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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 March 31, 2010ORo

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 ý

Non-accelerated filer o (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 May 7, 2010 there were 19,886,957 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 ("SEC").



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INDEX



PagePart IFinancial InformationItem 1.

Financial StatementsConsolidated Balance Sheets
As of December 31, 2009 and March 31, 2010 (unaudited)


1Unaudited Consolidated Statements of Operations
For the Three Months Ended March 31, 2009 and 2010


2Unaudited Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2009 and 2010


3Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2009 and 2010


4Item 2.

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


14Item 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


26Item 4.

(Removed and Reserved)


26Item 5.

Other Information


26Item 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.

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MYR GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

December 31,
2009

March 31,
2010(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
37,576

$
37,120Accounts receivable, net of allowances of $1,114 and $1,046, respectively


100,652


86,351Costs and estimated earnings in excess of billings on uncompleted contracts


30,740


31,893Deferred income tax assets


10,186


10,186Receivable for insurance claims in excess of deductibles


8,082


8,452Refundable income taxes


3,036


2,650Other current assets


3,308


3,155Total current assets


193,580


179,807Property and equipment, net of accumulated depreciation of $33,566 and $37,313, respectively


88,032


85,483Goodwill


46,599


46,599Intangible assets, net of accumulated amortization of $1,553 and $1,637, respectively


11,539


11,455Other assets


1,899


1,892Total assets

$
341,649

$
325,236LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
39,880

$
30,345Billings in excess of costs and estimated earnings on uncompleted contracts


25,663


18,674Accrued self insurance


33,100


33,395Other current liabilities


22,122


18,666Total current liabilities


120,765


101,080Long-term debt, net of current maturities


30,000


30,000Deferred income tax liabilities


15,870


15,870Other liabilities


899


848Total liabilities


167,534


147,798Commitments and contingenciesStockholders' equity:Preferred stock$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at December 31, 2009 and March 31,
2010





Common stock$0.01 par value per share; 100,000,000 authorized shares; 19,807,421 and 19,881,882 shares issued and outstanding at December 31,
2009 and March 31, 2010, respectively


198


198Additional paid-in capital


142,679


143,222Retained earnings


31,238


34,018Total stockholders' equity


174,115


177,438Total liabilities and stockholders' equity

$
341,649

$
325,236


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

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

Three months ended
March 31,2009

2010Contract revenues

$
132,935

$
148,889Contract costs


115,902


133,720Gross profit


17,033


15,169Selling, general and administrative expenses


11,974


10,564Amortization of intangible assets


84


84Gain on sale of property and equipment


(57
)

(190
)Income from operations


5,032


4,711Other income (expense)Interest income


122


11Interest expense


(222
)

(203
)Other, net


(60
)

(30
)Income before provision for income taxes


4,872


4,489Income tax expense


1,989


1,709Net income

$
2,883

$
2,780Income per common share:Basic

$
0.15

$
0.14Diluted

$
0.14

$
0.13Weighted average number of common shares and
potential common shares outstanding:Basic


19,712,811


19,821,127Diluted


20,716,255


20,733,287


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

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

Three months ended
March 31,2009

2010Cash flows from operating activities:Net income

$
2,883

$
2,780Adjustments to reconcile net income to net cash flows provided by
(used in) operating activitiesDepreciation and amortization of property and equipment


3,165


3,940Amortization of intangible assets


84


84Stock-based compensation expense


231


424Excess tax benefit from stock-based awards





(16
)Gain on sale of property and equipment


(57
)

(190
)Other non-cash items


21


21Changes in operating assets and liabilitiesAccounts receivable, net


8,216


14,301Costs and estimated earnings in excess of billings on
uncompleted contracts


2,061


(1,153
)Receivable for insurance claims in excess of deductibles


42


(370
)Other assets


51


541Accounts payable


(5,393
)

(9,544
)Billings in excess of costs and estimated earnings on
uncompleted contracts


(7,370
)

(6,989
)Accrued self insurance


(475
)

295Other liabilities


(4,047
)

(3,491
)Net cash flows provided by (used in) operating activities


(588
)

633Cash flows from investing activities:Proceeds from sale of property and equipment


125


190Purchases of property and equipment


(7,521
)

(1,382
)Net cash flows used in investing activities


(7,396
)

(1,192
)Cash flows from financing activities:Payments of capital lease obligations


(8
)

(16
)Employee stock option transactions





103Excess tax benefit from stock-based awards





16Equity financing costs


(10
)

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


(18
)

103Net decrease in cash and cash equivalents


(8,002
)

(456
)Cash and cash equivalents:Beginning of period


42,076


37,576End of period

$
34,074

$
37,120


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

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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 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 generally
accepted in the United States of America ("U.S. GAAP") for interim financial reporting and with 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 U.S. GAAP for complete financial statements. 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 condition of the
Company as of March 31, 2010, and the results of operations, and cash flows for the three months ended March 31, 2009 and 2010. The results of operations for the three months ended
March 31, 2010 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, 2009 has been
derived from the audited financial statements as of that date. These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended
December 31, 2009, included in the Company's annual report on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting U.S. GAAP 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 January 2010, the Financial Accounting Standards Board ("FASB") issued an accounting standard update to ASC Topic 820, Fair Value Measurements and
Disclosures("ASC 820"), which required new disclosures and clarified existing disclosures about fair value measurement.
Specifically, this update amends ASC 820 to now require: (a) a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair
value measurements and to describe the reasons for the transfers; and (b) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should
present separately information about purchases, sales, issuances, and settlements. In addition, this update clarifies the requirements of the following existing disclosures: (a) for purposes of
reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and (b) a
reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. This update became
effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of
activity in Level 3 fair value measurements, which will become effective for interim and reporting periods beginning after December 15, 2010. Although the adoption of this standard
modification did not have an impact on the Company's consolidated financial condition, results of operations or cash flows, there may be impacts to the Company's financial statement disclosures in the
future.

In
February 2010, the FASB issued an accounting standard update to ASC Topic 855,Subsequent Events, which eliminated the requirement for
an SEC filer to disclose the date through which subsequent events have been evaluated in both issued and revised financial statements. This standard became effective upon issuance, with limited
exceptions. Although, the adoption of this standard update did not have an impact on the Company's consolidated financial condition, results of operations or cash flows, there were impacts to the
Company's financial statement disclosures.

3. Fair Value Measurements

The accounting guidance provided by ASC 820 defines fair value, establishes methods used to measure fair value, and expands disclosure requirements about fair value measurements. The
fair value accounting guidance 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 March 31, 2010, the carrying value of cash and cash equivalents, accounts receivable and payable, accrued liabilities, and certain other financial assets and liabilities
approximated fair value due to the short maturities of these instruments.

As
of March 31, 2010, the Company held cash equivalents that were subject to the disclosure requirements of the fair value accounting guidance. These items included money market
funds held in deposit at a national bank and short-term certificates of deposit held on account under the Certificate

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

3. Fair Value Measurements (Continued)

of
Deposit Account Registry Services (CDARS) program. The combined net carrying value of the Company's cash and cash equivalents was $37,120, which was equal to the fair value at March 31, 2010
based upon Level 1 inputs.

The
carrying amount reported in the consolidated balance sheet as of March 31, 2010 for long term debt was $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 estimated the fair value of its debt to be $29,470 as of March 31, 2010.

4. Supplemental Cash Flows

Supplemental disclosures of cash flow information are as follows:

Three months ended
March 31,2009

2010Cash paid during the period for:Income taxes

$
293

$
1,365Interest expense


203


183Noncash investing activities:Acquisition of property and equipment for which payment was pending


314


211Acquisition of property and equipment under capital lease obligations


45





As
of December 31, 2009, the Company had purchased $202 of property and equipment for which payment was pending, all of which was paid during the three months ended
March 31, 2010. As of March 31, 2010, the Company recorded additional property and equipment of approximately $211 for which payment was pending.

5. Contracts in Process

The net asset (liability) position for contracts in process consisted of the following:

December 31,
2009

March 31,
2010Costs incurred on uncompleted contracts

$
839,315

$
862,909Estimated earnings


95,669


97,685934,984


960,594Less: Billings to date


929,907


947,375$
5,077

$
13,219


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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

5. Contracts in Process (Continued)

The
net asset (liability) position for contracts in process included in the accompanying consolidated balance sheets was as follows:

December 31,
2009

March 31,
2010Costs and estimated earnings in excess of billings on uncompleted contracts

$
30,740

$
31,893Billings in excess of costs and estimated earnings on uncompleted contracts


(25,663
)

(18,674
)$
5,077

$
13,219


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 months ended March 31, 2009 and 2010 was principally due to
state income taxes.

The
Company had approximately $836 and $795 of total unrecognized tax benefits as of December 31, 2009 and March 31, 2010, respectively, which was included in other
liabilities in the accompanying consolidated balance sheets. For the three months ended March 31, 2010, the Company recorded an additional $42 in unrecognized tax benefits related to the net
activity of current and prior year positions, which was offset by a reduction in unrecognized tax benefits of $83 related to the closure of a federal tax audit for the 2007 tax year.

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
amount of interest and penalties charged to income tax expense as a result of the unrecognized tax benefits was an expense of $1 and a benefit of $2, for the three months ended March 31, 2009
and 2010, respectively.

The
Company does not anticipate that there will be any material changes to the total unrecognized tax benefits within the next 12 months.

The
Company is subject to taxation in various jurisdictions. The Company continues to remain subject to examination by U.S. federal authorities for certain open tax years (2006, 2008 and
2009), and by various state authorities for the years 2005 through 2009.

7. Commitments and Contingencies

Letters of Credit

At both December 31, 2009 and March 31, 2010, the Company had one outstanding irrevocable standby letter of credit
totaling $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

7

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

7. Commitments and Contingencies (Continued)

leases
subsequent to March 31, 2010, are as follows: $6,570 for the remainder of 2010, $5,829 for 2011, $3,418 for 2012, $990 for 2013, and $29 for 2014.

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 March 31, 2010, the maximum guaranteed residual value was
approximately $1,458. 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.

Purchase Commitments for Construction Equipment

As of March 31, 2010, the Company has approximately $2,777 in outstanding purchase obligations for certain construction
equipment with cash outlay requirements scheduled to occur over the next five months.

Employment Agreements

As of December 31, 2009, the Company had recorded a contingent termination payment liability of approximately $1,628 related to
the employment agreements it entered into with six executive officers in December 2007, which were amended in December 2008 (each an "Employment Agreement"). The liability recorded, which was included
in other current liabilities in the accompanying consolidated balance sheet as of December 31, 2009, represented the amount the named executive officers would have been eligible to receive
under the terms of the original Employment
Agreements if they were to voluntarily terminate employment without "good reason" (as defined in the Employment Agreements) at any time.

In
March 2010, the Company amended and restated the Employment Agreements, which, among other things, removed the provision for severance pay subject to a voluntary termination without
good reason. The revised severance pay provisions in the Employment Agreements are all under the employer's control. Therefore, the Company has eliminated the $1,628 liability related to this
provision during the three months ended March 31, 2010. The benefit of reversing this liability was included as a reduction to selling, general and administrative expenses in the accompanying
consolidated statement of operations.

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 March 31, 2010, the total amount of outstanding performance bonds was
approximately $456,813, and the estimated cost to complete these bonded projects was approximately $97,815.

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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 the Company 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 the Company's financial condition,
results of operations, or cash flows.

8. Stock-Based Compensation

In November 2007, the Board of Directors approved the 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.

Stock Options

On March 24, 2010, the Company granted options to purchase 106,912 shares of the Company's common stock to various employees,
including the Company's executive officers. These new stock option awards will vest ratably over a three-year period. The grant date fair value of these option awards was approximately
$8.72 per share, using the Black-Scholes-Merton option-pricing model. These stock options are subject to certain claw-back provisions, as defined in the grant agreement.

Based
upon a weighted-average grant date fair value of approximately $7.22 per share, the Company recognized stock compensation expense related to all stock options granted under the
LTIP of approximately $231 and $416 for the three months ended March 31, 2009 and 2010, respectively, which is included in selling, general and administrative expenses in the accompanying
consolidated statements of operations. The stock compensation expense for the three months ended March 31, 2010,

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

8. Stock-Based Compensation (Continued)

included
approximately $180 related to the accelerated vesting of stock options of one of the Company's executive officers due to him reaching normal retirement age, as defined in his stock option
grant agreements.

As
of March 31, 2010, there was approximately $2,335 of total unrecognized compensation cost related to stock options granted under the LTIP, net of estimated forfeitures. This
cost is expected to be recognized over a weighted average vesting period of approximately 2.2 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated
and actual forfeitures.

During
the full year 2009, the Company issued 94,610 new shares to option holders upon the exercise of vested stock options. During the three months ended March 31, 2010, the
Company issued 20,646 new shares to option holders upon the exercise of vested stock options. Cash received from option exercises for the three months ended March 31, 2010 was $103. The excess
tax benefit realized from option exercises for the three months ended March 31, 2010 was $16. The total intrinsic value of stock options exercised during the three months ended March 31,
2010 was $241. No stock options were exercised during the three months ended March 31, 2009.

It
is the Company's policy to issue new shares upon the exercise of stock options. The Company has also been given authorization from the Board of Directors to use its discretion to
repurchase shares from time-to-time based upon the volume of stock options that have been exercised. To date, the Company has not made any such repurchases.

Restricted Stock

On March 24, 2010, the Company granted restricted stock awards covering 50,323 shares of common stock to various employees,
including the Company's executive officers, and 3,492 shares of common stock to certain eligible members of the Board of Directors. The restricted stock awards granted to employees will vest ratably
over a five-year period, while the restricted stock awards granted to the Board of Directors will vest ratably over a three-year period. During the restriction period, the
restricted stockholders are entitled
to all of the same rights of a common stockholder with respect to the shares, including the right to vote and receive dividends. These restricted stock awards are also subject to certain
claw-back provisions, as defined in the grant agreements.

The
grant date fair value of the restricted stock awards was $17.18 per share, which was equal to the closing trading price on the date of grant. Stock compensation expense related to
these awards will be amortized on a straight-line basis over the applicable vesting period, net of estimated forfeitures. For the three months ended March 31, 2010, the Company
recognized stock compensation expense of approximately $4, which was included in selling, general and administrative expenses in the accompanying consolidated statement of operations. There were no
restricted stock awards granted prior to 2010.

As
of March 31, 2010, there was approximately $907 of total unrecognized compensation cost related to non-vested restricted stock granted under the LTIP. This cost is
expected to be recognized over a weighted average vesting period of approximately 4.9 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual
forfeitures.

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

8. Stock-Based Compensation (Continued)

Performance Awards

On March 24, 2010, the Company granted performance stock awards covering 40,741 shares of common stock to certain key management
personnel, including the Company's executive officers. These performance stock awards will cliff vest on the third anniversary of the grant date, subject to a performance condition of achieving
certain specified levels of the Company's return-on-equity ("ROE"), as defined in the grant agreements, over a performance measurement period from January 1, 2010 to
December 31, 2012. If the Company achieves an ROE that is equal to or greater than the threshold ROE, as defined in the grant agreements, the payment of the performance stock awards will vary
depending upon the actual ROE that the Company achieves over the performance period, with the potential payout ranging from a minimum of 50% to a maximum of 200% of the target award. However, if the
Company were to achieve an ROE that is less than the threshold ROE, there would not be any payout under these awards and the awards would be forfeited. Additionally, these performance stock awards are
subject to certain claw-back provisions, as defined in the grant agreements.

The
grant date fair value of the performance stock awards was $17.18 per share. The Company will recognize stock compensation expense related to these awards based upon its determination
of the
potential achievement of the ROE target at each reporting date, net of estimated forfeitures. The stock compensation expense to be recognized will be amortized on a straight-line basis
over the three-year vesting period. For the three months ended March 31, 2010, the Company recognized stock compensation expense of approximately $4, which was included in selling,
general and administrative expenses in the accompanying consolidated statement of operations. There were no performance share awards granted prior to 2010.

As
of March 31, 2010, there was approximately $685 of total unrecognized compensation cost related to non-vested performance awards granted under the LTIP. This cost
is expected to be recognized over a weighted average vesting period of approximately 3.0 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and
actual forfeitures.

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MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

9. Segment Information

The information in the following table was derived from the segment's internal financial reports used for corporate management purposes:

Three months ended
March 31,2009

2010Contract revenues:T&D

$
99,677

$
102,834C&I


33,258


46,055$
132,935

$
148,889Operating income (loss):T&D

$
7,378

$
6,123C&I


2,682


2,214General Corporate


(5,028
)

(3,626
)$
5,032

$
4,711


10. Earnings Per Share

The Company calculates net income per common share in accordance with ASC Topic 260,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.

In
March 2010, the Company issued certain restricted stock awards which vest over a service period that ranges from three to five years. These awards contain non-forfeitable
rights to dividends or dividend equivalents. Awards containing such rights that are unvested are considered to be participating securities and would be included in the computation of earnings per
share pursuant to the two-class method. Under the two-class method, earnings are allocated between the Company's common stockholders and participating securities. The
application of the two-class method during the three months ended March 31, 2010, did not have a material impact on the earnings per share calculation.

Potential
common shares related to the assumed exercise of stock options of 538,000 (with a weighted average exercise price of $13.00) and 106,912 (with a weighted average exercise price
of $17.18), for the three months ended March 31, 2009 and 2010, respectively, were not included in the denominator of the diluted earnings per share calculation as the inclusion of such shares
would either be anti-dilutive or the exercise price was greater than the average market price of the Company's common stock for the period. Additionally, for the three months ended
March 31, 2010, potential common shares related to the unvested portion of restricted stock and performance awards of 53,815 and 40,741, respectively, both with a weighted average grant date
fair value of $17.18, were also not included in the denominator of the diluted earnings per share calculation as the inclusion of such shares would be anti-dilutive.

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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 (Continued)

The
weighted average number of common shares used to compute basic and diluted net income per share were as follows:

Three months ended
March 31,2009

2010Weighted average basic common shares outstanding


19,712,811


19,821,127Assumed exercise of stock options


1,003,444


912,160Weighted average diluted common shares outstanding


20,716,255


20,733,287


11. Subsequent Events

The Company's management has evaluated subsequent event activity through the date that these financial statements were filed with the SEC 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.

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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, 2009 and March 31, 2010, and for the three months ended March 31, 2009 and 2010, and with our annual report on Form 10-K for the year ended
December 31, 2009 (the "2009 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 2009 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 electric utilities, cooperatives and municipalities. We provide a broad range of
services which 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 three months ended March 31, 2010, of $148.9 million, of which 69.1% was attributable to our T&D customers and 30.9% was attributable
to our C&I customers. For the three months ended March 31, 2010, our net income and EBITDA(1) were $2.8 million and $8.7 million, respectively, compared to $2.9 million and
$8.2 million for the three months ended March 31, 2009.

---

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) monitor our capacity to generate returns for our stockholders.

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Three months ended
March 31,(dollars in thousands)

2009

2010Reconciliation of Net Income to EBITDA:Net Income

$
2,883

$
2,780Add/(subtract):Interest expense (income), net


100


192Provision for income taxes


1,989


1,709Depreciation & amortization


3,249


4,024EBITDA

$
8,221

$
8,705
 We
also use EBITDA as a liquidity measure. We believe that EBITDA 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 would be 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:


Three months ended
March 31,(dollars in thousands)

2009

2010Reconciliation of EBITDA to Net Cash Flows Provided By (Used In) Operating Activities:EBITDA

$
8,221

$
8,705Add/(subtract):Interest income (expense), net


(100
)

(192
)Provision for income taxes


(1,989
)

(1,709
)Depreciation & amortization


(3,249
)

(4,024
)Adjustments to reconcile net income to net cash flows provided by (used in) operating activities


3,444


4,263Changes in operating assets and liabilities


(6,915
)

(6,410
)Net cash flows provided by (used in) operating activities

$
(588
)
$
633


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.

Employment Agreements

As discussed in Note 7. "Commitments and ContingenciesEmployment Agreements" in the accompanying Notes to
Consolidated Financial Statements, we amended and restated the employment agreements with our six named executive officers in March 2010. Among other things, the amendment removed the provision for
severance payments under certain circumstances. As a result, we eliminated a $1.6 million liability related to this provision during the three months ended March 31, 2010.

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Table of Contents

Backlog

As of March 31, 2010, our backlog was approximately $199.5 million, consisting of $142.9 million and
$56.6 million in our T&D and C&I segments, respectively. As of March 31, 2009, our backlog was approximately $294.6 million, consisting of $214.2 million and
$80.4 million in our T&D and C&I segments, respectively. Changes in backlog from period to period are primarily the result of fluctuations in the timing and revenue recognition of contracts.
The decrease in backlog between 2009 and 2010 was primarily related to the contract completion process and resulting revenue recognition of a few significant contracts that were awarded during the
third quarter of 2008 and have not yet been replaced by contracts of similar size.

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 realized as part of our future revenues.

Project Bonding Requirements

Approximately 30.5% of our business by revenue, for both of the three-month periods ended March 31, 2009 and 2010, 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 March 31, 2010, the total amount of bonded backlog was approximately $108.6 million, which represented approximately
54.5% of our backlog.

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Table of Contents

Consolidated Results of Operations

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

Three months ended March 31,2009

2010(dollars in thousands)

Amount

Percent

Amount

PercentContract revenues

$
132,935


100.0
%
$
148,889


100.0
%Contract costs


115,902


87.2


133,720


89.8Gross profit


17,033


12.8


15,169


10.2Selling, general and administrative expenses


11,974


9.0


10,564


7.1Amortization of intangible assets


84


0.1


84


0.1Gain on sale of property and equipment


(57
)




(190
)

(0.1
)Income from operations


5,032


3.8


4,711


3.1Other income (expense)Interest income


122


0.1


11


Interest expense


(222
)

(0.2
)

(203
)

(0.1
)Other, net


(60
)




(30
)

Income before provision for income taxes


4,872


3.7


4,489


3.0Income tax expense


1,989


1.5


1,709


1.1Net income

$
2,883


2.2
%
$
2,780


1.9
%


Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2010

Revenues.Revenues increased $16.0 million, or 12.0%, from $132.9 million for the three months ended March 31, 2009 to
$148.9 million for the three months ended March 31, 2010. The majority of the increase in revenues was the result of a significant increase in revenues from a few large projects (greater
than $10.0 million in contract value) in both the T&D and C&I segments, which was partially offset with an overall reduction in revenues on smaller projects (less than $3.0 million in
contract value) in both reporting segments.

Gross Profit.Gross profit decreased approximately $1.9 million, or 10.9%, from $17.0 million for the three months ended
March 31, 2009 to $15.2 million for the three months ended March 31, 2010. As a percentage of overall revenues, gross profit margin decreased from 12.8% for the three months ended
March 31, 2009 to 10.2% for the three months ended March 31, 2010. For the three months ended March 31, 2010, we experienced pressures on margins due to lower productivity levels
compared to plan on certain contracts, coupled with overall margin pressures from increased competition. The decrease in gross profit was mainly attributable to an overall reduction in contract
margins on smaller T&D projects (less than $3.0 million in contract value) of approximately $3.3 million, which was partially offset by an overall net increase of approximately
$0.6 million in contract margins on larger projects (greater than $10.0 million in contract value) period over period.

Selling, General and Administrative Expenses.Selling, general and administrative expenses decreased $1.4 million, or 11.8%, from
$12.0 million for the three months ended March 31, 2009 to $10.6 million for the three months ended March 31, 2010. The decrease was primarily due to the elimination of a
$1.6 million severance liability as a result of the amended employment agreements of our executive officers. The decrease was partially offset by an increase in certain incremental employee
benefit costs. As a percentage of revenues, these expenses decreased from 9.0% for the three months ended March 31, 2009 to 7.1% for the three months ended March 31, 2010.

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Table of Contents

Gain on Sale of Property and Equipment.Gains from the sale of property and equipment increased $0.1 million from $0.1 million
for the
three months ended March 31, 2009 to $0.2 million for the three months ended March 31, 2010. Gains from the sale of property and equipment were the result of routine sales of
property and equipment that we determined were no longer useful or valuable to our ongoing operations.

Interest Income.Interest income decreased $0.1 million from $0.1 million for the three months ended March 31, 2009 to
less than
$0.1 million for the three months ended March 31, 2010 due to the overall decrease in interest rates earned on our average daily cash balance.

Interest Expense.Interest expense remained constant at $0.2 million for the three months ended March 31, 2009 and 2010.

Provision for Income Taxes.The provision for income taxes was $2.0 million for the three months ended March 31, 2009, with
an
effective tax rate of 40.8% compared to $1.7 million for the three months ended March 31, 2010, with an effective tax rate of 38.1%. The decrease in effective tax rate was mainly due to
an increase in certain domestic production tax credits available to us and a small reduction in our accrual for unrecognized tax benefits due to the closure of a federal tax audit during the three
months ended March 31, 2010.

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 March 31,2009

2010(dollars in thousands)

Amount

Percent

Amount

PercentContract revenues:Transmission & Distribution

$
99,677


75.0
%
$
102,834


69.1
%Commercial & Industrial


33,258


25.0


46,055


30.9Total

$
132,935


100.0

$
148,889


100.0Operating income (loss):Transmission & Distribution

$
7,378


7.4

$
6,123


6.0Commercial & Industrial


2,682


8.1


2,214


4.8Total


10,060


7.6


8,337


5.6Corporate


(5,028
)

(3.8
)

(3,626
)

(2.4
)Consolidated

$
5,032


3.8
%
$
4,711


3.2
%


Transmission & Distribution

Revenues for our T&D segment for the three months ended March 31, 2009 were $99.7 million compared to
$102.8 million for the three months ended March 31, 2010, an increase of approximately $3.2 million or 3.2%. The increase in revenues was the result of a significant increase in
revenues from a few large projects. Revenues from transmission projects represented 68.6% and 61.4% of T&D segment revenue for the three months ended March 31, 2009 and 2010, respectively.
Additionally, for the three months ended March 31, 2009, measured by revenue in our T&D segment, we provided 28.0% of our T&D services under fixed price contracts, as compared to 22.0% for the
three months ended March 31, 2010.

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Operating
income for our T&D segment for the three months ended March 31, 2009 was $7.4 million compared to $6.1 million for the three months ended March 31,
2010, a decrease of $1.3 million or 17.0%. As a percentage of revenues, operating income decreased from 7.4% for the three months ended March 31, 2009 to 6.0% for the three months ended
March 31, 2010. The decrease in operating income in the T&D segment was mainly attributable to an overall reduction in margins on smaller T&D contracts (less than $3.0 million in
contract value) of approximately $3.3 million, which was partially due to lower productivity levels compared to plan on certain contracts, as well as increased competition in bidding activity.
The decrease in margins on smaller contracts was partially offset with an overall increase in margins on large transmission contracts (greater than $10.0 million in contract value) of
approximately $2.1 million. This increase in margins from large transmission contracts during the current period is inclusive of the impact of a reduction in the estimated cost to complete on a
few contracts.

Commercial & Industrial

Revenues for our C&I segment for the three months ended March 31, 2009 were $33.3 million compared to
$46.1 million for the three months ended March 31, 2010, an increase of $12.8 million or 38.5%. The increase in revenues is due mainly to the significant increase in revenues
derived from a few large projects. Additionally, for the three months ended March 31, 2009, measured by revenue in our C&I segment, we provided 45.6% of our services under fixed price
contracts, as compared to 25.4% for the three months ended March 31, 2010.

Operating
income for our C&I segment for the three months ended March 31, 2009 was $2.7 million compared to $2.2 million for the three months ended March 31,
2010, a decrease of $0.5 million or 17.4%. As a percentage of revenues, operating income decreased from 8.1% for the three months ended March 31, 2009 to 4.8% for the three months ended
March 31, 2010. The decrease in operating income in the C&I segment was mainly attributable to an overall reduction in margins on large C&I contracts (greater than $10.0 million in
contract value) of approximately $1.5 million. This decrease in contract margins was due to lower productivity levels compared to plan on a few large contracts, as well as increased
competition.

Liquidity and Capital Resources

As of March 31, 2010, we had cash and cash equivalents of $37.1 million, positive working capital of $78.7 million
and long-term liabilities in the amount of $46.7 million, which consisted of the long-term portion of our term loan facility, deferred income taxes and deferred
compensation obligations. We also had a $15.0 million letter of credit outstanding under the Credit Agreement. During the three months ended March 31, 2010, consolidated operating
activities of our business resulted in net cash flow generated from operations of $0.6 million
compared to net cash used in operations of $0.6 million for the three months ended March 31, 2009. 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 three months ended March 31 2010, we used net cash in investing activities of $1.2 million, including
$1.4 million used for capital expenditures, offset by approximately $0.2 million of proceeds from the sale of property and equipment. During the three months ended March 31 2010,
we generated net cash from financing activities of $0.1 million, resulting primarily from net cash received from the exercise of stock options and the related tax benefits.

The
changes in various consolidated balance sheet accounts (such as, accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, accounts payable,
and billings in excess of costs and estimated earnings on uncompleted contracts) are due to normal timing fluctuations in our operating activities.

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Table of Contents

We
anticipate that our cash and cash equivalents on hand, the $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, and planned capital expenditures. We expect that our capital spending in 2010 will be reasonably
consistent with our 2009 capital spending. Although we believe that we have adequate cash and availability under our credit facility to meet these needs, our involvement in any 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.

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 under the facility accruing interest at 1.25%
(which is equal to an adjusted one-month LIBOR plus a spread of 1.0%) at March 31, 2010. As of March 31, 2010, 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
March 31, 2010.

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 March 31, 2010, our interest coverage ratio was in excess of 49.0 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 March 31, 2010, 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.

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.

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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 March 31, 2010, the maximum guaranteed residual value was
approximately $1.5 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 and the purchase option price is attractive.

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 March 31, 2010, we had a $15.0 million letter of credit outstanding under the Credit Agreement to secure obligations under our casualty insurance program.

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 March 31, 2010, an aggregate of approximately $456.8 million in
original face amount of bonds issued by the surety were outstanding. Our estimated cost to complete these bonded projects was approximately $97.8 million as of March 31, 2010.

Legal Proceedings

For a discussion regarding legal proceedings, please refer to Note 7. "Commitments and ContingenciesLitigation and
Other Legal Matters" in the accompanying Notes to Consolidated Financial Statements.

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Table of Contents

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 2009 Annual Report.

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 contained in this quarterly report on Form 10-Q are forward-looking statements, including those that express a belief, expectation, or intention, as
well as those that are not statements of historical fact. 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 2009 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 March 31, 2010, we did not have any derivative instruments. We did not use any material derivative financial instruments
during the three months ended March 31, 2009 and 2010, including trading or speculation on changes in interest rates or commodity prices of materials used in our business.

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. As of March 31, 2010, one customer represented 23.9% of total consolidated accounts receivable (excluding the impact of
allowance for doubtful accounts). No other customer represented more than 10.0% of our total consolidated accounts receivable as of March 31, 2010. For the three months ended March 31,
2010, revenues from two of those customers individually exceeded 10.0% of our total consolidated revenues, with a combined revenue from the two accounting for approximately 33.7% of our total
consolidated revenues. For the three months ended March 31, 2009, no individual customer exceeded 10.0% of our total consolidated revenues. 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 funds rate or LIBOR rise, our interest payment obligations will increase and have a
negative effect on

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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 March 31, 2010, 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 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 year.

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 first quarter ended March 31, 2010 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

For further discussion regarding legal proceedings, please refer to Note 7. "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 described in our 2009 Annual Report. 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.

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

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    (REMOVED AND RESERVED)

None.

ITEM 5.    OTHER INFORMATION

None.

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ITEM 6.    EXHIBITS

Number

Description3.1

Restated Certificate of Incorporation (1)3.2

Amended and Restated By-Laws (2)10.1

Form of Executive Officer Nonqualified Stock Option Award under 2007 Long-Term Incentive Plan 10.2

Form of Executive Officer Restricted Stock Award under 2007 Long-Term Incentive Plan 10.3

Form of Executive Officer Performance Share Award under 2007 Long-Term Incentive Plan 10.4

Form of Director Restricted Stock Award under 2007 Long-Term Incentive Plan 10.5

Form of Employment Agreement, dated March 11, 2010, between the Registrant and Executive Officer 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 


(1)Incorporated
by reference to exhibit 3.1 of the Company's Registration Statement on Form S-1 (File
No. 333-148864), filed with the SEC on January 25, 2008.(2)Incorporated
by reference to exhibit 3.2 of the Company's Registration Statement on Form S-1/A (File
No. 333-148864), filed with the SEC on May 13, 2008.Filed
herewith


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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)May 10, 2010

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


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