Great Lakes Dredge & Dock Corporation and Subsidiaries
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended March 31, 2001

INDEX

|              |  |                       |  |                                                                                                    |  | Page
|------------- |  | --------------------- |  | -------------------------------------------------------------------------------------------------- |  | ----
|Part I        |  | Financial Information |  |                                                                                                   
|              |  | Item 1                |  | Financial Statements (Unaudited)                                                                   |  |     
|              |  |                       |  | Condensed Consolidated Balance Sheets at March 31, 2001 and December 31, 2000                      |  | 2   
|              |  |                       |  | Condensed Consolidated Statements of Income for the Three Months ended March 31, 2001 and 2000     |  | 3   
|              |  |                       |  | Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2001 and 2000 |  | 4   
|              |  |                       |  | Notes to Unaudited Condensed Consolidated Financial Statements                                     |  | 5   
|              |  | Item 2                |  | Management's Discussion and Analysis of Financial Condition and Results of Operations              |  | 15  
|              |  | Item 3                |  | Quantitative and Qualitative Disclosures About Market Risk                                         |  | 21  
|Part II       |  | Other Information     |  |                                                                                                   
|              |  | Item 6                |  | Exhibits and Reports on Form 8-K                                                                   |  | 21  
|Signature     |  | 21                   
|Exhibit Index |  | 22                   

1

---



Part IFinancial Information

Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)

|                                          |                                                                                                                      | March 31, 2001                              |         | December 31, 2000 |        
|----------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | ----------------- | -------
|Assets                                    |                                                                                                                     
|Current assets:                           |                                                                                                                      |                                             |         |                   |        
|Cash and equivalents                      |                                                                                                                      | $                                           | 871     |                   | $      
|Accounts receivable, net                  |                                                                                                                      |                                             | 38,100  |                   |        
|Contract revenues in excess of billings   |                                                                                                                      |                                             | 17,849  |                   |        
|Inventories                               |                                                                                                                      |                                             | 14,674  |                   |        
|Prepaid expenses and other current assets |                                                                                                                      |                                             | 15,584  |                   |        
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total current assets                        |         |                   | 87,078 
|Property and equipment, net               |                                                                                                                      |                                             | 135,025 |                   |        
|Inventories                               |                                                                                                                      |                                             | 7,212   |                   |        
|Investments in joint ventures             |                                                                                                                      |                                             | 6,204   |                   |        
|Other assets                              |                                                                                                                      |                                             | 5,554   |                   |        
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total assets                                |         | $                 | 241,073
|                                          |                                                                                                                      |                                             |         |                   |        
|Liabilities and Stockholders' Deficit     |                                                                                                                     
|Current liabilities:                      |                                                                                                                      |                                             |         |                   |        
|Accounts payable                          |                                                                                                                      | $                                           | 28,341  |                   | $      
|Accrued expenses                          |                                                                                                                      |                                             | 19,770  |                   |        
|Billings in excess of contract revenues   |                                                                                                                      |                                             | 6,762   |                   |        
|Current maturities of long-term debt      |                                                                                                                      |                                             | 9,500   |                   |        
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total current liabilities                   |         |                   | 64,373 
|Long-term debt                            |                                                                                                                      |                                             | 153,000 |                   |        
|Deferred income taxes                     |                                                                                                                      |                                             | 44,224  |                   |        
|Other                                     |                                                                                                                      |                                             | 6,771   |                   |        
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total liabilities                           |         |                   | 268,368
|Minority interests                        |                                                                                                                      |                                             | 4,010   |                   |        
|Commitments and contingencies (Note 8)    |                                                                                                                      |                                             |        |                   |        
|Stockholders' deficit:                    |                                                                                                                      |                                             |         |                   |        
|                                          | Preferred stock, $.01 par value; 250,000 shares authorized:
45,000 issued; 44,675 outstanding in 2001 and 2000       |                                             |         | 1                 |        
|                                          | Common stock, $.01 par value; 50,000,000 shares authorized:
5,000,000 issued; 4,902,700 outstanding in 2001 and 2000 |                                             |         | 50                |        
|                                          | Additional paid-in capital                                                                                           |                                             |         | 50,457            |        
|                                          | Accumulated deficit                                                                                                  |                                             |         | (80,704           | )      
|                                          | Accumulated other comprehensive loss                                                                                 |                                             |         | (601              | )      
|                                          | Treasury stock, at cost (325 preferred shares, 97,300 common shares in 2001 and 2000)                                |                                             |         | (422              | )      
|                                          | Note receivable from stockholder                                                                                     |                                             |         | (86               | )      
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total stockholders' deficit                 |         |                   | (31,305
|                                          |                                                                                                                      |                                             |         |                   |        
|                                          |                                                                                                                      | Total liabilities and stockholders' deficit |         | $                 | 241,073
|                                          |                                                                                                                      |                                             |         |                   |        

See
notes to unaudited condensed consolidated financial statements.

2

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Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands)

|                                    |                                                   | Three Months Ended March 31, |       
|----------------------------------- | ------------------------------------------------- | ---------------------------- | ------
|
|Contract revenues                   |                                                   | $                            | 72,560
|Costs of contract revenues          |                                                   |                              | 58,483
|                                    |                                                   |                              |       
|                                    | Gross profit                                      |                              |       
|General and administrative expenses |                                                   |                              | 5,461 
|                                    |                                                   |                              |       
|                                    | Operating income                                  |                              |       
|Interest expense, net               |                                                   |                              | (4,429
|Equity in loss of joint venture     |                                                   |                              | (190  
|                                    |                                                   |                              |       
|                                    | Income before income taxes and minority interests |                              |       
|Income tax expense                  |                                                   |                              | (1,795
|Minority interests                  |                                                   |                              | (638  
|                                    |                                                   |                              |       
|                                    | Net income                                        |                              | $     
|                                    |                                                   |                              |       

See
notes to unaudited condensed consolidated financial statements.

3

---

Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

|                                                                                 |                                                       | Three Months Ended March 31,              |                                         
|-------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ----------------------------------------
|
|Operating Activities                                                             |                                                       |                                           |                                         
|Net income                                                                       |                                                       | $                                         | 1,564                                   
|Adjustments to reconcile net income to net cash flows from operating activities: |                                                       |                                           |                                         
|                                                                                 | Depreciation                                          |                                           |                                         
|                                                                                 | Loss of joint venture                                 |                                           |                                         
|                                                                                 | Minority interests                                    |                                           |                                         
|                                                                                 | Deferred income taxes                                 |                                           |                                         
|                                                                                 | Loss (gain) on dispositions of property and equipment |                                           |                                         
|                                                                                 | Other, net                                            |                                           |                                         
|                                                                                 | Changes in assets and liabilities:                    |                                           |                                         
|                                                                                 |                                                       | Accounts receivable, net                  |                                         
|                                                                                 |                                                       | Contract revenues in excess of billings   |                                         
|                                                                                 |                                                       | Inventories                               |                                         
|                                                                                 |                                                       | Prepaid expenses and other current assets |                                         
|                                                                                 |                                                       | Accounts payable and accrued expenses     |                                         
|                                                                                 |                                                       | Billings in excess of contract revenues   |                                         
|                                                                                 |                                                       |                                           |                                         
|                                                                                 |                                                       |                                           | Net cash flows from operating activities
|Investing Activities                                                             |                                                       |                                           |                                         
|Purchases of property and equipment                                              |                                                       |                                           | (550                                    
|Dispositions of property and equipment                                           |                                                       |                                           | 56                                      
|Distributions from and investments in joint ventures, net                        |                                                       |                                           |                                        
|                                                                                 |                                                       |                                           |                                         
|                                                                                 |                                                       |                                           | Net cash flows from investing activities
|Financing Activities                                                             |                                                       |                                           |                                         
|Repayments of long-term debt                                                     |                                                       |                                           | (2,000                                  
|Borrowings (repayments) of revolving loans, net                                  |                                                       |                                           | 9,500                                   
|Repayment on notes receivable from stockholders                                  |                                                       |                                           | 15                                      
|                                                                                 |                                                       |                                           |                                         
|                                                                                 |                                                       |                                           | Net cash flows from financing activities
|                                                                                 |                                                       |                                           |                                         
|Net change in cash and equivalents                                               |                                                       |                                           | (266                                    
|Cash and equivalents at beginning of period                                      |                                                       |                                           | 1,137                                   
|                                                                                 |                                                       |                                           |                                         
|Cash and equivalents at end of period                                            |                                                       | $                                         | 871                                     
|                                                                                 |                                                       |                                           |                                         
|Supplemental Cash Flow Information                                               |                                                       |                                           |                                         
|                                                                                 | Cash paid for interest                                |                                           | $                                       
|                                                                                 |                                                       |                                           |                                         
|                                                                                 | Cash paid for taxes                                   |                                           | $                                       
|                                                                                 |                                                       |                                           |                                         

See
notes to unaudited condensed consolidated financial statements.

4

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GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(dollars in thousands)

1. Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, these financial statements do not include all the information in the notes required by generally accepted accounting principles for complete financial
statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair
presentation of the financial position, results of operations and cash flows as of and for the dates presented. The unaudited condensed consolidated financial statements and notes herein should be
read in conjunction with the audited consolidated financial statements of Great Lakes Dredge & Dock Corporation and Subsidiaries (the "Company") and the notes thereto, included in the Company's
Annual Report filed on Form 10-K for the year ended December 31, 2000.

The
condensed consolidated results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.

2. Allocation of equipment cost

The Company can have significant fluctuations in equipment utilization throughout the year. Accordingly, for interim reporting, the Company defers or accrues
fixed equipment costs and amortizes the expenses in proportion to revenues recognized over the year to better match revenues and expenses.

3. Financial instruments and risk management

Effective January 1, 2001, the Company adopted Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133), as amended, which requires that all derivative instruments be reported in the balance sheet at fair value and establishes criteria for designation and effectiveness of hedge relationships.
Changes in the fair value of derivative instruments designated as cash flow hedges are recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair
value of derivative instruments which do not qualify for hedge treatment or are designated as fair value hedges are recorded in earnings as the changes occur. Any change in fair value resulting from
ineffectiveness, as defined by SFAS 133, is recognized immediately in earnings.

The
Company uses derivative instruments to manage commodity price and foreign currency exchange risks. Such instruments are not used for trading purposes. As of March 31, 2001,
the Company is party to various swap arrangements to hedge the price of a portion of its diesel fuel purchase requirements for work in its backlog to be performed through January 2002. As of
March 31, 2001, there were 7,007,000 gallons remaining on these contracts. Under these agreements, the Company will pay fixed prices ranging from $0.83 to $1.03 per gallon. At March 31,
2001 and December 31, 2000, the unrealized loss on these contracts was estimated to be $985 and $1,200, respectively, based on quoted market prices. The unrealized loss at March 31, 2001
is recorded in accrued liabilities on the balance sheet.

5

---

Upon adoption of SFAS 133, the Company designated these fuel hedge arrangements as cash flow hedges, resulting in the following activity in accumulated other comprehensive loss
(net of income taxes):

Cumulative effect of adopting SFAS 133 as of January 1, 2001

$
(745
)Losses reclassified into earnings from accumulated other comprehensive loss


274Change in fair value of derivatives


(130
)Accumulated other comprehensive loss as of March 31, 2001

$
(601
)


Ineffectiveness
related to these fuel hedge arrangements was determined to be immaterial. The remaining losses included in accumulated other comprehensive loss at March 31,
2001 will be reclassified into earnings over the next ten months, the remaining term of the hedge arrangements.

The
carrying values of other financial instruments included in current assets and current liabilities approximate fair values due to the short-term maturities of these instruments.
The carrying value of long-term bank debt is a reasonable estimate of its fair value as interest rates are variable, based on the prevailing market rates. The fair value of the Company's $115,000
long-term subordinated notes was $116,725 and $114,425 at March 31, 2001 and December 31, 2000, respectively, based on quoted market prices. The Company is contingently liable under
letters of credit and other financial guarantees. It is not practicable to estimate the fair value of these financial instruments; however, the Company does not expect any material losses to result
from these financial instruments since performance is not likely to be required.

4. Accounts receivable

Accounts receivable at March 31, 2001 and December 31, 2000 are as follows:

March 31, 2001

December 31, 2000Completed contracts

$
17,509

$
8,935Contracts in progress


18,584


29,102Retainage


2,994


3,52839,087


41,565Allowance for doubtful accounts


(987
)

(987
)$
38,100

$
40,578


6

---

5. Contracts in progress

The components of contracts in progress at March 31, 2001 and December 31, 2000 are as follows:

March 31, 2001

December 31, 2000Costs and earnings in excess of billings:Costs and earnings for contracts in progress

$
84,073

$
265,765Prepaid contract costs


(2,873
)

(2,788
)Amounts billed


(65,606
)

(246,000
)Costs and earnings in excess of billings for contracts in progress


15,594


16,977Costs and earnings in excess of billings for completed contracts


2,255


1,565$
17,849

$
18,542Billings in excess of costs and earnings:Amounts billed

$
(142,155
)
$
(77,837
)Costs and earnings for contracts in progress


134,918


69,217$
(7,237
)
$
(8,620
)


The
Company received advanced payments related to a long-term foreign contract that are considered billings in excess of costs and earnings. The contract commenced in 1999 and is
expected to be completed over approximately four years. These advance payment amounts are being earned as the work is performed over the duration of the contract. The amounts of $475 and $757 related
to contract performance anticipated to be beyond one year are included in other long-term liabilities at March 31, 2001 and December 31, 2000, respectively.

6. Accrued expenses

Accrued expenses at March 31, 2001 and December 31, 2000 are as follows:

March 31, 2001

December 31, 2000Foreign income taxes

$
6,562

$
6,341Payroll and employee benefits


2,562


5,787Interest


2,150


5,310Insurance


4,015


4,341U.S. income and other taxes


2,157


2,518Derivative liability


985


Other


1,339


1,339$
19,770

$
25,636


7

---

7. Segment information

The Company and its subsidiaries operate in one reportable segment of providing dredging services, which includes three primary types of work: capital,
maintenance and beach nourishment. Revenues by type of work for the three months ended March 31, 2001 and 2000 are as follows:

Three Months Ended March 31,2001

2000Capital

$
41,100

$
56,130Maintenance


7,365


24,632Beach nourishment


24,095


8,134$
72,560

$
88,896


8. Commitments and contingencies

In November 1999, the Company entered into a construction agency agreement to manage the construction of a 5,000 cubic meter hopper dredge. The dredge
is expected to cost approximately $50 million and be delivered by the end of 2001. The Company has indemnified the owner up to 85% of the costs during construction and has entered into a long-term
operating lease to operate the dredge upon completion.

At
March 31, 2001, the Company is contingently liable, in the normal course of business, for $6,235 in letters of credit related primarily to contract performance guarantees.

The
Company's joint venture equity investee, Amboy Aggregates, has a mortgage loan with a bank, which contains certain restrictive covenants, including limitations on the amount of
distributions to its joint venture partners. The Company has guaranteed 50% of the outstanding mortgage principal and accrued interest, which totaled $2,795 at March 31, 2001.

As
is customary with negotiated contracts with the federal government, the government has the right to audit the books and records of the Company to ensure compliance with such
contracts and applicable federal laws. The government has the ability to seek a price adjustment based on the results of such audit. Any such audits have not had and are not expected to have a
material impact on the financial position or operations of the Company.

In
the normal course of business, the Company is a defendant in various legal proceedings. Resolution of these claims is not expected to have a material impact on the financial
position or operations of the Company.

9. Subsequent event

In April 2001, the Company purchased 80% of the capital stock of North American Site Developers, Inc., a demolition service provider in the
Boston, Massachusetts area. The purchase consideration for the acquisition included (1) $35.0 million in cash payable to the stockholders of NASDI, and (2) two junior subordinated
promissory notes totaling $3.0 million from NASDI payable to the NASDI management shareholders. The Company issued $40.0 million of its 111/4% senior subordinated notes due 2008,
in order to fund the cash portion of the acquisition price and related fees and expenses.

In
connection with the acquisition, each of the two NASDI management stockholders entered into three-year employment agreements with NASDI, containing incentives to achieve certain
earnings levels, as well as non-compete provisions should the NASDI management stockholders leave NASDI.

8

---

The following unaudited pro forma results of operations have been prepared assuming the acquisition had occurred as of the beginning of the periods presented, including adjustments to
the historical financial statements for amortization of goodwill, increased interest on debt incurred to finance the acquisition, and adjustment of certain bonus compensation paid to shareholders to
reflect bonus amounts as allowed per the terms of the purchase agreement. The unaudited pro forma operating results are not necessarily indicative of operating results that would have occurred had
these acquisitions been consummated at the beginning of the periods presented, or of future operating results.

Three Months Ended March 31,2001

2000Contract revenues

$
81,266

$
111,596Operating income


10,419


18,223Income before income taxes and minority interests


4,588


12,331Net income


1,544


5,362


10. Supplemental condensed consolidating financial information

Included in the Company's long-term debt is $115,000 of 111/4% senior subordinated notes which will mature on August 15, 2008. The
payment obligations of the Company under the senior subordinated notes are guaranteed by certain of the Company's wholly owned domestic subsidiaries ("Subsidiary Guarantors"). Such guarantees are
full, unconditional and joint and several. Separate financial statements of the Subsidiary Guarantors are not presented because the Company's management has determined that they would not be material
to investors. The following supplemental financial information sets forth, on a combined basis, the balance sheets, statements of operations and statements of cash flows for the Subsidiary Guarantors,
the Company's non-guarantor subsidiaries and for the Company ("GLD Corporation").

9

---

Condensed Consolidating Balance Sheet at March 31, 2001

|                                               |                                                              | Guarantor Subsidiaries    |         | Other Subsidiaries |        | GLD Corporation |       | Eliminations |         | Consolidated Totals |        
|---------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | ------------------ | ------ | --------------- | ----- | ------------ | ------- | ------------------- | -------
|ASSETS                                         |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|Current assets:                                |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               | Cash and equivalents                                         |                           | $       | 798                |        | $               | 73    |              | $       |                    |        
|                                               | Accounts receivable, net                                     |                           |         | 36,792             |        |                 | 1,308 |              |         |                    |        
|                                               | Receivables from affiliates                                  |                           |         | 4,325              |        |                 | 8,799 |              |         |                    |        
|                                               | Current portion of net investment in direct financing leases |                           |         |                   |        |                 | 1,789 |              |         | 1,874               |        
|                                               | Contract revenues in excess of billings                      |                           |         | 14,981             |        |                 | 2,868 |              |         |                    |        
|                                               | Inventories                                                  |                           |         | 10,321             |        |                 | 4,353 |              |         |                    |        
|                                               | Prepaid expenses and other current assets                    |                           |         | 13,852             |        |                 | 994   |              |         | 738                 |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total current assets      |         |                    | 81,069 |                 |       | 20,184       |         |                     | 2,612  
|Property and equipment, net                    |                                                              |                           | 78,378  |                    |        | 14,024          |       |              | 42,623  |                     |        
|Net investment in direct financing leases      |                                                              |                           |        |                    |        | 1,469           |       |              | 1,176   |                     |        
|Investments in subsidiaries                    |                                                              |                           | 18,125  |                    |        |                |       |              | 124,002 |                     |        
|Notes receivable from affiliate                |                                                              |                           | 15,189  |                    |        |                |       |              |        |                     |        
|Inventories                                    |                                                              |                           | 7,212   |                    |        |                |       |              |        |                     |        
|Investments in joint ventures                  |                                                              |                           | 6,204   |                    |        |                |       |              |        |                     |        
|Other assets                                   |                                                              |                           | 2,109   |                    |        |                |       |              | 3,445   |                     |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | $                         | 208,286 |                    | $      | 35,677          |       | $            | 173,858 |                     | $      
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|Current liabilities:                           |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               | Accounts payable                                             |                           | $       | 25,244             |        | $               | 3,088 |              | $       |                    |        
|                                               | Payables to affiliates                                       |                           |         | 7,058              |        |                 | 4,131 |              |         | 1,935               |        
|                                               | Accrued expenses                                             |                           |         | 7,874              |        |                 | 1,879 |              |         | 10,017              |        
|                                               | Current portion of obligations under capital leases          |                           |         |                   |        |                 | 3,663 |              |         |                    |        
|                                               | Billings in excess of contract revenues                      |                           |         | 6,762              |        |                 |      |              |         |                    |        
|                                               | Current maturities of long-term debt                         |                           |         |                   |        |                 |      |              |         | 9,500               |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total current liabilities |         |                    | 46,938 |                 |       | 12,761       |         |                     | 21,452 
|Long-term debt                                 |                                                              |                           |        |                    |        |                |       |              | 153,000 |                     |        
|Obligations under capital leases               |                                                              |                           |        |                    |        | 2,645           |       |              |        |                     |        
|Note payable to affiliate                      |                                                              |                           |        |                    |        |                |       |              | 15,189  |                     |        
|Deferred income taxes                          |                                                              |                           | 30,520  |                    |        | 117             |       |              | 13,587  |                     |        
|Other                                          |                                                              |                           | 5,167   |                    |        | 270             |       |              | 1,334   |                     |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total liabilities         |         |                    | 82,625 |                 |       | 15,793       |         |                     | 204,562
|Minority interests                             |                                                              |                           |        |                    |        |                |       |              |        |                     |        
|Stockholders' equity (deficit)                 |                                                              |                           | 125,661 |                    |        | 19,884          |       |              | (30,704 | )                   |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | $                         | 208,286 |                    | $      | 35,677          |       | $            | 173,858 |                     | $      
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        

10

---

Condensed Consolidating Balance Sheet at December 31, 2000

|                                               |                                                              | Guarantor Subsidiaries    |         | Other Subsidiaries |        | GLD Corporation |       | Eliminations |         | Consolidated Totals |        
|---------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | ------------------ | ------ | --------------- | ----- | ------------ | ------- | ------------------- | -------
|ASSETS                                         |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|Current assets:                                |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               | Cash and equivalents                                         |                           | $       | (654               | )      | $               | 1,791 |              | $       |                    |        
|                                               | Accounts receivable, net                                     |                           |         | 37,558             |        |                 | 3,020 |              |         |                    |        
|                                               | Receivables from affiliates                                  |                           |         | 7,956              |        |                 | 6,186 |              |         | 9                   |        
|                                               | Current portion of net investment in direct financing leases |                           |         |                   |        |                 | 1,714 |              |         | 1,830               |        
|                                               | Contract revenues in excess of billings                      |                           |         | 17,254             |        |                 | 1,288 |              |         |                    |        
|                                               | Inventories                                                  |                           |         | 10,694             |        |                 | 3,963 |              |         |                    |        
|                                               | Prepaid expenses and other current assets                    |                           |         | 15,651             |        |                 | 844   |              |         | 748                 |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total current assets      |         |                    | 88,459 |                 |       | 18,806       |         |                     | 2,587  
|Property and equipment, net                    |                                                              |                           | 79,881  |                    |        | 14,454          |       |              | 43,327  |                     |        
|Net investment in direct financing leases      |                                                              |                           |        |                    |        | 1,946           |       |              | 1,661   |                     |        
|Investments in subsidiaries                    |                                                              |                           | 16,105  |                    |        |                |       |              | 119,326 |                     |        
|Notes receivable from affiliate                |                                                              |                           | 15,815  |                    |        |                |       |              |        |                     |        
|Inventories                                    |                                                              |                           | 6,773   |                    |        |                |       |              |        |                     |        
|Investments in joint ventures                  |                                                              |                           | 6,394   |                    |        |                |       |              |        |                     |        
|Other assets                                   |                                                              |                           | 2,109   |                    |        |                |       |              | 3,640   |                     |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | $                         | 215,536 |                    | $      | 35,206          |       | $            | 170,541 |                     | $      
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|Current liabilities:                           |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               | Accounts payable                                             |                           | $       | 34,901             |        | $               | 2,903 |              | $       |                    |        
|                                               | Payables to affiliates                                       |                           |         | 5,310              |        |                 | 5,482 |              |         | 3,359               |        
|                                               | Accrued expenses                                             |                           |         | 10,141             |        |                 | 2,005 |              |         | 13,490              |        
|                                               | Current portion of obligations under capital leases          |                           |         |                   |        |                 | 3,544 |              |         |                    |        
|                                               | Billings in excess of contract revenues                      |                           |         | 7,863              |        |                 |      |              |         |                    |        
|                                               | Current maturities of long-term debt                         |                           |         |                   |        |                 |      |              |         | 9,000               |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total current liabilities |         |                    | 58,215 |                 |       | 13,934       |         |                     | 25,849 
|Long-term debt                                 |                                                              |                           |        |                    |        |                |       |              | 146,000 |                     |        
|Obligations under capital leases               |                                                              |                           |        |                    |        | 3,607           |       |              |        |                     |        
|Note payable to affiliate                      |                                                              |                           |        |                    |        |                |       |              | 15,815  |                     |        
|Deferred income taxes                          |                                                              |                           | 30,310  |                    |        | 168             |       |              | 13,824  |                     |        
|Other                                          |                                                              |                           | 5,416   |                    |        | 280             |       |              | 1,336   |                     |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | Total liabilities         |         |                    | 93,941 |                 |       | 17,989       |         |                     | 202,824
|Minority interests                             |                                                              |                           |        |                    |        |                |       |              |        |                     |        
|Stockholders' equity (deficit)                 |                                                              |                           | 121,595 |                    |        | 17,217          |       |              | (32,283 | )                   |        
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        
|                                               |                                                              | $                         | 215,536 |                    | $      | 35,206          |       | $            | 170,541 |                     | $      
|                                               |                                                              |                           |         |                    |        |                 |       |              |         |                     |        

11

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Condensed Consolidating Statement of Income for the three months ended March 31, 2001

|                                    |                                                   | Guarantor Subsidiaries |         | Other Subsidiaries |   | GLD Corporation |       | Eliminations |        | Consolidated Totals |  
|----------------------------------- | ------------------------------------------------- | ---------------------- | ------- | ------------------ | - | --------------- | ----- | ------------ | ------ | ------------------- | -
|Contract revenues                   |                                                   | $                      | 67,409  |                    | $ | 13,451          |       | $            |       |                     | $
|Costs of contract revenues          |                                                   |                        | (56,989 | )                  |   | (9,352          | )     |              | (442   | )                   |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Gross profit                                      |                        |         | 10,420             |   |                 | 4,099 |              |        | (442                | )
|General and administrative expenses |                                                   |                        | (4,417  | )                  |   | (1,044          | )     |              |       |                     |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Operating income                                  |                        |         | 6,003              |   |                 | 3,055 |              |        | (442                | )
|Interest, net                       |                                                   |                        | 156     |                    |   | (203            | )     |              | (4,382 | )                   |  
|Equity in earnings of subsidiaries  |                                                   |                        | 2,021   |                    |   |                |       |              | 4,675  |                     |  
|Equity in loss of joint venture     |                                                   |                        | (190    | )                  |   |                |       |              |       |                     |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Income before income taxes and minority interests |                        |         | 7,990              |   |                 | 2,852 |              |        | (149                | )
|Income tax (expense) benefit        |                                                   |                        | (3,323  | )                  |   | (185            | )     |              | 1,713  |                     |  
|Minority interests                  |                                                   |                        |        |                    |   |                |       |              |       |                     |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Net income                                        |                        | $       | 4,667              |   | $               | 2,667 |              | $      | 1,564               |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  

Condensed Consolidating Statement of Income for the three months ended March 31, 2000

|                                    |                                                   | Guarantor Subsidiaries |         | Other Subsidiaries |   | GLD Corporation |       | Eliminations |        | Consolidated Totals |  
|----------------------------------- | ------------------------------------------------- | ---------------------- | ------- | ------------------ | - | --------------- | ----- | ------------ | ------ | ------------------- | -
|Contract revenues                   |                                                   | $                      | 80,609  |                    | $ | 13,950          |       | $            |       |                     | $
|Costs of contract revenues          |                                                   |                        | (67,934 | )                  |   | (10,445         | )     |              | (219   | )                   |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Gross profit (loss)                               |                        |         | 12,675             |   |                 | 3,505 |              |        | (219                | )
|General and administrative expenses |                                                   |                        | (4,266  | )                  |   | (971            | )     |              | (106   | )                   |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Operating income (loss)                           |                        |         | 8,409              |   |                 | 2,534 |              |        | (325                | )
|Interest, net                       |                                                   |                        | 57      |                    |   | 23              |       |              | (4,548 | )                   |  
|Equity in earnings of subsidiaries  |                                                   |                        | 1,810   |                    |   |                |       |              | 5,546  |                     |  
|Equity in loss of joint venture     |                                                   |                        | (194    | )                  |   |                |       |              |       |                     |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Income before income taxes and minority interests |                        |         | 10,082             |   |                 | 2,557 |              |        | 673                 |  
|Income tax (expense) benefit        |                                                   |                        | (4,255  | )                  |   | (324            | )     |              | 1,878  |                     |  
|Minority interests                  |                                                   |                        |        |                    |   |                |       |              |       |                     |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  
|                                    | Net income                                        |                        | $       | 5,827              |   | $               | 2,233 |              | $      | 2,551               |  
|                                    |                                                   |                        |         |                    |   |                 |       |              |        |                     |  

12

---

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2001

|                                                                                 |                                                   | Guarantor Subsidiaries                    |       | Other Subsidiaries |         | GLD Corporation |        | Eliminations |        | Consolidated Totals |       
|-------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | ----- | ------------------ | ------- | --------------- | ------ | ------------ | ------ | ------------------- | ------
|Operating Activities                                                             |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|Net income                                                                       |                                                   | $                                         | 4,667 |                    | $       | 2,667           |        | $            | 1,564  |                     | $     
|Adjustments to reconcile net income to net cash flows from operating activities: |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Depreciation                                      |                                           |       | 2,135              |         |                 | 388    |              |        | 664                 |       
|                                                                                 | (Loss) earnings of subsidiaries and joint venture |                                           |       | (1,839             | )       |                 |       |              |        | (4,667              | )     
|                                                                                 | Minority interests                                |                                           |       |                   |         |                 |       |              |        |                    |       
|                                                                                 | Deferred income taxes                             |                                           |       | 210                |         |                 | (51    | )            |        | (79                 | )     
|                                                                                 | Gain on dispositions of property and equipment    |                                           |       | (56                | )       |                 |       |              |        |                    |       
|                                                                                 | Other, net                                        |                                           |       | (249               | )       |                 | 71     |              |        | 394                 |       
|                                                                                 | Changes in assets and liabilities:                |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 |                                                   | Accounts receivable                       |       |                    | 766     |                 |        | 1,712        |        |                     |      
|                                                                                 |                                                   | Contract revenues in excess of billings   |       |                    | 2,273   |                 |        | (1,580       | )      |                     |      
|                                                                                 |                                                   | Inventories                               |       |                    | (66     | )               |        | (390         | )      |                     |      
|                                                                                 |                                                   | Prepaid expenses and other current assets |       |                    | 1,799   |                 |        | (150         | )      |                     | 236   
|                                                                                 |                                                   | Accounts payable and accrued expenses     |       |                    | (12,637 | )               |        | 59           |        |                     | (3,745
|                                                                                 |                                                   | Billings in excess of contract revenues   |       |                    | (1,101  | )               |        |             |        |                     | (282  
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from operating activities          |                                           |       | (4,098             | )       |                 | 2,726  |              |        | (5,915              | )     
|Investing Activities                                                             |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|Purchases of property and equipment                                              |                                                   |                                           | (511  | )                  |         | (39             | )      |              |       |                     |       
|Proceeds from dispositions of property and equipment                             |                                                   |                                           | 56    |                    |         |                |        |              |       |                     |       
|Principal payments (receipts) on direct financing leases                         |                                                   |                                           |      |                    |         | 402             |        |              | (402   | )                   |       
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from investing activities          |                                           |       | (455               | )       |                 | 363    |              |        | (402                | )     
|Financing Activities                                                             |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|Repayments of long-term debt                                                     |                                                   |                                           |      |                    |         |                |        |              | (2,000 | )                   |       
|Borrowing (repayments) of revolving loans, net                                   |                                                   |                                           |      |                    |         |                |        |              | 9,500  |                     |       
|Principal receipts (payments) on capital leases                                  |                                                   |                                           |      |                    |         | (843            | )      |              | 843    |                     |       
|Net change in accounts with affiliates                                           |                                                   |                                           | 6,005 |                    |         | (3,964          | )      |              | (2,041 | )                   |       
|Repayment on notes receivable from stockholders                                  |                                                   |                                           |      |                    |         |                |        |              | 15     |                     |       
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from financing activities          |                                           |       | 6,005              |         |                 | (4,807 | )            |        | 6,317               |       
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net change in cash and equivalents                |                                           |       | 1,452              |         |                 | (1,718 | )            |        |                    |       
|                                                                                 | Cash and equivalents at beginning of year         |                                           |       | (654               | )       |                 | 1,791  |              |        |                    |       
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       
|                                                                                 | Cash and equivalents at end of year               |                                           | $     | 798                |         | $               | 73     |              | $      |                    |       
|                                                                                 |                                                   |                                           |       |                    |         |                 |        |              |        |                     |       

13

---

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2000

|                                                                                 |                                                   | Guarantor Subsidiaries                    |        | Other Subsidiaries |         | GLD Corporation |        | Eliminations |        | Consolidated Totals |       
|-------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | ------ | ------------------ | ------- | --------------- | ------ | ------------ | ------ | ------------------- | ------
|Operating Activities                                                             |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|Net income                                                                       |                                                   | $                                         | 5,827  |                    | $       | 2,233           |        | $            | 2,551  |                     | $     
|Adjustments to reconcile net income to net cash flows from operating activities: |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Depreciation                                      |                                           |        | 2,021              |         |                 | 821    |              |        | 267                 |       
|                                                                                 | (Loss) earnings of subsidiaries and joint venture |                                           |        | (1,616             | )       |                 |       |              |        | (5,546              | )     
|                                                                                 | Minority interests                                |                                           |        |                   |         |                 |       |              |        |                    |       
|                                                                                 | Deferred income taxes                             |                                           |        | (1,088             | )       |                 | (44    | )            |        | 63                  |       
|                                                                                 | Loss on dispositions of property and equipment    |                                           |        | 37                 |         |                 |       |              |        | 287                 |       
|                                                                                 | Other, net                                        |                                           |        | (95                | )       |                 | (123   | )            |        | 639                 |       
|                                                                                 | Changes in assets and liabilities:                |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 |                                                   | Accounts receivable                       |        |                    | (21,176 | )               |        | (185         | )      |                     |      
|                                                                                 |                                                   | Contract revenues in excess of billings   |        |                    | (4,154  | )               |        | 171          |        |                     |      
|                                                                                 |                                                   | Inventories                               |        |                    | 1,033   |                 |        | (7           | )      |                     |      
|                                                                                 |                                                   | Prepaid expenses and other current assets |        |                    | 433     |                 |        | 610          |        |                     | (1,374
|                                                                                 |                                                   | Accounts payable and accrued expenses     |        |                    | 13,879  |                 |        | 1,628        |        |                     | (3,807
|                                                                                 |                                                   | Billings in excess of contract revenues   |        |                    | 1,020   |                 |        | (387         | )      |                     |      
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from operating activities          |                                           |        | (3,879             | )       |                 | 4,717  |              |        | (6,920              | )     
|Investing Activities                                                             |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|Purchases of property and equipment                                              |                                                   |                                           | (2,369 | )                  |         | (522            | )      |              |       |                     |       
|Dispositions of property and equipment                                           |                                                   |                                           | 321    |                    |         |                |        |              |       |                     |       
|Distributions from and investments in joint venture, net                         |                                                   |                                           | (84    | )                  |         |                |        |              |       |                     |       
|Principal payments (receipts) on direct financing leases                         |                                                   |                                           |       |                    |         | 1,306           |        |              | (1,306 | )                   |       
|Payments (receipts) on note with affiliate                                       |                                                   |                                           |       |                    |         | 172             |        |              | (172   | )                   |       
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from investing activities          |                                           |        | (2,132             | )       |                 | 956    |              |        | (1,478              | )     
|Financing Activities                                                             |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|Repayments of long-term debt                                                     |                                                   |                                           |       |                    |         |                |        |              | (1,250 | )                   |       
|Borrowing (repayments) of revolving loans, net                                   |                                                   |                                           |       |                    |         |                |        |              | 10,500 |                     |       
|Principal receipts (payments) on capital leases                                  |                                                   |                                           | 1,305  |                    |         | (2,161          | )      |              | 856    |                     |       
|Net change in accounts with affiliates                                           |                                                   |                                           | 6,034  |                    |         | (4,302          | )      |              | (1,732 | )                   |       
|Repayment on notes receivable from stockholders                                  |                                                   |                                           |       |                    |         |                |        |              | 24     |                     |       
|Dividends                                                                        |                                                   |                                           | 1,440  |                    |         | (1,800          | )      |              |       |                     |       
|Contributions                                                                    |                                                   |                                           | (1,080 | )                  |         | 1,440           |        |              |       |                     |       
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net cash flows from financing activities          |                                           |        | 7,699              |         |                 | (6,823 | )            |        | 8,398               |       
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Net change in cash and equivalents                |                                           |        | 1,688              |         |                 | (1,150 | )            |        |                    |       
|                                                                                 | Cash and equivalents at beginning of period       |                                           |        | 284                |         |                 | 1,249  |              |        |                    |       
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       
|                                                                                 | Cash and equivalents at end of period             |                                           | $      | 1,972              |         | $               | 99     |              | $      |                    |       
|                                                                                 |                                                   |                                           |        |                    |         |                 |        |              |        |                     |       

14

---



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Statement Under the Private Securities Litigation Reform Act

Certain information in this quarterly report on Form 10-Q, including but not limited to the Management's Discussion and Analysis of Financial Condition and
Results of Operations, may constitute forward-looking statements as such term is defined in Section 27A of the Securities Exchange Act of 1933 (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934. Certain forward-looking statements can be identified by the use of forward-looking terminology such as, "believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," "anticipates," or "hopeful," or the negative thereof or other comparable terminology, or by discussions of strategy, plans or intentions. Forward-looking statements
involve risks and uncertainties, including sales initiatives and those described in the Risk Factors section of Item 1 of the Company's Form S-4 Registration Statement (Registration No. 333-64687),
which could cause actual results to be materially different than those in the forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update such
information.

General

The Company is the largest provider of dredging services in the United States. Dredging generally involves the enhancement or preservation of navigability of
waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance (including
controlled disposal dredging) and Beach Nourishment, in which the Company experienced a combined U.S. market share of the projects on which it bids ("bid market") of 37% in 2000. In addition, the
Company has continued its role as the only U.S. dredging contractor with significant international operations, which averaged 17% of its contract revenues over the last three years.

Most
dredging contracts are obtained through competitive bidding on terms specified by the party inviting the bid. The nature of the specified services dictates the types of
equipment, material and labor involved, all of which affect the cost of performing the contract and the price that dredging contractors will bid.

Substantially
all of the Company's contracts for dredging services are fixed-price contracts, which provide for remeasurement based on actual quantities dredged. The Company
recognizes contract revenues under the percentage-of-completion method, based on the Company's engineering estimates of the physical percentage completed of each project. Costs of contract revenues
are adjusted to reflect the gross profit percentage expected to be achieved upon ultimate completion of each project. Provisions for estimated losses on contracts in progress are made in the period in
which such losses are determined. Claims for additional compensation due the Company are not recognized in contract revenues until such claims are settled. Billings on contracts are generally
submitted after verification with the customers of physical quantities completed and may not match the timing of revenue recognition. The difference between amounts billed and recognized as revenue is
reflected in the balance sheet as either contract revenues in excess of billings or billings in excess of contract revenues. Significant expenditures incurred incidental to major contracts are
deferred and recognized as costs of contracts based on contract performance over the duration of the related project. These expenditures are reported as prepaid expenses.

The
components of costs of contract revenues are labor, equipment (including depreciation, insurance, fuel, maintenance and supplies), subcontracts, rentals, lease expense and project
overhead. Hourly labor is generally hired on a project basis and laid-off upon completion of the project. Costs of contract revenues vary significantly depending on the type and location of work
performed and assets utilized. Generally, capital projects have the lowest costs of contract revenues as a percent of contract

15

---

revenues and beach nourishment have the highest. Of capital work, domestic projects typically have lower costs of contract revenues than foreign projects.

The
Company's cost structure includes significant fixed costs, averaging approximately 20% to 22% of total costs of contract revenues. The Company can have significant fluctuations in
equipment utilization throughout the year. Accordingly, for interim reporting, the Company prepays or accrues fixed equipment costs and amortizes the expenses in proportion to revenues recognized over
the year to better match revenues and expenses. Costs of contract revenues also include the net gain or loss on dispositions of property and equipment.

The
Company's equity in loss of joint ventures relates to the Company's 50% ownership interest in Amboy Aggregates ("Amboy"), which is accounted for using the equity method. The
Company conducts certain hopper dredging activities, primarily maintenance and beach nourishment projects, through the operations of NATCO Limited Partnership ("NATCO") and North American Trailing
Company ("North American"). Minority interests reflects Ballast Nedam Group N.V.'s respective 25% and 20% interest in NATCO and North American.

Results of Operations

The following table sets forth the components of net income and EBITDA as a percentage of contract revenues for the three months ended March 31, 2001
and 2000:

Three Months Ended March 31,2001

2000Contract revenues

100.0
%
100.0
%Costs of contract revenues

(80.6
)
(82.1
)Gross profit

19.4

17.9General and administrative expenses

(7.5
)
(6.0
)Operating income

11.9

11.9Interest expense, net

(6.1
)
(5.0
)Equity in loss of joint venture

(0.2
)
(0.2
)Income before income taxes and minority interests

5.6

6.7Provision for income tax

(2.5
)
(3.0
)Minority interests

(0.9
)
(0.8
)Net income

2.2
%
2.9
%EBITDA

16.3
%
15.4
%


"EBITDA,"
as provided herein, represents earnings from continuing operations before net interest expense, income taxes and depreciation expense and excludes equity earnings of joint
ventures and minority interests. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles. The Company's EBITDA is included as it is a basis
upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements are tied to similar measures. EBITDA should not be considered in isolation or
as an alternative to net income, cash flows from continuing operations, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles as measures
of the Company's profitability or liquidity. EBITDA as defined herein may differ from similarly titled measures presented by other companies.

16

---

Components of Contract Revenues

The following table sets forth, by type of work, the Company's contract revenues for the three months ended and backlog as of the periods indicated:

Three Months Ended March 31,2001

2000Revenues (in thousands)CapitalU.S.

$
29,658

$
40,619Capitalforeign


11,442


15,511Beach


24,095


8,134Maintenance


7,365


24,632$
72,560

$
88,896


March 31,2001

2000Backlog (in thousands)CapitalU.S.

$
73,352

$
111,982Capitalforeign


55,999


88,650Beach


39,064


2,290Maintenance


17,490


14,544$
185,905

$
217,466


First
quarter 2001 revenues represent a typical first quarter level for the Company, whereas the first quarter 2000 revenues benefited from optimal mechanical equipment efficiency and
increased equipment utilization due to favorable weather conditions. First quarter 2001 revenues of $72.6 million decreased by 18.3% compared to the first quarter of 2000, while first quarter 2001
gross profit of $14.1 million decreased only 11.8%, when compared to the same period of 2000.

Capital
work, which includes large port deepenings and other infrastructure projects, declined during the first quarter of 2001 due to the timing of performing certain capital
projects in backlog. However, the Company expects the domestic capital market to remain strong as Deep Port projects, authorized by the 1986 Water Resource Development Act and subsequent bills,
continue to be announced by the Army Corps of Engineers ("Corps"). Since 1997, the Corps has announced new Deep Port work and expanded existing projects with a revenue value in excess of $2.0 billion,
to be completed through 2005. Since this time, 23 projects with a total revenue value of $688.3 million, have been let for bid through the first quarter of 2001. The Company was the low bidder on ten
of these projects, with a value of $330.3 million, representing 48.0% of the total let for bid. The Company's cumulative market share of Deep Port projects let for bid over the last five years was
60%. The Company's bid market share of total U.S. capital projects (including Deep Port projects) was 35% in 2000.

During
this quarter, significant contract revenues from domestic capital projects included $20.5 million and $2.7 million from channel deepening projects in Wilmington and San Juan,
respectively. Additionally, foreign capital projects in India and Ghana contributed $6.2 million and $3.7 million, respectively, to first quarter revenues.

Beach
nourishment projects include rebuilding of shoreline areas which have been damaged by storm activity or ongoing erosion. First quarter 2001 revenues from beach nourishment
projects increased $15.9 million over the 2000 first quarter, as the Company performed on numerous beach projects won in the third and fourth quarters of 2000 and the first quarter of 2001.
Significant beach

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nourishment projects in Brevard County, Florida; Gulf Shores, Alabama; Ocean Isle, North Carolina; and Patrick Air Force Base, Florida contributed $8.8 million, $4.0 million, $2.4 million, and $2.3
million, respectively, to first quarter revenues.

Maintenance
projects include routine dredging of ports, rivers and channels to remove the regular build up of sediment. Revenues from maintenance projects for the three months ended
March 31, 2001 decreased $17.3 million over the same period of 2000, primarily due to the low level of maintenance backlog at year-end. Several projects were bid and won during the quarter, due
to the increase in precipitation experienced in the Midwest this spring.

First
quarter 2001 revenues of the Company's NATCO hopper dredging subsidiary totaled $13.5 million which was consistent with the first quarter 2000 revenues of $14.0 million.

Backlog

The Company's contract backlog represents management's current estimate of the revenues which will be realized under the portion of the contracts remaining to
be performed. Such estimates are subject to fluctuations based upon the amount of material actually dredged, as well as factors affecting the time required to complete the job. In addition, because
substantially all of the Company's backlog relates to government contracts, the Company's backlog can be canceled at any time without penalty. However, the Company will recover actual committed costs
and profit on work performed up to the date of cancellation. Consequently, backlog is not necessarily indicative of future revenues. The Company's backlog includes only those projects for which the
customer has provided an executed contract.

As
of March 31, 2001, the Company had backlog of $185.9 million, which is down from backlog at March 31, 2000 of $217.5 million, but continues to represent a strong
level for the Company. During the first quarter, domestic projects valued at $101.7 million were let for bid, of which the Company won approximately 37%. In addition, the Company added $12.9 million
to backlog on projects that were pending award at December 31, 2000. The second and third quarter bid markets are expected to improve based on information received from the Corps' offices and
authorizations included in the WRDA bills. As evidenced by the sporadic bidding experienced in 2000, the timing and flow of project bids can have a significant effect on unit pricing. We anticipate
that the bulk of 2001 projects will be
bid over the second and third quarters; however, if postponements occur in the second quarter, it will likely again lead to more competitive bidding and lower margins.

Domestic
capital projects make up $73.4 million or 39.5% of the March 31, 2001 backlog. This includes work remaining on significant Deep Port capital projects in San Juan,
Charleston, Wilmington and Baltimore. The majority of foreign capital project backlog is attributable to the project in Ghana.

The
beach market continued to improve through the first quarter, as a number of the beach nourishment projects, which had been postponed through mid-2000 due to administrative and
funding delays, have subsequently been let for bid. The beach nourishment backlog level of $39.1 million at March 31, 2001 is the highest its been since 1998. According to recent schedules
provided by the Corps, additional beach projects, which the Company estimates are valued in excess of $100 million, remain scheduled for 2001 bids.

Maintenance
backlog of $17.5 million at March 31, 2001, represents an improvement over all quarters of 2000. The abundant precipitation experienced in the Midwest this spring
is expected to result in increased work along the Mississippi River, which should yield high maintenance dredge utilization and improving maintenance margins, as compared to recent drought years.

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Results of Operations

Contract Revenues.Contract revenues were $72.6 million in the first quarter of 2001, a decrease of 18.4% from revenues
of $88.9 million in the first quarter of 2000. As mentioned previously, the 2001 first quarter represents typical first quarter performance for the Company. The 2000 first quarter revenues reflected
high levels of equipment utilization due to favorable weather and improved mechanical equipment efficiency.

Costs of Contract Revenues.Costs of contract revenues for the three months ended March 31, 2001 decreased $14.5
million, or 19.8%, over the three months ended March 31, 2000. The decrease in costs of contract revenues for the 2001 period is a result of the reduction in revenues. As a percentage of
contract revenues, costs of contract revenues were 80.6% for the first quarter of 2001 compared to 82.1% in the same 2000 period. Both 2000 and 2001 first quarter contract margins reflect a favorable
mix of higher margin projects; however, 2000 first quarter margins were also impacted by poor performance on the joint venture project in Egypt, which was completed in 2000.

Gross Profit.Gross profit was $14.1 million for the three months ended March 31, 2001, a decrease of $1.9 million or
11.8% over the three months ended March 31, 2000. The decline in 2001 is a result of the decrease in revenues.

General and Administrative Expenses.General and administrative expenses remained relatively consistent at $5.5 million
for the three months ended March 31, 2001, compared to $5.3 million for the same period of 2000.

Operating Income.Operating income decreased $2.0 million, or 18.9%, to $8.6 million for the three months ended
March 31, 2001 from $10.6 million for the three months ended March 31, 2000, due to the decrease in revenues.

EBITDA.EBITDA decreased $1.9 million or 14.0% to $11.8 million for the three months ended March 31, 2001 from
$13.7 million for the three months ended March 31, 2001, due to the decrease in revenues.

Interest Expense, Net.Net interest expense was $4.4 million for the three months ended March 31, 2001 and 2000.
While the Company's term loan has decreased to $29.0 million at March 31, 2001 compared to $36.3 million at March 31, 2000, revolver borrowings have recently increased due to additional working
capital investment required for certain projects; therefore, interest expense has remained consistent.

Equity in Loss of Joint Ventures.Equity in loss of joint ventures was $0.2 million for the three months ended
March 31, 2001 and 2000. Losses for both periods reflect the ongoing reduction in demand for Amboy's products, which is expected to continue in the foreseeable future.

Income Tax Expense.Income tax expense for the three months ended March 31, 2001 decreased $0.9 million from the
same period of 2000, due to decreased earnings in 2001. The effective tax rate for the three month periods was relatively comparable at 44.9% and 45.3% for 2001and 2000, respectively.

Minority Interests.For the three months ended March 31, 2001, the income attributable to minority interests was
$0.6, compared to $0.7 million for the three months ended March 31, 2000, as a result of the relatively consistent NATCO hopper dredging operations for the respective periods.

Net Income.Net income was $1.6 million for the three months ended March 31, 2001 compared to $2.6 million for
the three months ended March 31, 2000, a decrease of 38.7% resulting from the decline in revenues.

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Liquidity and Capital Resources

The Company's primary sources of liquidity are cash flows from operations and borrowings under the revolving line of credit with the Company's senior lenders.
The Company's primary uses of cash are funding working capital, capital expenditures and debt service.

The
Company's net cash used in operating activities for the three months ended March 31, 2001 and 2000 totaled $7.3 million and $6.1 million, respectively. The Company's use of
cash for operating activities in both periods relates primarily to increased working capital requirements necessitated by certain projects underway during the respective quarters.

The
Company's net cash used in investing activities for the three months ended March 31, 2001 and 2000, totaled $0.5 million and $2.7 million, respectively. The use of cash for
investing activities generally relates to capital expenditures, and has varied due to the timing of incurring such expenditures.

The
Company's net cash flows from financing activities for the three months ended March 31, 2001 and 2000 were $7.5 million and $9.3 million, respectively, and reflect the
Company's utilization of revolver borrowings, net of scheduled repayments of term debt during the respective periods.

Management
believes cash flows from operations and available credit will be sufficient to finance operations, planned capital expenditures and debt service requirements for the
foreseeable future. The Company's ability to fund its working capital needs, planned capital expenditures, scheduled debt payments and to comply with all of the financial covenants under its debt
agreements, depends on its future operating performance and cash flows, which in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are
beyond the Company's control.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The market risk of the Company's financial instruments as of March 31, 2001 has not significantly changed since December 31, 2000. The market
risk profile of the Company on December 31, 2000 is disclosed in the Company's 2000 Annual Report on Form 10-K.

Part II

Item 6 Exhibits and Reports on Form 8-K

(a)  Exhibits

(b)  Reports
on Form 8-K

No
reports on Form 8-K were filed during the quarter ended March 31, 2001.

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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.

|                   |  | GREAT LAKES DREDGE & DOCK CORPORATION
|------------------ |  | -------------------------------------
|Date: May 15, 2001 |  | By:                                  
|                   |  |                                      

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EXHIBIT INDEX

|Number |  | Document Description                                                                                                                                                                                                                     
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.01   |  | Plan and Agreement of Merger dated as of August 19, 1998 between the Company and Great Lakes Dredge & Dock Acquisition, Inc.(1)                                                                                                          
|2.02   |  | Stock Purchase Agreement by and among Great Lakes Dredge & Dock Corporation and Great Lakes/North American Site Developers, Inc. and North American Site Developers, Inc. and the Stockholders of North
American Site Developers, Inc.(3)
|3.01   |  | Restated Certificate of Incorporation of the Company.(1)                                                                                                                                                                                 
|3.02   |  | Bylaws of the Company.(1)                                                                                                                                                                                                                
|4.01   |  | Indenture dated as of August 19, 1998 among the Company, the Subsidiary Guarantors and the Bank of New York, as Trustee.(1)                                                                                                              
|4.02   |  | Form of 111/4% Senior Subordinated Note due 2008 (included in Exhibit 4.01).(1)                                                                                                                                                          
|10.01  |  | Amended and Restated Credit Agreement dated as of April 24, 2001 among the Company, the other loan parties thereto, the financial institutions party thereto and Bank of America, N.A. as administrative agent.(2)                       
|10.02  |  | Second Amendment to Second Amended and Restated Underwriting and Continuing Indemnity Agreement dated as of April 24, 2001.(2)                                                                                                           
|10.03  |  | Stockholders Agreement dated as of April 17, 2001, between Great Lakes Dredge & Dock Corporation, Christopher A. Berardi, Joseph K. Berardi, and Great Lakes/North American Site Developers, Inc.(3)                                     
|10.04  |  | Junior Subordinated Promissory Note dated as of April 17, 2001 between Great Lakes/North American Site Developers, Inc. and Christopher A. Berardi.(3)                                                                                   
|10.05  |  | Junior Subordinated Promissory Note dated as of April 17, 2001 between Great Lakes/North American Site Developers, Inc. and Joseph K. Berardi.(3)                                                                                        

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