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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

OR

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

For the transition period from            to            .

Commission file number:
333-64687

Great Lakes Dredge & Dock Corporation
(Exact name of registrant as specified in its charter)

(630) 574-3000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

    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 / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /x/

    The aggregate market value of the voting stock held by non-affiliates of the registrant is $139,800 based on a price of $1.00/share.

    As of March 16, 2001, there were outstanding 1,538,800 shares of Class A Common Stock, 3,363,900 shares of Class B Common Stock, and 44,675 shares of Preferred Stock.

DOCUMENTS INCORPORATED BY REFERENCE
NONE

GREAT LAKES DREDGE & DOCK CORPORATION
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

TABLE OF CONTENTS

    This Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, including but not limited to the Management's Discussion and Analysis of Financial Condition and Results of Operations, contains or may contain forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this Report, the words "anticipate," "believe," "estimate," "except," "future," "intend," "plan," "should" and similar expressions or the negative thereof or other comparable terminology or discussions of strategy, plans, or intentions, identify such forward-looking statements. Such forward-looking statements are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including, in addition to any risks and uncertainties disclosed in the text surrounding such statements or elsewhere in the Report, risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including the Company's customers, suppliers, business partners and competitors and legislative, regulatory, judicial and other governmental authorities and officials. Should the Company's assumptions or estimates prove to be incorrect, or should one or more of these risks or uncertainties materialize, actual amounts, results, events and circumstances may vary significantly from those reflected in such forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such information.

Part I

Item 1.—Business

Organization and recapitalization

    Great Lakes Dredge & Dock Corporation (the "Company" or "Great Lakes") is the largest provider of dredging services in the United States. Prior to August 19, 1998, the Company was wholly owned by certain Blackstone Limited Partnerships ("Blackstone"). On August 19, 1998, the Company completed a recapitalization, primarily providing for the redemption of all of the capital stock held by Blackstone, as follows: (i) management exercised vested options representing 7% of the Company's then outstanding common stock, (ii) a portion of those shares of common stock held by management was purchased directly by Vectura Holding Company, LLC ("Vectura"), (iii) newly issued common stock and preferred stock was sold to Vectura and certain additional members of management, (iv) the common stock formerly held by Blackstone was redeemed, and (v) a portion of the common stock held by management and Vectura was converted into preferred stock. The redemption of the common stock formerly held by Blackstone was financed using a portion of the proceeds from $115.0 million of senior subordinated debt, $110.0 million new bank credit facility, and $45.0 million of preferred stock and $3.6 million of common stock sold to Vectura and certain members of management. As a result of the recapitalization and subsequent stock activity, certain members of Company management own approximately 14% of the outstanding common stock and Vectura owns approximately 85%.

Operations

    Dredging generally involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replacement of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance and Beach Nourishment, in which activities the Company achieved a combined U.S. market share of the projects on which it bids ("bid market") of 37% and 44% in 2000 and 1999, respectively. In addition, the Company is the only U.S. dredging contractor with significant international operations, which averaged 17% of its contract revenues over the last three years. The Company's fleet of 28 dredges, 31 material transportation barges, three drillboats, and 163 other specialized support vessels is the largest and most diverse fleet in the U.S. The Company believes its fleet would cost in excess of $750 million to build.

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    Over its 110-year life, the Company has grown to be the leader in each of its business activities in the U.S. The Company's three principal dredging activities are:

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Capital—U.S. and Foreign  (approximately 69% of 2000 contract revenues). Capital dredging projects are primarily port expansion projects, which involve deepening channels to allow larger, deeper draft ships and providing land fill for building additional port facilities, thereby enhancing port profitability and competitiveness. The U.S. capital market includes "Deep Port" projects authorized under the 1986 Water Resource Development Act ("WRDA") as amended and supplemented, most recently in December 2000. WRDA initially authorized the deepening of 39 ports and has subsequently authorized additional port deepening projects and modified previously authorized projects.

In 1997, the U.S. Army Corps of Engineers (the "Corps") announced Deep Port work to be completed through 2005, with a value in excess of $2.0 billion. Since this announcement, 22 projects, with a total revenue value of approximately $646 million, had been let for bid through the end of 2000. The Company was low bidder on ten of these projects, with a value of $330 million, representing 51% of the total let for bid. The Company's cumulative market share of Deep Port projects let for bid over the last five years was 60%. Capital projects also include land reclamations, trench digging, and other construction related dredging. The Company's bid market share of total U.S. capital projects (including Deep Port projects) was 35% and 47% in 2000 and 1999, respectively. Foreign capital projects, typically related to channel deepening and port infrastructure development, represented approximately 21% of the Company's 2000 contract revenues.

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Maintenance  (approximately 21% of 2000 contract revenues). Maintenance dredging consists of the redredging of waterways and harbors to remove silt, sand and other accumulated sediments. Due to natural sedimentation, active channels generally require maintenance dredging every one to three years. This creates a continuous source of dredging work that is typically non-deferrable if optimal navigability is to be maintained. The Company's bid market share of U.S. maintenance projects was 27% and 43% in 2000 and 1999, respectively.



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Beach Nourishment  (approximately 10% of 2000 contract revenues). Beach nourishment dredging generally involves moving sand from the ocean floor to shoreline locations when erosion has progressed to a stage that threatens substantial shoreline assets. The Company's 2000 and 1999 bid market share of U.S. beach nourishment projects was 53% and 22%, respectively.

    The Company believes that it benefits from a number of favorable trends in the U.S. dredging market:

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Deep Port capital projects. The average controlling depth of the ten largest U.S. ports, as measured by annual container volume, is 40.4 feet compared to 52.7 feet for the ten largest non-U.S. ports worldwide. Without significant deepening efforts, most major U.S. ports risk being unable to accommodate larger cargo vessels, which renders them less competitive with deeper ports. The Corps has the primary responsibility for maintaining and improving the nation's waterways, ports and shorelines. Funding for announced projects has increased significantly during the past three years due to increased federal funding, authorized through the WRDA legislation, and increased cost sharing of capital projects by local governments.



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Increasing need for beach nourishment. Beach erosion is a continuous problem and there is a growing awareness among state and local governments as to the importance of beachfront assets to the multi-billion dollar tourism industry. To date, a significant amount of funding has been allocated by local governments to restore and preserve eroding beachfront.

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•

Erosion of wetlands and coastal marshes. There is a growing concern over the erosion of wetlands and coastal marshes, particularly in Louisiana, which could add substantial dollars to the dredging market over the next ten years. Louisiana's coastal deterioration threatens its entire coastal ecosystem, which impacts coastal recreation, the seafood industry, and potentially infrastructure, due to increased exposure to hurricanes.



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San Francisco airport. This mega-project continues to gain support and includes dredging and land reclamation valued in excess of $1 billion in order to expand the airport into the San Francisco Bay. The San Francisco Airport Commission is in the process of finalizing their selection for engineering consultants for the project.



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Reduction in the Corps' fleet. The Corps, which historically has performed a significant amount of domestic maintenance dredging projects, has substantially reduced its fleet from its height of 42 dredges in 1976 to 12 dredges currently, of which only its four hopper dredges compete directly with the Company. The Corps idled the largest of these hopper dredges in 1998 and maintains plans to idle the remaining three, as long as industry is able to respond in a timely manner. Thus, as a result of these plans, there is an increasing amount of maintenance work available to be performed by the private dredging industry.

Competitive Strengths

    The Company possesses a number of competitive strengths that have allowed it to develop and maintain its leading position within the dredging industry.

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Flexible portfolio of assets. The Company operates the largest and most diverse dredging fleet in the U.S. The size, versatility and technical capabilities of the fleet improves the Company's competitiveness as it generally permits the Company to select the most efficient equipment for a particular job. To maintain the value and effectiveness of its fleet, the Company emphasizes proactive maintenance that results in less downtime, increased profitability, enhanced vessel life and relatively low capital expenditure requirements.



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Favorable competitive dynamic. The Company benefits from significant advantages relative to both existing and potential competitors, including (i) the requirements of the Dredging Act of 1906 and the Jones Act of 1920, which effectively prohibit foreign dredges and foreign-owned dredging companies from competing in the U.S.; (ii) its being one of four dredging companies that it believes are independently able to obtain performance bonds in an amount greater than $50 million; (iii) the relatively high capital cost associated with the construction of a new dredge, which the Company estimates at between $18 to $50 million, which effectively limits new entrants in the dredging industry; and (iv) the Company's reputation for quality and customer service built up over its 110-year operating history, during which time it has never failed to complete a project.



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Specialized capability in capital projects. The Company has also been a leader in capital dredging, which generally requires specialized engineering expertise, specific combinations of equipment and experience in performing complex projects. The Company believes its extensive experience on complex projects significantly enhances its ability to profitably bid and complete these contracts.

Business Strategy

    The Company's strategy is to continue to profitably grow contract revenues and cash flow and strengthen its competitive position worldwide through providing services at the highest quality and

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safest means possible, while utilizing the most efficient equipment and technologically advanced methods. The principal elements of this strategy include:

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Continued growth in domestic markets. The Company expects to strengthen its domestic leadership position by leveraging (i) the size, diversity and technical capabilities of its fleet, (ii) its industry-leading operating experience, (iii) its engineering expertise, and (iv) its efficient and safe project management practices.



•

Enhanced operating capabilities. During the last few years, the Company has acquired several key pieces of equipment which will further enhance its capabilities by providing additional tools for capital projects and strengthening its ability to perform maintenance and beach nourishment projects. These acquisitions include:



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certain hydraulic dredging assets, including the dredge "Texas", which were acquired from T.L. James Dredging Company, a former competitor, in August 1998. In 2000, the Company made improvements to increase the dredge Texas' cutter power, making it the most powerful cutter dredge in the U.S., capable of handling rock work expected in certain of the upcoming port deepening projects.



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the dredge "New York", a newly-built backhoe dredge, which the Company took delivery of in July 1999 under a long-term lease. The New York has performed successfully on the Kill Van Kull channel deepening in New York, and is expected to enhance the Company's ability to compete for and execute future Deep Port projects. The New York will be working on the Wilmington, North Carolina and San Juan, Puerto Rico channel deepening projects in 2001.



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the drillboat, "Apache" which was constructed by the Company in 2000. The Apache has increased drilling efficiency and capacity and is capable of working in offshore conditions, the only drillboat of its type in use in U.S. waters.



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a new 5,000 cubic meter hopper dredge (the "Liberty Island") to accommodate anticipated growth in domestic hopper dredging attributable to the reduction of the Corps' hopper fleet, additional Deep Port work and related maintenance dredging, potential increased beach nourishment work, and the aging of the industry's hopper fleet. The Company secured construction and long-term lease financing in the fourth quarter of 1999. The new dredge is expected to be delivered by the end of 2001.




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Foreign market growth. Since the early 1990's, consolidation among certain foreign competitors, together with an increase in foreign governments' port infrastructure investments, have resulted in new overseas dredging opportunities for Great Lakes. The Company intends to continue to selectively pursue international opportunities that offer it the potential to increase the utilization of its asset base, to leverage its project management capabilities and to expand its non-U.S. dredging market share.



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Management development and reward. Great Lakes has a young management team with a vast amount of experience in the dredging industry. Great Lakes is committed to providing additional opportunities for challenge and responsibility to motivate management. Certain members of management own approximately 14% of the Company's outstanding common equity, which directly rewards the individuals through the success of the Company.

Customers

    The dredging industry's customers include federal, state, and local governments, foreign governments, and both domestic and foreign private concerns such as utilities and oil companies. Most dredging projects are competitively bid, with the award going to the lowest qualified bidder. There are

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generally few economical substitutes that customers can use for dredging services. The Corps is the largest dredging customer in the U.S. and has responsibility for federally funded projects related to navigation and flood control. In addition, the U.S. Coast Guard and the U.S. Navy are responsible for awarding federal contracts with respect to their own facilities. In 2000, approximately 67% of the Company's contract revenues were earned from contracts with federal government agencies or companies operating under contracts with federal government agencies.

    Foreign governments are the primary dredging customers in international markets, generally for Capital projects relating to infrastructure development. Approximately 21% of the Company's 2000 contract revenues were earned from contracts with foreign governments or companies operating under contracts with foreign governments.

Bidding Process

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

    For contracts under its jurisdiction, the Corps typically prepares a cost estimate based on its understanding of the availability of contractors and their equipment. To be successful, a bidder must be determined by the Corps to be a responsible bidder (i.e., a bidder that generally has the necessary equipment and experience to successfully complete the project) and submit the lowest responsive bid that does not exceed 125% of an estimate determined by the Corps to be fair and reasonable. With respect to projects that are not administered by the Corps, contracts are generally awarded to the lowest qualified bidder, provided such bid is no greater than the amount of funds that are available for such project.

    Substantially all of the Company's contracts are competitively bid. However, some government contracts are awarded by a sole source procurement process through negotiation between the contractor and the government. Prior to negotiations, the contractor submits a proposal and cost and pricing data to the government. Under such contracts, the government has the right, after award and/or completion of the contract, to audit the contractor's books and records, including the proposal and data available to the contractor during negotiations, to ensure compliance with the contract and applicable federal legislation, rules and regulations. The government may seek a price adjustment based on the results of such audit. The Corps has recently bid certain projects through a "request for proposal" (RFP) process. The RFP process is likely to be advantageous for the Company, as it allows the project award to be based on technical capability, as well as price.

    Great Lakes has operated for over 110 years and maintains an extensive historical database of dredging production records from its own and its competitors' activities and past bidding results. Prior production records help the Company predict sediment composition and optimum equipment requirements. Management believes that its extensive database and its accumulated estimating and bidding expertise allow the Company to be more accurate than its competitors in predicting dredging cost prior to bidding for contracts.

Bonding and Foreign Project Guarantees

    For most domestic projects and some foreign projects, dredging service providers are required to obtain three types of bonds, which are typically provided by large insurance companies. A bid bond is required to serve as a guarantee that if a service provider's bid is chosen, the service provider will sign the contract. The amount of the bond is typically 20% of the service provider's bid, up to a maximum bond of $3.0 million. After a contract is signed, the bid bond is replaced by a performance bond, the purpose of which is to guarantee that the job will be completed. A performance bond typically covers

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100% of the contract value with no maximum bond amounts. If the service provider fails to complete a job, the bonding company assumes such obligation and pays to complete the job, generally by using the equipment of the defaulting company. A company's ability to obtain performance bonds with respect to a particular contract depends upon the size of the contract, as well as the size of the service provider and its financial position. A payment bond is also required to protect the service provider's suppliers and subcontractors in the event that the service provider cannot make timely payments. Payment bonds are generally written at 100% of the contract value.

    Great Lakes' projects had been bonded by Reliance Surety Company ("Reliance") until mid-2000, at which time Travelers Property Casualty ("Travelers") purchased the surety business of Reliance. The Company has never experienced difficulty in obtaining bonding from Reliance for any of its projects and expects this good relationship to continue with Travelers, a major surety provider. If the Company were to fail to complete a project, the bond provider would be required to either (i) permit the customer to complete the job and reimburse the customer for the cost of completion or (ii) complete the defaulted contract utilizing the Company's equipment and labor force or a third party service provider. In the event the bonding company were to complete the defaulted contract, it would be entitled to be paid the contract price directly by the customer. Additionally, the bonding company would be entitled to be paid by the Company for any costs incurred in excess of the contract price.

    For most foreign projects, letters of credit or bank guarantees issued by foreign banks, which are secured by letters of credit issued under the Company's credit agreement with its senior secured lenders (the "Credit Agreement"), are required as security for the bid, performance and, if applicable, advance payment. Foreign bid guarantees are usually 2% to 5% of the service provider's bid. Foreign performance and advance payment guarantees are each typically 5% to 10% of the contract value.

Competitive Environment

    The U.S. dredging industry is highly fragmented but has experienced significant consolidation in recent years. Approximately 180 entities in the U.S. presently operate more than 600 dredges, most of which are smaller and service the inland, as opposed to coastal, waterways and therefore, do not compete with Great Lakes. Competition in the Company's market is determined primarily on the basis of price, and competition is often limited by the size of the job, equipment requirements, bonding requirements, certification requirements, or government regulations. Currently, Great Lakes and three competitors are the only dredging companies which independently bid on jobs with values in excess of $50.0 million.

    Until very recently, most dredging competitors concentrated their efforts in certain regions and operated only one type of dredge. Regional concentrations do not allow these competitors to respond to opportunities in other regions or to diversify their risks in the event of a temporary decline in the market in their area. A company with a variety of equipment, such as Great Lakes, is better able to respond to changes in demand for certain types of dredges and can select the most suitable equipment for any particular project, minimizing its project completion cost. Additionally, Great Lakes, with its extensive fleet and engineering expertise, can readily meet applicable certification, government and bonding requirements. In the last three years, consolidation within the domestic dredging market has allowed certain competitors to obtain additional dredging assets, which has enabled them to expand operations across regions, and bid more competitively. This is apparent in the Deep Port bid market in which Great Lakes' market share, while still strong, has declined since 1998 due to the more aggressive competition presented by these entities.

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Equipment

    Great Lakes' fleet of dredges, material barges and other specialized equipment is the largest and most versatile in the U.S. There are three primary types of dredging equipment: hopper dredges, hydraulic dredges and mechanical dredges.

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Hopper Dredges. Hopper dredges are self-propelled and have the general appearance of an ocean-going vessel. The dredge has hollow hulls into which material is suctioned hydraulically through drag-arms and deposited. Once the hollow hulls or "hoppers" are filled, the dredge will sail to the designated disposal site and either (i) bottom dump the material or (ii) pump the material from the hoppers through a pipeline to the designated site. Hopper dredges can operate in rough waters, are less likely to interfere with ship traffic and can move quickly from one project to another. Great Lakes operates the largest hopper fleet in the U.S., affording it flexibility to quickly respond to time-sensitive projects.



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Hydraulic Dredges. Hydraulic dredges remove material using a revolving cutterhead which cuts and churns the sediment on the ocean floor and hydraulically pumps the material by pipe to the disposal location. These dredges are very powerful and can dredge some types of rock. Certain materials can be directly pumped as far as seven miles with the aid of a booster pump. Hydraulic dredges work with an assortment of support equipment which help with the positioning and movement of the dredge, handling of the pipelines, and the placement of the dredged material. Great Lakes operates the only two large electric hydraulic dredges in the U.S., which makes the Company particularly competitive in markets with stringent emissions standards, such as California.



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Mechanical Dredges. There are two basic types of mechanical dredges operating in the U.S.: clamshell and backhoe. In all cases, the dredge uses a bucket which excavates the material from the ocean floor. The dredged material is placed by the bucket into material barges or "scows" for transport to the designated disposal area. The scows are emptied by bottom-dumping, direct pump-out or removal by a crane with a bucket. Mechanical dredges are capable of removing hardpacked sediments and debris and can work in tight areas such as along docks or terminals. Clamshell dredges with specialized buckets are ideally suited to handle material requiring controlled disposal. The Company has the largest fleet of material barges in the industry which provide cost advantages when dredged material is required to be disposed far offshore or when material requires controlled disposal.

    The Company is committed to preventive maintenance, which it believes is reflected in the long lives of most if its equipment and its low level of downtime on jobs. Effective January 1, 1999, the Company increased the estimated useful lives of certain operating equipment to better reflect the period over which the Company anticipates utilizing this equipment with normal repairs and maintenance. The Company spent $25.9 million on maintenance in 2000, in addition to $14.1 million on capital expenditures.

    Great Lakes' domestic fleet is typically positioned on the East and West coasts with a smaller number of vessels on the Gulf of Mexico and on inland rivers. The mobility of the Company's fleet enables Great Lakes to move equipment in response to changes in demand. The Company believes that, on average, its dredge equipment capacity utilization based on actual operating time is among the highest in the industry. Great Lakes' fleet includes assets currently positioned internationally in the Middle East, India, Africa, the Caribbean and Central America.

Future Equipment Needs

    The Company is continually assessing its need to upgrade and expand its fleet to take advantage of improving technology and to address the changing needs of the dredging market. As mentioned

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previously, the Company has recently made some significant additions to its dredging capacity which it believes will enhance its ability to compete for and execute future Deep Port projects.

Equipment Certification

    Certification of equipment by the U.S. Coast Guard and establishment of the permissible loading capacity by the America Bureau of Shipping ("A.B.S.") are important factors in Great Lakes' business. Many projects, such as beach nourishment projects with offshore sand, dredging projects in exposed entrance channels, and dredging projects with offshore disposal areas, are restricted by federal regulations to be performed only by dredges or scows that have U.S. Coast Guard certification and a load line established by the A.B.S. The certifications indicate that the dredge is structurally capable of operating in open waters. The Company has more certified vessels than any domestic competitor and makes substantial investments to maintain these certifications.

Government Regulations

    The Company is subject to government regulations pursuant to the dredging statute (46 U.S.C. Section 292) which protects the United States dredging industry from competition from foreign-built dredges. The law prohibits foreign-built vessels (absent special legislative action) from competing in the United States dredging market. Dredges operating in the navigable waters of the United States must also meet the coastwise trade requirements of the Jones Act (Section 27 of the Merchant Marine Act, 1920) and Section 2 of the Shipping Act, 1916, as amended, and must have a coastwise endorsement pursuant to the Vessel Documentation Act (46 U.S.C. Section 12101 et seq.). These acts prohibit vessels owned or controlled by entities which are less than 75% owned and controlled by United States citizens from transporting dredged material between points in the United States.

    The Company's operations and facilities are subject to a variety of federal and state environmental statutes and regulations. In addition, the Company is required to comply with federal and state statutes designed to protect certain species and habitats.

Backlog

    The Company's contract backlog represents management's estimate of the revenues which will be realized under the portion of the contracts remaining to be performed based upon current estimates. 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, except, in some cases, the recovery of the Company's actual committed costs and profit on work performed up to the date of cancellation. Consequently, backlog is not necessarily indicative of future results. The Company's backlog includes only those projects for which the customer has provided an executed contract. The components of the Company's backlog are addressed in more detail in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Employees

    Currently, the Company employs approximately 300 full-time salaried personnel, with additional hourly personnel, most of whom are unionized and hired on a project-by-project basis. During 2000, the Company employed an average of approximately 575 hourly personnel to meet project requirements. Crews are generally available for hire on relatively short notice.

    The Company is a party to more than twenty collective bargaining agreements that govern its relationships with its hourly personnel. Four primary agreements apply to more than ninety percent of such employees. The Company has not experienced any labor disputes in the past five years and

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believes it has good relationships with its significant unions; however, there can be no assurances that the Company will not experience labor strikes or disturbances in the future.

Joint Ventures

Amboy Aggregates

    The Company and a New Jersey aggregates company each own 50% of Amboy Aggregates ("Amboy"). Amboy was formed in December 1984 to mine sand from the entrance channel to the New York Harbor and to provide sand and aggregate for use in road and building construction. Great Lakes' dredging expertise and its partner's knowledge of the aggregate market formed the basis for the joint venture. The Company's investment in Amboy is accounted for using the equity method.

    Amboy is the only East coast aggregate producer to mine sand from the ocean floor. In 1988, Amboy built a specially designed dredge at a cost of $9.0 million for sand mining, de-watering and dry delivery. No other vessel of this type operates in the U.S. Amboy's ocean-based supply of sand provides a long-term competitive advantage in the Northeast as land-based sand deposits are depleted or rendered less cost competitive by escalating land values.

    Mining operations are performed pursuant to permits granted to Amboy by the federal government and the states of New York and New Jersey. In recent years, Amboy has failed to obtain approval for new permits to mine sand in new borrow areas. These new sources would have contained aggregate more closely meeting the specifications for concrete sand which would require less blending with other materials, thereby reducing the cost of the final product and improving margins. Despite these recent setbacks, Amboy continues to pursue other avenues for obtaining new permits, but it is likely that its current sand supply will continue to require additional blending, and hence additional costs, for the next few years. In 1999, Amboy partnered in a venture intended to provide a steady supply of grit, the material which is blended with its dredged aggregate. To date, this venture has performed poorly which has further impacted Amboy's performance. Amboy is also pursuing alternative uses for its current supply of sand in an effort to provide an additional earnings stream.

Argentine Joint Venture

    At December 31, 2000, Great Lakes had a 20% interest in Riovia S.A. ("Riovia"), a joint venture with four European dredging firms, to dredge the Rio Via channel linking Buenos Aires, Argentina and Montevideo, Uruguay which is important for shipping to Argentina and Uruguay. This venture was established in 1996, with six other partners originally, and has afforded Great Lakes the opportunity to work with these other international dredging companies to design, manage and execute this project. During 1999, upon completion of the capital works portion, Riovia entered into the maintenance phase of the dredging contract which is expected to continue until 2007. The Company currently accounts for its investment in Riovia at cost.

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Item 2.—Properties

    Great Lakes' dredging fleet is the largest in the U.S. and one of the largest fleets in the world. The fleet consists of over 200 pieces of equipment, including the largest hopper fleet and most of the large hydraulic dredges in the U.S.

    The following table provides a listing of the Company's current fleet of equipment.

    A significant portion of the Company's operating equipment is subject to liens by the Company's senior lenders and bonding companies. See Note 4, "Property and Equipment" and Note 7, "Long-term Debt" in the Notes to the Consolidated Financial Statements.

    The Company leases approximately 40,000 square feet of office facilities in Oak Brook, Illinois, which serves as its principal administrative facility. The primary lease for this property will expire in the year 2008. The Company also leases waterfront properties in Baltimore, Maryland, and Green Cove Springs, Florida. These locations serve as mooring sites for idle equipment and inventory storage.

    Annual rental expense for real estate and equipment leased by the Company during the year ended December 31, 2000 totaled $17.8 million, including other short-term rentals. See Note 13, "Lease Commitments" in the Notes to the Consolidated Financial Statements.

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Item 3.—Legal Proceedings

    Although the Company is subject to various claims and legal actions that arise in the ordinary course of business, the Company is not currently a party to any material legal proceedings or environmental claims.

    The Company's operations and facilities are subject to a variety of federal and state environmental statutes and regulations, including those regulating dredging operations, the disposal of dredged material, wetlands, storm and waste water discharges, air emissions and the handling of certain substances. The scope of such statutes and regulations and parties liable thereunder have been afforded broad interpretations by state and federal regulators and courts. In addition, the Company is required to comply with federal and state statutes designed to protect certain species and habitats. Such compliance can delay the authorization of, appropriation with respect to, and performance of, particular projects and increase expenses in connection therewith.

    The Company cannot predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered or interpreted or what environmental conditions may be found to exist on its properties. Compliance with more stringent environmental laws, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of those laws, and discovery of new conditions may require additional expenditures by the Company. There can be no assurance that one or more of the foregoing will not have material adverse effect on the Company.

Item 4.—Submission of Matters to a Vote of Security Holders

    None.

Part II

Item 5.—Market for the Registrant's Common Equity and Related Stockholder Matters

    There is no established public offering market for the outstanding common equity of the Company. At December 31, 2000, Vectura Holding Company, LLC ("Vectura") owns approximately 85% of the outstanding common equity of the Company and certain members of the Company's management own in aggregate approximately 14% of the outstanding common equity of the Company. Vectura's membership interests are owned by 399 Venture Partners, Inc., an affiliate of Citicorp Venture Capital Ltd., and certain other investors.

    The ability of the Company to pay dividends is restricted by certain covenants contained in the Company's senior credit facility, as well as certain restrictions contained in the Company's indenture relating to its subordinated debt.

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Item 6.—Selected Financial Data

    The following table sets forth certain financial data regarding the Company and should be read in conjunction with the consolidated financial statements and notes thereto (see Item 14, "Financial Statements" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations"). The income statement and balance sheet data presented below have been derived from the Company's consolidated financial statements.

(1)

EBITDA in 1998 was adjusted for equity incentive plan and other compensation expenses ($8.2 million) and recapitalization related expenses ($9.5 million).

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

Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations

General

    Great Lakes is the largest provider of dredging services in the United States. Dredging generally involves the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock. The U.S. dredging market consists of three primary types of work: Capital, Maintenance (including controlled disposal dredging) and Beach Nourishment, in which areas the Company has experienced an average combined bid market share in the U.S. of 46% over the past three years. In addition, the Company has continued its role as the only U.S. dredging contractor with significant international operations, which represented an average of 17% of its contract revenues over the past three years.

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

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

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

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

13

to better match revenues and expenses. Costs of contract revenues also include the net gain or loss on dispositions of property and equipment.

    In 2000, the Company's equity in losses of joint ventures relates to the Company's 50% ownership interest in Amboy. In 1998, equity in earnings of joint ventures also included earnings of $0.2 million, related to the Company's 17% interest in Riovia, in which the Company made an initial investment in 1996. Earnings for Riovia for the first three quarters of 1999 were insignificant. During 1999, Riovia entered into the maintenance phase of the dredging contract upon completion of the capital works portion. The Company has less involvement in the project operations going forward, and therefore, in the fourth quarter of 1999, the Company began accounting for its investment in Riovia at cost. The Company continues to account for its investment in Amboy using the equity method. In January 2000, the Company's interest in Riovia increased to 20%, as Great Lakes and four other venture partners bought out the interest of the sixth partner. The Company conducts certain hopper dredging activities, primarily maintenance and beach nourishment projects through the operation of NATCO Limited Partnership ("NATCO") and North American Trailing Company ("North American"). Minority interests reflects Ballast Nedam Group N.V.'s respective 25% and 20% interest in NATCO and North American.

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Quarterly Results of Operations

    The following table sets forth the components of net income and EBITDA on a quarterly basis for the years ended December 31, 2000 and 1999.

15

Results of Operations—Fiscal Years

    The following table sets forth the components of net income and EBITDA as a percentage of contract revenues for the years ended December 31:

(1)

EBITDA for 1998 has been adjusted for equity incentive plan and other compensation expenses and recapitalization related expenses.

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Components of Contract Revenues and Backlog

    The following table sets forth, by type of work, the Company's contract revenues for the years ended and backlog as of December 31:

    The Company's overall growth in 2000 revenues is the result of increased U.S. and foreign capital work, relating to the Deep Port projects and specific international projects in Ghana and India. Fourth quarter 2000 revenues of $83.6 million increased 10.0% from fourth quarter 1999 revenues of $76.0 million, which was primarily attributable to a very strong third quarter bidding market. Fourth quarter 2000 gross profit increased by 22.8% compared to the same period of 1999, due to the higher revenue level and from the mix of projects performed during the quarter, which included more beach nourishment work at higher margins.

    Domestic capital dredging project revenues increased $8.4 million or 5.5% in 2000, when compared to 1999 revenues. Capital projects include large port deepenings and other infrastructure projects. Due to the significant volume of capital projects announced and bid in 1999 and 2000, the Company has allocated more of its resources to these higher margin projects.

    In 2000, contract revenues from capital projects included $19.5 million generated from a large project in Los Angeles, which began work in 1997, and $26.9 million for the Houston Deep Port project, which was awarded in 1998. Jobs awarded in 1999 related to Deep Port work in San Juan, Charleston, and New York generated 2000 contract revenues of $18.8 million, $16.4 million, and $10.7 million, respectively. Additionally, two Deep Port projects in Wilmington, which were awarded in the third quarter of 2000, contributed $11.8 million to 2000 contract revenues.

    Beach nourishment projects include rebuilding of shoreline areas which have been damaged by storm activity or ongoing erosion. Year to date 2000 revenues from beach projects decreased $7.3 million or 18.0%, compared to 1999. This decrease continued to be primarily a result of the deferral of some key projects by the customers, so that fewer projects were let for bid than in prior years. Despite the overall decline, the bid market for beach work improved dramatically in the third and fourth quarters of 2000 when $70 million of new projects were bid. The Company expects to see additional growth in beach nourishment projects over the next few years due to growing awareness of the importance of the tourism revenue to the local economies. Several projects contributed to 2000's beach revenues, including beach nourishment projects in Brevard, Florida; Tybee Island, Georgia; and Egg Harbor/Peck Beach, New Jersey, which contributed revenues of $11.4 million, $6.5 million, and $7.3 million, respectively.

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    Maintenance projects include routine dredging of ports, rivers and channels to remove the regular build up of sediment. Revenues from maintenance projects for the year ended December 31, 2000 decreased $5.4 million or 6.9%, over 1999. The 2000 maintenance market saw a decline over prior years due to lower than typical precipitation levels in the Midwest, which affects the Mississippi River schoaling and dredging from St. Louis south to the Gulf. Significant maintenance revenues in 2000 were related to projects in Morehead/Wilmington, North Carolina; South Pass, Louisiana; and Mississippi/Memphis river rentals, which generated revenues of $6.9 million, $10.0 million, and $11.6 million, respectively.

    Revenues of the Company's NATCO hopper dredging subsidiary for 2000 approximated 1999 levels; however, margins improved by $1.0 million, or 9.5% due to receipt of claim revenue on the Long Beach project, which was substantially performed in 1999 and 2000. This project had experienced performance problems in its early stages since NATCO encountered more compacted material than was included in the specifications provided by the Corps. The Company expects NATCO's utilization in 2001 to be comparable to levels experienced in 2000. However, the hopper market is expected to continue to be highly competitive, with pricing being impacted by increased restrictions imposed by environmental windows coupled with the decline in emergency dredging opportunities on the Mississippi.

    Revenues from foreign operations in 2000 increased $41.1 million or 133.8% compared to 1999. Key foreign projects that contributed to 2000 revenues include the Company's joint venture project in Egypt, which began in the first quarter of 1999 and was completed in mid-2000, a project in Dabhol, India, which began in the third quarter of 1999 and will continue into 2001, and a long-term project in Ghana, West Africa, which began in the first quarter of 2000 and is expected to be completed in 2003. These projects contributed revenue of $10.2 million, $22.7 million, and $29.0 million, respectively, during 2000.

Backlog

    The Company's contract backlog represents management's estimate of the revenues which will be realized under the portion of the contracts remaining to be performed based upon current estimates. 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, except, in some cases, the recovery of the Company's actual committed costs and profit on work performed up to the date of cancellation. Consequently, backlog is not necessarily indicative of future results. The Company's backlog includes only those projects for which the customer has provided an executed contract.

    Backlog at December 31, 2000 of $198.3 million, while still strong from a historical perspective, declined 25.8% from the record year-end backlog level of $267.1 million at December 31, 1999. This decline in backlog reflects the overall dynamics of the 2000 bid market, which included three quarters of intensely competitive bidding and one quarter that accounted for more than fifty percent of the total bids for the year, rather than a more orderly flow of bidding opportunities.

    The strength in backlog continues to be in the capital work. The Deep Port and foreign markets have continued to provide numerous and attractive project opportunities, which is expected to continue into 2001, as a result of updates to the WRDA legislation approving and authorizing additional Deep Port work and the expected commencement of certain significant foreign projects, particularly in the Middle East. At December 31, 2000, the Company had been low bidder on additional work valued at $32.5 million which was still pending award, and therefore excluded from backlog.

    Additional significant revenues in backlog at December 31, 2000 relate to two capital projects in Wilmington for $54.0 million, and capital projects in San Juan, Puerto Rico for $13.9 million, in

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Baltimore for $16.0 million, and Ghana for $52.6 million. Backlog also reflects revenues remaining on certain beach nourishment work won in the third and fourth quarters of 2000, including projects in Sunny Isles, Florida for $14.4 million, Brevard, Florida for $7.1 million and Patrick Air Force Base, Florida for $4.0 million.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

    Contract Revenues.  Contract revenues increased $36.8 million or 12.2% from $302.3 million in 1999 to $339.1 million in 2000. The increase in 2000 is due primarily to a higher level of foreign project activity in 2000, which offset slight declines in revenues from beach nourishment and maintenance projects.

    Costs of Contract Revenues.  Costs of contract revenues increased $36.9 million or 15.1%, from $244.8 million in 1999 to $281.7 million in 2000. Costs of contract revenues as a percentage of contract revenues was 83.1% in 2000 and 81.0% in 1999. The increase in costs of contract revenues as a percentage of revenues in 2000 was attributable to a higher mix of lower margin foreign projects, as well as certain domestic projects which operated below margin levels experienced in recent years due to competitive pricing pressures experienced in the first half of the year.

    Gross Profit.  Gross profit remained level at $57.4 million and $57.5 million in 2000 and 1999, respectively, due to the impact of the increase in foreign work and certain capital projects on costs of contract revenues.

    General and Administrative Expenses.  General and administrative expenses were $22.3 million and $21.9 million in 2000 and 1999, respectively. As a percent of sales, general and administrative expenses remained relatively consistent as 6.6% of sales in 2000 compared to 7.2% in 1999.

    Operating Income.  Operating income was $35.1 million in 2000, compared to $35.6 million in 1999. Operating income declined as a percent of revenues, due to the impact of increased foreign work and certain lower margin domestic projects.

    EBITDA.  EBITDA increased only $0.2 million, to $47.8 million for the year ended December 31, 2000 from $47.6 million for the year ended December 31, 1999. Although revenues increased 12.2% in 2000, EBITDA as a percentage of revenue declined due to the higher mix of lower margin foreign work, as well as the impact of certain domestic projects, which operated below margin levels experienced in recent years due to competitive pricing pressures encountered in the first half of the year.

    Interest Expense, Net.  Net interest expense increased $0.5 million or 3.1%, from $18.1 million in 1999 to $18.6 million in 2000. The increase was due to a combination of higher working capital investment on the foreign projects and an increase in the borrowing rates on variable rate debt.

    Equity in (Loss) Earnings of Joint Ventures.  Equity in (loss) earnings of joint ventures declined $1.0 million from earnings of $0.2 million in 1999 to a loss $0.8 million in 2000. In 2000, Amboy recorded additional costs related to its efforts to obtain new permits and incurred expenses resulting from an unfavorable outcome on certain litigation.

    Income Tax Expense.  Income taxes decreased $1.1 million, to $7.4 million in 2000 from $8.5 million in 1999. The decrease was a result of decreased taxable earnings in 2000.

    Minority Interests.  Income attributable to minority interests increased the Company's allocation to minority interests to $1.0 million in 2000 from a credit from minority interests of $0.5 million in 1999. The 2000 expense was due to higher earnings from the NATCO hopper dredging operations in 2000 compared to losses incurred in 1999.

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    Net Income.  Net income decreased $2.4 million, to $7.3 million in 2000 from $9.7 million in 1999. The 2000 net income reflects the lower margins on the increased foreign work as well as the reduced margins obtained on certain domestic projects which were bid at lower margins due to the competitive bid market in 2000.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

    Contract Revenues.  Contract revenues increased $13.1 million or 4.5% from $289.2 million in 1998 to $302.3 million in 1999. The increase in 1999 was due primarily to the increased volume of higher margin capital dredging projects which offset a decline in revenues from beach nourishment and foreign projects.

    Costs of Contract Revenues.  Costs of contract revenues increased $4.2 million or 1.8%, from $240.6 million in 1998 to $244.8 million in 1999. Costs of contract revenues as a percentage of contract revenues was 81.0% in 1999 and 83.2% in 1998. The improvement in costs of contract revenues as a percentage of revenues in 1999 was primarily attributable to the project mix. Throughout 1999, there were more higher margin capital dredging projects and fewer lower margin beach nourishment and foreign projects.

    Gross Profit.  Gross profit increased $8.8 million or 18.2%, from $48.6 million in 1998 to $57.5 million in 1999. The improvement in 1999 was attributable to the increased volume of higher margin capital dredging work.

    General and Administrative Expenses.  General and administrative expenses remained relatively consistent as 7.2% of sales in 1999 compared to 7.8% in 1998.

    Operating Income.  Operating income was $35.6 million in 1999, an increase of $9.6 million compared to 1998 (excluding nonrecurring recapitalization and equity incentive plan and other compensation expenses totaling $17.7 million related to the recapitalization of the Company in August 1998). The 1999 increase in operating income was primarily a result of the increased volume of higher margin capital dredging work.

    EBITDA.  EBITDA increased $7.7 million or 19.2%, to $47.6 million for the year ended December 31, 1999 from $39.9 million (excluding recapitalization and equity incentive plan and other compensation expenses) for the year ended December 31, 1998. The increase was due to the increased volume of higher margin work in 1999.

    Interest Expense, Net.  Net interest expense increased $8.2 million or 83.5%, from $9.9 million in 1998 to $18.1 million in 1999. The increase was related to interest on the additional debt incurred in connection with the Company's recapitalization effected in August 1998.

    Equity in (Loss) Earnings of Joint Ventures.  Equity in earnings of joint ventures declined $1.0 million or 85.0%, from $1.2 million in 1998 to $0.2 million in 1999. The decrease was due to the continued reduction in demand for Amboy's products, combined with commencement of the maintenance phase of the Riovia project. The maintenance phase was anticipated to have lower revenues and margins than the capital phase, which was substantially complete at the end of 1998. Further, at October 1, 1999, the Company began accounting for its investment in Riovia using the cost method. Equity earnings for Riovia in 1999 were insignificant.

    Income Tax Expense.  Income taxes increased $7.8 million, to $8.5 million in 1999 from $0.7 million in 1998. The increase was a result of taxable earnings in 1999 of approximately $17.7 million compared to a loss in 1998 of $0.4 million which resulted from the inclusion of significant nonrecurring expenses related to the recapitalization of the Company.

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    Minority Interests.  Income attributable to minority interests declined to a loss of $0.5 million in 1999 from income of $2.7 million in 1998. The decrease was due to lower earnings from the NATCO hopper dredging operations in 1999 compared to 1998.

    Net Income (Loss).  Net income increased $14.4 million, to $9.7 million in 1999 from a loss of $4.7 million in 1998. The 1999 net income reflected the improved operating earnings resulting from the favorable project mix, while the 1998 losses reflected the additional nonrecurring expenses related to the Company's recapitalization in 1998.

Seasonality

    Prior to the last three years, the Company historically realized lower contract revenues and earnings in the first and fourth quarters of each year. This trend was due to a number of factors including variation in weather conditions and government funding cycles, which affected the timing and execution of projects. The Company has seen the trend of this historical seasonality diminish over the past three years, with the increase in Deep Port work and the impact of environmental windows, which require that certain work be performed in winter months to protect wildlife habitats. The Company has been able to respond to these market factors since it has the flexibility to move its equipment around, as weather conditions and environmental restrictions dictate. However, in the future, seasonality may become more of a factor if the project mix changes and the Company is not able to be as flexible in utilizing its equipment.

Liquidity and Capital Resources

    The Company's primary sources of liquidity are cash flows from operations and borrowings under the revolving line of credit provided by the Credit Agreement (see Note 7, "Long-term Debt" in the Notes to the Consolidated Financial Statements). The Company's primary uses of cash are funding working capital, capital expenditures and debt service.

    The Company's net cash flows from operating activities for the years ended December 31, 2000, 1999 and 1998 were $17.5 million, $25.3 million and $20.2 million, respectively. The decrease in cash flows from operating activities in 2000 compared to 1999 was due to additional working capital requirements for certain foreign projects, as well as the normal fluctuations in working capital requirements inherent in the Company's operations. The increase in cash flows from operating activities in 1999 compared to 1998 was due to favorable contract operations in 1999 over 1998 and a decrease in working capital resulting primarily from normal fluctuations in working capital requirements, along with an increase in billings received in advance of revenue recognition on its Ghana project.

    The Company's net cash flows used in investing activities for the years ended December 31, 2000, 1999 and 1998, were $13.7 million, $12.8 million, and $10.6 million, respectively. Uses in 2000 and 1999 relate primarily to capital expenditures; however, 1999 also included $3.6 million in distributions from joint ventures, which was offset by $1.7 million paid out as distributions to minority interests. In 1999, there was an increase in capital additions of $6.0 million compared to the net capital additions in 1998. Capital expenditures in 1998 included $13.6 million for two hydraulic dredges and certain support vessels acquired from a competitor. In December 1998, the Company entered into a sale lease-back transaction for this equipment and received proceeds of $14.5 million. Additionally, in 1998, the Company contracted to build a new backhoe dredge to cost approximately $18.0 million. Capital expenditures in 1998 included $5.7 million in costs related to the construction of this dredge. In October 1998, the Company sold the $5.7 million in related construction in progress and entered into a construction agency agreement to complete the backhoe and a long term operating lease to operate the dredge upon completion.

    The Company's net cash flows used in financing activities for the years ended December 31, 2000, 1999 and 1998, were $4.2 million, $11.7 million, and $10.6 million, respectively. The 2000 use of cash

21

related to the scheduled payments of its term senior debt, offset by net borrowings on its revolver arrangement. The 1999 use of cash related primarily to payments on the term loan portion of the Credit Agreement, which was amended in October 1999 to allow for prepayment of a portion of the term loan and increase capacity under the revolving loan. The use of cash related to financing activities in 1998 is explained by the recapitalization effected in August of 1998, which extinguished the debt under the former credit agreement and redeemed the stock of the majority shareholders with the proceeds from the new Credit Agreement, issuance of senior subordinated notes and equity investments by new shareholders.

    Distributions from and contributions to both Amboy and Riovia are subject to the unanimous consent of each partner in such joint venture. The Company received distributions from the joint ventures totaling $0.2 million and $3.6 million in 2000 and 1999, respectively. No distributions were received from joint ventures in 1998. In 2000, the Company made an additional investment in its Riovia joint venture of $0.3 million, representing its share of the cost to buy out one of the joint venture partners. The Company recorded (losses) earnings from joint ventures of $(0.8) million, $0.2 million and $1.2 million in 2000, 1999, and 1998, respectively. In the first half of 1999, the Company made distributions to minority interests of $1.7 million, related to 1998 earnings; such distributions were made during the fourth quarter of 1997 for 1997 earnings and no distributions have been made for 1999 or 2000 earnings. The Company recorded minority interest income (expense), attributable to subsidiary results, of $(1.0) million, $0.5 million, and $(2.7) million in 2000, 1999, and 1998, respectively.

    The Company has entered into operating lease agreements for certain dredging assets and office space, which require annual lease payments through 2011. See Note 13, "Lease Commitments" in the Notes to the Consolidated Financial Statements. In the fourth quarter of 1999, the Company secured construction and long-term lease financing for a new 5,000 cubic meter hopper dredge, expected to be delivered by the end of 2001. Additionally, the Company expects to incur annual maintenance expenses of approximately $25 to $27 million. Amounts expended for operating leases and maintenance expenses are charged to operations on an annual basis.

    Planned capital expenditures, which primarily include support equipment and equipment upgrades, are expected to require spending of approximately $12 to $15 million annually for the foreseeable future.

    Management believes cash flows from operations and available credit will be sufficient to finance operations, planned capital expenditures and debt service requirements for the foreseeable future. The Company's ability to fund its working capital needs, planned capital expenditures and scheduled debt payments, to refinance 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.

Effect of Recently Issued Accounting Standards

    Effective January 1, 2001, the Company adopted Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) as amended, which requires that all derivative instruments be reported in the balance sheet at fair value and established criteria for designation and effectiveness of hedge relationships. The adoption of SFAS 133 resulted in a pre-tax reduction to other comprehensive income of $1,200 ($626 after tax) related to the Company's fuel hedge arrangements, which are designated as cash flow hedges. The losses included in accumulated other comprehensive income as of January 1, 2001 will be reclassified into earnings over the next thirteen months, the remaining term of the hedge arrangements.

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    In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements," which summarizes certain of the SEC staff's views in applying accounting principles generally accepted in the United States of America to revenue recognition in financial statements. In June 2000, the SEC issued SAB 101B, which delayed the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. Adoption of this SAB has not had a material impact on the Company's financial statements.

Inflation

    The Company does not believe that inflation has had a material impact on the Company's operations for the years ended December 31, 2000, 1999, and 1998.

Item 7A.—Quantitative and Qualitative Disclosures about Market Risk

    A portion of the Company's current operations are conducted outside of the U.S. In 2000 and 1999, 21% and 10%, respectively, of contract revenues were attributable to overseas operations. It is the Company's policy to hedge foreign currency exchange risk on contracts denominated in currencies other than the U.S. dollar, if available. Forward currency exchange contracts, typically with durations of less than one year, are used to minimize the impact of foreign currency fluctuations on operations. The Company does not purchase forward exchange contracts for trading purposes. At December 31, 2000 and 1999, the Company had outstanding foreign currency forward contracts with a notional value of $2.0 million and $4.3 million, respectively, designated as a hedges of its foreign currency denominated tax liabilities.  The Company expects that gains or losses on the foreign currency forward contracts should offset gains or losses on the underlying tax liability being hedged, such that the impact of a change in the exchange rate would be immaterial to the Company's earnings.

    The Company's obligations under the Credit Agreement expose earnings to changes in short-term interest rates since interest rates on bank debt are variable. If the variable rates on the Company's outstanding bank debt were to increase by 10% from the rates at December 31, 2000, for the full year 2001, assuming scheduled principal payments are made, interest expense would increase $0.4 million and assuming a 38% marginal tax rate, net income would decrease $0.2 million.

    The fair value of the Company's fixed rate debt was $114.4 million and $120.2 million at December 31, 2000 and 1999, respectively, based on quoted market prices. Assuming a 10% decrease in interest rates from the rates at December 31, 2000, the fair value of this fixed rate debt would have increased by $7.0 million.

    A significant operating cost for the Company is diesel fuel. During 2000 and 1999, fuel expenditures represented 5.4% and 4.6%, respectively, of costs of contract revenues. The Company uses fuel commodity forward contracts, typically with durations of less than eighteen months, to reduce the impacts of changing fuel prices on operations. The Company does not purchase fuel hedges for trading purposes. Based on the Company's 2001 projected fuel consumption, a one cent change in the average annual price per gallon of fuel would impact its net income by less than $0.1 million, after the effect of fuel commodity contracts in place as of December 31, 2000. At December 31, 2000 and 1999, the Company had outstanding arrangements to hedge the price of a portion of its fuel purchases related to work in backlog, representing approximately 59% of its projected fuel requirements for 2001 and 2000, respectively.

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Item 8.—Financial Statements and Supplementary Data

    The consolidated financial statements (including financial statement schedules listed under Item 14 (a) of this report) of the Company called for by this Item, together with the Independent Auditors' Report dated January 29, 2001, are set forth on pages F-1 to F-25 inclusive, of this Report, and are hereby incorporated by reference into this Item. Financial statement schedules not included in this Report have been omitted because they are not applicable or because the information called for is shown in the consolidated financial statements or notes thereto.

Item 9.—Change In and Disagreements with Accountants on Accounting and Financial Disclosure

    None.

Part III

Item 10.—Directors and Executive Officers

    Set forth below are the names, ages and positions of the persons who serve as the directors and executive officers of the Company.

    Douglas B. Mackie — Mr. Mackie has been President, Chief Executive Officer and Director of the Company since 1995. Mr. Mackie joined the Company in 1978 as Corporate Counsel. In 1987 he was named Senior Vice President.

    Richard M. Lowry — Mr. Lowry has been the Executive Vice President and Chief Operating Officer of the Company since 1995. Mr. Lowry joined the Company in 1978 as a Project Engineer and has since held positions of increasing responsibility in the engineering and operating areas of the Company. In 1990 he was named Senior Vice President and Chief Engineer.

    Deborah A. Wensel — Ms. Wensel has been the Vice President, Chief Financial Officer and Treasurer of the Company since April 1999. Ms. Wensel joined the Company in 1987 as Accounting and Financial Reporting Supervisor. In 1989, she was named Controller and Chief Accounting Officer.

    William F. Pagendarm — Mr. Pagendarm has been a Vice President and Division Manager of the Company since 1985. He joined the Company in 1979 as Project Superintendent.

    Steven F. O'Hara — Mr. O'Hara has been a Vice President and Division Manager of the Company since 1988. He joined the Company in 1978 as Cost Accountant.

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    Bradley T. J. Hansen — Mr. Hansen has been a Vice President and Division Manager of the Company since 1994. Mr. Hansen joined the Company in 1977 as an Area Engineer. He was named Vice President & General Superintendent of the Company in 1991.

    Daniel L. Hussin — Mr. Hussin has been Vice President—Manager of U.S. Business Development since 1995. Mr. Hussin joined the Company in 1972 as an Estimator. He was named Vice President and Division Manager of the Company in 1973.

    Michael A. Delaney — Mr. Delaney became a director of the Company upon consummation of the recapitalization on August 19, 1998. Mr. Delaney has been a Managing Director of 399 Venture Partners, Inc. and its affiliate Citicorp Venture Capital Ltd. since 1997. From 1989 through 1997, he was a Vice President of Citicorp Venture Capital Ltd. and 399 Venture Partners, Inc. From 1986 through 1989, he was Vice President of Citicorp Mergers and Acquisitions. Mr. Delaney is also a director of GVC Holdings, JAC Holdings, Palomar Technologies, Inc., SC Processing, Inc., MSX International, Delco Remy International, Inc., International Knife and Saw Inc., Fabri-Steel Products, Inc. and Chip Pac, Strategic Industries.

    David Wagstaff III — Mr. Wagstaff became a director of the Company upon consummation of the recapitalization on August 19, 1998. Mr. Wagstaff has served as President and Chief Executive Officer of Vectura Group, Inc. since 1993. He was previously the Principal in a private consulting business and has worked in various executive capacities at the Equitable Life Assurance Company and Citicorp.

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Item 11.—Executive Compensation

    The following table sets forth certain information regarding the compensation for 2000, 1999, and 1998 of Great Lakes' Chief Executive Officer and the next four highest paid executive officers of the Company (collectively the "Named Executive Officers"):

*

Ms. Wensel was named an executive officer in 1999.

(1)

Attributable to the reported year, but paid in the subsequent year.

(2)

Includes the value of the difference between the price paid and the fair market value of the stock purchased upon the exercise of options and amounts reimbursed for the payment of taxes.

(3)

Includes bonuses paid pursuant to the terms of the agreement for recapitalization, employer matching contributions and profit sharing contributions under Great Lakes' 401(k) plan and payment of lost 401(k) benefit due to IRS limitations.

(4)

Includes the value of the difference between the price paid and the fair market value of the stock purchased upon the exercise of options of $1,616,701 prior to the recapitalization.

(5)

Includes bonus paid pursuant to the terms of the agreement for recapitalization of $1,400,000.

(6)

Includes the value of the difference between the price paid and the fair market value of the stock purchased upon the exercise of options of $1,616,701 prior to the recapitalization.

(7)

Includes bonus paid pursuant to the terms of the agreement for recapitalization of $1,400,000.

(8)

Includes the value of the difference between the price paid and the fair market value of the stock purchased upon the exercise of options of $518,941 prior to the recapitalization.

(9)

Includes the value of the difference between the price paid and the fair market value of the stock purchased upon the exercise of options of $518,941 prior to the recapitalization.

26

Executive Employment Arrangements

    The Company has entered into an Employment Agreement, dated as of January 1, 1992, with Douglas B. Mackie. The employment agreement provides for an initial term of three years with automatic renewal for successive one year terms, unless sooner terminated by either party giving 90 days written notice prior to the end of the then current term. In addition, either party may terminate the employment agreement at any time, with or without cause, by giving the other party 30 days prior written notice.

    Mr. Mackie's 2000 base salary under his employment agreement was $331,000, which is subject to annual increase as determined by the compensation committee of the Board of Directors, and benefits as provided from time to time by the Company to its senior executives. In the event Mr. Mackie resigns for good reason (defined to include, among other things, a material breach of the employment agreement by the Company) or the employment agreement is otherwise terminated by the Company for any reason other than cause, death or permanent disability, Mr. Mackie will be entitled to receive severance compensation in the amount equal to the sum of (a) Mr. Mackie's current annual base salary and (b) a bonus calculated by multiplying current base salary by the average percentage of Mr. Mackie's base salary represented by the bonuses Mr. Mackie received during the term of the employment agreement.

    During the term of the employment agreement and for one year thereafter, Mr. Mackie is prohibited from directly or indirectly carrying on, engaging or having a financial interest in any business which is in material competition with the business of the Company.

    The Company has also entered into an employment agreement with Richard M. Lowry which contains terms substantially similar to Mr. Mackie's employment agreement, other than the amount of base salary and the office held. Mr. Lowry's 2000 base salary under his employment agreement was $287,000.

    Compensation of Directors  (dollars stated at actual)

    In mid-2000, the Company implemented a policy providing compensation for directors. The policy provides that non-employee and non-Citicorp Venture Capital Ltd. affiliated directors will receive fees of $5,000 per board meeting and $2,000 per teleconference board meeting, not to exceed $20,000 per annum.

27

Item 12.—Security Ownership of Certain Beneficial Owners and Management

    The following table sets forth certain information with respect to the beneficial ownership of the preferred stock and common stock of the Company:

(1)

Vectura Holding Company LLC ("Vectura") is a Delaware limited liability company which beneficially owns the stock of the Company indicated above as well as other investments. Investors in Vectura hold voting and economic interests that vary depending on the Vectura investment concerned. With respect to Vectura's investment in the Company, 49.7% of the voting interests (including voting power and investment power) are owned by 399 Venture Partners, Inc., a wholly owned indirect subsidiary of Citigroup Inc. and its affiliates, and 49.1% of the voting interests (including voting power and investment power) are owned by David Wagstaff III, a director of the Company and a vice president of Vectura.

(2)

Includes certain shares held by family trusts established for the benefit of the children of Mr. Mackie.

Item 13.—Certain Relationships and Related Transactions

    In June 1999, the Company repurchased 450 shares and 124,800 shares of its preferred and common stock, respectively, from a former officer of the Company at a total cost of $0.6 million.

    In July 1999, the Company reissued 125 shares and 30,500 shares of its preferred and common stock, respectively, to certain members of management at a total cost of $0.2 million. At December 31, 2000 and 1999, $0.1 million remains receivable from certain members of management for a portion of their purchased shares.

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Part IV

Item 14.—Exhibits, Financial Statements Schedules and Reports on Form 8-K

(a) Documents filed as part of this report

 1. Consolidated Financial Statements

The consolidated financial statements listed below are set forth on pages F-1 to F-25, inclusive, of this Report and are incorporated by reference in Item 8 of this Report.

2. Financial Statement Schedules

The Report of J.H. Cohn, independent public accountants, on the financial statements of Amboy Aggregates is presented after page F-25 and incorporated by reference herein.

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

3. Exhibits

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the "Exhibit Index" which is attached hereto and incorporated by reference herein. Exhibits are available upon request for a reasonable fee (covering the expense of furnishing copies).

(b) Reports on Form 8-K

No reports were filed by the Company during the quarter ended December 31, 2000.

29

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Great Lakes Dredge & Dock Corporation:

    We have audited the accompanying consolidated balance sheets of Great Lakes Dredge & Dock Corporation and Subsidiaries (the Company) as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in stockholders' equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Amboy Aggregates (Amboy) joint venture for the years ended December 31, 2000 and 1999, the Company's investment in which is accounted for using the equity method. The Company's equity of $5.1 million and $6.0 million in Amboy's net assets at December 31, 2000 and 1999, respectively, and of $(0.8) million, $0.2 million and $1.0 million in Amboy's net (loss) income for each of the three years in the period ended December 31, 2000 are included in the accompanying financial statements. The financial statements of Amboy were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for such joint venture, is based solely on the report of such other auditors.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

    In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements presents fairly, in all material respects, the financial position of Great Lakes Dredge & Dock Corporation and Subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Chicago, Illinois
January 29, 2001

F-1

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

December 31, 2000 and 1999

(in thousands, except share and per share amounts)

See notes to consolidated financial statements.

F-2

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2000, 1999 and 1998

(in thousands)

See notes to consolidated financial statements.

F-3

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 2000, 1999 and 1998
(in thousands, except share amounts)