SECURITIESTable ANDof EXCHANGE COMMISSION Contents

INDEXTable of Contents

(AMOUNTSTable INof THOUSANDS EXCEPT SHARE DATA) Contents

(UNAUDITED)Table of Contents

TheTable accountingof policies followed by the Company in preparing interim condensed consolidated financial statements are similar to those described in the “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Contents

InTable conjunction with the SII acquisition, the Company established a pre-tax liability of $7.7 million for estimated severance and other costs associated with the involuntary termination of SII employees and the closing of an SII plant in early 2002. Through September 30, 2003, approximately $7.1 million of these costs have been paid. The remaining liability consists of $256,000 for remaining, scheduled severance payments, and $344,000 for legal costs related to the patent litigation. The Company anticipates $7.2 million of these estimated costs will have been paid by the end of 2003. Contents

9Table of Contents

ITEMTable 2.of MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONContents

NetTable costs related to the SII acquisition in 2003 were primarily related to closure costs of the Canadian plant closed in December 2002. Relocation costs of $215,000 in 2002 are related to costs of closing SII facilities in the U.S. and relocating inventory and equipment to locations in Houston, Texas, and Kingstree, South Carolina, certain legal and professional costs, and an accrual for an internal bonus program that was payable contingent upon the attainment of targeted synergy savings during 2002. Contents

InterestTable expense of $1,999,000 was 8.8% lower than last year primarily due to the reduction in the outstanding balance of long-term debt that is being re-paid in monthly installments. Average debt outstanding during the nine months was $5,363,000 lower than last year. Contents

OverviewTable of Contents

OnTable February 4, 2002, the Company entered into a 3-year credit agreement with Bank of America, N.A., as agent, to borrow up to $55,000,000 on a revolving basis. The amount of borrowings allowed under the credit agreement is determined by the amount of eligible receivable and inventory amounts that make up the borrowing base. Loans made pursuant to the credit agreement bear interest, at the Company’s option, at the bank’s prime rate or the reserve adjusted LIBOR plus an applicable margin based on the ratio, from time-to-time, of the Company’s EBITDA (as defined in the credit agreement) to certain “fixed charges”, including principal paid on funded debts, cash interest expense, dividends, stock repurchases and certain other distributions made, cash amount of taxes paid and net capital expenditures made from time-to-time. The applicable margin for prime rate loans may vary between 0% and .25% per annum, and the applicable margin for LIBOR based loans may vary between 2% and 2.75% per annum. Fees will be payable from time-to-time with respect to letters of credit issued pursuant to the credit agreement at a rate equal to the margin payable with respect to LIBOR based revolving loans. An annual commitment fee of 3/8% is payable on any unused portion of the facility. The terms of the credit agreement place various restrictions on the Company’s ability to pay dividends or make certain other payments, incur additional debt, consolidate or merge into another Contents

OtherTable of Contents

* * *Table of Contents

PARTTable IIof – OTHER INFORMATION Contents

~~Washington,~~SECURITIES D.AND C.EXCHANGE ~~20549~~COMMISSION

~~FORM~~Washington, ~~10-Q~~D. C. 20549

xFORM ~~QUARTERLY~~10-Q ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~x ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~September~~SECTION ~~30,~~13 ~~2003~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨For ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~March 1331, OR2004 ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~¨ ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~File~~the ~~Number~~transition ~~1-9307~~period from to

~~GUNDLE/SLT~~Commission ~~ENVIRONMENTAL,~~File ~~INC.~~Number 1-9307

~~(Exact~~GUNDLE/SLT ~~name~~ENVIRONMENTAL, ofINC. ~~Registrant as specified in its Charter)~~

Delaware		22-2731074
(State or other jurisdiction ofincorporation or organization)		(IRS EmployerIdentification No.)
19103 Gundle Road Houston, Texas		77073
(Address of principal executive offices)		(Zip Code)

(Exact name of Registrant as specified in its Charter)

(Registrant’s telephone number, including area code) (281) 443-8564


Delaware		22-2731074
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

19103 Gundle Road Houston, Texas		77073
(Address of principal executive offices)		(Zip Code)

~~Indicate by check mark whether the Registrant~~ (~~1) has filed all reports required to be filed by Section 13 or 15(d) of the~~Registrant’s ~~Securities~~telephone ~~Exchange~~number, ~~Act~~including ofarea ~~1934 during the preceding 12 months (or for such shorter period that the Registrant is required to file such reports~~code), ~~and~~ (2281) ~~has~~443-8564 ~~been subject to such filing requirements for the past 90 days. Yes x No ¨~~

Indicate by check mark whether the Registrant is(1) anhas ~~accelerated~~filed ~~filer~~all ~~(as defined~~reports inrequired ~~rule~~to ~~12b-2~~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 is required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate ~~the~~by ~~number~~check ofmark ~~shares~~whether ~~outstanding of each of~~ the ~~issuer’s~~ ~~classes~~registrant ofis ~~common~~an ~~stock,~~accelerated filer as ofdefined ~~the~~in ~~close~~Rule 12b-2 of the ~~latest~~Exchange ~~practicable date~~Act. Yes x No ¨

Class		Outstanding at October 21, 2003
Common stock, par value $.01		11,526,908

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the latest practicable date.

GUNDLE/SLT ENVIRONMENTAL, INC.


Class		Outstanding at April 16, 2003
Common stock, par value $.01		11,546,438

		PAGE
PART I – FINANCIAL INFORMATION
ITEM 1:	Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2003 (Unaudited) and December 31, 2002		3
Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2003 and 2002 (Unaudited)		4
Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2003 and 2002 (Unaudited)		5
Notes to Condensed Consolidated Financial Statements		6
ITEM 2:
Management’s Discussion and Analysis of Results of Operations and Financial Condition		11
ITEM 3:
Quantitative and Qualitative Disclosures About Market Risk		18
ITEM 4:
Controls and Procedures		18
PART II – OTHER INFORMATION
ITEM 6:	Exhibits and Reports on Form 8-K	18
Certifications

GUNDLE/SLT ENVIRONMENTAL, INC.

2 INDEX

GUNDLE/SLT ENVIRONMENTAL, INC.


		PAGE
PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2004 (Unaudited) and December 31, 2003		3

Consolidated Statements of Income (Loss) For the Three Months Ended March 31, 2004 and 2003 (Unaudited)		4

Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2004 and 2003 (Unaudited)		5

Notes to Condensed Consolidated Financial Statements		6

ITEM 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition		9

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk		14

ITEM 4: Controls and Procedures		14

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings		15

ITEM 6: Exhibits and Reports on Form 8-K		17

Certifications		19

~~CONDENSED~~2 ~~CONSOLIDATED BALANCE SHEETS~~

	SEPTEMBER 30,2003			DECEMBER 31,2002
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS	$	24,808		$	42,264
ACCOUNTS RECEIVABLE, NET		75,417			55,715
CONTRACTS IN PROGRESS		4,471			2,043
INVENTORY		27,635			27,352
DEFERRED INCOME TAXES		7,559			9,366
PREPAID EXPENSES AND OTHER		2,425			5,260
TOTAL CURRENT ASSETS		142,315			142,000
PROPERTY, PLANT AND EQUIPMENT, NET		33,193			33,011
EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET		23,941			22,529
DEFERRED INCOME TAXES		1,002			545
RESTRICTED CASH		18,056			0
OTHER ASSETS		930			4,225
	$	219,437		$	202,310
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	$	42,180		$	37,920
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS		2,543			5,173
SHORT-TERM DEBT		777			0
CURRENT PORTION OF LONG-TERM DEBT		4,802			4,690
INCOME TAXES PAYABLE		2,511			1,952
TOTAL CURRENT LIABILITIES		52,813			49,735
LONG-TERM DEBT		13,079			16,912
DEFERRED INCOME TAXES		67			252
OTHER LIABILITIES		1,703			1,366
MINORITY INTEREST		1,240			1,614
STOCKHOLDERS’ EQUITY:
PREFERRED STOCK, $1.00 PAR VALUE, 1,000,000 SHARES AUTHORIZED, NO SHARES ISSUED OR OUTSTANDING		—			—
COMMON STOCK, $.01 PAR VALUE, 30,000,000 SHARES AUTHORIZED, 18,593,169 AND 18,437,156 SHARES ISSUED		186			184
ADDITIONAL PAID-IN CAPITAL		72,118			70,763
RETAINED EARNINGS		115,320			99,149
ACCUMULATED OTHER COMPREHENSIVE INCOME		89			(487	)
		187,713			169,609
TREASURY STOCK AT COST, 7,066,261 and 7,066,261 SHARES		(37,178	)		(37,178	)
TOTAL STOCKHOLDERS’ EQUITY		150,535			132,431
	$	219,437		$	202,310

GUNDLE/SLT ENVIRONMENTAL, INC.

~~THE ACCOMPANYING NOTES~~ ~~ARE~~CONDENSED ANCONSOLIDATED ~~INTEGRAL~~BALANCE ~~PART~~SHEETS OF

~~THESE~~(AMOUNTS ~~CONDENSED~~IN ~~CONSOLIDATED~~THOUSANDS ~~FINANCIAL~~EXCEPT ~~STATEMENTS.~~SHARE DATA)


	MARCH 31, 2004			DECEMBER 31, 2003
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS	$	21,034		$	47,899
ACCOUNTS RECEIVABLE, NET		35,290			46,560
CONTRACTS IN PROGRESS		2,790			711
INVENTORY		42,645			33,231
DEFERRED INCOME TAXES		7,092			5,587
PREPAID EXPENSES AND OTHER		4,531			604

TOTAL CURRENT ASSETS		113,382			134,592

PROPERTY, PLANT AND EQUIPMENT, NET		32,681			33,131
EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET		23,384			23,365
DEFERRED INCOME TAXES		2,072			2,127
RESTRICTED CASH		18,056			18,056
OTHER ASSETS		2,452			2,232

	$	192,027		$	213,503

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	$	32,388		$	33,013
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS		2,239			2,781
CURRENT PORTION OF LONG-TERM DEBT		0			4,914
SHORT TERM DEBT		87			0
INCOME TAXES PAYABLE		464			1,432

TOTAL CURRENT LIABILITIES		35,178			42,140

LONG-TERM DEBT		0			11,808
OTHER LIABILITIES		1,404			1,189
MINORITY INTEREST		1,219			1,209

STOCKHOLDERS’ EQUITY:
PREFERRED STOCK, $1.00 PAR VALUE, 1,000,000 SHARES AUTHORIZED, NO SHARES ISSUED OR OUTSTANDING		—			—
COMMON STOCK, $.01 PAR VALUE, 30,000,000 SHARES AUTHORIZED, 18,635,699 AND 18,619,668 SHARES ISSUED		187			186
ADDITIONAL PAID-IN CAPITAL		72,907			72,756
RETAINED EARNINGS		116,896			119,920
ACCUMULATED OTHER COMPREHENSIVE INCOME		1,811			1,870

		191,801			194,732
TREASURY STOCK AT COST, 7,089,261 AND 7,089,261 SHARES		(37,575	)		(37,575	)

TOTAL STOCKHOLDERS’ EQUITY		154,226			157,157

	$	192,027		$	213,503

THE ACCOMPANYING NOTES ~~GUNDLE/SLT~~ARE ~~ENVIRONMENTAL,~~AN ~~INC.~~INTEGRAL PART OF

~~CONSOLIDATED~~THESE ~~STATEMENTS~~CONDENSED OFCONSOLIDATED ~~INCOME~~FINANCIAL STATEMENTS.

~~(AMOUNTS~~3 ~~IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)~~

	THREE MONTHSENDEDSEPTEMBER 30,						NINE MONTHSENDEDSEPTEMBER 30,
	2003			2002			2003			2002
SALES AND OPERATING REVENUE	$	92,650		$	93,957		$	218,650		$	214,619
COST OF PRODUCTS & SERVICES		71,617			72,730			173,176			167,787
GROSS PROFIT		21,033			21,227			45,474			46,832
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		6,565			7,182			21,281			22,375
COSTS RELATED TO THE SERROT ACQUISITION, NET		(98	)		215			(8	)		2,221
OPERATING INCOME		14,566			13,830			24,201			22,236
OTHER (INCOME) EXPENSES:
INTEREST EXPENSE		641			751			1,999			2,191
INTEREST INCOME		(98	)		(249	)		(349	)		(383	)
(GAIN)/LOSS ON SALE OF ASSETS		(3,193	)		(166	)		(3,777	)		(181	)
LOSS ON EXTINGUISHMENT OF DEBT		0			(26	)		0			1,278
OTHER (INCOME) EXPENSE, NET		(85	)		(1,102	)		(498	)		(860	)
MINORITY INTEREST		99			53			165			339
INCOME BEFORE INCOME TAXES		17,202			14,569			26,661			19,852
INCOME TAX PROVISION		6,022			5,708			9,332			7,942
NET INCOME BEFORE EXTRAORDINARY ITEM		11,180			8,861			17,329			11,910
EXTRAORDINARY GAIN - SERROT ACQUISITION		0			4,125			0			28,424
NET INCOME	$	11,180		$	12,986		$	17,329		$	40,334
BASIC EARNINGS PER SHARE
NET INCOME BEFORE EXTRAORDINARY ITEM		0.97			0.79			1.51			1.07
EXTRAORDINARY ITEM		0.00			0.36			0.00			2.55
NET INCOME PER SHARE	$	0.97		$	1.15		$	1.51		$	3.62
DILUTED EARNINGS PER SHARE
NET INCOME BEFORE EXTRAORDINARY ITEM		0.92			0.76			1.44			1.03
EXTRAORDINARY ITEM		0.00			0.35			0.00			2.45
NET INCOME PER SHARE	$	0.92		$	1.11		$	1.44		$	3.48
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC		11,521			11,247			11,481			11,154
DILUTED		12,149			11,721			12,061			11,585

GUNDLE/SLT ENVIRONMENTAL, INC.

~~THE ACCOMPANYING NOTES~~ ~~ARE~~CONSOLIDATED ANSTATEMENTS ~~INTEGRAL~~OF ~~PART~~INCOME OF(LOSS)

~~THESE~~(AMOUNTS ~~CONDENSED~~IN ~~CONSOLIDATED~~THOUSANDS ~~FINANCIAL~~EXCEPT ~~STATEMENTS.~~EARNINGS PER SHARE DATA)

4(UNAUDITED)

GUNDLE/SLT ENVIRONMENTAL, INC.


	THREE MONTHS ENDED MARCH 31
	2004			2003
SALES AND OPERATING REVENUE	$	35,649		$	39,119
COST OF PRODUCTS & SERVICES		31,156			34,269

GROSS PROFIT		4,493			4,850

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		7,908			7,641
EXPENSES RELATED TO THE SERROT ACQUISITION		0			73

OPERATING LOSS		(3,415	)		(2,864	)

OTHER (INCOME) EXPENSES:
INTEREST EXPENSE		1,519			644
INTEREST INCOME		(137	)		(102	)
FOREIGN EXCHANGE (GAIN) LOSS		215			(258	)
MINORITY INTEREST		11			(50	)
OTHER (INCOME) EXPENSE, NET		(144	)		(454	)

LOSS BEFORE INCOME TAXES		(4,879	)		(2,644	)

INCOME TAX BENEFIT		(1,854	)		(926	)

NET LOSS	$	(3,025	)	$	(1,718	)

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.26	)	$	(0.15	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC AND DILUTED		11,539			11,458

~~CONSOLIDATED~~THE ~~STATEMENTS~~ACCOMPANYING OFNOTES ARE ~~CASH~~AN ~~FLOWS~~INTEGRAL PART OF

~~(AMOUNTS~~THESE INCONDENSED ~~THOUSANDS)~~CONSOLIDATED FINANCIAL STATEMENTS.

~~(UNAUDITED)~~4

	NINE MONTHSENDEDSEPTEMBER 30,
	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	$	17,329		$	40,334
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION		6,550			5,862
AMORTIZATION		509			525
DEFERRED INCOME TAXES		1,089			4,584
MINORITY INTEREST		165			339
GAIN ON SALE OF ASSETS		(3,777	)		(181	)
GAIN ON PURCHASE OF SERROT		0			(28,424	)
GAIN ON SALE OF JOINT VENTURE INTEREST		0			(51	)
DEFERRED GAIN ON HEDGE		0			(290	)
CHANGE IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECTS FROM ACQUISITIONS:
ACCOUNTS RECEIVABLE		(16,435	)		(10,907	)
CONTRACTS IN PROGRESS		(2,351	)		(2,304	)
INVENTORY		1,875			1,692
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES		5,799			3,616
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS		(2,702	)		412
INCOME TAXES PAYABLE		662			(1,035	)
OTHER ASSETS AND LIABILITIES		(519	)		810
RESTRICTED CASH		(18,056	)		0
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(9,862	)		14,982
CASH FLOWS FROM INVESTING ACTIVITIES:
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT		(5,016	)		(6,420	)
PROCEEDS FROM SALE OF EQUIPMENT		3,858			520
CASH PAID FOR ACQUISITIONS, NET OF CASH ACQUIRED		(3,792	)		1,031
SALE OF JOINT VENTURE INTEREST, NET OF CASH SOLD		0			(957	)
OTHER		0			182
NET CASH USED IN INVESTING ACTIVITIES		(4,950	)		(5,644	)
CASH FLOWS FROM FINANCING ACTIVITIES:
REVOLVER		683			(5,000	)
PAYMENT OF FINANCING FEES		0			(2,037	)
PROCEEDS FROM NEW DEBT		0			25,338
PROCEEDS FROM THE EXERCISE OF STOCK OPTIONS AND PURCHASES UNDER THE EMPLOYEE STOCK PURCHASE PLAN		555			1053
RETIREMENT OF LONG-TERM DEBT		(3,690	)		(23,113	)
NET CASH USED IN FINANCING ACTIVITIES		(2,452	)		(3,759	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(192	)		(57	)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(17,456	)		5,522
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		42,264			16,163
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	24,808		$	21,685

~~THE~~GUNDLE/SLT ~~ACCOMPANYING~~ENVIRONMENTAL, ~~NOTES ARE~~INC. ~~AN INTEGRAL PART OF~~

~~THESE~~ CONSOLIDATED ~~CONDENSED~~STATEMENTS ~~CONSOLIDATED~~OF ~~FINANCIAL~~CASH ~~STATEMENTS.~~FLOWS

5(AMOUNTS IN THOUSANDS)

~~GUNDLE/SLT~~(UNAUDITED) ~~ENVIRONMENTAL, INC.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	THREE MONTHS ENDED MARCH 31
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS	$	(3,025	)	$	(1,718	)
ADJUSTMENTS TO RECONCILE NET LOSS TO CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION		1,920			2,192
AMORTIZATION		763			170
DEFERRED INCOME TAXES		(2,184	)		929
MINORITY INTEREST		11			(50	)
GAIN ON SALE OF ASSETS		(84	)		(361	)
CHANGE IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECTS FROM ACQUISITIONS:
ACCOUNTS RECEIVABLE		11,394			16,469
CONTRACTS IN PROGRESS		(2,082	)		(1,195	)
INVENTORY		(9,624	)		(8,036	)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES		(289	)		(149	)
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS		(545	)		(1,428	)
INCOME TAXES PAYABLE		(887	)		(2,295	)
OTHER ASSETS AND LIABILITIES		(4,313	)		(7,334	)
RESTRICTED CASH		0			(14,704	)

NET CASH USED IN OPERATING ACTIVITIES		(8,945	)		(17,510	)

CASH FLOWS FROM INVESTING ACTIVITIES:
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT		(1,544	)		(1,474	)
PROCEEDS FROM SALE OF EQUIPMENT		95			361
CASH PAID FOR ACQUISITIONS, NET OF CASH ACQUIRED		0			(3,747	)

NET CASH USED IN INVESTING ACTIVITIES		(1,449	)		(4,860	)

CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM SHORT TERM DEBT		87			0
PROCEEDS FROM THE EXERCISE OF STOCK OPTIONS AND PURCHASES UNDER THE EMPLOYEE STOCK PURCHASE PLAN		100			252
RETIREMENT OF LONG-TERM DEBT		(16,722	)		(1,181	)

NET CASH USED IN FINANCING ACTIVITIES		(16,535	)		(929	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		64			(151	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(26,865	)		(23,450	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		47,899			42,264

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	21,034		$	18,814

~~(1)~~THE ~~Basis~~ACCOMPANYING ofNOTES ARE ~~Presentation~~AN –INTEGRAL PART OF

~~General~~THESE –CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

~~The~~5 accompanying unaudited, condensed consolidated financial statements have been prepared by the Registrant (“Gundle/SLT Environmental, Inc.” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such financial statements for the periods indicated. Certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted in this Form 10-Q pursuant to Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission. However, the Company believes that the disclosures herein are adequate to make the information presented not be misleading. The results for the nine months ended September 30, 2003, are not necessarily indicative of future operating results. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

~~Organization~~GUNDLE/SLT –ENVIRONMENTAL, INC.

~~Gundle/SLT Environmental, Inc., a Delaware corporation, through GSE Lining~~ ~~Technology,~~NOTES ~~Inc.~~TO ~~and~~CONDENSED ~~the~~CONSOLIDATED ~~Company’s~~FINANCIAL ~~other~~STATEMENTS ~~operating subsidiaries, is primarily engaged in the manufacture, sale and installation of geosynthetic lining systems.~~

~~Stock-Based~~(1) ~~Compensation~~Basis –of Presentation -

InGeneral ~~accordance with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock~~-~~based Compensation,~~ the Company has elected to continue to follow the Accounting Principles Board Opinion (“APB”) 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock-based compensation plans. Under APB 25, if the exercise price of employee stock options equals or exceeds the fair value of the underlying stock on the date of grant, no compensation expense is recognized.

6The accompanying unaudited, condensed consolidated financial statements have been prepared by the Registrant (“Gundle/SLT Environmental, Inc.” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of such financial statements for the periods indicated. Certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted in this Form 10-Q pursuant to Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission. However, the Company believes that the disclosures herein are adequate to make the information presented not misleading. The results for the three months ended March 31, 2004, are not necessarily indicative of future operating results. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

The ~~following~~accounting ~~table~~policies ~~illustrates~~followed by the ~~effect~~Company onin ~~net~~preparing ~~income~~interim ~~and~~condensed ~~earnings~~consolidated ~~per~~financial ~~share~~statements asare ifsimilar ~~the~~to ~~fair~~those ~~value method,~~described in ~~accordance~~the “Notes ~~with~~to ~~Statement~~Consolidated of Financial ~~Accounting~~Statements” ~~Standards~~in ~~No.~~the ~~123,~~Company’s ~~had~~Annual ~~been~~Report ~~applied~~on toForm ~~all~~10-K ~~outstanding~~for ~~and~~the ~~unvested~~year ~~awards~~ended inDecember ~~each~~31, ~~period~~2003.

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2003		2002		2003		2002
Net income applicable to common stockholders:
As reported	$	11,180	$	12,986	$	17,329	$	40,334
Total stock-based employee compensation expense under fair value based method for all awards, net of tax		192		80		584		251
Pro forma net income applicable to common stockholders	$	10,988	$	12,906	$	16,745	$	40,083
Basic earnings per share:
As reported	$	.97	$	1.15	$	1.51	$	3.62
Pro forma	$	.95	$	1.15	$	1.46	$	3.59
Diluted earnings per share:
As reported	$	.92	$	1.11	$	1.44	$	3.48
Pro forma	$	.90	$	1.10	$	1.39	$	3.46

Organization -

~~Reclassifications~~Gundle/SLT –Environmental, Inc., a Delaware corporation, through GSE Lining Technology, Inc. and the Company’s other operating subsidiaries, is primarily engaged in the manufacture, sale and installation of geosynthetic lining systems.

~~The~~Stock-Based ~~accompanying consolidated~~Compensation ~~2002~~- ~~financial statements contain certain reclassifications to conform to the presentation used in 2003.~~

In accordance with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-based Compensation, the Company has elected to continue to follow the Accounting Principles Board Opinion (2“APB”) ~~Inventory~~25, –Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock-based compensation plans. Under APB 25, if the exercise price of employee stock options equals or exceeds the fair value of the underlying stock on the date of grant, no compensation expense is recognized.

~~Inventory~~6 is stated at the lower of cost or market. Cost, which includes material, labor and overhead, is determined by the weighted average cost method, which approximates the first-in, first-out cost method. Inventory consisted of the following (000’s):

	September 30,2003		December 31,2002
Raw materials and supplies	$	11,800	$	7,588
Finished goods		15,835		19,764
	$	27,635	$	27,352

The following table illustrates the effect on net income (3loss) ~~Income~~and ~~Taxes~~earnings –(loss) per share as if the fair value method, in accordance with Statement of Financial Accounting Standards No. 123, had been applied to all outstanding and unvested awards in each period.

The Company’s provision for income taxes is recorded at the statutory rates adjusted for the effect of any permanent differences. The Company has a tax holiday in Thailand through 2003 and a 50% reduced tax rate for 2004 through 2008.


	Three Months Ended
	March 31, 2004			March 31, 2003
Net income (loss) applicable to common stockholders
As reported	$	(3,025	)	$	(1,718	)
Total stock-based employee compensation expense under fair value based method for all awards, net of tax		180			217

Pro forma net income (loss) applicable to common stockholders	$	(3,205	)	$	(1,935	)

Basic and diluted earnings (loss) per share
As reported	$	(.26	)	$	(.15	)
Pro forma	$	(.28	)	$	(.17	)

7Reclassifications -

~~(4)~~The ~~Equity~~accompanying –consolidated 2003 financial statements contain certain reclassifications to conform to the presentation used in 2004.

On(2) ~~September~~Inventory ~~18,~~- 1998, the Company’s board of directors adopted a stock repurchase plan under which the Company was authorized to repurchase up to 1,000,000 shares of its outstanding common stock in open market transactions depending on market conditions. This amount was increased to 3,000,000 shares as of December 31, 2000. As of September 30, 2003, stockholders’ equity included 1,380,357 shares repurchased under this program. All of these transactions were funded with the Company’s available cash. At September 30, 2003, the Company had 11,526,908 shares outstanding.

~~(5)~~Inventory ~~Other~~is ~~Comprehensive~~stated ~~Income~~at –the lower of cost or market. Cost, which includes material, labor and overhead, is determined by the weighted average cost method, which approximates the first in, first out cost method. Inventory consisted of the following (000’s):

During the third quarter of 2003 and 2002, other comprehensive income (losses), representing foreign currency translation adjustments, amounted to $(2,000) and $(285,000), respectively. For the nine months ended September 30, 2003, and 2002, other comprehensive income, amounted to $576,000 and $1,381,000 respectively. The 2003 income included a cumulative translation loss of $1,882,000 related to the Company’s January 2003 purchase of its joint venture partner’s 50% interest in its Egyptian joint venture formed in 1996. This cumulative adjustment resulted from a decline in the Egyptian Pound exchange rate during the period the joint venture investment was accounted for under the equity method of accounting.


	March 31, 2004		December 31, 2003
Raw materials and supplies	$	8,586	$	6,197
Finished goods		34,059		27,034

	$	42,645	$	33,231

(63) Income ~~Business~~Taxes ~~Combinations~~- –

~~Serrot~~The ~~Acquisition~~Company’s ~~2002~~provision for income taxes is recorded at the statutory rates adjusted for the effect of any permanent differences. The Company has various tax holidays in Thailand through 2014.

On7 February 4, 2002, the Company completed the purchase of all the outstanding stock of Serrot International, Inc. (SII) from Waste Management Holdings, Inc. at a purchase cost of $12.0 million, which included $338,000 of debt assumed. The total cost of the acquisition was $16.4 million, which includes the purchase price and after tax costs associated with severances and closing an SII plant. During 2002, the Company recorded the transaction using the purchase method of accounting resulting in the recognition of a $26.0 million extraordinary gain representing the excess fair value of the assets acquired over the purchase price after its allocation to SII’s long-lived assets net of their associated tax benefits. The $28.4 million recognized as an extraordinary gain for the nine months ended September 30, 2002, is different from the extraordinary gain for the year ended December 31, 2002, due to purchase accounting adjustments recorded during the fourth quarter of 2002.

8(4) Warranty Reserve -

~~Unaudited~~The ~~pro~~Company ~~forma,~~accrues ~~combined~~a ~~operating~~warranty ~~results~~reserve ofbased ~~the~~on ~~Company~~estimates ~~and~~for ~~SII~~warranty ~~assuming~~claims. ~~the~~This ~~merger~~estimate ~~was~~is ~~completed~~based on historical claims asand ofcurrent ~~January~~business 1,activities ~~2002~~and is ~~summarized~~accrued as ~~follows~~a cost of sales in the period such business activity occurs. The table below reflects a summary of activity of the Company’s continuing operations for warranty obligations through March 31, 2004 (in thousands):

	Nine Months EndedSeptember 30, 2002
Balance at December 31, 2003	$	3,618
Sales and Operating Revenue	$	223,302
Application/reduction of warranty obligations		(129	)
Net Income Before Extraordinary Gain	$	10,980
Provision/addition of warranty obligations		34
Basic Income per Share	$	.98
Balance at March 31, 2004	$	3,523
Diluted Income per Share	$	.95

~~Egyptian~~(5) Equity ~~Acquisition~~- ~~2003~~

InOn ~~January~~September ~~2003~~18, ~~the Company~~1998, ~~completed~~ the ~~acquisition~~Company’s board of directors ~~the~~adopted a stock ofrepurchase ~~Hyma/GSE~~plan ~~Manufacturing~~under ~~Co.~~which ~~S.A.E.,~~the ~~and~~Company ~~Hyma/GSE~~was ~~Lining~~authorized ~~Technology~~to ~~Co.~~repurchase ~~S.A.E.~~up ~~held~~to by1,000,000 shares of its ~~joint~~outstanding ~~venture~~common ~~partners~~stock in ~~Cairo,~~open ~~Egypt,~~market ~~for~~transactions $4depending ~~million~~on market conditions. ~~The~~This ~~Company~~amount ~~recorded~~was $1increased to 3,~~601~~000,000 shares as of ~~goodwill~~December ~~with~~31, ~~the acquisition~~2000. InAs ~~addition,~~of ~~the~~March ~~Company~~31, ~~agreed~~2004, tostockholders’ ~~purchase~~equity aincluded ~~blown~~1,404,357 ~~film~~shares ~~round~~repurchased ~~die~~under ~~extrusion~~this ~~manufacturing~~program. ~~line~~All ~~currently~~of ~~leased~~these totransactions ~~Hyma/GSE~~were ~~Manufacturing~~funded ~~Co.~~with ~~S.A.E., by~~ the ~~end~~Company’s ofavailable ~~2003,~~cash. atAt aMarch ~~price~~31, ~~of $950~~2004,~~000,~~ ~~and to relocate~~ the ~~manufacturing~~Company ~~equipment~~had ~~within~~11,546,438 24shares ~~months~~outstanding.

(76) ~~Plant~~Other Comprehensive ~~Closing~~Income –-

InDuring ~~September 2002,~~ the ~~Company~~first ~~committed~~quarter ~~to a restructuring plan involving the closure~~ of ~~its~~2004 ~~Calgary plant~~ and 2003, ~~relocation~~other ofcomprehensive ~~its main production line to Houston~~losses, ~~Texas.~~representing ~~The~~foreign ~~Company~~currency ~~established~~translation aadjustments, ~~liability~~amounted ofto $~~700~~(59,000) ~~for~~and ~~the costs of closure~~$(607,000), ~~primarily~~respectively. ~~the~~The ~~estimated~~2003 ~~severance-related~~loss ~~costs~~included ~~associated~~a ~~with~~cumulative ~~the~~translation ~~involuntary~~adjustment ~~termination~~ of 41$(1,882,000) ~~employees~~related ~~pursuant~~ to ~~this~~the ~~plan.~~Company’s January ~~The~~2003 ~~charge~~purchase ~~was~~of ~~reported~~its asjoint ~~a relocation~~venture ~~cost in the Company~~partner’s ~~2002~~50% ~~consolidated~~interest ~~statement~~in ofits ~~operations.~~Egyptian ~~Through~~joint ~~September~~venture ~~30,~~formed ~~2003,~~in ~~approximately~~1996. ~~$630,000~~This ofcumulative ~~these~~adjustment ~~costs~~resulted ~~had~~from ~~been~~a ~~paid.~~decline ~~The~~in ~~Company~~the ~~anticipates~~Egyptian ~~that~~Pound ~~substantially~~exchange ~~all~~rate ~~amounts~~during ~~will~~the beperiod ~~paid by~~ the ~~end~~joint ~~of 2003.~~venture ~~The~~investment ~~Company~~was ~~sold~~accounted ~~the~~for ~~facility~~under inthe ~~September~~equity ~~2003~~method ~~for~~of ~~$2,300,000~~accounting.

(87) ~~Refinancing~~Business –Combinations -

OnEgyptian ~~February~~Acquisition 4,2003 2002, the Company entered into a note agreement with one lender in the amount of $25,000,000 and entered into a 3-year credit agreement with Bank of America, N.A., as agent, to borrow up to $55,000,000 on a revolving basis. Simultaneously the Company paid off its $20,000,000, 7.34% notes. The refinancing resulted in a loss of $1,278,000 before income taxes which has been reported as Loss on Extinguishment of Debt for the nine months ended September 30, 2002.

~~(9)~~In ~~New~~January ~~Accounting~~2003, ~~Pronouncements~~the Company –completed the acquisition of the stock of Hyma/GSE Manufacturing Co. S.A.E., and Hyma/GSE Lining Technology Co. S.A.E. held by its joint venture partners in Cairo, Egypt, for $4 million. The Company recorded $581,725 of goodwill with

In8 April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections. This statement eliminates the requirement under SFAS 4 to aggregate and classify all gains and losses from extinguishment of debt as an extraordinary item, net of related income tax effect. This statement also amends SFAS 13 to require certain

~~lease modifications with economic effects similar to sale-leaseback transactions to be accounted for in~~ the ~~same manner as sale-leaseback transactions~~acquisition. In addition, ~~SFAS~~the ~~145~~Company ~~requires~~agreed ~~reclassification~~to ofpurchase ~~gains~~a ~~and~~blown ~~losses~~film inround ~~all~~die ~~prior~~extrusion ~~periods~~manufacturing ~~presented~~line currently inleased ~~comparative financial statements related~~ to ~~debt~~Hyma/GSE ~~extinguishment~~Manufacturing ~~that~~Co. doS.A.E., ~~not~~by ~~meet~~ the ~~criteria~~end ~~for~~of ~~extraordinary~~2003, ~~items~~at ina ~~APB~~price ~~30.~~of ~~The statement is effective for fiscal years beginning after May 15~~$950, ~~2002~~000, ~~with~~and ~~early~~to ~~adoption~~relocate ~~encouraged.~~the ~~The~~manufacturing ~~Company~~equipment ~~adopted~~within ~~SFAS~~24 ~~145~~months ~~effective~~of ~~January~~such ~~1, 2003~~purchase. The ~~adoption~~acquisition ofdate ~~the statement resulted in the reclassification~~ of the ~~2002~~blown ~~extraordinary~~film ~~loss~~round ~~on extinguishment~~line ofhas ~~debt~~been ofextended ~~$1,278,000 from extraordinary loss~~ to the ~~loss~~end ~~on extinguishment~~ of ~~debt~~April 2004.

In July 2002, the FASB issued SFAS 146, Obligations Associated with Disposal Activities, which is effective for disposal activities initiated after December 31, 2002, with early application encouraged. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (~~including Certain Costs in a Restructuring~~8). ~~Under~~New ~~this statement, a liability for a cost associated with an exit or disposal activity would be recognized and measured at~~Accounting ~~its~~Pronouncements ~~fair~~– value when it is incurred rather than at the date of commitment to an exit plan. Also, severance pay would be recognized over time rather than up front provided the benefit arrangement requires employees to render service beyond a minimum retention period, which would be based on the legal notification period, or if there is no such requirement, 60 days, thereby allowing a liability to be recorded over the employees’ future service period. The Company adopted SFAS 146 effective with disposal activities initiated after December 31, 2002. The adoption of this statement has not had a material effect on the Company’s consolidated financial position or results of operations.

In ~~November~~January ~~2002~~2003, ~~the~~ FASB issued Interpretation No. 4546, ~~Guarantor’s Accounting~~“Consolidation ~~and~~of ~~Disclosure~~Variable ~~Requirements~~Interest ~~for~~Entities” ~~Guarantees,~~(FIN ~~Including~~46) ~~Indirect~~which ~~Guarantees~~requires ofthe ~~Indebtedness~~consolidation of ~~Others.~~variable ~~The~~interest ~~Interpretation~~entities, ~~requires~~as ~~certain~~defined. ~~guarantees~~FIN to46, beas ~~recorded~~revised, atwas ~~fair~~applicable ~~value~~to ~~and~~financial ~~also~~statements ~~requires~~of acompanies ~~guarantor~~that tohave interests ~~make~~in ~~certain~~“special ~~disclosures regarding~~purpose ~~guarantees.~~entities”, ~~The~~as ~~Interpretation’s~~defined, ~~initial~~during ~~recognition~~2003. ~~and~~FIN ~~initial~~46 ~~measurement~~is ~~provisions~~applicable ~~are~~to ~~applicable~~the onfinancial astatements ~~prospective~~of ~~basis~~companies tothat ~~guarantees~~have ~~issued~~interest orin ~~modified~~all ~~after~~other ~~December~~types 31of entities, ~~2002.~~in ~~The~~the ~~adoption~~first quarter of ~~this~~2004. ~~Interpretation~~The ~~has~~Company did not ~~had~~have aany ~~material~~variable ~~impact~~interest onentities ~~the~~that ~~Company’s~~were required to be consolidated ~~financial~~as ~~statements~~a orresult ~~disclosures~~of FIN 46.

In ITEM ~~December 2002, the FASB issued SFAS No~~2. ~~148,~~MANAGEMENT’S ~~Accounting~~DISCUSSION ~~for~~AND ~~Stock-Based~~ANALYSIS ~~Compensation~~OF –RESULTS ~~Transition~~OF ~~and~~OPERATIONS ~~Disclosure,~~AND ~~which~~FINANCIAL isCONDITION effective for fiscal years ended after December 15, 2002. SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation to permit two additional transition methods for a voluntary change to the fair value method of accounting for stock-based employee compensation from the intrinsic method under APB 25, Accounting for Stock Issued to Employees, and does not permit the prospective method of transition

10PROPOSED MERGER

~~under~~On ~~SFAS~~December ~~123~~31, 2003, the Company entered into a Plan and Agreement of Merger with GEO Holdings Corp. Inand ~~addition~~its wholly-owned subsidiary, ~~SFAS~~GEO NoSub Corp. ~~148~~GEO Holdings ~~amends~~Corp. ~~the~~and ~~disclosure~~GEO ~~requirements~~Sub ofCorp. ~~SFAS~~are ~~123~~both toDelaware ~~require~~corporations ~~prominent~~affiliated ~~disclosures~~with inCode ~~both~~Hennessy ~~annual~~& Simmons IV LP (“CHS IV”) and ~~interim financial~~were ~~statements~~organized ~~concerning~~to effect the ~~method~~merger. ofExcept ~~accounting~~as ~~used~~contemplated ~~for~~by ~~stock-based~~the ~~employee~~terms ~~compensation~~of the merger agreement and the related ~~effects~~transactions, ofCHS ~~that~~IV ~~method~~does onnot ~~reported~~have ~~results~~any relationship with the Company, its affiliates or its Board of ~~operations~~Directors. ~~Under~~Pursuant ~~SFAS~~to ~~148,~~the ~~pro~~merger ~~forma~~agreement, ~~disclosure~~GEO Sub will bemerge ~~required~~with inand ainto ~~specific~~the ~~tabular~~Company ~~format~~and the Company will become a wholly-owned insubsidiary of GEO Holdings. Immediately after the ~~“Summary~~consummation of ~~Significant~~the ~~Accounting~~merger ~~Policies.”~~and ~~The~~related ~~Company~~financial ~~has~~transactions, ~~adopted~~GEO Holdings will own 100% of the ~~disclosure~~Company’s ~~requirements~~outstanding common stock. Immediately following the consummation of ~~this~~the ~~statement~~merger ~~effective~~and related ~~December~~financing 16transactions, ~~2002.~~it ~~The~~is ~~adoption~~expected ~~had~~that nothe ~~effect~~equity onowners of GEO Holdings will be CHS IV, certain of the Company’s ~~consolidated~~officers ~~financial~~who ~~position~~will ~~or results~~hold options to purchase shares of ~~operations~~GEO Holdings’ capital stock and certain co-investors. ~~The~~Any co-investors will not have been affiliated with the Company, ~~continues~~its affiliates or its Board of Directors prior to ~~account~~the ~~for~~merger, ~~its~~and may own, collectively, up to 2% of GEO Holdings common stock~~-based~~. ~~compensation~~The ~~plans~~merger ~~under~~is ~~APB~~subject 25to various closing conditions. If all conditions are satisfied, a closing in May 2004 is anticipated, but cannot be assured.

In9 May 2003, the FASB issued Statement No. 150 (FAS 150), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” FAS 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Adoption of FAS 150 did not have a material effect on the Company’s financial statements.

~~STRATEGIC~~RESULTS ~~ALTERNATIVES~~OF OPERATIONS

~~The~~Quarter: Company’s strategic alternatives program is proceeding and it may be well into 2004 before the Company can determine what, if any, actions will be taken. As previously reported, an advisory investment banker is studying the Company and its opportunities. Acquisitions, mergers, joint ventures, and even the sale of the Company may be considered as ways to increase shareholder value.

~~RESULTS~~For OFthe three months ended March 31, 2004, sales and operating revenue was ~~OPERATIONS~~$35,649,000 compared with $39,119,000 for the same period last year. While U.S. units shipped were up 2.5%, sales and operating revenue of $16,261,000 were 10.0% lower than the same period last year. The starting of fewer installation jobs in the U.S. caused 2004 service revenues to be 44% lower than in the first quarter of 2003. This was primarily in the Company’s national accounts, which work remained in backlog at the end of March. Foreign sales and operating revenue was $19,388,000, 8.0% lower than last year. Foreign units shipped were down by 7.7% primarily due to the timing of shipments to South America. Foreign currency translation increased 2004 foreign sales and operating revenue by approximately $1,700,000.

~~Quarter:~~Gross profit for the quarter was $4,493,000, or 7.4% lower than the prior year at $4,850,000. Gross profit, as a percentage of sales and operating revenue, increased slightly to 12.6% from 12.4% last year. Foreign currency translation increased 2004 gross profit by approximately $199,000.

~~For the three months ended September 30~~Selling, ~~2003,~~general ~~sales~~ and ~~operating~~administrative ~~revenue was~~(SG&A) expenses were $927,~~650~~908,000 , compared with $937,~~957~~641,000 ~~for~~in the ~~same~~first ~~period~~quarter ~~last~~of ~~year.~~2003, ~~Inclement~~a ~~weather~~3.5% ~~during~~increase. ~~the~~Increased ~~quarter~~cost ~~slowed~~was ~~progress~~primarily onthe ~~customer~~result ~~projects~~of ~~and~~approximately ~~resulted~~$230,000 inof ~~reduced~~foreign ~~shipments~~currency ~~and~~translation ~~installations.~~effect ~~United States sales~~ and ~~operating revenue of~~ $56391,~~660,~~000 ~~was~~of ~~down~~transaction ~~7.4%~~costs ~~from~~associated with the ~~same~~proposed ~~period last year~~merger. SG&A, ~~United~~as ~~States~~a ~~shipments~~percent ~~were~~of ~~down~~sales, 14was 22.72% ~~and~~compared ~~units~~to ~~installed~~19.5% ~~were~~last ~~down 3~~year.2%

11Interest expense of $1,519,000 was significantly more than last year’s $644,000. This year’s cost includes a prepayment fee of $690,600 and deferred financing expense of $735,000 as a result of paying off all of the Company’s Transamerica debt.

~~while~~Other ~~unit~~income ~~prices were higher than 2002. Foreign sales and operating revenue~~ was $35144,~~990,~~000, ~~9.8%~~lower ~~higher~~ than ~~2002. Foreign currency translation increased~~the ~~foreign~~prior ~~sales~~year’s ~~and operating revenue for the quarter by~~ $2454,~~651,~~000, ~~due~~as toa ~~increased~~result ~~strength~~ of ~~the~~fewer ~~Euro~~disposals of property and ~~the~~equipment ~~British~~during ~~Pound~~the ~~Sterling~~quarter. ~~The~~Foreign ~~addition~~exchange loss of ~~our~~$215,000 ~~Egyptian~~was ~~operation~~more ~~added~~than the $~~803~~258,000 ofgain ~~sales~~on ~~and~~foreign ~~operating~~exchange ~~revenue.~~in ~~Year~~2003 ~~2002~~primarily ~~included $423,000~~due ofto ~~sales~~the ~~and~~effects ~~operating~~of ~~revenue~~changes ~~from~~in ~~businesses~~the ~~exited~~euro to indollar ~~2002~~exchange rate.

~~Gross~~The ~~profit~~quarterly provision for ~~the~~income taxes ~~quarter~~ was a benefit of $211,~~033~~854,000, ~~slightly~~compared ~~lower~~with ~~than~~a $926,000 benefit in the ~~prior~~same period last year’s. The year-to-date tax provision was determined at ~~$21~~the statutory rates adjusted for certain permanent differences on an entity-by-entity,~~227,000~~ year-to-date basis. ~~Gross~~The ~~profit~~year ~~margin,~~2003 asrate was favorably impacted by a ~~percentage~~100% oftax ~~sales~~holiday ~~and~~in ~~operating~~Thailand ~~revenue,~~that ~~increased~~has reduced to ~~22.7~~a 50% ~~from~~tax ~~22.6%~~holiday ~~last~~for ~~year~~2004. ~~Foreign~~The ~~currency translation~~2003 ~~increased~~lower ~~gross~~rate ~~profit~~included bythe ~~approximately~~benefits ~~$601,000~~of ~~due~~foreign toentity ~~the~~tax ~~increased~~differentials ~~strength~~created ofby the ~~Euro~~benefits of dividends from foreign operations and ~~the~~exchange ~~British~~losses ~~Pound~~on ~~Sterling~~U.S. dollar accounts in foreign operations, and a Serrot acquisition tax settlement.

~~Selling,~~10 general and administrative (SG&A) expenses were $6,565,000 compared with $7,182,000 in the second quarter of 2002, a 9% decrease. This decrease, which is net of a $188,000 increase from foreign translation, was primarily from closing one Canadian plant and synergy benefits in Germany from the SII acquisition. SG&A, as a percent of revenues, was 7.1% compared to 7.6% last year.

~~Interest~~LIQUIDITY ~~expense~~AND ofCAPITAL ~~$641,000~~RESOURCES ~~was $110,000 lower than last year, primarily due to the reduction in the outstanding balance of long-term debt that is being re-paid in monthly installments.~~

~~Gain~~Sources ~~on sale~~ of ~~assets~~Liquidity was $3,027,000 more than last year, primarily due to the sale of the Canadian plant and a small industrial site in Reno, Neveda, acquired with the SII acquisition last year and no longer used in operations.

~~Other~~The ~~(income)~~Company’s ~~expense~~primary source of liquidity during the first quarter of 2004 was cash on hand. At March 31, ~~net~~2004, the Company had working capital of $8578,204,000 of ~~income~~which $21,034,000 was ~~down~~cash ~~from~~and ~~last~~cash ~~year~~equivalents. The Company’s $1operating results and liquidity are normally reduced in the first quarter as both product deliveries and installations are at their lowest levels due to inclement weather experienced in the Northern Hemisphere,~~128~~ affecting when the installation season starts. Nevertheless,~~000~~ ofthe ~~income~~Company ~~primarily~~believes ~~due~~that it has sufficient funds (on hand and expected from future operations) and adequate financial resources available to ~~less~~meet ~~foreign~~its ~~exchange~~anticipated ~~gain~~liquidity ofneeds $1including anticipated requirements for working capital,~~103~~ capital expenditures,~~000~~ and debt service in 2004.

~~The~~Total ~~quarterly~~capitalization ~~provision~~as ~~for~~of ~~income~~March ~~taxes~~31, 2004 was $6154,~~022~~313,000 ~~compared with $5~~,~~708,000~~ inconsisting ~~the~~almost ~~same~~entirely period last year. The year-to-date tax provision was determined at the statutory rates adjusted for certain permanent differences on an entity-by-entity, full year basis. The year 2003 rate was favorably impacted by a reducedof ~~rate~~stockholders’ ~~in Germany because of the declaration of a dividend to the U~~equity.~~S. parent company and an SII acquisition tax settlement.~~

12Stock Repurchase Plan

~~Year-to-date:~~The Company has a stock repurchase plan with 1,595,643 shares still authorized. The repurchase program is inactive.

~~For~~Credit ~~the~~Facilities nine months ended September 30, 2003, sales and operating revenue was $218,650,000 compared with $214,619,000 for the same period last year. United States sales and operating revenue of $130,823,000 was up slightly over the same period last year. United States product sales were up from increased shipments and prices, but installation revenue was down due to more inclement weather this year than last year. Foreign sales and operating revenue was $87,827,000, 4% higher than 2002. Foreign shipments were up 4%. Foreign currency translation increased foreign sales and operating revenue by $8,444,000, and the addition of our Egyptian operation added $2,652,000 of sales and operating revenue. Year 2002 included $5,335,000 of sales and operating revenue from businesses exited in 2002.

~~Gross~~On ~~profit~~February ~~for~~4, 2002, the Company ~~nine~~entered ~~months~~into ~~was~~a note agreement with a lender in the amount of $4525,~~474~~000,000. This 3-year term facility is secured by the Company’s Houston, orTX, ~~2.9%~~and ~~less~~Kingstree, ~~than~~SC, real properties and all of the ~~prior~~Company’s ~~year~~equipment at these locations. The promissory note required monthly payments of approximately $46520,~~832,~~000. ~~Gross~~including ~~profit~~interest ~~margin,~~at asthe ~~a percentage~~rate of ~~sales~~9.22% and ~~operating~~matures ~~revenue~~on February 5, ~~decreased~~2005 with a balloon payment equal to ~~20.8%~~the ~~from~~unpaid ~~21.8%~~principal ~~last~~balance ~~year~~plus accrued and unpaid interest. The ~~gross~~terms of ~~profit~~the ~~decrease~~note ~~was~~placed ~~due~~various torestrictions ~~lower~~on ~~installation~~the ~~job~~Company’s ~~profits~~ability ~~resulting~~to ~~from~~pay ~~inefficiencies~~dividends ~~created~~or bymake ~~more~~certain ~~than~~other ~~usual~~payments, ~~inclement~~incur ~~weather~~additional indebt, ~~the~~consolidate ~~eastern~~or ~~half~~merge ~~of the~~into ~~U.S.~~another corporation or sell assets and ~~higher~~make ~~production~~capital ~~costs~~expenditures. ~~Foreign~~The ~~currency~~note ~~translation~~also required ~~increased~~the ~~gross~~Company ~~profit~~to bymaintain ~~$1,677,000~~certain ~~for~~financial ~~the~~ratios ~~period.~~and ~~Year~~specified ~~2002~~levels ~~included~~of ~~$476~~consolidated net worth. In January 2004,~~000~~ ofthe ~~gross~~Company ~~profit~~paid ~~from~~off ~~businesses~~the ~~exited~~note in ~~2002~~full.

~~Selling,~~On ~~general~~February ~~and administrative (SG&A) expenses were $21~~4,~~281,000 compared~~ ~~with $22,375,000 in~~ 2002, athe ~~4.9%~~Company ~~decrease.~~entered ~~This~~into ~~decrease, which is net of~~ a ~~$795,000 increase from foreign translation, was primarily from closing one Canadian plant, selling our Irish installation operation last~~ 3-year, ~~and~~credit ~~synergy~~agreement ~~benefits in~~with ~~Germany~~Bank ~~from~~of ~~the SII acquisition. Year 2002 included $1~~America,~~831,000~~ ~~of SG&A from businesses exited in 2002~~N. ~~SG&~~A., as ~~a percent of sales~~agent, ~~was~~to ~~9.7%~~borrow ~~compared~~ up to ~~10.4% last year.~~

~~Net~~11 costs related to the SII acquisition in 2003 were primarily related to relocating inventory and equipment from the Canadian plant closed in December 2002 to the Company’s plant in Houston, Texas. Relocation costs of $2,221,000 in 2002 are related to costs of closing SII acquired facilities in the U.S. and relocating inventory and equipment to locations in Houston, Texas, and Kingstree, South Carolina, certain legal and professional costs, and an accrual for an internal bonus program that was payable contingent upon the attainment of targeted synergy savings during 2002.

~~Gain~~$55,000,000 on ~~sale~~a revolving basis. The amount of ~~assets~~borrowings ~~was~~allowed $3under the credit agreement is determined by the amount of eligible receivable and inventory amounts that make up the borrowing base. Loans made pursuant to the credit agreement bear interest,~~596~~ at the Company’s option,~~000~~ ~~more~~at ~~than~~the bank’s prime rate or the reserve adjusted LIBOR plus an applicable margin based on the ratio, from time-to-time, of the Company’s EBITDA (as defined in ~~2002~~the ~~primarily~~credit ~~due~~agreement) to certain “fixed charges”, including principal paid on funded debts, cash interest expense, dividends, stock repurchases and certain other distributions made, cash amount of taxes paid and net capital expenditures made from time-to-time. The applicable margin for prime rate loans may vary between 0% and .25% per annum, and the applicable margin for LIBOR based loans may ~~sale~~vary between 2% and 2.75% per annum. Fees will be payable from time-to-time with respect to letters of ~~assets~~credit ~~acquired~~issued pursuant to the credit agreement at a rate equal to the margin payable with respect to LIBOR based revolving loans. An annual commitment fee of 3/8% is payable on any unused portion of the ~~SII~~facility. ~~acquisition~~The ~~last~~terms ~~year~~of ~~that~~the ~~are~~credit noagreement ~~longer~~place ~~used~~various inrestrictions ~~operations~~on the Company’s ability to pay dividends or make certain other payments, incur additional debt, consolidate or merge into another corporation or sell assets and to make capital expenditures. The credit agreement also requires the Company to maintain certain financial ratios and specified levels of consolidated net worth. As of March 31, 2004, the Company had $16,657,000 available under this credit agreement.

~~Other~~At ~~(income)~~March ~~expense~~31, ~~net~~2004, ~~was~~the Company ~~$498~~had five local foreign credit facilities. It had credit facilities with two German banks in the amount of EUR 5,100,000. These revolving credit facilities are secured by a corporate guarantee and bear interest at various market rates. These credit facilities are used primarily to guarantee the performance of ~~income~~European ininstallation ~~2003~~contracts and temporary working capital requirements. At March 31, ~~compared~~2004, tothe ~~$860~~Company had EUR 3,151,000 available under these credit facilities with EUR 1,949,000 of ~~income~~bank guarantees outstanding. The Company had two credit facilities with an Egyptian bank in ~~2002~~the amount of EGP 15,000,000. These credit facilities bear interest at various market rates and are primarily ~~due~~for tocash management purposes. At March 31, 2004, the ~~reduction~~Company ofhad ~~foreign~~EGP ~~exchange gain~~14,466,000 available under these credit facilities. The ~~foreign~~Company ~~exchange~~had ~~gain~~a credit facility with a Canadian bank in ~~2003~~the ~~was~~amount ~~$512~~of Canadian Dollar 500,000 ~~compared~~that tobears $1interest at market rate,~~022~~ secured by working capital. At March 31,~~000~~ in2004, ~~2002~~the Company had the full amount available under this line.

13Sources and Uses of Cash

~~The~~Cash ~~provision~~used ~~for~~in ~~income~~operating ~~taxes~~activities during the first quarter ended 2004 was $98,~~332~~945,000, compared ~~with~~to a $717,~~942~~510,000 used in ~~the~~operating ~~same~~activities ~~period~~in ~~last year. The year-to-date tax provision was determined at~~ the ~~statutory~~prior ~~rates adjusted for certain permanent differences on an entity-by-entity, full~~ year ~~basis~~. The ~~year~~decrease ~~2003 rate~~ was ~~favorably~~primarily ~~impacted~~from byrestricting a$14,704,000 ~~reduced~~of ~~rate~~cash in ~~Germany~~the ~~because~~prior ~~of the~~year ~~declaration~~for ofsecurity afor ~~dividend to~~ the ~~U.S.~~supercedeas ~~parent~~appeal ~~company~~bond ~~and~~in athe ~~SII~~Poly-America ~~acquisition~~case, ~~tax~~offset ~~settlement.~~partially ~~Year~~by ~~2003~~changes ~~effective~~in ~~rate~~elements isof ~~expected~~working ~~to be 35% compared to 42% for the same period last year~~capital.

~~LIQUIDITY~~12 ~~AND CAPITAL RESOURCES~~

~~The~~Cash ~~Company’s~~used ~~primary~~by ~~source~~investing ofactivities ~~liquidity~~ during the ~~third~~first quarter ofended ~~2003~~March 2004 was ~~cash on hand. At September 30, 2003, the Company had working capital of~~ $891,~~502~~449,000, ofcompared ~~which~~ to $244,~~808~~860,000 ~~was~~in ~~cash~~the ~~and~~prior ~~cash equivalents~~year. ~~The~~During ~~Company~~2003, ~~believes~~the ~~that~~purchase itof ~~has~~the ~~sufficient~~Egyptian ~~funds~~joint ~~(on~~venture ~~hand~~used ~~and~~cash ~~expected~~of ~~from~~$3,747,000. ~~future~~Cash ~~operations)~~of ~~and~~$1,449,000 ~~adequate~~was ~~financial~~used ~~resources~~for ~~available~~capital toexpenditures, ~~meet~~net ~~its~~of ~~anticipated~~proceeds ~~liquidity~~from ~~needs, including~~fixed ~~anticipated~~assets ~~requirements~~sold, ~~for~~compared ~~working~~to ~~capital~~$1, ~~capital expenditures~~113,000 ~~and debt service~~ in 2003 ~~and 2004~~.

~~Total~~Cash ~~capitalization~~used asin offinancing ~~September~~activities ~~30,~~during ~~2003~~the first quarter ended March 2004 was $~~169~~16,~~193~~535,000, ~~consisting~~compared ofto ~~total debt of~~ $18929,~~658,~~000 ~~and~~in ~~equity~~the ofprior ~~$150,535,000~~year. The ~~debt-to-capitalization~~ ~~ratio~~difference atis ~~September~~primarily ~~30,~~the ~~2003~~result ~~was~~of ~~11.0%~~the ~~compared~~retirement toof ~~14.0%~~term atnotes in the ~~end~~amount of ~~fiscal~~$16,722,000. ~~year~~(see ~~2002~~Credit Facilities above).

InOther January 2003, the Company purchased its joint venture partner’s remaining 50% interest in its Egyptian joint venture for a price of $4,000,000. As part of that agreement, the Company also has a commitment to purchase a blown film round die extrusion manufacturing line, currently leased to the end of calendar year 2003, for $950,000. The Company has agreed to purchase a new facility for its Eqyptian manufacturing operations for $855,000. The Company expects to complete the purchase of the new facility in 2003 and terminate its existing manufacturing facility lease by the end of 2004.

InThe ~~September~~Company’s ~~2003~~operations are subject to seasonal fluctuation with the greatest volume of product deliveries and installations typically occurring in the summer and fall months. In particular, the Company’s ~~sold~~operating ~~its~~results ~~Calgary,~~are ~~Canada,~~most ~~facility~~impacted ~~closed~~in ~~on December~~the ~~31,~~first ~~2002,~~quarter as both product deliveries and ~~its~~installations ~~Reno,~~are ~~Nevada,~~at ~~facility,~~their ~~for~~lowest alevels ~~combined~~due $3to the inclement weather experienced in the Northern Hemisphere,~~076,000~~ affecting when the installation season starts.

OnThe ~~January~~Company’s 6,foreign ~~2003,~~subsidiaries aroutinely ~~judgment~~accept ~~was~~contracts ~~entered against the Company~~ in ~~the~~currencies ~~United~~different ~~States~~than ~~District~~their ~~Court~~functional ~~for~~currency. ~~the~~The ~~Northern~~Company ~~District~~recognizes ofthat ~~Texas~~such ~~for~~practices ~~damages~~are ~~arising~~subject ~~out of the alleged patent infringement activities of SII conducted prior~~ to the ~~acquisition~~risk of ~~SII~~foreign bycurrency fluctuations ~~the~~not ~~Company.~~present ~~The jury~~ in ~~Dallas determined that SII had willfully infringed upon two patents held by Poly-America, L~~U.PS., ~~one~~operations. ~~for~~Foreign ~~the~~exchange ~~manufacturing~~gains ~~process~~ and alosses ~~second~~to ~~patent~~date ~~for~~have ~~the~~not ~~smooth~~been ~~edge~~material ~~textured sheet~~to ~~produced on round die blown film manufacturing equipment. On August 28, 2003,~~ the ~~court~~Company’s ~~issued~~operations anas ~~opinion and order on post trial motions, including~~ a ~~reduced judgment in the amount of $11,965,158, together with prejudgment interest in the sum of $3,081,050, post-judgment interest at the rate of 1~~whole.~~29%~~ ~~per annum, and taxable costs of the court. The~~

14Pricing for the Company’s products and services is primarily driven by worldwide manufacturing capacity in the industry, and by raw material costs. The Company’s primary raw materials, polyethylene and polypropylene, are occasionally in short supply and subject to substantial price fluctuation in response to market demand and the price of feed stocks, including natural gas. Any increase in the industry’s worldwide manufacturing capacity, interruption in raw material supply or electricity supply, or abrupt raw material price increases could have an adverse effect upon the Company’s operations and financial performance. Inflation has not had a significant impact on the Company’s operations.

~~court~~Critical ~~denied~~Accounting ~~the~~Policies ~~request of Poly-America, L.P. for treble damages~~ and ~~attorneys’~~Estimates fees. The Company posted an amended $18,055,699 supersedeas appeal bond and entered into a Collateral Agreement with an insurance company whereby the Company deposited funds equal to the bond amount. The Collateral Agreement provides for interest on the deposited fund, which interest accrues to the Company’s benefit. On September 29, 2003, the Company filed an appeal to the U.S. District Court of Appeals for the Federal Circuit in Washington, D.C. On the advice of legal counsel, the Company anticipates a favorable ruling on its appeal. However, such an outcome is not assured. No amount has been accrued for this judgment.

~~The~~A ~~Company~~discussion ~~has~~of acritical ~~stock~~accounting ~~repurchase~~policies ~~plan~~is ~~with~~included ~~1,619,643~~in ~~shares~~the ~~still~~Company’s ~~authorized~~2003 Annual Report on Form 10-K. ~~The~~There ~~repurchase~~have ~~program~~been isno ~~inactive~~material changes in critical accounting policies since the date of that filing, or during the quarter ended March 31, 2004.

~~Credit~~* * * ~~Facilities~~

On13 February 4, 2002, the Company entered into a note agreement with a lender in the amount of $25,000,000. This 3-year term facility is secured by the Company’s Houston, Texas, and Kingstree, South Carolina, real properties and all of the Company’s equipment at these locations. The promissory note requires monthly payments of approximately $520,000, including interest, at the rate of 9.22% and matures on February 5, 2005 with a balloon payment equal to the unpaid principal balance plus accrued and unpaid interest. The terms of the note place various restrictions on the Company’s ability to pay dividends or make certain other payments, incur additional debt, consolidate or merge into another corporation or sell assets and make capital expenditures. The note also requires the Company to maintain certain financial ratios and specified levels of consolidated net worth. At September 30, 2003, the Company’s balance outstanding under the note was $17,881,000.

15Forward-looking information:

This Form 10-Q contains certain forward-looking statements as such is ~~corporation~~defined orin ~~sell~~the ~~assets~~Private Securities Litigation Reform Act of 1995, and information relating to ~~make~~the ~~capital~~Company ~~expenditures.~~and ~~The~~its ~~credit~~subsidiaries ~~agreement~~that ~~also~~are ~~requires~~based on beliefs of the Company’s tomanagement, ~~maintain~~as ~~certain~~well ~~financial~~as ~~ratios~~assumptions made by and information currently ~~specified~~available ~~levels~~to the Company’s management. When used in this report, the words, “anticipate”, “believe”, “estimate”, “expect”, “intend” and words of ~~consolidated~~similar ~~net~~import, ~~worth~~as they relate to the Company or its subsidiaries or Company management, are intended to identify forward-looking statements. AsSuch ofstatements ~~September~~reflect 30the current risks, ~~2003~~uncertainties and assumptions related to certain factors including, without limitations, competitive market factors, world-wide manufacturing capacity in the ~~Company~~industry, ~~had~~general ~~$32~~economic conditions around the world,~~872~~ raw material pricing and supply,~~000~~ ~~available~~governmental ~~under~~regulation ~~this~~and ~~credit~~supervision, ~~agreement~~seasonality, distribution networks, and other factors described herein. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.

~~At September 30, 2003, the Company had credit facilities with two German banks in the amount of EUR 5,100,000. These revolving credit facilities are~~ ~~secured~~ITEM ~~by a corporate guarantee and bear interest at various market rates~~3. ~~These~~QUANTITATIVE ~~credit~~AND ~~facilities~~QUALITATIVE ~~are~~DISCLOSURES ~~used~~ABOUT ~~primarily~~MARKET toRISKS guarantee the performance of European installation contracts and temporary working capital requirements. At September 30, 2003, the Company had EUR 1,709,000 available under these credit facilities with EUR 2,725,000 of bank guarantees and EUR 666,000 of short-term borrowings outstanding.

~~Sources~~No ~~and~~material ~~Uses~~change ofsince ~~Cash~~December 31, 2003.

~~Cash~~ ITEM ~~used in operating activities during the nine months ended September 30, 2003 was $9,862,000~~4. ~~The~~CONTROLS ~~primary~~AND ~~uses~~PROCEDURES ~~of cash in 2003 was the purchase of the $18,056,000 supercedeas bond, and $13,671,000 used for changes in operating assets and liabilities, net of $21,865,000 generated from recurring operations.~~

~~Cash~~As ~~used~~of byMarch ~~investing~~31, ~~activities~~2004, ~~during~~an evaluation was performed under the ~~nine~~supervision ~~months~~and ~~ended~~with ~~September~~the 30participation of the Company’s management, ~~2003~~including ~~was~~the $4Chief Executive Officer and Chief Financial Officer,~~950,000.~~ ~~Cash~~of the effectiveness of ~~$1,158,000~~the ~~was~~design and ~~used~~operation ~~for~~of ~~capital~~the ~~expenditures,~~Company’s ~~net~~disclosure ofcontrols ~~$3,858,000~~and ~~proceeds~~procedures. ~~from~~Based ~~dispositions,~~on ~~primarily~~that ~~Calgary~~evaluation, ~~Canada,~~the Company’s Chief Executive Officer and ~~Reno,~~Chief ~~Nevada~~Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~facilities~~2004. During ~~2003~~the quarter ended March 31, ~~the~~2004, ~~purchase~~there ofwere no changes in the ~~Egyptian~~Company’s ~~joint~~internal ~~venture~~controls ~~used~~over ~~cash~~financial ofreporting $3that have materially affected,~~792,000,~~ ~~net~~or ofare ~~cash~~reasonably ~~acquired~~likely to materially affect internal controls over financial reporting.

~~Cash~~14 used in financing activities during the nine months ended September 2003 was $2,452,000, which includes proceeds from short-term borrowings of $683,000, repayments of long-term debt of $3,690,000, and proceeds of $555,000 from the issuance of common stock.

~~The Company’s operations are subject to seasonal fluctuation with the~~ ~~greatest~~PART ~~volume~~II of- ~~product~~OTHER ~~deliveries~~INFORMATION and installations typically occurring in the summer and fall months. In particular, the Company’s operating results are most impacted in the first quarter as both product deliveries and installations are at their lowest levels due to the inclement weather experienced in the Northern Hemisphere.

The Company’s foreign subsidiaries routinely accept contracts in currencies different than their functional currency. The Company recognizes that such practices are subject to the risk of foreign currency ~~fluctuations~~ITEM ~~not present in U~~1.S. ~~operations.~~LEGAL ~~Foreign~~PROCEEDINGS ~~exchange gains and losses from these transactions to date have not been material to the Company’s operations as a whole.~~

~~Pricing~~Poly ~~for~~America ~~the~~Lawsuit ~~Company’s products and services is primarily driven by worldwide manufacturing capacity in the industry, and by raw material costs. The Company’s primary raw materials, polyethylene and~~

On January 6, 2003, a judgment was entered against us in the United States District Court for the Northern District of Texas for damages arising out of the alleged patent infringement activities of Serrot conducted prior to our acquisition of Serrot. The jury in Dallas determined that Serrot had willfully infringed upon two patents held by Poly-America, L.P., one for the manufacturing process and a second patent for the smooth edge textured sheet produced on round die blown film manufacturing equipment. On August 28, 2003, the court issued an opinion and order on post trial motions, including a reduced judgment in the amount of $11,965,158, together with prejudgment interest in the sum of $3,081,050, post-judgment interest at the rate of 1.29% per annum, and taxable costs of the court. The court denied the request of Poly-America, L.P. for treble damages and attorneys’ fees. We posted an amended $18,055,699 supercedeas appeal bond and entered into a collateral agreement with an insurance company whereby we deposited funds equal to the bond amount. The collateral agreement provides for interest on the deposited funds, which interest accrues to our benefit. We have not reserved any amounts in connection with this litigation, however. On September 29, 2003, we filed an appeal to the U.S. District Court of Appeals for the Federal Circuit in Washington, D.C. and on December 16, 2003, filed our appeals brief. On April 1, 2004, we filed our reply brief.

~~polypropylene,~~Challenge ~~are occasionally in short supply and subject~~ to ~~substantial price fluctuation in response to market demand and~~ the ~~price~~Merger of feed stocks, including natural gas. Any increase in the industry’s worldwide manufacturing capacity, interruption in raw material supply or electricity supply, or abrupt raw material price increases could have an adverse effect upon the Company’s operations and financial performance. Inflation has not had a significant impact on the Company’s operations.

~~Critical~~The ~~Accounting~~Company, ~~Policies~~our directors, Code Hennessy & Simmons LLC, GEO Sub and ~~Estimates~~GEO Holdings have been named in one or more of three putative class action lawsuits filed in January 2004 in the Delaware Court of Chancery (Calhoun v. Gundle/SLT Environmental, Inc., et al., C.A. No.153-N, Twist Partners LLP v. Badawi, et al., C.A. No.150-N, and Bell v. Gundle/SLT Environmental, Inc., et al., C.A. No.169-N). These complaints allege that our directors breached their fiduciary duties by allegedly failing to auction the Company, to undertake an appropriate evaluation of the Company as a merger/acquisition candidate, to act independently to protect our stockholders, and to ensure that no conflicts of interest existed or that any conflicts were resolved in “the best interests of GSE’s public shareholders”. The complaints seek, among other relief, to enjoin the merger or to rescind it if approved by stockholders and consummated and to obtain unspecified damages from the defendants. On February 10, 2004, the Delaware Court of Chancery entered an order consolidating the three actions for all purposes and requiring the plaintiffs to file a consolidated amended complaint as soon as practicable. The parties to the consolidated actions have executed a Memorandum of Understanding that reflects an agreement in principle to settle the actions, subject to the negotiation of a definitive stipulation of settlement, due

A15 discussion of critical accounting policies is included in the Company’s 2002 Annual Report on Form 10-K. There have been no material changes in critical accounting policies since the date of that filing, or during the nine months ended September 30, 2003.

~~Forward-looking~~notice ~~information:~~to the Company’s current and former stockholders who are members of the plaintiff class and approval by the Delaware Court of Chancery. This agreement in principle is based on enhanced disclosures, all of which are included in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on April 9, 2004. The Memorandum of Understanding also includes the defendants’ agreement to pay plaintiffs’ attorney fees, costs and expenses up to $330,000, subject to approval of the Delaware Court of Chancery.

~~This~~We ~~Form~~and ~~10-Q~~our ~~contains~~directors ~~certain~~believe ~~forward-looking~~these ~~statements~~suits asare ~~such~~without ~~is defined in the Private Securities Litigation Reform Act of 1995~~merit, and ~~information relating~~if to the settlement ~~Company~~contemplated ~~and~~by ~~its~~the ~~subsidiaries~~Memorandum ~~that are based on beliefs~~ of ~~the~~Understanding ~~Company’s~~is ~~management,~~not asapproved ~~well as assumptions made~~ by ~~and information currently available to~~ the ~~Company’s~~Delaware ~~management.~~Court ~~When~~of ~~used in this report~~Chancery, ~~the~~we ~~words, “anticipate”, “believe”, “estimate”, “expect”, “intend”~~ and ~~words of similar import, as~~ they ~~relate~~intend to ~~the~~vigorously ~~Company~~defend orthe ~~its~~litigation. ~~subsidiaries~~These or ~~Company~~similar ~~management,~~lawsuits ~~are~~may ~~intended~~jeopardize ~~to identify forward-looking statements. Such statements reflect~~ the ~~current risks~~merger, ~~uncertainties~~since ~~and~~their ~~assumptions~~existence ~~related~~could result ~~to certain factors including, without limitations, competitive market factors, world-wide manufacturing capacity~~ in the ~~industry,~~failure ~~general~~of ~~economic conditions~~one ~~around~~or ~~the~~more ~~world,~~conditions ~~raw~~precedent ~~material~~to ~~pricing~~GEO ~~and~~Holdings’ ~~supply,~~obligation ~~governmental~~to ~~regulation~~conclude ~~and~~the ~~supervision,~~merger ~~seasonality, distribution networks,~~ and ~~other~~thus ~~factors~~permit ~~described~~GEO ~~herein.~~Holdings ~~Based~~to ~~upon~~terminate ~~changing~~the ~~conditions,~~merger ~~should~~agreement ~~any~~and ~~one~~abandon orthe ~~more~~merger ~~of these risks or uncertainties materialize, or~~ should ~~any~~it ~~underlying~~desire ~~assumptions~~to ~~prove~~do ~~incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended~~so.

17Wembley Dispute

~~ITEM~~On 3January 14, 2004, the Company received a letter from Shire Equipment Leasing Corporation (“Shire”) relating to litigation instituted by Wembley Ltd., ~~QUANTITATIVE~~the ~~AND~~holder ~~QUALITATIVE~~of ~~DISCLOSURES~~record ~~ABOUT~~of ~~MARKET~~4,557,143 ~~RISKS~~shares of our common stock and the Company’s largest stockholder. Wembley seeks a declaratory judgment that neither Pro Air, Inc., which was declared bankrupt in 2003, nor Shire, its assignee, ever acquired an ownership interest in 1.1 million of these shares, which are currently and have been held of record continuously by Wembley. Shire disputes this contention and indicates that it will seek recovery (a) against Wembley and, if Wembley is unable to satisfy any such judgment, (b) against the Company for as much as $200 million in alleged consequential damages resulting from its and/or Pro Air’s inability to own and sell the Company shares, if and to the extent that the Company acted in concert with Wembley “to thwart the (allegedly) rightful transfer” of the Company shares to which Shire makes claim. The Company believes that this dispute is between Wembley and Shire. Accordingly, should such a claim be forthcoming, the Company intends to defend itself vigorously. Upon conclusion of the merger, the Company expects to request all the Company stockholders to surrender their certificates for cancellation in exchange for payment of the merger consideration. The Company intends to pay the merger consideration to whichever of the parties (Wembley or Shire) submits, in the form required for “good delivery,” the stock certificate in controversy.

NoSEC ~~material~~Inquiry ~~change since December 31, 2002.~~

~~ITEM~~The 4.Fort ~~CONTROLS~~Worth ~~AND~~District ~~PROCEDURES~~Office of the Securities and Exchange Commission has inquired of the Company about a sale of its common

As16 of September 30, 2003, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2003. During the quarter ended September 30, 2003, there were no changes in the Company’s internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

GUNDLE/SLT ENVIRONMENTAL, INC.

DATE October 22, 2003

/S/ Roger J. Klatt

ROGER J. KLATT,

EXECUTIVE VICE PRESIDENT &

CHIEF FINANCIAL OFFICER

~~ITEM~~stock 6in late September 2003 by a former non-U.S.-resident ~~EXHIBITS~~Company ~~AND~~director. ~~REPORTS~~The ONshares ~~FORM~~were 8sold through a brokerage account on which the Company’s president and chief executive officer was listed as a contact person, without any beneficial or other interest. The sale was made shortly before the Company announced it would not meet earnings expectations for the third quarter 2003. The chief executive officer has informed the Company that he has no reason to believe that the non-Kresident former director, who left the Board several years ago, possessed any non-public information at the time of sale. The Company has voluntarily produced information and documents in connection with the former director’s sale, as requested by the Securities and Exchange Commission in November 2003 and January 2004. The Company has no knowledge of any wrongdoing on its part or that of any affiliates, officer or the former director and intends to continue to cooperate fully in respect of this inquiry.

~~(a)~~ ITEM ~~Exhibits~~6. EXHIBITS AND REPORTS ON FORM 8-K

ExhibitNo.
31.1		–Certification of Chief Executive Officer pursuant to Rule 13a–14(a)
31.2		–Certification of Chief Financial Officer pursuant to Rule 13a–14(a)
32.1		–Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002 of Samir T. Badawi, Chief Executive Officer
32.2		–Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002 of Roger J. Klatt, Chief Financial Officer

(a)

Exhibits

(b) GSE furnished a report on Form 8-K dated July 23, 2003, which reported the issuance of the Company’s second quarter 2003 earnings press release pursuant to Item 12 of Form 8-K. GSE filed a report on Form 8-K dated September 30, 2003, which reported the issuance of a press release announcing updated earnings guidance for the third quarter and the fiscal year.


Exhibit No.
31.1		Certification of Chief Executive Officer pursuant to Rules 13(a)-14(a)

31.2		Certification of Chief Financial Officer pursuant to Rules 13(a)-14(a)

32.1		-Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of Samir T. Badawi

32.2		-Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of Roger J. Klatt

18(b) Reports on Form 8-K

~~Pursuant~~Filed toJanuary ~~the~~5, ~~requirements~~2004, ofregarding the ~~Securities~~Plan ~~Exchange~~and ~~Act~~Agreement of ~~1934~~Merger, ~~the~~dated ~~registrant~~December ~~has~~31, ~~duly~~2003, ~~caused~~between ~~this report~~GEO toSub beCorp, ~~signed~~and onGEO ~~its~~Holdings ~~behalf~~Corp., byand the ~~undersigned thereunto duly authorized~~Company.

Filed January 6, 2004, regarding a press release announcing that the Company, its directors and a prospective buyer of the Company had been named in a lawsuit related to the proposed merger, styled Twist Partners LLP v. Badawi, et al, C.A. No. 150-N.

19Filed February 11, 2004 regarding a press release describing the earnings for the quarter and year ended December 31, 2003.

Filed April 9, 2004 regarding a memorandum of understanding between the parties in the matters of Calhoun v. Gundle/SLT Environmental, Inc., et al, C.A. No. 153-N, Twist Partners LLP v. Badawi, et al, C.A. No. 150-N, and Bell v. Gundle/SLT Environmental, Inc., et al, C.A. No. 169-N related to the proposed merger of Code Hennessy & Simmons LLC, GEO Sub Corp. and GEO Holdings Corp.

Pursuant to the requirements 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.


	GUNDLE/SLT ENVIRONMENTAL, INC.

DATE April 22, 2004	BY	/S/ Roger J. Klatt
		ROGER J. KLATT,
		EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER

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