UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended December 31, 2001

[_] 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 0-22303

GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)

Louisiana 72-1147390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

583 Thompson Road, Houma, Louisiana 70363
(Address of principal executive offices) (zip code)

(985) 872-2100
(Registrant's telephone number,
including area code)

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
par value per share.

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 at March 1, 2002 was approximately $105,224,634.

The number of shares of the Registrant's common stock, no par value per
share, outstanding at March 1, 2002 was 11,708,844.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement prepared for use in
connection with the registrant's 2002 Annual Meeting of Shareholders to be
held April 24, 2002 have been incorporated by reference into Part II and
Part III of this Form 10-K.

GULF ISLAND FABRICATION, INC.
ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2001

TABLE OF CONTENTS

Page
----

PART I

Items 1 and 2. Business and Properties.............................. 1
Item 3. Legal Proceedings.................................... 11
Item 4. Submission of Matters to a Vote of Security Holders.. 11
Item 4A. Executive Officers of the Registrant................. 11

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters................................. 12
Item 6. Selected Financial Data.............................. 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 14
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk................................................ 17
Item 8. Financial Statements and Supplementary Data.......... 17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................. 18

PART III

Item 10. Directors and Executive Officers of the Registrant... 18
Item 11. Executive Compensation............................... 18
Item 12. Security Ownership of Certain Beneficial Owners and
Management.......................................... 18
Item 13. Certain Relationships and Related Transactions....... 18

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................... 18

GLOSSARY OF CERTAIN TECHNICAL TERMS..................................... G1
FINANCIAL STATEMENTS.................................................... F1
SIGNATURES.............................................................. S1
EXHIBIT INDEX........................................................... E1

-i-

PART I

Items 1 and 2. Business and Properties

Certain technical terms are defined in the "Glossary of Certain Technical
Terms" appearing at the end of this Report.

General

Gulf Island Fabrication, Inc. (the "Company"), together with its
subsidiaries, is a leading fabricator of offshore drilling and production
platforms and other specialized structures used in the development and
production of offshore oil and gas reserves. Structures and equipment
fabricated by the Company include jackets and deck sections of fixed
production platforms; hull and/or deck sections of floating production
platforms (such as ("TLPs, SPARs and FPSOs"); piles, wellhead protectors,
subsea templates and various production, compressor and utility modules; and
offshore living quarters. Services provided by the Company include offshore
interconnect pipe hook-up; inshore marine construction; manufacture and repair
of pressure vessels; and steel warehousing and sales.

The Company was founded in 1985 by a group of investors, including Alden J.
"Doc" Laborde and Huey J. Wilson, and began operations at its fabrication yard
on the Houma Navigation Canal in southern Louisiana, approximately 30 miles
from the Gulf of Mexico. The Company's primary facilities are located on 620
acres, of which 271 are currently developed for fabrication activities with
347 acres available for future expansion. These facilities allow the Company
to build jackets for installation in water depths of up to 800 feet and deck
sections for fixed or floating production platforms for use in unlimited water
depths. In addition, the Company is able to build certain hull sections of
floating production platforms, typically for use in water depths greater than
1,000 feet.

On January 2, 1997, Gulf Island Fabrication, Inc. acquired Dolphin Services,
Inc. and two related companies (collectively, "Dolphin Services"), which
perform offshore and inshore fabrication and construction services (the
"Dolphin Acquisition"), and in April 1997, completed the initial public
offering (the "Initial Public Offering") of its common stock, no par value per
share (the "Common Stock"). Effective January 1, 1998, the Company acquired
all of the outstanding shares of Southport, Inc. and its wholly owned
subsidiary Southport International, Inc. (collectively "Southport"). Southport
specializes in the fabrication of living quarters for offshore platforms. The
purchase price was $6.0 million cash, plus contingent payments of up to an
additional $5.0 million based on Southport's net income over a four-year
period ending December 31, 2001. On October 26, 2000, the Company effectively
eliminated the possibility of contingency payments by reaching an agreement
with the former shareholders of Southport, Inc. to an early payout amount of
approximately $2.0 million.

In April 1998 the Company formed a limited liability company called MinDOC,
L.L.C. to patent, design and market a deepwater floating, drilling, and
production concept ("MinDOC"). During 2001, three of the participants
terminated their respective interests in MinDOC, L.L.C. thus, since October 1,
2001, the Company has owned a 60% interest in MinDOC, L.L.C. with the balance
owned by an engineering company. Prior to October 1, 2001, the Company's
investment in MinDOC, L.L.C. was accounted for under the equity method of
accounting for investments with its share of operating results included in
other income as an expense in the statements of income. Effective October 1,
2001, the Company's investment in MinDOC, L.L.C. and resulting operations were
consolidated within the consolidated financial statements of Gulf Island
Fabrication, Inc.

In November 1999 the Company announced that it had formed a wholly owned
subsidiary, Gulf Island MinDOC Company ("GIMCO"), to develop and market
deepwater oil and gas production structures, including a MinDOC, the deepwater
floating, drilling, and production concept that the Company has a proprietary
interest in. When fully operational, the subsidiary will be headquartered in
Houston, Texas.

Effective January 1, 2000, all of the operating assets, buildings and
properties owned directly by the Company were placed in Gulf Island, L.L.C., a
wholly owned subsidiary formed to conduct all of the fabrication and other
operations previously conducted directly by the Company. As a result, the
existing Gulf Island Fabrication, Inc. now serves as a holding company and
conducts all of its operations through its subsidiaries.

Description of Operations

The Company's primary activity is the fabrication of offshore drilling and
production platforms, including jackets and deck sections of fixed production
platforms, hull and/or deck sections of floating production platforms (such as
TLPs, SPARs, and FPSOs), piles, wellhead protectors, subsea templates and
various production, compressor and utility modules. The Company also has the
ability to produce and repair pressure vessels used in the oil and gas
industry, refurbish existing platforms and fabricate various other types of
steel structures. With its acquisition of Southport, the Company has also
increased its presence in the market for the fabrication of living quarters
for installation on such platforms.

The Company uses the latest welding and fabrication technology available,
and all of the Company's products are manufactured in accordance with industry
standards and specifications, including those published by the American
Petroleum Institute, the American Welding Society and the American Society of
Mechanical Engineers. All of the Company's operating subsidiaries are
certified as either ISO 9001 or ISO 9002 fabricators for their respective
quality assurance programs. See "-- Safety and Quality Assurance."

Fabrication of Offshore Platforms. The Company fabricates structural
components of fixed platforms for use in the offshore development and
production of oil and gas. A fixed platform is the traditional type of
platform used for the offshore development and production of oil and gas,
although in recent years there has been an increase in the use of floating
production platforms as a result of increased drilling and production
activities in deeper waters. Most fixed platforms built today can accommodate
both drilling and production operations. These combination platforms are large
and generally more costly than single-purpose structures. However, because
directional drilling techniques permit a number of wells to be drilled from a
single platform and because drilling and production can take place
simultaneously, combination platforms are often more cost effective.

The most common type of fixed platform consists of a jacket (a tubular
steel, braced structure extending from the mudline on the seabed to a point
above the water surface) which is supported on tubular pilings driven deep
into the seabed and supports the deck structure located above the level of
storm waves. The deck structure, extending above the surface of the water and
attached to the top end of the jacket, is designed to accommodate multiple
functions, including drilling, production, separating, gathering, piping,
compression, well support and crew quartering. Platforms can be joined by
bridges to form complexes of platforms for very large developments or to
improve safety by dividing functions among specialized platforms. Jacket-type
platforms are generally the most viable solution for water depths of 1,000
feet or less. Although there is no height limit to the size of the jackets
that can be fabricated at the Company's facilities, the dimensions of the
Houma Navigation Canal prevent the transportation to the Gulf of Mexico of
most jackets designed for water depths exceeding 800 feet. The Company can,
however, build decks, piping and equipment modules, living quarters, piles and
other components of platforms for installation in any water depth. Often,
customers split projects among fabricators, contracting with different
companies for the fabrication of the jacket, deck sections, living quarters
and piles for the same platform. Through the construction of these components
the Company participates in the construction of platforms requiring jackets
that are larger than those the Company can transport through the Houma
Navigation Canal.

Most of the steel used in the Company's operations arrives at the Company's
fabrication yards as steel plate. The plate is cut and rolled into tubular
sections at rolling mills in the fabrication yards. The tubular sections
(which vary in diameter up to 12 feet) are welded together in long straight
tubes to become legs or into shorter tubes to become part of the network of
bracing that supports the legs. Various cuts and welds in the fabrication
process are made by computer-controlled equipment that operates from data
developed during the design of the structure. The Company's ability to
fabricate and assemble the large tubular sections needed for jackets built for
use in water depths over 300 feet distinguish the Company from all but three
of its domestic competitors.

Jackets are built on skidways (which are long parallel rails along which the
jacket will slide when it is transferred to a barge for towing out to sea) and
are generally built in sections so that, to the extent possible, much of their
fabrication is done on the ground. As each section of legs and bracing is
complete, large crawler

cranes pick up an entire side and "roll up" the section, which is then joined
to another uprighted section. When a jacket is complete and ready for launch,
it is pulled along the skidway onto a launch barge, which is gradually
deballasted to compensate for the weight of the structure as more of it moves
aboard the barge. Using ocean-going tugs, the barge and jacket are transported
to the offshore installation site.

Decks are built either as single structures or in sections and are installed
on location by marine construction contractors. The composition and quantity
of petroleum in the well stream generally determine the makeup of the
production deck on a processing platform. Typical deck equipment includes
crude oil pumps, gas and oil separators and gas compressors. Unlike large
jackets, which are transported in a horizontal position, decks are transported
upright and, as a result, are not subject to the width restrictions of the
Houma Navigation Canal. Therefore, the only limitation on the Company's
ability to fabricate decks is the weight capacity of the barges that transport
the decks from the Company's yard to the installation site. Barges currently
exist that have the weight capacity and other characteristics required to
transport even the largest of the decks currently installed in the Gulf of
Mexico, and management believes that currently there are no decks installed in
the Gulf of Mexico that could not have been constructed at the Company's
facilities. While larger deck structures to be built in the future could
exceed the capacities of currently existing barges, management does not
believe that this will materially affect its share of the market for deck
construction.

The Company can also fabricate sections of, and structures used in
connection with, TLPs. TLPs consist of a deck that sits atop one or more
column-shaped hulls, which are positioned on site with vertical tendons
running from the hulls to the seabed. The tendons hold the hulls partially
submerged and are highly tensioned using the buoyancy of the hulls. This
system develops a restoring force against wave, wind and current actions in
proportion to the lateral displacement of the vessel. Wells for a TLP are
often pre-drilled through a subsea template. Long, flexible production risers,
which carry the petroleum to the deck of the TLP, are supported in tension by
mechanical tensioner machines on the platform's deck and are directly subject
to wave, wind and current forces. TLPs can be used in any water depth and are
generally better suited than fixed platforms for water depths greater than
1,000 feet.

The size of a TLP depends on a number of factors, including the intended
scope of production of the platform, the length of the production risers
connected to the platform, the size of the deck to be installed on the
platform and the water depth for which the platform is designed. The Company
can fabricate deck sections for use with TLPs of any size. The constraints of
the Houma Navigation Canal, however, limit the Company's ability to deliver
certain hulls for use with TLPs, depending on the size and weight of the hull
sections. In July 1998 the Company completed the fabrication of the deck
section and floating hull of a TLP designed for installation in 1,800 feet of
water. In August 1999 the Company completed the construction of a similar hull
that was installed in 3,200 feet of water. To the Company's knowledge, these
are the first two TLPs of this size to be constructed entirely in the United
States. With TLP's and other floating concepts as the alternative of choice
for deepwater drilling and production platforms, and the Company's
participation in this arena firmly established, the Company will participate
in the continued expansion into the deepwater areas.

The Company has fabricated subsea templates for use in connection with TLPs,
which are structures that are installed on the seabed before development
drilling begins. As exploration and drilling move into the deepwater of the
Gulf of Mexico, the Company believes that there will be increased
opportunities to fabricate subsea templates, as well as decks and other
structures, for use in connection with TLPs.

The Company also fabricates piles and other rolled goods, templates, bridges
for connecting offshore platforms, wellhead protectors, various production,
compressor and utility modules and other structures used in offshore oil and
gas production and development activities. All of the Company's products are
installed by marine construction contractors.

Through Dolphin Services, the Company also provides interconnect piping
services on offshore platforms, inshore steel and wood structure construction,
fabrication of pressure vessels and large and small packaged skid units, and
steel warehousing and sales. Interconnect piping services involve sending
employee crews to offshore

platforms that have been installed in the Gulf of Mexico in order to perform
welding and other activities required to connect production equipment, service
modules and other equipment to a platform prior to its becoming operational.
Dolphin Services also contracts with oil and gas companies that have platforms
and other structures located in the inland lakes and bays throughout the
Southeast for various on-site construction and maintenance activities. At its
existing facility, a quarter of a mile from the Company's main yard, Dolphin
Services can fabricate jackets up to 100 feet tall along with decks and other
steel structures. Dolphin Services has also been active in the refurbishment
of existing platforms. Platform operators occasionally remove platforms
previously installed in the Gulf of Mexico and return the platforms to a
fabricator for refurbishment, which usually consists of general repairs,
maintenance work and modification.

Through Southport, the Company fabricates living quarters, primarily for
offshore platforms, ranging in size from 4 to 250 beds.

Facilities and Equipment

Facilities. The Company's corporate headquarters and main fabrication yard
are located on the east bank of the Houma Navigation Canal at Houma,
Louisiana, approximately 30 miles from the Gulf of Mexico. This facility is
situated on approximately 140 acres, of which 100 acres are developed for
fabrication, and includes one 17,000 square foot building that houses
administrative staff, 180,000 square feet of covered fabrication area, over
17,000 square feet of warehouse storage area and 8,000 square feet of training
and medical facilities. The main yard also has approximately 2,800 linear feet
of water frontage, of which 1,500 feet is steel bulkhead that permits
outloading of heavy structures. In December 2001 the Company began purchasing
material for the construction of a new fabrication building scheduled to be
completed in the third quarter of 2002. When completed, the new building will
be 250 feet wide, 350 feet deep and 100 feet high. This will provide an
additional 87,500 feet of covered fabrication area to the Company's existing
facilities. The new building will allow the Company to fabricate large deck
sections that measure 100 feet wide and weigh up to 800 tons under a totally
covered fabrication area.

The Company's west yard is located across the Houma Navigation Canal from
the main yard on 437 acres, 130 acres of which are developed for fabrication
and over 300 acres of unimproved land, which could be used for expansion. The
west yard, which has approximately 72,000 square feet of covered fabrication
area and 4,600 square feet of warehouse storage area, spans 6,750 linear feet
of the Houma Navigation Canal, of which 2,350 feet is steel bulkhead.

Dolphin Services operates from a 20-acre site located approximately a
quarter of a mile from the Company's main yard on a channel adjacent to the
Houma Navigation Canal. The facility includes a 9,900 square foot building
that houses administrative staff, approximately 14,000 square feet of covered
fabrication area, 1,500 square feet of warehouse storage area, a 10,000 square
foot blasting and coating facility and 600 linear feet of steel bulkhead.
Dolphin Services also operates a commercial steel sales division and a
pressure vessel shop. The steel sales division operates a three acre facility
adjacent to the Company's main yard with a product line that includes pressure
vessel plates and other products that utilize Gulf Island, L.L.C.'s capability
to process the steel by cutting, shaping, forming and painting.

The vessel shop can manufacture pressure vessels up to eleven feet in
diameter and eight inches in thickness. The shop is equipped with a Cypress
Circle Cutter, auto core flux and submerged arc welding equipment. The vessel
shop can also accommodate the construction of a 50 ton skid unit inside the
facility.

In January 2001 Southport relocated its operations to the east bank of the
Houma Navigation Canal across Thompson Road from the Company's main
fabrication yard. In February 2001 the Company purchased an additional 11.7
acres of land adjacent to it's existing property. The expanded facility covers
23 acres and includes a two-story, 5,000 square foot administration building
with an attached 5,300 square foot warehouse. Also located on the property is
an additional two-story, 2,100 square foot administration building. The
property has approximately 1,850 linear feet of water frontage, of which 380
linear feet is steel bulkhead that permits docking of large ocean going
vessels and the outloading of heavy loads.

The Company owns all of the foregoing properties.

Equipment. The Company's main yard houses its Model 34 and Model 20 plate
bending rolls, a Frye Wheelabrator grit blast system, a hydraulic plate shear,
a hydraulic press brake and various other equipment needed to build offshore
structures and fabricate steel components. The Company's west yard has a
Bertsch Model 38 plate bending roll, a computerized Vernon brace coping
machine used for cutting steel in complex geometric sections and various other
equipment used in the Company's fabrication business. The Company also
currently uses 14 crawler cranes, which range in tonnage capacity from 150 to
300 tons and service both of the Company's yards. The Company owns these
cranes, thus avoiding the need to rent cranes on a monthly basis except in
times of very high activity levels. The Company has a computerized numeric
controlled plasma-arc cutting system that cuts and bevels steel up to one inch
thick at a rate of two hundred inches per minute. The system can also etch
into steel for piece markings and layout markings at a rate of three hundred
inches per minute. The Company performs routine repairs and maintenance on all
of its equipment.

The Company's plate bending rolls allow it to roll and weld into tubular
pipe sections approximately 50,000 tons of plate per year. By having such
capacity at its fabrication facility, the Company is able to coordinate all
aspects of platform construction, thereby reducing the risk of cost overruns,
delays in project completion, and labor costs. In addition, these facilities
allow the Company to participate as subcontractor on projects awarded to other
contractors. The Company has a state of the art, fully enclosed, and
environmentally friendly blast and coating facility that can operate 24 hours
a day. The facility is automated and provides blasting and coating activities
in support of the Company's fabrication projects. The design output of the
facility also allows the Company to provide blast and paint services to the
local shipbuilding industry. The use of this equipment provides the Company a
competitive advantage by reducing labor costs and demonstrates the Company's
commitment to being a good neighbor to the community and the environment.

Dolphin Services owns three spud barges and leases one barge for use in
connection with its inshore construction activities, with each barge being
equipped with a crane that has the lifting capacity of 60 to 100 tons. Dolphin
Services also owns two Manitowoc 4100 cranes with lifting capacities of 200 to
230 tons and five smaller crawler cranes ranging from 60 to 100 tons lifting
capacity.

Materials and Supplies

The principal materials and supplies used by the Company in its fabrication
business, standard steel shapes, steel plate, welding gases, fuel oil,
gasoline and paint, are currently available in adequate supply from many
sources. The Company does not depend upon any single supplier or source.

Safety and Quality Assurance

Management is concerned with the safety and health of the Company's
employees and maintains a stringent safety assurance program to reduce the
possibility of costly accidents. The Company's safety department establishes
guidelines to ensure compliance with all applicable state and federal safety
regulations and provides training and safety education through orientations
for new employees and subcontractors, daily crew safety meetings and first aid
and CPR training. The Company also employs four in-house medical personnel.
The Company has a comprehensive drug program and conducts periodic employee
health screenings. A safety committee, whose members consist of management
representatives and peer-elected field representatives, meets twice a month to
discuss safety concerns and suggestions that could prevent accidents. The
Company also rewards its employees with safety awards every three months.
These awards are the result of observations and audits performed by the safety
department and front line supervision.

The Company fabricates to the standards of the American Petroleum Institute,
the American Welding Society, the American Society of Mechanical Engineers and
specific customer specifications. The Company uses welding and fabrication
procedures in accordance with the latest technology and industry requirements.
Training programs have been instituted to upgrade skilled personnel and
maintain high quality standards. In addition, the

Company maintains on-site facilities for the non-destructive testing of all
welds, which process is performed by an independent contractor.

Gulf Island, L.L.C. and Dolphin Services are certified as ISO 9002
fabricators. Southport is certified as an ISO 9001 fabricator. ISO 9001 and
ISO 9002 are internationally recognized verification systems for quality
management overseen by the International Standard Organization based in
Geneva, Switzerland. The certification is based on a review of the Company's
programs and procedures designed to maintain and enhance quality production
and is subject to annual review and recertification.

Customers and Contracting

The Company's customers are primarily major and independent oil and gas
exploration and production companies. Over the past five years, sales of
structures used in the Gulf of Mexico by oil and gas exploration and
production companies accounted for approximately 86% of the Company's revenue.
The balance of its revenue was derived from the fabrication of structures
installed outside the Gulf of Mexico, including offshore West Africa and Latin
America.

A large portion of the Company's revenue has historically been generated by
a few customers (El Paso Corporation, Anadarko Petroleum Corporation,
ChevronTexaco Corp. and Global Industries Ltd.), although not necessarily the
same customers from year-to-year. For example, the Company's largest customers
(those which individually accounted for more than 10% of revenue in a given
year) accounted for 21% (El Paso Corporation which includes projects for a
subsidiary of The Coastal Corporation prior to its merger with El Paso
Corporation), 13% (Anadarko), and 33% (Texaco, Inc., prior to its merger with
Chevron Corp., and Global Industries combined) of revenue for fiscal 2001,
2000, and 1999, respectively. In addition, at December 31, 2001, 62% of the
Company's backlog was for the same customer, which was for a large topside
destined for deepwater Gulf of Mexico. Because the level of fabrication that
the Company may provide to any particular customer depends, among other
things, on the size of that customer's capital expenditure budget devoted to
platform construction plans in a particular year and the Company's ability to
meet the customer's delivery schedule, customers that account for a
significant portion of revenue in one fiscal year may represent an immaterial
portion of revenue in subsequent years.

Most of the Company's projects are awarded on a fixed-price or
alliance/partnering basis, and while customers may consider other factors,
including the availability, capability, reputation and safety record of a
contractor, price and the ability to meet a customer's delivery schedule are
the principal factors on which the Company is awarded contracts. The Company's
contracts generally vary in length from one month to twenty-four months
depending on the size and complexity of the project. Generally, the Company's
contracts and projects are subject to termination at any time prior to
completion, at the option of the customer. Upon termination, however, the
customer is generally required to pay the Company for work performed and
materials purchased through the date of termination and, in some instances,
cancellation fees.

Under fixed price contracts, the Company receives the price fixed in the
contract, subject to adjustment only for change orders approved by the
customer. As a result, the Company retains all cost savings but is also
responsible for all cost overruns. Under typical alliance/partnering
arrangements, the Company and the customer agree in advance to a target price
that includes specified levels of labor and material costs and profit margins.
If the project is completed at less cost than that targeted in the contract,
the contract price is reduced by a portion of the savings. If the cost of
completion is greater than that targeted in the contract, the contract price
is increased, but generally to the target price plus the actual incremental
cost of materials and direct labor costs. Accordingly, under
alliance/partnering arrangements, the Company has some protection from cost
overruns but also shares a portion of any cost savings with the customer.
Under cost-plus arrangements, the Company receives a specified fee in excess
of its direct labor and material cost and so is protected against cost
overruns but does not benefit directly from cost savings. Because the Company
generally prices materials as pass-through items on its contracts, the cost
and productivity of the Company's labor force are the primary factors
affecting the Company's operating costs. Consequently, it is essential that
the Company control the cost and productivity of

the direct labor hours worked on the Company's projects. As an aid to
achieving this control, the Company places a single project manager in charge
of the production operations related to each project and gives significant
discretion to the project manager, with oversight by the applicable
subsidiary's President and the Company's Executive Vice President of
Operations. As an incentive to control costs, the Company gives bonuses to its
employees totaling 5% of the Company's income before taxes.

Seasonality

Although high activity levels in the oil and gas industry and capacity
limitations can somewhat diminish the seasonality of the Company's operations,
the Company's operations have historically been subject to seasonal variations
in weather conditions and daylight hours. Since most of the Company's
construction activities take place outdoors, the number of direct labor hours
worked generally declines during the winter months due to an increase in rainy
and cold conditions and a decrease in daylight hours. In addition, the
Company's customers often schedule the completion of their projects during the
summer months in order to take advantage of the milder weather during such
months for the installation of their platforms. As a result, a
disproportionate portion of the Company's income has historically been earned
during the second and third quarters of the year, and in the past the Company
has occasionally incurred losses during the first and fourth quarters of the
year.

The table below indicates for each quarter of the Company's last three
fiscal years the percentage of the annual revenue, gross profit and net
income, and the number of direct labor hours worked.

2001 2000 1999
------------------- ------------------- -------------------
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

Revenue................. 24% 30% 27% 19% 28% 25% 25% 22% 25% 23% 24% 28%
Gross profit............ 15% 37% 30% 18% 24% 23% 23% 30% 29% 28% 25% 18%
Net income.............. 13% 40% 30% 17% 26% 25% 24% 25% 29% 29% 26% 16%
Direct labor hours (in
000's)................. 411 460 445 343 434 410 408 400 500 459 459 433

Because of this seasonality, full year results are not likely to be a direct
multiple of any particular quarter or combination of quarters. Reductions in
industry activity levels may tend to increase the seasonality of the Company's
operations.

Competition

The offshore platform fabrication industry is highly competitive and
influenced by events largely outside of the control of offshore platform
fabrication companies. Platform fabrication companies compete intensely for
available projects, which are generally awarded on a competitive bid basis
with customers usually requesting bids on projects one to three months prior
to commencement. The Company's marketing staff contacts oil and gas companies
believed to have fabrication projects scheduled to allow the Company an
opportunity to bid for the projects. Although price and the contractor's
ability to meet a customer's delivery schedule are the principal factors in
determining which qualified fabricator is awarded a contract for a project,
customers also consider, among other things, the availability of technically
capable personnel and facility space, a fabricator's efficiency, condition of
equipment, reputation, safety record and customer relations.

The Company currently has three primary competitors, Technip CSO/Aker Gulf
Marine, McDermott International, Inc., and Kiewit Offshore Services, for the
fabrication of platform jackets to be installed in the Gulf of Mexico in water
depths greater than 300 feet. In addition to these three companies, the
Company primarily competes with five other fabricators for platform jackets
for intermediate water depths from 150 feet to 300 feet. A number of other
companies compete for projects designed for shallower waters as well as for
the projects typically performed by Southport. Certain of the Company's
competitors have greater financial and other resources than the Company.

Management believes that, while new competitors can enter the market for
smaller structures relatively easily, it is more difficult to enter the market
for jackets designed for use in water depths greater than 300 feet.

This difficulty results from the substantial investment required to establish
an adequate facility, the difficulty of locating a facility adjacent to an
adequate waterway due to environmental and wetland regulations, and the
limited availability of experienced supervisory and management personnel.

Management believes that the Company's competitive pricing, expertise in
fabricating offshore structures and its certification as ISO 9001 and ISO 9002
fabricators will enable it to continue to compete effectively for projects
destined for international waters. The Company recognizes, however, that
foreign governments often use subsidies and incentives to create jobs where
oil and gas production is being developed. In addition, the increased
transportation costs that are incurred when exporting structures from the U.S.
to foreign locations may hinder the Company's ability to successfully bid for
projects against foreign competitors. Because of subsidies, import duties and
fees, taxes on foreign operators, lower wage rates in foreign countries,
fluctuations in the value of the U.S. dollar, the possible imposition of
tariffs on raw materials imported into the United States and other factors,
the Company may not be able to remain competitive with foreign contractors for
projects designed for use in international waters as well as those designed
for use in the Gulf of Mexico.

Backlog

As of December 31, 2001, the Company's backlog was $54.4 million, $44.1
million of which management expects to be performed during 2002. Of the $54.4
million backlog at December 31, 2001, approximately 62% was for the same
customer, which was for a large topside destined for deepwater Gulf of Mexico.

The Company's backlog is based on management's estimate of the direct labor
hours required to complete, and the remaining revenue to be recognized with
respect to, those projects as to which a customer has authorized the Company
to begin work or purchase materials pursuant to written contracts, letters of
intent or other forms of authorization received by our Company. Often,
however, management's estimates are based on incomplete engineering and design
specifications. As engineering and design plans are finalized or changes to
existing plans are made, management's estimate of the direct labor hours
required to complete and price at completion for such projects is likely to
change. In addition, all projects currently included in the Company's backlog
are subject to termination at the option of the customer, although the
customer in that case is generally required to pay the Company for work
performed and materials purchased through the date of termination and, in some
instances, pay the Company cancellation fees.

Government and Environmental Regulation

Many aspects of the Company's operations and properties are materially
affected by federal, state and local regulation, as well as certain
international conventions and private industry organizations. The exploration
and development of oil and gas properties located on the outer continental
shelf of the United States is regulated primarily by the Minerals Management
Service (United States Department of the Interior) ("MMS"). The MMS has
promulgated federal regulations under the Outer Continental Shelf Lands Act
requiring the construction of offshore platforms located on the outer
continental shelf to meet stringent engineering and construction
specifications. Violations of these regulations and related laws can result in
substantial civil and criminal penalties as well as injunctions curtailing
operations. The Company believes that its operations are in compliance with
these and all other regulations affecting the fabrication of platforms for
delivery to the outer continental shelf of the United States. In addition, the
Company depends on the demand for its services from the oil and gas industry
and, therefore, can be affected by changes in taxes, price controls and other
laws and regulations relating to the oil and gas industry. Offshore
construction and drilling in certain areas has also been opposed by
environmental groups and, in certain areas, has been restricted. To the extent
laws are enacted or other governmental actions are taken that prohibit or
restrict offshore construction and drilling or impose environmental protection
requirements that result in increased costs to the oil and gas industry in
general and the offshore construction industry in particular, the business and
prospects of the Company could be adversely affected, although such
restrictions in the areas of the Gulf of Mexico where the Company's products
are used have not been substantial. The Company cannot determine to what
extent future operations and earnings of the Company may be affected by new
legislation, new regulations or changes in existing regulations.

The Houma Navigation Canal provides the only means of access for the
Company's products from the Company's facilities to open waters. The Houma
Navigation Canal is considered to be a navigable waterway of the United States
and, as such, is protected by federal law from unauthorized obstructions that
would hinder water-borne traffic. Federal law also authorizes federal
maintenance of the canal by the United States Corps of Engineers. The canal
requires bi-annual dredging to maintain its water depth and, while federal
funding for this dredging has been provided for over 30 years, there is no
assurance that Congressional appropriations sufficient for adequate dredging
and other maintenance of the canal will be continued indefinitely. If
sufficient funding were not appropriated for that purpose, the Houma
Navigation Canal could become impassable by barges required to transport many
of the Company's products, with the result that the Company's operations and
financial position could be materially and adversely affected.

The Company's operations and properties are subject to a wide variety of
increasingly complex and stringent foreign, federal, state and local
environmental laws and regulations, including those governing discharges into
the air and water, the handling and disposal of solid and hazardous wastes,
the remediation of soil and groundwater contaminated by hazardous substances
and the health and safety of employees. These laws may provide for "strict
liability" for damages to natural resources and threats to public health and
safety, rendering a party liable for the environmental damage without regard
to negligence or fault on the part of such party. Sanctions for noncompliance
may include revocation of permits, corrective action orders, administrative or
civil penalties and criminal prosecution. Certain environmental laws provide
for strict, joint and several liability for remediation of spills and other
releases of hazardous substances, as well as damage to natural resources. In
addition, the Company may be subject to claims alleging personal injury or
property damage as a result of alleged exposure to hazardous substances. Such
laws and regulations may also expose the Company to liability for the conduct
of or conditions caused by others, or for acts of the Company that were in
compliance with all applicable laws at the time such acts were performed.

The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and similar laws provide for responses to and liability for
releases of hazardous substances into the environment. Additionally, the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, the Emergency Planning and Community Right to Know
Act, each as amended, and similar foreign, state or local counterparts to
these federal laws, regulate air emissions, water discharges, hazardous
substances and wastes, and require public disclosure related to the use of
various hazardous substances. Compliance with such environmental laws and
regulations may require the acquisition of permits or other authorizations for
certain activities and compliance with various standards or procedural
requirements. The Company believes that its facilities are in substantial
compliance with current regulatory standards.

The Company's operations are also governed by laws and regulations relating
to workplace safety and worker health, primarily the Occupational Safety and
Health Act and regulations promulgated thereunder. In addition, various other
governmental and quasi-governmental agencies require the Company to obtain
certain permits, licenses and certificates with respect to its operations. The
kinds of permits, licenses and certificates required in the Company's
operations depend upon a number of factors. The Company believes that it has
all material permits, licenses and certificates necessary for the conduct of
its existing business.

The Company's compliance with these laws and regulations has entailed
certain additional expenses and changes in operating procedures, which
historically have resulted in approximately $180,000 in expenditures per year.
The Company believes that compliance with these laws and regulations will not
have a material adverse effect on the Company's business or financial
condition for the foreseeable future. However, future events, such as changes
in existing laws and regulations or their interpretation, more vigorous
enforcement policies of regulatory agencies, or stricter or different
interpretations of existing laws and regulations, may require additional
expenditures by the Company, which expenditures may be material.

Certain activities engaged in by employees of the Company, including
interconnect piping and other service activities conducted on offshore
platforms and activities performed on the spud barges owned by the Company,
are covered by the provisions of the Jones Act, the Death on the High Seas Act
and general maritime law, which

laws operate to make the liability limits established under state workers'
compensation laws inapplicable to these employees and, instead, permit them or
their representatives to pursue actions against the Company for damages or job
related injuries, with generally no limitations on the Company's potential
liability. The Company's ownership and operation of vessels can give rise to
large and varied liability risks, such as risks of collisions with other
vessels or structures, sinkings, fires and other marine casualties, which can
result in significant claims for damages against both the Company and third
parties for, among other things, personal injury, death, property damage,
pollution and loss of business.

In addition to government regulation, various private industry
organizations, such as the American Petroleum Institute, the American Society
of Mechanical Engineers and the American Welding Society, promulgate technical
standards that must be adhered to in the fabrication process.

Insurance

The Company maintains insurance against property damage caused by fire,
flood, explosion and similar catastrophic events that may result in physical
damage or destruction to the Company's facilities. All policies are subject to
deductibles and other coverage limitations. The Company also maintains a
builder's risk policy for its construction projects and general liability
insurance. The Company and its subsidiary, Gulf Island, L.L.C., are self-
insured for workers' compensation liability except for losses in excess of
$300,000 per occurrence for Louisiana workers' compensation and for U.S.
longshoreman and harbor workers' coverage. Dolphin Services and Southport are
conventionally insured for workers' compensation liability with deductibles of
$100,000 and $25,000, respectively. The Company also maintains maritime
employer's liability insurance. Although management believes that the
Company's insurance is adequate, there can be no assurance that the Company
will be able to maintain adequate insurance at rates which management
considers commercially reasonable, nor can there be any assurance that such
coverage will be adequate to cover all claims that may arise.

Employees

The Company's workforce varies based on the level of ongoing fabrication
activity at any particular time. During 2001, the number of Company employees
ranged from approximately 690 to 850. As of March 1, 2002, the Company had
approximately 750 employees. Although the seasonality of the Company's
operations may cause a decline in Company output during the winter months, the
Company generally does not lay off employees during those months but reduces
the number of hours worked per day by many employees to coincide with the
reduction in daylight hours during that period. None of the Company's
employees are employed pursuant to a collective bargaining agreement, and the
Company believes that its relationship with its employees is very good.

The Company's ability to remain productive and profitable depends
substantially on its ability to attract and retain skilled construction
workers, primarily welders, fitters and equipment operators. In addition, the
Company's ability to expand its operations depends not only upon customer
demand but also the Company's ability to increase its labor force. The demand
for such workers is high and the supply is extremely limited, especially
during periods of high activity in the oil and gas industry. While the Company
believes its relationship with its skilled labor force is very good, a
significant increase in the wages paid by competing employers could result in
a reduction in the Company's skilled labor force, increases in the wage rates
paid by the Company, or both. If either of these occurred, in the near-term,
the profits expected by the Company from work in progress could be reduced or
eliminated and, in the long-term, to the extent such wage increases could not
be passed on to the Company's customers, the production capacity of the
Company could be diminished and the growth potential of the Company could be
impaired.

As part of an effort to maintain its workforce, the Company has instituted
and enhanced several incentive programs and expanded its training facility for
its current employees. The Company has facilities to train its employees on
productivity and safety matters. The Company is committed to training its
employees and offers advancement through in-house and outsourced training
programs for skilled craft, supervisory and management personnel.

Cautionary Statement Concerning Forward-Looking Information

Certain statements included in this report and in oral statements made from
time to time by management of the Company that are not statements of
historical fact are forward-looking statements. In this report, forward-
looking statements are included primarily in the sections entitled "Business
and Properties," "Legal Proceedings," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The words
"expect," "believe," "anticipate," "project," "plan," "estimate," "predict"
and similar expressions often identify forward-looking statements. All such
statements are subject to factors that could cause actual results and outcomes
to differ materially from the results and outcomes predicted in the statements
and investors are cautioned not to place undue reliance upon them. These
factors include, among others, the timing and extent of changes in the prices
of crude oil and natural gas; the timing of new projects and the Company's
ability to obtain them; competitive factors in the heavy marine fabrication
industry; and the Company's ability to successfully complete the testing,
production and marketing of the MinDOC and other deepwater production systems
and to develop and provide financing for them.

Item 3. Legal Proceedings

The Company is subject to various routine legal proceedings in the normal
conduct of its business primarily involving commercial claims, workers'
compensation claims, and claims for personal injury under general maritime
laws of the United States and the Jones Act. While the outcome of these
lawsuits, legal proceedings and claims cannot be predicted with certainty,
management believes that the outcome of any such proceedings, even if
determined adversely, would not have a material adverse effect on the
financial position, results of operations or cash flows of the Company.

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

Not applicable.

Item 4A. Executive Officers of the Registrant

Listed below are the names, ages and offices held by each of the executive
officers of the Company as of March 1, 2002. All officers of the Company serve
at the pleasure of the Company's Board of Directors.

Name Age Position
---- --- --------

Kerry J. Chauvin.................... 54 Chairman of the Board, President and
Chief Executive Officer
Kirk J. Meche....................... 39 Executive Vice President--Operations
and President of Gulf Island, L.L.C.
(fabrication subsidiary)
Murphy A. Bourke.................... 57 Executive Vice President--Marketing
Joseph P. Gallagher, III............ 51 Vice President--Finance, Chief
Financial Officer, and Treasurer

Kerry J. Chauvin was elected Chairman of the Board effective April 25, 2001.
Mr. Chauvin has served as the Company's President since the Company's
inception and has served as Chief Executive Officer since January 1990. Mr.
Chauvin also served as the Company's Chief Operating Officer from inception to
January 1990. He has over 20 years of experience in the fabrication industry
including serving from 1979 to 1984 as President of Delta Fabrication, the
assets of which were purchased by the Company in 1985, and as Executive Vice
President, General Manager and Manager of Engineering with Delta Fabrication
from 1977 to 1979. From 1973 to 1977, he was employed by Delta Shipyard as
Manager of New Construction and as a Project Manager. Mr. Chauvin holds both
an M.B.A. degree and a B.S. degree in Mechanical Engineering from Louisiana
State University.

Kirk J. Meche became Executive Vice President--Operations of the Company and
President of Gulf Island, L.L.C. effective February 1, 2001. Mr. Meche served
as President of Southport, Inc. from December 1999 to February 2001 and Vice
President of Operations from February 1999 to December 1999. He was a Project
Manager for the Company from 1996 to 1999. Mr. Meche served in various
capacities with McDermott Fabrication and Shipyard from 1985 to 1996 including
Structural Engineer, Hull Engineering Supervisor and Project Manager. He
received his B.S. degree in Engineering Design from Louisiana State University
in 1985.

Murphy A. Bourke has been Executive Vice President--Marketing since January
1, 2000, and was Vice President--Marketing since the Company began operations
in 1985. Mr. Bourke also served as Vice President Marketing for Delta
Fabrication from 1979 to 1984 and as the General Sales Manager of Louisiana
State Liquor Distributors, Inc., a beverage distributor, from 1972 to 1979. He
holds a B.A. degree in marketing from Southeastern Louisiana University.

Joseph P. "Duke" Gallagher, III was elected Vice President--Finance and
Chief Financial Officer of the Company in January 1997. Mr. Gallagher served
as the Company's Controller from 1985 until 1997. He has been the Company's
Treasurer since 1986 and served as the Company's Secretary from January 1993
until April 1999. From 1981 to 1985, he was employed as the Controller of TBW
Industries, Incorporated, a manufacturer of machinery and pressure vessels,
and from 1979 to 1981 as the Assistant Controller of Brock Exploration
Corporation, a publicly traded oil and gas exploration company. Mr. Gallagher,
a Certified Public Accountant, also worked as a Senior Auditor for the
accounting firm A.A. Harmon & Co., CPA's Inc. He received a B.S. degree in
Production Management in 1973 from the University of Southwestern Louisiana.

PART II

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

The Company's common stock, no par value per share (the "Common Stock"), is
traded on the Nasdaq Stock Market under the symbol "GIFI." At March 8, 2002,
the Company had approximately 2,300 holders of record of Common Stock.

The following table sets forth the high and low bid prices per share of the
Common Stock, as reported by the Nasdaq Stock Market, for each fiscal quarter
of the two most recent fiscal years.

High Low
------ ------

Fiscal Year 2001
First Quarter................................................... $20.50 $16.13
Second Quarter.................................................. 18.25 14.30
Third Quarter................................................... 14.34 7.75
Fourth Quarter.................................................. 13.02 7.84

High Low
------ ------

Fiscal Year 2000
First Quarter................................................... $14.63 $ 8.56
Second Quarter.................................................. 19.00 11.75
Third Quarter................................................... 18.69 14.00
Fourth Quarter.................................................. 19.50 13.00

The Company has not paid dividends since 1997. The Company currently intends
to retain earnings, if any, to meet its working capital requirements and to
finance the future operation and growth of its business and, therefore, does
not plan to pay cash dividends to holders of its Common Stock in the
foreseeable future.

Information about the Company's Common Stock that may be issued upon the
exercise of options, warrants and rights under all of the Company's existing
equity compensation plans as of December 31, 2001 will be

included in the Company's definitive Proxy Statement prepared in connection
with the 2002 Annual Meeting of Shareholders and is incorporated herein by
reference.

Item 6. Selected Financial Data

The following table sets forth selected historical financial data as of the
dates and for the periods indicated. The historical financial data for each
year in the five-year period ended December 31, 2001 are derived from the
audited financial statements of the Company. The table also sets forth
unaudited pro forma financial information as of and for the year ended
December 31, 1997 that gives effect to the termination of the Company's S
Corporation status, as further explained in Note 2 to this Item 6. The
following information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's financial statements and notes thereto included elsewhere in
this report.

Year Ended December 31,
------------------------------------------------
2001 2000 1999 1998(1) 1997
-------- -------- -------- -------- --------
(in thousands, except per share data)

Income Statement Data:
Revenue.................... $113,697 $112,090 $120,241 $192,372 $136,355
Cost of revenue............ 98,330 101,648 105,813 156,326 112,033
-------- -------- -------- -------- --------
Gross profit............... 15,367 10,442 14,428 36,046 24,322
General and administrative
expenses.................. 4,435 4,489 4,210 6,023 4,670
-------- -------- -------- -------- --------
Operating income........... 10,932 5,953 10,218 30,023 19,652
Net interest income
(expense)................. 1,067 1,298 681 172 (118)
Other, net income
(expense)................. (748) (558) (116) (4) 9
-------- -------- -------- -------- --------
Income before income
taxes..................... 11,251 6,693 10,783 30,191 19,543
Income taxes............... 3,990 2,507 4,097 11,359 5,973
Cumulative deferred tax
provision (2)............. -- -- -- -- 1,144
-------- -------- -------- -------- --------
Net income................. $ 7,261 $ 4,186 $ 6,686 $ 18,832 $ 12,426
======== ======== ======== ======== ========

Income Summary Data (Pro Forma 1997
(unaudited)):
Income before provision for
income taxes.............. $ 19,543
Provision for income
taxes..................... 5,976
Provision for income taxes
(2)....................... 1,379
--------
Net income................. $ 12,188
========
Basic earnings per share... $ 0.62 $ 0.36 $ 0.57 $ 1.62 $ 1.15
======== ======== ======== ======== ========
Diluted earnings per
share..................... $ 0.62 $ 0.36 $ 0.57 $ 1.61 $ 1.14
======== ======== ======== ======== ========
Weighted-average common
shares.................... 11,704 11,666 11,638 11,630 10,633
======== ======== ======== ======== ========
Adjusted weighted-average
common shares............. 11,789 11,756 11,691 11,703 10,700
======== ======== ======== ======== ========

As of December 31,
------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
(in thousands)

Balance Sheet Data:
Working capital............ $ 46,601 $ 37,175 $ 31,787 $ 25,239 $ 17,555
Property, plant and
equipment, net............ 41,666 42,662 43,664 45,418 34,505
Total assets............... 102,538 96,062 95,049 97,740 67,678
Debt....................... -- -- -- 3,000 --

Year Ended December 31,
------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
(in thousands)

Operating Data:
Direct labor hours worked
(3)....................... 1,659 1,652 1,851 2,615 2,150
Backlog (4)
Direct labor hours........ 838 437 682 1,079 1,341
Dollars................... $ 54,400 $ 26,600 $ 38,900 $ 67,300 $ 86,300

- --------
(1) Includes results of operations of Southport, Inc. from January 1, 1998.
(2) Includes pro forma effect for the application of federal and state income
taxes to the Company as if it were a C Corporation for tax purposes. Prior
to the Initial Public Offering, the Company elected to terminate its S
Corporation status. As a result, the Company became subject to corporate
level income taxation. In conjunction with the termination of S
Corporation status, the Company paid a distribution of $14 million to its
shareholders representing substantially all of the Company's remaining
undistributed S Corporation earnings through April 4, 1997. The S
Corporation earnings for the period April 1, 1997 to April 4, 1997 were an
immaterial part of the total distribution. The balance sheet of the
Company as of December 31, 1997 reflected a deferred income tax liability
of $1.9 million, which included $1.1 million of deferred income tax
liability that resulted from the termination of the S Corporation status.
(3) Direct labor hours are hours worked by employees directly involved in the
production of the Company's products.
(4) The Company's backlog is based on management's estimate of the number of
direct labor hours required to complete, and the remaining revenues to be
recognized with respect to, those projects on which a customer has
authorized the Company to begin work or purchase materials.

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

Introduction and Outlook

The Company's results of operations are affected primarily by (i) the level
of exploration and development activity maintained by oil and gas exploration
and production companies in the Gulf of Mexico, and to a lesser extent,
foreign locations throughout the world; (ii) the Company's ability to win
contracts through competitive bidding or alliance/partnering arrangements and
(iii) the Company's ability to manage those contracts to successful
completion. The level of exploration and development activity is related to
several factors, including trends of oil and gas prices, exploration and
production companies' expectations of future oil and gas prices, and changes
in technology which reduce costs and improve expected returns on investment,
especially in subsalt geological formations (which generally are located in
300 to 800 feet of water) and in deepwater (800 to 6,000 feet) areas of the
Gulf of Mexico. Over the first three of the past seven years, generally
favorable trends in these factors led to increased activity levels in the Gulf
of Mexico. In the past four years, however, the distraction caused by
consolidation activity by the oil and gas exploration and production companies
and generally unfavorable trends in the exploration and development activity
factors, have caused a corresponding reduction in the level of oil and gas
development activity.

Development activity in water depths greater than 300 feet, where larger
structures requiring more steel tonnage are needed, began declining in 1999
and continued to decline throughout 2000. This had a negative effect on the
demand for the available capacity of the major platform fabricators serving
the Gulf of Mexico, with a resulting decline in pricing levels for their
services through the end of 2000. While 2001 did not result in a significant
improvement in market conditions in the fabrication sector of the oil and gas
industry, the Company did experience some stability in the awarding of
projects, with several projects being awarded at increased pricing levels from
2000.

The combination of the backlog at December 31, 2000, projects awarded during
2001 with increased profit margins and continually improving market
conditions, resulted in a stronger performance in 2001 compared to 2000.
Revenue in 2001 was $113.7 million, a 1.4% increase compared to 2000 revenue,
and net income was $7.3 million, a 73.5% increase compared to 2000 net income.
In the third quarter of 2001 the Company was awarded a large topside destined
for deep water Gulf of Mexico, resulting in a 105% increase in backlog at
December 31, 2001 to $54.4 million compared to $26.6 million at December 31,
2000.

The dollar value of projects available in the market is significantly below
those levels of four to five years ago. Competition for available projects
remains intense and near term, future margins will likely remain uncertain.
Cost reduction measures are continuously reviewed to meet these conditions. In
the longer term,

demand for the Company's services will continue to depend largely upon actual
or anticipated prices for oil and gas, which are difficult to predict. At some
point, however, it is expected that demand for the Company's products and
services should recover as oil and gas reserves are reduced and the Company's
customers are forced to replace them.

During 2001, the Company's workforce ranged from approximately 850 to 690
employees. Due to current demand for the Company's products and services, the
Company does not anticipate the need to engage a material amount of contract
labor in the foreseeable future.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States, which require
the Company to make estimates and assumptions. The Company believes that of
its significant accounting policies (see Note 1 to the consolidated financial
statements), the following involve a higher degree of judgment and complexity.

Revenue Recognition

The majority of the Company's revenue is recognized on a percentage-of-
completion basis based on the ratio of direct labor hours actually performed
to date compared to the total estimated direct labor hours required for
completion. Accordingly, contract price and cost estimates are reviewed
monthly as the work progresses, and adjustments proportionate to the
percentage of completion are reflected in revenue for the period when such
estimates are revised. If these adjustments were to result in a reduction of
previously reported profits, the Company would have to recognize a charge
against current earnings, which may be significant depending on the size of
the project or the adjustment. Profit incentives from customers are included
in revenue when their realization is reasonably assured. Claims for extra work
or changes in scope of work are included in revenue when collection is
probable. Provisions for estimated losses on uncompleted contracts are
recorded in the period in which such losses are determined.

Goodwill Impairment--Southport Acquisition

In assessing the recoverability of the Company's excess of cost over the
fair value of the net assets acquired (goodwill) from the Southport
acquisition, the Company must make assumptions regarding estimated future cash
flows and other factors to determine the fair value of the respective assets.
During the year ended December 31, 2001, the Company evaluated goodwill for
impairment in accordance with Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," by estimating the future cash flows arising from
existing contracts and projected contracts, specifically those for which bids
were outstanding. The Company did not record an impairment charge during the
year ended December 31, 2001. If the Company's estimates or their related
assumptions were to change as it relates to estimated profit margins on
contracts or the Company's assessment of the likelihood of the projected
contracts being awarded, the Company may be required to record an impairment
charge for these assets. At December 31, 2001, unamortized goodwill was $4.8
million.

Pursuant to Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets," the Company will apply the new rules for
accounting for goodwill beginning in the first quarter of 2002. The Company
has not yet determined the impact of the new standard on its financial
position.

Results of Operations

Comparison of the Years Ended December 31, 2001 and 2000

The Company's revenue for the year ended December 31, 2001 was $113.7
million, an increase of 1.4%, compared to $112.1 million in revenue for the
year ended December 31, 2000. Revenue for 2001 remained relatively stable when
compared to 2000 revenue due to a consistent volume of direct labor hours
applied to contracts for both years.

The cost of revenue consists of costs associated with the fabrication
process, including direct costs (such as direct labor hours and raw materials)
allocated to specific projects and indirect costs (such as supervisory labor,
utilities, welding supplies and equipment costs) that are associated with
production but are not directly related to a specific project. As a percentage
of revenue, these costs were 86.5% and 90.7% for the years ended December 31,
2001 and 2000, respectively. The utilization of labor saving equipment enabled
the Company to maintain production volumes while increasing profit margins.
Also contributing to increased profit margins were increased product prices
and discounts from major suppliers of material and services. Gross profit
increased $4.9 million or 47.2% when comparing 2001 to 2000. For the year
ended December 31, 2001, gross profit was $15.4 million (13.5% of revenue),
compared to $10.4 million (9.3% of revenue) of gross profit for the year ended
December 31, 2000.

The Company's general and administrative expenses were $4.4 million for the
year ended December 31, 2001 compared to $4.5 million for the year ended
December 31, 2000. These expenses as a percentage of revenue were 3.9%
compared to 4.0% for the years ended December 31, 2001 and 2000, respectively.
By continuously monitoring general and administrative costs, the Company was
able to keep these costs relative to production volumes.

The Company's net interest income decreased to $1.1 million for the year
ended December 31, 2001 compared to $1.3 million for 2000. The current
reduction in interest income is the result of a reduction in short-term
interest rates when comparing 2001 to 2000. Other expense increased to
$748,000 in 2001 from $558,000 in 2000. This expense includes $288,000 related
to the Company's portion of the net loss of MinDOC, L.L.C. as it continues to
design and market the MinDOC floating platform concept for deepwater drilling
and production. Also included in the other-net was $280,000 for the settlement
of a lawsuit the Company had been involved in for several years and $180,000
resulting from a loss the Company had on the sale of the 13-acre facility
Southport previously occupied in Harvey, Louisiana.

Comparison of the Years Ended December 31, 2000 and 1999

The Company's revenue for the year ended December 31, 2000 was $112.1
million, a decrease of 6.7%, compared to $120.2 million in revenue for the
year ended December 31, 1999. Revenue decreased as a result of the delay in
the anticipated recovery in the late cycle sectors, such as offshore
fabrication, in which the Company operates. The prolonged delay in the
recovery of offshore fabrication caused a reduced demand and, thus reduced
margins on the goods and services the Company provides. These factors also
generated a decrease in the volume of direct labor hours applied to contracts
for the year ended December 31, 2000, compared to the year ended December 31,
1999 (1.7 million in 2000 versus 1.9 million in 1999). The combination of
reduced volume and lower margins caused a 27.1% decrease in gross profit to
$10.5 million (9.4% of revenue) for the year ended December 31, 2000 compared
to gross profit of $14.4 million (12.0% of revenue) for the year ended
December 31, 1999.

The Company's general and administrative expenses were $4.5 million for the
year ended December 31, 2000 compared to $4.2 million for the year ended
December 31, 1999. These expenses as a percentage of revenue were 4.0%
compared to 3.5% for the years ended December 31, 2000 and 1999, respectively.
The increase of approximately $300,000 was primarily related to increased
legal fees related to negotiating the agreement with the former Southport,
Inc. shareholders to an early payout of contingent payments.

The Company's net interest income increased to $1.3 million for 2000
compared to $681 thousand for 1999. The Company's cash provided by operations
has remained at a level that has allowed the Company to make

capital expenditures and acquisitions without incurring any debt, thus
increasing its cash and short term investments. Other expense increased to
$558,000 in 2000 from $116,000 in 1999. This expense is primarily comprised of
the Company's portion of the net loss of MinDOC, L.L.C. as it continued to
design and market the MinDOC floating platform concept for deepwater drilling
and production.

Liquidity and Capital Resources

Historically the Company has funded its business activities through funds
generated from operations and borrowings under its revolving line of credit
(the "Revolver"). Net cash provided by operating activities was $12.0 million
for the year ended December 31, 2001, while working capital was $46.6 million
(an increase of 25.4%) at December 31, 2001. The ratio of current assets to
current liabilities increased to 6.26 to 1 at December 31, 2001 from 4.6 to 1
at December 31, 2000. Net cash used in investing activities for the year ended
December 31, 2001 was $11.2 million, which included $2.1 million of proceeds
on the sale of property, $7.7 million for the purchase of short term
investments, and $5.5 million of capital expenditures. In June 2001 the
Company sold its 13 acre facility located in Harvey, Louisiana, which was
occupied by Southport, Inc. prior to moving its operations to a facility in
Houma, Louisiana. The Company's capital expenditures during 2001 were for
improvements to its production facilities and for equipment designed to
increase the capacity of its facilities and the productivity of its labor
force.

The Company's Revolver provides for a revolving line of credit of up to
$20.0 million, which bears interest equal to, at the Company's option, the
prime lending rate established by Bank One Corporation or LIBOR plus 1.5%. The
Revolver matures December 31, 2003, and is secured by a mortgage on the
Company's real estate, equipment and fixtures. The Company paid a fee on a
quarterly basis of three-sixteenths of one percent per annum on the average
unused portion of the line of credit. At December 31, 2001, there were no
borrowings outstanding under the credit facility, but the Company did have
letters of credit outstanding totaling $1,415,000 which reduces the unused
portions of the Revolver. The Company is required to maintain certain
covenants, including balance sheet and cash flow ratios. At December 31, 2001,
the Company was in compliance with these covenants.

The Company's Board of Directors approved a capital budget of $12.6 million
for 2002, including additional yard and facility expansion improvements.
Specifically approved in the budget is $6.2 million for the construction of a
new fabrication building to be located in the main yard scheduled to be
completed in the third quarter of 2002. When completed the new building will
be 250 feet wide, 350 wide deep and 100 feet high. This will provide an
additional 87,500 square feet of covered fabrication area to the Company's
existing facilities. The new building will allow the Company to fabricate
large deck sections that measure 100 feet wide and weigh up to 800 tons under
a totally covered fabrication area. Also approved in the budget is $2.2
million for the purchase of four, rubber tired, hydraulic transporters that
will allow fabricated deck sections that weigh as much as 800 tons to be
transported around the facility. Management believes that its available funds,
cash generated by operating activities and funds available under the bank
credit facility will be sufficient to fund these capital expenditures and its
working capital needs. However, the Company may expand its operations through
acquisitions in the future, which may require additional equity or debt
financing.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

The Company does not have operations subject to material risk of foreign
currency fluctuations, nor does it use derivative financial instruments in its
operations or investment portfolio. The Company has a $20.0 million line of
credit with its commercial banks. Under the terms of the revolving credit
agreement, the Company may elect to pay interest at either a fluctuating base
rate established by the bank from time to time or at a rate based on the rate
established in the London interbank market. The Company does not believe that
it has any material exposure to market risk associated with interest rates.

Item 8. Financial Statements and Supplementary Data

In this report the consolidated financial statements of the Company appear
on pages F-1 through F-14 and are incorporated herein by reference. See Index
to Consolidated Financial Statements on Page 18.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

Information called for by this item either will be included in the Company's
definitive Proxy Statement prepared in connection with the 2002 Annual Meeting
of Shareholders or is included in Item 4A of this report on Form 10-K. Such
information is incorporated herein by reference.

Item 11. Executive Compensation

Information called for by this item will be included in the Company's
definitive Proxy Statement prepared in connection with the 2002 Annual Meeting
of Shareholders and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Item 13. Certain Relationships and Related Transactions

PART IV

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

(a) The following financial statements, schedules and exhibits are filed as
part of this Report:

(i) Financial Statements

Page
----

Report of Independent Auditors..................................... F-1
Consolidated Balance Sheets at December 31, 2001 and at December
31, 2000.......................................................... F-2
Consolidated Statements of Income for the Years Ended December 31,
2001, 2000, and 1999.............................................. F-3
Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 2001, 2000, and 1999..................... F-4
Consolidated Statements of Cash Flows for the Years Ended December
31, 2001, 2000 and 1999........................................... F-5
Notes to Consolidated Financial Statements......................... F-6

(ii) Schedules

Other schedules have not been included because they are not required, not
applicable, immaterial or the information required has been included
elsewhere herein.

(iii) Exhibits

See Exhibit Index on page E-1. The Company will furnish to any eligible
shareholder, upon written request, a copy of any exhibit listed upon payment
of a reasonable fee equal to the Company's expenses in furnishing such
exhibit. Such requests should be addressed to Investor Relations, Gulf Island
Fabrication, Inc., P.O. Box 310, Houma, LA 70361-0310.

(b) Reports on Form 8-K

The Company filed no reports on Form 8-K during the last quarter of the
period for which this report is filed.

GLOSSARY OF CERTAIN TECHNICAL TERMS

blasting and coating facility: Building and equipment used to clean steel products
and prepare them for coating with marine paints and
other coatings.

coping machine: A computerized machine that cuts ends of tubular
pipe sections to allow for changes in weld bevel
angles and fits onto other tubular pipe sections.

deck: The component of a platform on which development
drilling, production, separating, gathering,
piping, compression, well support, crew quartering
and other functions related to offshore oil and gas
development are conducted.

direct labor hours: Hours worked by employees directly involved in the
production of the Company's products. These hours
do not include contractor labor hours and support
personnel hours such as maintenance, warehousing
and drafting.

fixed platform: A platform consisting of a rigid jacket which rests
on tubular steel pilings driven into the seabed and
which supports a deck structure above water
surface.

floating production platform: Floating structure that supports offshore oil and
gas production equipment (TLP, FPSO, SPAR).

FPSO: Floating Production Storage and Offloading vessel.

grit blast system: System of preparing steel for coating by using
steel grit rather than sand as a blasting medium.

hydraulic plate shear: Machine that cuts steel by a mechanical system
similar to scissors.

inshore: Inside coastlines, typically in bays, lakes and
marshy areas.

ISO 9001: International Standards of Operations 9001--Defines
quality management system of procedures and goals
for certified companies.

ISO 9002: International Standards of Operations 9002--Defines
quality management system of procedures and goals
for certified companies.

jacket: A component of a fixed platform consisting of a
tubular steel, braced structure extending from the
mudline of the seabed to a point above the water
surface. The jacket is supported on tubular steel
pilings driven into the seabed and supports the
deck structure located above the level of storm
waves.

modules: Packaged equipment usually consisting of major
production, utility or compression equipment with
associated piping and control system.

offshore:
In unprotected waters outside coastlines.

G-1

piles: Rigid tubular pipes that are driven into the seabed
to support platforms.

plasma-arc cutting system: Steel cutting system that uses an ionized gas
cutting rather than oxy-fuel system.

platform: A structure from which offshore oil and gas
development drilling and production are conducted.

pressure vessel: A metal container generally cylindrical or
spheroid, capable of withstanding various internal
pressure loadings.

SPAR: A vessel with a circular cross-section that sits
vertically in the water and is supported by
buoyancy chambers ("hard tanks") at the top and
stabilized by a structure ("midsection") hanging
from the hard tanks.

spud barge: Construction barge rigged with vertical tubular or
square lengths of steel pipes that are lowered to
anchor the vessel.

skid unit: Packaged equipment usually consisting of major
production, utility or compression equipment with
associated piping and control system.

subsea templates: Tubular frames which are placed on the seabed and
anchored with piles. Usually a series of oil and
gas wells are drilled through these underwater
structures.

tension leg platform (TLP):A platform consisting of a floating hull and deck
anchored by vertical tensioned cables or pipes
connected to pilings driven into the seabed. A
tension leg platform is typically used in water
depths exceeding 1,000 feet.

G-2

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Gulf Island Fabrication, Inc.

We have audited the accompanying consolidated balance sheets of Gulf Island
Fabrication, Inc. as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Gulf Island
Fabrication, Inc. at December 31, 2001 and 2000, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States.

ERNST & YOUNG LLP

New Orleans, Louisiana
January 30, 2002

F-1

GULF ISLAND FABRICATION, INC.

CONSOLIDATED BALANCE SHEETS

December 31,
----------------
2001 2000
-------- -------
(in thousands)

ASSETS
------

Current assets:
Cash and cash equivalents................................... $ 11,274 $10,079
Short-term investments...................................... 23,758 16,024
Contracts receivable, net................................... 14,231 15,922
Contract retainage.......................................... 1,736 738
Costs and estimated earnings in excess of billings on
uncompleted contracts...................................... 1,961 2,419
Prepaid expenses............................................ 1,170 1,017
Inventory................................................... 1,331 1,347
-------- -------
Total current assets...................................... 55,461 47,546
Property, plant and equipment, net............................ 41,666 42,662
Excess of cost over fair value of net assets acquired less
accumulated amortization of $1,302,425 and $869,225 at
December 31, 2001 and 2000, respectively..................... 4,765 5,198
Other assets.................................................. 646 656
-------- -------
Total assets.............................................. $102,538 $96,062
======== =======

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current liabilities:
Accounts payable............................................ $ 1,660 $ 2,229
Billings in excess of costs and estimated earnings on
uncompleted contracts...................................... 2,891 3,608
Accrued employee costs...................................... 2,012 1,696
Accrued expenses............................................ 1,929 2,446
Income taxes payable........................................ 368 392
-------- -------
Total current liabilities................................. 8,860 10,371
Deferred income taxes......................................... 4,773 4,425
-------- -------
Total liabilities......................................... 13,633 14,796
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized,
no shares issued and outstanding........................... -- --
Common stock, no par value, 20,000,000 shares authorized,
11,706,864 and 11,681,500 shares issued and outstanding at
December 31, 2001 and 2000, respectively................... 4,227 4,195
Additional paid-in capital.................................. 36,101 35,755
Retained earnings........................................... 48,577 41,316
-------- -------
Total shareholders' equity................................ 88,905 81,266
-------- -------
Total liabilities and shareholders' equity................ $102,538 $96,062
======== =======

The accompanying notes are an integral part of these statements.

F-2

GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Year ended December 31,
----------------------------
2001 2000 1999
-------- -------- --------

Revenue........................................... $113,697 $112,090 $120,241
Cost of revenue................................... 98,330 101,648 105,813
-------- -------- --------
Gross profit...................................... 15,367 10,442 14,428
General and administrative expenses............... 4,435 4,489 4,210
-------- -------- --------
Operating income.................................. 10,932 5,953 10,218
Other income (expense)
Interest expense................................ (36) (34) (58)
Interest income................................. 1,103 1,332 739
Other, net...................................... (748) (558) (116)
-------- -------- --------
319 740 565
-------- -------- --------
Income before income taxes........................ 11,251 6,693 10,783
Income taxes...................................... 3,990 2,507 4,097
-------- -------- --------
Net income........................................ $ 7,261 $ 4,186 $ 6,686
======== ======== ========
Earnings per share data:
Basic........................................... $ 0.62 $ 0.36 $ 0.57
======== ======== ========
Diluted......................................... $ 0.62 $ 0.36 $ 0.57
======== ======== ========

The accompanying notes are an integral part of these statements.

F-3

GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands, except share data)

Common Stock Additional Total
----------------- Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
---------- ------ ---------- -------- -------------

Balance at January 1,
1999..................... 11,638,400 $4,162 $35,124 $30,444 $69,730
Income tax benefit from
exercise of stock
options.................. -- -- 202 -- 202
Net income................ -- -- -- 6,686 6,686
---------- ------ ------- ------- -------
Balance at December 31,
1999..................... 11,638,400 4,162 35,326 37,130 76,618
Exercise of stock
options.................. 43,100 33 303 -- 336
Income tax benefit from
exercise of stock
options.................. -- -- 126 -- 126
Net income................ -- -- -- 4,186 4,186
---------- ------ ------- ------- -------
Balance at December 31,
2000..................... 11,681,500 4,195 35,755 41,316 81,266
Exercise of stock
options.................. 25,364 32 287 -- 319
Income tax benefit from
exercise of stock
options.................. -- -- 59 -- 59
Net income................ -- -- -- 7,261 7,261
---------- ------ ------- ------- -------
Balance at December 31,
2001..................... 11,706,864 $4,227 $36,101 $48,577 $88,905
========== ====== ======= ======= =======

The accompanying notes are an integral part of these statements.

F-4

GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year ended December 31,
----------------------------
2001 2000 1999
-------- -------- --------

Operating activities:
Net income..................................... $ 7,261 $ 4,186 $ 6,686
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................. 4,433 4,454 4,699
Amortization................................. 433 317 274
Deferred income taxes........................ 348 1,361 749
Changes in operating assets and liabilities:
Contracts receivable....................... 1,691 6,817 11,943
Contract retainage......................... (998) 2,513 2,586
Costs and estimated earnings in excess of
billings on uncompleted contracts......... 458 1,019 (1,377)
Prepaid expenses, inventory and other
assets.................................... (137) (388) 39
Accounts payable........................... (569) (1,938) (2,984)
Billings in excess of costs and estimated
earnings on uncompleted contracts......... (717) (2,865) (3,003)
Accrued employee costs..................... 316 (94) (2,295)
Accrued expenses........................... (517) 971 (508)
Income taxes............................... 35 (944) 2,195
-------- -------- --------
Net cash provided by operating
activities.............................. 12,037 15,409 19,004
Investing activities:
Capital expenditures, net...................... (5,527) (3,442) (3,062)
Proceeds on the sale of property............... 2,100 -- --
Purchase of short-term investments............. (7,734) (4,809) (11,215)
Purchase of subsidiaries, net of cash
acquired...................................... -- (1,950) --
-------- -------- --------
Net cash used in investing activities........ (11,161) (10,201) (14,277)
Financing activities:
Principal payments on notes payable............ -- -- (3,000)
Proceeds from exercise of stock options........ 319 336 --
-------- -------- --------
Net cash provided by (used in) financing
activities.................................. 319 336 (3,000)
-------- -------- --------
Net increase in cash and cash equivalents........ 1,195 5,544 1,727
Cash and cash equivalents at beginning of year... 10,079 4,535 2,808
-------- -------- --------
Cash and cash equivalents at end of year......... $ 11,274 $ 10,079 $ 4,535
======== ======== ========
Supplemental cash flow information:
Interest paid.................................. $ 27 $ 34 $ 82
======== ======== ========
Income taxes paid, net of refunds.............. $ 3,607 $ 2,090 $ 1,153
======== ======== ========

The accompanying notes are an integral part of these statements.

F-5

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2001

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Gulf Island Fabrication, Inc. ("the Company"), located in Houma, Louisiana,
is engaged in fabrication and refurbishment of offshore oil and gas platforms
for oil and gas industry companies. The Company's principal markets are
concentrated in the offshore regions of the coast of the Gulf of Mexico. The
consolidated financial statements include the accounts of Gulf Island
Fabrication, Inc. and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expense during
the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

The principal customers of the Company are the major and large independent
oil and gas companies. This concentration of customers may impact the
Company's overall exposure to credit risk, either positively or negatively, in
that customers may be similarly affected by changes in economic or other
conditions. However, the Company's management believes that the portfolio of
receivables is diversified and that such diversification minimizes any
potential credit risk. Receivables are generally not collateralized.

The Company believes that its allowance for doubtful accounts is adequate
for its credit loss exposure.

Revenue Recognition

Revenue from fixed-price and cost-plus construction contracts is recognized
on the percentage-of-completion method, computed by the efforts-expended
method which measures the percentage of labor hours incurred to date as
compared to estimated total labor hours for each contract.

Contract costs include all direct material, labor and subcontract costs and
those indirect costs related to contract performance, such as indirect labor,
supplies and tools. Also included in contract costs are a portion of those
indirect contract costs related to plant capacity, such as depreciation,
insurance and repairs and maintenance. These indirect costs are allocated to
jobs based on actual direct labor hours incurred. Profit incentives are
included in revenue when their realization is reasonably assured. Claims for
extra work or changes in scope of work are included in revenue when collection
is probable. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.

F-6

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The asset caption entitled "costs and estimated earnings in excess of
billings on uncompleted contracts," represents revenue recognized in excess of
the amounts billed. The liability caption entitled "billings in excess of
costs and estimated earnings on uncompleted contracts" represents billings in
excess of revenue recognized.

Inventory

Inventory consists of materials and production supplies and is stated at the
lower of cost or market determined on the first-in, first-out basis.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on the straight-line basis over the
estimated useful lives of the assets, which range from 3 to 30 years. Ordinary
maintenance and repairs, which do not extend the physical or economic lives of
the plant or equipment, are charged to expense as incurred.

Long-Lived Assets

In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less
than the carrying amounts of those assets. The impairment loss is determined
by comparing the fair value of the assets to their carrying amounts and
recording the excess of the carrying amounts of the assets over their fair
value. Fair value is determined based on discounted cash flows or appraised
values, as appropriate.

Income Taxes

Income taxes have been provided using the liability method in accordance
with the Financial Accounting Standards Board's Statement No. 109, Accounting
for Income Taxes.

Excess of Cost Over Fair Value of Net Assets Acquired

Through the period ended December 31, 2001, excess of cost over the fair
value of the net assets acquired (goodwill) was amortized on the straight-line
method over a period of 15 years.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.

Short-Term Investments

Short-term investments consist of highly liquid debt securities with a
maturity of greater than three months, but less than twelve months. The
securities are classified as available-for-sale and the fair value of these
investments approximated their carrying value at December 31, 2001 and 2000.

Derivative Instruments

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities". SFAS 133, as amended, establishes

F-7

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

accounting and reporting standards for recognition and measurement of
derivative instruments, including derivative instruments embedded in other
contracts, and for hedging activities. The Company currently does not have any
derivative instruments or hedging activities.

Reclassifications

Certain items included in the consolidated financial statements for the year
ended December 31, 2000 had been reclassified to conform to the December 31,
2001 consolidated financial statement presentation.

2. ACQUISITION

Effective January 1, 1998, the Company acquired all of the outstanding
shares of Southport, Inc. and its wholly owned subsidiary, Southport
International, Inc. (collectively, "Southport"). Southport specializes in the
fabrication of living quarters for offshore platforms. The purchase price was
$6.0 million cash, plus contingent payments of up to an additional $5.0
million based on Southport's net income over a four-year period ending
December 31, 2001. The purchase price plus $130,000 of direct expenses
exceeded the fair value of the assets acquired of $12.3 million less
liabilities assumed of $10.3 million by $4.1 million. On October 26, 2000, the
Company reached an agreement with the former shareholders of Southport to an
early payout amount of approximately $2.0 million. The acquisition and the
early payout amount were accounted for under the purchase method of accounting
as described by Accounting Principles Board Opinion No. 16, "Business
Combinations".

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141, "Business Combinations". The statement
eliminated the pooling of interest method of accounting for business
combinations and changed the criteria for recognizing intangible assets apart
from goodwill. The statement is effective for any business combination that
was completed after June 30, 2001. The Company had no such business
combinations since June 30, 2001.

3. NEW ACCOUNTING STANDARDS

In June 2001 the Financial Accounting Standards Board issued the Statement
of Financial Accounting Standards ("SFAS") 142, "Goodwill and Other Intangible
Assets" (the "Statement"), effective for fiscal years beginning after December
15, 2001. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statement. Other intangible assets
will continue to be amortized over their useful lives. The Company currently
does not have any other intangible assets deemed to have indefinite lives. The
Company will apply the new rules on accounting for goodwill prior to June
2002. Application of the nonamortization provisions of the Statement is
expected to result in an increase in net income of $433,000 ($0.04 diluted
EPS) per year. During 2002, the Company will perform the first of the required
impairment tests of goodwill as of January 1, 2002, and has not yet determined
what effect of these tests will be on the earnings and financial position of
the Company.

F-8

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):

2001 2000 1999
------ ------ ------

Numerator for basic and diluted earnings per share........ $7,261 $4,186 $6,686
====== ====== ======
Denominator:
Denominator for basic earnings per share-weighted-
average shares......................................... 11,704 11,666 11,638
Effect of dilutive securities:
Employee stock options.................................. 85 90 53
------ ------ ------
Dilutive potential common shares:
Denominator for diluted earnings per share-adjusted
weighted-average shares................................ 11,789 11,756 11,691
====== ====== ======
Basic earnings per share.................................. $ 0.62 $ 0.36 $ 0.57
====== ====== ======
Diluted earnings per share................................ $ 0.62 $ 0.36 $ 0.57
====== ====== ======

5. CONTRACTS RECEIVABLE

Amounts due on contracts as of December 31 were as follows (in thousands):

2001 2000
------- -------

Completed contracts...................................... $ 3,170 $ 4,423
Contracts in progress:
Current................................................ 11,108 11,550
Retainage due within one year.......................... 1,736 738
Less allowance for doubtful accounts..................... 47 51
------- -------
$15,967 $16,660
======= =======

6. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Information with respect to uncompleted contracts as of December 31 is as
follows (in thousands):

2001 2000
------- -------

Costs incurred on uncompleted contracts................ $35,908 $41,823
Estimated profit earned to date........................ 4,125 2,860
------- -------
40,033 44,683
Less billings to date.................................. 40,963 45,872
------- -------
$ (930) $(1,189)
======= =======

F-9

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The above amounts are included in the accompanying consolidated balance
sheets under the following captions (in thousands):

2001 2000
------- -------

Costs and estimated earnings in excess of billings on
uncompleted contracts............................... $ 1,961 $ 2,419
Billings in excess of costs and estimated earnings on
uncompleted contracts............................... (2,891) (3,608)
------- -------
$ (930) $(1,189)
======= =======

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at December 31 (in
thousands):

2001 2000
------- -------

Land..................................................... $ 3,576 $ 4,369
Buildings................................................ 9,809 10,056
Machinery and equipment.................................. 41,672 39,368
Furniture and fixtures................................... 1,576 1,426
Transportation equipment................................. 1,527 1,482
Improvements............................................. 15,605 14,297
Construction in progress................................. 2,056 2,116
------- -------
75,821 73,114
Less accumulated depreciation............................ 34,155 30,452
------- -------
$41,666 $42,662
======= =======

The Company leases certain equipment used in the normal course of its
operations under month-to-month lease agreements cancelable only by the
Company. During 2001, 2000, and 1999, the Company expensed $1,300,425,
$1,631,046, and $1,679,807, respectively, related to these leases.

8. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities as of December 31, 2001
and 2000 were as follows (in thousands):

2001 2000
------ ------

Deferred tax liabilities:
Depreciation............................................. $5,275 $5,022
------ ------
Total deferred tax liabilities:........................ 5,275 5,022
Deferred tax assets:
Employee benefits........................................ 383 429
Uncompleted contracts.................................... 16 153
Other benefits........................................... 103 15
------ ------
Total deferred tax assets:............................. 502 597
------ ------
Net deferred tax liabilities:.............................. $4,773 $4,425
====== ======

F-10

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Significant components of income taxes for the years ended December 31,
2001, 2000 and 1999 were as follows (in thousands):

2001 2000 1999
------ ------ ------

Current:
Federal............................................ $3,591 $1,070 $3,125
State.............................................. 51 76 223
------ ------ ------
Total current.................................... 3,642 1,146 3,348
Deferred:
Federal............................................ 343 1,270 699
State.............................................. 5 91 50
------ ------ ------
Total deferred................................... 348 1,361 749
------ ------ ------
Income taxes......................................... $3,990 $2,507 $4,097
====== ====== ======

A reconciliation of income taxes computed at the U.S. federal statutory tax
rate to the Company's income tax expense for 2001, 2000, and 1999 is as
follows (in thousands):

2001 % 2000 % 1999 %
------ ---- ------ ---- ------ ----

U.S. statutory rate............ $3,825 34.0% $2,276 34.0% $3,774 35.0%
Increase (decrease) resulting
from:
State income taxes........... 56 0.5 167 2.5 273 2.5
Foreign sales corporation.... 0 0 (144) (2.1) (135) (1.3)
Other........................ 109 1.0 208 3.1 185 1.7
------ ---- ------ ---- ------ ----
Income tax expense............. $3,990 35.5% $2,507 37.5% $4,097 37.9%
====== ==== ====== ==== ====== ====

The Company's effective tax rate was decreased in 2001 due primarily to the
utilization of Louisiana tax credits.

9. LINE OF CREDIT AND NOTES PAYABLE

The Company's bank credit facility provides for a revolving line of credit
(the Revolver) of up to $20.0 million that bears interest equal to, at the
Company's option, the prime lending rate established by BankOne Corporation or
LIBOR plus 1.5%. The Revolver matures December 31, 2003 and is secured by a
mortgage on the Company's real estate, equipment and fixtures. The Company
paid a fee on a quarterly basis, of three-sixteenths of one percent per annum
on the average unused portion of the line of credit. At December 31, 2001,
there were no borrowings outstanding under the credit facility, but the
Company did have letters of credit outstanding totaling $1,415,000 which
reduces the unused portion of the Revolver. The Company is required to
maintain certain covenants, including balance sheet and cash flow ratios. At
December 31, 2001, the Company was in compliance with these covenants.

10. LONG-TERM INCENTIVE PLAN

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, (APB 25) and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, Accounting For Stock-Based Compensation, (Statement 123)
requires use of options valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the exercise price of
the

F-11

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

On February 13, 1997, the board of directors adopted the Long-Term Incentive
Plan (the "Plan"). The Plan has authorized the grant of options to purchase an
aggregate of 1,000,000 shares of the Company's common stock to certain
officers and key employees of the Company chosen by a committee appointed by
the board of directors (the Compensation Committee) to administer such plan.
Under the Plan, all options granted have 10-year terms, and conditions
relating to the vesting and exercise of options are "nonstatutory options"
(options which do not afford income tax benefits to recipients, but the
exercise of which may provide tax deductions for the Company). Each option
will have an exercise price per share not less than the fair market value of a
share of common stock on the date of grant and no individual employee may be
granted options to purchase more than an aggregate of 400,000 shares of common
stock.

Pro forma information regarding net income and earnings per share is
required by Statement 123 and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
statement. The fair value for these options was estimated at the date of grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions. For 1999, a risk-free interest rate of 6.93%; dividend
yield of zero; volatility factor of the expected market price of the Company's
common stock of .641; and a weighted-average expected life of the option of
eight years. For 2000, a risk-free interest rate of 5.79% on the January
options and a risk-free interest rate of 5.80% on the November options;
dividend yield of zero; volatility factor of the expected market price of the
Company's common stock of .588; and a weighted-average expected life of the
options of eight years. For 2001, a risk-free interest rate of 5.66% on the
February options, a risk-free interest rate of 5.72% on the April options and
a risk-free interest rate of 5.74% on the December options; dividend yield of
zero; volatility factor of the expected market price of the Company's common
stock of .450; and a weighted-average expected life of the options of eight
years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimated, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

For purpose of pro forma disclosures, the estimated fair value of the
options (net of expected tax benefits) is amortized to expense over the
options' vested period. Since the Company's options generally vest over a
five-year period, the pro forma disclosures are not indicative of future
amounts until Statement 123 is applied to all outstanding non-vested options.
The Company's pro forma information for 1999, 2000 and 2001 is as follows (in
thousands, except per share data):

1999 2000 2001
------ ------ ------

Net income:
As reported....................................... $6,686 $4,186 $7,261
Pro forma including the effect of options......... $6,125 $3,243 $6,408
Basic earnings per share:
As reported....................................... $ 0.57 $ 0.36 $ 0.62
Pro forma including the effect of options......... $ 0.53 $ 0.28 $ 0.55
Diluted earnings per share:
As reported....................................... $ 0.57 $ 0.36 $ 0.62
Pro forma including the effect of options......... $ 0.52 $ 0.28 $ 0.54

F-12

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of the Company's stock options activity and related information
for the years ended
December 31, 1999, 2000 and 2001 is as follows (in thousands, except per share
data):

1999 2000 2001
------------------ ------------------ ------------------
Weighted- Weighted- Weighted-
Average Average Average
Options Exercise Options Exercise Options Exercise
(000s) Price (000s) Price (000s) Price
------- --------- ------- --------- ------- ---------

Outstanding--beginning
of year................ 446 $13.529 511 $11.785 810 $13.126
Granted................. 115 7.125 394 13.954 169 12.128
Exercised............... -- -- (43) 7.801 (25) 12.554
Expired................. -- -- -- -- -- --
Forfeited............... (50) 16.543 (52) 10.656 (65) 14.498
------ ------- ------ ------- ------ -------
Outstanding--end of
year................... 511 $11.785 810 $13.126 889 $12.853
====== ======= ====== ======= ====== =======
Exercisable at end of
year................... 124 $13.485 171 $13.919 296 $13.114
====== ======= ====== ======= ====== =======
Weighted-average fair
value of options
granted during the
year................... $5.180 $9.517 $7.153
====== ====== ======

The 889,000 options outstanding at December 31, 2001 fall into two general
exercise-price ranges as follows:

Exercise Price Range
----------------------------------
$7.125 to $11.68 $15.00 to $19.625
---------------- -----------------

Options outstanding at December 31,
2001................................ 406,000 483,000
Weighted-average exercise price...... $9.29 $15.85
Weighted-average remaining
contractual life.................... 7.7 years 7.8 years
Options exercisable at December 31,
2001................................ 112,000 184,000
Weighted-average exercise price of
options exercisable at December 31,
2001................................ $7.61 $16.45

11. RETIREMENT PLAN

The Company has a defined contribution plan (the Plan) for all employees
that are qualified under Section 401(k) of the Internal Revenue Code.
Contributions to the Plan by the Company are based on the participants'
contributions, with an additional year-end discretionary contribution
determined by the board of directors. For the years ended December 31, 2001,
2000, and 1999, the Company contributed a total of $816,735, $710,751, and
$865,100, respectively.

12. CONTINGENT LIABILITIES

F-13

GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. SALES TO MAJOR CUSTOMERS

The Company's customer base is primarily concentrated in the oil and gas
industry. The Company is not dependent on any one customer, and the revenue
earned from each customer varies from year to year based on the contracts
awarded. Sales to customers comprising 10% or more of the Company's total
revenue are summarized as follows (in thousands):

2001 2000 1999
------ ------ -------

Customer A.......................................... $ -- $ -- $26,336
Customer B.......................................... 23,708 -- --
Customer C.......................................... -- 14,446 --
Customer D.......................................... -- -- 13,765

14. INTERNATIONAL SALES

The Company's fabricated structures are used worldwide by U.S. customers
operating abroad and by foreign customers. Sales of fabricated structures for
delivery outside of the United States accounted for 2%, 14%, and 20%, of the
Company's revenues during 2001, 2000, and 1999, respectively.

2001 2000 1999
------ ------ ------
(In Millions)

Location:
United States...................................... $111.8 $ 95.9 $ 96.5
International...................................... 1.9 16.2 23.7
------ ------ ------
Total................................................ $113.7 $112.1 $120.2
====== ====== ======

15. QUARTERLY OPERATING RESULTS (UNAUDITED)

A summary of quarterly results of operations for the years ended December
31, 2001 and 2000 were as follows (in thousands, except per share data):

March 31, June 30, September 30, December 31,
2001 2001 2001 2001
--------- -------- ------------- ------------

Revenue................. $27,558 $34,267 $30,496 $21,376
Gross Profit............ 2,283 5,637 4,670 2,777
Net income.............. 918 2,940 2,157 1,246
Basic earnings per
share.................. 0.08 0.25 0.18 0.11
Diluted earnings per
share.................. 0.08 0.25 0.18 0.11

March 31, June 30, September 30, December 31,
2000 2000 2000 2000
--------- -------- ------------- ------------

Revenue................. $31,741 $28,380 $27,544 $24,425
Gross Profit............ 2,548 2,450 2,385 3,059
Net income.............. 1,107 1,028 1,020 1,031
Basic earnings per
share.................. 0.10 0.09 0.09 0.09
Diluted earnings per
share.................. 0.09 0.09 0.09 0.09

Quarterly data may not sum to the full year data reported in the Company's
consolidated financial statements due to rounding.

F-14

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 21,
2002.

GULF ISLAND FABRICATION, INC.
(Registrant)

/s/ Kerry J. Chauvin
By: _________________________________
Kerry J. Chauvin
Chairman of the Board,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 21, 2002.

Signature Title
--------- -----

/s/ Kerry J. Chauvin Chairman of the Board, President and Chief Executive
______________________________________ Officer (Principal Executive Officer)
Kerry J. Chauvin

/s/ Joseph P. Gallagher, III Vice President--Finance, Chief Financial Officer,
______________________________________ and Treasurer (Principal Financial Officer)
Joseph P. Gallagher, III

/s/ Robin A. Seibert Controller and Chief Accounting Officer, (Principal
______________________________________ Accounting Officer)
Robin A. Seibert

/s/ Gregory J. Cotter Director
______________________________________
Gregory J. Cotter

/s/ Thomas E. Fairley Director
______________________________________
Thomas E. Fairley

/s/ Hugh J. Kelly Director
______________________________________
Hugh J. Kelly

/s/ Alden J. Laborde Director
______________________________________
Alden J. Laborde

/s/ John P. Laborde Director
______________________________________
John P. Laborde

/s/ Huey J. Wilson Director
______________________________________
Huey J. Wilson

S-1

GULF ISLAND FABRICATION, INC.

EXHIBIT INDEX

Sequentially
Exhibit Numbered
Number Pages
------- ------------

2.1 Stock Purchase Agreement with respect to Dolphin
Services, Inc. dated November 27, 1996. *

2.2 Stock Purchase Agreement with respect to Dolphin Steel
Sales, Inc. dated as of November 27, 1996. *

2.3 Stock Purchase Agreement with respect to Dolphin Sales
& Rentals, Inc. dated as of November 27, 1996. *

3.1 Amended and Restated Articles of Incorporation of the
Company. *

3.2 Bylaws of the Company as Amended and Restated through
March 10, 1999, incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998.

4.1 Specimen Common Stock Certificate. *

10.1 Form of Indemnity Agreement by and between the Company
and each of its directors and executive officers. *

10.2 Registration Rights Agreement between the Company and
Alden J. Laborde. *

10.3 Registration Rights Agreement between the Company and
Huey J. Wilson. *

10.4 The Company's Long-Term Incentive Plan. * +

10.5 Form of Stock Option Agreement under the Company's
Long-Term Incentive Plan, as amended, incorporated by
reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997. +

10.6 Form of Reimbursement Agreement. * +

10.7 Eighth Amended and Restated Revolving Credit Agreement
among the Company and Bank One NA, and Whitney National
Bank, dated as of January 1, 2000, incorporated by
reference to the Company's Quarterly Report on Form 10-
Q for the period ended March 31, 2000.

10.8 First Amendment to Eighth Amended and Restated
Revolving Credit Agreement among the Company and Bank
One NA, and Whitney National Bank dated as of September
21, 2000, incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the period ended
September 30, 2000.

10.9 Second Amendment to Eighth Amended and Restated
Revolving Credit Agreement among the Company and Bank
One, NA and Whitney National Bank, dated as of October
24, 2001, incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the period ended
September 30, 2001.

21.1 Subsidiaries of the Company--The Company's significant
subsidiaries, Gulf Island, L.L.C., Dolphin Services,
Inc. and Southport, Inc., are organized under Louisiana
law, are wholly owned subsidiaries and are included in
the Company's consolidated financial statements.

23.1 Consent of Ernst & Young LLP

99.1 Press release issued by the Company on November 8, 2001
announcing agreement to construct topside for Gunnison
project.

99.2 Press release issued by the Company on January 14, 2002
announcing date of earnings release and quarterly
conference call.

E-1

Sequentially
Exhibit Numbered
Number Pages
------- ------------

99.3 Press release issued by the Company on January 30, 2002
announcing its 2001 fourth quarter and year earnings.

- --------
+ Management Contract or Compensatory Plan.
* Incorporated by reference to the Company's Registration Statement on Form
S-1 filed with the Commission on February 14, 1997 (Registration Number
333-21863).

E-2