<PAGE>

                      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, 1999

{ }  Transition report pursuant to section 13 or 15(d) of the Securities Act
     of 1934

                         Commission File Number 1-9307

                        Gundle/SLT Environmental, Inc.
            (Exact name of registrant as specified in its charter)

             Delaware                             22-2731074
 (State or other Jurisdiction of       (I.R.S. Employer Identification
  Incorporation or Organization)                     No.)

        19103 Gundle Road
          Houston, Texas                            77073
 (Address of Principal Executive                  (Zip Code)
             Offices)

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

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                     Name of Each Exchange on
            Title of Each Class                          Which Registered
            -------------------                      ------------------------
<S>                                         <C>
       Common Stock, $.01 Par Value                   New York Stock Exchange
</TABLE>

          Securities registered pursuant to Section 12(g) of the Act:

                                     None.

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]

Based upon the February 22, 2000 New York Stock Exchange Closing price of
$3.1875 per share the aggregate market value of the voting stock held by non-
affiliates of the Registrant was approximately $24,953,000. All share amounts
included herein have been restated to reflect all previous stock splits.

The number of shares outstanding of the issuer's common stock, $.01 par value,
as of February 22, 2000, was 12,480,314 shares.

The Registrant's proxy statement to be filed in connection with the
Registrant's 2000 Annual Meeting of Stockholders is incorporated by reference
into Part III of this report.
<PAGE>

                          1999 FORM 10-K ANNUAL REPORT

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
                                     PART I

 <C>      <S>                                                              <C>
 Item 1.  Description of Business                                            1
 Item 2.  Properties                                                         6
 Item 3.  Legal Proceedings                                                  8
 Item 4.  Submission of Matters to a Vote of Security Holders                8

                                    PART II

 Item 5   Market for the Registrant's Common Equity and Related
           Stockholder Matters                                               8
 Item 6.  Selected Financial Data                                            8
 Item 7.  Management's Discussion and Analysis of Results of Operations
          and Financial Condition                                            9
 Item 7A. Quantitative and Qualitative Disclosure about Market Risk         11
 Item 8.  Consolidated Financial Statements and Supplementary Data          12
 Item 9.  Changes in and Disagreements With Accountants on Accounting
          and Financial Disclosure                                          30

                                    PART III

 Item 10. Directors and Executive Officers of the Registrant                30
 Item 11. Executive Compensation                                            30
 Item 12. Security Ownership of Certain Beneficial Owners and Management    30
 Item 13. Certain Relationships and Related Transactions                    30

                                    PART IV

 Item 14. Exhibits, Financial Statement Schedules and Reports on Form
           8-K                                                              30
</TABLE>
<PAGE>

                               1999 ANNUAL REPORT
                                    FORM 10K

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

  Gundle/SLT Environmental, Inc. (the "Company" or "GSE") is the world leader
in the manufacture and installation of geosynthetic lining products and
services for environmental protection and other uses. It is a Delaware
corporation headquartered in Houston, Texas.

  The Company manufactures, sells, and installs flexible geomembrane liners,
geonets, geosynthetic clay liners, concrete protection liners, and geocomposite
products made from specially formulated polyethylene resins. Its fabrication
department offers a variety of specialty products, such as manholes, sumps,
pipe penetration boots, floats, floating covers, and vertical membrane barrier
wall panels. All of these products are sold and installed on a worldwide basis,
typically as part of geosynthetic containment systems. The Company's products
and other related geosynthetic products are used in containment systems for the
prevention of groundwater contamination, and for the confinement of water,
industrial liquids and solids.

  The Company's products are installed by independent third parties and by the
Company's full-time field personnel, who are organized into close-knit
construction crews. Crewmembers are extensively trained in hot wedge and
extrusion welding techniques. Using the latest equipment, these crews install
liners in the field to make one continuous, seamless containment system. The
use of an extensive weld-seam quality assurance testing program, combined with
our manufacturing quality control program and high quality resin, enables the
Company to offer what it believes are the highest quality products and
services.

ACQUISITION

  The Company, in August 1999, expanded its sales operations into the Far
East/Pacific Rim countries by forming and staffing a limited private liability
company in Thailand. This new company has acquired the assets of a well-
established geosynthetic manufacturing company in the Kingdom of Thailand. This
24 million pound manufacturing facility will allow the Company to focus on
increasing sales in the Far East and the Peoples Republic of China.

COMPANY PRODUCTS

  The Company's principal products-flexible liners-are manufactured from
specially formulated polyethylene resins with chemical additives designed to
resist weathering, ultraviolet degradation and chemical exposure for extended
time in exposed applications. Either customers or third-party engineering firms
design the containment and confinement systems into which the Company's
products are installed. These systems may include other Company manufactured
products consisting of drainage nets, geocomposites, geosynthetic clay liners,
vertical barrier walls, specialty concrete protection liners, and other
companies' products. Marketing efforts for its products are carried on through
a worldwide distribution organization made up of internal sales, independent
dealers, agents, and distributors.

  The Company's primary product is a smooth-finish, high density polyethylene-
HDPE-liner. The sale and installation of this product in 1999, 1998, and 1997
accounted for approximately 54%, 56%, and 60% of total sales. Its HDPE liner
products come in thickness ranges from 20 to 240 mil (one mil equals 1/1000th
of an inch), and seamless widths up to 34.5 feet. Liner width dictates how many
seams are required during installation, and seaming represents the major
technical difficulty for liner installers. The fewer the number of seams, the
less labor involved, and the less testing required.

  The Company manufactures very flexible polyethylene (VFPE) sheet products
(GSE UltraFlex(R)) from low-density resin. VFPE products are finding greater
use in landfill caps, mining heap leach pads, and floating covers where greater
flexibility is desired. Both VFPE and HDPE products are available with
texturing for use on sloping terrain, or where a high friction angle is
required.

                                       1

<PAGE>

  Demand is increasing for products made using the Company's co-extrusion
manufacturing capability. This manufacturing process produces products with
different layers made of various resin densities that become molecularly
integrated such that they cannot delaminate or separate. One of the major
products created using this process is GSE White(R), the Company's patented
white-surface (reflective) product for use in landfills and waste containment
applications. By reflecting radiant heat, the reflective surface reduces the
expansion and contraction (wrinkling and bridging) of the liner during
installation. Its reflective nature protects subgrade soils from drying out
and cracking (desiccation). Under identical exposure conditions, white-
surfaced liners recorded temperatures as much as 50% lower than standard black
surface liner. The white-surface greatly improves detection of installation
damage by revealing scoring and abrasions as black marks exposed against the
white surface.

  Using this same co-extrusion technology, the Company received a patent for
GSE Conductive(R), its electrically conductive liner. This product
incorporates a conductive layer that allows for spark testing of 100% of the
surface once the liner is installed. The unique ability to electric spark test
the entire surface eliminates the need for flooding the containment system
with water for leak detection, which can be expensive and time consuming. This
product is finding greater use in waste containment lagoons and landfill sump
applications.

  The Company offers different specifications of drainage net (GSE
HyperNet(R)) consisting of two sets of HDPE strands intertwined to form a
channel along which fluid is conveyed for drainage. This net can be bonded
with geotextiles on one or both sides to form GSE FabriNet(R) and GSE
FabriCap, the Company's geocomposite products. These products are used as
drainage media for primary leachate collection where the soil is placed
directly on top of the drainage layer. GSE FabriCap products are specifically
designed for landfill capping project applications requiring a load bearing
drainage net. The Company has just acquired a license to sell a drainage net
and a geocomposite manufactured using three strands of HDPE. These new
products will be offered as GSE Triplanar net and composite for use in
landfill cell expansions where higher load bearing characteristics are
required, and in landfill capping projects where higher flow rate
characteristics are needed.

  Another product manufactured and offered by the Company is its patented
geosynthetic clay liner (Gundseal(R)) that combines HDPE liners with highly
expansive sodium bentonite clay. The sodium bentonite clay is adhered directly
to the liner, and has demonstrated its primary function of sealing small
punctures accidentally made in the overlaying liner. When hydrated, the
bentonite material is itself a highly impermeable liner taking the place of up
to three feet of compacted clay ordinarily required as a subgrade layer.

  GSE Studliner(R), is fabricated in the Company's facility located in
Rechlin, Germany. This product is finding extensive use in tunnels, corrosive
containment applications, and protecting concrete piping, pilings, and
foundations. The Company fabricates products made from this material for many
types of civil engineering applications.

  The Company also offers a wide variety of specially fabricated products,
such as manholes, sumps, pipe penetration boots, floating booms, and vertical
membrane barrier wall panels. Its product lines include portable secondary
containment pads, temporary or daily landfill covers, and self-installed pond
and pit liners.

  The Company offers third-party products under non-exclusive agreements, such
as geogrids, HDPE piping, and geotextiles. Polypropylene products are
manufactured and sold by the Company's subsidiary in the United Kingdom, in
addition to products manufactured from polyethylene.

  The Company considers quality control and testing as critical to the
successful operation of its manufacturing and installation business. At its
in-house laboratories, it conducts various quality control tests, as well as
other sophisticated physical and chemical property tests. On-site testing of
its manufactured products is conducted continuously during the manufacturing
process. Our laboratories monitor the quality of incoming raw materials, and
perform routine tests on all finished products. Certifications as to the
quality and test results are routinely furnished to customers as part of the
quality assurance program.

  The Company believes that its products made from HDPE and VFPE resins offer
several critically important physical advantages over other resin liner
products. Those advantages include: chemical resistance to various acids,
alkalis, aromatic solvents and oils; puncture resistance and tendency to
stretch rather than tear under certain pressures; and relative impermeability.
These characteristics are the reason that the Company's products represent a
major portion of the geosynthetic liner market, particularly in solid waste
applications.

                                       2
<PAGE>

SERVICES

  The Company often provides its customers with installation services. Trained
field personnel travel to the customers' job sites and install products.
Company trained crews are available in the United States, the United Kingdom,
central Europe and Australia. Inside the United States, a network of carefully
selected independent dealers also provides installation services. Outside the
United States, in addition to the Company's installation capabilities, a
network of qualified distributors and subcontractors provide installation
services. Upon request from a customer using third-party installers, the
Company may furnish a technical supervisor to monitor installation activities
and provide quality assurance.

  Sheeting products are field-joined using hot wedge or extrusion welders. The
computer controlled, self-propelled wedge welding equipment creates a dual
track seam resulting in a homogeneous bond created between the sheets. The
presence of an unwelded channel between the dual seams allows trained
technicians to perform 100% non-destructive quality control testing of the
welds. The extrusion welding equipment extrudes hot resin through the dual head
of the welder resulting in an integration of the hot resin with the sheet
liner. These two forms of seam formation are considered superior to other
methods of bonding, including gluing. The strength and adequacy of seam welds
are tested by some combination of the following test methods: (1) cutting
samples from the liner and destructively testing the weld seams; (2) pressure
testing the air channel created during the wedge welding process; (3)
performing vacuum testing for air tightness of the extrusion welds; and (4)
electric spark testing of the conductive liner.

RESEARCH AND DEVELOPMENT

  The Company's research and development efforts focus on new products, new
quality control procedures, and more efficient manufacturing and installation
techniques. Expenditures in 1999 were $1,616,000, compared to $1,845,000 in
1998 and $1,851,000 in 1997.

RAW MATERIALS

  The Company's high-grade polyethylene resins are purchased from at least two
primary suppliers at each manufacturing location. These resins arrive ready for
screening tests already formulated with Company designated stabilizers and
antioxidants. The Company consistently works with its suppliers to ensure
supply, pricing stability, quality and new product development. Occasionally,
resins are in short supply and subject to substantial price fluctuations. The
Company has not encountered any significant difficulty to date in obtaining
resins in sufficient quantities at all of its facilities to support its
worldwide demands for its products. Any significant interruption in resin
supplies or abrupt increase in prices could have a material adverse impact on
the Company's operations.

APPLICATIONS

  This table describes the principal applications of the Company's Products for
the past three years based on the sales and operating revenues for each
application.

                          SALES BY MARKET APPLICATION
                                 (in thousands)
<TABLE>
<CAPTION>
                                          Year Ended December 31,
                                   ----------------------------------------
                                     1999    %     1998    %     1997    %
                                   -------- ---  -------- ---  -------- ---
<S>                                <C>      <C>  <C>      <C>  <C>      <C>
Solid Waste Containment            $116,075  65% $117,323  65% $122,681  62%
Mining                               17,371  10    18,341  10    21,844  11
Hazardous Waste Containment          11,042   6    13,891   8    14,765   7
Liquid Containment                   21,765  12    16,650   9    23,059  12
Other Applications                   12,316   7    13,350   8    16,969   8
                                   -------- ---  -------- ---  -------- ---
Total Sales and Operating Revenue  $178,569 100% $179,555 100% $199,318 100%
                                   ======== ===  ======== ===  ======== ===
</TABLE>

  Solid Waste Containment. This application includes liners for new landfills,
and new cells within existing landfills designed for the disposal or storage of
non-hazardous wastes. Included within this definition are products used to
cover (cap) lined and unlined landfills. Capping is required to prevent
rainwater from creating excessive leachate generation, which may then seep into
groundwater in unlined landfills. A secondary benefit derived from capping is
the collection of methane gas produced as waste decays.

                                       3
<PAGE>

  Mining. The mining industry uses our products for the containment and
confinement of chemicals used in mining gold, copper, and phosphate. These
minerals are dissolved or "leached" from the ore by chemical solutions that
are circulated through the ore-bearing crushed rock deposited on top of the
liner pad. The pad serves as the collection and drainage system for the
mineral-bearing solution. Leaching is a lower cost recovery technique
permitting the extraction of minerals from low-grade ore that previously was
not processed. The Company's products are also used to contain spent ore,
tailings and chemical solutions after the leaching process. Gypsum, a by-
product of the phosphate mining industry, is required to be stored on liners
because of its acidic nature.

  Hazardous Waste Containment. Synthetic liners are extensively used to
contain both solid and liquid hazardous waste and substances with the use of
liners in these applications mandated in the U.S. by the Hazardous and Solid
Waste Amendments of 1984.

  Liquid Containment. The Company's products are used in a wide range of
liquid containment applications including aquaculture ponds, tank linings,
irrigation canals, storm water runoff containment, organic waste from pig and
cattle feedlot operations and potable water reservoirs.

  Other Applications. The Company's products are used in various other
applications involving secondary containment and liquid confinement. These
applications are tunnel waterproofing, protection of concrete products from
corrosive chemicals and odor control through the use of floating covers. A
growing application is the use of its products to promote anaerobic digestion
of organic wastes and the capture of the resulting methane gas.

MARKETING AND SALES

  Marketing is a worldwide effort conducted by sales personnel located in the
United States, France, Germany, the United Kingdom, Italy, the Netherlands,
Thailand, Australia, Egypt, and the United Arab Emirates. The Company's multi-
tiered sales efforts are focused on engineers, general contractors, facility
owners, state and federal regulators and government officials who are
responsible for product specifications and the design and awarding of
contracts. A strong network of independent commercial agents, dealers and
distributors throughout the world work closely with the Company's sales staff.

  Advertisements of the Company's products appear regularly in specialized
trade publications and on the Company's worldwide web site (www.gseworld.com).
The Company participates in trade shows, conducts industry seminars and makes
presentations to governmental administrators. Efforts are ongoing to inform
engineers and regulators of the benefits to be derived from using our GSE
White, GSE Conductive and GundSeal products.

  The Company sells its products in a very competitive market place.
Substantial quantities of its products are sold through the competitive
bidding process, whether in the United States or in foreign countries. The
Company bids either directly to the general contractor or owner, or through
one of the Company's independent distributors or dealers. The customers' bid
proposals establish the design and performance criteria for the products. The
Company negotiates the remainder of the contract terms where possible. In most
cases, the Company agrees to indemnify the site owner, general contractor and
others for certain damages resulting from the negligence of the Company and
its employees. The Company often is required to post bid and performance bonds
or bank guarantees. In all cases, the Company provides its customers with
limited material warranties on its products, and limited installation
warranties for its workmanship. These limited warranties may last up to 20
years, but are generally limited to repair or replacement of defective liners
or workmanship on a prorated basis up to the dollar amount of the original
contract.

  In some foreign contracts, the Company may be required to provide the
customer with specified contractual limited warranties as to material quality.
The Company's product warranty liability in many foreign countries is dictated
by local laws in addition to the warranty specified in the contracts. Several
of our foreign subsidiaries sell products and installation services under
competitively bid construction contracts.

  The enactment of numerous environmental laws with corresponding regulations
has enhanced the market for the Company's products. In the United States, the
Resource Conservation and Recovery Act of 1976, as amended (RCRA); Subtitle C-
Hazardous Waste Management; and Subtitle D-State or Regional Solid Waste Plans
provide the legal framework for the storage, treatment and disposal of
hazardous and non-hazardous wastes. Of particular importance to the Company
has been the impact of Subtitle D that regulates the disposal of municipal
solid waste (MSW) at roughly 2,300 U.S. landfills. State regulations adopted
under this title impose strict compliance standards with regard to groundwater
protection, which is exactly what the Company's products are designed to
provide.

                                       4
<PAGE>

  Subtitle D regulations specify the use of a composite liner system consisting
of highly impermeable clay and a geomembrane liner. The liner must be at least
30 mils thick. The United States Environmental Protection Agency (EPA) took
another step in its efforts to protect groundwater when it published a
presumptive remedy requiring the use of a "liner cap" in closed MSW landfills.
This liner cap is designed to prevent groundwater contamination and assist in
the containment of subterranean liquid waste plumes. The Company's products
have been installed in both applications in landfills located throughout the
United States.

  In 1980 the Comprehensive Environmental Response, Compensation and Liability
Act (Superfund) became law. This law was in response to the dangers of
abandoned or uncontrolled hazardous waste sites. Our products are used in the
cleanup work undertaken by owners, operators and waste generators that have
been compelled by the EPA or a state environmental protection agency to clean
up these sites.

  RCRA was amended in 1984 by the Hazardous and Solid Waste Amendments of 1984.
These amendments require all new hazardous waste landfills to use geosynthetic
lining systems composed of two or more liners with leachate collection and
drainage systems above and between the liners. These same amendments require
surface impoundments or ponds used in the containment of certain hazardous
liquids to be double lined. The EPA also established procedures for testing
weld seams joining sections of liners. The Company believes that since 1984,
its products have been the most widely used in these applications.

  Recently, EPA published regulations covering gypsum waste management
generated as a by-product of phosphate mining. Gypsum waste must now be stored
on synthetic lined containment systems. The EPA and the state agencies have
also adopted regulations controlling the handling and storage of hazardous
substances, specifically petroleum products and other chemicals contained in
tanks and lagoons. The Company's products are designed and used to directly
address these applications.

  Similar environmental laws and regulations exist in other countries,
particularly in the European Community, Japan and the Americas. As the world's
populations increase and industrial development continues, the demand for
enforcement of existing laws and the adoption of new laws to protect valuable
natural resources will increase. The focus of current law is on those projects
involving intensive water use and activities that have an impact on groundwater
quality. These activities include agricultural irrigation, animal feedlots and
compounds, aquaculture facilities, industrial storm water runoff containment
areas, canals, mining leach pads and tunnels.

CUSTOMERS

  The primary customers for the Company's products are domestic and
international, municipal and private companies engaged in waste management,
mining, water and wastewater treatment, aquaculture and other industrial
activities, including the engineering and civil works construction companies
serving these customers. Within the last three years, the Company has sold more
than 2 billion square feet of products to customers in more than 70 countries.
The Company is a full service organization that strives to provide its
customers with a single source of geomembrane liners, related products and
services for environmental protection and other uses.

  During the years 1999, 1998, and 1997, no single customer accounted for more
than 10% of the Company's net sales. In those same years, 54%, 52% and 52% of
the Company's net sales were to customers in the United States. The Company
believes that the loss of any one customer would not have a material adverse
effect on the Company's financial position or results of operations.

BACKLOG

  As of December 31, 1999, the Company's backlog was $44.4 million compared to
$60.6 million at December 31, 1998. The Company anticipates that the majority
of the value of construction contracts and customer purchase orders included in
backlog at December 31, 1999 will be completed or filled prior to the end of
2000, subject to weather and other construction related delays. Contracts and
commitments for products and services are occasionally varied, modified, or
cancelled by mutual consent.

SEASONALITY AND OTHER BUSINESS CONDITIONS

  The greatest volume of product deliveries and installations typically occur
during the summer and fall, which results in seasonal fluctuations of revenue.
Often, scheduled deliveries are subject to delays at the customers' request

                                       5
<PAGE>

to correspond with customers' annual budgetary and permitting cycles. The
Company uses its manufacturing capacity at its various locations in an attempt
to mitigate the seasonal fluctuation on its manufacturing, delivery, and
installation schedules. (See Supplementary Data.)

COMPETITION

  The Company believes that there are approximately 30 companies engaged in
the production of various synthetic geomembrane liners worldwide. These
companies offer the wide range of products identified in the section on
Company Products. The Company's competition is not limited to those companies
that manufacture polyethylene liners, but encompasses companies offering PVC,
Hypalon, and EPDM geomembranes. A least 12 of the companies manufacturing HDPE
liners compete directly with the Company in the United States.

  The principal resin types used in the products sold by the Company are high-
density polyethylene and very flexible polyethylene. In addition to HDPE and
VFPE products manufactured by its primary competitors, the Company's products
compete directly with flexible membrane liners manufactured from other forms
of resins. Other resins are: polyvinyl chloride (PVC), ethylene propylene
diene terpolymer (EPDM), scrim-reinforced chlorosulphonated polyethylene
(Hypalon), and polypropylene.

  The Company encounters competition in its other product lines in the United
States with three companies competing in the sale and installation of
geosynthetic clay liners. In the geonet market, six companies offer products
that directly compete with the Company's geonet product line.

  Competition is based on the performance of the lining systems, installation
capacity and pricing. As a full service company that manufactures, sells and
installs a full range of geosynthetic products, the Company believes that it
maintains its position within the market because of the quality and
performance of its products and installation services. The combining of its
financial strength with its full service program enables the Company to remain
competitive. Pricing remains very competitive with over-capacity in the
industry driving margins downward. Two of the larger competitors in the United
States merged in late 1999, and the impact of that merger in the marketplace
will be more fully understood in the year 2000. One new competitor commenced
production of HDPE liner in Taiwan in 1999. The appearance of new competitors
in a slow growth market demonstrates a lack of barriers to entry into this
market.

EMPLOYEES

  The Company had a total of 788 employees as of December 31, 1999, with 579
employed in the United States. During peak construction periods, the Company's
workforce increases in all locations. In the off-season construction period,
the Company maintains a nucleus of experienced employees somewhat below the
peak season staffing levels. Some of the Company's full-time employees in
foreign locations are unionized, but the Company has never experienced a
strike or lockout. The Company believes its employee relations are
satisfactory.

  The Company is firmly committed to a policy of Equal Employment Opportunity
and administers its personnel policies and conducts its employment practices
in a manner which treats each employee and applicant for employment on the
basis of merit, experience and other work-related criteria without regard to
race, color, religion, sex, national origin, ancestry, age, disability or any
other protected class under relevant state and federal laws.

PATENTS AND PROPRIETARY INFORMATION

  The Company has received patents from the U.S. Patent and Trademark Office
for its GSE White, GSE Conductive and GSE CurtainWall products, as well as its
FrictionFlex texturing process. Certain of these patents are either registered
or in the process of being registered in select foreign countries. It has
registered its new trademark and logo ("GSE") with the same patent office and
is in the process of registering this trademark in select foreign countries.
The Company has other patents, license-to-use patents (such as GundSeal), and
pending applications. Although in the aggregate GSE's patents are important in
the operation of its businesses, the loss, by expiration or otherwise, of any
one patent or group of patents would not materially effect its business.

ITEM 2. PROPERTIES.

  The Company manufactures its products in six locations around the world.
These operations use flat sheet extrusion and round die extrusion
manufacturing technologies to produce products. There are eleven extrusion
lines for producing liner products, and three for the production of drainage
net products.

                                       6
<PAGE>

UNITED STATES

  GSE Lining Technology, Inc. conducts U.S. operations at the Company's
headquarters located on a 21.5-acre tract of Company-owned land in an
industrial park in Houston, Texas. This location has 31,400 square feet of
office space in two buildings, housing administrative, sales, and installation
functions. Here the Company has two large manufacturing facilities servicing
the U.S. and foreign markets. One manufacturing facility is a 67,000 square
foot building of metal skin over steel frame construction that contains seven
blown film round die extrusion lines, and one geocomposite line. Fabrication is
housed in a 12,000 square foot facility.

  The second manufacturing facility in Houston occupies 16.9 acres of Company-
owned land with 3,300 square feet of office space, and two buildings with a
total of 83,000 square feet for manufacturing operations. The manufacturing
buildings house a flat cast sheet-extrusion line, as well as a
geonet/geocomposite line and a texturing line. The flat sheet extruder is
considered the most precise method in the industry for manufacturing certain
mil thickness of sheeting.

  The Company's patented GundSeal products are manufactured on one production
line housed in a Company-owned 16,000 square foot building located in
Spearfish, South Dakota. The plant is located near the sources for clay
(bentonite).

GERMANY

  GSE Lining Technology GmbH headquartered in Hamburg, Germany, manages the
Company's European operations. Its manufacturing facility is located in
Rechlin, Germany, on 8.2 acres owned by the Company. From this location, the
Company supplies its customers with products manufactured on a flat cast
extrusion line and two texturing lines. Operating at the same facility is a
fabrication department involved in fabricating products from the Company's
StudLiner sheeting. The Company's staff in Hamburg can help its customers in 21
languages.

UNITED KINGDOM

  The Company's operations in the United Kingdom are carried out by its
subsidiary, GSE Lining Technology Ltd., operating at a .75 acre leased facility
in Soham, England, just north of London. This location has 2,500 square feet of
office space and 10,652 square feet of manufacturing facilities. Its products
are manufactured on a round die extrusion line located on this site. The
Company's administrative, sales, and installation service personnel are housed
at this location. This facility manufacturers both polyethylene and
polypropylene geomembrane products.

EGYPT

  The Company owns a 50% interest in two joint ventures, Hyma/GSE Manufacturing
Co. and Hyma/GSE Lining Technology Co., a manufacturing company and a trading
company. The manufacturing operations are located on a 1.1 acre leased site
outside of Cairo. Located on this site are two buildings totaling 34,262 square
feet that house a flat sheet extrusion line. The trading company operates out
of a small leased facility in Nasr City, Cairo, and its staff sells products
manufactured by the Hyma/GSE Manufacturing Co., the Company, and other
subsidiaries of the Company.

OTHER

  The Company's sales efforts in the United Arab Emirates, Oman, Bahrain,
Qatar, Kuwait and Yemen are conducted by GSE Gulf FZE located in leased
warehouse and sales facilities in the Jebel Ali Free Trade Zone in Dubai. This
joint-venture company warehouses select quantities of products in the duty free
trade zone.

  The Company's sales and installation operations in Australia are carried out
by GSE Lining Technology Pty Ltd. operating out of leased offices located in
Moorebank, New South Wales. It offers the full range of Company geomembranes
and related products, coupled with installation service for customers located
throughout the South Pacific Rim.

  Sales activities for the Company in Asia are conducted by GSE Lining
Technology Company Ltd. located in leased office space in Bangkok, Thailand.
All inquiries from customers, engineering firms and construction companies from
Far East countries about the Company's products and services are directed
through this office.

                                       7
<PAGE>

ITEM 3. LEGAL PROCEEDINGS.

  For information about various legal proceedings involving the Company, see
Note 17 of the Notes to Consolidated Financial Statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

  Not applicable.

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

  The common stock of the Company trades on the New York Stock Exchange under
the symbol GSE. The following table shows the quarterly range of high and low
sale prices for the stock through December 31, 1999.

<TABLE>
<CAPTION>
                   Year Ended
                  December 31,
                --------------------------------
                  1999               1998
                -------------      -------------
                High      Low      High      Low
                ----      ---      ----      ---
<S>             <C>       <C>      <C>       <C>
First Quarter    4 7/16    2 3/4    6 1/8     5 1/4
Second Quarter   4 1/4     3 1/8    5 13/16   4 1/4
Third Quarter    4 15/16   3        4 11/16   2 1/2
Fourth Quarter   4 1/2     2 15/16  4 1/4     3 1/8
</TABLE>

  The approximate number of record holders of the Company's common stock at
February 18, 2000, was 318. Management estimates that the aggregate number of
beneficial holders exceeds 2,000.

  The Company does not currently intend to declare or pay dividends on its
Common Stock and expects to retain funds generated by operations for the
development and growth of the Company's business. The Company's future
dividend policy will be determined by the Company's Board of Directors on the
basis of various factors, including among other things, the Company's
financial condition, cash flows from operations, the level of its capital
expenditures, its future business prospects, the requirements of Delaware law
and any restrictions imposed by the Company's credit facilities.

ITEM 6. SELECTED FINANCIAL DATA.
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                             Year Ended December 31,
                                   --------------------------------------------
                                     1999     1998     1997     1996     1995
                                   -------- -------- -------- -------- --------
<S>                                <C>      <C>      <C>      <C>      <C>
INCOME STATEMENT DATA:
 Sales and operating revenue       $178,569 $179,555 $199,318 $209,372 $248,063
 Gross profit                        35,921   34,928   36,101   49,871   47,690
 Nonrecurring charges                    --       --       --       --   15,270
 Operating income                     9,904    8,918   10,613   22,562    3,727
 Interest expense, net                1,716    2,357    2,191    3,230    5,350
 Income (loss) before income taxes    8,461    6,932    7,846   20,080   (1,296)
 Net income (loss)                    4,907    4,020    4,550   11,646   (2,231)
 Basic and diluted earnings (loss)
  per common share                      .38      .30      .29      .67     (.13)
BALANCE SHEET DATA:
 Working capital                   $ 60,715 $ 59,569 $ 60,461 $ 86,585 $ 79,546
 Total assets                       161,697  169,320  177,961  204,046  196,021
 Total debt                          31,360   37,414   43,395   49,740   55,573
 Stockholders' equity                93,271   89,793   86,110  109,513   97,550
</TABLE>

                                       8
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

  This Form 10-K contains certain forward-looking statements as such term is
defined in the Private Securities Litigation Reform Act of 1995, and
information relating to the Company and its subsidiaries that are based on the
beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. When used in this
report, the words, "anticipate", "believe", "estimate", "expect", "intend" and
words or phrases of similar import, as they relate to the Company or its
subsidiaries or Company management, are intended to identify forward-looking
statements. Such statements reflect the current risks, uncertainties and
assumptions related to certain factors including, without limitations,
competitive market factors, worldwide manufacturing capacity in the industry,
general economic conditions around the world, raw material pricing and supply,
governmental regulation and supervision, 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.

RESULTS OF OPERATIONS

 General

  On January 23, 1997, the Company purchased 2,071,656 shares of its common
stock at a price of $7.00 per share for a total cost of $14,502,000. On
December 16, 1997, the Company purchased 2,200,000 shares of its common stock
at a price of $5.40 per share for a total cost of $11,880,000. Both of these
transactions were funded from the Company's available cash. The Company has
repurchased 394,357 shares of its common stock in open market transactions
since September 1998, under a 1,000,000 share repurchase program. At December
31, 1999, the Company had 12,768,630 shares outstanding.

 Year Ended December 31, 1999, Versus Year Ended December 31, 1998

  The Company's net sales and operating revenue of $178,569,000 decreased
$986,000, or less than 1%, in 1999 from the $179,555,000 reported in 1998. The
decrease was primarily the result of changes in the US dollar value of foreign
entities functional currencies that caused 1999 sales to decrease 3% compared
to 1998. Product prices were about the same in 1999 as 1998. 1999's net sales
and operating revenue were enhanced by 48% of the revenue stream from products
sold with added value installation services vs. 46% in 1998. Sales to the North
American market were $96,551,000 in 1999 compared with $94,900,000 in 1998.
North American unit sales and unit prices were up 1% from 1998. Sales to
foreign markets were $82,018,000 in 1999 compared with $84,655,000 in 1998.
Decreases in foreign exchange rates caused $2,100,000 of the drop. Sales, in
units, in foreign markets were down 2% from 1998.

  Gross profit was $35,921,000 in 1999 compared to $34,928,000 in 1998. This 3%
increase of $993,000 was primarily caused by improved margins as units shipped
were down 1%. Gross profit margin improved to 20% of sales in 1999 from 19% of
sales in 1998. While 1999 selling prices of products were virtually the same as
1998's, lower resin cost and improved installation service margins caused
improvements in the gross margin.

  Selling, general and administrative expenses of $24,649,000 were $18,000
higher in 1999 than in 1998. 1998 expenses included approximately $1,000,000
severance paid to the former President and CEO. Excluding this one-time
expense, selling, general and administrative expenses would have been up by
$1,000,000. Expenses were down in the Company's foreign operating units by
almost $300,000 caused primarily by the change in foreign exchange rates. The
increase came from the U.S. operations and was primarily related to
amortization of the cost of the Company's new ERP system.

  Interest expense was $657,000 lower in 1999 than in 1998. This reduction was
the result of a lower level of average debt outstanding. During 1999 the
company repaid $5,000,000 of its 11.17% interest rate debt and reduced debt in
Germany by $924,000.

  Foreign exchange losses of $16,000 were recorded in 1999 compared with
foreign exchange gains of $209,000 in 1998. Last year's gains were primarily
the result of the improved value of the German Deutsche Mark. These gains and
losses result from the Company's foreign operating units entering into sales
and purchases in currencies other than their functional currency.

                                       9
<PAGE>

  The Company recorded Other Income of $289,000 in 1999 compared with Other
Income of $162,000 in 1998. In 1999 there was a decrease of approximately
$211,000 in income from the Company's Egyptian joint ventures compared to
1998.

  The Company's provision for income taxes was $3,554,000 in 1999 compared
with $2,912,000 in 1998. The tax provision in both years was provided at
statutory rates adjusted for permanent differences.

 Year Ended December 31, 1998, Versus Year Ended December 31, 1997

  The Company's net sales of $179,555,000 decreased $19,763,000, or 10%, in
1998 from the $199,318,000 reported in 1997. The decrease resulted from a 5%
decrease in units sold and a 5% drop in product and services selling prices.
The effect on net sales of changes in foreign exchange rates was less than 1%.
Sales to the North American market were $94,900,000 in 1998 compared with
$104,109,000 in 1997. North American unit sales were down 5% from 1997. Sales
to foreign markets were $84,655,000 in 1998 compared with $95,209,000 in 1997.
Decreases in foreign exchange rates caused $1,500,000 of the drop. Sales, in
units, to foreign markets were down 5% from 1997.

  Gross profit was $34,928,000 in 1998 compared to $36,101,000 in 1997. This
3% decrease of $1,173,000 was primarily caused by 5% lower volumes offset by
improved margins. Gross profit margin improved to 19% of sales in 1998 from
18% of sales in 1997. While 1998 selling prices of products were lower than
1997's as a result of lower resin cost, cost reductions exceeded lower selling
prices.

  Selling, general and administrative expenses of $24,631,000 were $524,000
higher in 1998 than in 1997. 1998 expenses included approximately $1,000,000
severance paid to the former President and CEO, who left the Company in April.
Excluding this one-time expense, selling, general and administrative expenses
would have been down by $476,000. Expenses were down in the Company's foreign
operating units by almost $300,000 with the remainder in the U.S. operations.

  Interest expense was $572,000 lower in 1998 than in 1997. This reduction was
the result of a lower level of average debt outstanding. During 1998 the
company repaid $5,000,000 of its 11.17% interest rate debt.

  Interest income of $1,058,000 in 1998 compared with $1,796,000 in 1997. This
decrease was the result of lower levels of short-term investments in 1998.
Short-term investments were reduced $11,880,000 in December 1997 to repurchase
2,200,000 of the Company's common shares.

  Foreign exchange gains of $209,000 were recorded in 1998 compared with
foreign exchange losses of $334,000 in 1997. This year's gains were primarily
the result of the improved value of the German Deutsche Mark. These gains and
losses result from the Company's foreign operating units entering into sales
and purchases in currencies other than their functional currency.

  The Company recorded Other Income of $162,000 in 1998 compared with Other
Expense of $242,000 in 1997. In 1998 there was an improvement of approximately
$450,000 in income recorded from the Company's Egyptian joint ventures
compared to 1997.

  The Company's provision for income taxes was $2,912,000 in 1998 compared
with $3,296,000 in 1997. The tax provision in both years was provided at
statutory rates adjusted for permanent differences.

LIQUIDITY AND CAPITAL RESOURCES

  At December 31, 1999, the Company had working capital of $60,715,000 of
which $16,873,000 was cash and cash equivalents. The Company's cash, inventory
and receivable balances fluctuate from quarter to quarter due to the
seasonality of sales. The Company's capital structure consisted of $31,360,000
in debt and $93,271,000 in stockholders' equity at December 31, 1999.

  The Company has a $25,000,000 multi-currency revolving credit facility (the
"Revolver") with Bank of America as agent bank. The Revolver, as amended,
matures on September 30, 2002, and bears interest, at the Company's option, at
the bank's prime rate or LIBOR plus an applicable margin based on the ratio of
funded debt to total capitalization. An annual commitment fee of up to 3/8% is
payable on any unused portion of the facility. Under the terms of the
revolving line of credit agreement, the Company is required to maintain
certain financial ratios and a specific level of consolidated tangible net
worth. At December 31, 1999, and December 31, 1998, there was no balance
outstanding on the Revolver. However, at December 31, 1999, letters of credit
issued under this facility totaled $975,000 thereby reducing the balance
available to $24,025,000 (see Note 8 of the Notes to Consolidated Financial
Statements). The letters of credit issued under this facility secure
performance of installation projects and self-insurance programs.

                                      10
<PAGE>

  The Company has credit facilities with two German banks to support its
European cash management and bank guarantee requirements in the amount of DM
12,000,000. These revolving credit facilities are secured by property and plant
in Germany, which also secures an installment loan and matures in September,
2002, and bears interest at various market rates. These credit facilities are
used primarily to guarantee the performance of European installation contracts.
At December 31, 1999, the Company had DM 7,162,000 available under these credit
facilities with DM 4,838,000 of bank guarantees outstanding.

  The Company has invested approximately $6,000,000 for the purchase of
equipment and working capital for its newly formed operations in Thailand. On
June 15, 2000, the Company will make a $5,000,000 principal payment on its
11.17% Notes. The Company believes that its cash balance, cash generated by
operations and the balance available under the Revolver are adequate to meet
any foreseeable cash requirements during 2000.

  The Company currently purchases its raw material (polyethylene resins) from
at least two suppliers at each location. Polyethylene resins are occasionally
in short supply and are subject to substantial price fluctuation in response to
market demand. The Company has not encountered any significant difficulty to
date in obtaining raw materials in sufficient quantities to support its
operations at current or expected near-term future levels. However, any
disruption in raw material supply or abrupt increases in raw material prices
could have an adverse effect upon the Company's operations.

  The Company's 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 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.

IMPACT OF YEAR 2000

  In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its installation,
remediation and testing of systems. As a result of those efforts the Company
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. The cost incurred by the
Company in the assessment, replacement and installation of Year 2000 systems
was approximately $5.0 million. The Company is not aware of any material
problems resulting from Year 2000 issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its mission critical computer applications and those
of its suppliers and vendors throughout the year to insure that any latent Year
2000 matters that may arise are addressed promptly.

ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

  The Company's exposure to interest rate market risk is limited to credit
facilities that bear interest at the floating rates. As of December 31, 1999,
there was no balances outstanding under the Revolvers. A change in interest
rates would have no impact on the Company's earnings.

  In connection with sales and installation projects outside of the United
States, principally Europe and Australia, the Company may enter into sales or
installation contracts that are denominated in currencies different than the
subsidiary's functional currency. The Company recognizes that its international
operations are subject to the risk of foreign currency fluctuations not present
in domestic operations. Currency losses to date have not been material to the
Company's operations as a whole. The Company's German operation will primarily
take place within the European Union(EU). The exchange rates within the EU are
fixed in relation to the Euro, the currency of the EU. The Euro structure will
eliminate the currency fluctuations among members of the EU and should
eliminate a great deal of the currency risks associated with sales by the
Company's German operation.

  The Company routinely enters into fixed price contracts with commencement of
performance dates spread throughout the year. Due to the nature of the
construction business into which our products are sold, the Company has limited
contractual means of passing through resin price increases. The Company
believes that it successfully manages this risk by:

  a) setting expiration dates on bids,

  b) negotiating delays in announced resin price increases,

  c) carrying inventory to meet expected demand and

  d) planning and staying informed on economic factors influencing resin
  prices.

  The Company does not enter into purchase contracts for the future delivery of
raw materials.

                                       11
<PAGE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                        REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Gundle/SLT Environmental, Inc.

  We have audited the accompanying consolidated balance sheets of Gundle/SLT
Environmental, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. Our audits
also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 Gundle/SLT
Environmental, Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

                                                              ERNST & YOUNG LLP

Houston, Texas
January 28, 2000

                                      12
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                           December 31,
                                                         ------------------
                                                           1999      1998
                                                         --------  --------
<S>                                                      <C>       <C>
Current assets:
 Cash and cash equivalents                               $ 16,873  $ 29,399
 Accounts receivable:
  Trade, net                                               54,010    45,639
  Other                                                       938       878
 Contracts in progress                                      2,508     1,884
 Inventory                                                 19,733    18,562
 Deferred income taxes                                      4,948     5,609
 Prepaid expenses and other                                   804     1,039
                                                         --------  --------
  Total current assets                                     99,814   103,010
Property, plant and equipment, net                         30,881    34,838
Excess of purchase price over fair value of net assets
 acquired, net                                             25,217    26,868
Other assets                                                5,785     4,604
                                                         --------  --------
                                                         $161,697  $169,320
                                                         ========  ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued liabilities                $ 29,073  $ 32,486
 Advance billings on contracts in progress                  2,360     1,861
 Current portion of long-term debt                          5,343     5,366
 Income taxes payable                                       2,323     3,192
 Deferred income taxes                                         --       536
                                                         --------  --------
  Total current liabilities                                39,099    43,441
Deferred income taxes                                       1,858     2,491
Long-term debt                                             26,017    32,048
Other liabilities                                           1,452     1,547
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, 18,096,211 and 18,092,336 shares issued         181       181
 Additional paid-in capital                                69,358    69,374
 Retained earnings                                         55,277    50,370
 Unearned compensation                                         --      (130)
 Accumulated other comprehensive income                       627       832
                                                         --------  --------
                                                          125,443   120,627
 Treasury stock at cost, 5,327,581 shares and 4,964,689
   shares                                                 (32,172)  (30,834)
                                                         --------  --------
  Total stockholders' equity                               93,271    89,793
                                                         --------  --------
                                                         $161,697  $169,320
                                                         ========  ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       13
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                              ----------------------------
                                                1999      1998      1997
                                              --------  --------  --------
<S>                                           <C>       <C>       <C>
Sales and operating revenue                   $178,569  $179,555  $199,318
Cost of products and services                  142,648   144,627   163,217
                                              --------  --------  --------
Gross profit                                    35,921    34,928    36,101
Selling, general and administrative expenses    24,649    24,631    24,107
Amortization of goodwill                         1,368     1,379     1,381
                                              --------  --------  --------
Operating income                                 9,904     8,918    10,613
Other expenses:
 Interest expense                                2,758     3,415     3,987
 Interest income                                (1,042)   (1,058)   (1,796)
 Foreign exchange (gain) loss                       16      (209)      334
 Other (income) expense, net                      (289)     (162)      242
                                              --------  --------  --------
Income before income taxes                       8,461     6,932     7,846
Provision for income taxes                       3,554     2,912     3,296
                                              --------  --------  --------
Net income                                    $  4,907  $  4,020  $  4,550
                                              ========  ========  ========
Basic and diluted earnings per common share   $   0.38  $   0.30  $   0.29
                                              ========  ========  ========
</TABLE>




  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       14
<PAGE>

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>
                                                            Accumulated
                         Common Stock  Additional              Other                  Treasury Stock
                         -------------  Paid-in   Retained Comprehensive   Unearned   ---------------
                         Shares Amount  Capital   Earnings    Income     Compensation Shares  Amount    Total
                         ------ ------ ---------- -------- ------------- ------------ ------ --------  --------
<S>                      <C>    <C>    <C>        <C>      <C>           <C>          <C>    <C>       <C>
Balance at December 31,
 1996                    17,872  $179   $69,405   $41,800     $3,600       $(1,204)     500  $ (4,267) $109,513
 Net income                  --    --        --     4,550                       --       --        --     4,550
 Cumulative translation
  adjustment                 --    --        --        --     (2,249)           --       --        --    (2,249)
                                                                                                       --------
 Comprehensive Income        --    --        --        --         --            --       --        --     2,301
                                                                                                       --------
 Exercise of stock
  options                    70             488        --         --            --       --        --       488
 Restricted stock grant     139     1         8        --         --           153       35        --       162
 Purchases under the
  Employee Stock
  Purchase Plan               6              28        --         --            --       --        --        28
 Treasury stock
  purchases                                                       --                  4,272   (26,382)  (26,382)
                         ------  ----   -------   -------     ------       -------    -----  --------  --------
Balance at December 31,
 1997                    18,087   180    69,929    46,350      1,351        (1,051)   4,807   (30,649)   86,110
 Net income                  --    --        --     4,020         --            --       --        --     4,020
 Cumulative translation
  adjustment                 --    --        --        --       (519)           --       --        --      (519)
                                                                                                       --------
 Comprehensive Income        --    --        --        --         --            --       --        --     3,501
                                                                                                       --------
 Exercise of stock
  options                    --    --        --        --         --            --       --        --        --
 Restricted stock grant      --    --      (580)       --         --           921       93        --       341
 Purchases under the
  Employee Stock
  Purchase Plan               5     1        25        --         --            --       --        --        26
 Treasury stock
  purchases                  --    --        --        --         --            --       65      (185)     (185)
                         ------  ----   -------   -------     ------       -------    -----  --------  --------
Balance at December 31,
 1998                    18,092   181    69,374    50,370        832          (130)   4,965   (30,834)   89,793
 Net income                  --    --        --     4,907         --            --       --        --     4,907
 Cumulative translation
  adjustment                 --    --        --        --       (205)           --       --        --      (205)
                                                                                                       --------
 Comprehensive Income        --    --        --        --         --            --       --        --     4,702
                                                                                                       --------
 Restricted stock grant      --    --       (30)       --         --           130       34        --       100
 Purchases under the
  Employee Stock
  Purchase Plan               4    --        14        --         --            --       --        --        14
 Treasury stock
  purchases                  --    --        --        --         --            --      329    (1,338)   (1,338)
                         ------  ----   -------   -------     ------       -------    -----  --------  --------
Balance at December 31,
 1999                    18,096  $181   $69,358   $55,277     $  627       $    --    5,328  $(32,172) $ 93,271
                         ======  ====   =======   =======     ======       =======    =====  ========  ========
</TABLE>



  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       15
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      -------------------------
                                                       1999     1998     1997
                                                      -------  -------  -------
<S>                                                   <C>      <C>      <C>
Cash flows from operating activities:
 Net income                                           $ 4,907  $ 4,020  $ 4,550
 Adjustments to reconcile net income to cash
  provided by (used in) operating activities:
  Depreciation                                          8,186    7,289    7,148
  Amortization of goodwill                              1,368    1,379    1,381
  Amortization of debt issuance costs                      90       58      120
  Amortization of unearned compensation                    39      (34)     164
  Deferred income taxes                                  (369)    (581)    (749)
  Gain on sale of assets                                 (111)      12     (271)
  Equity in Affiliates and Other                         (274)    (600)      --
  Increase (decrease) in cash due to changes in
   assets and liabilities:
   Accounts receivable, net                            (9,677)   7,807   (2,292)
   Costs and estimated earnings in excess of billings
    on contracts in progress                             (768)     415    1,345
   Inventory                                           (1,502)   3,497   (1,434)
   Prepaid expenses and other, net                        (66)     190      856
   Accounts payable and accrued liabilities            (1,597)  (7,487)   7,166
   Advance billings on contracts in progress              544    1,109     (181)
   Income taxes payable                                  (797)     198     (576)
                                                      -------  -------  -------
    Net cash (used in) provided by operating
     activities                                           (27)  17,272   17,227
                                                      -------  -------  -------
Cash flows from investing activities:
 Additions to property, plant and equipment            (5,286)  (6,674)  (3,769)
 Proceeds from the sale of equipment                      264      289      450
 Advances to affiliates and other, net                     --       --     (123)
                                                      -------  -------  -------
   Net cash used for investing activities              (5,022)  (6,385)  (3,442)
                                                      -------  -------  -------
Cash flows from financing activities:
 Repayments of long-term debt                          (5,863)  (5,991)  (5,916)
 Proceeds from the exercise of stock options and
  purchases under the employee stock purchase plan         14       25      486
 Repurchase of common stock                            (1,338)    (185) (26,382)
                                                      -------  -------  -------
    Net cash used by financing activities              (7,187)  (6,151) (31,812)
Effect of exchange rate changes on cash                  (290)    (181)    (251)
                                                      -------  -------  -------
Net increase (decrease) in cash and cash equivalents  (12,526)   4,555  (18,278)
Cash and cash equivalents at beginning of year         29,399   24,844   43,122
                                                      -------  -------  -------
Cash and cash equivalents at end of year              $16,873  $29,399  $24,844
                                                      =======  =======  =======
Cash paid for interest                                $ 2,934  $ 3,654  $ 4,152
                                                      =======  =======  =======
Cash paid for income taxes                            $ 4,478  $ 3,090  $ 4,764
                                                      =======  =======  =======
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       16
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION --

 Organization --

  Gundle/SLT Environmental, Inc. (the "Company"), a Delaware corporation, was
incorporated in August 1986, and through its wholly owned subsidiaries is
primarily engaged in the manufacture, sale and installation of polyethylene
lining systems.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --

 Consolidation --

  The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. Investments in partially owned
entities in which ownership ranges from 20 to 50 percent are accounted for
using the equity method. All material intercompany balances and transactions
have been eliminated.

 Cash Equivalents --

  The Company considers all highly liquid short-term investments with an
original maturity of three months or less to be cash equivalents.

 Inventory --

  Inventory 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.

 Property, plant and equipment --

  Costs of additions and major improvements are capitalized, whereas
maintenance and repairs which do not improve or extend the life of the asset
are charged to expense as incurred. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book
value and proceeds realized thereon. Interest costs incurred in construction of
assets are capitalized and depreciated over the useful life of the asset.
Depreciation is computed using the straight-line method, based on the estimated
useful lives of the assets. Total repairs and maintenance expense during 1999,
1998 and 1997 was $2,577,000, $2,676,000 and $2,411,000, respectively.

 Excess of purchase price over fair value of net assets acquired --

  The excess of the aggregate price paid by the Company in the acquisition of
businesses, accounted for as a purchase, over the fair market value of the net
assets acquired is amortized on a straight-line basis over periods not
exceeding 40 years. The carrying value of the excess of purchase price over
fair value of net assets acquired is reviewed if the facts and circumstances
suggest that it may be impaired. If this review indicates that the carrying
value will not be recoverable, determined based on the undiscounted cash flows
of the entity acquired over the remaining amortization period, it is reduced to
the discounted cash flow value. As of December 31, 1999 and 1998, accumulated
amortization was $13,878,000 and $12,613,000, respectively.

 Revenue and cost recognition --

  The Company recognizes revenue upon shipment of product to the customer
except when work is being performed under an installation contract. Revenues
from installation contracts are recognized on the percentage-of-completion
method measured by the percentage of costs incurred to total estimated costs
for each contract.

  Cost of sales includes all direct material and labor costs, and indirect
costs such as indirect labor, depreciation, insurance, supplies, tools and
repairs.

  Provisions for the total estimated losses on uncompleted contracts are made
in the period in which such losses are determined. Changes in job performance,
job conditions, estimated profitability and final contract settlements may
result in revisions to costs and income and are recognized in the period in
which the revisions are determined.

                                       17
<PAGE>

                        GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Selling, general and administrative costs are charged to expense as
incurred.

 Deferred costs --

  Debt issuance costs are capitalized and amortized using the effective
interest rate method over the period the related debt is anticipated to be
outstanding.

 Warranty Costs --

  The Company's products are sold and installed with specified limited
warranties as to material quality and workmanship and may extend up to 20
years. Provision for warranty costs are made based on the Company's claims
experience. The reserve for these costs is included in the self-insurance
reserve (see Note 7).

 Income taxes --

  The Company follows the liability method of accounting for income taxes.
Under this method, deferred income tax assets and liabilities are determined
based on differences between the financial statements and income tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse.

 Foreign currency translation --

  Results of operations for foreign subsidiaries with functional currencies
other than the U.S. dollar are translated using average exchange rates during
the year. Assets and liabilities of these foreign subsidiaries are translated
using the exchange rates in effect at the balance sheet date and the resulting
translation adjustments are recognized as a separate component of
stockholders' equity. Gains and losses arising from foreign currency
transactions are recognized in income as incurred.

  In connection with contracts performed outside of the United States, the
Company routinely bids fixed-price contracts denominated in currencies
different than the functional currency of the applicable subsidiary performing
the work. The Company recognizes that such bidding practices, in the context
of international operations, are subject to the risk of foreign currency
fluctuations not present in domestic operations. Losses related to these
contracts are included in cost of sales and have not been significant.

 Foreign exchange contracts --

  The Company occasionally enters into forward contracts and cross currency
swaps in its management of foreign currency exposures. As a matter of policy,
the Company does not speculate in financial markets and therefore, does not
hold these contracts for trading purposes. The Company utilizes what it
considers straightforward instruments to accomplish its objectives.

  The Company is using a cross currency principal and interest rate swap to
effectively convert a portion of its U.S. dollar denominated debt into
Deutsche Marks. The objective of this hedging strategy is the management of
the foreign currency exchange risk associated with its net investment in
Germany and is based on the projected foreign currency cash flows from Germany
over the ten year life of the contract. The Company's investment in Germany
and the foreign currency portion of its swap are adjusted each period to
reflect current foreign exchange rates with the gains and losses recorded in
the equity section of the balance sheet. The differential paid or received on
the interest rate component is recognized as an adjustment to interest
expense.

 Stock options --

  The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and related interpretations in accounting for
stock options. See Note 11 for disclosures required by Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation".

                                      18
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Use of estimates --

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

 Supplier/sources of supply --

  The Company currently purchases its raw material (polyethylene resins) from
at least two suppliers at each location. Polyethylene resins are occasionally
in short supply and are subject to substantial price fluctuation in response to
market demand. The Company has not encountered any significant difficulty to
date in obtaining raw materials in sufficient quantities to support its
operations at current or expected near-term future levels. However, any
disruption in raw material supply or abrupt increases in raw material prices
could have an adverse effect upon the Company's operations.

 Reclassifications --

  The accompanying consolidated financial statements for 1997 and 1998 contain
certain reclassifications to conform with the presentation used in 1999.

 Accounting Changes --

  In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Financial Instruments and Hedging Activities.
Statement 133 requires that all derivatives be recognized as assets and
liabilities and measured at fair value. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and the
resulting designation. Statement 133 is effective for fiscal years beginning
after June 15, 2000 and early adoption is permitted. Because of the Company's
minimal use of derivatives, management does not anticipate the adoption of
Statement 133 will have a significant effect on net income or the financial
position of the Company.

(3) TRADE RECEIVABLES --

  Trade receivables consisted of the following at December 31:
<TABLE>
<CAPTION>
                                  1999     1998
                                 -------  -------
                                 (in thousands)
<S>                              <C>      <C>
Direct sales                     $29,810  $25,862
Contracts:
 Completed                        17,165    6,642
 In progress                       9,304   15,717
 Retainage                         2,985    2,373
                                 -------  -------
                                  59,264   50,594
Allowance for doubtful accounts   (5,254)  (4,955)
                                 -------  -------
                                 $54,010  $45,639
                                 =======  =======
</TABLE>

(4) ACCOUNTING FOR INSTALLATION CONTRACTS --

  The following summarizes installation contracts in progress at December 31:
<TABLE>
<CAPTION>
                                                       1999     1998
                                                      -------  -------
                                                      (in thousands)
<S>                                                   <C>      <C>
Costs incurred on contracts in progress               $40,970  $40,145
Estimated earnings, net of losses                       6,719    5,283
                                                      -------  -------
                                                       47,689   45,428
 Less -- billings to date                              47,541   45,405
                                                      -------  -------
                                                      $   148  $    23
                                                      =======  =======
Included in the accompanying balance sheet under the
 following captions:
 Contracts in progress                                $ 2,508  $ 1,884
 Advance billings                                      (2,360)  (1,861)
                                                      -------  -------
                                                      $   148  $    23
                                                      =======  =======
</TABLE>

                                       19
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(5) INVENTORY --

  Inventory consisted of the following at December 31:
<TABLE>
<CAPTION>
                             1999    1998
                            ------- -------
                            (in thousands)
<S>                         <C>     <C>
Raw materials and supplies  $ 7,101 $ 4,207
Finished goods               12,632  14,355
                            ------- -------
                            $19,733 $18,562
                            ======= =======
</TABLE>

(6) PROPERTY, PLANT AND EQUIPMENT --

  Property, plant and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                  Useful lives
                                     Years      1999     1998
                                  ------------ -------  -------
                                               (in thousands)
<S>                               <C>          <C>      <C>
Land                                           $ 3,005  $ 3,077
Buildings and improvements           10-15      14,506   14,455
Machinery and equipment               3-12      66,280   72,710
Furniture and fixtures                 3-5         846    1,134
                                               -------  -------
                                                84,637   91,376
Less -- accumulated depreciation               (53,756) (56,538)
                                               -------  -------
                                               $30,881  $34,838
                                               =======  =======
</TABLE>

(7) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES--

  Accounts payable and accrued liabilities consisted of the following at
December 31:

<TABLE>
<CAPTION>
                             1999    1998
                            ------- -------
                            (in thousands)
<S>                         <C>     <C>
Trade accounts payable      $14,031 $14,350
Self-insurance reserves       3,086   2,867
Compensation and benefits     2,698   3,066
Accrued construction costs      233     462
Taxes, other than income      1,310   1,617
Other accrued liabilities     7,715  10,124
                            ------- -------
                            $29,073 $32,486
                            ======= =======
</TABLE>

(8) LONG-TERM DEBT --

  Long-term debt consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                              1999     1998
                                                             -------  -------
                                                             (in thousands)
<S>                                                          <C>      <C>
Revolving line of credit payable to banks, interest due
 quarterly                                                   $    --  $    --
11.17% Notes due June 15, 2000, with interest payable
 quarterly at 11.17%                                           5,000   10,000
7.34% Notes due August 1, 2005, with required annual
 principal payments of $5,000,000 beginning August 1, 2001,
 interest payable semi-annually at 7.34%                      25,000   25,000
8% Promissory Note due December 31, 2004, with required
 annual principal and interest payments of $206,000 on
 December 31                                                     822      952
Installment loans, denominated in Deutsche Marks, due
 September, 2002, with required semi-annual principal and
 interest payments, interest rates ranging from 7.5% to
 8.0%, secured by property and plant                             538    1,462
                                                             -------  -------
                                                              31,360   37,414
 Less -- current maturities                                   (5,343)  (5,366)
                                                             -------  -------
                                                             $26,017  $32,048
                                                             =======  =======
</TABLE>

                                       20
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

  The Company entered into a $25,000,000 multi-currency revolving credit
facility (the "Revolver") with Bank of America, N.A. (formerly NationsBank of
Texas, N.A.) as agent, on July 27, 1995. The Revolver as amended, matures on
September 30, 2002, and bears 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 of funded debt to total capitalization. An annual commitment fee of up to
3/8% is payable on any unused portion of the facility. Under the terms of the
revolving line of credit agreement, the Company is required to maintain certain
financial ratios and a specific level of consolidated tangible net worth. As of
December 31, 1999, there was no balance outstanding under the Revolver.
However, letters of credit issued under this facility totaled $975,000 reducing
the balance available to $24,025,000. The letters of credit primarily secure
performance of installation contracts and self-insurance programs.

  The Company has credit facilities with two German banks to support its
European cash management and bank guarantee requirements in the amount of DM
12,000,000. These revolving credit facilities are secured by property and plant
in Germany which also secures an installment loan that matures in September,
2002, and bears interest at various market rates. These credit facilities are
used primarily to guarantee the performance of European installation contracts.
At December 31, 1999, the Company had DM 7,162,000 available under these credit
facilities with DM 4,838,000 of bank guarantees outstanding.

  On July 27, 1995, the Company entered into note agreements (the "7.34%
Notes") with two lenders, in the aggregate amount of $25,000,000, which mature
on August 1, 2005. The 7.34% Notes, which are unsecured, require semiannual
interest payments at a rate of 7.34% that began February 1, 1996, and annual
principal payments of $5,000,000 beginning August 1, 2001. The terms of the
7.34% Notes 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 unless certain other criteria are
met. The 7.34% Notes also require the Company to maintain certain financial
ratios and a specified level of consolidated net worth.

  The 11.17% Notes, which are unsecured, require quarterly interest payments at
a rate of 11.17% that began September 15, 1990, and annual principal payments
of $5,000,000 that began June 15, 1996. The terms of the 11.17% Notes are
consistent with the terms of the 7.34% Notes.

  Summarized below are the maturities of long-term debt of the Company during
the next five years and thereafter (in thousands).

<TABLE>
<CAPTION>
      Year Ending
      December
      31,
      -----------
      <S>           <C>
       2000           5,343
       2001           5,354
       2002           5,295
       2003           5,177
       2004           5,191
       Thereafter     5,000
                    -------
                    $31,360
                    =======
</TABLE>

(9) FINANCIAL INSTRUMENTS --

 Fair value of financial instruments --

  The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables, debt instruments and a cross
currency swap (see "Derivative financial instrument" below). The book values of
cash and cash equivalents, trade receivables and trade payables and floating-
rate debt instruments are considered to be representative of their respective
fair values. The Company had $31,360,000 and $37,414,000 of fixed-rate debt
instruments at December 31, 1999 and 1998, with fair values of approximately
$31,438,000 and $35,586,000, respectively. The fair value of long-term debt was
estimated based on quoted market prices for these or similar issues or on the
current rates offered to the Company for debt of the same remaining maturities.
The difference between the fair value and the carrying value represents the
theoretical net discount or premium the Company would receive or have to pay to
retire all debt at such date.

                                       21
<PAGE>

                        GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Derivative financial instrument --

  Effective October 18, 1996, the Company swapped $10,000,000 in long-term
debt with an annual interest rate of 7.34% for 15,380,000 Deutsche Mark (DM)
denominated long-term debt with an annual interest rate of 6.32%, effectively
hedging a portion of its German net investment. The DM swap agreement requires
the Company to re-exchange 3,076,000 DM for $2,000,000 each August 1 for the
five-year period beginning August 1, 2001. The DM debt is marked to market as
the U.S. Dollar/DM exchange rate changes. These adjustments are included as a
component of comprehensive income in stockholders' equity. Interest payments
and receipts are semi-annual on February 1 and August 1. The DM interest
payments are also subject to exchange rate fluctuations. The gains and losses
resulting from these fluctuations are recognized in interest expense during
the current period. The swap agreement has been amended to anticpate its
settlement in Euros.

(10) PER SHARE INFORMATION--

  The following table sets forth the weighted average shares for the
computation of basic and diluted earnings per share (in thousands):

<TABLE>
<CAPTION>
                                                          Year Ended December
                                                                  31,
                                                          --------------------
                                                           1999   1998   1997
                                                          ------ ------ ------
<S>                                                       <C>    <C>    <C>
Weighted average common shares outstanding                12,931 13,208 15,506
Dilutive securities -- stock options                          --     --      3
                                                          ------ ------ ------
Weighted average common shares outstanding assuming full
 dilution                                                 12,931 13,208 15,509
                                                          ====== ====== ======
</TABLE>

(11)STOCKHOLDERS' EQUITY --

  On September 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. As of December 31, 1999, stockholders' equity
included 394,357 shares repurchased under the plan at an aggregate cost of
$1,522,975.

  During 1997, the Company purchased 4,271,656 shares of its common stock at a
cost of $26,382,000. The transaction was funded with the Company's available
cash balances. The shares purchased represented approximately 26% of the
Company's then outstanding stock.

  The Company's board of directors adopted a qualified employee stock purchase
plan on October 16, 1991, effective January 1, 1992. The plan authorizes the
issuance of up to 100,000 shares of common stock for purchase by participating
employees at a 15% discount from the market price. As of December 31, 1999 and
1998, 39,186 and 35,311 shares, respectively, had been issued under this plan.

  In 1986, the Company's board of directors adopted an employee stock option
plan (the "1986 Employee Plan"). This Plan, as amended, permitted up to
850,000 stock options to be granted. The plan permitted the grant of both
"incentive" and "non-qualified" stock options to employees of the Company.
Each option is exercisable for a period of up to ten years after it is
granted. Unless the terms of the option specify otherwise, options may be
exercised in respect of 33 1/3%, 66 2/3% and 100% of the shares covered, upon
the third, fourth and fifth anniversaries of the date of grant. The option
price cannot be less than the fair market value of the shares on the date the
option is granted. Any options that were available for grant under this plan
as of December 1995, are now a part of the 1995 Incentive Stock Plan.

  During 1988, the Company's board of directors adopted a director stock
option plan (the "1988 Director Plan"), which permits the grant of up to
75,000 "non-qualified" stock options to non-employee directors. The terms of
this plan are substantially the same as those of the 1986 Employee Plan. This
Plan was terminated in December 1995 and subsequently replaced by the 1996
Non-Qualified Stock Option Plan for Non-Employee Directors.

  In 1995, the Company's board of directors adopted the 1995 Incentive Stock
Plan (the "1995 Employee Plan"). The 1995 Employee Plan as subsequently
amended and restated, permits the grant of up to 1,750,000 stock options less

                                      22
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

any options exercised or outstanding under the 1986 Employee Plan. The 1995
Employee Plan provides for the grant of (i) non-qualified stock options, (ii)
incentive stock options, (iii) shares of restricted stock, (iv) shares of
phantom stock, and (v) stock bonuses (collectively, "Incentive Awards"). In
addition, the 1995 Employee Plan permits the grant of cash bonuses payable when
a participant is required to recognize income for federal income tax purposes
in connection with the vesting of shares of restricted stock or the grant of a
stock bonus. Key employees, including officers (whether or not they are
directors), of the Company and its subsidiaries are eligible to participate in
the 1995 Employee Plan. Each non-qualified stock option issued under the 1995
Employee Plan is granted for a period up to seven years after it is granted and
may be exercised in respect of 50% and 100% of the shares covered upon the
first and second anniversaries of the date of grant. The option price cannot be
less than the fair market value of the shares on the date the option is
granted.

  During 1999, 1998 and 1997, the board of directors granted 0, 0, and 138,840
shares, respectively of restricted stock to senior management under the 1995
Employee Plan. One-third of the shares are subject to annual vesting provided
specific financial performance measurements are met by the Company. This plan
also provides for cash bonuses to be paid to grantees to cover federal income
taxes and requires that the grantee be employed at the end of the three year
vesting period in order to receive the shares except under certain
circumstances when the employee is terminated by the Company. Unvested shares
issued to employees who terminate employment prior to the plans three year
vesting period are transferred into treasury shares except under certain
circumstances when the employee is terminated by the Company.

  During 1996, the Company's board of directors adopted the 1996 Non-Qualified
Stock Option Plan for Non-Employee Directors (the "1996 Director Plan"). The
1996 Director Plan authorizes an aggregate of 100,000 shares, of non-qualified
stock options to be issued to non-employee directors. The 1996 Director Plan
provides for the automatic annual grant to each non-employee director of a five
year option to purchase 2,000 shares of common stock at an exercise price equal
to the market price on the date of grant. The options will be granted
immediately following each annual meeting of stockholders, with each option to
vest and become exercisable in its entirety one year from the date of grant.
This Plan replaces the 1988 Director Plan.

  The stock option activity under each plan is set forth below:

<TABLE>
<CAPTION>
                           1986 Employee Plan       1988 Director Plan       1995 Employee Plan      1996 Director Plan
                         ------------------------ ------------------------ ------------------------ ---------------------
                         Shares                   Shares                    Shares                  Shares
                          Under    Option Price    Under    Option Price    Under     Option Price  Under   Option Price
                         Option      Per Share    Option      Per Share     Option     Per share    Option   Per Share
                         -------  --------------- -------  --------------- --------  -------------- ------ --------------
<S>                      <C>      <C>             <C>      <C>             <C>       <C>            <C>    <C>
Outstanding at December
 31, 1996                234,797  $4.27 to $16.92  60,000  $6.25 to $16.17  419,700  $5.38 to $7.13 12,000 $6.50 to $7.00
 Granted                                                                    438,590  $4.88 to $9.00 12,000     $4.88
 Exercised                                                                 (140,090) $5.63 to $7.25
 Cancelled               (50,647) $5.25 to $13.38                           (37,750) $5.50 to $6.75
                         -------  --------------- -------                  --------  -------------- ------
Outstanding at December
 31, 1997                184,150  $5.25 to $15.63  60,000  $6.25 to $16.17  680,450  $4.88 to $9.00 24,000 $4.88 to $7.00
 Granted                                                                    291,500  $4.00 to $5.31 16,000 $5.63 to $5.81
 Exercised
 Cancelled               (32,700) $5.25 to $13.38 (15,000) $6.25 to $16.17  (12,500) $5.25 to $6.50
                         -------  --------------- -------  --------------- --------  -------------- ------
Outstanding at December
 31, 1998                151,450  $5.25 to $15.63  45,000  $6.25 to $11.63  959,450  $4.00 to $9.00 40,000 $4.88 to $7.00
                         -------  --------------- -------  --------------- --------  -------------- ------ --------------
 Granted                                                                    416,000  $3.75 to $3.75 12,000 $3.81 to $3.81
 Exercised
 Cancelled               (56,000) $5.25 to $15.63                          (429,500) $4.00 to $6.50
                         -------  ===============
Outstanding at December
 31, 1999                 94,450  $5.25 to $11.13  45,000  $6.25 to $11.63  945,950  $3.75 to $9.00 52,000 $3.81 to $7.00
                         =======  =============== =======  =============== ========  ============== ====== ==============
Options exercisable       95,450  $5.25 to $11.13  41,664  $6.25 to $11.63  411,200  $4.00 to $9.00 40,000 $4.88 to $7.00
                         =======  =============== =======  =============== ========  ============== ====== ==============
Options available for
 future grants                 0                        0                   283,221                 48,000
                         =======                  =======                  ========                 ======
</TABLE>

                                       23
<PAGE>

                        GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Substantially all outstanding options were priced between $4.00 and $11.63
per share at December 31, 1999. The weighted average of the remaining
contractual life for the outstanding options at December 31, 1999, was 5.4
years. The weighted average price of options outstanding during 1999, 1998 and
1997 was $4.84, $5.69 and $6.59, respectively.

  The Company applies APB Opinion 25 and related Interpretations in accounting
for its stock-based compensation plans. Accordingly, no compensation expense
has been recognized for its 1996 Director Plan and unrestricted stock options
from the 1995 Employee Plan. The compensation expense that has been charged
against income for its performance based restricted stock grant pursuant to
the provisions of the 1995 Employee Plan was $24,000, $(34,000), and $164,000
for 1999, 1998, and 1997, respectively.

  Pro forma information regarding net income and earnings per share is
required by FASB Statement No. 123, "Accounting for Stock-Based Compensation".
Statement 123 also requires that the information be determined as if the
Company has accounted for its employee stock options granted subsequent to
December 31, 1994, under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-
Scholes option pricing model with the following weighted-average assumptions
for 1999, 1998 and 1997, respectively: risk-free interest rates of 6.5%, 4.7%
and 6.0%; a dividend yield of 0%; volatility factors of the expected market
price of the Company's common stock of 60%, 40% and 44% and a weighted-average
expected life of the option of 5 to 7 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 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 estimate
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 purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows (in thousands except for earnings per
share information):
<TABLE>
<CAPTION>
                                             Year Ended December 31,
                                             -----------------------
                                              1999     1998    1997
                                             ------   ------  ------
<S>                                          <C>       <C>    <C>
Net income (loss)
 As reported                                 $4,907   $4,020  $4,550
 Pro forma                                    4,649    3,569   4,235
Basic and diluted earnings (loss) per share
 As reported                                    .38      .30     .29
 Pro forma                                      .36      .27     .27
</TABLE>

  The estimated fair value of stock options issued in 1999 and 1998 was
$258,000 and $639,000, respectively.

(12) INCOME TAXES --

  Domestic and foreign income before income taxes were as follows:
<TABLE>
<CAPTION>
                                             Year Ended December 31,
                                             -----------------------
                                             1999     1998     1997
                                             ------  ------   ------
                                                 (in thousands)
<S>                                          <C>    <C>    <C>
Domestic                                     $4,107   $4,796  $5,836
Foreign                                       4,354    2,136   2,010
                                             ------   ------  ------
 Total                                       $8,461   $6,932  $7,846
                                             ======   ======  ======
</TABLE>

                                      24
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
                                    Year Ended December 31,
                                    -----------------------
                                     1999    1998    1997
                                    ------  ------  ------
                                       (in thousands)
<S>                                 <C>     <C>     <C>
Current expense:
 U.S.
  Federal                           $2,025  $1,720  $2,149
  State                                181     139     195
                                    ------  ------  ------
  Total U.S                          2,206   1,859   2,344
 Foreign                             2,214   1,411   2,081
                                    ------  ------  ------
  Total current                      4,420   3,270   4,425
Deferred expense (benefit):
 U.S.
  Federal                             (356)    (57)    129
  State                               (138)     (1)     19
                                    ------  ------  ------
  Total U.S                           (494)    (58)    148
 Foreign                              (372)   (300) (1,277)
                                    ------  ------  ------
  Total deferred                      (866)   (358) (1,129)
                                    ------  ------  ------
  Total provision for income taxes  $3,554  $2,912  $3,296
                                    ======  ======  ======
</TABLE>

  A reconciliation between the provision for income taxes and income taxes
computed by applying the statutory rate is as follows:
<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                                -----------------------
                                                 1999    1998    1997
                                                ------  ------  ------
                                                   (in thousands)
<S>                                             <C>     <C>     <C>
Tax provision (benefit) at statutory rate       $2,877  $2,357  $2,667
Add (deduct):
 Amortization of goodwill                          388     451     449
 Meals and entertainment disallowance              350     387     375
 Foreign Sales Corporation benefit                (170)   (204)   (306)
 Taxable differential for foreign subsidiaries     243     139     122
 State income taxes                                 98      91      72
 Equity in Unconsolidated Foreign Joint Venture    (80)   (152)
 Other, net                                       (152)   (157)    (83)
                                                ------  ------  ------
                                                $3,554  $2,912  $3,296
                                                ======  ======  ======
</TABLE>

  The tax effects of temporary differences that gave rise to the deferred tax
assets and liabilities were as follows at December 31:
<TABLE>
<CAPTION>
                                                    1999   1998
                                                   ------ ------
                                                   (in thousands)
<S>                                                <C>    <C>
Deferred tax assets:
 Accrued expenses                                  $4,778 $5,581
 Other                                                255     77
                                                   ------ ------
                                                    5,033  5,658
                                                   ------ ------
Deferred tax liabilities:
 Excess of tax depreciation over book depreciation  1,943  2,607
 Long-term contracts                                   --    284
 Other                                                 --    186
                                                   ------ ------
                                                    1,943  3,077
                                                   ------ ------
  Total deferred tax asset                         $3,090 $2,581
                                                   ====== ======
</TABLE>

  Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $5,274,000 at December 31, 1999. Those earnings are considered to
be indefinitely reinvested and, accordingly, no provision for U.S. federal and
state income taxes has been provided thereon. Upon distribution of those
earnings in the form of

                                       25
<PAGE>

                        GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

dividends or otherwise, the Company would be subject to both U.S. income taxes
(subject to an adjustment for foreign tax credits) and withholding taxes
payable to the various foreign countries. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable because of
the complexities associated with its hypothetical calculation.

(13) EMPLOYEE BENEFIT PLANS --

  The Company has a defined contribution employee benefit plan under which
substantially all U.S. employees are eligible to participate. The Company
matches a portion of the employees' contributions. The Company contributed
$472,000, $441,000 and $412,000 to the plan during the years ended
December 31, 1999, 1998 and 1997, respectively. Under the terms of the plan,
contributions to the plan may be discontinued at any time.

(14) PENSION PLAN --

  The Company's German subsidiary has an unfunded pension plan providing
benefits to three former employees. The plan provides fixed minimum pension
payments at retirement age. There are no assets held in outside funds.

  The Company has adopted FAS 87, "Employers' Accounting for Pensions";
however, to the extent pension costs under German law exceed amounts computed
under FAS 87, those additional amounts are recorded by the Company. Pension
expense for the years ended December 31, 1999, 1998, and 1997 was $84,000,
$132,000 and $96,000 respectively. The actuarial present value of accumulated
benefits was $1,302,000 and $1,453,000 as of December 31, 1999 and December
31, 1998, respectively. The projected benefit obligation for service rendered
to date, net of unrecognized prior service cost, was $1,302,000 and $1,453,000
as of December 31, 1999 and 1998, respectively.

  The computation assumed a discount rate on benefit obligations of 7%, annual
salary increases of 2% and annual benefit increases of 2% for 1999 and 1998.

(15) CONCENTRATION OF CREDIT RISK --

  Accounts receivable, as financial instruments, could potentially subject the
Company to concentrations of credit risk. The Company continuously evaluates
the creditworthiness of its customers and may require customers to provide
letters of credit to guarantee payments. During 1999, 1998 and 1997, no single
customer accounted for 10% or greater of total net sales.

(16) RESEARCH AND DEVELOPMENT COSTS --

  Research and development costs are charged to expense as incurred. The
amounts of research and development and quality control expenditures during
the years ended December 31, 1999, 1998 and 1997 were $1,616,000, $1,845,000
and $1,851,000 respectively.

(17) COMMITMENTS AND CONTINGENCIES --

 Product warranties and insurance coverage --

  The Company's products are sold and installed with specified limited
warranties as to material quality and workmanship. These limited warranties
may last for up to 20 years, but are generally limited to repair or
replacement by the Company of the defective liner or the dollar amount of the
contract involved, on a prorated basis. The Company may also indemnify the
site owner or general contractor for other damages resulting from negligence
of the Company's employees. The Company often is required to post bid and
performance bonds or bank guarantees covering the full amount of an
installation contract.

  Although the Company is not exposed to the type of potential liability that
might arise from being in the business of handling, transporting or storing
hazardous waste or materials, the Company could be susceptible to liability
for environmental damage or personal injury resulting from defects in the
Company's products or negligence by Company employees in the installation of
its lining systems. Such liability could be substantial because of the
potential that hazardous or other waste materials might leak out of their
containment system into the environment.

                                      26
<PAGE>

                         GUNDLE/SLT ENVIRONMENTAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company maintains liability insurance, which includes contractors pollution
liability coverage in amounts which it believes to be prudent. However, there
is no assurance that this coverage will remain available to the Company. While
the Company's claims experience to date may not be a meaningful measure of its
potential exposure for product liability, the Company has experienced no
material losses from defects in products and installations.

 Litigation and claims --

  The Company is involved in litigation arising in the ordinary course of
business, which in the opinion of management, will not have a material adverse
effect on the Company's financial position or results of operations.

 Operating Leases --

  The Company leases certain equipment through operating lease arrangements of
varying terms. Annual rental expense under the terms of non-cancelable
operating leases is less than 1% of consolidated revenues.

(18) SEGMENT INFORMATION --

  The Company operates exclusively in the geosynthetic liner market.
Substantially all sales and operating revenues result from the sale and
installation of the Company's manufactured products. These products are
manufactured and sold in various locations throughout the world using similar
raw materials (polyethylene resin), production processes (flat or round die
extrusion) and distribution channels (product and installation sales made
directly to customers or through representatives of the Company).

  Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information allows the aggregation of an
enterprise's segments if they are similar. The Company operates in different
geographic areas, however, the Company has reviewed the aggregation criteria
and determined that the Company operates as one segment based on the high
degree of similarity of the following aspects of the Company's operations:

  .  nature of the products and services,

  .  raw materials and production processes used,

  .  customers and markets served,

  .  methods used to distribute products and services,

  .  effects of regulatory influences on the market, and the economic
     characteristics of the products and services in different geographical
     areas.

<TABLE>
<CAPTION>
                                                           Years Ended
                                                     ------------------------
                                                      1999    1998     1997
                                                     ------- ------- --------
<S>                                                  <C>     <C>     <C>
Sales to unaffiliated customers (based on the
 geographic location of the customer):
 United States                                       $94,767 $92,934 $102,682
 Europe                                               51,256  49,195   51,928
 Latin & South America                                 8,923  15,300   14,553

 Far East/Pacific Rim                                 13,496  13,309   21,353
 Other                                                10,128   8,817    8,800

 Only sales to one country, the United States,
 accounted for more than 10% of total sales. Sales
 into other countries, accounting for less than 10%

 of total sales, have been aggregated into
 geographic regions for this presentation.

Long lived assets (principally property, plant and
 equipment):
 United States                                        23,368  25,481   25,551
 Germany                                               4,729   6,532    6,528
 Other                                                 5,319   5,393    5,756

 Only long-lived assets in the United States and Germany accounted for more
 than 10% of total long-lived assets.
</TABLE>

                                       27
<PAGE>

                        GUNDLE/SLT ENVIRONMENTAL, INC.
                              SUPPLEMENTARY DATA

CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED) --

  Unaudited quarterly information for fiscal 1999 and 1998 is as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                   1999                              1998
                      --------------------------------  --------------------------------
                                  Quarter                           Quarter
                      --------------------------------  --------------------------------
                       First   Second   Third  Fourth    First   Second   Third  Fourth
                      -------  ------- ------- -------  -------  ------- ------- -------
<S>                   <C>      <C>     <C>     <C>      <C>      <C>     <C>     <C>
Net sales             $22,448  $52,069 $61,389 $42,663  $31,319  $49,636 $57,086 $41,514
Gross profit            2,886   12,166  14,296   6,573    5,125    8,733  11,978   9,092
Income (loss) before
 income taxes          (4,151)   5,152   7,944    (484)  (1,525)   1,031   4,985   2,441
Net income (loss)      (2,408)   2,989   4,607    (281)    (869)     587   2,842   1,460
Basic and diluted
 earnings (loss) per
 Common share            (.18)     .23     .36    (.02)    (.07)     .04     .22     .11
</TABLE>




 The above data should be read in conjunction with the consolidated financial
                         statements and notes thereto.

                                      28
<PAGE>

                                                                     SCHEDULE II

                         GUNDLE/SLT ENVIRONMENTAL, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                 Balance at Additions            Balance
                                 Beginning   Charged             at End
Description                       of Year   to Expense Writeoffs of Year
-----------                      ---------- ---------- --------- -------
<S>                              <C>        <C>        <C>       <C>
December 31, 1997:
 Allowance for doubtful accounts   $5,424     $1,290    $2,367   $4,347
                                   ======     ======    ======   ======
December 31, 1998:
 Allowance for doubtful accounts   $4,347     $1,394    $  785   $4,955
                                   ======     ======    ======   ======
December 31, 1999:
 Allowance for doubtful accounts   $4,955     $1,195    $  896   $5,254
                                   ======     ======    ======   ======
</TABLE>

                                       29
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

  Not applicable.

                                   PART III

  Part III (Items 10 through 13) is omitted since the Company expects to file
with the Securities and Exchange Commission within 120 days following December
31, 1999, definitive proxy materials pursuant to Regulation 14A under the
Securities Exchange Act of 1934 involving the annual election of directors and
certain other matters. If for any reason such a statement is not so filed,
this Report will be appropriately amended.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

  (a)(1) Financial statements (see financial statements at pages 12-27)

  (a)(2) Supplementary data (see page 28)

  (a)(3) Financial schedule (see page 29)

  Schedules not listed above are omitted since the information required to be
submitted has been included in the financial statements or the notes thereto,
or the schedules are not required.

  (a)(3) Exhibits:

<TABLE>
<CAPTION>
 Exhibit
   No.
 -------
 <C>     <S>
 2-A     --Plan Agreement of Merger dated March 28, 1995, between the Company
          and SLT Environmental, Inc. (Exhibit A to Registrant's Preliminary
          Proxy Statement filed on May 4, 1995, is incorporated herein by
          reference).
 3-A     --Articles of Incorporation as amended (Exhibits 3.1, 3.2 and 3.3 to
          Registrant's Registration Statement No. 33-9809 are incorporated
          herein by reference).
 3-B     --Bylaws (Exhibit 3.4 to Registrant's Registration Statement
          No. 33-9809 is incorporated herein by reference).
 4-E     --Credit Agreement dated as of July 27, 1995, between the Company, the
          financial institutions named therein and NationsBank of Texas, N.A.,
          as agent (incorporated by reference to Exhibit 1.6 to Registrant's
          Current Report on Form 8-K filed on August 9, 1995).
 4-F     --Note Agreements dated as of June 15, 1995, between Gundle
          Environmental Systems, Inc. and certain institutions covering the
          Senior Notes due August 1, 2005 (Incorporated by reference to
          Exhibits 1.3 and 1.4 to Registrant's Current Report on Form 8-K filed
          August 9, 1995).
 10-B    --Registrant's 1986 stock option plan (Exhibit 10.11 to Registrant's
          Registration Statement
          No. 33-44306 is incorporated herein by reference).
 10-G    --Registrant's 1995 Amended and Restated Incentive Stock Plan.
          (Incorporated by reference to 4.1 of the Registrant's Registration
          Statement number 333-01759)
 10-I    --Employment Agreement dated March 10, 1997, between Roger J. Klatt
          and the Company. (Incorporated by reference to Exhibit of the same
          Number in Registrant's 1997 Annual Report on Form 10-K)
 10-J    --Registrant's 1996 Nonqualified Stock Option Plan for Non-Employee
          Directors (Exhibit 4.1 to Registrant's Report on Form S-8 No. 333-
          23299 is incorporated herein by reference).
 10-K    --Employment letter dated June 4, 1998, between Samir T. Badawi and
          the Company. (Incorporated by reference to Exhibit of the same Number
          in Registrant's 1998 Annual Report on Form 10-K)
 10-L    --Amendment dated June 4, 1998, to the Employment Agreement dated
          March 10, 1997, between Roger J. Klatt and the Company. (Incorporated
          By reference to Exhibit of the same Number in Registrant's 1998
          Annual Report on Form 10-K)
 11      --Computation of per share earnings (see financial statements at
          page 22)
 21      --Subsidiaries.
 23      --Consent of Independent Auditors -- Ernst & Young LLP.
 27      --Financial Data Schedule.
</TABLE>

  (b) Reports on Form 8-K -- None.

  (c) Exhibits (see Item (a)(3), above).

  (d) Additional financial statements (see Items (a)(1) and (a)(2) above).

                                      30
<PAGE>

                                   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 the 2nd day of
March, 2000.

                                 GUNDLE/SLT ENVIRONMENTAL, INC.

                                 By /s/ Samir T. Badawi
                                    ___________________________________________
                                    Samir T. Badawi, President

  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 in the capacities indicated on the 2nd day of March, 2000.


<TABLE>
<CAPTION>
              Signature                                  Title
              ---------                                  -----

<S>                                    <C>
         /s/ Samir T. Badawi           Director and Principal Executive Officer
______________________________________
            Samir T. Badawi

          /s/ Roger J. Klatt           Principal Financial and Accounting Officer
______________________________________
             Roger J. Klatt

         /s/ Samir T. Badawi           Director and Chairman of the Board
______________________________________
            Samir T. Badawi

          /s/ James R. Burke           Director
______________________________________
             James R. Burke

         /s/ Ahmed Y. Khalawi          Director
______________________________________
            Ahmed Y. Khalawi

        /s/ T. William Porter          Director
______________________________________
           T. William Porter

           /s/ Hugh L. Rice            Director
______________________________________
              Hugh L. Rice

          /s/ Brian D. Young           Director
______________________________________
             Brian D. Young

        /s/ Edward T. Sheehan          Director
______________________________________
           Edward T. Sheehan
</TABLE>

                                       31
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
   No.
 -------
 <C>     <S>
 2-A     --Plan Agreement of Merger dated March 28, 1995, between the Company
          Proxy Statement filed on May 4, 1995, is incorporated herein by and
          SLT Environmental, Inc. (Exhibit A to Registrant's Preliminary
 3-A     --Articles of Incorporation as amended (Exhibits 3.1, 3.2 and 3.3 to
          Registrant's Registration Statement No. 33-9809 are incorporated
          herein by reference).
 3-B     --Bylaws (Exhibit 3.4 to Registrant's Registration Statement
          No. 33-9809 is incorporated herein by reference).
 4-E     --Credit Agreement dated as of July 27, 1995, between the Company, the
          financial institutions named therein and NationsBank of Texas, N.A.,
          as agent (incorporated by reference to Exhibit 1.6 to Registrant's
          Current Report on Form 8-K filed on August 9, 1995).
 4-F     --Note Agreements dated as of June 15, 1995, between Gundle
          Environmental Systems, Inc. and certain institutions covering the
          Senior Notes due August 1, 2005 (Incorporated by reference to
          Exhibits 1.3 and 1.4 to Registrant's Current Report on Form 8-K filed
          August 9, 1995).
 10-B    --Registrant's 1986 stock option plan (Exhibit 10.11 to Registrant's
          Registration Statement
          No. 33-44306 is incorporated herein by reference).
 10-G    --Registrant's 1995 Amended and Restated Incentive Stock Plan.
          (Incorporated by reference to 4.1 of the Registrant's Registration
          Statement number 333-01759)
 10-I    --Employment Agreement dated March 10, 1997, between Roger J. Klatt
          and the Company. (Incorporated by reference to Exhibit of the same
          Number in Registrant's 1997 Annual Report on Form 10-K)
 10-J    --Registrant's 1996 Nonqualified Stock Option Plan for Non-Employee
          Directors (Exhibit 4.1 to Registrant's Report on Form S-8 No. 333-
          23299 is incorporated herein by reference).
 10-K    --Employment letter dated June 4, 1998, between Samir T. Badawi and
          the Company. (Incorporated by reference to Exhibit of the same Number
          in Registrant's 1998 Annual Report on Form 10-K)
 10-L    --Amendment dated June 4, 1998, to the Employment Agreement dated
          March 10, 1997, between Roger J. Klatt and the Company. (Incorporated
          By reference to Exhibit of the same Number in Registrant's 1998
          Annual Report on Form 10-K)
 11      --Computation of per share earnings (see financial statements at
          page 22)
 21      --Subsidiaries.
 23      --Consent of Independent Auditors -- Ernst & Young LLP.
 27      --Financial Data Schedule.
</TABLE>

                                       32