GUNDLE SLT ENVIRONMENTAL INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-118278

GUNDLE/SLT ENVIRONMENTAL, INC.

(Exact name of Registrant as specified in its Charter)


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)

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

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 is required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x

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


Class		Outstanding at October 25, 2004
Common stock, par value $.01		2,985,360

GUNDLE/SLT ENVIRONMENTAL, INC.

INDEX


		PAGE
PART I - FINANCIAL INFORMATION

	ITEM 1: Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and December 31, 2003	3

	Condensed Consolidated Statements of Income For the Three Months Ended September 30, 2004 and 2003 (Unaudited)	4

	Condensed Consolidated Statements of Income (Loss) For the Year-to-Date Ended September 30, 2004 and 2003 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows For the Year-to-Date Ended September 30, 2004 and 2003 (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements	7

	ITEM 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition	22

	ITEM 3: Quantitative and Qualitative Disclosures About Market Risk	31

	ITEM 4: Controls and Procedures	32

PART II - OTHER INFORMATION

	ITEM 1: Legal Proceedings	32

	ITEM 2: Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	35

	ITEM 3: Defaults Upon Senior Securities	35

	ITEM 4: Submission of Matters to a Vote of Security Holders	35

	ITEM 5: Other Information	35

	ITEM 6: Exhibits	35

Certifications

GUNDLE/SLT ENVIRONMENTAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)


	PREDECESSOR			SUCCESSOR
	DECEMBER 31, 2003			SEPTEMBER 30, 2004
				(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS	$	47,899		$	9,144
ACCOUNTS RECEIVABLE, NET		46,560			74,990
CONTRACTS IN PROGRESS		711			8,303
INVENTORY		33,231			29,730
DEFERRED INCOME TAXES		5,587			4,491
PREPAID EXPENSES AND OTHER		604			1,680

TOTAL CURRENT ASSETS		134,592			128,338

PROPERTY, PLANT AND EQUIPMENT, NET		33,131			97,414
EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET		23,365			52,617
CUSTOMER LISTS AND OTHER INTANGIBLE ASSETS		0			22,755
DEFERRED INCOME TAXES		2,127			6,983
RESTRICTED CASH		18,056			18,056
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET		2,232			14,439

	$	213,503		$	340,602

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	$	33,013		$	49,607
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS		2,781			2,505
CURRENT PORTION OF LONG-TERM DEBT		4,914			4,434
SHORT TERM DEBT		0			10,000
INCOME TAXES PAYABLE		1,432			662

TOTAL CURRENT LIABILITIES		42,140			67,208

LONG-TERM DEBT		11,808			170,260
OTHER LIABILITIES		1,189			1,170
DEFERRED TAXES		0			29,758
MINORITY INTEREST		1,209			2,331

STOCKHOLDERS’ EQUITY:
COMMON STOCK, $.01 PAR VALUE, 30,000,000 SHARES AUTHORIZED, 18,619,668 SHARES ISSUED		186			0
COMMON STOCK, $.01 PAR VALUE, 3,700,000 SHARES AUTHORIZED, 2,985,360 SHARES ISSUED		0			30
ADDITIONAL PAID-IN CAPITAL		72,756			60,599
RETAINED EARNINGS		119,920			8,034
ACCUMULATED OTHER COMPREHENSIVE INCOME		1,870			1,212

		194,732			69,875
TREASURY STOCK AT COST, 7,089,261 AND -0- SHARES		(37,575	)		0

TOTAL STOCKHOLDERS’ EQUITY		157,157			69,875

	$	213,503		$	340,602

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF

THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

GUNDLE/SLT ENVIRONMENTAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(AMOUNTS IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)

(UNAUDITED)


	PREDECESSOR			SUCCESSOR
	THREE MONTHS ENDED SEPTEMBER 30, 2003			THREE MONTHS ENDED SEPTEMBER 30, 2004
SALES AND OPERATING REVENUE	$	92,650		$	101,034
COST OF PRODUCTS & SERVICES		71,617			78,644

GROSS PROFIT		21,033			22,390

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		6,241			7,862
EXPENSES RELATED TO CHS ACQUISITION		226			0

OPERATING INCOME		14,566			14,528

OTHER (INCOME) EXPENSES:
INTEREST EXPENSE		641			5,173
INTEREST INCOME		(98	)		(83	)
FOREIGN EXCHANGE LOSS		87			7
MINORITY INTEREST		99			28
OTHER (INCOME) EXPENSE, NET		(3,365	)		41

INCOME BEFORE INCOME TAXES		17,202			9,362

INCOME TAX PROVISION		6,022			3,228

NET INCOME	$	11,180		$	6,134

BASIC EARNINGS PER COMMON SHARE	$	0.97		$	2.05

DILUTED EARNINGS PER COMMON SHARE	$	0.92		$	1.89

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC		11,521			2,985

DILUTED		12,149			3,253

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF

THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

GUNDLE/SLT ENVIRONMENTAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(AMOUNTS IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)

(UNAUDITED)


	PREDECESSOR						SUCCESSOR
	NINE MONTHS ENDED SEPTEMBER 30, 2003			JANUARY 1 THROUGH MAY 17, 2004			MAY 18 THROUGH SEPTEMBER 30, 2004
SALES AND OPERATING REVENUE	$	218,650		$	70,393		$	150,061
COST OF PRODUCTS & SERVICES		173,176			60,107			117,948

GROSS PROFIT		45,474			10,286			32,113

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		20,738			12,430			12,151
EXPENSES RELATED TO CHS ACQUISITION		535			5,863			0

OPERATING INCOME (LOSS)		24,201			(8,007	)		19,962

OTHER (INCOME) EXPENSES:
INTEREST EXPENSE		1,999			1,639			7,622
INTEREST INCOME		(349	)		(188	)		(165	)
FOREIGN EXCHANGE (GAIN) LOSS		(512	)		131			29
MINORITY INTEREST		165			(31	)		112
OTHER (INCOME) EXPENSE, NET		(3,763	)		(272	)		6

INCOME (LOSS) BEFORE INCOME TAXES		26,661			(9,286	)		12,358

INCOME TAX PROVISION (BENEFIT)		9,332			(2,310	)		4,324

NET INCOME (LOSS)	$	17,329		$	(6,976	)	$	8,034

BASIC EARNINGS PER COMMON SHARE	$	1.51		$	(0.60	)	$	2.69

DILUTED EARNINGS PER COMMON SHARE	$	1.44		$	(0.60	)	$	2.47

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC		11,481			11,542			2,985

DILUTED		12,061			11,542			3,253

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF

THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

GUNDLE/SLT ENVIRONMENTAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

(UNAUDITED)


	PREDECESSOR						SUCCESSOR
	NINE MONTHS ENDED SEPTEMBER 30, 2003			JANUARY 1 THROUGH MAY 17, 2004			MAY 18 THROUGH SEPTEMBER 30, 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)	$	17,329		$	(6,976	)	$	8,034
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION		6,550			2,998			3,614
AMORTIZATION OF INTANGIBLES		0			0			1,677
AMORTIZATION OF DEBT ISSUANCE COSTS		509			736			648
AMORTIZATION OF NON-COMPETE AGREEMENT		0			42			38
DEFERRED INCOME TAXES		1,089			(1,162	)		(1,784	)
STOCK OPTION COMPENSATION		0			1,490			0
MINORITY INTEREST		165			(31	)		112
GAIN ON SALE OF ASSETS		(3,777	)		(190	)		16
CHANGE IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECTS FROM ACQUISITIONS:
ACCOUNTS RECEIVABLE		(16,435	)		450			(21,887	)
CONTRACTS IN PROGRESS		(2,351	)		(3,480	)		(4,099	)
INVENTORY		1,875			(7,020	)		11,176
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES		5,799

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