Good morning. This is Katie Hayes, and I welcome you to our quarterly conference call.

Bruce Biemeck, our President and Chief Financial Officer, will begin our discussion representing the financial highlights for the 3 and 6 months ended June 30, 2012. Then Jon Berger, our Chief Executive Officer, will share his market overview.

Following their comments, there will be an opportunity for questions.

During this call, we will make certain forward-looking statements to help you understand our business. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations.

Certain risk factors inherent in our business are set forth in our filings with the SEC, including our 2011 Form 10-K and subsequent filings.

During this call, we also refer to other certain non-GAAP financial measures, including EBITDA, which are explained in the net income to adjusted EBITDA reconciliation attached to our earnings release and posted on our Investor Relations website, along with certain other operating data.

I will now turn the call over to Bruce.

Thank you. Well, we issued our press release this morning, which should help you in understanding how our second quarter results fit into our annual and long-term plans.

Some of the highlights to discuss are that we were very pleased with our second quarter results, as we’ve met our 6-month budget plan, and our forecast remains on track with our budget expectations. We anticipate a busy second half of bidding and have already experienced a strong start in July.

I'll start out by discussing the quarter and year-to-date June 30 results, as well as some of the operating events occurring during the first 6 months. I'll also discuss where we are headed in the second half of the year.

Jon will then add some color to our current plans and how we are doing with our longer-term plans.

The 6-month results met the results expected in our internal plan, our budget plan. As we discussed previously, our plan was weighted toward stronger second half earnings.

The weighting was based on the timing of project opportunities and availability of equipment, particularly our hopper dredges. We remain on track with the plan and reaffirm our earnings guidance provided in the first quarter conference call.

Revenues in the second quarter were $166.5 million, up from $154.9 million for the first quarter of this year and also up from $155 million in the second quarter of '11. As I discussed during last quarter's call, revenues in the first quarter of the year were affected by weather impact in January and February, affecting East Coast dredging operations.

The effect of the weather, as in other weather-affected quarters, was detrimental to both revenue levels and profit margins. Weather during the second quarter of the year was more favorable, meaning at cost-estimate expectations, and we met the revenue expectations included in our internal plan for the first half of the year.

The dredging division executed on several beach projects in the second quarter, as well as attaining greater revenue in the Rivers business. Margins met expectations as utilization improved in the second quarter.

And overall, the projects performed well. The dredge in New York was employed through a portion of June, and now the dredge is going through a full readiness program in order to depart early in quarter 4 for Australia.

The dredge will forgo other opportunities in 2012 in order to prepare for the Wheatstone project in Australia. This not only affects revenue in '12 but also increases maintenance spending and inventory investment.

The Demolition business, which got off to a strong start in the first quarter with revenue of $32.5 million followed with $31.8 million in the second quarter. This brings 2012 year-to-date revenue to $64.3 million versus $48.6 million a year ago.

A continuing strong bridge demolition market has helped the division, but market growth is prevalent in all sectors. Year-to-date, Demolition gross profit margin improved to 7.5% from a loss of 4.4% in 2011.

Our Demolition business earnings declined from the first quarter due primarily to completing older projects with loss reserves or lower margins, some of which include change order work and claims, which require negotiation prior to recording the recoveries.

As previously noted, the demo margins have been affected by projects requiring loss reserves, but these projects have been completed, and upside exists for the change orders that I just discussed. The momentum continues in demolition for adding market opportunities.

We have been qualified to bid in increasingly larger and specialized markets, which will provide opportunities to further expand the division into large manufacturing plants, marine demolition, remediation services and bridge demolition.

I’m going to turn to the market for a minute. The second quarter bid market for dredging presented few opportunities, as is often the case in the second quarter.

It tends to be our slowest bidding quarter. In fact, the first month of the third quarter, that is July, included more bidding opportunities than the entire second quarter.

Accordingly, we monitor last 12 months’ bidding analysis to remove the cyclical nature of bidding activity. For the first 6 months of 2012, our win rate was at 37% and the last 12 months at 42%, both within our expectation of the share of the market we should be at.

Domestic dredging backlog at June 30 was $173 million versus $142 million at June 30, '11. The foreign dredging backlog was $211 million versus $54 million at June 30, 2011, and demolition was $57 million versus $74 million at June 30, '11.

The total backlog, therefore, totals $455 million in 2012 versus $271 million in 2011. In addition, both periods had just over $30 million in low bids pending award, which are not included in the numbers I just gave you.

The domestic dredging bid market in 2012 has totaled $353 million compared to $333 million in the prior year. We expect the domestic market to exceed $1 billion in calendar year 2012, thus the second half will indeed be busy, with over $650 million in bidding opportunities.

Demolition segment backlog declined slightly from $60 million at March 31 to $57 million. The bid market ahead, however, looks very strong.

On debt and liquidity. The cash balance at June 30 was $70.8 million.

The decrease in cash related to continued investment in working capital in the quarter for the Wheatstone and Gulf Coast restoration projects also -- and also to the higher level of early CapEx in the quarter. The company has spent over $7 million on pipe this year and expects to spend approximately $8 million more to be in a strong competitive position for the Gulf Coast restoration project.

The billing cycle does not begin for certain projects until pipe is in place and mobilization is complete, resulting in temporary increases in working capital investment.

In June, as announced, we entered into a new, unsecured revolving credit facility with 5-year term. The new facility reflects the improvement in Great Lakes' credit profile over the last 5 years.

In the third quarter of '11, we completed a new, unsecured surety agreement and proceeded toward this agreement on the same unsecured basis. We appreciate the support of the lenders in providing a facility responsive to Great Lakes' financial discipline and current position that helps all parties achieve the goals set at the beginning of the refinancing process.

Our lenders understand the strength of Great Lakes' balance sheet, business discipline and operational controls today and the prospects for responsible growth in the future.

Our financial ratios remain very manageable, despite increased working capital investment and accelerated capital spending. Our total leverage ratio, which is net of cash and equivalents, is 2.2 at the end of the quarter, and our fixed coverage charge ratio, new under this facility, was 2.8.

We recently announced we are building a new ATB hopper dredge, which we are very excited about. Jon will discuss it in a few minutes, but I want to cover a few of the details.

The consortium period will be about 22 months with delivery mid-2014. We have analyzed various methods of financing the dredge and are pursuing an off-balance-sheet lease with the ability to finance the construction period milestone payments, starting in 2013.

The remainder of 2012 includes minimal payments for final engineering drawings and initial material orders. The market for leases has availability, and the pricing is competitive.

Those are some summary comments related to operations and liquidity.

I'd like to now turn the call over to Jon Berger, who's going to discuss some of the initiatives that I referred to, as well as strategic planning and growth considerations for moving forward.

Thank you, Bruce. As Bruce said, the second quarter met our expectations.

And for the first 6 months, we are on track to meet our full year plan. With that, we are reaffirming our forecast for adjusted EBITDA from operations in the range of $93 million to $100 million for the full 2012.

Obviously, this requires strong work for the second half of the year and our plan, and with our current backlog and the bidding activity we see out there and the focus from our operating leaders, who support the optimism, we expect to achieve these results. Further, we are very excited about the future growth, and we expect that to appear in '13.

As we said last week, we announced the building of a new hopper dredge on the heels of legislation passed that will have a significant impact on our market. The Restore Act, which was passed in the Transportation Bill, will ensure that 80% of the fines as a result of the Deepwater Horizon oil spill will be spent on coastal restoration in the 5 states impacted by the spill.

We expect a significant amount of that money to go towards dredging, and we expect to see a significant increase in Gulf Coast dredging activity over the next 5 years. In addition, while the Harbor Maintenance Trust Fund legislation was not part of the Transportation Bill, there was acknowledgment by Congress with a sense of the Congress that we need to be spending the Harbor Maintenance Trust Fund on its intended purpose.

So we do hope that, that will continue to spur increased spending on the part of the federal government on traditional maintenance and operation dredging.

I want to give some clarification and support for the press release that spoke about our building of our hopper dredge and, specifically, the engineering experience and creativity that resulted in our announcement to build an ATB-based hopper dredge. As we said, the ATB hopper dredge, to give you some color, will be 15,000 cubic yard capacity, and we budgeted $94 million to build it.

In the market right now is one of our competitors who recently cut steel on an 8,500 cubic yard hopper dredge at similar cost. So understand that we are at a similar cost building a dredge that has 75% higher carrying capacity.

Couple of details that make this so exciting for us. This is the first ATB design that actually matches and mirrors the performance of traditional hopper dredges, both on speed and power results.

And even with its maximum load capacity, it still has a draft of only 28 feet. So this is a tremendous engineering design that we've come up with.

And it's going to provide us tremendous cost-competitive pricing once built and put in the marketplace. In addition, we also announced building of 2 large scows to increase our scow capacity to support what we believe is a growing market.

Now let me focus a little bit on -- finally, I’m going to talk about -- I should before I go into specifics of the market, the announcement by the White House that they want to fast track certain infrastructure projects. Included among that are 7 projects that involve deepenings of 5 key East Coast ports.

As I've talked about with many of you, the time has come where we have to start deepening if we're going to start meeting what is everybody's expectation for the increased drafts coming through the Panama Canal. And what the White House has done is accelerate the approval process and streamline feasibility studies to allow these projects to move forward much quicker than normally would.

So we do expect that to be -- to support the deepenings that we've all talked about and the expectation that at least 5 of the major ports should get their projects moving way quicker than alternatively.

Now let's talk about some of our markets going forward. As Bruce mentioned, in July, there are over 30 projects on the docket to be bid in the next 30 days -- excuse me, in August.

Of that, 2/3 of these are suitable for our equipment and we will bid on. And additionally, the following month, in September, we also see a robust bidding market.

The Miami deepening should bid in October, as previously discussed. And we also feel, as we have for quite a while, that we are best positioned to compete this -- to complete this work, and we believe that we have a very, very good shot of winning that, and we're very excited that it's moving forward and we’ll bid.

As we talked about, coastal restoration being passed, we expect to see a significant amount of work coming out in the Gulf Coast over the next coming years. And as we've talked about with you, we've invested significantly in pipe, specifically for the Scofield project we are mobilizing now and which we'll be dredging in the fourth quarter and the first quarter, and we expect that to give us a competitive advantage on other projects that are on the planning stages in the state of Louisiana.

Internationally, Wheatstone is moving along as expected. As Bruce gave you, expectations to have the New York totally prepared and moving in the fourth quarter, and we'll start dredging in the first quarter.

In the Middle East, we continue to see bidding opportunities, and we have significant opportunities in Middle East that, over the next few months, we do need to replenish our backlog in the Middle East to keep utilization up with our full suite of equipment in the region, and we continue to look for opportunities outside the Middle East to deploy our international equipment base. As Bruce mentioned, our Rivers business has increased revenue in the first half, year-over-year, and is looking at some substantial bidding opportunities in line with the expectations when we purchased the company in the end of 2010.

Let's turn to demolition for a minute. Both our whole management team and the board is very happy with the turnaround we implemented in the business from a year ago.

Revenues are up, as Bruce said, and our margins are positive. We expect to work off certain low-margin projects from legacy management and to continue to improve our margins.

And strategically, our demolition business has moved beyond its core regional business in New England and New York and into new markets, bridge demolition, brownfields, utilities and working with our dredging business. So we feel very good strategically where we've positioned that business.

And we look to continue to grow that business along the lines of remediation and environmental work.

Finally, our team has a significant amount of work to do in the second half to meet our expectations. We believe between the backlog in place and the bidding visibility over the next few months, we believe we can execute at levels to be able to hit our 2012 plan.

And as always, I'd like to thank our employees who are working on the front lines, ask them to remain safe as they keep working at very high levels of productivity in the coming months.

With that, I'd like to open it up for any questions.

Can you talk about the operating margin trend going forwards? Really, what levers are the most significant in the next 6 months?

Is it bid margins, utilization, dredging mix or maybe timing of the more profitable projects, demolitions or maybe some other factor?

Well, there are a few factors that come into play here. One is the amount of bidding activity.

During the second quarter, as we said, the bidding activity was slow, as it normally is, and they're -- that tends to drive down margins. As we get into the busier periods, margins seem to improve.

However, I think, as we look further out, the coming market events that will affect us, such as Gulf Coast restoration, increases in maintenance dredging, deepenings, these all will put more -- add to the dredging market, and we expect that the margins will show improvement as the market increases. And we think that as we have moved up our -- in our demolition business to more complex projects where we see fewer bidders, we think that there are some strong margin opportunities there.

Yes, Jon, and if you look a little further out, clearly, we think the marketplace in the next 6 to 24 months will have a significant amount of capital work. And as we've talked about in the past, capital is the most complex type of work we do.

Wheatstone's a good example. Miami, a lot of the Gulf Coast restoration work.

And with the capital dredging work, you tend to get higher margins. So we think it's both utilization and the mix of projects, as Bruce said, will garner higher margins.

Got it. And can you give us a little more color on the expectations of Army Corps awards to normalize over the next 12 months?

I mean, we've got the sense of Congress from the Transportation Bill, and it looks like the budget is up, but does that necessarily equate to a more normalized environment?

We think, though not getting harbor maintenance passed, having the sense of Congress, we think there's clearly a significant amount of momentum and understanding that we have to keep our ports at a level of utilization that would garner higher maintenance -- operations and maintenance dredging. I think when you hear the Obama administration saying that they want to fast track infrastructure projects, I think you'll see more money coming out and certainly speeding up the process of getting the deepening projects approved.

And also, the Restore Act's going throw a lot of money into this marketplace. So I think you will see the Army Corps working at ultimately a higher level, issuing projects.

It’s Mark Mihallo on Andy today. So really, just to start out, can you just discuss bookings in the quarter?

So based on my calculation, it seems that the backlog burn would imply that there were a few segments that had slightly negative awards. Can you just explain that?

Well, as we said, second quarter is usually a pretty slow bidding quarter, and it was once again. We had a little over $100 million of projects that we bid on in the quarter.

So I think it's bound to see a decline in a couple of segments. That said, we were at the same -- we're a little lower than where we are at June 30 of '11, and the market for the total year ended up being in the $1 billion range.

So and I guess I should say I'm talking about calendar year, not the Corps of Engineer year, but so the calendar year that we look at. So we expect that -- we expect this quarter to include an abundance of opportunities.

We saw some in July. We see -- as Jon said, we have a vast list of projects for August and into September, and we expect the fourth quarter to have a pretty strong population of projects to bid on as well.

Okay. And then as you guys pointed out actually in the previous question, so the language around the Harbor Maintenance Trust Fund by Congress is somewhat ambiguous, although positive that they're mentioning it.

So at this point, what do you think the incremental bookings opportunity is, stemming from this recognition by Congress of the fund, over the next year or 2, let's say?

Yes, no crystal ball. But I think last year, the O&M budget was something in the $850 million, $860 million or something like that.

And the house number was $1 billion in the initial budget. Obviously we're working real hard to try to push that up, and whether we're successful in twisting arms to get it pushed further or not, we'll have to see.

But indications are that we're moving towards a higher number. It's a little tricky, because obviously, as you follow the business, oftentimes there's supplementals that come in that affect the ultimate dredging, and so what we’re trying to do is focus them on making that supplemental as part of the core number, also.

So but the basic answer to your question, Mark, is kind of the house put $1 billion number on there, and I think it was $860 million last year, something like that.

Okay, got you. Just finally, how much conviction do you have around the Miami project being released in 4Q?

Do you think the potential is there for the project to be delayed slightly even more to maybe early 2013?

Not that we're being told. We feel it's kind of an all systems go.

I mean, the county has gotten all their approvals in. There is nothing to led us to believe that this is not a go for kind of an October bidding process.

Just actually to expand on a previous question. What where your contacts in Washington telling you exactly what happened with the language that they kind of backed off to be a sense of Congress?

I mean, I heard that certain people in the Senate thought it might impact other parts of the Army Corps' budget, and that was part of the reason that they didn't want to go forward. And then what's your sense moving forward?

I know Boustany's still trying to push for 100% allocation. Is that possible?

And what's kind of the strategy going forward?

Yes, let me give you, specifically as best as I can tell in the House and in the Senate. On the House side, we took on the appropriators, taking money directly out of their hands.

And the appropriators are extremely strong group of congressmen led by Hal Rogers, and they're very united. So they believe that they've helped us significantly by giving us $1 billion as opposed to $850 million, $860 million, and they were vocal against locking their hands to just giving up all that money.

On the Republican side of the Senate, there are certain questions of, especially without earmarks, that if we pull this money, all it would do is cap the EPW budget at the same number but drain $400 million, $500 million away from other EPA things and some of -- there were some powerful senators that have some pet projects that would've been lost. So it really came down to that when we tried to get that enforcement mechanism, we just -- we met with some significant resistance.

Okay. And then going forward, I mean, is there still a chance they can still get this, or...

We're going to keep working that. To be fair, I think we're going to have to find, in my view, at least in my own personal view, some compromise or some mechanism to move it up incrementally.

And we'll keep fighting. I think the one nice thing that we have done is we have made this a fight well beyond a small dredging industry.

Because the truth of the matter is, we're a small industry, and we have gotten the ports on board. We've gotten the shippers.

So it's become a tremendously more important issue than beyond a small coalition of dredgers. So we'll be successful.

It's just a question of how successful and how quickly.

Okay. And then, just I guess, another way to ask the previous question.

I know the bid market in the second quarter is usually later, but, at least from what I can extrapolate, your win rate was smaller in general. Now did that have to do with -- I mean, it looks like it was mostly maintenance work.

Was this just -- that hasn't been your focus. Are you saving capacity for Miami, just was there more competition or just -- that's just the way it fell in a lumpy industry?

No, I mean, last year, I think we ran out and took a lot of projects probably sooner in the marketplace and filled up our capacity probably a little quicker, and maybe we left some margin on the table. So I wouldn't read much into the 37%, as Bruce said, versus the 42%.

There's a lot of bidding opportunities out there in the next month to 45 days. And we believe that we'll -- the water will rise to kind of our traditional 10-year average.

Yes, it was an extremely low bidding quarter, even lower than a number of other second quarters have been, as I'd say, a little over $100 million in opportunities. And we didn't chase any work.

I mean, could have, but we didn't, and we have our sights set on a strong third quarter of bidding and booking backlog.

Okay, that makes sense. And then I know with guidance, it's second half weighted, but with some mobilization in the third quarter.

Would you say it's fourth quarter weighted? Is it going to kind of be equal, third and fourth?

How should we think about it?

I think it's pretty equal. We look for a strong third quarter.

We have -- we started to have some weather issues in the fourth quarter. I -- at this point, we think of it as kind of even over the remainder of the year.

Okay. And then just one more on deepening.

Just to be clear, so Miami is going to start bidding in October, because, I think, originally it was going to bid that at least according to the Army Corps schedules sometime late July. Did that get pushed back?

It got pushed a little bit from the early schedule. Don't forget they had the court cases that pushed them back some.

But we feel pretty confident that everything we're hearing right now is kind of early October, give them time, and it's a first quarter mobilization start work is our expectation.

And then with the other port deepening getting fast-tracked, I mean, what's kind of your timeline? Is there anything within the next 12 months of size, with -- in terms of deepening that is going to come to market?

Or this just turns a 5-year timeline into maybe a 2-year timeline?

Yes. I mean, I think it's probably a 12 to 18 months before we see the next big one.

But you'll see, I do think we'll see a lot more Gulf Coast things coming online quicker. I mean, there are a lot projects there.

And there are some smaller things. There are some Delaware River things that aren't the total big deepening, and then there is a Boston project.

But I think you still got some time on Savannah and Charleston and some of the other ones are there. And then there is also another -- the final phase of the first New York deepening.

I think that will bid in the next 12 months.

Okay. Now is that something you would need the New York dredge for that's going to be over in Australia, or you have the…

No, I mean, I think we would look at that with some of our other clamp blasting [ph], but it would probably be more drilling than blasting.

So you mentioned that you think that the back half, kind of quarterly, is going to be fairly equal. But that includes, just so I'm clear here, that includes the mobilization cost associated with Wheatstone in the fourth quarter?

Well we've -- yes. There will be mobilization during the fourth quarter for Wheatstone, and that's actually a revenue item.

That's part of our overall price. So we will pick up revenue associated with that mobilization.

Right. In the 4Q, then?

Yes.

Yes, that's true.

Okay. And then, can you talk a little bit more about what you guys are seeing on the international front, as far as Middle East and South America and any other markets you might be seeing opportunity?

Well we've -- as Jon said, our Middle East backlog has declined. We're working on several opportunities right now to add to backlog.

We have a good equipment fleet there, ready to respond, and we see several opportunities that we're working on right now and we expect could be booked very soon. Brazil is tougher.

There's a market there, and we feel that if we can land a decent job that will cover our cost of moving equipment there, we'll be in a unique position to continue to pick up projects for that equipment. But we haven't gotten to that project yet.

Talked about it, negotiated it, it's been postponed a couple of times, and we continue to work on it. So as we kind of wait for that market to develop for us, we are -- we're trying to fit that dredge into our utilization here in the U.S.

So but I thought you guys were already kind of a low bidder on that project. So you're saying that...

Well, we were, Trey, and it just keeps moving around a little bit. So until we have it fully defined, the dredge isn't moving down there.

And it's been one that's -- we've been the back and forth negotiating for probably 6 months. They've got all their approvals, and it's now just getting down to the structure.

So it's -- and that's kind of that South America -- the issue with South America, you kind of got to -- takes a long time to get these things worked in.

Okay. And then, kind of looking at the Mississippi River, running very low levels right now.

So I was just kind of wondering, to kind of get your opinion on, in addition to kind of flood-related opportunities there, do you see the low river levels that we're currently seeing here as a potential opportunity for dredging?

Yes. I mean, I think when there's -- when the river's really low, when it's dry, and really high, there's dredging opportunities.

I actually think there is a project bidding today or tomorrow that, because the river's so low, you're actually having the saltwater start coming up the river more, which ultimately could affect some of the drinking waters. So I think there’s actually a project being bid this week sometime to deal with that.

The 5 port deepening fast-tracked projects, which I assume includes Miami or maybe it doesn't, how much -- do we know how much in total in terms of dollars that they've -- those have the potential to be?

God, Savannah alone, they keep talking it about it being a $600 million project. And we haven't seen the full scope of each of them.

But with that itself, it’s probably north of $1 billion.

And Miami is still around $180 million, I believe, is that more or less...

I think that's the number that they have said, they have submitted to it, correct.

Okay. So that has the potential to be on the smaller side, maybe, or...

No. I mean, it all depends.

I mean, $180 million would be the, if that's the number, would be the single largest contract ever issued by the Army Corps for dredging.

Okay, okay. On the new dredge that'll take 22 months, a few questions.

You mentioned off-balance-sheet financing, potentially. Could you just maybe talk a little bit more about that?

And then what -- or maybe discuss sort of your options set that you're looking at. And then what sort of EBITDA potential does that dredge have the potential to add, if it's fully -- or when it's fully deployed?

Well, sure. The off-balance-sheet financing is operating lease financing as we have in place for a few other pieces of equipment.

That market that we've used in the past looks similar to when we used that vehicle in previous equipment adds. So it would -- we have talked about various terms, including maybe a 15-year lease.

But we haven't finalized that. And we've also talked about financing during the construction period.

I don't know if you have any more specific question than that.

No, that's fine. Just wanted to get some more color, I guess.

And then the EBITDA potential of a dredge like that?

Well, we've modeled this several ways, and we think that so much of it depends on what happens with the markets that Jon and I have just been talking about. What will happen -- because this dredge will be able to work in, really, all the markets.

It'll have deepening capability, beach renourishment capability, maintenance dredging. So there's a number of markets it can fit in.

And the question is, do the markets to grow enough to add that capacity, plus the capacity of the competitor, or does that mean some of our equipment gets -- or others’ equipment gets deployed to other countries, other markets. So we've looked at this a number of ways.

We think that this is a dredge that has the ability to achieve strong margins. When I say strong margins, at the high-end of the margins that we've -- we talk about in our business.

I mean, we talk about north of 20% for capital dredging. And I think that, that is our expectation for this dredge.

Yes, I mean, Jack, one of the things you look at, and kind of anecdotally, I mean if it's -- if we can -- with such a large hopper, low draft, most efficient new engines, this thing is, by far, going to be the most competitive dredge in the U.S. market.

So our cost to move sand, mud, whatever it is, is going to be the lowest. So just, it really depends on the market dynamics.

If the market grows and margins stay strong, this thing is going to be a tremendous earner for us.

This is Sean Wondrack sitting in for Phil Volpicelli. I hate to beat a dead horse, but I have a couple more questions about this new ATB hopper dredge.

I think Bruce might've mentioned in his prepared remarks that there might be a little expense in 2012 towards this. Is that correct?

And would that be a cash expense or where exactly would that hit the P&L?

Yes, well, it'll be -- if we don't enter into an off-balance-sheet lease agreement before the end of '12, it will be booked as a capital expenditure. So no, it won't hit P&L.

We do expect that the payments, the cash flow out in '12 will be minimal. Theheavier cash flow out for the dredge takes place starting in '13.

What happens over the next couple of months is finalization of the drawings that are used to actually build the vessel. And the ordering of steel and some such [ph], so the cash flow out is not very high in '12.

It really steps up significantly in '13. So until we have a vehicle for financing, it'll be -- we'll use our cash, and we will book it as a capital expenditure.

Okay. And with respect to the operating leases then.

I guess this would -- would this flow through SG&A, then, going forward? And what kind of an impact is that going to have, if you can give a rough estimation?

Could you repeat that?

It would be an operating expense.

It's an operating expense so it's -- at gross margin, not SG&A.

Right, but as Bruce says, through '13 and '14 until we put it into service, it's just -- it'll be on the balance sheet, and then once we put it into service, it'll roll through operating expense.

In today's press release, you guys mentioned an additional $1 billion investment. I'm wondering if that includes monies associated with both the Restore Act and NRDAA.

That stands for Natural Resource Development Assessment Act. It seems light, given the combined estimates are anywhere north of $20 billion.

Yes. I mean, we're just giving a low estimate.

Correct. I mean, anywhere -- you hear anywhere someone saying from $7 billion on the small end penalties up to $20 billion.

I think Senator Landrieu, when she did her press release afterwards, she lauded $14 billion to $20 billion. And 80% of that will go into Gulf Coast restoration.

So and we expect a reasonably significant amount of that to be dredging. I think, certainly Mississippi and Louisiana are well along with their plans.

Some of the other states, to be fair, aren't as far along with where they are and what they're going to do with the money. And I think they need to start getting their plans together.

Along the Panhandle of Florida, I think you'll end up seeing a lot of beach nourishment work. And so, but I think they'll -- it all combines in there.

But I mean, correct me if I'm wrong, Jon, but I was under the impression that the Restore Act and the NRDAA were -- NRDAA was going to be an additional payment to the Gulf Coast states.

No.

No. I think it's all combined.

The NRDAA fines are what the Restore Act is going to ensure goes towards those states use for coastal restoration.

Correct. Right.

The Restore Act deals with the NRDAA fines.

Okay. All right.

And then, secondly, just on -- in terms of the Demolition side, how do you guys look at the growth potential in that business?

Yes. I mean, I've -- we've set a 3-year plan to be $200 million in that business.

And I think, if you look at where they are through the first half of the year, they were somewhere, what, north of $60 million in revenue. We think as we move into the remediation side, we think, strategically, there's probably some obviously significant growth there.

And I think there is also, potentially, some small acquisitions we can add to give us some new geographic coverage and some skill sets. So we're very high on that whole market as part of our strategy to get that to be a fulsome second leg of ours.

And what type of margins do you guys think you can achieve?

On the operating side, I think they should be similar to our dredging margins.

Yes, that's correct.

Yes.

Just a couple of quick follow-ups. Did you give operating income between the 2 segments?

We did not. That'll be in our Q, which will be filed today.

Okay. And then with Restore and NRDAA, what should we look at in terms of timing?

Is there something pending where they are going to finally say whether it is $10 billion, $22 billion…

I think that, I mean -- and sorry, I mean, if I interrupted you, Richard. Yes, I mean, obviously, it was imperative that they got Restore passed before they settled with BP.

Because it if they didn't get it settled, it would have just gone into the -- if they didn't get Restore Act, it would go into the general fund. So I think BP, I think the government, I think everybody would like to get it settled as quick as possible.

So I think you hear some people say as soon as September. We're obviously nowhere near party to any of those discussions.

So all the rumors we hear are just talking to House members, talking to senators. But I assume it's in BP's interest, it's in everyone's interest to get it done as soon as possible.

Okay. And then finally, with you guys building some new dredges, Weeks coming out, I mean, is there going to be, over the next year or so, any other company that you know of that are going to be building new dredges?

And what does that do to kind of the overall fleet in the domestic market?

Well, we don't foresee any other hopper builds. There could be some clamshell equipment we hear about once in a while.

But that will -- we don't see anything that is going to affect our market at this point in time.

Yes, I think Bruce is right. We have seen some scow capacity being announced and built, and I think the marketplace needs it.

And also, don't forget, I think both our build and the Weeks build ultimately will probably take out some older equipment from the U.S. market.

Okay. So with your expectations though, demand will still far outweigh any added net capacity?

That's clearly -- we modeled this, as Bruce said, many different ways, and we actually modeled it from a slight decrease in demand up to obviously anytime you have increased demand, it makes sense. And clearly, the answer is, our dredge makes all the sense in the world, but I think that's correct.

Thank you very much for joining us today. We look forward to speaking with you at our next conference call.