EXHIBIT 13.1
  SELECTED
    FINANCIAL DATA
    (in thousands, except per share
    information)
  2010(1)


2009


2008


2007


2006Results of OperationsContinuing OperationsRevenues

$
499,353


$
445,177


$
455,929


$
401,463


$
380,062Operating income


22,289



30,558



33,300



26,491



8,146Net income


14,678



24,572



22,558



17,330



5,654Diluted earnings per share

$
1.60


$
2.75


$
2.54


$
1.95


$
0.65Return on shareholders investment


8.0
%


15.5
%


17.5
%


16.6
%


6.5
%Total Michael Baker CorporationNet income

$
12,166


$
26,921


$
29,154


$
19,340


$
10,332Diluted earnings per share

$
1.33


$
3.01


$
3.28


$
2.18


$
1.19Return on shareholders investment


6.6
%


17.0
%


22.6
%


18.5
%


11.9
%Financial ConditionTotal assets

$
321,065


$
278,844


$
292,062


$
276,350


$
263,916Working capital

$
123,974


$
154,357


$
114,209


$
84,629


$
67,227Current ratio


2.17



2.59



1.84



1.56



1.44Long-term debt

$



$



$



$



$
11,038Shareholders Investment


195,815



173,433



142,644



115,057



93,621Book value per outstanding share


21.23



19.47



16.11



13.06



10.76Year-end closing share price

$
31.10


$
41.40


$
36.91


$
41.10


$
22.65Cash FlowNet cash provided by/(used in) operating activities

$
27,073


$
36,365


$
32,228


$
26,635


$
(9,343
)Net cash (used in)/provided by investing activities


(53,805
)


19,398



(5,285
)


(1,560
)


(14,933
)Net cash (used in)/provided by financing activities


(1,084
)


446



55



(16,205
)


18,417(Decrease)/increase in cash

$
(27,816
)

$
56,209


$
26,998


$
8,870


$
(5,859
)Backlog

$
1,575,100


$
1,425,200


$
984,200


$
1,122,200


$
1,057,100Share InformationYear-end shares outstanding


9,223



8,907



8,855



8,810



8,698Diluted weighted average shares outstanding


9,153



8,933



8,891



8,874



8,718   (1)
    
    These results included LPA for the
    period May 3, 2010 to December 31, 2010. 1




---



##### 



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    RESULTS OF OPERATIONS
  Form 10-K
  Business Overview
    and Environment
          
    An estimated $75.0 million IDIQ contract, which is for one
    year and may be extended up to four additional years, was
    awarded by the Naval Facilities Engineering Command
    (NAVFAC) to provide architectural and engineering 2




---



##### 



services for Multimedia Environmental Compliance Engineering
    Support to the Navy and other Department of Defense entities.  
    A five-year, $30 million IDIQ architectural and engineering
    contract was awarded to one of our joint ventures, which we will
    be a subcontractor for, by the U.S. Army Corps of
    Engineers  Sacramento District to provide master
    planning and related geographical information systems services
    for various federal, state, local and municipal agencies
    worldwide.
    A $14.9 million, four-year contract with the Virginia
    Department of Transportation to deliver construction engineering
    and inspection services for the I-95 Bridges Rehabilitation
    Project in Richmond, Virginia.
    An $8.9 million, three-year project with the Indiana
    Department of Transportation and the Kentucky Transportation
    Cabinet to provide construction oversight services for the
    Milton-Madison Ohio River Bridge project.
    A twelve-month, $6.7 million contract with the Arizona
    Department of Transportation to design three miles of new
    freeway in the cities of Glendale and Surprise, Arizona.
    Four separate design-build contracts with the U.S. Army
    Corps of Engineers, Louisville District, were awarded to our
    design-build team with the Korte Company to provide architecture
    and engineering design services for Armed Forces Reserve
    Facilities in Oklahoma, Texas and Puerto Rico. The total
    construction value of the facilities is $74.0 million,
    while our combined fees for the projects will be
    $5.0 million.      Discontinued
    Operations  Energy
    Executive
    Overview
       3




---



##### 



year-over-year
    Results of
    Operations
  Comparisons of
    the Year Ended December 31, 2010 and 2009
  Revenues
    Transportation.
  (in millions)

2010


2009Revenues by client typeFederal government

$
9.5



4
%

$
9.7



5
%State and local government


210.3



76
%


163.4



83
%Domestic private industry


56.3



20
%


23.2



12
%Total revenues

$
276.1



100
%

$
196.3



100
%   period-over-period
  Federal.
  (in millions)

2010


2009Revenues by client typeFederal government

$
173.8



78
%

$
207.8



84
%State and local government


29.6



13
%


17.6



7
%Domestic private industry


19.9



9
%


23.5



9
%Total revenues

$
223.3



100
%

$
248.9



100
%      4




---



##### 



Gross
    Profit
      Transportation.
  Federal.
  Selling, General and Administrative Expenses
      period-over-period
 5




---



##### 



Other Income/(Expense)
    Income
    Taxes
    Loss/Income from
    Discontinued Operations
     6




---



##### 



Comparisons of
    the Year Ended December 31, 2009 and 2008
  Revenues
    Transportation.
  (in millions)

2009


2008Revenues by client typeFederal government

$
9.7



5
%

$
7.0



4
%State and local government


163.4



83
%


155.8



86
%Domestic private industry


23.2



12
%


18.0



10
%Total revenues

$
196.3



100
%

$
180.8



100
%     Federal.
  (in millions)

2009


2008Revenues by client typeFederal government

$
207.8



84
%

$
231.8



85
%State and local government


17.6



7
%


20.0



7
%Domestic private industry


23.5



9
%


23.3



8
%Total revenues

$
248.9



100
%

$
275.1



100
%       Gross
    Profit
  year-over-year
   7




---



##### 



Transportation.
  Federal.
  Selling, General
    and Administrative Expenses
    year-over-year
    Other
    Income/(Expense)
    Income
    Taxes
     8




---



##### 



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
  year-over-year
    Loss on Sale of
    Energy
   9




---



##### 



Contract
    Backlog
  and/or
    As of December 31,(in millions)

2010


2009Funded

$
569.5


$
461.3Unfunded


1,005.6



963.9Total

$
1,575.1


$
1,425.2       state-of-the-art
 10




---



##### 



Liquidity and
    Capital Resources
      (in millions)Available Funding CapacityCash & Cash Equivalents





$
77.4Available for sale securities






9.8Credit agreementRevolving credit facility


125.0Outstanding borrowings


Issued letters of credit


(7.7
)Net line of credit capacity available






117.3Total available funding capacity





$
204.5     As of December 31,(in millions, except ratios)

2010


2009


ChangeCurrent assets

$
230.2


$
251.3


$
(21.1
)Current liabilities


(106.2
)


(97.0
)


9.2Working capital

$
124.0


$
154.3


$
(30.3
)Current Ratio*


2.17



2.59



N/A   *
    
    Current ratio is calculated by
    dividing current assets by current liabilities.    Cash Provided by
    Operating Activities
   11




---



##### 



Cash (Used
    in)/Provided by Investing Activities
  available-for-sale
  available-for-sale
    Cash (Used
    in)/Provided by Financing Activities
    Credit
    Agreement
  sub-facility
   12




---



##### 



Financial
    Condition & Liquidity
    and/or
    and/or
 13




---



##### 



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)

$
86.0


$
19.0


$
26.6


$
18.9


$
21.5Purchase
    obligations(2)


17.3



7.5



8.7



0.9



0.2Other long-term
    liabilities(3)


1.1















1.1Capital lease
    obligations(4)


0.2



0.2











Total contractual obligations

$
104.6


$
26.7


$
35.3


$
19.8


$
22.8   (1)
    
    We utilize operating leases to
    provide for use of certain assets in our daily business
    activities. This balance includes office space of
    $79.2 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.(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 represents deferred compensation for
    our Board of Directors.(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

$
7.7


$
7.7


$



$



$
Performance and payment bonds


14.3



6.3



6.4



1.6



Total commercial commitments

$
22.0


$
14.0


$
6.4


$
1.6


$
       Critical
    Accounting Estimates
   14




---



##### 



Project Cost Estimates to Complete. percentage-of-completion percentage-of-completion and/or percentage-of-completion
  Revenue Recognition. percentage-of-completion and/or and/or
  Income and Other Taxes.
    Goodwill and Intangible Assets.
   15




---



##### 



and/or
  Contingencies. and/or
  Recent Accounting
    Pronouncements
   16




---



##### 



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

2010


2009


2008Revenues

$
499,353


$
445,177


$
455,929Cost of work performed


400,296



357,197



371,397Gross profit


99,057



87,980



84,532Selling, general and administrative expenses


76,768



57,422



51,232Operating income


22,289



30,558



33,300Other income/(expense):Equity income from unconsolidated subsidiaries


2,576



7,057



3,065Interest income


399



160



642Interest expense


(276
)


(70
)


(93
)Other, net


(296
)


257



66Income before income taxes and noncontrolling interests


24,692



37,962



36,980Provision for income taxes


9,246



13,234



14,422Net income from continuing operations before noncontrolling
    interests


15,446



24,728



22,558(Loss)/income from discontinued operations, net of tax


(2,512
)


7,208



6,672Loss on sale of discontinued operations, net of tax






(4,724
)


Less: Net income attributable to noncontrolling interests






(135
)


(76
)Net (loss)/income from discontinued operations attributable
    to Michael Baker Corporation


(2,512
)


2,349



6,596Less: Net income attributable to noncontrolling
    interests  continuing operations


(768
)


(156
)


Net income attributable to Michael Baker
    Corporation


12,166



26,921



29,154Other comprehensive (loss)/incomeUnrealized loss on investments


(17
)






Foreign currency translation adjustments with reclassification
    adjustments


270



2,232



(2,661
)Less: Foreign currency translation adjustments attributable to
    noncontrolling interests with reclassification adjustments






(233
)


526Comprehensive income attributable to Michael Baker
    Corporation

$
12,419


$
28,920


$
27,019Earnings per share (E.P.S.) attributable to
    Michael Baker CorporationBasic E.P.S.  Continuing operations

$
1.64


$
2.77


$
2.56Diluted E.P.S.  Continuing operations


1.60



2.75



2.54Basic E.P.S.  Net income


1.36



3.04



3.31Diluted E.P.S.  Net income

$
1.33


$
3.01


$
3.28   The accompanying notes are an
    integral part of the consolidated financial statements.
 17




---



##### 



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

2010


2009ASSETSCurrent AssetsCash and cash equivalents

$
77,443


$
105,259Short term investments






2,500Available for sale securities


9,795



2,155Proceeds receivable  Energy sale






9,965Receivables, net of allowances of $601 and $723, respectively


73,681



76,455Unbilled revenues on contracts in progress


58,884



49,605Prepaid expenses and other


10,400



5,407Total current assets


230,203



251,346Property, Plant and Equipment, net


16,847



12,578Other Long-term AssetsGoodwill


53,441



9,626Other intangible assets, net


14,569



76Deferred tax asset


878



Other long-term assets


5,127



5,218Total other long-term assets


74,015



14,920Total assets

$
321,065


$
278,844LIABILITIES AND SHAREHOLDERS INVESTMENTCurrent LiabilitiesAccounts payable

$
38,918


$
31,948Accrued employee compensation


20,638



23,000Accrued insurance


11,992



9,576Billings in excess of revenues on contracts in progress


18,816



19,102Deferred income tax liability


6,405



3,958Income taxes payable


545



1,355Other accrued expenses


8,915



8,050Total current liabilities


106,229



96,989Long-term LiabilitiesDeferred income tax liability


9,894



346Other long-term liabilities


8,405



7,769Total liabilities


124,528



105,104Shareholders InvestmentCommon Stock, par value $1, authorized 44,000,000 shares,issued 9,718,351 and 9,402,835, respectively


9,718



9,403Additional paid-in capital


59,637



49,989Retained earnings


131,301



119,135Accumulated other comprehensive loss


(80
)


(333
)Less  495,537 shares of Common Stock in
    treasury, at cost


(4,761
)


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


195,815



173,433Noncontrolling interest


722



307Total shareholders investment


196,537



173,740Total liabilities and shareholders investment

$
321,065


$
278,844   The accompanying notes are an
    integral part of the consolidated financial statements.
 18




---



##### 



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

2010


2009


2008Cash Flows from Operating ActivitiesNet income

$
12,933


$
27,212


$
29,230Adjustments to reconcile net income to net cash provided
    by/(used in) operating activities:Net loss/(income) from discontinued operations


2,512



(2,484
)


(6,672
)Depreciation and amortization


9,501



5,592



4,952Stock-based compensation expense


1,384



1,063



772Tax benefit of stock compensation


13



232



117Excess tax benefit from stock-based compensation






(5
)


(17
)Deferred income tax expense/(benefit)


144



(5,152
)


(2,794
)Realized and unrealized loss on investments, net


36







Equity affiliates earnings


(2,576
)


(7,057
)


(3,065
)Equity affiliates dividends received


2,600



7,300



2,700Loss on disposal of fixed assets


391



154



94Changes in assets and liabilities:Decrease/(increase) in receivables


10,643



(2,234
)


(7,311
)(Increase)/decrease in unbilled revenues and billings in excess,
    net


(2,710
)


4,103



5,480(Increase)/decrease in other net assets


(1,569
)


7,764



1,114(Decrease)/increase in accounts payable


(990
)


(4,652
)


439(Decrease)/increase in accrued expenses


(4,713
)


(7,779
)


9,584Net cash provided by continuing operations


27,599



24,057



34,623Net cash (used in)/provided by discontinued operations


(526
)


12,308



(2,395
)Net cash provided by operating activities


27,073



36,365



32,228Cash Flows from Investing ActivitiesAdditions to property, plant and equipment


(6,213
)


(5,421
)


(3,472
)Cash portion of LPA acquisition


(52,381
)






Purchase of short-term investments


(250
)


(2,500
)


Maturity of short term investments


2,750







Purchase of
    available-for-sale
    securities


(13,564
)


(2,155
)


Sale of
    available-for-sale
    securities


5,888







Investment in equity affiliates






(400
)


Net cash used in continuing operations


(63,770
)


(10,476
)


(3,472
)Net cash provided by/(used in) discontinued operations


9,965



29,874



(1,813
)Net cash (used in)/provided by investing activities


(53,805
)


19,398



(5,285
)Cash Flows from Financing ActivitiesDebt issuance costs


(621
)






Proceeds from exercise of stock options


50



632



366Payments on capital lease obligations


(160
)


(333
)


(285
)Excess tax benefit from stock-based compensation






5



17Noncontrolling interest distributions


(353
)






Capital contributions from noncontrolling interests






152



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


(1,084
)


456



98Net cash used in discontinued operations






(10
)


(43
)Net cash (used in)/provided by financing activities


(1,084
)


446



55Net (decrease)/increase in cash and cash equivalents


(27,816
)


56,209



26,998Cash and cash equivalents, beginning of year


105,259



49,050



22,052Cash and cash equivalents, end of year

$
77,443


$
105,259


$
49,050   The accompanying notes are an
    integral part of the consolidated financial statements.
 19




---



##### 



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


income/(loss)


investmentBalance, January 1, 2008


9,306


$
9,306



(496
)

$
(4,761
)

$
47,356


$
63,060


$
196


$
96


$
115,253Net income attributable to MichaelBaker 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 interestInvestment 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
)

$
173,740Net income attributable to MichaelBaker Corporation






















12,166











12,166Stock options exercised


6



6











44















50Options granted


















315















315Restricted stock issued


83



83











(83
)














Amortization of restricted stock


















1,018















1,018Tax benefit of stock compensation


















13















13Stock appreciation rights


















505















505Stock issued for LPA acquisition


226



226











7,836















8,062Noncontrolling interestsNet income


























768







768Profit distribution


























(353
)






(353
)Other comprehensive (loss)/income, net of tax:Unrealized loss on investments






























(17
)


(17
)Foreign currency translation adjustments






























270



270Balance, December 31, 2010


9,718


$
9,718



(496
)

$
(4,761
)

$
59,637


$
131,301


$
722


$
(80
)

$
196,537   The accompanying notes are an
    integral part of the consolidated financial statements.
 20




---



##### 



MICHAEL BAKER
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    NATURE OF
    BUSINESS     2.
    BASIS OF
    PRESENTATION       3.
    SUMMARY OF
    SIGNIFICANT ACCOUNTING POLICIES   Principles of
    Consolidation
  less-than-wholly-owned
  Revenue
    Recognition and Accounting for Contracts
  Time-and-Materials out-of-pocket
 21




---



##### 



percentage-of-completion percentage-of-completion catch-up and/or
  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 is expended, in addition
    to other direct costs incurred in connection with the contract.
    Time-and-materials
    contracts typically have a stated contract value.       22




---



##### 



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
        Foreign Currency
    Translation
   23




---



##### 



Other
    Comprehensive (Loss)/Income
    Noncontrolling
    interests
    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
   24




---



##### 



Business
    Combinations
    Goodwill and
    Intangible Assets
    Property, Plant
    and Equipment
      Accrued
    Insurance
   25




---



##### 



Leases
      Impairment of
    Long-lived Assets
    Accounting for
    Stock-Based Compensation
      Recent accounting
    pronouncements
    4.
    LPA
    ACQUISITION    26




---



##### 



(in thousands)

Fair ValueReceivables

$
12,046Unbilled revenues on contracts in progress


12,105Prepaid expenses and other


2,348Property, Plant and Equipment


3,359Goodwill


43,815Other intangible assets


19,260Accounts payable


(7,872
)Billings in excess of revenues on contracts in progress


(5,250
)Other accrued expenses


(8,528
)Deferred income tax liability


(10,840
)     WeightedAverageAmortizable(in thousands)

Fair Value


LifeProject backlog

$
9,640



1.9Customer contracts and related relationships


6,720



3.6Non-competition agreements


2,500



1.5Trademark/trade name


400



1.3Total intangible assets

$
19,260



2.4      27




---



##### 



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

2010


2009Continuing operationsRevenues

$
535,202


$
538,317Net income


16,569



21,694Diluted earnings per share

$
1.79


$
2.37     5.
    BUSINESS
    SEGMENTS        28




---



##### 



For the year ended December 31,(in millions)

2010


2009


2008RevenuesTransportation

$
276.1


$
196.3


$
180.8Federal


223.3



248.9



275.1Total revenues

$
499.4


$
445.2


$
455.9For the year ended December 31,(in millions)

2010


2009


2008Gross profitTransportation

$
53.5


$
36.3


$
28.7Federal


47.2



52.8



54.7Corporate


(1.6
)


(1.1
)


1.1Total gross profit


99.1



88.0



84.5Less: SG&ATransportation


(45.1
)


(28.3
)


(24.8
)Federal


(31.6
)


(28.8
)


(26.3
)Corporate


(0.1
)


(0.3
)


(0.1
)Total SG&A


(76.8
)


(57.4
)


(51.2
)Total operating incomeTransportation


8.4



8.0



3.9Federal


15.6



24.0



28.4Corporate


(1.7
)


(1.4
)


1.0Total operating income

$
22.3


$
30.6


$
33.3For the year ended December 31,(in millions)

2010


2009


2008Depreciation and amortization expense:Transportation

$
6.5


$
1.4


$
1.0Federal


1.8



1.7



1.5Corporate


1.2



2.5



2.5Total

$
9.5


$
5.6


$
5.0Capital expenditures:Transportation

$
2.4


$
2.0


$
2.1Federal


2.6



2.9



1.4Corporate


1.3



0.4



0.6Total

$
6.3


$
5.3


$
4.1   29




---



##### 



As of December 31,(in millions)

2010


2009Segment assets:Transportation

$
159.1


$
81.3Federal


59.6



64.4Corporate


102.4



133.1Total

$
321.1


$
278.8As of December 31,(in millions)

2010


2009Equity investments in unconsolidated subsidiaries:Transportation

$
0.1


$
0.1Federal


0.6



2.0Total

$
0.7


$
2.1For the year ended December 31,(in millions)

2010


2009Income from unconsolidated subsidiaries:Transportation

$
1.4


$
Federal


1.2



7.1Total

$
2.6


$
7.1       For the year ended December 31,(in millions)

2010


2009


2008Revenues by geographic origin:Domestic

$
472.1


$
401.0


$
417.2Foreign(1)


27.3



44.2



38.7Total

$
499.4


$
445.2


$
455.9   (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


37
%


49
%


52
%Various state governmental and quasi-government agencies


48
%


41
%


38
%Commercial, industrial and private clients


15
%


10
%


10
%    30




---



##### 



6.
    DISCONTINUED
    OPERATIONS         For the year ended December 31,(in thousands)

2010


2009


2008Revenues

$



$
160,418


$
243,466Cost of work performed






144,734



214,341Gross profit






15,684



29,125Selling, general and administrative expenses


2,469



13,204



18,984(Loss)/Income from discontinued operations


(2,469
)


2,480



10,141Other (expense)/income


(221
)


(185
)


3,356(Loss)/Income from discontinued operations before income
    taxes and loss on sale


(2,690
)


2,295



13,497(Benefit)/provision for income taxes


(178
)


(4,913
)


6,825(Loss)/income from discontinued operations before loss on
    sale


(2,512
)


7,208



6,672Loss on sale of discontinued operations, net of tax






(4,724
)


(Loss)/income from discontinued operations


(2,512
)


2,484



6,672Less: Net income attributable to noncontrolling interests






(135
)


(76
)Net (loss)/income from discontinued operations attributable
    to Michael Baker Corporation

$
(2,512
)

$
2,349


$
6,596      31




---



##### 



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   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
)    32




---



##### 



7.
    EQUITY INCOME
    FROM UNCONSOLIDATED SUBSIDIARIES           For the year ended December 31,(in thousands)

2010


2009


2008Contract revenue earned

$
47,544


$
154,140


$
130,408Gross profit


3,966



21,763



9,693Net Income

$
3,511


$
21,161


$
9,195   As of December 31,(in thousands)

2010


2009Current assets

$
929


$
17,377Noncurrent assets






20Current liabilities

$
416


$
12,594    33




---



##### 



8.
    CONTRACTS     As of December 31,(in millions)

2010


2009Revenues

$
2,093


$
1,702Billings


(2,053
)


(1,671
)Net unbilled revenue

$
40


$
31     and/or
    9.
    INCOME
    TAXES     For the year ended December 31,(in thousands)

2010


2009


2008Provision/(benefit) for income taxes:Continuing operations

$
9,246


$
13,234


$
14,422Discontinued operations


(178
)


(4,913
)


6,825Loss on sale of discontinued operations






(563
)


Provision for income taxes

$
9,068


$
7,758


$
21,247  34




---



##### 



For the year ended December 31,(In thousands)

2010


2009


2008Domestic

$
24,085


$
37,559


$
37,337Foreign


(162
)


247



(357
)Total

$
23,923


$
37,806


$
36,980     For the year ended December 31,(in thousands)

2010


2009


2008Current income tax provision:U.S. federal*

$
7,441


$
15,807


$
14,404Foreign


42



164



305State


1,619



2,415



2,507Total current income tax provision

$
9,102



18,386



17,216   For the year ended December 31,(in thousands)

2010


2009


2008Deferred income tax provision/(benefit):U.S. federal*


348



(4,473
)


(2,044
)Foreign










90State


(204
)


(679
)


(840
)Total deferred income tax provision/(benefit)


144



(5,152
)


(2,794
)Total income tax provision

$
9,246


$
13,234


$
14,422   *
    
    Includes U.S. taxes related to
    foreign income.    As of December 31,(in thousands)

2010


2009


2008Unrecognized tax benefits:Beginning of the year

$
3,034


$
1,873


$
1,909Additions based on tax positions related to the current year


242



1,230



224Additions for tax positions of prior years


317







352Reductions for tax positions of prior years


(466
)






(6
)Settlements with taxing authorities


(20
)






(333
)Lapses of statutes of limitations


(508
)


(69
)


(273
)End of the year

$
2,599


$
3,034


$
1,873    35




---



##### 



For the year ended December 31,(in thousands)

2010


2009


2008Computed income taxes at U.S. federal statutory rate

$
8,642


$
13,287


$
12,943Income passed through to non-controlling interest
    holders(1)


(269
)


(53
)


Foreign tax credits


(500
)


(1,421
)


State income taxes, net of federal income tax benefit


807



856



958Tax expense on foreign income


99



78



520Permanent differences


590



704



78Change in reserves


168



143



(55
)Deferred tax on foreign earnings not indefinitely reinvested






(253
)


163Other


(291
)


(107
)


(185
)Total income tax provision

$
9,246


$
13,234


$
14,422   (1)
    
    Includes income that is not
    taxable to the Company. Such income is directly taxable to the
    Companys non-controlling interest partners.    As of December 31,(in thousands)

2010


2009Deferred income tax assets:Accruals not currently deductible for tax purposes

$
9,474


$
8,221Billings in excess of revenues


7,060



7,325Tax loss carryforwards


10,315



11,048Foreign tax credits


1,281



1,961Fixed and intangible assets


220



62All other items


734



605Gross deferred tax assets


29,084



29,222Valuation allowance for deferred tax assets


(11,441
)


(11,458
)Net deferred tax assets


17,643



17,764Deferred income tax liabilities:Unbilled revenues


(21,583
)


(18,366
)Change in method of accounting


(540
)


Fixed and intangible assets


(9,633
)


(2,841
)All other items


(1,308
)


(861
)Gross deferred tax liabilities


(33,064
)


(22,068
)Net deferred tax liabilities

$
(15,421
)

$
(4,304
)    36




---



##### 



Discontinued
    Operations
          10.
    SHORT-TERM
    INVESTMENTS    37




---



##### 



11.
    AVAILABLE-FOR-SALE
    SECURITIES   available-for-sale available-for-sale available-for-sale available-for-sale available-for-sale
  Gross


GrossAmortized


Unrealized


Unrealized


Fair(in thousands)

Cost


Gains


Losses


ValueDecember 31, 2010Debt securities

$
9,812


$
23


$
(40
)

$
9,795     (in thousands)Mature within one year

$
3,044Mature in one to five years


6,751Total

$
9,795   12.
    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.  available-for-sale
 38




---



##### 



Quoted Market


SignificantPrices in Active


Other


SignificantMarkets for


Observable


UnobservableIdentical Assets


Inputs


Inputs(in thousands)

Total


(Level 1)


(Level 2)


(Level 3)December 31, 2010Cash equivalents

$
30,279


$
30,279


$



$
Available-for-sale
    securities


9,795



9,795







Total cash equivalents and investments

$
40,074


$
40,074


$



$
Percent to total


100
%


100
%






December 31, 2009Cash equivalents

$
58,000


$
58,000


$



$
Short-term investments


2,500



2,500







Available-for-sale
    securities


2,155







2,155



Total cash equivalents and investments

$
62,655


$
60,500


$
2,155


$
Percent to total


100
%


97
%


3
%


   available-for-sale
  13.
    GOODWILL AND
    OTHER INTANGIBLE ASSETS     (in thousands)Other intangible asset, net

Transportation


Federal


TotalBalance, January 1, 2009

$



$
162


$
162Less: Amortization






(86
)


(86
)Balance, December 31, 2009






76



76Purchase of LPA


19,260







19,260Less: Amortization


(4,728
)


(39
)


(4,767
)Balance, December 31, 2010

$
14,532


$
37


$
14,569   (in thousands)Goodwill

Transportation


Federal


TotalBalance, December 31, 2009

$
8,916


$
710


$
9,626Purchase of LPA


43,815







43,815Balance, December 31, 2010

$
52,731


$
710


$
53,441    39




---



##### 



Acquisition Date


Accumulated


Carrying(in thousands)

Fair Value


Amortization


ValueProject backlog

$
10,489


$
3,824


$
6,665Customer contracts and related relationships


6,720



734



5,986Non-competition agreements


2,500



833



1,667Trademark / trade name


400



149



251Total

$
20,109


$
5,540


$
14,569       (in thousands)For the year ending December 31,2011

$
6,9502012


4,0022013


1,7942014


1,823Total

$
14,569   14.
    PROPERTY, PLANT
    AND EQUIPMENT     As of December 31,(in thousands)

2010


2009Land

$
486


$
486Buildings and improvements


5,403



4,992Furniture, fixtures, and office equipment


15,766



12,738Equipment and vehicles


273



221Computer hardware


2,092



1,271Computer software


21,172



19,015Leasehold improvements


4,855



4,923Equipment and vehicles under capital lease


1,283



1,283Total, at cost


51,330



44,929Less  Accumulated depreciation and amortization


(34,483
)


(32,351
)Net property, plant and equipment

$
16,847


$
12,578    40




---



##### 



15.
    COMMITMENTS &
    CONTINGENCIES   Commitments
    Maximum undiscounted(in millions)

future paymentsStandby letters of credit*:Insurance related

$
7.3Other


0.4Performance and payment bonds*


14.3   *
    
    These instruments require no
    associated liability on the Companys Consolidated Balance
    Sheet.        Contingencies
  Camp Bonneville Project. not-for-profit
 41




---



##### 



Legal Proceedings.
 42




---



##### 



Self-Insurance.
        Reliance Liquidation.
  16.
    LEASE
    COMMITMENTS       (in thousands)

Capital lease


Operating leaseFor the year ending December 31,

obligations


obligations


Total2011

$
161


$
19,002


$
19,1632012






15,002



15,0022013






11,543



11,5432014






10,226



10,2262015






8,697



8,697Thereafter






21,484



21,484Total

$
161


$
85,954


$
86,115  43




---



##### 



17.
    LONG-TERM DEBT
    AND BORROWING AGREEMENTS   sub-facility
      18.
    EARNINGS PER
    SHARE     For the year ended December 31,(in thousands)

2010


2009


2008Net income from continuing operations

$
15,446


$
24,728


$
22,558Less: Net income attributable to noncontrollinginterests  continuing operations


(768
)


(156
)


Net income from continuing operations attributableto Michael Baker Corporation


14,678



24,572



22,558Net (loss)/income from discontinued operations attributable to
    Michael Baker Corporation


(2,512
)


2,349



6,596Net income attributable to Michael Baker Corporation

$
12,166


$
26,921


$
29,154   44




---



##### 



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

2010


2009


2008Basic:Weighted average shares outstanding


8,929



8,855



8,811Earnings/(loss) per share:Continuing operations

$
1.64


$
2.77


$
2.56Discontinued operations


(0.28
)


0.27



0.75Total

$
1.36


$
3.04


$
3.31Diluted:Effect of dilutive securities -Contingently issuable shares and stock based compensation


224



78



80Weighted average shares outstanding


9,153



8,933



8,891Earnings/(loss) per share:Continuing operations

$
1.60


$
2.75


$
2.54Discontinued operations


(0.27
)


0.26



0.74Total

$
1.33


$
3.01


$
3.28     19.
    CAPITAL
    STOCK           20.
    RIGHTS
    AGREEMENT    45




---



##### 



21.
    BAKER 401(k)
    PLAN         22.
    DEFERRED
    COMPENSATION PLAN     23.
    STOCK BASED
    COMPENSATION    46




---



##### 



WeightedaverageRestricted


issuance priceshares


per shareBalance at January 1, 2008


21,000


$
23.57Restricted shares granted


12,000



37.53Restricted shares vested


(13,500
)


21.74Balance at December 31, 2008


19,500



33.42Restricted shares granted


12,000



40.46Restricted shares vested


(7,500
)


26.86Balance at December 31, 2009


24,000



38.99Restricted shares granted


82,907



34.94Restricted shares vested


(12,000
)


37.53Balance at December 31, 2010


94,907


$
35.63     WeightedWeighted





averageShares


average


Aggregate


contractual lifesubject


exercise price


intrinsic


remainingto option


per share


value


in yearsBalance at January 1, 2008


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



5.3Options granted


16,000



37.23Options exercised


(6,162
)


8.16Balance at December 31, 2010


114,301


$
25.67


$
971,014



5.3    47




---



##### 



Options outstanding


Options exercisableWeighted





WeightedNumber





average


Number


averageof


Average


exercise


of


exerciseRange of exercise prices

options


life(1)


price


options


price$6.25  $8.55


9,267



1.6


$
8.54



9,267


$
8.54$10.025  $15.625


33,034



1.5



14.33



33,034



14.33$20.16  $26.86


24,000



5.5



22.43



24,000



22.43$37.225  $40.455


48,000



8.5



38.40



48,000



38.40Total


114,301



5.3


$
25.67



114,301


$
25.67   (1)
    
    Average life remaining in years.    2010


2009


2008Weighted average risk-free interest rate


2.3%



3.2%



3.4%Weighted average expected volatility


48.3%



47.1%



36.2%Expected option life


7.4 years



7.9 years



8.1 yearsExpected dividend yield


0.00%



0.00%



0.00%           24.
    RELATED PARTY
    TRANSACTIONS      48




---



##### 



25.
    SUPPLEMENTAL
    DISCLOSURES OF CASH FLOW DATA     For the Year Ended December 31,(In thousands)

2010


2009


2008Common stock issued in the LPA acquisition, 226,447 shares

$
8,062


$



$
Income taxes paid


14,241



18,925



21,098Interest paid

$
23


$
14


$
199     26.
    QUARTERLY RESULTS
    OF OPERATIONS  (UNAUDITED)     2010  Three Months Ended(In thousands, except per share information)

Mar. 31


June 30


Sept. 30


Dec. 31Revenues

$
111,660


$
131,757


$
135,573


$
120,363Gross profit


21,519



28,599



30,262



18,677Income/(loss) before income taxes and noncontrolling interests


7,665



9,292



8,390



(655
)Net income/(loss) attributable to Michael Baker CorporationContinuing operations


4,613



5,554



5,031



(520
)Discontinued operations


(628
)


(164
)


(682
)


(1,038
)Total


3,985



5,390



4,349



(1,558
)Diluted earnings/(loss) per common shareContinuing operations


0.52



0.61



0.54



(0.07
)Discontinued operations


(0.07
)


(0.02
)


(0.07
)


(0.11
)Total

$
0.45


$
0.59


$
0.47


$
(0.18
)   49




---



##### 



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/(loss) before income taxes and noncontrolling interests


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  50




---



##### 



MANAGEMENTS
    REPORT TO SHAREHOLDERS ON
    ITS RESPONSIBILITY FOR FINANCIAL STATEMENTS                  
       51




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors and
    Shareholders of
 Michael Baker Corporation:
          Internal Control  Integrated Framework
        52




---



##### 



SUPPLEMENTAL
    FINANCIAL INFORMATION
  Market
    Information  Common Shares
    2010


2009Fourth


Third


Second


First


Fourth


Third


Second


FirstHigh

$
34.96


$
39.49


$
40.49


$
41.37


$
41.40


$
42.96


$
43.69


$
42.60Low


30.38



31.50



33.38



33.37



34.95



33.48



25.44



24.70  53