EXHIBIT 13.1
  SELECTED
    FINANCIAL DATA
  (In thousands, except per share
    information)
  2009


2008


2007


2006


2005Results of OperationsContinuing OperationsRevenues

$
445,177


$
455,929


$
401,463


$
380,062


$
371,102Operating income


30,558



33,300



26,491



8,146



17,834Net income


24,572



22,558



17,330



5,654



11,690Diluted earnings per share

$
2.75


$
2.54


$
1.95


$
0.65


$
1.34Return on shareholdersinvestment


15.5
%


17.5
%


16.6
%


6.5
%


15.1
%Total Michael Baker CorporationNet income

$
26,921


$
29,154


$
19,340


$
10,332


$
5,051Diluted earnings per share

$
3.01


$
3.28


$
2.18


$
1.19


$
0.58Return on shareholdersinvestment


17.0
%


22.6
%


18.5
%


11.9
%


6.5
%Financial ConditionTotal assets

$
278,844


$
292,062


$
276,350


$
263,916


$
225,461Working capital

$
154,357


$
114,209


$
84,629


$
67,227


$
49,264Current ratio


2.59



1.84



1.56



1.44



1.35Long-term debt

$



$



$



$
11,038


$
Shareholders Investment


173,433



142,644



115,057



93,621



79,824Book value per outstanding share


19.47



16.11



13.06



10.76



9.40Year-end closing share price

$
41.40


$
36.91


$
41.10


$
22.65


$
25.55Cash FlowNet cash provided by/(used in)operating activities

$
36,365


$
32,228


$
26,635


$
(9,343
)

$
12,440Net cash provided by/(used in)investing activities


19,398



(5,285
)


(1,560
)


(14,933
)


(7,078
)Net cash provided by/(used in)financing activities


446



55



(16,205
)


18,417



(1,792
)Increase/(decrease) in cash and cash equivalents

$
56,209


$
26,998


$
8,870


$
(5,859
)

$
3,570Backlog

$
1,425,200


$
984,200


$
1,122,200


$
1,057,100


$
1,109,300Share InformationYear-end shares outstanding


8,907



8,855



8,810



8,698



8,490Diluted weighted average shares outstanding


8,933



8,891



8,874



8,718



8,715  1




---



##### 



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    RESULTS OF OPERATIONS
  Form 10-K
  Discontinued
    Operations  Energy
    Business
    Overview and Environment
      60-month 12-month 12-month
 2




---



##### 




    BakerAECOM was awarded an IDIQ contract by FEMA for Production
    and Technical Services for FEMAs Risk MAP Program which is
    intended to be the successor to the Multi-Hazard Flood Map
    Modernization Program (FEMA Map Mod Program). The
    resultant performance-based contract has a five-year term with a
    maximum contract value of up to $600 million.
    An approximately $75.0 million IDIQ contract, which is for
    one year and may be extended by up to four additional years, was
    awarded by the Naval Facilities Engineering Command to provide
    architectural and engineering services for Multimedia
    Environmental Compliance Engineering Support to the Navy and
    Other Department of Defense entities.
    An approximately $60.0 million IDIQ contract, which is for
    one year and may be extended by up to four additional years, was
    awarded by the U.S. Army Corps of Engineers
    (USACE) Transatlantic Programs Center
    (TAC) for architecture-engineering services in its
    Area of Responsibility, which includes the Middle East, the
    Arabian Gulf States, Southwest Asia and Africa.
    A $15.0 million, five-year contract with the Pennsylvania
    Department of Transportation, Bureau of Public Transportation,
    for planning and oversight of public transportation projects
    across Pennsylvania.
    A $12.0 million contract to provide design work on the
    expansion of the I-15 Corridor Reconstruction project for the
    Utah Department of Transportation.
    A $10.8 million agreement with Alamo Regional Mobility
    Authority to provide engineering and environmental consulting
    services in Bexar County, Texas.
    A $8.3 million agreement with the New Jersey Turnpike
    Authority to provide design services for the widening of
    multiple intersections on the Garden State Parkway.
    A $5.4 million contract to provide design services for the
    new $70 million Equipment Maintenance and Operations Center
    located in Rockville, Maryland for Montgomery County.
    A $5.0 million, two-year agreement to provide construction
    management support and construction inspection services on 17
    separate construction projects for the Pennsylvania Department
    of Transportation.
    A $5.0 million engineering contract from Alaskas
    Department on Natural Resources to evaluate alternatives for a
    pipeline system to deliver natural gas from the North Slope of
    Alaska to in-State Alaska projects; determine a valid
    pre-feasibility level estimate for the cost of gas
    transportation; determine a
    right-of-way,
    and evaluate associated construction and logistics requirements.   3




---



##### 



Executive
    Overview
      Results of
    Operations
  Comparisons of
    the Year Ended December 31, 2009 and 2008
  Revenues
  (dollars in millions)

2009


2008Revenues by client typeFederal government

$
217.5



49
%

$
238.8



52
%State and local government


181.0



41
%


173.2



38
%Domestic private industry


46.7



10
%


43.9



10
%Total revenues

$
445.2



100
%

$
455.9



100
%       Gross
    Profit
     4




---



##### 



Selling, General and Administrative Expenses
    (SG&A)
  year-over-year
  Other Income/(Expense)
    Income
    Taxes
      Income from
    Discontinued Operations
    (in thousands)

2009


2008Income from discontinued operations before income tax (benefit)/
    provision and loss on sale

$
2,295


$
13,497(Benefit)/provision for income taxes


(4,913
)


6,825Income from discontinued operations before loss on sale


7,208



6,672Loss on sale of discontinued operations before income tax benefit


(5,287
)


Benefit for income taxes


(563
)


Loss on sale of discontinued operations, net of tax


(4,724
)


Income from discontinued operations


2,484



6,672Less: Net income attributable to noncontrolling interests


(135
)


(76
)Income from discontinued operations

$
2,349


$
6,596   Income from
    Discontinued Operations Attributable to Michael Baker
    Corporation
   5




---



##### 



year-over-year
    Loss on Sale of
    Energy
        Comparisons of
    the Years Ended December 31, 2008 and 2007
  Revenues
    (dollars in millions)

2008


2007Revenues by client typeFederal government

$
238.8



52
%

$
196.5



49
%State and local government


173.2



38
%


160.7



40
%Domestic private industry


43.9



10
%


44.3



11
%Total revenues

$
455.9



100
%

$
401.5



100
%    6




---



##### 



Gross
    Profit
      Selling, General
    and Administrative Expenses
    Other
    Income/(Expense)
    Income
    Taxes
   7




---



##### 



Income from
    Discontinued Operations
    (in thousands)

2008


2007Income from discontinued operations before income tax

$
13,497


$
5,283Provision for income taxes


6,825



3,306Less: Net (income)/loss attributable to noncontrolling interests


(76
)


33Income from discontinued operations

$
6,596


$
2,010   Income from
    Discontinued Operations Attributable to Michael Baker
    Corporation
  year-over-year
    Contract
    Backlog
  As of December 31,(in millions)

2009


2008Funded

$
461.3


$
449.5Unfunded


963.9



534.7Total

$
1,425.2


$
984.2     and/or
     8




---



##### 



state-of-the-art
    Liquidity and
    Capital Resources
      Cash Provided by
    Operating Activities
         9




---



##### 



Cash Provided
    by/(Used in) Investing Activities
    available-for-sale
  Cash Provided
    by/(Used in) Financing Activities
    Credit
    Agreement
    and/or
    Financial
    Condition & Liquidity
   10




---



##### 



and/or
    and/or
  Contractual
    Obligations and Off-Balance Sheet Arrangements
    Payments due by periodWithin 1


1-3


3-5


After 5(in millions)

Total


year


years


years


yearsContractual obligationsOperating lease
    obligations(1)

$
68.9


$
14.9


$
21.7


$
14.0


$
18.3Purchase
    obligations(2)


12.1



5.4



6.7







Other long-term
    liabilities(3)


1.6







0.5







1.1Capital lease
    obligations(4)


0.4



0.2



0.2







Total contractual obligations

$
83.0


$
20.5


$
29.1


$
14.0


$
19.4   (1)
    
    We utilize operating leases to
    provide for use of certain assets in our daily business
    activities. This balance includes office space of
    $62.9 million, with the remaining balance relating to
    computers, computer-related equipment, and motor vehicles. The
    lease payments for use of these assets are recorded as expenses,
    but do not appear as liabilities on our consolidated balance
    sheets. 11




---



##### 



(2)
    
    Our purchase obligations relate to
    legally binding agreements to purchase goods or services at
    agreed prices, but do not appear as liabilities on our
    consolidated balance sheets. These obligations primarily relate
    to office equipment and maintenance obligations.(3)
    
    The majority of the
    $1.1 million balance for obligations after five years
    represents deferred compensation for our Board of Directors
    while the $0.5 million obligation within two to three years
    represents our liability for stock appreciation rights.(4)
    
    Capital leases include computers
    and computer-related equipment.    Amount of commitment expiration per periodWithin 1


2-3


4-5


After 5(in millions)

Total


year


years


years


yearsOff-Balance Sheet ArrangementsStandby letters of credit

$
9.4


$
9.4


$



$



$
Performance and payment bonds


14.3



6.3



0.7



7.3



Total commercial commitments

$
23.7


$
15.7


$
0.7


$
7.3


$
       Critical
    Accounting Estimates
    Project Cost Estimates to Complete. percentage-of-completion percentage-of-completion and/or percentage-of-completion
 12




---



##### 



Revenue Recognition. percentage-of-completion and/or and/or
  Income and Other Taxes.
    Goodwill. and/or
  Contingencies. and/or
  Recent Accounting
    Pronouncements
     13




---



##### 



14




---



##### 



MICHAEL BAKER
    CORPORATION
  CONSOLIDATED STATEMENTS OF INCOME
  For the year ended December 31,(in thousands, except per share amounts)

2009


2008


2007Revenues

$
445,177


$
455,929


$
401,463Cost of work performed


357,197



371,397



321,850Gross profit


87,980



84,532



79,613Selling, general and administrative expenses


57,422



51,232



53,122Operating income


30,558



33,300



26,491Other income/(expense):Equity income from unconsolidated subsidiary


7,057



3,065



2,224Interest income


160



642



303Interest expense


(70
)


(93
)


(554
)Other, net


257



66



(55
)Income before noncontrolling interests and income taxes


37,962



36,980



28,409Less: Income attributable to noncontrolling interests


(156
)






Income before income taxes


37,806



36,980



28,409Provision for income taxes


13,234



14,422



11,079Net income from continuing operations attributable to Michael
    Baker Corporation


24,572



22,558



17,330Income from discontinued operations, net of tax


7,208



6,672



1,977Loss on sale of discontinued operations, net of tax


(4,724
)






Less: Net (income)/loss attributable to noncontrolling interests


(135
)


(76
)


33Net income from discontinued operations attributable to
    Michael Baker Corporation


2,349



6,596



2,010Net income attributable to Michael Baker
    Corporation


26,921



29,154



19,340Other comprehensive income/(loss)  Foreign currency
    translation adjustments with reclassification adjustments


2,232



(2,661
)


255Less: Foreign currency translation adjustments attributable to
    noncontrolling interests with reclassification adjustments


(233
)


526



(107
)Comprehensive income attributable to Michael Baker
    Corporation

$
28,920


$
27,019


$
19,488Earnings per share (E.P.S.) attributable to
    Michael Baker CorporationBasic E.P.S.  Continuing operations

$
2.77


$
2.56


$
1.98Diluted E.P.S.  Continuing operations


2.75



2.54



1.95Basic E.P.S.  Net income


3.04



3.31



2.21Diluted E.P.S.  Net income

$
3.01


$
3.28


$
2.18   The accompanying notes are an
    integral part of the consolidated financial statements.
 15




---



##### 



MICHAEL BAKER
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  As of December 31,(in thousands, except share amounts)

2009


2008ASSETSCurrent AssetsCash and cash equivalents

$
105,259


$
49,050Short term investments


2,500



Available for sale securities


2,155



Proceeds receivable  Energy sale


9,965



Receivables, net of allowances of $723 and $2,765, respectively


76,455



113,676Unbilled revenues on contracts in progress


49,605



70,455Prepaid expenses and other


5,407



16,756Total current assets


251,346



249,937Property, Plant and Equipment, net


12,578



16,671Other Long-term AssetsGoodwill


9,626



17,092Other intangible assets, net


76



162Deferred tax asset






1,209Other long-term assets


5,218



6,991Total other long-term assets


14,920



25,454Total assets

$
278,844


$
292,062LIABILITIES AND SHAREHOLDERS INVESTMENTCurrent LiabilitiesAccounts payable

$
31,948


$
42,421Accrued employee compensation


23,000



35,530Accrued insurance


9,576



11,632Billings in excess of revenues on contracts in progress


19,102



17,449Deferred income tax liability


3,958



9,923Income taxes payable


1,355



4,946Other accrued expenses


8,050



13,827Total current liabilities


96,989



135,728Long-term LiabilitiesDeferred income tax liability


346



7,121Other long-term liabilities


7,769



6,297Total liabilities


105,104



149,146Shareholders InvestmentCommon Stock, par value $1, authorized 44,000,000 shares,issued 9,402,835 and 9,350,835, respectively


9,403



9,351Additional paid-in capital


49,989



48,405Retained earnings


119,135



92,214Accumulated other comprehensive loss


(333
)


(2,565
)Less  495,537 shares of Common Stock in
    treasury, at cost


(4,761
)


(4,761
)Total Michael Baker Corporation shareholders
    investment


173,433



142,644Noncontrolling interests


307



272Total shareholders investment


173,740



142,916Total liabilities and shareholders investment

$
278,844


$
292,062   The accompanying notes are an
    integral part of the consolidated financial statements.
 16




---



##### 



MICHAEL BAKER
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the year ended December 31,(in thousands)

2009


2008


2007Cash Flows from Operating ActivitiesNet income

$
27,212


$
29,230


$
19,307Adjustments to reconcile net income to net cash provided
    by/(used in) operating activities:Net income from discontinued operations


(2,484
)


(6,672
)


(1,977
)Depreciation and amortization


5,592



4,952



5,039Stock-based compensation expense


1,063



772



436Tax benefit of stock compensation


232



117



975Excess tax benefits from stock-based compensation


(5
)


(17
)


(26
)Deferred income tax (benefit)/expense


(5,152
)


(2,794
)


1,751Equity affiliates earnings


(7,057
)


(3,065
)


(2,224
)Equity affiliates dividends received


7,300



2,700



1,528Loss on disposal of fixed assets


154



94



229Changes in assets and liabilities:Increase in receivables


(2,234
)


(7,311
)


(4,233
)Decrease/(increase) in unbilled revenues and billings in excess,
    net


4,103



5,480



(2,895
)Decrease/(increase) in other net assets


7,764



1,114



(134
)(Decrease)/increase in accounts payable


(4,652
)


439



3,236(Decrease)/increase in accrued expenses


(7,779
)


9,584



(1,196
)Net cash provided by continuing operations


24,057



34,623



19,816Net cash provided by/(used in) discontinued operations


12,308



(2,395
)


6,819Net cash provided by operating activities


36,365



32,228



26,635Cash Flows from Investing ActivitiesAdditions to property, plant and equipment


(5,421
)


(3,472
)


(1,206
)Purchase of short-term investments


(2,500
)






Purchase of
    available-for-sale
    securities


(2,155
)






Investment in equity affiliates


(400
)






Net cash used in continuing operations


(10,476
)


(3,472
)


(1,206
)Net cash provided by/(used in) discontinued operations


29,874



(1,813
)


(354
)Net cash provided by/(used in) investing activities


19,398



(5,285
)


(1,560
)Cash Flows from Financing ActivitiesPayments on long-term debt, net










(11,038
)Decrease in book overdrafts










(4,164
)Capital contribution from noncontrolling interest


152







Proceeds from exercise of stock options


632



366



1,381Payments on capital lease obligations


(333
)


(285
)


(383
)Excess tax benefits from stock-based compensation


5



17



26Net cash provided by/(used in) continuing operations


456



98



(14,178
)Net cash used in discontinued operations


(10
)


(43
)


(2,027
)Net cash provided by/(used in) financing activities


446



55



(16,205
)Net increase in cash and cash equivalents


56,209



26,998



8,870Cash and cash equivalents, beginning of year


49,050



22,052



13,182Cash and cash equivalents, end of year

$
105,259


$
49,050


$
22,052   The accompanying notes are an
    integral part of the consolidated financial statements.
 17




---



##### 



MICHAEL BAKER
    CORPORATIONCONSOLIDATED STATEMENTS OF SHAREHOLDERS
    INVESTMENT
  AccumulatedCommon stock,








Additional





Non-


other


Totalpar value $1


Treasury


paid-in


Retained


controlling


comprehensive


shareholders(in thousands)

Shares


Amount


Shares


Amount


capital


earnings


interest


(loss)/income


investmentBalance, January 1, 2007


9,194


$
9,194



(496
)

$
(4,761
)

$
44,676


$
44,671


$
398


$
(159
)

$
94,019Net income attributable to Michael Baker Corporation






















19,340











19,340Impact of adopting FIN 48






















(951
)










(951
)Stock options exercised


101



101











1,280















1,381Options granted


















184















184Tax benefit of stock compensation


















975















975Restricted stock issued


11



11











(11
)














Amortization of restricted stock


















252















252Noncontrolling interest net loss


























(309
)






(309
)Other comprehensive income, net of tax:Foreign currency translation adjustments


























107



255



362Balance, December 31, 2007


9,306


$
9,306



(496
)

$
(4,761
)

$
47,356


$
63,060


$
196


$
96


$
115,253Net income attributable to Michael Baker Corporation






















29,154











29,154Stock options exercised


33



33











333















366Options granted


















287















287Tax benefit of stock compensation


















117















117Restricted stock issued


12



12











(12
)














Amortization of restricted stock


















324















324Noncontrolling interest net loss


























602







602Other comprehensive loss, net of tax:Foreign currency translation adjustments


























(526
)


(2,661
)


(3,187
)Balance, December 31, 2008


9,351


$
9,351



(496
)

$
(4,761
)

$
48,405


$
92,214


$
272


$
(2,565
)

$
142,916Net income attributable to MichaelBaker Corporation






















26,921











26,921Stock options exercised


40



40











592















632Options granted


















359















359Tax benefit of stock compensation


















232















232Restricted stock issued


12



12











(12
)














Amortization of restricted stock


















413















413Noncontrolling interest  netInvestment in shares


























152







152Divestiture of subsidiary


























(176
)






(176
)Net income


























291







291Other comprehensive income, net of tax:Reclassification adjustment for foreign currency translation
    included in the current period loss from discontinued operations


























(232
)


2,069



1,837Foreign currency translation adjustments






























163



163Balance, December 31, 2009


9,403


$
9,403



(496
)

$
(4,761
)

$
49,989


$
119,135


$
307


$
(333
)

$
173,740   The accompanying notes are an
    integral part of the consolidated financial statements.
 18




---



##### 



MICHAEL BAKER
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    NATURE OF
    BUSINESS     Geographic and
    market information
  For the year ended December 31,2009


2008


2007Revenues by geographic origin:Domestic

$
401.0


$
417.2


$
383.2Foreign(1)


44.2



38.7



18.3Total

$
445.2


$
455.9


$
401.5     (1)
    
    The Company defines foreign
    contract revenue as work performed outside the U.S. irrespective
    of the clients U.S. or
    non-U.S.
    ownership.  Revenues by principal markets:United States government


49
%


52
%


49
%Various state governmental and quasi-governmentagencies


41
%


38
%


40
%Commercial, industrial and private clients


10
%


10
%


11
%      2.
    BASIS OF
    PRESENTATION       3.
    SUMMARY OF
    SIGNIFICANT ACCOUNTING POLICIES   Principles of
    Consolidation
  less-than-wholly-owned
 19




---



##### 



Revenue
    Recognition and Accounting for Contracts
  Time-and-Materials out-of-pocket
  percentage-of-completion percentage-of-completion catch-up and/or
    and/or
      
    Cost-Plus.  Tasks under these contracts can
    have various cost-plus features. Under cost-plus fixed fee
    contracts, clients are billed for the Companys costs,
    including both direct and indirect costs, plus a fixed
    negotiated fee. Under cost-plus fixed rate contracts, clients
    are billed for the Companys costs plus negotiated fees or
    rates based on its indirect costs. Some cost-plus contracts
    provide for award fees or penalties based on performance
    criteria in lieu of a fixed fee or fixed rate. Contracts may
    also include performance-based award fees or incentive fees.
    Fixed-Price.  Under fixed-price contracts, the
    Companys clients are billed at defined milestones for an
    agreed amount negotiated in advance for a specified scope of
    work.
    Time-and-Materials.  Under
    the Companys
    time-and-materials
    contracts, the Company negotiates hourly billing rates and
    charges based on the actual time that it expended, in addition
    to other direct costs incurred in connection with the contract.
    Time-and-materials
    contracts typically have a stated contract value. 20




---



##### 



Unbilled Revenues
    on Contracts in Progress and Billings in Excess of Revenues on
    Contracts in Progress
      Use of
    Estimates
  percentage-of-completion and/or
    Income
    Taxes
     21




---



##### 



Foreign Currency
    Translation
    Other
    Comprehensive Income/(Loss)
    Fair Value of
    Financial Instruments
  available-for-sale
  Cash and Cash
    Equivalents
    Short-term
    Investments
    Available-for-Sale
    Securities
  Available-for-sale available-for-sale
  Concentrations of
    Credit Risk and Allowance for Doubtful Accounts
  available-for-sale
   22




---



##### 



Goodwill and
    Intangible Assets
    Property, Plant
    and Equipment
      Leases
      Impairment of
    Long-lived Assets
   23




---



##### 



Accounting for
    Stock-Based Compensation
      4.
    RECENT ACCOUNTING
    PRONOUNCEMENTS           5.
    DISCONTINUED
    OPERATIONS      24




---



##### 



For the year ended December 31,(in thousands)

2009


2008


2007Revenues

$
160,418


$
243,466


$
325,502Cost of work performed


144,734



214,341



304,619Gross profit


15,684



29,125



20,883Selling, general and administrative expenses


13,204



18,984



15,999Income from discontinued operations


2,480



10,141



4,884Other (expense)/income


(185
)


3,356



399Income from discontinued operations before income taxes and
    loss on sale


2,295



13,497



5,283(Benefit)/provision for income taxes


(4,913
)


6,825



3,306Income from discontinued operations before loss on sale


7,208



6,672



1,977Loss on sale of discontinued operations, net of tax


(4,724
)






Income from discontinued operations


2,484



6,672



1,977Less: Net (income)/loss attributable to noncontrolling interests


(135
)


(76
)


33Net income from discontinued operations attributable to
    Michael Baker Corporation

$
2,349


$
6,596


$
2,010         Baker Energy Sale
    Proceeds
  (in thousands)Gross sale proceeds received at closing

$
37,944Net asset adjustment receivable


9,965Gross proceeds


47,909Less:Investment banker and legal fees


(907
)Management retention payments


(1,304
)Net proceeds from sale of Baker Energy

$
45,698  25




---



##### 



Baker Energy Loss
    on Sale
  (in thousands)Net proceeds from sale

$
45,698Net assets of Baker Energy as of September 30, 2009


(48,469
)Realization of cumulative translation adjustments


(2,174
)Non-controlling interest in Baker Energy


(127
)Tax benefit related to transaction costs


563Loss on sale of Baker Energy, net of tax benefit

$
(4,509
)   B.E.S. Sale
    Proceeds
  (in thousands)Gross sale proceeds

$
1,056Less:Investment banker and legal fees


(16
)Thailand withholdings and fees


(149
)Net proceeds from sale of B.E.S.

$
891   B.E.S. Loss on
    Sale
  (in thousands)Net proceeds from B.E.S. sale

$
891Net assets of B.E.S. as of December 18, 2009


(1,514
)Realization of cumulative translation adjustments


105Non-controlling interest in B.E.S.


303Loss on sale of B.E.S., net of tax

$
(215
)     6.
    EQUITY INCOME
    FROM UNCONSOLIDATED SUBSIDIARY      26




---



##### 



For the year ended December 31,(in thousands)

2009

2008

2007Contract revenue earned

$
154,140


$
130,408


$
77,226Gross profit


21,763



9,693



6,993Net Income

$
21,161


$
9,195


$
6,663   As ofDecember 31,

December 31,(in thousands)

2009

2008Current assets

$
17,377


$
27,970Noncurrent assets


20



7Current liabilities

$
12,594


$
22,436     7.
    CONTRACTS     As of December 31,2009

2008Revenues

$
1,702


$
2,915Billings


(1,671
)


(2,862
)Net unbilled revenue

$
31


$
53     and/or
 27




---



##### 



8.
    INCOME
    TAXES     For the year ended December 31,(in thousands)

2009


2008


2007Provision/(benefit) for income taxes:Continuing operations

$
13,234


$
14,422


$
11,079Discontinued operations


(4,913
)


6,825



3,306Loss on sale of discontinued operations


(563
)






Provision for income taxes

$
7,758


$
21,247


$
14,385   Continuing
    Operations
    For the year ended December 31,2009


2008


2007Domestic

$
37,559


$
37,337


$
28,033Foreign


247



(357
)


376Total

$
37,806


$
36,980


$
28,409     For the year ended December 31,2009


2008


2007Current income tax provision/(benefit):U.S. federal*

$
15,807


$
14,404


$
8,533Foreign


164



305



126State


2,415



2,507



669Total current income tax provision


18,386



17,216



9,328   For the year ended December 31,2009


2008


2007Deferred income tax (benefit)/provision:U.S. federal*


(4,473
)


(2,044
)


1,259Foreign






90



(134
)State


(679
)


(840
)


626Total deferred income tax (benefit)/provision


(5,152
)


(2,794
)


1,751Total income tax provision

$
13,234


$
14,422


$
11,079   *
    
    Includes U.S. taxes related to
    foreign income. 28




---



##### 



As of December 31,2009


2008


2007Unrecognized tax benefits:Beginning of the year

$
1,873


$
1,909


$
1,656Additions based on tax positions related to the current year


1,230



224



197Additions for tax positions of prior years






352



511Reductions for tax positions of prior years






(6
)


(455
)Settlements with taxing authorities






(333
)


Lapses of statutes of limitations


(69
)


(273
)


End of the year

$
3,034


$
1,873


$
1,909         For the year ended December 31,2009


2008


2007Computed income taxes at U.S. federal statutory rate

$
13,234


$
12,943


$
9,943Foreign tax credits


(1,421
)






State income taxes, net of federal income tax benefit


856



958



767Tax expense/(benefit) on foreign income and losses


78



520



(140
)Permanent differences


704



78



116Change in reserves


143



(55
)


228Deferred tax on foreign earnings not indefinitely reinvested


(253
)


163



Other


(107
)


(185
)


165Total income tax provision

$
13,234


$
14,422


$
11,079  29




---



##### 



As of December 31,2009


2008Deferred income tax assets:Accruals not currently deductible for tax purposes

$
8,221


$
8,578Billings in excess of revenues


7,325



6,624Tax loss carryforwards


11,048



6,495Foreign tax credits


1,961



Fixed and intangible assets


62



91All other items


605



457Gross deferred tax assets


29,222



22,245Valuation allowance for deferred tax assets


(11,458
)


(5,085
)Net deferred tax assets


17,764



17,160Deferred income tax liabilities:Unbilled revenues


(18,366
)


(23,877
)Undistributed foreign earnings






(6,163
)Fixed and intangible assets


(2,841
)


(2,766
)All other items


(861
)


(14
)Gross deferred tax liabilities


(22,068
)


(32,820
)Net deferred tax liabilities

$
(4,304
)

$
(15,660
)         Discontinued
    Operations
   30




---



##### 



9.
    SHORT-TERM
    INVESTMENTS     10.
    AVAILABLE-FOR-SALE
    SECURITIES   available-for-sale available-for-sale available-for-sale
  11.
    FAIR VALUE
    MEASUREMENTS     
    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs (i.e. projections,
    estimates, interpretations, etc.) that are supported by little
    or no market activity and that are significant to the fair value
    of the assets or liabilities.    Fair value measurements at December 31, 2009Quoted market


Significantprices in active


other


Significantmarkets for


observable


unobservabeidentical assets


inputs


inputs(in thousands)

Total


(Level 1)


(Level 2)


(Level 3)Short-term investments

$
2,500


$
2,500


$



$
Available-for-sale
    securities


2,155







2,155



Total Investments

$
4,655


$
2,500


$
2,155


$
Percent to total


100
%


54
%


46
%


  31




---



##### 



12.
    GOODWILL AND
    OTHER INTANGIBLE ASSETS     OtherintangibleGoodwill


assets, netBalance, January 1, 2008

$
17,092


$
275Less:Amortization






(113
)Balance, December 31, 2008

$
17,092


$
162Less:Amortization






(86
)Sale of Baker Energy


(7,466
)


Balance, December 31, 2009

$
9,626


$
76         For the year ending December 31,2010

$
402011


342012


2Total

$
76  32




---



##### 



13.
    PROPERTY, PLANT
    AND EQUIPMENT     As of December 31,2009


2008Land

$
486


$
486Buildings and improvements


4,992



5,892Furniture, fixtures, and office equipment


12,738



12,146Equipment and vehicles


221



2,818Computer hardware


1,271



3,754Computer software


19,015



19,265Leasehold improvements


4,923



5,766Equipment and vehicles under capital lease


1,283



1,460Total, at cost


44,929



51,587Less  Accumulated depreciation and amortization


(32,351
)


(34,916
)Net property, plant and equipment

$
12,578


$
16,671     14.
    COMMITMENTS &
    CONTINGENCIES   Commitments
    Maximum undiscountedfuture paymentsStandby letters of credit*:Insurance related

$
8.9Other


0.5Performance and payment bonds*

$
14.3   *
    
    These instruments require no
    associated liability on the Companys Consolidated Balance
    Sheet.     33




---



##### 



Contingencies
  Camp Bonneville Project. not-for-profit
             34




---



##### 



Legal Proceedings.
  Credit Risk.
            Services Agreement.
 35




---



##### 



Self-Insurance.
        Reliance Liquidation.
  15.
    LEASE
    COMMITMENTS    36




---



##### 



Capital lease


Operating leaseFor the year ending December 31,

obligations


obligations


Total2010

$
188


$
14,903


$
15,0912011


161



11,569



11,7302012






10,081



10,0812013






7,375



7,3752014






6,659



6,659Thereafter






18,336



18,336Total

$
349


$
68,923


$
69,272   16.
    LONG-TERM DEBT
    AND BORROWING AGREEMENTS   sub-limit) sub-limit
    and/or
  17.
    EARNINGS PER
    SHARE     For the year ended December 31,(in thousands)

2009


2008


2007Net income from continuing operations attributable toMichael Baker Corporation

$
24,572


$
22,558


$
17,330Net income from discontinued operations attributable toMichael Baker Corporation


2,349



6,596



2,010Net income attributable to Michael Baker Corporation

$
26,921


$
29,154


$
19,340   37




---



##### 



For the year ended December 31,(in thousands, except per share data)

2009


2008


2007Basic:Weighted average shares outstanding


8,855



8,811



8,742Earnings per share:Continuing operations

$
2.77


$
2.56


$
1.98Discontinued operations


0.27



0.75



0.23Total

$
3.04


$
3.31


$
2.21Diluted:Effect of dilutive securities -Stock options and restricted shares


78



80



132Weighted average shares outstanding


8,933



8,891



8,874Earnings per share:Continuing operations

$
2.75


$
2.54


$
1.95Discontinued operations


0.26



0.74



0.23Total

$
3.01


$
3.28


$
2.18     18.
    CAPITAL
    STOCK           19.
    RIGHTS
    AGREEMENT      38




---



##### 



20.
    BAKER 401(k)
    PLAN       21.
    DEFERRED
    COMPENSATION PLAN     22.
    STOCK BASED
    COMPENSATION      39




---



##### 



WeightedWeighted





averageShares


average


Aggregate


contractual lifesubject


exercise price


intrinsic


remainingto option


per share


value


in yearsBalance at January 1, 2007


235,093


$
13.43Options granted


14,000



26.86Options exercised


(101,573
)


13.60Options forfeited or expired


(2,000
)


6.84Balance at December 31, 2007


145,520


$
14.70


$
3,841,521



4.8Options granted


16,000



37.53Options exercised


(33,057
)


11.06Balance at December 31, 2008


128,463


$
18.48


$
2,377,316



5.4Options granted


16,000



40.46Options exercised


(40,000
)


15.81Balance at December 31, 2009


104,463


$
22.87


$
1,935,885



5.3       Options outstanding


Options exercisableWeightd





WeightdNumber





average


Number


averageof


Average


exercise


of


exerciseRange of exercise prices

options


life(1)


price


options


price$6.25  $8.55


15,429



1.9


$
8.39



15,429


$
8.39$10.025  $15.625


33,034



2.5



14.33



33,034



14.33$20.16  $26.86


24,000



6.5



22.43



24,000



22.43$37.525  $40.455


32,000



9.1



38.99



32,000



38.99Total


104,463



5.3


$
22.87



104,463


$
22.87   (1)
    
    Average life remaining in years.    As of December 31,2009


2008


2007Weighted average risk-free interest rate


3.4
%


1.9
%


3.7
%Weighted average expected volatility


48.7
%


43.4
%


34.1
%Expected option life


7.4 years



7.9 years



8.0 yearsExpected dividend yield


0.00
%


0.00
%


0.00
%      40




---



##### 



23.
    RELATED PARTY
    TRANSACTIONS       24.
    SUPPLEMENTAL
    DISCLOSURES OF CASH FLOW DATA     For the year ended December 31,2009


2008


2007Interest paid

$
14


$
199


$
349Income taxes paid

$
18,925


$
21,098


$
14,490     25.
    QUARTERLY RESULTS
    OF OPERATIONS (UNAUDITED)     2009  Three months endedMar. 31


June 30


Sept. 30


Dec. 31Revenues

$
115,084


$
113,323


$
110,153


$
106,617Gross profit


22,683



22,683



22,239



20,375Income before noncontrolling interest and income taxes


10,289



8,921



10,919



7,833Net income/(loss) attributable to Michael Baker CorporationContinuing operations


6,276



5,481



6,956



5,859Discontinued operations


1,563



1,569



322



(1,105
)Total


7,839



7,050



7,278



4,754Diluted earnings/(loss) per common shareContinuing operations


0.70



0.62



0.78



0.65Discontinued operations


0.18



0.17



0.03



(0.12
)Total

$
0.88


$
0.79


$
0.81


$
0.53   41




---



##### 



2008  Three months endedMar. 31


June 30


Sept. 30


Dec.
    31(1)Revenues

$
108,644


$
113,519


$
119,155


$
114,611Gross profit


20,843



23,827



23,788



16,074Income before noncontrolling interest and income taxes


9,260



13,222



11,317



3,181Net income attributable to Michael Baker CorporationContinuing operations


5,649



8,157



6,811



1,941Discontinued operations


466



101



4,982



1,047Total


6,115



8,258



11,793



2,988Diluted earnings per common shareContinuing operations


0.64



0.91



0.78



0.21Discontinued operations


0.05



0.01



0.55



0.13Total

$
0.69


$
0.92


$
1.33


$
0.34   (1)
    
    During the fourth quarter, the
    Companys Board of Directors approved a discretionary
    increase in incentive compensation related to the Companys
    2008 operating performance, which resulted in the recognition of
    $4.0 million of additional incentive compensation expense.
    The Companys discontinued operations were unfavorably
    impacted in the fourth quarter of 2008 by a $1.6 million
    bad debt reserve related to a portion of a bankrupt
    clients receivables and a $2.5 million reserve for a
    contract-related claim. 42




---



##### 



MANAGEMENTS
    REPORT TO SHAREHOLDERS ON
    ITS RESPONSIBILITY FOR FINANCIAL STATEMENTS



Management of Michael Baker Corporation is responsible for
    preparing the accompanying consolidated financial statements and
    for ensuring their integrity and objectivity. These financial
    statements were prepared in accordance with accounting
    principles generally accepted in the United States of America
    and fairly represent the transactions and financial position of
    the Company. The financial statements include amounts that are
    based on managements best estimates and judgments.



The Companys 2009, 2008 and 2007 financial statements have
    been audited by Deloitte & Touche LLP, independent
    registered public accounting firm, as selected by the Audit
    Committee. Management has made available to Deloitte &
    Touche LLP all the Companys financial records and related
    data, as well as the minutes of shareholders and
    directors meetings.



The Audit Committee is composed of directors who are not
    officers or employees of the Company. It meets regularly with
    members of management, the internal auditors and the independent
    registered public accounting firm to discuss the adequacy of the
    Companys internal control over financial reporting, its
    financial statements, and the nature, extent and results of the
    audit effort. Both the Companys internal auditors and its
    independent registered public accounting firm have free and
    direct access to the Audit Committee without the presence of
    management.





/s/ Bradley L. Mallory



Bradley L. Mallory

President and Chief Executive Officer





/s/ Michael J. Zugay



Michael J. Zugay

Executive Vice President
    and Chief Financial Officer





/s/ James M. Kempton



James M. Kempton

Vice President and Corporate Controller


43




---



##### 



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of
    Directors and Shareholders of
    Michael Baker Corporation:
          Internal Control  Integrated Framework
        44




---



##### 



SUPPLEMENTAL
    FINANCIAL INFORMATION
  Market
    Information  Common Shares
    2009

2008Fourth

Third

Second

First

Fourth

Third

Second

FirstHigh

$
41.40


$
42.96


$
43.69


$
42.60


$
37.90


$
38.34


$
22.79


$
41.00Low


34.95



33.48



25.44



24.70



18.29



22.95



19.61



22.05  45