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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number 333-64687



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GREAT LAKES DREDGE & DOCK CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                             |  |                                             
|---------------------------------------------------------------------------- |  | --------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)      |  | 13-3634726
(IRS Employer
Identification No.)
|                                                                             |  |                                             
|2122 York Road, Oak Brook, Illinois
(Address of principal executive offices) |  | 60523
(Zip Code)                            

Registrant telephone number, including area code: (630) 574-3000



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Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Yes x   No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

As of
May 8, 2003, there were outstanding 1,616,982 shares of Class A Common Stock, 3,363,900 shares of Class B Common Stock and 44,857 shares of Preferred Stock.



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TABLE OF CONTENTS



|                                                                         |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I - Financial Information                                          
|                                                                         |                                                                                               | Condensed Consolidated Balance Sheets               
|                                                                         |                                                                                               | Condensed Consolidated Statements of Income         
|                                                                         |                                                                                               | Condensed Consolidated Statements of Cash Flows     
|                                                                         |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                                         | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                         | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                                         | Item 4. Controls and Procedures                                                              
|PART II  Other Information                                             
|                                                                         | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                                                               
|CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
|EXHIBIT INDEX                                                           
|Amendment No.6 to the Credit Agreement                                  
|Certification                                                           
|Certification                                                           



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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, 2003

INDEX

|               |                       |  |        |                                                                                                    |  |  |  |  | 
|-------------- | --------------------- |  | ------ | -------------------------------------------------------------------------------------------------- |  |  |  |  | 
|Part I         | Financial Information |  |        |                                                                                                    | 
|               |                       |  | Item 1 | Financial Statements (Unaudited)                                                                   |  |  |  | 
|               |                       |  |        | Condensed Consolidated Balance Sheets at
March 31, 2003 and December 31, 2002                      |  |  |  | 
|               |                       |  |        | Condensed Consolidated Statements of Income
for the Three Months ended March 31, 2003 and 2002     |  |  |  | 
|               |                       |  |        | Condensed Consolidated Statements of Cash Flows
for the Three Months ended March 31, 2003 and 2002 |  |  |  | 
|               |                       |  |        | Notes to Unaudited Condensed Consolidated
Financial Statements                                     |  |  |  | 
|               |                       |  | Item 2 | Managements Discussion and Analysis of
Financial Condition and Results of Operations              |  |  |  | 
|               |                       |  | Item 3 | Quantitative and Qualitative Disclosures
About Market Risk                                         |  |  |  | 
|               |                       |  | Item 4 | Controls and Procedures                                                                            |  |  |  | 
|Part II        | Other Information     |  |        |                                                                                                    | 
|               |                       |  | Item 6 | Exhibits and Reports on Form 8-K                                                                   |  |  |  | 
|Signature      |                       |  |        |                                                                                                    |  | 
|Certifications |                       |  |        |                                                                                                    |  | 
|Exhibit Index  |                       |  |        |                                                                                                    |  | 

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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, |         | December 31,
|                                          |                                                                                         |                                                          |                                             |                             |    | 2003      |         | 2002        
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Assets                                    |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Current assets:                           |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Cash and equivalents                      |                                                                                         | $                                                        | 617                                         |                             |    | $         | 1,456   |             
|Accounts receivable, net                  |                                                                                         |                                                          | 45,197                                      |                             |    |           | 52,125  |             
|Contract revenues in excess of billings   |                                                                                         |                                                          | 17,742                                      |                             |    |           | 13,052  |             
|Inventories                               |                                                                                         |                                                          | 14,121                                      |                             |    |           | 13,282  |             
|Prepaid expenses and other current assets |                                                                                         |                                                          | 18,560                                      |                             |    |           | 18,283  |             
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          | Total current assets                        |                             |    | 96,237    |         |              |    | 98,198  |        
|Property and equipment, net               |                                                                                         |                                                          | 138,723                                     |                             |    |           | 139,419 |             
|Goodwill                                  |                                                                                         |                                                          | 29,405                                      |                             |    |           | 29,405  |             
|Inventories                               |                                                                                         |                                                          | 10,019                                      |                             |    |           | 9,828   |             
|Investments in joint ventures             |                                                                                         |                                                          | 6,462                                       |                             |    |           | 5,552   |             
|Other assets                              |                                                                                         |                                                          | 4,950                                       |                             |    |           | 5,084   |             
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          | Total assets                                |                             | $  | 285,796   |         |              | $  | 287,486 |        
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Liabilities and Stockholders Deficit     |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Current liabilities:                      |                                                                                         |                                                          |                                             |                             |    |           |         |             
|Accounts payable                          |                                                                                         | $                                                        | 31,568                                      |                             |    | $         | 31,598  |             
|Accrued expenses                          |                                                                                         |                                                          | 23,680                                      |                             |    |           | 30,114  |             
|Billings in excess of contract revenues   |                                                                                         |                                                          | 6,362                                       |                             |    |           | 10,915  |             
|Current maturities of long-term debt      |                                                                                         |                                                          | 7,287                                       |                             |    |           | 11,000  |             
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          | Total current liabilities                   |                             |    | 68,897    |         |              |    | 83,627  |        
|Long-term debt                            |                                                                                         |                                                          | 170,779                                     |                             |    |           | 161,769 |             
|Deferred income taxes                     |                                                                                         |                                                          | 46,921                                      |                             |    |           | 46,363  |             
|Other                                     |                                                                                         |                                                          | 5,700                                       |                             |    |           | 5,787   |             
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          | Total liabilities                           |                             |    | 292,297   |         |              |    | 297,546 |        
|Minority interest                         |                                                                                         |                                                          | 2,367                                       |                             |    |           | 2,346   |             
|Commitments and contingencies (Note 10)   |                                                                                         |                                                          |                                            |                             |    |           |        |             
|Stockholders deficit:                    |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          | Preferred stock, $.01 par value; 250,000 shares authorized:                             |                                                          |                                             |                             |    |           |         |              |   
|                                          |                                                                                         | 45,000 issued; 44,857 outstanding in 2003 and 2002       |                                             |                             | 1  |           |         |              | 1  |        
|                                          | Common stock, $.01 par value; 50,000,000 shares authorized:                             |                                                          |                                             |                             |    |           |         |              |   
|                                          |                                                                                         | 5,000,000 issued; 4,980,882 outstanding in 2003 and 2002 |                                             |                             | 50 |           |         |              | 50 |        
|                                          | Additional paid-in capital                                                              |                                                          |                                             | 50,457                      |    |           |         | 50,457       |   
|                                          | Accumulated deficit                                                                     |                                                          |                                             | (59,300                     | )  |           |         | (62,787      | ) 
|                                          | Accumulated other comprehensive income                                                  |                                                          |                                             | 135                         |    |           |         | 103          |   
|                                          | Treasury stock, at cost; 143 preferred shares and 19,118
common shares in 2003 and 2002 |                                                          |                                             | (162                        | )  |           |         | (162         | ) 
|                                          | Note receivable from stockholder                                                        |                                                          |                                             | (49                         | )  |           |         | (68          | ) 
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          |                                             | Total stockholders deficit |    |           | (8,868  | )            |    |         | (12,406 | )
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             
|                                          |                                                                                         |                                                          | Total liabilities and stockholders deficit |                             | $  | 285,796   |         |              | $  | 287,486 |        
|                                          |                                                                                         |                                                          |                                             |                             |    |           |         |             

See notes to unaudited condensed consolidated financial statements.

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

|                                           |                  |                            |        |                    |       |      |        |        |       | 
|------------------------------------------ | ---------------- | -------------------------- | ------ | ------------------ | ----- | ---- | ------ | ------ | ----- | 
|                                           |                  |                            |        | Three Months Ended
|                                           |                  |                            |        | March 31,         
|                                           |                  |                            |        |                   
|                                           |                  |                            |        | 2003               |       | 2002
|                                           |                  |                            |        |                    |       |     
|Contract revenues                          |                  | $                          | 99,693 |                    |       | $    | 78,973 |       
|Costs of contract revenues                 |                  |                            | 81,655 |                    |       |      | 64,757 |       
|                                           |                  |                            |        |                    |       |      |        |       
|                                           | Gross profit     |                            |        | 18,038             |       |      |        | 14,216 |      
|General and administrative expenses        |                  |                            | 6,941  |                    |       |      | 6,720  |       
|                                           |                  |                            |        |                    |       |      |        |       
|                                           | Operating income |                            |        | 11,097             |       |      |        | 7,496  |      
|Interest expense, net                      |                  |                            | (5,056 | )                  |       |      | (5,295 | )     
|Equity in earnings (loss) of joint venture |                  |                            | 67     |                    |       |      | (321   | )     
|Minority interests                         |                  |                            | (21    | )                  |       |      | 1,113  |       
|                                           |                  |                            |        |                    |       |      |        |       
|                                           |                  | Income before income taxes |        |                    | 6,087 |      |        |        | 2,993 | 
|Income tax expense                         |                  |                            | (2,600 | )                  |       |      | (1,357 | )     
|                                           |                  |                            |        |                    |       |      |        |       
|                                           | Net income       |                            | $      | 3,487              |       |      | $      | 1,636  |      
|                                           |                  |                            |        |                    |       |      |        |       

See notes to unaudited condensed consolidated financial statements.

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

|                                                                                 |                                                |                                           |                                          |       |        |                    |        |        |         |         |   | 
|-------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | ---------------------------------------- | ----- | ------ | ------------------ | ------ | ------ | ------- | ------- | - | 
|                                                                                 |                                                |                                           |                                          |       |        | Three Months Ended
|                                                                                 |                                                |                                           |                                          |       |        | March 31,         
|                                                                                 |                                                |                                           |                                          |       |        |                   
|                                                                                 |                                                |                                           |                                          |       |        | 2003               |        | 2002  
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|Operating Activities                                                             |                                                |                                           |                                          |       |        |                    |        |       
|Net income                                                                       |                                                | $                                         | 3,487                                    |       |        | $                  | 1,636  |       
|Adjustments to reconcile net income to net cash flows
from operating activities: |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 | Depreciation                                   |                                           |                                          | 4,067 |        |                    |        | 3,855  |        
|                                                                                 | Loss (earnings) of equity method investment    |                                           |                                          | (67   | )      |                    |        | 321    |        
|                                                                                 | Minority interests                             |                                           |                                          | 21    |        |                    |        | (1,113 | )      
|                                                                                 | Deferred income taxes                          |                                           |                                          | (137  | )      |                    |        | (219   | )      
|                                                                                 | Gain on dispositions of property and equipment |                                           |                                          | (3    | )      |                    |        | (61    | )      
|                                                                                 | Other, net                                     |                                           |                                          | 314   |        |                    |        | 552    |        
|                                                                                 | Changes in assets and liabilities:             |                                           |                                          |       |        |                    |        |        |        
|                                                                                 |                                                | Accounts receivable, net                  |                                          |       | 6,928  |                    |        |        | (20,939 | )      
|                                                                                 |                                                | Contract revenues in excess of billings   |                                          |       | (4,690 | )                  |        |        | 9,631   |        
|                                                                                 |                                                | Inventories                               |                                          |       | (1,030 | )                  |        |        | (666    | )      
|                                                                                 |                                                | Prepaid expenses and other current assets |                                          |       | 596    |                    |        |        | (1,441  | )      
|                                                                                 |                                                | Accounts payable and accrued expenses     |                                          |       | (6,464 | )                  |        |        | (7,845  | )      
|                                                                                 |                                                | Billings in excess of contract revenues   |                                          |       | (4,553 | )                  |        |        | (1,756  | )      
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 |                                                |                                           | Net cash flows from operating activities |       |        | (1,531             | )      |        |         | (18,045 | )
|Investing Activities                                                             |                                                |                                           |                                          |       |        |                    |        |       
|Purchases of property and equipment                                              |                                                |                                           | (3,371                                   | )     |        |                    | (7,530 | )     
|Dispositions of property and equipment                                           |                                                |                                           | 3                                        |       |        |                    | 155    |       
|Equity investment in land acquisition                                            |                                                |                                           | (843                                     | )     |        |                    |       |       
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 |                                                |                                           | Net cash flows from investing activities |       |        | (4,211             | )      |        |         | (7,375  | )
|Financing Activities                                                             |                                                |                                           |                                          |       |        |                    |        |       
|Repayments of long-term debt                                                     |                                                |                                           | (3,713                                   | )     |        |                    | (2,500 | )     
|Borrowings of revolving loans, net of repayments                                 |                                                |                                           | 9,000                                    |       |        |                    | 26,500 |       
|Financing fees                                                                   |                                                |                                           | (403                                     | )     |        |                    |       |       
|Repayment on note receivable from stockholder                                    |                                                |                                           | 19                                       |       |        |                    | 18     |       
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 |                                                |                                           | Net cash flows from financing activities |       |        | 4,903              |        |        |         | 24,018  |  
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|Net change in cash and equivalents                                               |                                                |                                           | (839                                     | )     |        |                    | (1,402 | )     
|Cash and equivalents at beginning of period                                      |                                                |                                           | 1,456                                    |       |        |                    | 2,590  |       
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|Cash and equivalents at end of period                                            |                                                | $                                         | 617                                      |       |        | $                  | 1,188  |       
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|Supplemental Cash Flow Information                                               |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 | Cash paid for interest                         |                                           | $                                        | 8,977 |        |                    | $      | 9,126  |        
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       
|                                                                                 | Cash paid for taxes                            |                                           | $                                        | 2,432 |        |                    | $      | 4,137  |        
|                                                                                 |                                                |                                           |                                          |       |        |                    |        |       

See notes to unaudited condensed consolidated financial statements.

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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 accounting principles generally accepted
in the U.S. 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, 2002.

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 dredging 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.   Comprehensive income

Total comprehensive income comprises net income and net unrealized gains
and losses on cash flow hedges. Total comprehensive income for the three
months ended March 31, 2003 and 2002 was $3,519 and $2,450, respectively.

4.   Risk management activities

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, 2003, 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 October 2004. As
of March 31, 2003, there were 10.9 million gallons remaining on these
contracts. Under these agreements, the Company will pay fixed prices ranging
from $0.68 to $0.75 per gallon. At March 31, 2003 and December 31, 2002, the
fair value on these contracts was estimated to be $222 and $169, respectively,
based on quoted market prices, and is recorded in other current assets.
Ineffectiveness related to these fuel hedge arrangements was determined to be
immaterial. The remaining gains included in accumulated other comprehensive
income at March 31, 2003 will be reclassified into earnings over the next
nineteen months, corresponding to the period during which the hedged fuel is
expected to be utilized.

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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. At March 31, 2003 and December 31, 2002, the
Company had long-term subordinated notes outstanding with a recorded book value
of $154,779 and $154,769, respectively. The fair value of these notes was
$162,750 and $161,386 at March 31, 2003 and December 31, 2002, respectively,
based on quoted market prices.

5.   Accounts receivable

Accounts receivable at March 31, 2003 and December 31, 2002 are as
follows:

|                                |  |           |        |              |  |   |        |  
|------------------------------- |  | --------- | ------ | ------------ |  | - | ------ | -
|                                |  | March 31, |        | December 31,
|                                |  | 2003      |        | 2002        
|                                |  |           |        |             
|Completed contracts             |  | $         | 9,382  |              |  | $ | 15,134 |  
|Contracts in progress           |  |           | 28,874 |              |  |   | 31,466 |  
|Retainage                       |  |           | 7,950  |              |  |   | 6,511  |  
|                                |  |           |        |              |  |   |        |  
|                                |  |           | 46,206 |              |  |   | 53,111 |  
|Allowance for doubtful accounts |  |           | (1,009 | )            |  |   | (986   | )
|                                |  |           |        |              |  |   |        |  
|                                |  | $         | 45,197 |              |  | $ | 52,125 |  
|                                |  |           |        |              |  |   |        |  

6.   Contracts in progress

The components of contracts in progress at March 31, 2003 and December
31, 2002 are as follows:

|                                                                               |                                              |   |           |          |              |   |         |          |  
|------------------------------------------------------------------------------ | -------------------------------------------- | - | --------- | -------- | ------------ | - | ------- | -------- | -
|                                                                               |                                              |   | March 31, |          | December 31,
|                                                                               |                                              |   | 2003      |          | 2002        
|                                                                               |                                              |   |           |          |             
|Costs and earnings in excess of billings:                                      |                                              |   |           |          |              |   |         |         
|                                                                               | Costs and earnings for contracts in progress |   | $         | 288,037  |              |   | $       | 190,837  |  
|                                                                               | Amounts billed                               |   |           | (271,609 | )            |   |         | (179,468 | )
|                                                                               |                                              |   |           |          |              |   |         |         
|Costs and earnings in excess of billings for
contracts in progress             |                                              |   | 16,428    |          |              |   | 11,369  |         
|Costs and earnings in excess of billings for
completed contracts               |                                              |   | 1,314     |          |              |   | 1,683   |         
|                                                                               |                                              |   |           |          |              |   |         |         
|                                                                               |                                              | $ | 17,742    |          |              | $ | 13,052  |         
|                                                                               |                                              |   |           |          |              |   |         |         
|Prepaid contract costs (included in prepaid
expenses and other current assets) |                                              | $ | 2,221     |          |              | $ | 3,218   |         
|                                                                               |                                              |   |           |          |              |   |         |         
|Billings in excess of costs and earnings:                                      |                                              |   |           |          |              |   |         |         
|                                                                               | Amounts billed                               |   | $         | (50,393  | )            |   | $       | (69,909  | )
|                                                                               | Costs and earnings for contracts in progress |   |           | 44,031   |              |   |         | 58,994   |  
|                                                                               |                                              |   |           |          |              |   |         |         
|                                                                               |                                              | $ | (6,362    | )        |              | $ | (10,915 | )       
|                                                                               |                                              |   |           |          |              |   |         |         

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7.   Accrued expenses

Accrued expenses at March 31, 2003 and December 31, 2002 are as follows:

|                              |  |           |        |              |  |   |        | 
|----------------------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|                              |  | March 31, |        | December 31,
|                              |  | 2003      |        | 2002        
|                              |  |           |        |             
|Insurance                     |  | $         | 6,741  |              |  | $ | 6,477  | 
|U.S. income and other taxes   |  |           | 5,467  |              |  |   | 4,721  | 
|Payroll and employee benefits |  |           | 3,826  |              |  |   | 8,615  | 
|Interest                      |  |           | 2,568  |              |  |   | 6,880  | 
|Fixed equipment costs         |  |           | 1,890  |              |  |   |       | 
|Other                         |  |           | 3,188  |              |  |   | 3,421  | 
|                              |  |           |        |              |  |   |        | 
|                              |  | $         | 23,680 |              |  | $ | 30,114 | 
|                              |  |           |        |              |  |   |        | 

8.   Long-term debt

In March 2003, the Company amended its Credit Agreement to increase its
revolving credit facility from $70,000 to $80,000. The revolving credit
facility may be used for borrowings or for letters of credit; it expires in
2006.

9.   Segment information

The Company and its subsidiaries operate in two reportable segments:
dredging and demolition. The Companys financial reporting systems present
various data for management to run the business, including profit and loss
statements prepared according to the segments presented. Segment information
for the periods presented is as follows:

|           |                   |  |                    |        |      |  |   |        | 
|---------- | ----------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|           |                   |  | Three Months Ended
|           |                   |  | March 31,         
|           |                   |  |                   
|           |                   |  | 2003               |        | 2002
|           |                   |  |                    |        |     
|Dredging   |                   |  |                    |        |      |  |   |       
|           | Contract revenues |  | $                  | 91,369 |      |  | $ | 70,303 | 
|           | Operating income  |  |                    | 10,298 |      |  |   | 6,087  | 
|Demolition |                   |  |                    |        |      |  |   |       
|           | Contract revenues |  | $                  | 8,324  |      |  | $ | 8,670  | 
|           | Operating income  |  |                    | 799    |      |  |   | 1,409  | 
|Total      |                   |  |                    |        |      |  |   |       
|           | Contract revenues |  | $                  | 99,693 |      |  | $ | 78,973 | 
|           | Operating income  |  |                    | 11,097 |      |  |   | 7,496  | 

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10.   Commitments and contingencies

At March 31, 2003, the Company is contingently liable, in the normal
course of business, for $14,655 in undrawn letters of credit, with the majority
relating primarily to contract performance guarantees and one covering the
Companys insurance payment liabilities.

Amboy Aggregates, a joint venture in which the Company has a 50% equity
interest, 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 $1,259 at March 31, 2003.

The Company finances certain key vessels used in its operations with
off-balance sheet lease arrangements with unrelated lessors, requiring annual
rentals of $17 to $18 million. These off-balance sheet leases contain default
provisions which are triggered by an acceleration of debt maturity under the
terms of the Companys Credit Agreement. Additionally, the leases typically
contain provisions whereby the Company indemnifies the lessors for the tax
treatment attributable to such leases based on the tax rules in place at lease
inception. The tax indemnifications do not have a contractual dollar
limit. Additionally, it is impractical to develop an estimate of the maximum potential
exposure under these lease indemnification arrangements,
since it is entirely dependent on the unique tax
circumstances of each lessor.

A substantial portion of the Companys operating equipment serves as
collateral for borrowings under the Companys Credit Agreement and issuance of
performance and bid bonds under its bonding agreement with a surety company.
The net book value of such equipment at March 31, 2003 does not materially
differ from the value at December 31, 2002. Both the Credit Agreement and
bonding agreement contain certain provisions and covenants; the Company is in
compliance with such covenants at March 31, 2003. The performance and bid
bonds are customarily required for dredging and marine construction projects,
as well as some demolition projects. Bid bonds are generally obtained for a
percentage of bid value and amounts outstanding typically range between $5 to
$10 million. At March 31, 2003, the Company had outstanding performance bonds
valued at approximately $210 million, based on the estimated remaining revenue
value of bonded projects.

Certain foreign projects performed by the Company have warranty periods,
typically spanning no more than three to five years beyond project completion,
whereby the Company retains responsibility to maintain the project site to
certain specifications during the warranty period. Generally, any potential
liability of the Company is mitigated by insurance, shared responsibilities
with consortium partners, and/or recourse to owner-provided specifications.

The Company considers it unlikely that it would have to perform under any
of these aforementioned contingent obligations and performance has never been
required in any of these circumstances in the past.

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 adverse 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 adverse impact on the financial position or operations of the
Company.

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11.   Supplemental condensed consolidating financial information

Included in the Companys long-term
debt is $155,000 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 the Companys domestic subsidiaries
(the 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).
The Condensed Consolidating Statements
of Operations and Cash Flows for the
three months ended March 31, 2002
include the operations of NATCO Limited
Partnership and North American Trailing
Company within the non-guarantor
subsidiary information. Pursuant to the
Companys acquisition of the minority
partners remaining shares in November
2002, these entities were dissolved
effective December 31, 2002 and all
subsequent activity is conducted by
Great Lakes Dredge & Dock Company, a
wholly-owned subsidiary of the Company
and a Subsidiary Guarantor.

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

Condensed Consolidating Balance Sheet at March 31, 2003

|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |        |         | 
|---------------------------------------------- | ----------------------------------------- | ------------------------- | ------- | ------------ | ------- | ------------ | ----- | ----------- | ----- | ------------ | ------- | ------ | ------- | ------------ | -------- | ------- | ------- | - | ------- | ------ | ------- | 
|                                               |                                           |                           |         | Guarantor    |         | Other        |       | GLD         |       |              |         |        |         | Consolidated
|                                               |                                           |                           |         | Subsidiaries |         | Subsidiaries |       | Corporation |       | Eliminations |         | Totals
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |       
|ASSETS                                         |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|Current assets:                                |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               | Cash and equivalents                      |                           | $       | 580          |         |              | $     | 37          |       |              | $       |       |         |              | $        |        |         |   | $       | 617    |        
|                                               | Accounts receivable, net                  |                           |         | 45,197       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 45,197 |        
|                                               | Receivables from affiliates               |                           |         | 12,607       |         |              |       | 2,975       |       |              |         | 6,000  |         |              |          | (21,582 | )       |   |         |       |        
|                                               | Contract revenues in excess of billings   |                           |         | 17,742       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 17,742 |        
|                                               | Inventories                               |                           |         | 14,121       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 14,121 |        
|                                               | Prepaid expenses and other current assets |                           |         | 17,204       |         |              |       |            |       |              |         | 1,356  |         |              |          |        |         |   |         | 18,560 |        
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total current assets      |         |              | 107,451 |              |       |             | 3,012 |              |         |        | 7,356   |              |          |         | (21,582 | ) |         |        | 96,237  | 
|Property and equipment, net                    |                                           |                           | 101,990 |              |         |              | 70    |             |       |              | 36,663  |        |         |              |         |         |         |   | 138,723 |       
|Goodwill, net of amortization                  |                                           |                           | 29,405  |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 29,405  |       
|Investments in subsidiaries                    |                                           |                           | 5,295   |              |         |              |      |             |       |              | 132,944 |        |         |              | (138,239 | )       |         |   |        |       
|Notes receivable from affiliates               |                                           |                           |        |              |         |              |      |             |       |              | 13,500  |        |         |              | (13,500  | )       |         |   |        |       
|Inventories                                    |                                           |                           | 10,019  |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 10,019  |       
|Investments in joint ventures                  |                                           |                           | 6,462   |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 6,462   |       
|Other assets                                   |                                           |                           | 2,560   |              |         |              |      |             |       |              | 2,390   |        |         |              |         |         |         |   | 4,950   |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | $                         | 263,182 |              |         | $            | 3,082 |             |       | $            | 192,834 |        |         | $            | (173,321 | )       |         | $ | 285,796 |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|Current liabilities:                           |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               | Accounts payable                          |                           | $       | 31,561       |         |              | $     |            |       |              | $       |       |         |              | $        | 7       |         |   | $       | 31,568 |        
|                                               | Payables to affiliates                    |                           |         | 8,745        |         |              |       |            |       |              |         | 6,837  |         |              |          | (15,582 | )       |   |         |       |        
|                                               | Accrued expenses                          |                           |         | 16,326       |         |              |       | 30          |       |              |         | 7,324  |         |              |          |        |         |   |         | 23,680 |        
|                                               | Billings in excess of contract revenues   |                           |         | 6,362        |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 6,362  |        
|                                               | Current maturities of long-term debt      |                           |         | 6,000        |         |              |       |            |       |              |         | 7,287  |         |              |          | (6,000  | )       |   |         | 7,287  |        
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total current liabilities |         |              | 68,994  |              |       |             | 30    |              |         |        | 21,448  |              |          |         | (21,575 | ) |         |        | 68,897  | 
|Long-term debt                                 |                                           |                           | 3,000   |              |         |              |      |             |       |              | 167,779 |        |         |              |         |         |         |   | 170,779 |       
|Notes payable to affiliates                    |                                           |                           | 13,500  |              |         |              |      |             |       |              |        |        |         |              | (13,500  | )       |         |   |        |       
|Deferred income taxes                          |                                           |                           | 35,088  |              |         |              | 22    |             |       |              | 11,811  |        |         |              |         |         |         |   | 46,921  |       
|Other                                          |                                           |                           | 5,017   |              |         |              |      |             |       |              | 683     |        |         |              |         |         |         |   | 5,700   |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total liabilities         |         |              | 125,599 |              |       |             | 52    |              |         |        | 201,721 |              |          |         | (35,075 | ) |         |        | 292,297 | 
|Minority interests                             |                                           |                           |        |              |         |              |      |             |       |              |        |        |         |              | 2,367    |         |         |   | 2,367   |       
|Stockholders equity (deficit)                 |                                           |                           | 137,583 |              |         |              | 3,030 |             |       |              | (8,868  | )      |         |              | (140,613 | )       |         |   | (8,868  | )     
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | $                         | 263,182 |              |         | $            | 3,082 |             |       | $            | 192,834 |        |         | $            | (173,321 | )       |         | $ | 285,796 |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       

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

Condensed Consolidating Balance Sheet at December 31, 2002

|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |        |         | 
|---------------------------------------------- | ----------------------------------------- | ------------------------- | ------- | ------------ | ------- | ------------ | ----- | ----------- | ----- | ------------ | ------- | ------ | ------- | ------------ | -------- | ------- | ------- | - | ------- | ------ | ------- | 
|                                               |                                           |                           |         | Guarantor    |         | Other        |       | GLD         |       |              |         |        |         | Consolidated
|                                               |                                           |                           |         | Subsidiaries |         | Subsidiaries |       | Corporation |       | Eliminations |         | Totals
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |       
|ASSETS                                         |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|Current assets:                                |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               | Cash and equivalents                      |                           | $       | 1,451        |         |              | $     | 5           |       |              | $       |       |         |              | $        |        |         |   | $       | 1,456  |        
|                                               | Accounts receivable, net                  |                           |         | 52,125       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 52,125 |        
|                                               | Receivables from affiliates               |                           |         | 7,970        |         |              |       | 2,983       |       |              |         |       |         |              |          | (10,953 | )       |   |         |       |        
|                                               | Contract revenues in excess of billings   |                           |         | 13,052       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 13,052 |        
|                                               | Inventories                               |                           |         | 13,282       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 13,282 |        
|                                               | Prepaid expenses and other current assets |                           |         | 17,132       |         |              |       |            |       |              |         | 1,151  |         |              |          |        |         |   |         | 18,283 |        
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total current assets      |         |              | 105,012 |              |       |             | 2,988 |              |         |        | 1,151   |              |          |         | (10,953 | ) |         |        | 98,198  | 
|Property and equipment, net                    |                                           |                           | 101,889 |              |         |              | 86    |             |       |              | 37,444  |        |         |              |         |         |         |   | 139,419 |       
|Goodwill                                       |                                           |                           | 29,405  |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 29,405  |       
|Investments in subsidiaries                    |                                           |                           | 3,044   |              |         |              |      |             |       |              | 126,494 |        |         |              | (129,538 | )       |         |   |        |       
|Notes receivable from affiliates               |                                           |                           |        |              |         |              |      |             |       |              | 21,000  |        |         |              | (21,000  | )       |         |   |        |       
|Inventories                                    |                                           |                           | 9,828   |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 9,828   |       
|Investments in joint ventures                  |                                           |                           | 5,552   |              |         |              |      |             |       |              |        |        |         |              |         |         |         |   | 5,552   |       
|Other assets                                   |                                           |                           | 2,671   |              |         |              |      |             |       |              | 2,413   |        |         |              |         |         |         |   | 5,084   |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | $                         | 257,401 |              |         | $            | 3,074 |             |       | $            | 188,502 |        |         | $            | (161,491 | )       |         | $ | 287,486 |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|Current liabilities:                           |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               | Accounts payable                          |                           | $       | 31,809       |         |              | $     |            |       |              | $       | (108   | )       |              | $        | (103    | )       |   | $       | 31,598 |        
|                                               | Payables to affiliates                    |                           |         | 3,945        |         |              |       |            |       |              |         | 7,008  |         |              |          | (10,953 | )       |   |         |       |        
|                                               | Accrued expenses                          |                           |         | 18,658       |         |              |       |            |       |              |         | 11,456 |         |              |          |        |         |   |         | 30,114 |        
|                                               | Billings in excess of contract revenues   |                           |         | 10,915       |         |              |       |            |       |              |         |       |         |              |          |        |         |   |         | 10,915 |        
|                                               | Current maturities of long-term debt      |                           |         | 6,000        |         |              |       |            |       |              |         | 11,000 |         |              |          | (6,000  | )       |   |         | 11,000 |        
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total current liabilities |         |              | 71,327  |              |       |             |      |              |         |        | 29,356  |              |          |         | (17,056 | ) |         |        | 83,627  | 
|Long-term debt                                 |                                           |                           | 3,000   |              |         |              |      |             |       |              | 158,769 |        |         |              |         |         |         |   | 161,769 |       
|Notes payable to affiliates                    |                                           |                           | 15,000  |              |         |              |      |             |       |              |        |        |         |              | (15,000  | )       |         |   |        |       
|Deferred income taxes                          |                                           |                           | 34,233  |              |         |              | 30    |             |       |              | 12,100  |        |         |              |         |         |         |   | 46,363  |       
|Other                                          |                                           |                           | 5,104   |              |         |              |      |             |       |              | 683     |        |         |              |         |         |         |   | 5,787   |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | Total liabilities         |         |              | 128,664 |              |       |             | 30    |              |         |        | 200,908 |              |          |         | (32,056 | ) |         |        | 297,546 | 
|Minority interests                             |                                           |                           |        |              |         |              |      |             |       |              |        |        |         |              | 2,346    |         |         |   | 2,346   |       
|Stockholders equity (deficit)                 |                                           |                           | 128,737 |              |         |              | 3,044 |             |       |              | (12,406 | )      |         |              | (131,781 | )       |         |   | (12,406 | )     
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       
|                                               |                                           | $                         | 257,401 |              |         | $            | 3,074 |             |       | $            | 188,502 |        |         | $            | (161,491 | )       |         | $ | 287,486 |       
|                                               |                                           |                           |         |              |         |              |       |             |       |              |         |        |         |              |          |         |         |   |         |       

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

Condensed Consolidating Statement of Income for the three months ended March 31, 2003

|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |        | 
|----------------------------------------- | --------------------------------- | - | ------------ | ------ | ------------ | - | ----------- | --- | ------------ | - | ------ | ----- | ------------ | - | ------ | ------ | - | - | ------- | ------ | 
|                                          |                                   |   | Guarantor    |        | Other        |   | GLD         |     |              |   |        |       | Consolidated
|                                          |                                   |   | Subsidiaries |        | Subsidiaries |   | Corporation |     | Eliminations |   | Totals
|                                          |                                   |   |              |        |              |   |             |     |              |   |       
|Contract revenues                         |                                   | $ | 99,693       |        |              | $ |            |     |              | $ |       |       |              | $ |       |        |   | $ | 99,693  |       
|Costs of contract revenues                |                                   |   | (81,173      | )      |              |   | (16         | )   |              |   | (356   | )     |              |   | (110   | )      |   |   | (81,655 | )     
|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |       
|                                          | Gross profit (loss)               |   |              | 18,520 |              |   |             | (16 | )            |   |        | (356  | )            |   |        | (110   | ) |   |         | 18,038 | 
|General and administrative expenses       |                                   |   | (6,902       | )      |              |   | (9          | )   |              |   | (30    | )     |              |   |       |        |   |   | (6,941  | )     
|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |       
|                                          | Operating income (loss)           |   |              | 11,618 |              |   |             | (25 | )            |   |        | (386  | )            |   |        | (110   | ) |   |         | 11,097 | 
|Interest expense, net                     |                                   |   | (683         | )      |              |   |            |     |              |   | (4,373 | )     |              |   |       |        |   |   | (5,056  | )     
|Equity in (loss) earnings of subsidiaries |                                   |   | (23          | )      |              |   |            |     |              |   | 6,454  |       |              |   | (6,431 | )      |   |   |        |       
|Equity in earnings of joint venture       |                                   |   | 67           |        |              |   |            |     |              |   |       |       |              |   |       |        |   |   | 67      |       
|Minority interest                         |                                   |   |             |        |              |   |            |     |              |   |       |       |              |   | (21    | )      |   |   | (21     | )     
|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |       
|                                          | Income (loss) before income taxes |   |              | 10,979 |              |   |             | (25 | )            |   |        | 1,695 |              |   |        | (6,562 | ) |   |         | 6,087  | 
|Income tax (expense) benefit              |                                   |   | (4,403       | )      |              |   | 11          |     |              |   | 1,792  |       |              |   |       |        |   |   | (2,600  | )     
|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |       
|                                          | Net income (loss)                 |   | $            | 6,576  |              |   | $           | (14 | )            |   | $      | 3,487 |              |   | $      | (6,562 | ) |   | $       | 3,487  | 
|                                          |                                   |   |              |        |              |   |             |     |              |   |        |       |              |   |        |        |   |   |         |       

Condensed Consolidating Statement of Income for the three months ended March 31, 2002

|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |        | 
|----------------------------------------- | --------------------------------- | - | ------------ | ------ | ------------ | - | ----------- | ------ | ------------ | - | ------ | ----- | ------------ | - | ------ | ---- | - | - | ------- | ------ | 
|                                          |                                   |   | Guarantor    |        | Other        |   | GLD         |        |              |   |        |       | Consolidated
|                                          |                                   |   | Subsidiaries |        | Subsidiaries |   | Corporation |        | Eliminations |   | Totals
|                                          |                                   |   |              |        |              |   |             |        |              |   |       
|Contract revenues                         |                                   | $ | 68,644       |        |              | $ | 15,460      |        |              | $ |       |       |              | $ | (5,131 | )    |   | $ | 78,973  |       
|Costs of contract revenues                |                                   |   | (51,039      | )      |              |   | (18,505     | )      |              |   | (344   | )     |              |   | 5,131  |      |   |   | (64,757 | )     
|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |       
|                                          | Gross profit (loss)               |   |              | 17,605 |              |   |             | (3,045 | )            |   |        | (344  | )            |   |        |     |   |   |         | 14,216 | 
|General and administrative expenses       |                                   |   | (5,338       | )      |              |   | (1,382      | )      |              |   |       |       |              |   |       |      |   |   | (6,720  | )     
|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |       
|                                          | Operating income (loss)           |   |              | 12,267 |              |   |             | (4,427 | )            |   |        | (344  | )            |   |        |     |   |   |         | 7,496  | 
|Interest expense, net                     |                                   |   | (684         | )      |              |   | (121        | )      |              |   | (4,490 | )     |              |   |       |      |   |   | (5,295  | )     
|Equity in (loss) earnings of subsidiaries |                                   |   | (3,539       | )      |              |   |            |        |              |   | 5,118  |       |              |   | (1,579 | )    |   |   |        |       
|Equity in loss of joint venture           |                                   |   | (321         | )      |              |   |            |        |              |   |       |       |              |   |       |      |   |   | (321    | )     
|Minority interests                        |                                   |   |             |        |              |   |            |        |              |   |       |       |              |   | 1,113  |      |   |   | 1,113   |       
|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |       
|                                          | Income (loss) before income taxes |   |              | 7,723  |              |   |             | (4,548 | )            |   |        | 284   |              |   |        | (466 | ) |   |         | 2,993  | 
|Income tax (expense) benefit              |                                   |   | (2,535       | )      |              |   | (174        | )      |              |   | 1,352  |       |              |   |       |      |   |   | (1,357  | )     
|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |       
|                                          | Net income (loss)                 |   | $            | 5,188  |              |   | $           | (4,722 | )            |   | $      | 1,636 |              |   | $      | (466 | ) |   | $       | 1,636  | 
|                                          |                                   |   |              |        |              |   |             |        |              |   |        |       |              |   |        |      |   |   |         |       

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

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2003

|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |        |        |  
|--------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ------ | ------------ | ------ | ------------ | --- | ----------- | -- | ------------ | ------ | ------ | ------ | ------------ | ------ | ----- | - | - | ------ | ------ | ------ | -
|                                                                                        |                                                    |                                           |        | Guarantor    |        | Other        |     | GLD         |    |              |        |        |        | Consolidated
|                                                                                        |                                                    |                                           |        | Subsidiaries |        | Subsidiaries |     | Corporation |    | Eliminations |        | Totals
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |       
|Operating Activities                                                                    |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|Net income (loss)                                                                       |                                                    | $                                         | 6,576  |              |        | $            | (14 | )           |    | $            | 3,487  |        |        | $            | (6,562 | )     |   | $ | 3,487  |       
|Adjustments to reconcile net income (loss) to net
cash flows from operating activities: |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Depreciation                                       |                                           |        | 3,270        |        |              |     | 16          |    |              |        | 781    |        |              |        |      |   |   |        | 4,067  |       
|                                                                                        | Loss (earnings) of subsidiaries and joint ventures |                                           |        | 90           |        |              |     |            |    |              |        | (6,698 | )      |              |        | 6,541 |   |   |        | (67    | )     
|                                                                                        | Minority interest                                  |                                           |        |             |        |              |     |            |    |              |        |       |        |              |        | 21    |   |   |        | 21     |       
|                                                                                        | Deferred income taxes                              |                                           |        | (533         | )      |              |     | (8          | )  |              |        | 404    |        |              |        |      |   |   |        | (137   | )     
|                                                                                        | Gain on dispositions of property
and equipment     |                                           |        | (3           | )      |              |     |            |    |              |        |       |        |              |        |      |   |   |        | (3     | )     
|                                                                                        | Other, net                                         |                                           |        | 291          |        |              |     |            |    |              |        | 23     |        |              |        |      |   |   |        | 314    |       
|                                                                                        | Changes in assets and liabilities:                 |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |        |       
|                                                                                        |                                                    | Accounts receivable, net                  |        |              | 6,928  |              |     |             |   |              |        |        |       |              |        |       |  |   |        |        | 6,928  |  
|                                                                                        |                                                    | Contract revenues in excess of billings   |        |              | (4,690 | )            |     |             |   |              |        |        |       |              |        |       |  |   |        |        | (4,690 | )
|                                                                                        |                                                    | Inventories                               |        |              | (1,030 | )            |     |             |   |              |        |        |       |              |        |       |  |   |        |        | (1,030 | )
|                                                                                        |                                                    | Prepaid expenses and other current assets |        |              | 782    |              |     |             |   |              |        |        | (186   | )            |        |       |  |   |        |        | 596    |  
|                                                                                        |                                                    | Accounts payable and accrued expenses     |        |              | (2,470 | )            |     |             | 30 |              |        |        | (4,024 | )            |        |       |  |   |        |        | (6,464 | )
|                                                                                        |                                                    | Billings in excess of contract revenues   |        |              | (4,553 | )            |     |             |   |              |        |        |       |              |        |       |  |   |        |        | (4,553 | )
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Net cash flows from operating activities           |                                           |        | 4,658        |        |              |     | 24          |    |              |        | (6,213 | )      |              |        |      |   |   |        | (1,531 | )     
|Investing Activities                                                                    |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|Purchases of property and equipment                                                     |                                                    |                                           | (3,371 | )            |        |              |    |             |    |              |       |        |        |              |       |       |   |   | (3,371 | )     
|Dispositions of property and equipment                                                  |                                                    |                                           | 3      |              |        |              |    |             |    |              |       |        |        |              |       |       |   |   | 3      |       
|Investment in joint venture                                                             |                                                    |                                           | (843   | )            |        |              |    |             |    |              |       |        |        |              |       |       |   |   | (843   | )     
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Net cash flows from investing activities           |                                           |        | (4,211       | )      |              |     |            |    |              |        |       |        |              |        |      |   |   |        | (4,211 | )     
|Financing Activities                                                                    |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|Repayments of long-term debt                                                            |                                                    |                                           |       |              |        |              |    |             |    |              | (3,713 | )      |        |              |       |       |   |   | (3,713 | )     
|Borrowings of revolving loans, net of repayments                                        |                                                    |                                           |       |              |        |              |    |             |    |              | 9,000  |        |        |              |       |       |   |   | 9,000  |       
|Net change in accounts with affiliates                                                  |                                                    |                                           | (1,337 | )            |        |              | 8   |             |    |              | 1,329  |        |        |              |       |       |   |   |       |       
|Financing fees                                                                          |                                                    |                                           |       |              |        |              |    |             |    |              | (403   | )      |        |              |       |       |   |   | (403   | )     
|Repayment on note receivable from stockholder                                           |                                                    |                                           | 19     |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   | 19     |       
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Net cash flows from financing activities           |                                           |        | (1,318       | )      |              |     | 8           |    |              |        | 6,213  |        |              |        |      |   |   |        | 4,903  |       
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Net change in cash and equivalents                 |                                           |        | (871         | )      |              |     | 32          |    |              |        |       |        |              |        |      |   |   |        | (839   | )     
|                                                                                        | Cash and equivalents at beginning of period        |                                           |        | 1,451        |        |              |     | 5           |    |              |        |       |        |              |        |      |   |   |        | 1,456  |       
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       
|                                                                                        | Cash and equivalents at end of period              |                                           | $      | 580          |        |              | $   | 37          |    |              | $      |       |        |              | $      |      |   |   | $      | 617    |       
|                                                                                        |                                                    |                                           |        |              |        |              |     |             |    |              |        |        |        |              |        |       |   |   |        |       

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

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2002

|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |         |         |  
|--------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ------ | ------------ | ------- | ------------ | ------ | ----------- | ------ | ------------ | ------- | ------ | ------ | ------------ | ---- | ------ | - | - | ------ | ------- | ------- | -
|                                                                                        |                                                    |                                           |        | Guarantor    |         | Other        |        | GLD         |        |              |         |        |        | Consolidated
|                                                                                        |                                                    |                                           |        | Subsidiaries |         | Subsidiaries |        | Corporation |        | Eliminations |         | Totals
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |       
|Operating Activities                                                                    |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|Net income (loss)                                                                       |                                                    | $                                         | 5,188  |              |         | $            | (4,722 | )           |        | $            | 1,636   |        |        | $            | (466 | )      |   | $ | 1,636  |        
|Adjustments to reconcile net income (loss) to net
cash flows from operating activities: |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Depreciation                                       |                                           |        | 2,664        |         |              |        | 529         |        |              |         | 662    |        |              |      |       |   |   |        | 3,855   |        
|                                                                                        | Earnings (loss) of subsidiaries and joint ventures |                                           |        | 3,930        |         |              |        |            |        |              |         | (5,188 | )      |              |      | 1,579  |   |   |        | 321     |        
|                                                                                        | Minority interests                                 |                                           |        |             |         |              |        |            |        |              |         |       |        |              |      | (1,113 | ) |   |        | (1,113  | )      
|                                                                                        | Deferred income taxes                              |                                           |        | 362          |         |              |        | (323        | )      |              |         | (258   | )      |              |      |       |   |   |        | (219    | )      
|                                                                                        | Gain on dispositions of property
and equipment     |                                           |        | (61          | )       |              |        |            |        |              |         |       |        |              |      |       |   |   |        | (61     | )      
|                                                                                        | Other, net                                         |                                           |        | 247          |         |              |        | (4          | )      |              |         | 309    |        |              |      |       |   |   |        | 552     |        
|                                                                                        | Changes in assets and liabilities:                 |                                           |        |              |         |              |        |            |        |              |         |        |        |              |      |        |   |   |        |         |        
|                                                                                        |                                                    | Accounts receivable, net                  |        |              | (14,284 | )            |        |             | (6,655 | )            |         |        |       |              |      |        |  |   |        |         | (20,939 | )
|                                                                                        |                                                    | Contract revenues in excess of billings   |        |              | 10,489  |              |        |             | (858   | )            |         |        |       |              |      |        |  |   |        |         | 9,631   |  
|                                                                                        |                                                    | Inventories                               |        |              | (508    | )            |        |             | (158   | )            |         |        |       |              |      |        |  |   |        |         | (666    | )
|                                                                                        |                                                    | Prepaid expenses and other current assets |        |              | (2,405  | )            |        |             | 1,053  |              |         |        | (89    | )            |      |        |  |   |        |         | (1,441  | )
|                                                                                        |                                                    | Accounts payable and accrued expenses     |        |              | (1,665  | )            |        |             | (1,672 | )            |         |        | (4,508 | )            |      |        |  |   |        |         | (7,845  | )
|                                                                                        |                                                    | Billings in excess of contract revenues   |        |              | (1,756  | )            |        |             |       |              |         |        |       |              |      |        |  |   |        |         | (1,756  | )
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Net cash flows from operating activities           |                                           |        | 2,201        |         |              |        | (12,810     | )      |              |         | (7,436 | )      |              |      |       |   |   |        | (18,045 | )      
|Investing Activities                                                                    |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|Purchases of property and equipment                                                     |                                                    |                                           | (7,449 | )            |         |              | (81    | )           |        |              |        |        |        |              |     |        |   |   | (7,530 | )      
|Dispositions of property and equipment                                                  |                                                    |                                           | 155    |              |         |              |       |             |        |              |        |        |        |              |     |        |   |   | 155    |        
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Net cash flows from investing activities           |                                           |        | (7,294       | )       |              |        | (81         | )      |              |         |       |        |              |      |       |   |   |        | (7,375  | )      
|Financing Activities                                                                    |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|Repayments of long-term debt                                                            |                                                    |                                           |       |              |         |              |       |             |        |              | (2,500  | )      |        |              |     |        |   |   | (2,500 | )      
|Borrowing of revolving loans, net of repayments                                         |                                                    |                                           |       |              |         |              |       |             |        |              | 26,500  |        |        |              |     |        |   |   | 26,500 |        
|Principal receipts (payments) on capital leases                                         |                                                    |                                           |       |              |         |              | (656   | )           |        |              | 656     |        |        |              |     |        |   |   |       |        
|Net change in accounts with affiliates                                                  |                                                    |                                           | 3,696  |              |         |              | 13,524 |             |        |              | (17,220 | )      |        |              |     |        |   |   |       |        
|Repayment on note receivable from stockholder                                           |                                                    |                                           | 18     |              |         |              |       |             |        |              |        |        |        |              |     |        |   |   | 18     |        
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Net cash flows from financing activities           |                                           |        | 3,714        |         |              |        | 12,868      |        |              |         | 7,436  |        |              |      |       |   |   |        | 24,018  |        
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Net change in cash and equivalents                 |                                           |        | (1,379       | )       |              |        | (23         | )      |              |         |       |        |              |      |       |   |   |        | (1,402  | )      
|                                                                                        | Cash and equivalents at beginning of period        |                                           |        | 2,515        |         |              |        | 75          |        |              |         |       |        |              |      |       |   |   |        | 2,590   |        
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        
|                                                                                        | Cash and equivalents at end of period              |                                           | $      | 1,136        |         |              | $      | 52          |        |              | $       |       |        |              | $    |       |   |   | $      | 1,188   |        
|                                                                                        |                                                    |                                           |        |              |         |              |        |             |        |              |         |        |        |              |      |        |   |   |        |        

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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 those
described in the Risk Factors section of Item 1 of the Companys Form S-4
Registration Statement (Registration No. 333-60300), 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 the 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 and Beach Nourishment, in
which the Company experienced an average combined U.S. bid market share of 42%
over the last three years. The Companys bid market is defined as the
population of projects on which it bid or could have bid if not for capacity
constraints (bid market). In addition, the Company has continued its role as
the only U.S. dredging contractor with significant international operations,
which averaged 16% of its contract revenues over the last three years.

The Company also owns 80% of the capital stock of North American Site
Developers, Inc. (NASDI), a demolition service provider located in the
Boston, Massachusetts area. NASDIs principal services consist of interior and
exterior demolition of commercial and industrial buildings, salvage and
recycling of related materials, and removal of hazardous substances and
materials. The NASDI management stockholders retain a 20% non-voting interest
in NASDI.

The Companys equity in earnings of joint ventures relates to the Companys 50%
ownership interest in Amboy Aggregates (Amboy) which is accounted for using
the equity method. Through November 2002, the Company conducted 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). On November 25, 2002, the
Company purchased its foreign minority partners interests in NATCO and North
American for $4.5 million. These subsidiary entities were dissolved at the end
of 2002, and all hopper dredging activities are now being conducted by Great
Lakes Dredge & Dock Company, a wholly-owned dredging subsidiary of the Company.
Therefore, minority interest solely reflects NASDI management stockholders
20% interest in NASDI.

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##### Table of Contents



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, 2003 and
2002:

|                                     |                            |  |                    |      |      |  |       |      |  
|------------------------------------ | -------------------------- |  | ------------------ | ---- | ---- |  | ----- | ---- | -
|                                     |                            |  | Three Months Ended
|                                     |                            |  | March 31,         
|                                     |                            |  |                   
|                                     |                            |  | 2003               |      | 2002
|                                     |                            |  |                    |      |     
|Contract revenues                    |                            |  | 100.0              | %    |      |  | 100.0 | %   
|Costs of contract revenues           |                            |  | (81.9              | )    |      |  | (82.0 | )   
|                                     |                            |  |                    |      |      |  |       |     
|                                     | Gross profit               |  |                    | 18.1 |      |  |       | 18.0 |  
|General and administrative expenses  |                            |  | (7.0               | )    |      |  | (8.5  | )   
|                                     |                            |  |                    |      |      |  |       |     
|                                     | Operating income           |  |                    | 11.1 |      |  |       | 9.5  |  
|Interest expense, net                |                            |  | (5.0               | )    |      |  | (6.7  | )   
|Equity
in earnings of joint ventures |                            |  |                   |      |      |  | (0.4  | )   
|Minority interest                    |                            |  |                   |      |      |  | 1.4   |     
|                                     |                            |  |                    |      |      |  |       |     
|                                     | Income before income taxes |  |                    | 6.1  |      |  |       | 3.8  |  
|Income tax expense                   |                            |  | (2.6               | )    |      |  | (1.7  | )   
|                                     |                            |  |                    |      |      |  |       |     
|                                     | Net income                 |  |                    | 3.5  | %    |  |       | 2.1  | %
|                                     |                            |  |                    |      |      |  |       |     
|EBITDA                               |                            |  | 15.2               | %    |      |  | 14.4  | %   
|                                     |                            |  |                    |      |      |  |       |     

EBITDA, as provided herein, represents earnings from continuing operations
before interest expense (net), income taxes and depreciation expense, and
excludes equity in earnings from joint ventures and minority interests. 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. The Company believes EBITDA is a
useful measure for the users of its financial statements because it provides
information that can be used to evaluate the effectiveness of the Companys
business from an operational perspective, exclusive of costs to finance its
activities and exclusive of income taxes and depreciation of operating assets,
none of which is directly relevant to the efficiency of its operations. The
Companys measure of EBITDA may not be comparable to similar measurements used
by other companies and should not be construed as a substitute for other
performance or liquidity measures such as net income, operating income or
operating cash flows reported in accordance with accounting principles
generally accepted in the United States of America (GAAP). EBITDA is
reconciled to operating income, as follows:

|                 |        |   |                    |        |      |   |       |        | 
|---------------- | ------ | - | ------------------ | ------ | ---- | - | ----- | ------ | 
|                 |        |   | Three Months Ended
|                 |        |   | March 31,         
|                 |        |   |                   
|                 |        |   | 2003               |        | 2002
|                 |        |   |                    |        |     
|Operating income |        | $ | 11,097             |        |      | $ | 7,496 |       
|Depreciation     |        |   | 4,067              |        |      |   | 3,855 |       
|                 |        |   |                    |        |      |   |       |       
|                 | EBITDA |   | $                  | 15,164 |      |   | $     | 11,351 | 
|                 |        |   |                    |        |      |   |       |       

16



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##### Table of Contents



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

|                        |                   |      |                    |        |  |   |        |        | 
|----------------------- | ----------------- | ---- | ------------------ | ------ |  | - | ------ | ------ | 
|                        |                   |      | Three Months Ended
|                        |                   |      | March 31,         
|                        |                   |      |                   
|Revenues (in thousands) |                   | 2003 |                    | 2002  
|                        |                   |      |                    |       
|Dredging:               |                   |      |                    |        |  |   |        |       
|                        | Capital - U.S     |      | $                  | 53,813 |  |   | $      | 26,414 | 
|                        | Capital - foreign |      |                    | 10,037 |  |   |        | 10,514 | 
|                        | Beach             |      |                    | 19,790 |  |   |        | 26,574 | 
|                        | Maintenance       |      |                    | 7,729  |  |   |        | 6,801  | 
|Demolition              |                   |      | 8,324              |        |  |   | 8,670  |       
|                        |                   |      |                    |        |  |   |        |       
|                        |                   | $    | 99,693             |        |  | $ | 78,973 |       
|                        |                   |      |                    |        |  |   |        |       

|                       |                   |      |           |         |  |   |         |        | 
|---------------------- | ----------------- | ---- | --------- | ------- |  | - | ------- | ------ | 
|                       |                   |      | March 31,
|                       |                   |      |          
|Backlog (in thousands) |                   | 2003 |           | 2002   
|                       |                   |      |           |        
|Dredging:              |                   |      |           |         |  |   |         |       
|                       | Capital - U.S     |      | $         | 214,790 |  |   | $       | 76,994 | 
|                       | Capital - foreign |      |           | 50,212  |  |   |         | 93,093 | 
|                       | Beach             |      |           | 11,287  |  |   |         | 38,293 | 
|                       | Maintenance       |      |           | 5,483   |  |   |         | 2,153  | 
|Demolition             |                   |      | 15,770    |         |  |   | 26,689  |       
|                       |                   |      |           |         |  |   |         |       
|                       |                   | $    | 297,542   |         |  | $ | 237,222 |       
|                       |                   |      |           |         |  |   |         |       

First quarter 2003 revenues were $99.7 million, an increase of $20.7 million or
26.2%, over first quarter 2002 revenues of $79.0 million. The increase in 2003
was predominantly a result of additional domestic capital dredging work, much
of which was added to the Companys backlog in the second half of 2002. The
Companys gross profit margin remained consistent at 18.1% for the first
quarter of 2003 compared to 18.0% for the same period of 2002. Although the
2003 quarter included a proportionately higher amount of capital domestic
dredging work, which is generally performed at higher margins than foreign or
other domestic dredging types of work, the demolition segment experienced some
downward adjustments on a couple of its projects during the quarter, such that
on a consolidated basis, gross profit margins remained level.

Capital projects include large port deepenings and other infrastructure
projects. Domestic capital dredging revenue of $53.8 million in the first
quarter of 2003 represents an increase of $27.4 million, or more than 100%,
compared to the same period of 2002. The 2002 domestic dredging bid market was
significantly larger than in prior years and heavily weighted toward Deep Port
capital work. The Company successfully bid and won 65% of the 2002 Deep Port
bid market and is performing on some of these projects. As discussed
previously, the Deep Port projects were authorized by the 1986 Water Resource
Development Act (WRDA) and subsequent bills. In 1997, the Army Corps of
Engineers (Corps) announced Deep Port work, authorized by WRDA, to be
completed through 2005, with a value in excess of $2.0 billion, and
supplemental authorizations have increased this amount to over $3.0 billion.
Since the 1997 announcement, numerous projects with a combined revenue value of
over $1.3 billion have been let for bid and awarded through the first quarter
of 2003. The Company has been the low bidder on projects with a total value of
approximately $650 million, representing 50% of the total let for bid and
awarded.

17



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During the first quarter of 2003, the Company continued work on the Deep Port
projects in Kill Van Kull, New York; Jacksonville Harbor, Florida and
Wilmington Harbor, North Carolina, which contributed combined revenue to the
quarter of $36.5 million. A new work capital project in the Boston area, for
which the Company was excavating a trench for a gas pipeline installation,
added another $8.9 million of revenue to the quarter. Additionally, work
continued on two foreign capital projects in Bahrain and Ghana, which
contributed $9.7 million in total revenue to the quarter. In March, with the
onset of the war in Iraq and the uncertainty regarding security in the region,
the Company did temporarily suspend operations on its terminal project in
Bahrain; however, this suspension only lasted two weeks as it became apparent
that the project site was sufficiently secure. Therefore, given the short
duration of the suspension, there was no significant impact to the Bahrain
projects schedule or estimate.

Beach nourishment projects include rebuilding of shoreline areas which have
been damaged by storm activity or ongoing erosion. Revenues from beach
nourishment projects decreased $6.8 million, to $19.8 million in the first
quarter of 2003 from $26.6 million in the first quarter of 2002, due to the
shifting of more resources to capital work during the period. During the first
quarter, the Company continued work on its beach nourishment project in
Townsends/Hereford Inlet, New Jersey and began a project on the Sebastian Inlet
in Florida, which added combined revenue of $15.0 million to the quarter.

Maintenance projects include routine dredging of ports, rivers and channels to
remove the regular build up of sediment. Maintenance revenues in the first
quarter of 2003 of $7.7 million represent an increase of $0.9 million compared
to revenues for the same period of 2002 of $6.8 million. The first quarter
2003 revenues were consistent with typical maintenance dredging volume, which
varies depending on levels of Midwest precipitation as well as the Companys
available equipment capacity and were derived primarily from Corps maintenance
projects in Morehead City, North Carolina; Charleston, South Carolina; and New
Haven, Connecticut, as well as two dredge rental projects along the Mississippi
River.

NASDIs demolition revenue for the first quarter of 2003 totaled $8.3 million,
compared to $8.7 million for the first quarter of 2002. Over half of NASDIs
first quarter 2003 revenues related to demolition and abatement work at the
NECCO Candy facility, the Saltonstall interior office building demolition, and
demolition work at the Murphy Federal Center, with the remaining revenue for
the quarter attributable to numerous other projects. During the quarter, NASDI
incurred downward revisions on estimates for a couple of its projects, both of
which incurred costs in excess of those anticipated at year-end, resulting in
lower than typical margins for this segment.

Net interest expense for the first quarter of 2003 was $5.1 million, which
decreased $0.2 million compared to the first quarter 2002 amount of $5.3
million, due to a reduction in the Companys bank borrowings. Minority
interest expense for the first quarter of 2003 is negligible and is due solely
to NASDIs performance in the quarter, whereas the 2002 first quarter minority
interests reflects a gain to the Company of $1.1 million, primarily due to the
allocation of NATCOs 2002 year to date loss to its minority partner.

The Companys effective income tax rate for the first quarter of 2003 was
approximately 42% compared to 45% for the first quarter of 2002. The decline
was primarily a result of a reduction in foreign tax expense in 2003.

Net income was $3.5 million for the first quarter of 2003, compared to $1.6
million for the first quarter of 2002. EBITDA (as defined on page 16) was
$15.2 million for the first quarter of 2003,

18



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##### Table of Contents



compared to $11.4 million for same period of 2002. The increase in 2003 net
income and EBITDA was due to the increase in domestic capital dredging revenues
as discussed previously.

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 a substantial portion of the Companys
backlog relates to government contracts, the Companys backlog can be canceled
at any time without penalty. However, the Company can generally recover the
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, 2003, the Company had dredging backlog of $281.8 million,
which compares to dredging backlog of $350.5 million at December 31, 2002 and
$210.5 million at March 31, 2002.
Although dredging backlog at March 31, 2003 declined from year-end, it still
represents a high level of backlog for the Company. During the quarter, the
Company performed on work in its backlog at year-end, while adding only a
minimal amount of new work since bidding opportunities declined in the first
quarter. This is consistent with recent years, in which the bid market
activity slows in the first quarter and then accelerates in the second and
third quarters. The annual 2002 bid market was substantially larger than in
previous years with total bid volume over $900 million. The 2003 bid market is
expected to return to a more average level of $500-600 million. During the
first quarter, domestic projects valued at $111 million were let for bid, and
the Company was a successful bidder on only $12 million, or 11%, of the
domestic work let for bid. The quarters bid market was dominated by three
projects which were won by competitors, including an additional phase of the
Kill Van Kull Deep Port work in New York and two upland disposal maintenance
jobs which were bid with relatively low margins and consisted principally of
disposal fees with minimal dredging.

Backlog at March 31, 2003 continues to be concentrated in the capital dredging
market, both domestic and foreign. The Deep Port capital work, which is
generally higher margin work, makes up over 68% of total backlog and much of
this work will be performed throughout 2003 and into 2004. Domestic capital
backlog at March 31, 2003 includes work remaining on Deep Port projects in Kill
Van Kull, New York; Providence River, Rhode Island; Jacksonville, Florida; Los
Angeles, California; Houston, Texas; and Manatee Harbor, Florida. Foreign
capital project backlog, which comprises $50 million or 17% of the March 31,
2003 backlog, relates primarily to the long-term projects in Ghana and Bahrain,
as well as a new project in Alexandria, Egypt, which was bid and won in the
first quarter of 2003.

Beach backlog at March 31, 2003 declined to $11 million, as only three small
projects were let for bid during the quarter. The Company was low bidder on
two of these projects, valued at $5 million, but one of these was subsequently
postponed so it was not added to backlog. Project owners have provided
schedules identifying beach nourishment projects valued in excess of $100
million which are currently expected to bid later in 2003. This includes two
large projects to renourish Hollywood and Venice Beaches in Florida, as well
as a number of smaller projects primarily in Florida and New York. It appears
that sufficient federal funding was appropriated in the Corps 2003 budget
which was finally passed in February of this year. However, as seen in recent
months, many of these projects keep being postponed due to their specific
permitting

19



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##### Table of Contents



issues or lack of resolution regarding local/federal cost-sharing
arrangements. While it appears that the necessity for this work is there, and
that the localities have the incentive to perform these projects, it is
uncertain as to when these various issues will be resolved and therefore when
these projects will actually be let for bid.

The demolition backlog level at March 31, 2003 was $15.8 million, which
compares to $15.2 million at December 31, 2002 and $26.7 million at March 31,
2002. NASDI has continued to encounter additional competition given the
slow-down in the economy, but has been able to obtain sufficient work to
maintain recent backlog levels and is still expected to meet budget
expectations for the year. NASDI management continues to target a number of
significant projects for bidding in the near-term, which have the potential to
contribute to 2003 and 2004 earnings.

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.

In the first quarter of 2003 and 2002, the Companys net cash used by operating
activities totaled $1.5 million and $18.0 million, respectively. The
Companys usage of cash in 2003 declined due to reduced working capital
requirements during the quarter associated with normal timing differences on
the recognition and billing of revenues, as well as increased net income.

The Companys net cash flows used in investing activities were $4.2 million for
the first quarter of 2003, compared to $7.4 million for the first quarter of
2002. The use of cash relates primarily to equipment acquisitions, which were
disproportionately high in the first quarter of 2002. In the first quarter of
2003, the Company also utilized $0.8 million to purchase 50% of a real estate
interest related to its Amboy joint venture.

The Companys net cash flows from financing activities for the first quarter of
2003 totaled $4.9 million compared to $24.0 million in the same period of 2002.
In the 2003 quarter, the Company borrowed less on its revolver credit facility
since its working capital investment was reduced. In March 2003, the Company
amended its Credit Agreement to provide an additional $10 million of revolver
capacity and allow for potential repurchase of a portion of its
111⁄4% notes.

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 is exploring options to
reduce its interest expense, including refinancing of certain operating lease
agreements and repurchase of a portion of its subordinated notes. The
Companys ability to fund its working capital needs, planned capital
expenditures and scheduled debt payments, to refinance its indebtedness, and to
comply with all of the financial covenants under its debt agreements, depends
on its future operating performance and cash flow, 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.

20



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##### Table of Contents



Critical Accounting Policies and Estimates

In preparing its consolidated financial statements, the Company follows
accounting principles generally accepted in the United States of America. The
application of these principles requires significant judgments or an estimation
process that can affect the results of operations, financial position and cash
flows of the Company, as well as the related footnote disclosures. The Company
continually reviews its accounting policies and financial information
disclosures. There have been no material changes in or policies or estimates
since December 31, 2002.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The market risk of the Companys financial instruments as of March 31, 2003 has
not significantly changed since December 31, 2002. The market risk profile of
the Company on December 31, 2002 is disclosed in the Companys 2002 Annual
Report on Form 10-K.




Item 4. Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures. The Companys Chief
Executive Officer and Chief Financial Officer have conducted an evaluation of
the effectiveness of disclosure controls and procedures (as such term is
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934, as amended) as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date). Based on that evaluation, such
officers have concluded that the disclosure controls and procedures are
effective in ensuring that all material information required to be filed in
this quarterly report has been made known to them in a timely fashion.

(b)  Changes in Internal Controls.Since the Evaluation Date, there have not
been any significant changes in our internal controls or in other factors that
could significantly affect such controls.




PART II  Other Information




Item 6. Exhibits and Reports on Form 8-K

|      |  |                                                                                                                        
|----- |  | -----------------------------------------------------------------------------------------------------------------------
|(a)   |  | Exhibits                                                                                                               
|      |  |                                                                                                                        
|10.01 |  | Amendment No. 6 to the Credit Agreement, dated March 31, 2003.                                                         
|      |  |                                                                                                                        
|99.1  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|      |  |                                                                                                                        
|99.2  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|      |  |                                                                                                                        
|(b)   |  | Reports on Form 8-K                                                                                                    
|      |  |                                                                                                                        
|      |  | No reports on Form 8-K were filed during the first quarter of 2003.                                                    

21



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##### Table of Contents






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 9, 2003 |  | By:                                                                      | /s/ Deborah A. Wensel

Deborah A. Wensel
Senior Vice President
and Chief Financial Officer
|                  |  |                                                                          |                                                                                           
|                  |  | (Principal Financial and Accounting Officer and
Duly Authorized Officer)

22



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##### Table of Contents






CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Douglas B. Mackie, Chief Executive Officer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Great Lakes Dredge
& Dock Corporation;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| |                                                                
| | ---------------------------------------------------------------
| | /s/ Douglas B. Mackie
Douglas B. Mackie
Chief Executive Officer

23



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##### Table of Contents



CERTIFICATION

I, Deborah A. Wensel, Chief Financial Officer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Great Lakes Dredge
& Dock Corporation;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| |                                                                
| | ---------------------------------------------------------------
| | /s/ Deborah A. Wensel
Deborah A. Wensel
Chief Financial Officer

24



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##### Table of Contents






EXHIBIT INDEX

|       |  |                                                                                                                         
|------ |  | ------------------------------------------------------------------------------------------------------------------------
|Number |  | Document Description                                                                                                    
|       |  |                                                                                                                         
|10.01  |  | Amendment No. 6 to the Credit Agreement, dated March 31, 2003.*                                                         
|       |  |                                                                                                                         
|99.1   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*
|       |  |                                                                                                                         
|99.2   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*

*     Filed or furnished herewith.

25