Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


Commission file number: 1-08325



MYR GROUP INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

36-3158643(I.R.S. Employer Identification No.)Three Continental
Towers                 60008-42101701 Golf Road, Suite 3-1012(Zip Code)Rolling Meadows, IL(Address of principal executive offices)(847) 290-1891(Registrant's telephone number, including area code)




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 (the "Exchange Act") 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 ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files). Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

As of August 7, 2009 there were 19,749,441 outstanding shares of the registrant's $0.01 par value common stock.

WEB SITE ACCESS TO COMPANY'S REPORTS

MYR
Group Inc.'s internet Web site address iswww.myrgroup.com. Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act will be
available free of charge through our Web site as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.



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INDEX



PagePart IFinancial InformationItem 1.

Financial StatementsConsolidated Balance Sheets
As of December 31, 2008 and June 30, 2009 (unaudited)


1Unaudited Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2008 and 2009


2Unaudited Consolidated Statements of Cash Flows
For the Three and Six Months Ended June 30, 2008 and 2009


3Notes to Consolidated Financial Statements
For the Three and Six Months Ended June 30, 2008 and 2009


4Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operation


12Item 3.

Quantitative and Qualitative Disclosures About Market Risk


24Item 4.

Controls and Procedures


25Part IIOther InformationItem 1.

Legal Proceedings


26Item 1A.

Risk Factors


26Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


26Item 3.

Defaults Upon Senior Securities


27Item 4.

Submission of Matters to a Vote of Security Holders


27Item 5.

Other Information


27Item 6.

Exhibits


27


Throughout
this report, references to "MYR Group," the "Company," "we," "us" and "our" refer to MYR Group Inc. and its consolidated subsidiaries, except as otherwise indicated or as the context
otherwise requires.

i

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MYR GROUP INC.        CONSOLIDATED BALANCE SHEETS        (In thousands, except share and per share data)

December 31, 2008

June 30, 2009(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
42,076

$
44,015Accounts receivable, net of allowances of $1,845 and $1,678, respectively


94,048


87,154Costs and estimated earnings in excess of billings on uncompleted contracts


25,821


27,980Deferred income tax assets


10,621


10,621Receivable for insurance claims in excess of deductibles


8,968


8,902Refundable income taxes


145


230Other current assets


3,731


2,880Total current assets


185,410


181,782Property and equipment, net of accumulated depreciation of $21,158 and $27,204, respectively


75,873


80,314Goodwill


46,599


46,599Intangible assets, net of accumulated amortization of $1,218 and $1,385, respectively


11,874


11,707Other assets


2,307


1,931Total assets

$
322,063

$
322,333LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
30,187

$
34,480Billings in excess of costs and estimated earnings on uncompleted contracts


32,698


25,351Accrued self insurance


32,881


33,667Other current liabilities


27,571


22,300Total current liabilities


123,337


115,798Long-term debt, net of current maturities


30,000


30,000Deferred income tax liabilities


12,429


12,429Other liabilities


938


953Total liabilities


166,704


159,180Commitments and contingenciesStockholders' equity:Preferred stock$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at December 31, 2008 and June 30,
2009





Common stock$0.01 par value per share; 100,000,000 authorized shares; 19,712,811 and 19,748,191 shares issued and outstanding at
December 31, 2008 and June 30, 2009, respectively


197


197Additional paid-in capital


141,159


141,755Retained earnings


14,003


21,201Total stockholders' equity


155,359


163,153Total liabilities and stockholders' equity

$
322,063

$
322,333


The accompanying notes are an integral part of these consolidated financial statements.

1

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MYR GROUP INC.        UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands, except share and per share data)

Three months ended
June 30,

Six months ended
June 30,2008

2009

2008

2009Contract revenues

$
147,170

$
162,923

$
283,933

$
295,858Contract costs


127,202


144,146


243,765


260,048Gross profit


19,968


18,777


40,168


35,810Selling, general and administrative expenses


12,236


11,361


24,154


23,335Amortization of intangible assets


84


83


167


167Gain on sale of property and equipment


(337
)

(153
)

(485
)

(210
)Income from operations


7,985


7,486


16,332


12,518Other income (expense)Interest income


239


52


659


174Interest expense


(374
)

(219
)

(916
)

(441
)Other, net


(50
)

(51
)

(107
)

(111
)Income before provision for income taxes


7,800


7,268


15,968


12,140Income tax expense


3,198


2,953


6,547


4,942Net income

$
4,602

$
4,315

$
9,421

$
7,198Income per common share:Basic

$
0.23

$
0.22

$
0.48

$
0.37Diluted

$
0.22

$
0.21

$
0.45

$
0.35Weighted average number of common shares and potential common shares outstanding:Basic


19,712,811


19,727,048


19,712,811


19,719,969Diluted


20,713,241


20,689,524


20,721,074


20,702,087


The
accompanying notes are an integral part of these consolidated financial statements.

2

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MYR GROUP INC.        UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

Three months ended
June 30,

Six months ended
June 30,2008

2009

2008

2009Cash flows from operating activities:Net income

$
4,602

$
4,315

$
9,421

$
7,198Adjustments to reconcile net income to net cash flows provided by (used in) operating activitiesDepreciation


2,512


3,131


5,129


6,296Amortization of intangible assets


84


83


167


167Stock-based compensation expense


229


231


459


462Gain on sale of property and equipment


(337
)

(153
)

(485
)

(210
)Other non-cash items


21


21


42


42Changes in operating assets and liabilitiesAccounts receivable, net


(12,703
)

(1,322
)

8,211


6,894Costs and estimated earnings in excess of billings on uncompleted contracts


(241
)

(4,220
)

2,192


(2,159
)Construction materials inventory


(583
)




(1,023
)

Receivable for insurance claims in excess of deductibles


66


24


343


66Other assets


1,248


1,049


3,957


1,100Accounts payable


4,270


13,953


(6,892
)

8,560Billings in excess of costs and estimated earnings on uncompleted contracts


(674
)

23


(3,370
)

(7,347
)Accrued self insurance


29


1,261


526


786Other liabilities


1,473


(1,230
)

(7,552
)

(5,277
)Net cash flows provided by (used in) operating activities


(4
)

17,166


11,125


16,578Cash flows from investing activities:Proceeds from sale of property and equipment


343


162


1,504


287Purchases of property and equipment


(6,236
)

(7,515
)

(17,182
)

(15,036
)Net cash flows used in investing activities


(5,893
)

(7,353
)

(15,678
)

(14,749
)Cash flows from financing activities:Payments of capital lease obligations





(5
)




(13
)Employee stock option transactions





134





134Equity financing costs


(225
)

(1
)

(1,978
)

(11
)Payment on note payable to FirstEnergy


(2,298
)




(2,298
)

Notes receivable from purchase of common stock








2


Net cash flows provided by (used in) financing activities


(2,523
)

128


(4,274
)

110Net increase (decrease) in cash and cash equivalents


(8,420
)

9,941


(8,827
)

1,939Cash and cash equivalents:Beginning of period


34,140


34,074


34,547


42,076End of period

$
25,720

$
44,015

$
25,720

$
44,015


The
accompanying notes are an integral part of these consolidated financial statements.

3

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MYR GROUP INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (Amounts in thousands, except share and per share data)

1. Organization and Business

MYR Group Inc. (the "Company") consists of the following wholly-owned subsidiaries: The L. E. Myers Co., a Delaware corporation; Hawkeye Construction, Inc., an
Oregon corporation; Harlan Electric Company, a Michigan corporation; Sturgeon Electric Company, Inc., a Michigan corporation; MYR Transmission Services, Inc., a Delaware corporation;
ComTel Technology Inc., a Colorado corporation; MYRpower, Inc., a Delaware corporation and Great Southwestern Construction, Inc., a Colorado corporation.

The
Company performs construction services in two business segments: Transmission and Distribution ("T&D"), and Commercial and Industrial ("C&I"). T&D customers include more than 125
electric utilities, cooperatives and municipalities nationwide. The Company's broad range of services includes design, engineering, procurement, construction, upgrade, maintenance and repair services
with a particular focus on construction, maintenance and repair throughout the continental United States. The Company also provides C&I electrical contracting services to facility owners and general
contractors in the western United States.

2. Basis of Presentation

Interim Consolidated Financial Information

The accompanying consolidated financial statements of the Company have been prepared in accordance with Accounting Principles Board
("APB") No. 28,Interim Financial Reporting, and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the financial statements do not include all the disclosures required by accounting principles generally accepted in the United States of America for
complete financial statements. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In the
opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial position of
the Company as of June 30, 2009, and the results of operations, changes in stockholders' equity and cash flows for the three and six months ended June 30, 2008 and 2009. The results of
operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results for the full year or the results for any future periods. The consolidated balance sheet
as of December 31, 2008 has been derived from the audited financial statements as of that date. It is suggested that these financial statements be read in conjunction with the audited financial
statements and related notes for the year ended December 31, 2008, included in the Company's annual report on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. The most significant estimates are related to the accounts receivable reserve,
estimates to complete on contracts, insurance reserves, tax reserves, recoverability of goodwill and intangibles and estimates surrounding stock-based compensation. Actual results could differ from
these estimates.

4

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

2. Basis of Presentation (Continued)

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141 (Revised 2007), Business Combinations("SFAS
No. 141R"). SFAS No. 141R requires an acquiring entity to recognize all the assets acquired and liabilities
assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141R on January 1, 2009 did not have an impact on
the Company's consolidated financial position, results of operations or cash flows.

In
February 2008, the FASB issued FASB Staff Position No. FAS 157-2,Effective Date of FASB Statement No. 157("FSP FAS 157-2"). FSP FAS 157-2 defers the effective date of SFAS No. 157,Fair Value Measurements("SFAS
No. 157") to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and nonfinancial liabilities. The adoption of FSP
FAS 157-2 on January 1, 2009 did not have an impact on the Company's consolidated financial position, results of operations or cash flows.

In
April 2008, the FASB issued FSP FAS 142-3,Determination of the Useful Life of Intangible Assets. FSP
FAS 142-3 improves the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS No. 141R. FSP FAS 142-3 is effective for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP
FAS 142-3 on January 1, 2009 did not have an impact on the Company's consolidated financial position, results of operations or cash flows.

In
April 2009, the FASB issued FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP FAS 157-4 provides additional guidance for estimating fair value in accordance
with SFAS No. 157 when certain circumstances exist where the volume and level of
activity for an asset or liability have significantly decreased. It also includes guidance on identifying circumstances that would indicate when a transaction is not orderly. FSP
FAS 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. The adoption of FSP FAS 157-4 did not have an impact on the
Company's consolidated financial position, results of operations or cash flows.

Also
in April 2009, the FASB issued FSP FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments("FSP FAS 107-1"). FSP FAS 107-1 extends the disclosure requirements of FAS 107,Disclosures
about Fair Value of Financial Instruments, to interim financial statements of publicly traded companies as defined by APB Opinion No. 28,Interim
Financial Reporting. FSP FAS 107-1 is effective for interim periods ending after June 15, 2009. Although the adoption of FSP
FAS 107-1 did not have an impact on the Company's consolidated financial position, results of operations or cash flows, there were impacts to the Company's financial statement
disclosures.

In
May 2009, the FASB issued SFAS 165,Subsequent Events. SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are issued. It requires the disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date. SFAS 165 is effective for fiscal years and interim periods ending after June 15, 2009. Although, the adoption of SFAS 165 did not have an impact on
the Company's consolidated financial position, results of operations or cash flows, there were impacts to the Company's financial statement disclosures.

5

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

2. Basis of Presentation (Continued)

In
June 2009, the FASB issued SFAS 166,Accounting for Transfers of Financial Assetsan amendment of FASB Statement
No. 140. SFAS 166 is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in
its financial reports about a transfer of financial assets, as well as a transferor's continuing involvement, if any, in the transferred financial assets. SFAS 166 is effective for fiscal years
and interim periods beginning after November 15, 2009. The adoption of SFAS 166 is not expected to have a material impact on the Company's consolidated financial position, results of
operations or cash flows.

3. Fair Value Measurements

SFAS No. 157 defines fair value, establishes methods used to measure fair value and expands disclosure requirements about fair value measurements. SFAS No. 157 establishes
a three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers
include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to
develop its own assumptions.

As
of June 30, 2009, the carrying value of cash and cash equivalents, accounts receivable and payable, accrued liabilities, and certain other financial assets and liabilities
approximates fair value due to the short maturities of these instruments.

As
of June 30, 2009, the Company held certain cash and cash equivalents that are required to be measured at fair value on a recurring basis subject to the disclosure requirements
of SFAS No. 157. These items include money market funds held in deposit at a national bank and short-term certificates of deposits held on account under the Certificate of Deposit
Account Registry Services (CDARS) program. These items had a combined carrying value of $44,015, which was equal to the fair value at June 30, 2009 based upon Level 1 inputs.

The
carrying amount reported in the consolidated balance sheet as of June 30, 2009 for long term debt is $30,000. Using a discounted cash flow technique that incorporates a market
interest rate adjusted for risk profile based upon Level 3 inputs, the Company has determined the fair value of its debt to be $29,483 as of June 30, 2009.

6

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Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

4. Supplemental Cash Flows

Supplemental disclosures of cash flow information for the three and six months ended June 30, 2008 and 2009 are as follows:

Three months ended
June 30,

Six months ended
June 30,2008

2009

2008

2009Cash paid during the period for:Income taxes

$
2,316

$
4,649

$
2,351

$
4,942Interest expense


401


196


927


399Noncash investing activities:Acquisition of property and equipment for which
payment is pending


1,022


23


1,022


23Acquisition of property and equipment under
capital lease obligations











45


As
of December 31, 2008, the Company had purchased $4,290 of property and equipment for which payment was pending, all of which was paid during the six months ended
June 30, 2009. As of June 30, 2009, the Company recorded the acquisition of additional property and equipment of approximately $23 for which payment was pending.

5. Contracts in Process

The net asset (liability) position for contracts in process consisted of the following at December 31, 2008 and June 30, 2009:

2008

2009Cost incurred on uncompleted contracts

$
941,714

$
805,592Estimated earnings


121,407


94,3611,063,121


899,953Less: Billings to date


1,069,998


897,324$
(6,877
)
$
2,629


The
net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets at December 31, 2008 and June 30, 2009 as follows:

2008

2009Cost and estimated earnings in excess of billings on uncompleted contracts

$
25,821

$
27,980Billings in excess of costs and estimated earnings on uncompleted contracts


(32,698
)

(25,351
)$
(6,877
)
$
2,629


7

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Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

6. Income Taxes

The difference between the U.S. federal statutory tax rate of 35% and the Company's effective tax rates for the three and six months ended June 30, 2008 and 2009 is principally
due to state income taxes.

The
Company had approximately $823 and $870 of total unrecognized tax benefits as of December 31, 2008 and June 30, 2009, respectively, which is included in other
liabilities in the accompanying consolidated balance sheets. For the six months ended June 30, 2009, the Company recorded an additional $47 in unrecognized tax benefits related to the net
activity of current and prior year positions. The Company anticipates that the total unrecognized tax benefits will be reduced by
approximately $350 within the next three months due to lapse in the statute of limitations. Additionally, the Company's policy is to recognize interest and penalties related to income tax liabilities
as a component of income tax expense in the consolidated statements of operations.

The
Company is subject to taxation in various jurisdictions. The Company continues to remain subject to examination by U.S. federal authorities for the years 2005 through 2008 and for
various state authorities for the years 2004 through 2008.

7. Commitments and Contingencies

Letters of Credit

At both December 31, 2008 and June 30, 2009 the Company had one outstanding irrevocable standby letter of credit in the
amount of $15,000 related to the Company's payment obligation under its insurance programs.

Leases

The Company leases real estate and construction and certain office equipment under operating leases with terms ranging from one to five
years. Future minimum lease payments for these operating leases subsequent to June 30, 2009 are $5,710 for the remainder of 2009, $7,812 for 2010, $4,822 for 2011, $2,600 for 2012, and $705 for
2013.

The
Company has guaranteed the residual value of the underlying assets under certain equipment operating leases at the date of termination of such leases. The Company has agreed to pay
any differences between this residual value and the fair market value of each underlying asset as of the lease termination date. As of June 30, 2009, the maximum guaranteed residual value was
approximately $1,859. The Company does not believe that significant payments will be made as a result of the difference between the fair market value of the leased equipment and the guaranteed
residual value. However, there can be no assurance that future payments will not be required.

Surety Bonds

In certain circumstances, the Company is required to provide performance bonds in connection with its future performance on contractual
commitments. The Company has indemnified its sureties for any expenses paid out under these performance bonds. As of June 30, 2009, the total amount of outstanding performance bonds was
approximately $413,351 and the estimated cost to complete these bonded projects was approximately $150,142.

8

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Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

7. Commitments and Contingencies (Continued)

Litigation and Other Legal Matters

The Company is from time to time party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of
business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or
injunctive or declaratory relief. With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable that a liability has been incurred and the amount of loss
can be reasonably estimated. The Company does not believe that any of these proceedings, separately or in the aggregate, will have a material adverse effect on the Company's financial position,
results of operations or cash flows.

The
Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations, arising in the ordinary course of our present business as well as in
respect of our divested businesses. Some of these include claims related to our current services and operations, and asbestos-related claims concerning historic operations of a predecessor affiliate.
The Company believes
that it has strong defenses to these claims as well as adequate insurance coverage in the event any asbestos-related claim is not resolved in our favor. These claims have not had a material impact on
us to date and the Company believes that the likelihood that a future material adverse outcome will result from these claims is remote. However, if facts and circumstances change in the future, the
Company cannot be certain that an adverse outcome of one or more of these claims would not have a material adverse effect on our financial condition, results of operations, or cash flows.

Liability Settlement

In June 2008, the Company settled an outstanding liability with its former parent, FirstEnergy for $2,498. This liability related to
the sale of a subsidiary, whereby the Company owed FirstEnergy for the amounts collected on a note receivable from the purchaser. As part of the final settlement agreement, FirstEnergy agreed to give
the Company a $200 credit for reimbursement of certain administrative costs surrounding the sale of the subsidiary and the subsequent monitoring of certain provisions. In June 2008, the Company paid
FirstEnergy a net amount of $2,298, of which the credit of $200 and the remaining amount of the liability of $3 were recorded as reductions to selling, general and administrative expenses in the
accompanying consolidated statement of operations.

8. Stock Option Plans

In November 2007, the Board of Directors approved the 2007 Long-Term Incentive Plan (the "LTIP") for the Company. Upon the adoption of the LTIP, the Company no longer grants
awards under the 2006 Stock Option Plan. The LTIP provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not
qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) performance awards, (f) phantom stock, (g) stock bonuses,
(h) dividend equivalents, or (i) any combination of such awards. The LTIP permits the granting of up to 2,000,000 shares of common stock to directors, officers and employees of the
Company.

The
Company did not grant any awards under the LTIP during the six months ended June 30, 2009. Based upon a weighted-average grant date fair value of approximately $6.87 per
share, excluding the impact of expected forfeitures, the Company recognized stock compensation expense related to all stock options granted under the LTIP of approximately $459 and $462 for the six
months ended

9

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Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

8. Stock Option Plans (Continued)

June 30,
2008 and 2009, respectively, which is included in selling, general and administrative expenses in the consolidated statements of operations.

As
of June 30, 2009, there was approximately $2,290 of total unrecognized compensation cost related to stock options granted under the LTIP. This cost is expected to be recognized
over a weighted average vesting period of 2.49 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures.

A
summary of the activity relating to the outstanding options of the Company under the various stock option plans for the six months ended June 30, 2009 is as follows:

Number of
Options

Weighted-
Average Exercise
Price

Weighted-
Average
Remaining
Contractual
Term

Aggregate
Intrinsic ValueOptions outstanding, December 31, 2008


1,913,442

$
6.30Options granted





Options exercised


(35,380
)

3.79Options forfeited


(1,500
)

13.00Options outstanding, June 30, 2009


1,876,562

$
6.34

7.4 years

$
26,039Exercisable at June 30, 2009


1,465,062

$
4.51

7.1 years

$
23,020


The
aggregate intrinsic value above represents the total pre-tax intrinsic value that would have been received by the holders of the stock options had all of the options been
exercised as of that date. The stock price used to calculate the pre-tax intrinsic value was $20.22, which was the last trading price of the quarter ended June 30, 2009.

9. Segment Information

The following table presents contract revenues and operating income for the Company's segments for the three and six months ended June 30, 2008 and 2009:

Three months ended
June 30,

Six months ended
June 30,2008

2009

2008

2009Contract revenues:T&D

$
105,961

$
124,873

$
204,533

$
224,550C&I


41,209


38,050


79,400


71,308$
147,170

$
162,923

$
283,933

$
295,858Operating income (loss):T&D

$
9,788

$
8,881

$
19,957

$
16,259C&I


3,922


3,600


7,274


6,282General Corporate


(5,725
)

(4,995
)

(10,899
)

(10,023
)$
7,985

$
7,486

$
16,332

$
12,518


10

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Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

10. Earnings Per Share

The Company calculates net income per common share in accordance with SFAS No. 128,Earnings per Share. Basic earnings per share is
calculated by dividing net income by the weighted average number of shares outstanding for the reporting period. Diluted earnings per share is computed similarly, except that it reflects the potential
dilutive impact that would occur if dilutive securities were exercised into common shares. Potential common shares of 540,000 and 536,000, with a weighted average exercise price of $13.00, for the
three and six months ended June 30, 2008 and 2009, respectively, are not included in the denominator of the diluted earnings per share calculation as the inclusion of such shares would be
anti-dilutive.

The
weighted average number of common shares used to compute basic and diluted net income per share for the three and six months ended June 30, 2008 and 2009 were as follows:

Three months ended
June 30,

Six months ended
June 30,2008

2009

2008

2009Weighted average basic common shares
outstanding


19,712,811


19,727,048


19,712,811


19,719,969Assumed exercise of stock options


1,000,430


962,476


1,008,263


982,118Weighted average diluted common shares outstanding


20,713,241


20,689,524


20,721,074


20,702,087


11. Subsequent Events

Under the guidance of SFAS 165, the Company's management has evaluated subsequent event activity through August 10, 2009, the date that these financial statements were
issued to the Securities and Exchange Commission in accordance with the Exchange Act. As a result of the evaluation, it was determined that no material subsequent events have occurred that would
require additional adjustments or disclosures to the accompanying financial statements of the Company.

11

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Table of Contents

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with the accompanying consolidated financial statements
as of December 31, 2008 and June 30, 2009 and for the three and six months ended June 30, 2008 and 2009 and with our annual report on Form 10-K for the year
ended December 31, 2008 (the "2008 Annual Report"). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions
that could cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed herein under the captions labeled "Cautionary Statement
Concerning Forward-Looking Statements and Information" and "Risk Factors," as well as in the 2008 Annual Report. We assume no obligation to update any of these forward-looking
statements.

Overview

We are a leading specialty contractor serving the electrical infrastructure market in the United States. We are one of the largest
national contractors servicing the T&D sector of the United States electric utility industry. Our T&D customers include more than 125 electric utilities, cooperatives and municipalities nationwide.
Our broad range of services includes design, engineering, procurement, construction, upgrade, maintenance and repair services with a particular focus on construction, maintenance and repair throughout
the continental United States. We also provide C&I electrical contracting services to facility owners and general contractors in the western United States.

We
had consolidated revenues for the six months ended June 30, 2009 of $295.9 million, of which 75.9% was attributable to our T&D customers and 24.1% was attributable to
our C&I customers. For the six months ended June 30, 2009, our net income and EBITDA(1) were $7.2 million and $18.9 million, respectively, compared to $9.4 million and
$21.5 million for the six months ended June 30, 2008.

---

However,
using EBITDA as a performance measure has material limitations as compared to net income, or other financial measures as defined under U.S. GAAP as it excludes certain recurring items
which may be meaningful to investors. EBITDA excludes interest expense or interest income; however, as we have borrowed money in order to finance transactions and operations, or invested available
cash to generate interest income, interest expense and interest income are elements of our cost structure and ability to generate revenue and returns for our stockholders. Further, EBITDA excludes
depreciation and amortization; however, as we use capital and intangible assets to generate revenues, depreciation and amortization are a necessary element of our costs and ability to generate
revenue. Finally, EBITDA excludes income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. As a result of these exclusions from
EBITDA, any measure that excludes interest expense, interest income, depreciation and amortization and income taxes has material limitations as compared to net income. When using EBITDA as a
performance measure, management compensates for these limitations by comparing EBITDA to net income in each period, so as to allow for the comparison of the performance of the underlying core
operations with the overall performance of the company on a full-cost, after tax basis. Using
both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors, and (b) ultimately monitor our
capacity to generate returns for our stockholders.

12

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Table of Contents



For the three months ended
June 30,

For the six months ended
June 30,(dollars in thousands)

2008

2009

2008

2009Reconciliation of Net Income to EBITDA:Net Income

$
4,602

$
4,315

$
9,421

$
7,198Add/(subtract):Interest expense (income), net


135


167


257


267Provision for income taxes


3,198


2,953


6,547


4,942Depreciation & amortization


2,596


3,214


5,296


6,463EBITDA

$
10,531

$
10,649

$
21,521

$
18,870


We
also use EBITDA as a liquidity measure. We believe this financial measure is important in analyzing our liquidity because it is a key component of certain material covenants contained within our
syndicated credit facility (the "Credit Agreement"). Non-compliance with these financial covenants under the Credit Agreementour interest coverage ratio and our leverage
ratiocould result in our lenders requiring us to immediately repay all amounts borrowed. If we anticipated a potential covenant violation, we would seek relief from our lenders, likely
causing us to incur additional cost, and such relief might not be available, or if available, might not be on terms as favorable as those in the Credit Agreement. In addition, if we cannot satisfy
these financial covenants, we would be prohibited under the Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring or
disposing of assets. Based on the information above, management believes that the presentation of EBITDA as a liquidity measure is useful to investors and relevant to their assessment of our capacity
to service, or incur, debt.

The
following table provides a reconciliation of EBITDA to net cash flows provided by (used in) operating activities:

For the three months ended
June 30,

For the six months ended
June 30,(dollars in thousands)

2008

2009

2008

2009Reconciliation of EBITDA to Net Cash Flows Provided By (Used In) Operating Activities:EBITDA

$
10,531

$
10,649

$
21,521

$
18,870Add/(subtract):Interest income (expense), net


(135
)

(167
)

(257
)

(267
)Provision for income taxes


(3,198
)

(2,953
)

(6,547
)

(4,942
)Depreciation & amortization


(2,596
)

(3,214
)

(5,296
)

(6,463
)Adjustments to reconcile net income to net cash flows provided by (used in) operating activities


2,509


3,313


5,312


6,757Changes in operating assets and liabilities


(7,115
)

9,538


(3,608
)

2,623Net cash flows provided by (used in) operating activities

$
(4
)
$
17,166

$
11,125

$
16,578


Our historical growth has been driven primarily by successful bids for, and execution of, several large projects, our ability to continue to
capitalize on increased infrastructure spending in our markets and the breadth of our customer base. We believe our centralized fleet and skilled workforce provide us with a competitive advantage as
increased spending in the transmission infrastructure market has resulted in an increased demand for a limited supply of specialized equipment and labor. We expect to continue to grow our business
organically, as well as selectively consider strategic acquisitions that may improve our competitive position within our existing markets, expand our geographic footprint or strengthen our fleet.

Long-Term Incentive Plan

Total stock compensation expense related to option grants under our 2007 Long-Term Incentive Plan (the "LTIP") was
approximately $459,000 and $462,000 for the six months ended June 30, 2008 and 2009, respectively, based upon a weighted-average grant date fair value of approximately $6.87 per share,
excluding the impact of expected forfeitures.

13

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Table of Contents

As
of June 30, 2009, there was approximately $2.3 million of total unrecognized compensation cost related to stock options granted under the LTIP. This cost is expected to
be recognized over a weighted average vesting period of 2.49 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures.

Backlog

As of June 30, 2009, our backlog was approximately $316.6 million, consisting of $232.1 million and
$84.5 million in our T&D and C&I segments, respectively. As of June 30, 2008, our backlog was approximately $240.5 million, consisting of $155.0 million and
$85.5 million in our T&D and C&I segments, respectively. Changes in backlog from period to period are primarily the result of normal fluctuations in contracts and projects.

We
refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, minus the revenue we have recognized under such
contracts, as "backlog." We calculate backlog differently for different types of contracts. For our fixed-price contracts, we include the full remaining portion of the contract in our calculation of
backlog. For our unit-price, time-and-equipment, time-and-materials and cost-plus contracts, our projected revenue for a
three-month period is included in the calculation of backlog, regardless of the duration of the contract, which typically exceeds such three-month period. These types of contracts are generally
awarded as part of master service agreements ("MSAs") which typically have a one- to three-year duration from execution. Given the duration of our contracts and MSAs and our
method of calculating backlog, our backlog at any point in time may not accurately represent the revenue that we expect to realize during any period and our backlog as of the end of a fiscal year may
not be indicative of the revenue we expect to earn in the following fiscal year and should not be viewed or relied upon as a stand-alone indicator.

Certain
of the projects that we undertake are not completed in one accounting period. Revenue on construction contracts is recorded on the
percentage-of-completion accounting method determined by the ratio of cost incurred to date on the contracts (excluding uninstalled direct materials) to management's estimates
of total contract costs. Projected losses are provided for in their entirety when identified. There can be no assurance as to our customers' requirements or that our estimates of existing and future
needs under MSAs, or the values of our cost or time-dependent contracts, are accurate and, therefore, our backlog may not be reflected in our actual revenues.

Project Bonding Requirements

Approximately 37.6% and 19.8% of our business by revenue for the six months ended June 30, 2009 and 2008, respectively, required
surety bonds or other means of financial assurance to secure contractual performance. If we fail to perform or pay subcontractors and vendors, the customer may demand that the surety provide services
or make payments under the bond. We must reimburse the surety for any expenses or outlays it incurs. To date, we have not been required to make any reimbursements to our surety for claims against the
bonds. As of June 30, 2009, the total amount of bonded backlog was approximately $166.0 million, which represented approximately 52.7% of our backlog.

14

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Table of Contents

Consolidated Results of Operations

The following table sets forth selected statements of operations data and such data as a percentage of revenues for the period
indicated (dollars in thousands):

For the three months ended
June 30,

For the six months ended
June 30,2008

2009

2008

2009Amount

Percent

Amount

Percent

Amount

Percent

Amount

PercentContract revenues

$
147,170


100.0
%
$
162,923


100.0
%
$
283,933


100.0
%
$
295,858


100.0
%Contract costs


127,202


86.4


144,146


88.5


243,765


85.9


260,048


87.9Gross profit


19,968


13.6


18,777


11.5


40,168


14.1


35,810


12.1Selling, general and administrative expenses


12,236


8.3


11,361


7.0


24,154


8.5


23,335


7.9Amortization of intangible assets


84


0.1


83


0.1


167


0.1


167


0.1Gain on sale of property and equipment


(337
)

(0.2
)

(153
)

(0.1
)

(485
)

(0.2
)

(210
)

(0.1
)Income from operations


7,985


5.4


7,486


4.5


16,332


5.7


12,518


4.2Other income (expense)Interest income


239


0.2


52





659


0.2


174


0.1Interest expense


(374
)

(0.3
)

(219
)

(0.1
)

(916
)

(0.3
)

(441
)

(0.1
)Other, net


(50
)




(51
)




(107
)




(111
)

(0.1
)Income before provision for income taxes


7,800


5.3


7,268


4.4


15,968


5.6


12,140


4.1Income tax expense


3,198


2.2


2,953


1.8


6,547


2.3


4,942


1.7Net income

$
4,602


3.1
%
$
4,315


2.6
%
$
9,421


3.3
%
$
7,198


2.4
%


Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2009

Revenues.Revenues increased approximately $15.8 million, or 10.7%, from $147.2 million for the three months ended
June 30, 2008
to $162.9 million for the three months ended June 30, 2009. The increase in revenues was mostly due to increased activity in a few large T&D projects (contracts with values greater than
$10.0 million). This increase was offset by the reduction of revenues from smaller T&D projects (less than $3.0 million in contract value) that were in production during the second
quarter of 2009 as compared to 2008, as well as an overall reduction in revenues in the C&I segment. The reduction of revenues in the C&I segment was due to the current economic environment which has
caused an overall reduction in spending and an increase in bidding competition.

Gross Profit.Gross profit decreased $1.2 million, or 6.0%, from $20.0 million for the three months ended June 30, 2008
to
$18.8 million for the three months ended June 30, 2009. As a percentage of overall revenues, gross margin decreased from 13.6% for the three months ended June 30, 2008 to 11.5%
for the three months ended June 30, 2009. The higher gross profit during the three months ended June 30, 2008 versus the same period in 2009 was mainly attributable to strong performance
and increased margins on a few large contracts that resulted in approximately $2.1 million in incremental gross profit during the three months ended June 30, 2008. These large projects
in 2008 were not replaced by projects with similar margins in the second quarter of 2009. Additionally, we

15

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Table of Contents

experienced
an increase in the estimated costs to complete certain T&D contracts that resulted in a reduction to gross margin of approximately $1.3 million for the three months ended
June 30, 2009.

Selling, General and Administrative Expenses.Selling, general and administrative expenses decreased approximately $0.9 million,
or 7.2%, from
$12.2 million for the three months ended June 30, 2008 to $11.4 million for the three months ended June 30, 2009. The decrease related primarily to a decrease in profit
sharing and other incentive compensation accruals offset by annual salary increases and other incremental employee benefit costs. As a percentage of revenues, these expenses decreased from 8.3% for
the three months ended June 30, 2008 to 7.0% for the three months ended June 30, 2009.

Gain on Sale of Property and Equipment.Gains from the sale of property and equipment decreased from $0.3 million for the three
months ended
June 30, 2008 to $0.2 million for the three months ended June 30, 2009. The overall gains from the sale of property and equipment are due to the timing of the routine sale of such
items, as we regularly dispose of property and equipment that are no longer useful or valuable to our ongoing operations.

Interest Income.Interest income decreased from $0.2 million for the three months ended June 30, 2008 to $0.1 million for
the
three months ended June 30, 2009 due to the overall decrease in interest rates earned on our cash balance.

Interest Expense.Interest expense decreased from $0.4 million for the three months ended June 30, 2008 to $0.2 million
for the
three months ended June 30, 2009 due to the overall decrease in the interest rates applied to our outstanding borrowings.

Provision for Income Taxes.The provision for income taxes was $3.2 million for the three months ended June 30, 2008, with an
effective
tax rate of 41.0% compared to $3.0 million for the three months ended June 30, 2009, with an effective tax rate of 40.6%.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment in thousands of dollars, segment
net sales as percentage of total net sales and segment operating income as a percentage of segment net sales.

Three months ended June 30,2008

2009(dollars in thousands)

Amount

Percent

Amount

PercentContract revenues:Transmission & Distribution

$
105,961


72.0
%
$
124,873


76.6
%Commercial & Industrial


41,209


28.0


38,050


23.4Total

$
147,170


100.0

$
162,923


100.0Operating income (loss):Transmission & Distribution

$
9,788


9.2

$
8,881


7.1Commercial & Industrial


3,922


9.5


3,600


9.5Total


13,710


9.3


12,481


7.7Corporate


(5,725
)

(3.9
)

(4,995
)

(3.1
)Consolidated

$
7,985


5.4
%
$
7,486


4.6
%


16

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Table of Contents

Transmission & Distribution

Revenues for our T&D segment for the three months ended June 30, 2008 were $106.0 million compared to
$124.9 million for the three months ended June 30, 2009, an increase of $18.9 million or 17.8%. The increase in the revenues was the result of a significant increase in revenues
from a few large transmission projects (contracts with values greater than $10.0 million) partially offset by a reduction in revenues from smaller distribution projects (less than
$3.0 million in contract value) that were in production during the second quarter of 2009 as compared to 2008.

Operating
income for our T&D segment for the three months ended June 30, 2008 was $9.8 million compared to $8.9 million for the three months ended June 30,
2009, a decrease of $0.9 million or 9.3%. As a percentage of revenues, operating income decreased from 9.2% for the three months ended June 30, 2008 to 7.1% for the three months ended
June 30, 2009. The higher operating income in the T&D segment during the three months ended June 30, 2008 versus the same period in 2009 was mainly attributable to strong performance and
increased margins on a few large contracts that resulted in approximately $1.1 million in incremental gross profit during the three months ended June 30, 2008. These large projects in
2008 have not been replaced by projects with similar margins in the second quarter of 2009. Additionally, we experienced an increase in our estimated costs to complete certain contracts that resulted
in a reduction to gross margin of approximately $1.3 million for the three months ended June 30, 2009.

Commercial & Industrial

Revenues for our C&I segment for the three months ended June 30, 2008 were $41.2 million compared to $38.0 million
for the three months ended June 30, 2009, a decrease of $3.2 million or 7.7%. The decrease in revenues was due mainly to the current economic environment which has caused an overall
reduction in spending and an increase in bidding competition.

Operating
income for our C&I segment for the three months ended June 30, 2008 was $3.9 million compared to $3.6 million for the three months ended June 30,
2009, a decrease of $0.3 million or 8.2%. As a percentage of revenues, operating income remained constant at 9.5% for the three months ended June 30, 2008 and 2009. The operating income
in the C&I segment benefited from strong performance and increased margins on a few large contracts that resulted in approximately $1.0 million in incremental gross profit during both the three
months ended June 30, 2008 and 2009.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2009

Revenues.Revenues increased approximately $11.9 million, or 4.2%, from $283.9 million for the six months ended June 30,
2008 to
$295.9 million for the six months ended June 30, 2009. The increase in revenues was mostly due to increased activity in a few large T&D projects (contracts with values greater than
$10.0 million). This increase was offset by the reduction of revenues from smaller T&D projects (less than $3.0 million in contract value) that were in production during the first half
of 2009 as compared to 2008, as well as an overall reduction in revenues in the C&I segment. The reduction of revenues in the C&I segment was due to the current economic environment which has caused
an overall reduction in spending and an increase in bidding competition.

Gross Profit.Gross profit decreased $4.4 million, or 10.8%, from $40.2 million for the six months ended June 30, 2008
to
$35.8 million for the six months ended June 30, 2009. As a percentage of overall revenues, gross margin decreased from 14.1% for the six months ended June 30, 2008 to 12.1% for
the six months ended June 30, 2009. The higher gross profit during the six months ended June 30, 2008 versus the same period in 2009 was mainly attributable to strong performance and
increased margins on a few large contracts that resulted in approximately $4.2 million in incremental gross profit during the six months ended June 30, 2008. These large projects in 2008
were not replaced by projects with similar margins in the first half of 2009. Additionally, we experienced an increase in the estimated

17

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Table of Contents

costs
to complete certain T&D contracts that resulted in a reduction to gross margin of approximately $2.3 million for the six months ended June 30, 2009.

Selling, General and Administrative Expenses.Selling, general and administrative expenses decreased approximately $0.8 million,
or 3.4%, from
$24.2 million for the six months ended June 30, 2008 to $23.3 million for the six months ended June 30, 2009. The decrease related primarily to a decrease in profit sharing
and other incentive compensation accruals offset by annual salary increases and other incremental employee benefit costs. As a percentage of revenues, these expenses decreased from 8.5% for the six
months ended June 30, 2008 to 7.9% for the six months ended June 30, 2009.

Gain on Sale of Property and Equipment.Gains from the sale of property and equipment decreased from $0.5 million for the six
months ended
June 30, 2008 to $0.2 million for the six months ended June 30, 2009. The overall gains from the sale of property and equipment are due to the timing of the routine sale of such
items, as we regularly dispose of property and equipment that are no longer useful or valuable to our ongoing operations.

Interest Income.Interest income decreased from $0.7 million for the six months ended June 30, 2008 to $0.2 million for
the six
months ended June 30, 2009 due to the overall decrease in interest rates earned on our cash balance.

Interest Expense.Interest expense decreased from $0.9 million for the six months ended June 30, 2008 to $0.4 million
for the
six months ended June 30, 2009 due to the overall decrease in the interest rates applied to our outstanding borrowings.

Provision for Income Taxes.The provision for income taxes was $6.5 million for the six months ended June 30, 2008, with an
effective
tax rate of 41.0% compared to $4.9 million for the six months ended June 30, 2009, with an effective tax rate of 40.7%.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment in thousands of dollars, segment
net sales as percentage of total net sales and segment operating income as a percentage of segment net sales.

Six months ended June 30,2008

2009(dollars in thousands)

Amount

Percent

Amount

PercentContract revenues:Transmission & Distribution

$
204,533


72.0
%
$
224,550


75.9
%Commercial & Industrial


79,400


28.0


71,308


24.1Total

$
283,933


100.0

$
295,858


100.0Operating income (loss):Transmission & Distribution

$
19,957


9.8

$
16,259


7.2Commercial & Industrial


7,274


9.2


6,282


8.8Total


27,231


9.6


22,541


7.6Corporate


(10,899
)

(3.8
)

(10,023
)

(3.4
)Consolidated

$
16,332


5.8
%
$
12,518


4.2
%


Transmission & Distribution

Revenues for our T&D segment for the six months ended June 30, 2008 were $204.5 million compared to $224.6 million
for the six months ended June 30, 2009, an increase of approximately

18

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$20.0 million
or 9.8%. The increase in the revenues was the result of a significant increase in revenues from a few large transmission projects (contracts with values greater than
$10.0 million) partially offset by a reduction in revenues from smaller distribution projects (less than $3.0 million in contract value) that were in production during the first half of
2009 as compared to 2008. Revenues from transmission projects increased from 63.3% of T&D segment revenue for the six months ended June 30, 2008 to 75.4% of T&D segment revenue for the six
months ended June 30, 2009. Additionally, we provided 44.6% and 32.7% of our T&D services under fixed price contracts for the six months ended June 30, 2008 and 2009, respectively.

Operating
income for our T&D segment for the six months ended June 30, 2008 was $20.0 million compared to $16.3 million for the six months ended June 30,
2009, a decrease of $3.7 million or 18.5%. As a percentage of revenues, operating income decreased from 9.8% for the six months ended June 30, 2008 to 7.2% for the six months ended
June 30, 2009. The higher operating income in the T&D segment during the six months ended June 30, 2008 versus the same period in 2009 was mainly attributable to strong performance and
increased margins on a few large contracts that resulted in approximately $2.5 million in incremental gross profit during the six months ended June 30, 2008. These large projects in 2008
have not been replaced by projects with similar margins in the first half of 2009. Additionally, we experienced an increase in our estimated costs to complete certain contracts that resulted in a
reduction to gross margin of approximately $2.3 million for the six months ended June 30, 2009.

Commercial & Industrial

Revenues for our C&I segment for the six months ended June 30, 2008 were $79.4 million compared to $71.3 million
for the six months ended June 30, 2009, a decrease of $8.1 million or 10.2%. The decrease in revenues was due mainly to the current economic environment which has caused an overall
reduction in spending and an increase in bidding competition. Additionally, we provided 49.9% and 44.3% of our C&I services under fixed price contracts for the six months ended June 30, 2008
and 2009, respectively.

Operating
income for our C&I segment for the six months ended June 30, 2008 was $7.3 million compared to $6.3 million for the six months ended June 30, 2009,
a decrease of $1.0 million or 13.6%. As a percentage of revenues, operating income decreased from 9.2% for the six months ended June 30, 2008 to 8.8% for the six months ended
June 30, 2009. The operating income in the C&I segment benefited from strong performance and increased margins on a few large contracts that resulted in approximately $1.7 million and
$1.3 million in incremental gross profit during the six months ended June 30, 2008 and 2009, respectively.

Liquidity and Capital Resources

Cash Requirements

Our cash and cash equivalents on hand totaled $44.0 million as of June 30, 2009. We anticipate that our cash and cash
equivalents on hand, our $60.0 million borrowing availability under the Credit Agreement, and our future cash flow from operations will provide sufficient cash to enable us to meet our future
operating needs, debt service requirements, planned capital expenditures and to facilitate our future ability to grow. Although we believe that we have adequate cash and availability under our credit
facility to meet these needs, our anticipated participation in certain significant large-scale initiatives to rebuild the United States electric power grid may require additional working capital,
depending upon the size and duration of the project and the financial terms of the underlying agreement.

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Sources and Uses of Cash

As of June 30, 2009, we had cash and cash equivalents of $44.0 million, positive working capital of $66.0 million,
and long-term liabilities in the amount of $43.4 million, which consisted of the long-term portion of our term loan facility, deferred taxes and deferred compensation
obligations. We also had a $15.0 million letter of credit outstanding under the Credit Agreement. During the six months ended June 30, 2009, operating activities associated with our T&D
and C&I segments resulted in net cash flows provided by operations of $16.6 million compared to net cash flows provided by operations of $11.1 million for the six months ended
June 30, 2008. Cash flow from operations is primarily influenced by demand for our services, operating margins and the type of services we provide our customers. During the six months ended
June 30, 2009, we used net cash in investing activities of $14.7 million, including $15.0 million used for capital expenditures, offset by $0.3 million of proceeds from the
sale of property and equipment.

Debt Instruments

On August 31, 2007, we entered into an agreement for a $125.0 million senior secured credit facility which provides for a
$75.0 million revolving credit line (which may be increased or decreased in accordance with the terms of the related credit agreement) and a $50.0 million term loan facility. At our
option, borrowings under the Credit Agreement bear interest at either (1) the greater of a prime rate or the Federal funds rate plus a spread based upon our leverage ratio or (2) an
adjusted London Interbank Offered Rate ("LIBOR") plus a spread based upon our leverage ratio. There were $30.0 million of borrowings outstanding currently accruing interest at 1.3125% (which is
equal to an adjusted one-month LIBOR plus a spread of 1.0%) at June 30, 2009. As of June 30, 2009, we had a $15.0 million letter of credit outstanding, which reduced
our borrowing capacity under the revolving credit line. The Credit Agreement expires on August 31, 2012. We had $60.0 million available under the Credit Agreement as of June 30,
2009.

The
terms of the Credit Agreement require, among other things, that we adhere to a maximum leverage ratio and maintain a minimum EBITDA-based interest coverage ratio, both of which are
defined under the Credit Agreement and determined on a rolling four consecutive quarter basis. The EBITDA-based interest coverage ratio covenant requires us to have a ratio of EBITDA to interest
expense of not less than 3.0 to 1.0. We are also required to have a leverage ratio of no more than 3.0 to 1.0. As of June 30, 2009, our interest coverage ratio was in excess of 39.0 to 1.0 and
our leverage
ratio was less than 1.0 to 1.0, both within the required covenant levels permitted under the Credit Agreement.

The
Credit Agreement also includes other specific limits or restrictions on additional indebtedness, liens and capital expenditure activity. Our obligations under the Credit Agreement
are secured by a lien on all of our property (including the capital stock of our subsidiaries) other than any property subject to a certificate of title, subject to a lease or similar interest and our
real property and fixtures. As of June 30, 2009, we were in compliance with all applicable debt covenants.

Off-Balance Sheet Transactions

As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of
business that result in risks not directly reflected in our balance sheets. Our significant off-balance sheet transactions include liabilities associated with non-cancelable
operating leases, letter of credit obligations and surety guarantees entered into in the normal course of business. We have not engaged in any off-balance sheet financing arrangements
through special purpose entities.

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Leases

We enter into non-cancelable operating leases for many of our facility, vehicle and equipment needs. These leases allow us
to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. We may decide to cancel or terminate a lease before the end of its
term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease.

We
have guaranteed the residual value of the underlying assets under certain of our equipment operating leases at the date of termination of such leases. We have agreed to pay any
difference between this residual value and the fair market value of each underlying asset as of the lease termination date. As of June 30, 2009, the maximum guaranteed residual value was
approximately $1.9 million. We believe that no significant payments will be made as a result of the difference between
the fair market value of the leased equipment and the guaranteed residual value. However, there can be no assurance that future significant payments will not be required.

We
typically have purchase options on the equipment underlying our long term operating leases and many of our short term rental arrangements. We continue to exercise many of these
purchase options as the need for equipment is on-going.

Letters of Credit

Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to
beneficiaries under our insurance programs. In addition, from time-to-time some customers require us to post letters of credit to ensure payment to our subcontractors and
vendors under those contracts and to guarantee performance under our contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit commits the
issuer to pay specified amounts to the holder of the letter of credit if the holder claims that we have failed to perform specified actions in accordance with the terms of the letter of credit. If
this were to occur, we would be required to reimburse the issuer of the letter of credit. Depending on the circumstances of such a reimbursement, we may also have to record a charge to earnings for
the reimbursement. We do not believe that it is likely that any claims will be made under any letter of credit in the foreseeable future.

As
of June 30, 2009, we had a $15.0 million letter of credit outstanding under the Credit Agreement primarily to secure obligations under our casualty insurance program.
This irrevocable stand-by letter of credit has a current maturity date of December 1, 2009; however, upon maturity, we expect that this letter of credit will be renewed for another
one-year period.

Surety Bonds

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a
financial institution known as a surety. These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors. If we fail
to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the surety for any
expenses or outlays it incurs. Under our continuing indemnity and security agreement with the surety, with the consent of our lenders under the Credit Agreement, we have granted security interests in
certain of our assets to collateralize our obligations to the surety. We may be required to post letters of credit or other collateral in favor of the surety or our customers. Posting letters of
credit in favor of the surety or our customers would reduce the borrowing availability under the Credit Agreement. To date, we have not been required to make any reimbursements to the surety for
bond-related costs. We believe that it is unlikely that we will have to fund significant claims under our surety arrangements in the foreseeable future. As of June 30, 2009, an
aggregate of

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approximately
$413.4 million in original face amount of bonds issued by the surety were outstanding. Our estimated cost to complete these bonded projects was approximately $150.1 million
as of June 30, 2009.

New Accounting Pronouncements

For a discussion regarding new accounting pronouncements, please refer to Note 2. "Basis of PresentationRecently
Issued Accounting Pronouncements" in the accompanying Notes to Consolidated Financial Statements.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements,
which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates. For further information regarding our critical accounting
policies and estimates, please refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies" included in the
2008 Annual Report and Note 2. "Basis of PresentationRecently Issued Accounting Pronouncements" in the accompanying Notes to Consolidated Financial Statements.

Cautionary Statement Concerning Forward-Looking Statements and Information

We are including the following discussion to inform you of some of the risks and uncertainties that can affect our company and to take
advantage of the protections for forward-looking statements that applicable federal securities law affords.

Various
statements this quarterly report on Form 10-Q contain, including those that express a belief, expectation, or intention, as well as those that are not
statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our
future production, revenue, income and capital spending. Our forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate,"
"potential," "plan," "goal" or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this quarterly report on Form 10-Q speak only
as of the date of this quarterly report on Form 10-Q; we disclaim any obligation to update these statements (unless required by securities laws), and we caution you not to rely on
them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of
which are beyond our control. These and other important factors, including those discussed in Item 1A. "Risk Factors" in our 2008 Annual Report, may cause our actual results, performance or
achievements to differ materially from any future results, performance or achievements expressed or implied by these forward- looking statements.

These
risks, contingencies and uncertainties include, but are not limited to, the following:



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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2009, we did not have any derivative instruments. We did not use any material derivative financial instruments
during the six months ended June 30, 2008 and 2009, including trading or speculation on changes in interest rates, or commodity prices of materials used in our business.

We
are subject to concentrations of credit risk related to our cash and cash equivalents and accounts receivable. Substantially all of our cash investments are managed by what we believe
to be high credit quality financial institutions. Our primary cash investments include money market funds and short term certificates of deposit. Although we do not currently believe the principal
amounts of these cash investments are subject to any material risk of loss, the recent volatility in the financial markets will likely continue to significantly impact the interest income we receive
from these cash investments.

Additionally,
we grant credit under normal payment terms, generally without collateral, to our customers, which include electric power companies, governmental entities, general
contractors and builders, owners and managers of commercial and industrial properties located in the United States. Consequently, we are subject to potential credit risk related to changes in business
and economic factors throughout the United States. However, we generally have certain statutory lien rights with respect to services provided. Under certain circumstances such as foreclosures or
negotiated settlements, we may take title to the underlying assets in lieu of cash in settlement of receivables. We also perform ongoing internal credit risk assessments of our customers, as well as
extensive due diligence on new customers. No customer accounted for more than 13.2% and 9.9% of revenues for the six months ended June 30, 2008 and 2009, respectively. Management believes the
terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk.

Borrowings
under the Credit Agreement are based upon an interest rate that will vary depending upon the prime rate, the Federal funds rate and LIBOR. If we borrow additional amounts
under the Credit Agreement, the interest rate on those borrowings will also be variable. If the prime rate, Federal

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funds
rate or LIBOR rise, our interest payment obligations will increase and have a negative effect on our cash flow and financial condition. We currently do not maintain any hedging contracts that
would limit our exposure to variable rates of interest. As of June 30, 2009, we had $30 million of borrowings outstanding under the Credit Agreement. The Credit Agreement currently
accrues annual interest at one-month LIBOR in effect at each month end plus a spread of 1.00%, based upon our current leverage ratio, as defined in the 2007 Credit Agreement. A 0.125%
increase or decrease in the interest rate would have the effect of changing our interest expense by $37,500 per annum.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in
the reports we file or submit pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such
information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management,
together with our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act
Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance related to the matters stated in the above paragraph.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the second quarter ended June 30, 2009 that
have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and
procedures or our internal control over financial reporting will detect or prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. These inherent limitations include the realities that judgments in decision- making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls
also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II.OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

In 2005, one of our subsidiaries was convicted of a criminal misdemeanor for violation of certain Occupational Safety and Health
Administration ("OSHA") safety regulations that occurred in 1999. The subsidiary was assessed and paid a fine of $0.5 million and was sentenced to probation for a three-year period,
which terminated on December 8, 2008. The subsidiary appealed the conviction and, on April 10, 2009, the Seventh Circuit Court of Appeals reversed the conviction and remanded the case
for a new trial. On August 4, 2009, the U.S. Department of Justice notified our subsidiary that it will move to dismiss the case with prejudice.

For
further discussion regarding legal proceedings, please refer to Note 9. "Commitments and ContingenciesLitigation and Other Legal Matters" in the accompanying
Notes to Consolidated Financial Statements.

ITEM 1A.    RISK FACTORS

An investment in our common stock involves various risks. When considering an investment in our company, you should carefully consider
all of the risk factors discussed in Item 1A. "Risk Factors" in our 2008 Annual Report as well as any updates to risk factors as described below. These risks and uncertainties are not the only
ones facing us and there may be additional matters that are not known to us or that we currently consider immaterial. All of these risks and uncertainties could adversely affect our business,
financial condition or future results and, thus, the value of our common stock and any investment in our company.

Our unionized workforce could adversely affect our operations.

As of June 30, 2009, approximately 92% of our field labor employees were covered by collective bargaining agreements. Although
the majority of these agreements prohibit strikes and work stoppages, we cannot be certain that strikes or work stoppages will not occur in the future. Strikes or work stoppages would adversely impact
our relationships with our customers and could have a material adverse effect on our financial condition, results of operations and cash flows.

Additionally,
these agreements may require us to participate with other companies in various multi-employer pension plans. To the extent that we participate in any multi-employer pension
plans that are underfunded, the Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, may subject us to substantial liabilities under
those plans if we were to withdraw from them or if they were terminated. Furthermore, the Pension Protection Act of 2006 (the "PPA") imposes additional funding rules applicable to plan years beginning
after 2007 for multi-employer plans that are classified as either "endangered", "seriously endangered" or "critical" status. For a plan that is classified as being in critical status, additional
required contributions and benefit reductions could apply.

During
the quarter ended June 30, 2009, we were informed that several of the multi-employer plans to which our subsidiaries contribute have been labeled "critical" or "endangered"
status as defined by the PPA. Although we are not currently aware of any potential liabilities to us as a result of these plans being classified as critical status, future results could be impacted if
we were to be subject to increased contributions under these plans.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 12, 2009, we held our 2009 Annual Meeting of Stockholders. At the 2009 Annual Meeting, our stockholders elected two
Class II directors to hold office until the 2012 Annual Meeting of Stockholders and until their respective successors are elected and qualified, by the following votes:

Jack L. Alexander

For: 12,419,985

Abstain: 4,923,586Betty R. Johnson

For: 12,423,275

Abstain: 4,920,296


The
following Class III directors will continue to hold office until their terms expire in 2010: William A. Koertner, Larry F. Altenbaumer, and William D. Patterson, and the
following Class I directors will continue to hold office until their terms expire in 2011: Henry W. Fayne, Gary R. Johnson, and Carter A. Ward.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.    EXHIBITS

Number

Description3.1

Restated Certificate of Incorporation (1)3.2

Amended and Restated By-Laws (2)10.1

Amended and Restated 2006 Stock Option Plan 10.2

Form of Option Award under 2006 Stock Option Plan 31.1

Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a) 31.2

Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a) 32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. §135032.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350


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SIGNATURE

Pursuant to the requirements 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.

MYR GROUP INC.(Registrant)August 10, 2009

/s/ MARCO A. MARTINEZ Vice President, Chief Financial Officer and Treasurer


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