11. Subsidiary guarantors

The Company’s long-term debt at June 30, 2012 includes $250,000 of 7.375% senior notes due February 1, 2019. The Company’s obligations under these senior unsecured notes are guaranteed by the Company’s wholly-owned domestic subsidiaries. Such guarantees are full, unconditional and joint and several.

The following supplemental financial information sets forth for the Company’s subsidiary guarantors (on a combined basis), the Company’s non-guarantor subsidiaries (on a combined basis) and Great Lakes Dredge & Dock Corporation, exclusive of its subsidiaries (“GLDD Corporation”):


	(i)	balance sheets as of June 30, 2012 and December 31, 2011;


	(ii)	statements of operations and comprehensive income for the three and six months ended June 30, 2012 and 2011; and

(iii)

statements of cash flows for the six months ended June 30, 2012 and 2011.


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2012
(In thousands)

ASSETS	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals
CURRENT ASSETS:
Cash and cash equivalents	$	70,623	$	168	$	-	$	-	$	70,791
Accounts receivable — net		112,289		608		-		-		112,897
Receivables from affiliates		56,184		8,344		7,685		(72,213)		-
Contract revenues in excess of billings		50,932		191		-		(234)		50,889
Inventories		48,696		-		-		-		48,696
Prepaid expenses and other current assets		36,429		30		6,473		-		42,932
Total current assets		375,153		9,341		14,158		(72,447)		326,205

PROPERTY AND EQUIPMENT—Net		316,408		52		-		-		316,460
GOODWILL AND OTHER INTANGIBLE ASSETS—Net		98,369		360		-		-		98,729
INVENTORIES — Noncurrent		23,206		-		-		-		23,206
INVESTMENTS IN JOINT VENTURES		6,899		-		-		-		6,899
INVESTMENTS IN SUBSIDIARIES		3,397		-		645,270		(648,667)		-
OTHER		11,539		3		6,919		-		18,461
TOTAL	$	834,971	$	9,756	$	666,347	$	(721,114)	$	789,960

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	79,668	$	650	$	334	$	-	$	80,652
Payables to affiliates		60,546		3,659		8,180		(72,385)		-
Accrued expenses		18,290		718		8,469		-		27,477
Billings in excess of contract revenues		19,939		122		-		(62)		19,999
Current portion of long term debt		2,658		-		-		-		2,658
Total current liabilities		181,101		5,149		16,983		(72,447)		130,786

LONG TERM NOTE PAYABLE		2,500		-		-		-		2,500
7 3/8% SENIOR NOTES		-		-		250,000		-		250,000
DEFERRED INCOME TAXES		(74)		-		102,994		-		102,920
OTHER		7,384		-		769		-		8,153
Total liabilities		190,911		5,149		370,746		(72,447)		494,359

Total Great Lakes Dredge & Dock Corporation Equity		644,060		4,607		295,373		(648,667)		295,373
NONCONTROLLING INTERESTS		-		-		228		-		228
TOTAL EQUITY		644,060		4,607		295,601		(648,667)		295,601
TOTAL	$	834,971	$	9,756	$	666,347	$	(721,114)	$	789,960


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2011
(In thousands)

ASSETS	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals
CURRENT ASSETS:
Cash and cash equivalents	$	108,985	$	4,303	$	-	$	-	$	113,288
Accounts receivable — net		118,530		1,738		-		-		120,268
Receivables from affiliates		79,683		7,729		49,724		(137,136)		-
Contract revenues in excess of billings		26,323		153		-		(64)		26,412
Inventories		33,426		-		-		-		33,426
Prepaid expenses and other current assets		15,929		125		16,330		-		32,384
Total current assets		382,876		14,048		66,054		(137,200)		325,778

PROPERTY AND EQUIPMENT—Net		310,459		61		-		-		310,520
GOODWILL AND OTHER INTANGIBLE ASSETS—Net		98,474		389		-		-		98,863
INVENTORIES — Noncurrent		30,103		-		-		-		30,103
INVESTMENTS IN JOINT VENTURES		6,923		-		-		-		6,923
INVESTMENTS IN SUBSIDIARIES		4,385		-		627,754		(632,139)		-
OTHER		10,729		3		5,547		(6)		16,273
TOTAL	$	843,949	$	14,501	$	699,355	$	(769,345)	$	788,460

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	81,971	$	774	$	-	$	-	$	82,745
Payables to affiliates		85,865		7,234		44,053		(137,152)		-
Accrued expenses		22,445		629		8,047		-		31,121
Billings in excess of contract revenues		13,607		68		-		(48)		13,627
Current portion of long term debt		3,033		-		-		-		3,033
Total current liabilities		206,921		8,705		52,100		(137,200)		130,526

LONG TERM NOTE PAYABLE		2,500		-		-		-		2,500
7 3/4% SENIOR SUBORDINATED NOTES		-		-		250,000		-		250,000
DEFERRED INCOME TAXES		399		-		103,959		(6)		104,352
OTHER		7,786		-		759		-		8,545
Total liabilities		217,606		8,705		406,818		(137,206)		495,923

Total Great Lakes Dredge & Dock Corporation Equity		626,343		5,796		291,969		(632,139)		291,969
NONCONTROLLING INTERESTS		-		-		568		-		568
TOTAL EQUITY		626,343		5,796		292,537		(632,139)		292,537
TOTAL	$	843,949	$	14,501	$	699,355	$	(769,345)	$	788,460


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2012
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

Contract revenues	$	166,467	$	2,251	$	-	$	(2,186)	$	166,532
Costs of contract revenues		(142,315)		(2,514)		-		2,186		(142,643)
Gross profit		24,152		(263)		-		-		23,889

OPERATING EXPENSES:
General and administrative expenses		10,679		162		615		-		11,456
Gain on sale of assets—net		(93)		-		-		-		(93)
Operating income (loss)		13,566		(425)		(615)		-		12,526

Interest expense—net		(257)		(23)		(5,103)		-		(5,383)
Equity in earnings of subsidiaries		(223)		-		12,350		(12,127)		-
Equity in loss of joint ventures		(8)		-		-		-		(8)
Loss on foreign currency transactions—net		(21)		-		-		-		(21)

Income (loss) before income taxes		13,057		(448)		6,632		(12,127)		7,114

Income tax (provision) benefit		(482)		-		(2,286)		-		(2,768)

Net income (loss)		12,575		(448)		4,346		(12,127)		4,346
Net loss attributable to noncontrolling interests		-		-		91		-		91
Net income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	12,575	$	(448)	$	4,437	$	(12,127)	$	4,437


Comprehensive income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	10,813	$	(456)	$	2,667	$	(10,357)	$	2,667


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2011
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

Contract revenues	$	151,223	$	6,269	$	-	$	(2,533)	$	154,959
Costs of contract revenues		(132,879)		(4,847)		-		2,533		(135,193)
Gross profit		18,344		1,422		-		-		19,766

OPERATING EXPENSES:
General and administrative expenses		12,522		208		892		-		13,622
Gain on sale of assets—net		(2,513)		-		-		-		(2,513)
Operating income (loss)		8,335		1,214		(892)		-		8,657

Interest expense—net		(49)		(54)		(4,808)		-		(4,911)
Equity in earnings (loss) of subsidiaries		1,160		-		11,567		(12,727)		-
Equity in loss of joint ventures		(123)		-		-		-		(123)
Loss on extinguishment of debt		-		-		-		-		-

Income (loss) before income taxes		9,323		1,160		5,867		(12,727)		3,623

Income tax benefit (provision)		2,244		-		(3,699)		-		(1,455)

Net income (loss)		11,567		1,160		2,168		(12,727)		2,168
Net income attributable to noncontrolling interests		-		-		(462)		-		(462)
Net income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	11,567	$	1,160	$	1,706	$	(12,727)	$	1,706


Comprehensive income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	10,753	$	1,160	$	892	$	(11,913)	$	892


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2012
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

Contract revenues	$	321,911	$	4,050	$	-	$	(4,522)	$	321,439
Costs of contract revenues		(277,482)		(4,568)		-		4,522		(277,528)
Gross profit		44,429		(518)		-		-		43,911

OPERATING EXPENSES:
General and administrative expenses		23,248		348		1,127		-		24,723
Gain on sale of assets—net		(135)		-		11		-		(124)
Operating income (loss)		21,316		(866)		(1,138)		-		19,312

Interest expense—net		(538)		(51)		(10,053)		-		(10,642)
Equity in earnings of subsidiaries		(602)		-		18,697		(18,095)		-
Equity in loss of joint ventures		(24)		-		-		-		(24)
Loss on foreign currency transactions—net		(15)		-		-		-		(15)

Income (loss) before income taxes		20,137		(917)		7,506		(18,095)		8,631

Income tax (provision) benefit		(1,125)		-		(2,207)		-		(3,332)

Net income (loss)		19,012		(917)		5,299		(18,095)		5,299
Net loss attributable to noncontrolling interests		-		-		206		-		206
Net income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	19,012	$	(917)	$	5,505	$	(18,095)	$	5,505


Comprehensive income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	17,724	$	(921)	$	4,213	$	(16,803)	$	4,213


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2011
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

Contract revenues	$	305,262	$	9,586	$	-	$	(4,551)	$	310,297
Costs of contract revenues		(259,788)		(7,852)		-		4,551		(263,089)
Gross profit		45,474		1,734		-		-		47,208

OPERATING EXPENSES:
General and administrative expenses		23,726		421		1,564		-		25,711
Gain on sale of assets—net		(2,771)		-		-		-		(2,771)
Operating income (loss)		24,519		1,313		(1,564)		-		24,268

Interest expense—net		(129)		(99)		(10,633)		-		(10,861)
Equity in earnings (loss) of subsidiaries		1,214		-		28,118		(29,332)		-
Equity in loss of joint ventures		(714)		-		-		-		(714)
Loss on extinguishment of debt		-		-		(5,145)		-		(5,145)

Income (loss) before income taxes		24,890		1,214		10,776		(29,332)		7,548

Income tax benefit (provision)		3,228		-		(6,210)		-		(2,982)

Net income (loss)		28,118		1,214		4,566		(29,332)		4,566
Net income attributable to noncontrolling interests		-		-		(468)		-		(468)
Net income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	28,118	$	1,214	$	4,098	$	(29,332)	$	4,098


Comprehensive income (loss) attributable to Great Lakes Dredge & Dock Corporation	$	27,870	$	1,214	$	3,850	$	(29,084)	$	3,850


GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

OPERATING ACTIVITIES:
Net cash flows provided by (used in) operating activities	$	9,512	$	331	$	(25,028)	$	-	$	(15,185)

INVESTING ACTIVITIES:
Purchases of property and equipment		(22,428)		-		-		-		(22,428)
Proceeds from dispositions of property and equipment		226		-		-		-		226

Net cash flows used in investing activities		(22,202)		-		-		-		(22,202)

FINANCING ACTIVITIES:
Deferred financing fees		-		-		(2,039)		-		(2,039)
Distributions paid to minority interests		-		-		(133)		-		(133)
Dividends paid		-		-		(2,482)		-		(2,482)
Dividend equivalents paid on restricted stock units		-		-		(22)		-		(22)
Taxes paid on settlement of vested share awards		-		-		(212)		-		(212)
Net change in accounts with affiliates		(25,246)		(4,477)		29,723		-		-
Capital contributions		-		-		-		-		-
Repayments of equipment debt		(426)		-		-		-		(426)
Exercise of stock options		-		-		75		-		75
Excess income tax benefit from share-based compensation		-		-		118		-		118

Net cash flows provided by (used in) financing activities		(25,672)		(4,477)		25,028		-		(5,121)

Effect of foreign currency exchange rates on cash and cash equivalents		-		11		-		-		11

Net decrease in cash and cash equivalents		(38,362)		(4,135)		-		-		(42,497)

Cash and cash equivalents at beginning of period		108,985		4,303		-		-		113,288

Cash and cash equivalents at end of period	$	70,623	$	168	$	-	$	-	$	70,791



GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011
(In thousands)

	Subsidiary Guarantors		Non-Guarantor Subsidiaries		GLDD Corporation		Eliminations		Consolidated Totals

OPERATING ACTIVITIES:
Net cash flows provided by (used in) operating activities	$	3,004	$	3,230	$	(16,679)	$	-	$	(10,445)

INVESTING ACTIVITIES:
Purchases of property and equipment		(13,583)		-		-		-		(13,583)
Proceeds from dispositions of property and equipment		7,275		-		-		-		7,275

Net cash flows used in investing activities		(6,308)		-		-		-		(6,308)

FINANCING ACTIVITIES:
Proceeds from issuance of 7 3/8% senior notes		-		-		250,000		-		250,000
Redemption of 7 3/4% senior subordinated notes		-		-		(175,000)		-		(175,000)
Senior subordinated notes redemption premium		-		-		(2,264)		-		(2,264)
Deferred financing fees		-		-		(5,829)		-		(5,829)
Dividends paid		-		-		(2,236)		-		(2,236)
Dividend equivalents paid on restricted stock units		-		-		(11)		-		(11)
Taxes paid on vested share awards		-		-		(250)				(250)
Net change in accounts with affiliates		50,703		(2,893)		(47,810)		-		-
Repayments of equipment debt		(217)		-		-		-		(217)
Exercise of stock options		-		-		27		-		27
Excess income tax benefit from share-based compensation		-		-		52		-		52

Net cash flows provided by financing activities		50,486		(2,893)		16,679		-		64,272

Net increase in cash and cash equivalents		47,182		337		-		-		47,519

Cash and cash equivalents at beginning of period		48,416		62		-		-		48,478

Cash and cash equivalents at end of period	$	95,598	$	399	$	-	$	-	$	95,997