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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

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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.