     requires  the  trustee to vote the shares  held by the trust in  accordance
     with the instructions  from the ESOP  participants for all shares allocated
     to  such  participants'  accounts.  Allocated  shares  for  which  no  such
     instructions  are given and  shares  not  allocated  to the  account of any
     employee are voted by the trustee in the same  proportion  as the votes for
     which  participant  instructions  are given. In the case of a tender offer,
     allocated  shares  for  which no  instructions  are  given are not voted or
     tendered, and shares not allocated to the account of any employee are voted
     by the trustee in the same  proportion  as the votes for which  participant
     instructions are given.

(2)  Shares held as a group by Goldman  Sachs & Co. and the Goldman Sachs Group,
     L.P., each of which disclaim beneficial  ownership of all such shares. This
     information has been taken from Schedule 13G dated as of December 31, 1998.

(3)  Dimensional  Fund Advisors  Inc.,  ("Dimensional")  an  investment  advisor
     registered  under  Section  203 of the  Investment  Advisors  Act of  1940,
     furnishes  investment advice to four investment  companies registered under
     the Investment  Registrant Act of 1940, and serves as investment manager to
     certain  other  investment  vehicles,  including  commingled  group trusts.
     (These investment  companies and investment vehicles are the "Portfolios").
     In its role as  investment  advisor  and  investment  manager,  Dimensional
     possesses  both  voting and  investment  power over the  securities  of the
     Issuer  described in this  schedule that are owned by the  Portfolios.  All
     securities  reported  in this  schedule  are owned by the  Portfolios,  and
     Dimensional disclaims beneficial ownership of such securities.

(4)  Some or all of such shares are jointly owned by such person and his spouse.
     Voting and investment  power as to such shares is shared by the nominee and
     his spouse.

(5)  Includes  the number of shares of Common  Stock  indicated  for each of the
     following persons or group which are allocated to their respective accounts
     as  participants  in the  ESOP and as to which  they are  entitled  to give
     binding voting instructions to the trustee of the ESOP: Mr. Fusilli (12,416
     shares);  Mr. Hayward (12,442 shares); Mr. Homan (23,485 shares); Mr. White
     (6,255  shares);  Mr. Wiley  (18,447  shares);  and directors and executive
     officers as a group (87,996 shares). ESOP holdings have been rounded to the
     nearest full share.

(6)  Includes the number of shares of Series B Common Stock  indicated  for each
     of the following  persons or group which are allocated to their  respective
     accounts as  participants  in the ESOP and as to which they are entitled to
     give binding  voting  instructions  to the trustee of the ESOP: Mr. Fusilli
     (8,169 shares);  Mr. Hayward (9,934 shares) Mr. Homan (20,156 shares);  Mr.
     White  (1,532  shares);  Mr.  Wiley  (15,349  shares);  and  directors  and
     executive  officers as a group  (61,900  shares).  ESOP  holdings have been
     rounded to the nearest full share.
<PAGE>

(7)  Includes  indicated  number of shares of Common Stock issuable  pursuant to
     stock  options  which may be  exercised  within 60 days of the date of this
     Form 10-K.
</FN>
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

The  Registrant  entered  into an  employment  agreement  with  Richard  L. Shaw
(formerly  President and Chief  Executive  Officer of the  Registrant)  in April
1988, which agreement was supplemented in March 1992,  October 1994 and February
1998. At the time of his  retirement as of the end of September  1994,  Mr. Shaw
was  being  compensated  at an  annual  salary of  approximately  $400,000.  The
agreement  provides for Mr. Shaw's  performance  of  consulting  services to the
Registrant  until May 31,  2000,  with annual  compensation  equal to 20% of his
salary prior to retirement. In addition, during this period, the Registrant will
cover costs of health  insurance,  reimburse actual  out-of-pocket  expenses and
maintain a life insurance  policy for Mr. Shaw. This agreement also provides for
a  supplemental  retirement  benefit  of $2,500 per month  commencing  after the
expiration of such period.

<PAGE>

                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
         ---------------------------------------------------------------

(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  Balance Sheet as of December 31, 1998 and 1997 
       Consolidated Statement of Income for the three years ended 
         December 31, 1998
       Consolidated Statement of Cash Flows for the three years ended 
         December 31, 1998
       Consolidated Statement of Shareholders' Investment for the three years
         ended December 31, 1998
       Notes to Consolidated Financial Statements
       Report of Independent Accountants

(a)(2) All financial statement 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:
<TABLE>
<CAPTION>

EXHIBIT NO.                DESCRIPTION
-----------                -----------
    <S>          <C>
    3.1          Articles of Incorporation of the Registrant,  as amended, filed
                 as Exhibit 3.1 to the  Registrant's  Annual Report on Form 10-K
                 for the fiscal year ended December 31, 1993,  and  incorporated
                 herein by reference.

    3.2          By-laws of the Registrant,  as amended, filed as Exhibit 3.2 to
                 the Registrant's Annual Report on Form 10-K for the fiscal year
                 ended December 31, 1994, and incorporated herein by reference.

    10.1         1998 Incentive Compensation Plan of Michael Baker Corporation,
                 filed herewith.

    10.2         Employment  Agreement dated as of April 12, 1988,  Supplemental
                 Agreement  No. 1 dated as of March 17, 1992,  and  Supplemental
                 Agreement No. 2 dated as of October 1, 1994, by and between the
                 Registrant  and Richard L. Shaw,  filed as Exhibit  10.6 to the
                 Registrant's  Annual  Report  on Form  10-K for the year  ended
                 December 31, 1994, and incorporated herein by reference.

    10.2(a)      Supplemental  Employment  Agreement  No.  3 dated as of June 1,
                 1995  and  Supplemental  Agreement  No.  4 dated as of March 1,
                 1998, by and between the Registrant and Richard L. Shaw,  filed
                 as Exhibit  10.2(a) to the  Registrant's  Annual Report on Form
                 10-K for the year ended  December  31, 1997,  and  incorporated
                 herein by reference.

    10.3         Loan  Agreement  by and among  Michael  Baker  Corporation  and
                 Subsidiaries  and Mellon Bank,  N.A. dated as of June 12, 1997,
                 filed as Exhibit 10.1 to the  Registrant's  Quarterly Report on
                 Form 10-Q for the period ended June 30, 1997, and  incorporated
                 herein by reference.
<PAGE>

    10.3(a)      First  Amendment to Loan  Agreement by and among  Michael Baker
                 Corporation and  Subsidiaries and Mellon Bank, N.A. dated as of
                 July  24,  1998,  filed  as  Exhibit  10.1 to the  Registrant's
                 Quarterly  Report on Form 10-Q for the period  ended  September
                 30, 1998, and incorporated herein by reference.

    10.4         Michael Baker  Corporation  1995 Stock  Incentive  Plan amended
                 effective  April 23,  1998,  filed  herewith.

    10.5         Michael Baker Corporation 1996 Nonemployee  Directors' Stock
                 Incentive Plan, filed as Exhibit A to the Registrant's 
                 definitive Proxy  Statement  with  respect  to its 1996  Annual
                 Meeting  of Shareholders, 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,  1998 and for the three years then ended, Report 
                 of  Independent  Accountants,  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, 1998.

    21.1         Subsidiaries of the Registrant, filed herewith.

    23.1         Consent of Independent Accountants, filed herewith.

    (b)          The  Registrant  filed no reports on Form 8-K during the fourth
                 quarter of 1998.
</TABLE>
<PAGE>
Pursuant to the  requirements of Section 13 or 15(d) 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:  April 29, 1999                            By:/s/ Charles I. Homan    
                                                     ------------------------
                                                     Charles I. Homan, President
                                                     and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated:

SIGNATURE                           TITLE                         DATE
---------                           -----                         ----

/s/ Richard L. Shaw                 Chairman of the Board         April 29, 1999
------------------------------
Richard L. Shaw


/s/ Charles I. Homan                Director, President           April 29, 1999
------------------------------      and Chief Executive
Charles I. Homan                    Officer


/s/ J. Robert White                 Director, Executive Vice      April 29, 1999
------------------------------      President, Chief Financial
J. Robert White                     Officer and Treasurer
                                    (Principal Financial and
                                    Accounting Officer)


/s/ Robert N. Bontempo              Director                      April 29, 1999
------------------------------
Robert N. Bontempo


                                    Director                      April 29, 1999
------------------------------
William J. Copeland


/s/ Roy V. Gavert, Jr.              Director                      April 29, 1999
------------------------------
Roy V. Gavert, Jr.


/s/ Thomas D. Larson                Director                      April 29, 1999
------------------------------
Thomas D. Larson


/s/ John E. Murray, Jr.             Director                      April 29, 1999
------------------------------
John E. Murray, Jr.


/s/ Konrad M. Weis                  Director                      April 29, 1999
------------------------------
Konrad M. Weis