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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1998

REGISTRATION NO. 333-63287

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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TREX COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 3089 54-1910453
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTIONOF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

20 SOUTH CAMERON STREET
WINCHESTER, VA 22601
(540) 678-4070
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ANTHONY J. CAVANNA
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
TREX COMPANY, INC.
20 SOUTH CAMERON STREET
WINCHESTER, VA 22601
(540) 678-4070
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:

RICHARD J. PARRINO, ESQ. BRIAN HOFFMANN, ESQ.
HOGAN & HARTSON L.L.P. MCDERMOTT, WILL & EMERY
555 13TH STREET, N.W. 50 ROCKEFELLER PLAZA, 11TH FLOOR
WASHINGTON, DC 20004-1190 NEW YORK, NY 10020-1605
(202) 637-5600 (212) 547-5400

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434,please check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION DATED NOVEMBER 13, 1998

________ SHARES

[LOGO APPEARS HERE] TREX COMPANY, INC.

COMMON STOCK

Trex Company, Inc. (the "Company") is hereby offering (the "Offering")
___________ shares (the "Shares") of the Company's common stock, par value
$.01 per share (the "Common Stock"). Prior to the Offering, there has been no
public market for the Common Stock and there can be no assurance that any
active trading market will develop. It is anticipated that the initial public
offering price will be between $_______ and $________ per Share. See
"Underwriting" for information relating to the factors to be considered in
determining the initial public offering price.

The Company will apply for the Common Stock to be listed on the New York
Stock Exchange (the "NYSE") under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS IN CONNECTION WITH AN
INVESTMENT IN THE SHARES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION OF THE
CONTRARY IS A CRIMINAL OFFENSE.

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share.............................. $ $ $
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Total (3).............................. $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses of the Offering estimated at $ which will
be paid by the Company out of the proceeds of the Offering.

(3) The Company has granted to the Underwriters an option (the "Over-Allotment
Option") exercisable for a 30-day period from the closing of the Offering
to purchase up to an additional ____________ shares of Common Stock on the
same terms set forth above to cover over-allotments, if any. If the Over-
Allotment Option is exercised in full, the total Price to Public will be
$ ________ , the total Underwriting Discounts and Commissions will be
$ ________ and the total Proceeds to the Company will be $________ .

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The Shares are being offered by the several Underwriters named herein,
subject to prior sale and acceptance by the Underwriters and subject to their
right to reject any order in whole or in part. It is expected that the Shares
will be available for delivery on or about _________, 1998 at the offices of
Schroder & Co. Inc., New York, New York.

SCHRODER & CO. INC. J.C. BRADFORD & CO.

___________, 1998

[TREX ARTWORK]

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CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
INCLUDING OVER-ALLOTMENTS, STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS
AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

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SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
Financial Statements and related Notes thereto appearing elsewhere in this
Prospectus. Except as otherwise indicated, the information in this Prospectus
assumes (i) consummation of the Reorganization (as defined below) and (ii)
consummation of the Offering at an initial public offering price of $ per
share (the midpoint of the range set forth on the cover page of this
Prospectus) and no exercise of the Over-Allotment Option. Unless otherwise
indicated, references in this Prospectus to the "Company" mean, at all times
prior to the consummation of the Reorganization, Trex Company, LLC or (prior to
August 29, 1996) its predecessor, the Composite Products Division of Mobil Oil
Corporation, and, at all times thereafter, Trex Company, Inc. and its wholly-
owned subsidiary. The information on the decking market presented in this
Prospectus is for the U.S. market. Trex(R) is a registered trademark of the
Company.

THE COMPANY

GENERAL

The Company is the nation's largest manufacturer of non-wood decking
alternative products, which are marketed under the brand name Trex(R). Trex
Wood-Polymer(TM) lumber is a wood/plastic composite that offers an attractive
appearance and the workability of wood without wood's on-going maintenance
requirements or functional disadvantages. Trex is manufactured in a proprietary
process that combines waste wood fibers and reclaimed polyethylene and is used
primarily for residential and commercial decking. The Company promotes Trex
among consumers and contractors as a premium decking product. Net sales of Trex
increased from $0.6 million in 1992 to $34.1 million in 1997 and totaled $29.3
million in the six months ended June 30, 1998. Income from operations increased
from a loss of $5.6 million in 1992 to a profit of $8.4 million in 1997 and
totaled $9.4 million in the six months ended June 30, 1998.

Annual factory sales of residential and commercial decking in 1997 totaled
approximately $1.7 billion and approximately $200 million, respectively. For
the seven-year period ended December 31, 1997, factory sales of all residential
decking increased at a compounded annual growth rate of approximately 8%. In
recent years, factory sales of non-wood alternative decking products to the
residential market have increased at a compounded annual growth rate of over
25%. Although wood decking accounted for approximately 97% of 1997 decking
sales (measured by board feet of lumber), developing consumer awareness of non-
wood decking alternatives, the trend to low-maintenance products and the
decline in lumber quality and quantity have contributed to increased sales of
wood/plastic composites used for decking. Residential decking purchases include
the installation of new or replacement decks for existing homes, construction
of decks for new homes and repair of existing decks. The Company believes that,
because residential deck construction is not primarily tied to new home
activity, residential decking sales generally have not experienced the high
level of cyclicality common to businesses in the new home construction and
building materials industries.

The Company seeks to achieve sales growth in the decking market by converting
demand for wood decking products into demand for Trex. The Company intends to
continue to develop and promote the Trex brand name as a premium decking
product and to focus on the contractor-installed market segment, since this
segment represents approximately 70% of the decking market (measured by board
feet of lumber) and since contractors generally build larger, more elaborate
residential decks than decks built by homeowners in the "do-it-yourself" market
segment. The Company sells its products through approximately 55 wholesale
distribution locations, which in turn sell Trex to approximately 2,000
independent contractor-oriented retailer lumber yards ("dealer outlets") across
the United States.

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The Company was formed in August 1996 in a buyout (the "Acquisition") of the
assets of the Composite Products Division of Mobil Oil Corporation ("Mobil").
Mobil established the Composite Products Division in April 1992 after
purchasing the technology and related assets used to create Trex. The buyout
was led by four senior Mobil executives with over 75 years of combined
management experience.

COMPETITIVE STRENGTHS

The Company believes that its primary competitive strengths are the
following:

Superior Product. Trex offers a number of significant advantages over wood
decking products. Trex eliminates many of wood's major functional
disadvantages, which include warping, splitting, rotting and other damage from
moisture. Trex requires no sealing to protect against moisture damage, provides
a splinter-free surface and needs no chemical treatment against insect
infestation. These features of Trex eliminate the on-going maintenance
requirements for a wood deck and make Trex less costly than wood over the life
of the deck. Like wood, Trex is slip-resistant, even when wet, can be painted
or stained and is not vulnerable to damage from ultraviolet rays. The special
characteristics of Trex, including resistance to splitting, flexibility and
ease and consistency of machining and finishing, facilitate deck installation,
reduce contractor call-back and afford customers a wide range of design
options.

Brand Name Development. The Company has invested over $10 million during the
last three years to develop Trex as a recognized brand name in the residential
and commercial decking market. The Company's marketing strategy has been to
promote Trex among consumers and contractors as a premium decking product. The
Company uses extensive print and television advertising to build brand
awareness among homeowners and commercial users and targets decking contractors
with advertisements in leading building and remodeling magazines. Brand name
recognition helps to generate demand for Trex directly among consumers and also
among distributors and dealers, who recommend Trex to contractors and other
consumers. The Company believes that its branding strategy promotes product
differentiation of Trex in a market which is not generally characterized by
brand identification and enables the Company both to command premium prices and
maintain price stability for Trex.

Extensive Distribution Network. The Company has developed an extensive
distribution network which complements its branding strategy and focus on the
contractor-installed market segment. At June 30, 1998, the Company sold Trex
through approximately 55 wholesale distribution locations. At the same date,
the Company's distributors marketed Trex to approximately 2,000 dealer outlets,
which directly service contractors and consumers. The Company selects
distributors based upon their anticipated commitment to Trex, and the Company's
distribution network devotes significant resources to promoting and selling
Trex. All distributors have appointed a Trex specialist, regularly conduct
dealer training sessions, fund demonstration projects and participate in local
advertising campaigns and home shows. These distributors generally sell Trex as
their only non-wood decking alternative and agree in their distribution
agreements with the Company not to market other wood/plastic composites with
the same applications as Trex.

Investment in Manufacturing Process and Product Development. Production of a
non-wood decking alternative like Trex requires significant capital investment,
special process know-how and time to develop. The Company has invested over $23
million and five years in manufacturing process improvements, new product
development and product enhancements. The Company's investment of time and
capital has enabled it to increase manufacturing line production rates by more
than 200% since 1992, has facilitated the Company's development of new products
and has produced improvements in the dimensional consistency, surface texture
and color uniformity of Trex.

Building Code Listing. Trex is the only non-wood decking alternative to
receive a product building code listing either from the National Evaluation
Service (the "NES") or from any of the three

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NES regional members that establish construction standards in the United
States. Since receiving its NES listing in 1995, Trex has been the only non-
wood alternative decking product published in all major code books throughout
the country. The Company's listing facilitates the acquisition of building
permits by residential consumers of Trex. The Company believes that its listing
promotes customer and industry acceptance of Trex as a substitute for wood in
decking.

Experienced Management Team. The Company is managed by four experienced
senior executives who led the buyout of Mobil's Composite Products Division in
1996. The Company's executives have managed billion-dollar operations as well
as smaller, high-growth divisions and product rollouts within and outside of
Mobil. They have approximately 75 years of combined management experience at
Mobil across a wide range of management functions.

GROWTH STRATEGIES

The Company's goals are to continue to be the leading producer of a superior
non-wood decking alternative product, to increase its market share of the
decking market and to expand new products and geographic markets. To attain
these goals, the Company employs the following strategies:

Continue Brand Name Development. The Company plans to increase its investment
in, and the resources devoted to, development of the Trex brand. The Company's
branding efforts will focus on implementation of enhanced integrated
advertising, public relations and trade programs. The Company's sales growth in
the decking market will largely depend on converting demand for wood products
into demand for Trex. Accordingly, the Company's branding strategy will
continue to emphasize the advantages of Trex over wood decking products. The
Company's brand building programs also are designed to support the positioning
of Trex as a premium product in the decking market.

Expand Distribution Coverage. The Company intends to establish comprehensive
national coverage for Trex. To achieve this objective, the Company expects to
increase the number of dealer outlets selling Trex over the next three years by
50% to approximately 3,000 outlets. The Company will seek to expand its dealer
network by adding new distributors and increasing the number of its wholesale
distribution locations to approximately 75 distribution locations from its base
of approximately 55 at June 30, 1998.

Increase Production Capacity. Currently, customer demand for Trex exceeds the
Company's manufacturing capacity. To support sales growth and improve customer
service, the Company plans to increase output by adding production lines and
increasing productivity in its existing facility in Winchester, Virginia and by
establishing an additional manufacturing facility in the Western United States.
With this investment, the Company expects to increase its current manufacturing
capacity by approximately 40% in the first quarter of 1999 and to double its
current capacity by the end of 1999.

Invest in Process and Product Development. The Company will continue to make
substantial investments in process and product development to support new
products and improve product consistency, reduce manufacturing costs and
increase operating efficiencies. In September 1998, the Company centralized its
research and development operations in the Trex Technical Center, a 30,000-
square foot building adjacent to its Winchester manufacturing facility.

Increase New Product Development and Export Markets. As part of its long-term
growth strategy, the Company will continue to develop opportunities for Trex in
new products and product applications and in geographic markets beyond the
Company's U.S. base. In 1997, the Company derived approximately 15% of its net
sales from sales of Trex for non-decking applications, including industrial
block flooring, applications for parks and recreational areas, floating and
fixed docks and other marine applications, and landscape edging. The Company
believes that the product

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characteristics of Trex are well suited to satisfy the diverse appearance,
performance and safety requirements of these and other potential product
applications. In expanding its geographic scope of operations, the Company
plans to increase exports to Canada, where it currently has limited sales, and
explore export opportunities in the Caribbean, Latin America and selected parts
of Europe.

REORGANIZATION

In connection with the Offering, the Company and Trex Company, LLC will take
certain actions described below which are collectively referred to in this
Prospectus as the "Reorganization."

Trex Company, Inc. is currently a wholly-owned subsidiary of Trex Company,
LLC, a Delaware limited liability company. Prior to the consummation of the
Offering, the members of Trex Company, LLC other than Mobil will contribute
their membership interests in Trex Company, LLC to Trex Company, Inc. in
exchange for Common Stock of Trex Company, Inc. (the "Exchange Transaction").
Concurrently with such exchange, Trex Company, Inc. will purchase Mobil's
membership interest in Trex Company, LLC for $3.1 million. As a result of the
Exchange Transaction and such purchase, Trex Company, LLC will become a wholly-
owned subsidiary of Trex Company, Inc.

In connection with the Exchange Transaction, Trex Company, LLC will make a
special cash distribution of approximately $6.9 million to certain of its
members (the "LLC Distribution"). Of the LLC Distribution, approximately $4.5
million represents the amount of the previously recognized and undistributed
income of Trex Company, LLC through the expected payment date on which the
members have paid, or will pay, income tax and approximately $2.4 million
represents a return of capital. The estimated $4.5 million amount and the total
amount of the LLC Distribution are subject to adjustment based on the actual
income of Trex Company, LLC from July 1, 1998 through the date of the LLC
Distribution. See "Certain Transactions--Reorganization."

The Company's principal executive offices are located at 20 South Cameron
Street, Winchester, Virginia 22601, and the Company's telephone number at that
address is (540) 678-4070.

THE OFFERING

Common Stock offered hereby... shares

Common Stock outstanding
after the Offering........... shares (1)

Use of Proceeds............... The net proceeds from the Offering will be used
to repay substantially all of the Company's
indebtedness, to purchase all of the Company's
outstanding preferred equity, to fund a portion
of the LLC Distribution and to provide funds
for construction of the Company's second
manufacturing facility, expansion of existing
operations, working capital, brand development
and other general corporate purposes. See "Use
of Proceeds."

Proposed NYSE symbol.....

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(1) Does not include shares of Common Stock reserved for issuance
pursuant to the Company's 1998 Stock Incentive Plan (the "Stock Incentive
Plan"), which will be effective upon consummation of the Offering. See
"Management--1998 Stock Incentive Plan."

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RISK FACTORS

Potential investors should carefully consider the risk factors relating to
the Company, its business and an investment in the Shares set forth under "Risk
Factors." Such risk factors include the following:

. Ability to Increase Market Acceptance

. Lack of Product Diversification

. Dependence on Single Manufacturing Facility

. Reliance on Supply of Raw Materials

. Sensitivity to Economic Conditions

. Ability to Increase Manufacturing Capacity

. Ability to Manage Growth

. Seasonality and Fluctuations in Quarterly Operating Results

. Significant Capital Requirements

. Dependence on Significant Distributors

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The summary historical financial data presented below as of December 31, 1997
and June 30, 1998 and for the period from August 29, 1996 to December 31, 1996,
the year ended December 31, 1997 and the six months ended June 30, 1998 are
derived from the Company's Financial Statements and related Notes thereto
appearing elsewhere in this Prospectus, which have been audited by Ernst &
Young LLP, independent auditors. The summary historical statement of operations
data and cash flow data presented below for the year ended December 31, 1995
and the period from January 1, 1996 to August 28, 1996 are derived from the
Financial Statements of the Composite Products Division of Mobil Oil
Corporation (the "Predecessor") and related Notes thereto appearing elsewhere
in this Prospectus, which have been audited by Ernst & Young LLP. The summary
historical statement of operations data and cash flow data presented below for
the six months ended June 30, 1997 have been derived from the unaudited
financial statements of the Company appearing elsewhere in this Prospectus. The
summary historical financial data for the six months ended June 30, 1997 are
unaudited, but, in the opinion of management, include all adjustments,
consisting only of normal recurring items, necessary for a fair presentation of
the results of the interim periods. The results of operations for the interim
period ended June 30, 1998 are not necessarily indicative of the results to be
expected for any other interim period or for the year ending December 31, 1998.
The unaudited pro forma, as adjusted, statement of operations data, cash flow
data and other data give effect to the Reorganization and the Offering as if
such transactions had been consummated at the beginning of the periods
indicated. The unaudited pro forma, as adjusted, balance sheet data give effect
to the Reorganization and the Offering as if such transactions had been
consummated on June 30, 1998. The unaudited pro forma and pro forma, as
adjusted, financial data are based on assumptions that management believes are
reasonable, are presented for comparative and informational purposes only and
do not purport to represent what the Company's actual results of operations or
financial condition would have been if the Reorganization and the Offering in
fact had occurred on such dates or to project the Company's results of
operations for any future period or financial condition at any future date. The
summary historical and unaudited pro forma and pro forma, as adjusted,
financial data presented below also include certain unaudited other data. The
summary financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements of the Company and the Predecessor and related Notes
thereto appearing elsewhere in this Prospectus.

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THE PREDECESSOR(1) THE COMPANY(1)
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PRO FORMA,
PRO FORMA, AS ADJUSTED
YEAR JAN. 1, AUGUST 29, YEAR AS ADJUSTED SIX MONTHS
ENDED 1996 TO 1996 TO ENDED YEAR ENDED SIX MONTHS ENDED
DEC. 31, AUGUST 28, DEC. 31, DEC. 31, DEC. 31,(2) ENDED JUNE 30, JUNE 30,(2)
-------- ---------- ---------- -------- ----------- ---------------- ---------------
1995 1996 1996 1997 1997 1997 1998 1997 1998
-------- ---------- ---------- -------- ----------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF
OPERATIONS
DATA:

Net sales....... $ 19,635 $ 18,071 $ 5,708 $ 34,137 $ 34,137 $19,446 $29,327 $19,446 $29,327
Gross profit.... 9,366 8,883 2,227 17,363 17,363 9,933 16,042 9,933 16,042
Income (loss)
from
operations..... 2,423 3,375 (331) 8,371 8,371 4,859 9,370 4,859 9,370
Interest
expense, net... - - 934 2,777 - 1,471 1,257 - 11
-------- ---------- ---------- -------- ----------- ------- ------- ------- -------
Income (loss)
before income
tax expense.... $ 2,423 $ 3,375 $ (1,265) $ 5,594 8,371 $ 3,388 $ 8,113 4,859 9,359
======== ========== ========== ======== =========== ======= ======= ======= =======
Pro forma income
tax
expense
(3)(4)(5)
(unaudited).... 3,348 1,944 3,744
----------- ------- -------
Pro forma net
income (4)(5)
(unaudited).... $ 5,023 $ 2,915 $ 5,615
=========== ======= =======
Pro forma net
income
per share,
basic(4)(5)(6)
(unaudited).... $ $ $
=========== ======= =======
CASH FLOW DATA:
Cash flow from
(used in)
operating
activities..... $ 4,841 $ 2,848 $ (222) $ 6,521 $ 3,838 $12,482
Cash flow (used
in) from
investing
activities..... (3,842) (3,708) (30,253) (3,252) (1,478) (4,607)
Cash flow (used
in) from
financing
activities..... (1,009) 860 34,216 (5,010) (3,817) 1,934
=========== ======= =======
OTHER DATA
(unaudited):
EBITDA(7)....... $ 3,750 $ 4,492 $ 525 $ 11,013 $ 11,013 $ 6,422 $10,817 $ 6,422 $10,817
Pounds of Trex
sold........... 71,822 61,483 19,924 113,948 113,948 64,757 95,273 64,757 95,273

AS OF JUNE 30, 1998
--------------------------------------
AS OF
DECEMBER 31, PRO FORMA,
1997 ACTUAL PRO FORMA(8) AS ADJUSTED(8)(9)
------------ ------- ------------ -----------------
BALANCE SHEET DATA (in
thousands): (UNAUDITED) (UNAUDITED)

Cash and cash equivalents...... $ 2,000 $11,809 $ 4,309 $
Working capital (deficit)...... 4,163 10,926 3,426
Total assets................... 37,229 47,467 39,967
Total debt..................... 26,250 30,030 30,030 3,780
Total
stockholders'/members'equity.. 7,534 13,801 6,301

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(1) On August 29, 1996, the Company acquired substantially all of the assets
and assumed certain of the liabilities of the Predecessor for a purchase
price of approximately $29.5 million. See "Certain Transactions--
Acquisition Transactions."

(2) The pro forma, as adjusted, statement of operations data for the year
ended December 31, 1997 and six months ended June 30, 1997 and 1998 have
been computed by eliminating interest expense of $2.9 million for the year
ended December 31, 1997, $1.5 million for the six months ended June 30,
1997 and $1.4 million for the six months ended June 30, 1998 related to
debt that will be repaid with the net proceeds of the Offering. The pro
forma, as adjusted, statement of operations data do not reflect adjustments
to (i) record an extraordinary loss, net of taxes, of $1.1 million for each
of the year ended December 31, 1997 and the six months ended June 30, 1997
and 1998 related to the extinguishment of such debt or (ii) reflect
recognition of a one-time non-cash tax charge of approximately $0.2 million
for the year ended December 31, 1997, $0.2 million for the six months ended
June 30, 1997 and $1.4 million for the six months ended June 30, 1998 with
respect to a net deferred tax liability related to the Company's conversion
in the Reorganization to a corporation taxed in accordance with Subchapter
C of the Internal Revenue Code (a "C corporation"). The pro forma, as
adjusted, income tax provision is calculated at a combined federal and
state income tax rate of 40%. See "Management's Discussion and

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Analysis of Financial Condition and Results of Operations--Overview" and
"Certain Transactions--Reorganization." Historical interest income has been
eliminated to reflect application of cash balances to fund a portion of the
LLC Distribution.

(3) For the periods shown, the Predecessor was included in the consolidated
tax return of its parent and, accordingly, no tax provision was provided.
For all periods since inception, the Company elected to be treated as a
partnership for federal and state income tax purposes. As a result, the
Company's income has been taxed directly to the Company's members, rather
than to the Company.

(4) Pro forma net income and pro forma net income per share reflect current
federal and state income taxes (assuming a 40% combined effective tax
rate) as if the Company had been taxed as a C corporation for the periods
presented.

(5) Pro forma net income and pro forma net income per share for the year
ended December 31, 1997 and the six months ended June 30, 1997 and 1998 do
not reflect adjustments to record deferred income tax expense of $0.2
million, $0.2 million and $1.4 million, respectively, that will be
recorded as a result of the Company's conversion to C corporation status
in the Reorganization.

(6) Assumes weighted average shares outstanding during the year
ended December 31, 1997 and the six months ended June 30, 1997 and 1998.
Diluted income per share is the same as basic income per share and,
therefore, is not separately presented.

(7) EBITDA consists of income from operations plus depreciation and
amortization. EBITDA is presented because it is a commonly used measure of
performance by the financial community. Although management believes
EBITDA is a useful measure of the Company's performance, EBITDA should not
be considered an alternative to net income (loss) as a measure of
operating performance or to cash provided by (used for) operating
activities as a measure of liquidity. In addition, this measure of EBITDA
may not be comparable to similarly titled measures reported by other
companies.

(8) Reflects the LLC Distribution of $7.5 million at June 30, 1998. The $7.5
million LLC Distribution adjustment is calculated as if the LLC
Distribution had been made on June 30, 1998 and is based in part on the
estimated amount of previously recognized and undistributed income of the
Company through such date, while the $6.9 million LLC Distribution amount
appearing elsewhere in this Prospectus also reflects the then estimated
additional results of operations of the Company from July 1, 1998 through
the estimated date of the LLC Distribution. The estimated $7.5 million
amount as of June 30, 1998 will be increased by the amount of any income
or reduced by the amount of any loss realized by the Company from July 1,
1998 through the date of the LLC Distribution. See "Certain Transactions--
Reorganization."

(9) Reflects (i) the LLC Distribution of $7.5 million at June 30, 1998, (ii)
a net deferred tax liability of $1.6 million that would have been recorded
by the Company if it had converted to C corporation status on June 30,
1998, (iii) an extraordinary $0.3 million charge for the write-off of
unamortized debt discount and (iv) the sale by the Company of the Shares
in the Offering and the application of the net proceeds therefrom. See
"Use of Proceeds," "Capitalization," "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Overview" and "Certain
Transactions--Reorganization."

- --------------------------------------------------------------------------------

RISK FACTORS

In addition to the other information in this Prospectus, investors should
carefully consider the following risk factors before deciding whether to
purchase the Shares offered hereby. Certain statements in this Prospectus
concerning the Company's future financial condition and performance are
forward-looking statements. The Company's actual results may differ materially
from those expressed in or implied by such forward-looking statements. Factors
that may cause such a difference include, but are not limited to, those
discussed below and in the sections of this Prospectus entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

ABILITY TO INCREASE MARKET ACCEPTANCE

The Company's ability to grow will largely depend on its success in
converting demand for wood decking products, which accounted for approximately
97% of the 1997 decking market (measured by board feet of lumber), into demand
for Trex. The Company's strategy to increase market acceptance of Trex is to
develop and promote the Trex brand name as a premium decking product and to
emphasize the advantages of Trex over wood decking products. To increase its
market share, the Company must overcome the low consumer awareness of non-wood
decking alternatives, the preference of many consumers for well-accepted wood
products, the moderately different appearance of Trex, the greater initial
expense of installing a Trex deck and the established relationships existing
between suppliers of wood decking products and contractors and homebuilders.
The Company's failure to achieve increased market acceptance of Trex would
have a material adverse effect on the Company's business, financial condition
and results of operations.

LACK OF PRODUCT DIVERSIFICATION

All of the Company's net sales are derived from Trex. Although the Company
has developed new Trex products and new applications for Trex since 1992, and
intends to continue such development, the Company's product line is based
exclusively on the composite formula and manufacturing process for Trex Wood-
Polymer lumber. If the Company should experience any problems, real or
perceived, with product quality or acceptance of Trex, the Company's lack of
product diversification would have a material adverse effect on the Company's
business, financial condition and results of operations.

DEPENDENCE ON SINGLE MANUFACTURING FACILITY

Trex is currently produced solely in the Company's manufacturing facility in
Winchester, Virginia. Any interruption in the operations or decrease in the
production capacity of this facility, whether because of equipment failure,
natural disaster or otherwise, would limit the Company's ability to meet
existing and future customer demand for Trex and would have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company intends to construct a second manufacturing facility
in the Western United States. The new facility is expected to be operational
in the third quarter of 1999, but construction of the facility is subject to
risks that could delay commencement of operations beyond that date. See "--
Ability to Increase Manufacturing Capacity."

RELIANCE ON SUPPLY OF RAW MATERIALS

Production of Trex requires substantial amounts of wood fiber and
polyethylene. The Company purchases wood fiber under contracts with a
relatively small number of suppliers primarily located within a 200-mile
radius of the Company's manufacturing facility, and obtains polyethylene under
purchase order arrangements with suppliers of reclaimed grocery sacks and
stretch film throughout the United States. Four suppliers collectively
accounted for approximately 80% of the Company's 1997 wood fiber purchases.
For a description of the supply agreements with such suppliers, see
"Business--Suppliers--Wood Fiber." The Company's ability to obtain adequate
polyethylene

supplies depends on its success in developing new sources, entering into long-
term arrangements with suppliers and managing the collection of supplies from
geographically dispersed distribution centers. The termination of the
Company's relationships with suppliers of a significant portion of its wood
fiber or polyethylene requirements could subject the Company to the risks that
it would be unable to purchase sufficient quantities of raw materials to meet
its production requirements or would have to pay higher prices for replacement
supplies. Further, the Company generally obtains its raw materials from
existing suppliers at fixed prices that are established annually. There can be
no assurance that the Company will be successful in maintaining such pricing
policies to protect against fluctuations in raw materials prices. The Company
believes it will be able to obtain sufficient additional wood and polyethylene
supplies from its existing suppliers and new supply sources to meet the
increased requirements resulting from its planned addition of two new
production lines to its Winchester facility and its construction of a second
manufacturing facility. The termination of significant sources of raw
materials, the payment of higher prices for raw materials or the failure to
obtain sufficient additional raw materials to meet planned increases in
capacity could have a material adverse effect on the Company's business,
financial condition and results of operations. See "--Ability to Increase
Manufacturing Capacity" and "Business--Suppliers."

SENSITIVITY TO ECONOMIC CONDITIONS

The demand for decking products is sensitive to changes in the level of
activity in home improvements and, to a lesser extent, new home construction,
which are affected by such factors as consumer spending habits, employment,
interest rates and inflation. An economic downturn could reduce consumer
income available for spending on discretionary items such as decking, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Decking Market Overview."

ABILITY TO INCREASE MANUFACTURING CAPACITY

Currently, customer demand for Trex exceeds the Company's manufacturing
capacity. As part of its strategy to increase capacity, the Company intends to
add two new production lines to its Winchester facility by the first quarter
of 1999 and to construct a second manufacturing facility in the Western United
States by the third quarter of 1999. See "Business--Growth Strategies." In
constructing the new facility, the Company will be subject to the risks
normally associated with the development of manufacturing facilities,
including risks relating to the availability and timely receipt of zoning and
other regulatory approvals and the cost and timely completion of construction
(which may be affected by causes beyond the Company's control, such as
weather, labor conditions or material shortages). Further, in the start-up and
operation of the new facility and the two additional production lines, the
Company will be subject to the risks involved in recruiting and training a
factory workforce, installing and operating new production equipment,
purchasing raw materials, commencing manufacturing operations and maintaining
product quality. These risks could result in substantial unanticipated delays
or expense, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "--Dependence on
Single Manufacturing Facility" and "--Reliance on Supply of Raw Materials."

ABILITY TO MANAGE GROWTH

The Company's recent growth has placed significant demands on its management
and other resources. The Company's net sales increased to $29.3 million in the
six months ended June 30, 1998 from $19.4 million in the six months ended June
30, 1997 and to $34.1 million in 1997 from $23.8 million in 1996. The number
of dealer outlets selling Trex has increased from approximately 1,500 at
December 31, 1997 to approximately 2,000 at June 30, 1998, and further
significant increases are expected in the future. The Company also plans to
support its geographic expansion

by opening a second manufacturing facility, which will be located in the
Western United States. To manage its growth effectively, the Company will need
to continue to develop and improve its operational, financial, accounting and
other internal systems. In addition, the Company's future success will depend
in large part upon its ability to recruit, train, motivate and retain senior
managers and other employees and to maintain product quality. If the Company
is unable to manage its growth effectively, such inability could have a
material adverse effect on the quality of the Company's products and its
business, financial condition and results of operations.

SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's net sales and income from operations historically have varied
from quarter to quarter. Such variations are principally attributable to
seasonal trends in the demand for Trex. The Company experiences lower net
sales levels during the fourth quarter, in which holidays and adverse weather
conditions in certain regions usually reduce the level of home improvement and
new construction activity. Income from operations and net income tend to be
lower in quarters with lower sales due to a lower gross margin which is not
offset by a corresponding reduction in selling, general and administrative
expenses, in part because the Company continues to make advertising
expenditures throughout the year. As a result of these factors, the Company
believes period-to-period comparisons of its net sales and other operating
results should not be relied upon as indicators of future performance, and the
results of any quarterly period may not be indicative of results to be
expected for a full year. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Seasonality."

SIGNIFICANT CAPITAL REQUIREMENTS

Expansion of the Company's production capacity will require significant
capital expenditures. The Company currently estimates that its aggregate
capital requirements in 1998 and 1999 will total approximately $25.2 million,
of which approximately $14.4 million is expected to be incurred in 1998
(including $4.6 million of capital expenditures made as of June 30, 1998) and
approximately $10.8 million in 1999. Capital expenditures will be used
primarily for the addition of two production lines to the Company's Winchester
facility and for the site acquisition, construction and equipping of the
Company's new manufacturing facility in the Western United States. The Company
believes that the net proceeds of the Offering, together with cash on hand,
cash flow from operations and borrowings expected to be available under the
Company's current credit facility, will provide sufficient funds to enable the
Company to expand its business as currently planned at least through the end
of 1999. The actual amount and timing of the Company's future capital
requirements may differ materially from the Company's estimates depending on
the demand for Trex and as a result of new market developments and
opportunities. The Company may determine that it is necessary or desirable to
obtain financing for such requirements through bank borrowings or the issuance
of debt or equity securities. Debt financing would increase the leverage of
the Company, while equity financing may dilute the ownership of the Company's
stockholders. There can be no assurance as to whether, or as to the terms on
which, the Company will be able to obtain such financing. Any failure by the
Company to generate sufficient funds from operations or equity or debt
financings to meet its capital requirements could have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

DEPENDENCE ON SIGNIFICANT DISTRIBUTORS

The Company's aggregate net sales to its five largest distributors accounted
for approximately 68% of the Company's net sales in 1997. The Company's
contracts with these distributors are terminable by the distributors upon
notice at any time during the contract term. Although the Company believes it
would be able to replace any current distributor, a contract termination or
significant decrease or interruption in business from any of its five largest
distributors or any other

significant distributor could cause a short-term disruption of the Company's
operations. Such a disruption could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Distribution."

DEPENDENCE ON KEY PERSONNEL

The Company's success will depend in large part upon the continued services
of a small number of key management employees, including Anthony J. Cavanna,
Andrew U. Ferrari, Robert G. Matheny and Roger A. Wittenberg. None of such
employees is party to an employment agreement with the Company. The loss of
the services of one or more of the Company's key employees could have a
material adverse effect on the Company. In addition, if one or more of the
Company's key employees resigns from the Company to join a competitor or to
form a competing company, the loss of such employees and any resulting loss of
existing or potential customers to such competitor could have a material
adverse effect on the Company's business, financial condition and results of
operations. In the event of the loss of any such personnel, there can be no
assurance that the Company would be able to prevent the unauthorized
disclosure or use of its technical knowledge, practices or procedures by such
personnel. Although the Company's key employees are parties to agreements
containing confidentiality covenants, there can be no assurance that courts
will enforce such covenants as written or that the agreements will deter
conduct prohibited by such covenants. See "Management."

COMPETITION

The residential and commercial decking market in which the Company
principally operates is highly competitive. As a wood/plastic composite
product, Trex competes with wood, other wood/plastic composites and 100%
plastic lumber for use as decking. The primary competition for Trex is wood
decking, which accounted for approximately 97% of 1997 decking sales (measured
by board feet of lumber). The conventional lumber suppliers with which the
Company competes in many cases have established ties to the building and
construction industry and have well-accepted products. Many of the Company's
competitors in the decking market that sell wood products have significantly
greater financial, technical and marketing resources than the Company. The
Company's ability to compete depends, in part, upon a number of factors
outside its control, including the ability of its competitors to develop new
non-wood decking alternatives which are competitive with Trex. Trex is the
only non-wood decking alternative to receive a product building code listing
from the NES or any of its three regional members. A product building code
listing covers all uses of a product meeting the specified design criteria. In
addition, the Company is aware of one manufacturer of wood/plastic composite
products that has publicly announced it has applied for a regional application
listing for its products and of at least four manufacturers that have applied
for regional application listings of their 100% plastic lumber products. An
application listing covers specific uses of the listed products. There can be
no assurance that one or more of the Company's competitors will not receive a
listing for their non-wood decking alternative products in the immediate
future. Any product receiving such a listing could be more competitive with
Trex. The Company's failure to compete successfully with its competitors would
have a material adverse effect on the Company's business, operating results
and financial condition. See "Business--Competition."

IMPACT OF GOVERNMENT REGULATION

The Company is subject to federal, state and local environmental,
occupational health and safety, and other laws and regulations. The
environmental laws and regulations applicable to the Company's operations
establish air quality standards for emissions from the Company's manufacturing
operations, govern the disposal of solid waste, and regulate waste water and
storm water discharge. The Company believes that it currently complies in all
material respects with such environmental laws and regulations. As is the case
with manufacturers in general, the Company may be held liable for response
costs and damages to natural resources if a release or threat of release of
hazardous materials occurs on or from the Company's properties or any
associated offsite disposal location, or if contamination from prior
activities is discovered at any properties owned or operated by the Company.
Such liability could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Government
Regulation."

YEAR 2000 COMPLIANCE

The Company and third parties with which the Company does business rely on
numerous computer programs in their day-to-day operations. The Company has
undertaken a program to address the Year 2000 problem as it relates to the
Company's internal computer systems and the third-party computer systems with
which the Company interacts, including the systems of its major suppliers and
customers. The Company expects to continue to incur internal staff costs and
other expenses, which may be significant and will be expensed as incurred, to
address these issues. In addition, the appropriate course of action may
include replacement or an upgrade of certain systems or equipment at a
substantial cost to the Company. There can be no assurance that the Year 2000
issues will be resolved in 1998 or 1999. If not resolved, such issues could
have a material adverse impact on the Company's business, operating results
and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000 Compliance."

INFLUENCE BY PRINCIPAL STOCKHOLDERS

Upon completion of the Offering, the Company's four management stockholders
will beneficially own approximately % of the Common Stock. As a result,
such stockholders collectively will be able to exercise control over the
Company's business and affairs by virtue of their voting power with respect to
the election of directors and actions requiring stockholder approval. See
"Management," "Principal Stockholders" and "Description of Capital Stock."

INTELLECTUAL PROPERTY

The Company's success depends, in part, upon its intellectual property
rights. The Company relies upon a combination of trade secret, nondisclosure
and other contractual arrangements, and copyright and trademark laws to
protect its proprietary rights. The Company also has obtained patent
protection for certain of its production processes. The Company enters into
confidentiality agreements with its employees and limits access to and
distribution of its proprietary information. There can be no assurance that
the steps taken by the Company in this respect will be adequate to deter
misappropriation of its proprietary information or that the Company will be
able to detect unauthorized use and take appropriate steps to enforce its
intellectual property rights. See "Business--Intellectual Property."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Certificate of Incorporation (the
"Certificate of Incorporation") and Bylaws (the "Bylaws") and the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law") could delay or impede the removal of incumbent directors, could make it
more difficult to consummate a merger, tender offer or proxy contest involving
the Company, or could discourage a third party from attempting to acquire
control of the Company, even if such events would be beneficial to the
interests of the Company's stockholders. In addition, the Certificate of
Incorporation authorizes the Board of Directors to provide for the issuance of
up to shares of preferred stock of the Company, in one or more
series, which the Board of Directors could issue without stockholder approval
and upon such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The ability to issue
preferred stock could have the effect of discouraging unsolicited acquisition
proposals or making it more difficult for a third party to gain control of the
Company, or otherwise could adversely affect the market price of the Common
Stock. See "Description of Capital Stock--Anti-Takeover Effect of Certain
Charter and Bylaw Provisions" and "--Section 203 of the Delaware General
Corporation Law."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF SHARE PRICE

Prior to the Offering, there has been no market for the Common Stock.
Although the Company will apply for the Shares to be listed on the New York
Stock Exchange, there is no assurance that an active trading market for the
Shares will develop or be sustained after the Offering.

There can be no assurance that the market price of the Shares will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations between the Company and the
representatives of the Underwriters and may not be indicative of future market
prices. See "Underwriting" for information relating to the factors to be
considered in determining the initial public offering price. In recent years,
stock markets have experienced extreme price and volume fluctuations. The
trading price of the Shares could be subject to wide fluctuations in response
to quarterly variations in operating results, changes in earnings estimates by
analysts, announcements of new contracts or product offerings by the Company
or its competitors, general economic or stock market conditions and other
events or factors.

DILUTION TO NEW INVESTORS

The initial public offering price per Share is substantially higher than the
Company's net tangible book value per share of Common Stock. Purchasers of
Shares in the Offering will experience immediate dilution of $ in the
pro forma net tangible book value per Share and may experience further
dilution upon the exercise of future options to purchase shares of Common
Stock. See "Dilution."

NO DIVIDENDS

The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. The Company's revolving credit facility
contains provisions restricting the Company's ability to pay cash dividends on
the Common Stock. See "Dividend Policy."

BENEFITS OF OFFERING TO AFFILIATES AND OTHER CURRENT INVESTORS

Approximately $28.5 million of the net proceeds of the Offering will be used
to repay indebtedness of the Company to Connecticut General Life Insurance
Company, Connecticut General Life Insurance Company on behalf of one or more
separate accounts, Life Insurance Company of North America and Lincoln
National Life Insurance Company, all of which own equity interests in the
Company and one or more of which may be deemed affiliates of the Company prior
to the Offering (collectively the "Institutional Investors"). The Company
incurred such indebtedness in connection with the Acquisition. In addition,
the Company will use approximately $3.1 million of the net proceeds of the
Offering to purchase Mobil's preferred equity interest in the Company issued
in connection with the Acquisition.

As part of the Reorganization, the Company will make the LLC Distribution of
approximately $6.9 million to its four management members and to the
Institutional Investors. A portion of the net proceeds of the Offering will be
used to pay approximately $2.0 million of the LLC Distribution. The amount of
the LLC Distribution and the amount of the net proceeds of the Offering to be
applied in respect thereof are subject to adjustment based on the Company's
actual income from July 1, 1998 through the date of the LLC Distribution. See
"Use of Proceeds," "Principal Stockholders" and "Certain Transactions."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Future sales of a substantial number of shares of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
the prevailing market price of the Common Stock and could make it more
difficult for the Company to raise funds through a public offering of its
equity securities. Upon completion of the Offering, there will be
shares of Common Stock outstanding, including the Shares issued in
the Offering. The Shares offered hereby will be freely tradable
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), by persons other than "affiliates" of the Company as
defined in Rule 144 under the Securities Act. The remaining shares
of Common Stock will be deemed "restricted securities" within the meaning of
Rule 144 and, as such, may not be sold in the

absence of registration under the Securities Act or an exemption therefrom,
including the exemption afforded by Rule 144. In connection with the Offering,
the Company and all stockholders of the Company prior to the Offering have
entered into "lock-up" agreements with the Underwriters. The Company and such
stockholders have agreed that they will not offer, sell, contract to sell,
issue or otherwise dispose of any shares of Common Stock or any securities of
the Company which are substantially similar to the Common Stock or which are
convertible into or exchangeable or exercisable for Common Stock or securities
substantially similar to the Common Stock for a period of 180 days after the
closing of the Offering without the prior written consent of Schroder & Co.
Inc., which it may grant in whole or in part without a public announcement.
The foregoing restrictions will not apply to the issuance of options to
purchase Common Stock pursuant to the Stock Incentive Plan, transfers of
Common Stock to the Company or certain transfers of Common Stock to family
trusts or by gift, will or intestate succession. As a condition to any such
transfer to a family trust or transfer by gift, will or intestate succession,
the transferee (or trustee or legal guardian on the transferee's behalf) will
be required to execute and deliver a lock-up agreement containing the terms
described in this paragraph. Upon expiration of the lock-up period,
shares of Common Stock will be eligible for sale under Rule 144. See "Shares
Eligible for Future Sale."

The Company has granted "demand" and "piggyback" registration rights with
respect to the Common Stock held by the Institutional Investors. The
Institutional Investors are entitled to require the Company to register the
sale of their shares under the Securities Act on up to two occasions. In
addition, if the Company proposes to register the Common Stock under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
Form S-8), whether or not for its own account, the Institutional Investors are
entitled to require the Company, subject to certain conditions, to include all
or a portion of their shares in such registration. The foregoing registration
rights are subject to certain notice requirements, timing restrictions and
volume limitations which may be imposed by the underwriters of an offering.
The Company is required to bear the expenses of all such registrations except
for underwriting discounts and commissions. Following consummation of the
Offering, shares of Common Stock, or % of total number of
outstanding shares of Common Stock, will be entitled to the benefits of such
registration rights. See "Certain Transactions--Acquisition Transactions."

USE OF PROCEEDS

The net proceeds to the Company from the Offering after deducting
underwriting discounts and commissions and after expenses of the Offering are
expected to be $ million ($ million if the Over-Allotment
Option is exercised in full). Of such net proceeds, the Company will use
approximately $28.5 million to repay $26.3 million principal amount of
indebtedness, approximately $0.7 million of accrued and unpaid interest
thereon and a prepayment premium related thereto of approximately $1.5
million. Such indebtedness, which was incurred in connection with the
Acquisition, consists of (i) $21.3 million principal amount of senior notes,
which accrue interest at an annual rate of 10% and mature on August 30, 2003
(the "Senior Notes"), and (ii) $5.0 million principal amount of subordinated
notes, which accrue interest at an annual rate of 12% and mature on August 30,
2004 (the "Subordinated Notes"). The Senior Notes and the Subordinated Notes
are held by the Institutional Investors, one or more of which may be deemed
affiliates of the Company prior to the Offering. The Company also will use
approximately $3.1 million of the net proceeds of the Offering to purchase
Mobil's preferred equity interest in the Company issued in connection with the
Acquisition and in payment of accrued and unpaid dividends thereon. See
"Certain Transactions--Acquisition Transactions." The Company will pay
approximately $2.0 million of the net proceeds of the Offering to fund a
portion of the LLC Distribution to its four management members and to the
Institutional Investors. The estimated LLC Distribution as of June 30, 1998 is
$7.5 million. Such amount will be increased by the amount of any income or
reduced by the amount of any loss realized by the Company from July 1, 1998
through the date of the LLC Distribution. The amount of the net proceeds of
the Offering to be applied in respect of the LLC Distribution, which is
estimated to be approximately $6.9 million as of the expected payment date, is
subject to adjustment based on the actual amount of the LLC Distribution. See
"Certain Transactions--Reorganization."

Of the remaining net proceeds of the Offering of approximately $
million, the Company intends to use approximately $10.4 million for the
construction of the Company's second manufacturing facility and the balance
for expansion of the Company's existing operations, working capital, brand
development and other general corporate purposes. The Company estimates that
the cost of the site acquisition, construction and equipping of its second
manufacturing facility will be approximately $19.6 million and the cost of
adding two new production lines to its Winchester facility will be
approximately $6.5 million. The precise allocation of funds among these uses
will depend upon future developments in or affecting the Company's business.

Pending the foregoing uses, the net proceeds of the Offering will be
invested in short-term, interest-bearing, investment grade securities.

DIVIDEND POLICY

The Company intends to retain future earnings, if any, to finance the
development and expansion of its business and, therefore, does not anticipate
paying any cash dividends on the Common Stock in the foreseeable future. The
payment of dividends is within the discretion of the Board of Directors and
will be dependent upon, among other factors, the Company's results of
operations, financial condition and capital requirements, restrictions imposed
by the Company's financing agreements and legal requirements. The Company's
revolving credit facility restricts payment of cash dividends on the Common
Stock to a specified percentage of the Company's net income and conditions
such payment on the Company's compliance with certain financial ratios.

Prior to the Reorganization, the Company has been treated as a partnership
for federal and state income tax purposes. The Company made distributions to
its members of $1.6 million in each of 1997 and the six months ended June 30,
1998 to satisfy their allocated portion of the Company's taxable income. As
part of the Reorganization, the Company will make the LLC Distribution of
approximately $6.9 million to certain of its members. The amount of the LLC
Distribution is subject to adjustment based on the Company's actual income
from July 1, 1998 through the date of the LLC Distribution. See "Certain
Transactions--Reorganization."

CAPITALIZATION

The following table sets forth, as of June 30, 1998, (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the
Company after giving effect to the LLC Distribution and (iii) the pro forma
capitalization of the Company after giving effect to the Reorganization and as
adjusted for the Offering and the application of the net proceeds therefrom as
described under "Use of Proceeds." This table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Financial Statements and related Notes thereto
appearing elsewhere in this Prospectus.

AS OF JUNE 30, 1998
-----------------------------
PRO FORMA,
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE
AND UNIT DATA)

Long-term debt (including
current portion):
Senior Notes.............. $21,250 $21,250 $ --
Subordinated Notes........ 5,000 5,000 --
Mortgage.................. 3,780 3,780 3,780
------- ------- ------
Total long-term debt..... 30,030 30,030 3,780
Deferred income taxes...... -- --
Members' equity:
Preferred units, 1,000
units
authorized, issued and
outstanding.............. 3,000 3,000 --
Junior units, 4,000 units
authorized, issued and
outstanding.............. 2,350 2,350 --
Undistributed income...... 8,451 951 --
------- ------- ------
Total members' equity...... 13,801 6,301 --
Stockholders' equity:
Common Stock, $0.01 par
value,
shares authorized;
shares issued and
outstanding.............. -- --
Preferred Stock, $0.01 par
value,
shares authorized; 0
shares issued and
outstanding.............. -- --
Additional capital........ -- --
Retained earnings......... -- --
Total stockholders'
equity..................
------- ------- ------
Total capitalization.... $43,831 $36,331 $
======= ======= ======

DILUTION

At June 30, 1998, the pro forma net tangible book value of the Common Stock,
after giving effect to the Reorganization, was $ million, or
approximately $ per share outstanding. As of June 30, 1998, the adjusted
pro forma net tangible book value of the Common Stock, after giving effect to
the Reorganization and the consummation of the Offering and the application of
the net proceeds therefrom, was $ million, or approximately $ per
share outstanding. This represents an immediate increase in net tangible book
value of $ per share to existing stockholders and an immediate dilution in
net tangible book value of $ per share to new investors purchasing Shares
in the Offering. The net tangible book value per share of Common Stock
represents the amount of the Company's tangible assets less its liabilities
divided by the number of shares of Common Stock outstanding.

The following table illustrates this dilution in net tangible book value per
share to new investors at June 30, 1998:

Initial public offering price per Share............................. $
Pro forma net tangible book value per share at June 30, 1998 after
giving effect to the Reorganization................................ $
Increase in net tangible book value per share attributable to new
investors..........................................................
----
Adjusted pro forma net tangible book value per share at June 30,
1998 after giving effect to the Offering...........................
----
Dilution per share to new investors................................. $
====

The following table sets forth, at June 30, 1998 on a pro forma basis, the
difference between the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
the existing holders of the Common Stock and by the new investors, before
deducting underwriting discounts and estimated offering expenses payable by
the Company:

TOTAL AVERAGE
SHARES PURCHASED CONSIDERATION PRICE PAID
----------------- ----------------- ----------

NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
------ ---------- ------ ---------- ---------
Existing stockholders.......... % $ % $
New investors.................. $
------ ---------- ------ ----------
Total......................... % $ $
====== ========== ====== ==========

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The selected historical financial data presented below as of December 31,
1996 and 1997 and June 30, 1998 and for the period from August 29, 1996 to
December 31, 1996, the year ended December 31, 1997 and the six months ended
June 30, 1998 are derived from the Company's Financial Statements and related
Notes thereto, appearing elsewhere in this Prospectus, which have been audited
by Ernst & Young LLP. The selected historical financial data presented below
as of December 31, 1995 and for the year ended December 31, 1995 and the
period from January 1, 1996 to August 28, 1996 are derived from the Financial
Statements of the Predecessor and related Notes thereto appearing elsewhere in
this Prospectus, which have been audited by Ernst & Young LLP. The selected
historical financial data presented below as of December 31, 1993 and 1994 and
for each of the years ended December 31, 1993 and 1994 are derived from the
Predecessor's unaudited financial statements. The selected historical
statement of operations data and cash flow data presented below for the six
months ended June 30, 1997 have been derived from the unaudited financial
statements of the Company appearing elsewhere in this Prospectus. The selected
historical financial data for the six months ended June 30, 1997 are
unaudited, but, in the opinion of management, include all adjustments,
consisting only of normal recurring items, necessary for a fair presentation
of the results of the interim periods. The results of operations for the
interim period ended June 30, 1998 are not necessarily indicative of the
results to be expected for any other interim period or for the year ending
December 31, 1998. The unaudited pro forma, as adjusted, statement of
operations data, cash flow data and other data give effect to the
Reorganization and the Offering as if such transactions had been consummated
at the beginning of the periods indicated. The unaudited pro forma, as
adjusted, balance sheet data give effect to the Reorganization and the
Offering as if such transactions had been consummated on June 30, 1998. The
unaudited pro forma and pro forma, as adjusted, financial data are based on
assumptions that management believes are reasonable, are presented for
comparative and informational purposes only and do not purport to represent
what the Company's actual results of operations or financial condition would
have been if the Reorganization and the Offering in fact had occurred on such
dates or to project the Company's results of operations for any future period
or financial condition at any future date. The summary historical and
unaudited pro forma and pro forma, as adjusted, financial data presented below
also include certain unaudited other data. The selected financial data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements of the
Company and the Predecessor and related Notes thereto appearing elsewhere in
this Prospectus.

THE PREDECESSOR(1) THE COMPANY(1)
-------------------------------------- -----------------------------------------------------
PRO FORMA,
JAN. 1, AUGUST 29, AS ADJUSTED
1996 TO 1996 TO YEAR ENDED YEAR ENDED SIX MONTHS
YEAR ENDED DEC. 31, AUGUST 28, DEC. 31, DEC. 31, DEC. 31,(2) ENDED JUNE 30,
-------------------------- ---------- ---------- ---------- ----------- ----------------
1993 1994 1995 1996 1996 1997 1997 1997 1998
------- -------- ------- ---------- ---------- ---------- ----------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF
OPERATIONS
DATA:

Net sales....... $ 3,530 $ 7,376 $19,635 $ 18,071 $ 5,708 $ 34,137 $ 34,137 $19,446 $29,327
C ost of sales.. 5,080 6,203 10,269 9,188 3,481 16,774 16,774 9,513 13,285
------- -------- ------- ---------- ---------- ---------- ----------- ------- -------
Gross (loss)
profit......... (1,550) 1,173 9,366 8,883 2,227 17,363 17,363 9,933 16,042
Selling, general
and
administrative
expenses....... 8,190 13,875 6,943 5,508 2,558 8,992 8,992 5,074 6,672
------- -------- ------- ---------- ---------- ---------- ----------- ------- -------
(Loss) income
from
operations..... (9,740) (12,702) 2,423 3,375 (331) 8,371 8,371 4,859 9,370
Interest
expense, net... -- -- -- -- 934 2,777 -- 1,471 1,257
------- -------- ------- ---------- ---------- ---------- ----------- ------- -------
(Loss) income
before income
tax expense.... $(9,740) $(12,702) $ 2,423 $ 3,375 $ (1,265) $ 5,594 $ 8,371 $ 3,388 $ 8,113
======= ======== ======= ========== ========== ========== =========== ======= =======
Pro forma income
tax
expense (3)(4)(5)
(unaudited).... 3,348
-----------
Pro forma net
income (4)(5)
(unaudited).... $ 5,023
===========
Pro forma net
income per
share,
basic(4)(5)(6)(unaudited).. $
===========
CASH FLOW DATA:
Cash flow (used
in) from
operating
activities..... $ (4,404) $ 4,841 $ 2,848 $ (222) $ 6,521 $ 3,838 $12,482
Cash flow (used
in) from
investing
activities..... (4,427) (3,842) (3,708) (30,253) (3,252) (1,478) (4,607)
Cash flow from
(used in)
financing
activities..... 8,778 (1,009) 860 34,216 (5,010) (3,817) 1,934
OTHER DATA
(unaudited):
EBITDA(7)....... $(6,499) $ (4,080) $ 3,750 $ 4,492 $ 525 $ 11,013 $ 11,013 $ 6,422 $10,817
Pounds of Trex
sold........... 16,201 30,081 71,822 61,483 19,924 113,948 113,948 64,757 95,273

PRO FORMA,
AS ADJUSTED
SIX MONTHS
ENDED
JUNE 30,(2)
---------------
1997 1998
------- -------
STATEMENT OF
OPERATIONS
DATA:

Net sales....... $19,446 $29,327
C ost of sales.. 9,513 13,285
------- -------
Gross (loss)
profit......... 9,933 16,042
Selling, general
and
administrative
expenses....... 5,074 6,672
------- -------
(Loss) income
from
operations..... 4,859 9,370
Interest
expense, net... - 11
------- -------
(Loss) income
before income
tax expense.... $ 4,859 $ 9,359
======= =======
Pro forma income
tax
expense (3)(4)(5)
(unaudited).... 1,944 3,744
------- -------
Pro forma net
income (4)(5)
(unaudited).... $ 2,915 $ 5,615
======= =======
Pro forma net
income per
share,
basic(4)(5)(6)(unaudited).. $ $
======= =======
CASH FLOW DATA:
Cash flow (used
in) from
operating
activities.....
Cash flow (used
in) from
investing
activities.....
Cash flow from
(used in)
financing
activities.....
OTHER DATA
(unaudited):
EBITDA(7)....... $ 6,422 $10,817
Pounds of Trex
sold........... 64,757 95,273

THE PREDECESSOR(1) THE COMPANY(1)
---------------------------- ------------------------------------------------------
AS OF DECEMBER 31, AS OF JUNE 30, 1998
--------------------------------------------- --------------------------------------
PRO FORMA,
1993 1994 1995 1996 1997 ACTUAL PRO FORMA(8) AS ADJUSTED(8)(9)
-------- -------- -------- ------- ------- ------- ------------ -----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

BALANCE SHEET DATA:
(in thousands)
Cash and cash
equivalents............ $ 63 $ 10 $ -- $ 3,741 $ 2,000 $11,809 $ 4,309 $
Working capital......... (190) (403) (1,150) 3,974 4,163 10,926 3,426
Total assets............ 14,347 11,959 13,047 36,561 37,229 47,467 39,967
Total debt.............. 29,281 38,059 37,050 29,250 26,250 30,030 30,030
Total stockholders'/
members' (deficit)
equity................. (16,419) (29,121) (26,698) 3,950 7,534 13,801 6,301

(2) The pro forma, as adjusted, statement of operations data for the year ended
December 31, 1997 and six months ended June 30, 1997 and 1998 have been
computed by eliminating interest expense of $2.9 million for the year ended
December 31, 1997, $1.5 million for the six months ended June 30, 1997 and
$1.4 million for the six months ended June 30, 1998 related to debt that
will be repaid with the net proceeds of the Offering. The pro forma, as
adjusted, statement of operations data do not reflect adjustments to (i)
record an extraordinary loss, net of taxes, of $1.1 million for each of the
year ended December 31, 1997 and the six months ended June 30, 1997 and
1998 related to the extinguishment of such debt or (ii) reflect recognition
of a one-time non-cash tax charge of approximately $0.2 million for the
year ended December 31, 1997, $0.2 million for the six months ended June
30, 1997 and $1.4 million for the six months ended June 30, 1998 with
respect to a net deferred tax liability related to the Company's conversion
in the Reorganization to a C corporation. The pro forma, as adjusted,
income tax provision is calculated

at a combined federal and state income tax rate of 40%. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview" and "Certain Transactions-- Reorganization." Historical interest
income has been eliminated to reflect application of cash balances to fund
a portion of the LLC Distribution.

(5) Pro forma net income and pro forma net income per share for the year ended
December 31, 1997 and the six months ended June 30, 1997 and 1998 do not
reflect adjustments to record deferred income tax expense of $0.2 million,
$0.2 million and $1.4 million, respectively, that will be recorded as a
result of the Company's conversion to C corporation status in the
Reorganization.

(9) Reflects (i) the LLC Distribution of $7.5 million at June 30, 1998, (ii) a
net deferred tax liability of $1.6 million that would have been recorded
by the Company if it had converted to C corporation status on June 30,
1998, (iii) an extraordinary $0.3 million charge for the write-off of
unamortized debt discount and (iv) the sale by the Company of the Shares
in the Offering and the application of the net proceeds therefrom. See
"Use of Proceeds," "Capitalization," "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Overview" and "Certain
Transactions--Reorganization."

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

The Company is the nation's largest manufacturer of non-wood decking
alternative products, which are marketed under the brand name Trex. Trex Wood-
Polymer lumber is a wood/plastic composite that offers an attractive
appearance and the workability of wood without wood's on-going maintenance
requirements or functional disadvantages. Trex is manufactured in a
proprietary process that combines waste wood fibers and reclaimed polyethylene
and is used primarily for decking. Trex also has non-decking product
applications, including industrial block flooring, applications for parks and
recreational areas, floating and fixed docks and other marine applications,
and landscape edging.

The primary market for Trex is residential and commercial decking, which
accounted for approximately 85% of the Company's 1997 net sales. The Company
seeks to achieve sales growth in the decking market by converting demand for
wood decking products into demand for Trex. Wood decking accounted for
approximately 97% of 1997 decking sales (measured by board feet of lumber).
The Company's strategy to increase market acceptance of Trex is to develop and
promote the Trex brand name as a premium decking product and to emphasize the
advantages of Trex over wood decking products. The Company has invested over
$10 million during the last three years to develop Trex as a recognized brand
name. The Company focuses on the contractor-installed market segment, since
this segment represents 70% of the decking market (measured by board feet of
lumber) and since contractors generally build larger and more elaborate
residential decks than decks built by homeowners in the "do-it-yourself"
market segment.

The Company has developed an extensive distribution network which
complements its branding strategy and its focus on the contractor-installed
market segment. At June 30, 1998, the Company sold Trex through approximately
55 wholesale distribution locations. At the same date, the Company's
distributors marketed Trex to approximately 2,000 dealer outlets, which
directly service contractors and consumers.

Net sales consists of sales net of returns and discounts. The Company has
experienced net sales growth each year since it began operations in 1992. The
increase in net sales is primarily attributable to the growth in sales volume,
which increased from 16.2 million pounds of finished product in 1993, the
first full year of operations, to 113.9 million pounds in 1997. The Company's
branding and product differentiation strategy enables the Company both to
command premium prices and maintain price stability for Trex. Prices for Trex
in the last three years have increased at a compounded annual growth rate of
approximately 4.2%.

From time to time since 1992, customer demand for Trex has exceeded the
Company's manufacturing capacity. The constraints on the Company's capacity in
these periods have limited the rate of the Company's net sales growth.

The Company's cost of sales consists of raw material costs, direct labor
costs and manufacturing costs, including depreciation. In the last three
years, the cost of raw materials increased an average of approximately 5.0%
annually. Almost all of the increases were attributable to higher costs of
polyethylene. Although cost of sales has increased with the growth in net
sales, cost of sales as a percentage of net sales decreased in the six months
ended June 30, 1998 and the year ended December 31, 1997 from the prior
corresponding periods. During these periods, productivity gains from the
Company's investment in manufacturing process improvements and the addition of
production lines outweighed increases in raw material and direct labor costs.
Production line rates, which are measured in pounds of finished product per
production hour, have increased over 200% since 1992, and the number of
production lines has increased from one line in 1992 to six lines in the

second quarter of 1998. The Company expects that cost of sales as a percentage
of net sales will increase in the second half of 1998 as the Company augments
its manufacturing capacity through the addition of two production lines to its
Winchester facility and the construction of a new manufacturing facility in
the Western United States.

The principal component of selling, general and administrative expenses is
sales and marketing costs, which have increased significantly as the Company
has sought to build brand awareness of Trex in the decking market. Sales and
marketing costs consist primarily of salaries, commissions and benefits paid
to sales and marketing personnel, advertising expenses and other promotional
costs. General and administrative expenses include salaries and benefits of
personnel engaged in research and development, procurement, accounting and
other business functions and office occupancy costs attributable to such
functions, as well as amortization expense. Selling, general and
administrative expenses as a percentage of net sales have decreased in recent
years as these costs have been absorbed by a larger net sales base. As a
percentage of net sales, selling, general and administrative expenses have
varied from quarter to quarter, especially when the Company has determined to
build inventory selectively and to continue expenditures for advertising. The
Company anticipates that, because of capacity constraints and sales and
marketing expenditures planned for the second half of 1998, selling, general
and administrative expenses as a percentage of net sales will be higher in the
year ending December 31, 1998 than in the six months ended June 30, 1998.

In connection with the Acquisition, the Company incurred indebtedness of
$29.3 million, of which $26.3 million was outstanding at June 30, 1998, and
recorded $11.3 million for goodwill, substantially increasing its interest and
amortization expense. The Company will repay its Acquisition-related
indebtedness with a portion of the net proceeds of the Offering. See "Use of
Proceeds." In the quarter in which the Offering is consummated, as a result of
repayment of such indebtedness, the Company will recognize an extraordinary
cash charge against income of $1.5 million on a pre-tax basis for early
extinguishment of debt and an extraordinary $0.2 million non-cash charge
against income for the write-off of unamortized debt discount. The Company is
amortizing its goodwill over a 15-year period in an amount of approximately
$0.7 million per year and other intangible assets over a five-year period in
an amount of approximately $0.1 million per year.

The Company did not record an income tax provision for any period through
the date of the Offering. Prior to the Acquisition, the Company was included
in the consolidated tax return of its parent company. Since the Acquisition,
the Company has elected to be treated as a partnership for federal and state
income tax purposes, and the Company's income has been taxed directly to the
Company's members, rather than to the Company. Upon consummation of the
Reorganization, the Company will become subject to income tax as a corporation
taxed in accordance with Subchapter C of the Internal Revenue Code. In the
quarter in which the Offering is consummated, as a result of the Company's
conversion to C corporation status, the Company will recognize a $1.5 million
non-cash charge against income for income tax expense.

Upon consummation of the Reorganization, the Company will recognize a charge
in excess of $1.4 million with respect to net deferred tax liabilities
representing the difference between the relative values of the Company's
assets for financial reporting and tax purposes. The effect of this charge
will be to increase substantially the Company's effective tax rate for the
quarter in which the Reorganization is consummated. The increased effective
tax rate will be recognized only in such quarter and, accordingly, the Company
believes that its effective tax rate for subsequent periods should not exceed
approximately 40%.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
statement of operations data as a percentage of net sales:

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
----------------------- ------------------
1995 1996(1) 1997 1997 1998
------ ------ ------ -------- --------

Net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................... 52.3 53.3 49.1 48.9 45.3
------ ------ ------ -------- --------
Gross profit..................... 47.7 46.7 50.9 51.1 54.7
Selling, general and
administrative expenses......... 35.4 33.9 26.3 26.1 22.8
------ ------ ------ -------- --------
Income (loss) from operations.... 12.3 12.8 24.5 25.0 32.0
Interest expense................. 0.0 3.9 8.1 7.6 4.3
------ ------ ------ -------- --------
Net income(2).................... 12.3% 8.9% 16.4% 17.4% 27.7%
====== ====== ====== ======== ========

- --------
(1) Reflects the sum of the selected statement of operations data for the
Predecessor during the period January 1, 1996 to August 28, 1996 and for
the Company during the period August 29, 1996 to December 31, 1996.

(2) The Company did not record an income tax provision for any period through
the date of the Offering. The Predecessor was included in the
consolidated tax return of its parent company and, accordingly, no tax
provision was provided. The Company has elected to be treated as a
partnership for federal and state income tax purposes for all periods
since inception. As a result, the income of the Company has been taxed
for such purposes directly to the Company's members, rather than to the
Company.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

Net Sales. Net sales increased 51.0% to $29.3 million in the six months
ended June 30, 1998 (the "1998 six-month period") from $19.4 million in the
six months ended June 30, 1997 (the "1997 six-month period"). The increase in
net sales was primarily attributable to the growth in sales volume, which
increased to 95.3 million pounds of finished product in the 1998 six-month
period from 64.8 million pounds in the 1997 six-month period. Production line
rate increases and the addition of a sixth production line in the second
quarter of 1998 significantly increased the Company's production capacity in
the 1998 six-month period. To stimulate demand for Trex, the Company increased
expenditures on network and cable television advertising and instituted
incentive sales programs in the 1998 six-month period. Increased sales of a
railing product and a Trex color introduced in 1997 also contributed to the
higher sales volume. The Company substantially increased the number of dealer
outlets, from approximately 1,500 at December 31, 1997 to approximately 2,000
at June 30, 1998.

Cost of Sales. Cost of sales increased 40.0% to $13.3 million in the 1998
six-month period from $9.5 million in the 1997 six-month period. All
components of cost of sales increased to support the higher level of sales
activity. Cost of sales as a percentage of net sales decreased to 45.3% in the
1998 six-month period from 48.9% in the 1997 six-month period. The decline
principally reflected operating efficiencies from improved production line
rates.

Gross Profit. Gross profit increased 61.6% to $16.0 million in the 1998 six-
month period from $9.9 million in the 1997 six-month period, reflecting the
higher sales volume in the 1998 six-month period. Gross profit as a percentage
of net sales increased to 54.7% in the 1998 six-month period from 51.1% in the
1997 six-month period. The contribution to gross profit of greater operating
efficiencies more than offset the effects of discounts offered by the Company
to distributors in the 1998 six-month period as part of its sales incentive
programs.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 31.4% to $6.7 million in the 1998 six-month
period from $5.1 million in the 1997 six-month period. The increase was
primarily attributable to higher sales and marketing expenses, which increased
31.3% to $4.2 million in the 1998 six-month period from $3.2 million in the
1997 six-month period. The largest component of the increase was advertising
costs, which increased 53.8% as the Company expanded promotion of the Trex
brand on network and cable television. The Company also incurred higher
personnel costs through additions to its sales and marketing staff. The
increase in corporate personnel and the upgrading of accounting and other
systems to support growth contributed to a 41.0% increase in general and
administrative expenses. Selling, general and administrative expenses as a
percentage of net sales decreased to 22.8% in the 1998 six-month period from
26.1% in the 1997 six-month period.

Interest Expense. Interest expense decreased 13.3% to $1.3 million in the
1998 six-month period from $1.5 million in the 1997 six-month period. The
decrease primarily resulted from lower average borrowings attributable to the
Company's prepayment of $3.0 million principal amount of Senior Notes in the
second quarter of 1997.

1997 COMPARED TO 1996

Net Sales. Net sales increased 43.3% to $34.1 million in 1997 from $23.8
million in the period January 1, 1996 to August 28, 1996 and the period August
29, 1996 to December 31, 1996 (such periods together, "1996"). The increase in
net sales was primarily attributable to the growth in sales volume, which
increased to 113.9 million pounds of finished product in 1997 from 81.4
million pounds in 1996. The Company's production capacity in 1997 was
significantly augmented by a fifth production line added in the third quarter
of 1996. The Company used the additional capacity to build up inventories in
late 1996 for sale in 1997. The introduction of a new railing product and, to
a lesser extent, a new Trex color also contributed to the higher sales volume
in 1997. The Company significantly expanded its distribution network by
increasing the number of dealer outlets from approximately 1,200 at December
31, 1996 to approximately 1,500 at December 31, 1997.

Cost of Sales. Cost of sales increased 32.3% to $16.8 million in 1997 from
$12.7 million in 1996. Raw materials purchases, direct labor costs and
manufacturing costs all increased to support the higher sales volume in 1997.
Cost of sales as a percentage of net sales declined to 49.1% in 1997 from
53.3% in 1996. The decline was primarily attributable to improved production
line rates resulting from the efforts of an engineering team assigned in 1996
to focus on productivity improvements.

Gross Profit. Gross profit increased 56.8% to $17.4 million in 1997 from
$11.1 million in 1996, reflecting the higher sales volume in 1997. Gross
profit as a percentage of net sales increased to 50.9% in 1997 from 46.7% in
1996. The increase was primarily attributable to operating efficiencies
resulting from improved production line rates.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 11.1% to $9.0 million in 1997 from $8.1
million in 1996. The increase resulted principally from higher sales and
marketing expenses, which increased 21.4% to $5.1 million in 1997 from $4.2
million in 1996. An increase of 14.8% in advertising costs over 1997 and the
addition of new sales and marketing personnel contributed to the higher sales
and marketing expenses. The increased general and administrative expenses in
1997 reflected an expense of $0.8 million from amortization of goodwill and
organizational costs incurred in connection with the Acquisition. Selling,
general and administrative expenses as a percentage of net sales decreased to
26.3% in 1997 from 33.9% in 1996.

Interest Expense. Interest expense increased to $2.8 million in 1997 from
$0.9 million in 1996. The increase reflected a full year of interest expense
on indebtedness incurred in connection with the Acquisition. See "Certain
Transactions--Acquisition Transactions."

1996 COMPARED TO 1995

Net Sales. Net sales increased 21.4% to $23.8 million in 1996 from $19.6
million in 1995. The increase in net sales was primarily attributable to the
growth in sales volume, which increased to 81.4 million pounds of finished
product in 1996 from 71.8 million pounds in 1995. Production line rate
increases and the additions of a fourth production line in the last quarter of
1995 and a fifth production line in the third quarter of 1996 significantly
increased the Company's production capacity in 1996. Demand for Trex in 1996
exceeded the Company's increased production capacity for most of 1996. The
Company increased the number of its dealer outlets to approximately 1,200 at
December 31, 1996 from approximately 1,000 at December 31, 1995.

Cost of Sales. Cost of sales increased 23.3% to $12.7 million in 1996 from
$10.3 million in 1995. All components of cost of sales increased to support
the higher level of sales activity. The increase in cost of sales over 1995
also reflected the lower raw material costs incurred by the Company throughout
most of 1995 as a result of favorable pricing terms offered to Mobil
divisions. Cost of sales as a percentage of net sales increased to 53.3% in
1996 from 52.3% in 1995. The increase in overhead costs from the recruitment
of additional engineers offset the operating efficiencies from improved
production line rates.

Gross Profit. Gross profit increased 18.1% to $11.1 million in 1996 from
$9.4 million in 1995, reflecting the higher sales volume in 1996. Gross profit
as a percentage of net sales decreased to 46.7% in 1996 from 47.7% in 1995.
Higher manufacturing costs more than offset the contribution of greater
operating efficiencies to gross profit.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 17.4% to $8.1 million in 1996 from $6.9
million in 1995. Most of the increase was attributable to higher sales and
marketing expenses, which increased 20.0% to $4.2 million in 1996 from $3.5
million in 1995. The largest component of the increase was advertising costs,
which increased 32.4% as the Company expanded promotion of the Trex brand. The
increase in research and development personnel and an expense of $0.7 million
from amortization of goodwill incurred in connection with the Acquisition
contributed to a 16.2% increase in general and administrative expenses.
Selling, general and administrative expenses as a percentage of net sales
decreased to 33.9% in 1996 from 35.4% in 1995.

Interest Expense. Interest expense totaled $0.9 million in 1996, while the
Company recorded no interest expense in 1995. The increase in 1996 resulted
from indebtedness incurred in connection with the Acquisition. See "Certain
Transactions--Acquisition Transactions."

SEASONALITY

The Company's net sales and income from operations historically have varied
from quarter to quarter. Such variations are principally attributable to
seasonal trends in the demand for Trex. The Company experiences lower net
sales levels during the fourth quarter, in which holidays and adverse weather
conditions in certain regions usually reduce the level of home improvement and
new construction activity. Income from operations and net income tend to be
lower in quarters with lower sales due to a lower gross margin which is not
offset by a corresponding reduction in selling, general and administrative
expenses, in part because the Company continues to make advertising
expenditures throughout the year. The Company utilizes a variety of sales
incentive programs with customers to reduce the effects of seasonality.

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has financed its operations and growth primarily
with cash flow from operations, operating leases, normal trade credit terms
and borrowings under its revolving credit facility.

The Company's cash flow from operating activities was $12.5 million in the
six months ended June 30, 1998 and $6.5 million, $2.6 million and $4.8 million
in 1997, 1996 and 1995, respectively. Higher sales volume, which was
stimulated by sales incentive programs, accounted for the significant cash
flows in the six months ended June 30, 1998.

The Company's working capital generally averages between 12% and 18% of
annual net sales. The Company's working capital needs correlate closely with
the level of the Company's net sales. Consequently, the Company's short-term
borrowing requirements are affected by the seasonality of its business. As of
June 30, 1998, no borrowings were outstanding under the Company's $6.0 million
revolving credit facility.

As of June 30, 1998, the Company's long-term indebtedness, including current
portion, was $30.0 million, with an overall weighted average interest rate of
10.0%. Of such indebtedness, $26.3 million principal amount of the Senior
Notes and the Subordinated Notes will be repaid from the net proceeds of the
Offering. See "Use of Proceeds."

As part of the Reorganization, the Company will make the LLC Distribution of
approximately $6.9 million to certain of its members. A portion of the net
proceeds of the Offering will be used to pay approximately $2.0 million of the
LLC Distribution. The Company will fund the balance of the LLC Distribution
from available cash. The amount of the LLC Distribution and the amount of the
net proceeds of the Offering to be applied in respect thereof are subject to
adjustment based on the Company's actual income from July 1, 1998 through the
date of the LLC Distribution. See "Certain Transactions--Reorganization."

Expansion of the Company's production capacity will require significant
capital expenditures. The Company currently estimates that its aggregate
capital requirements in 1998 and 1999 will total approximately $25.2 million,
of which approximately $14.4 million is expected to be incurred in 1998
(including $4.6 million of capital expenditures made as of June 30, 1998) and
approximately $10.8 million in 1999. Capital expenditures will be used
primarily for the addition of two production lines to the Company's Winchester
facility and for the construction and equipping of the Company's new
manufacturing facility in the Western United States. The Company believes that
the net proceeds of the Offering, together with cash on hand, cash flow from
operations and borrowings expected to be available under the Company's current
credit facility, will provide sufficient funds to enable the Company to expand
its business as currently planned at least through the end of 1999. The actual
amount and timing of the Company's future capital requirements may differ
materially from the Company's estimate depending on the demand for Trex and
new market developments and opportunities. The Company may determine that it
is necessary or desirable to obtain financing for such requirements through
bank borrowings or the issuance of debt or equity securities. Debt financing
would increase the leverage of the Company, while equity financing may dilute
the ownership of the Company's stockholders. There can be no assurance as to
whether, or as to the terms on which, the Company will be able to obtain such
financing.

YEAR 2000 COMPLIANCE

The Company's Program. The Company has undertaken a program to address the
Year 2000 issue with respect to the following: (i) the Company's information
technology and operating systems (including its billing, accounting and
financial reporting systems); (ii) the Company's non-information technology
systems (such as buildings, plant, equipment and other infrastructure systems
that may contain embedded microcontroller technology); (iii) certain systems
of the Company's major suppliers and material service providers (insofar as
such systems relate to the Company's business activities with such parties);
and (iv) the Company's major distributors (insofar as the Year 2000 issue
relates to the ability of such distributors to distribute Trex to the
Company's dealer outlets). As described

below, the Company's Year 2000 program involves (i) an assessment of the Year
2000 problems that may affect the Company, (ii) the development of remedies to
address the problems discovered in the assessment phase, (iii) the testing of
such remedies and (iv) the preparation of contingency plans to deal with worst
case scenarios.

Assessment Phase. As part of the assessment phase of its program, the
Company will attempt to identify substantially all of the major components of
the systems described above. In order to determine the extent to which such
systems are vulnerable to the Year 2000 issue, the Company is currently
evaluating its internally developed software applications. The Company expects
that its evaluation will be completed by December 15, 1998. In addition, in
the third quarter of 1998, the Company began sending letters to certain of its
major suppliers and other material service providers and to the Company's
major distributors, requesting them to provide the Company with detailed,
written information concerning existing or anticipated Year 2000 compliance by
their systems insofar as the systems relate to such parties' business
activities with the Company. The Company expects that it will complete its
distribution of these inquiries early in the fourth quarter of 1998. The
Company is requesting that all responses to the inquiries be returned to it no
later than January 1, 1999.

Remediation and Testing Phase. Based upon the results of its assessment
efforts, the Company will undertake remediation and testing activities. The
Company intends to complete this phase by December 31, 1998. The activities
conducted during the remediation and testing phase are intended to address
potential Year 2000 problems in computer software used by the Company in its
information technology and non-information technology systems in an attempt to
demonstrate that this software will be made substantially Year 2000 compliant
on a timely basis. In this phase, the Company will first evaluate a program
application and, if a potential Year 2000 problem is identified, will take
steps to attempt to remediate the problem and individually test the
application to confirm that the remediating changes are effective and have not
adversely affected the functionality of that application. After the individual
applications and system components have undergone remediation and testing
phases, the Company will conduct integrated testing for the purpose of
demonstrating functional integrated systems operation.

Contingency Plans. The Company intends to develop contingency plans to
handle its most reasonably likely worst case Year 2000 scenarios, which it has
not yet identified fully. The Company intends to complete its determination of
worst case scenarios after it has received and analyzed responses to
substantially all of the inquiries it has made of third parties. The Company
expects to complete its contingency plans by June 30, 1999.

Costs Related to the Year 2000 Issue. To date, the Company has incurred
approximately $35,000 in costs for its Year 2000 program. The Company
currently estimates that it will incur additional costs, which are not
expected to exceed approximately $25,000, to complete its Year 2000 compliance
work. These costs may vary from the foregoing estimates.

Risks Related to the Year 2000 Issue. Although the Company's Year 2000
efforts are intended to minimize the adverse effects of the Year 2000 issue on
the Company's business and operations, the actual effects of the issue and the
success or failure of the Company's efforts described above cannot be known
until the year 2000. Failure by the Company and its major suppliers, other
material service providers and major distributors to address adequately their
respective Year 2000 issues in a timely manner (insofar as such issues relate
to the Company's business) could have a material adverse effect on the
Company's business, results of operations and financial condition.

INFLATION

Inflation did not have a material impact on the Company's operating results
in the six months ended June 30, 1998 or in any of the years ended December
31, 1997, 1996 or 1995.

BUSINESS

GENERAL

The Company is the nation's largest manufacturer of non-wood decking
alternative products, which are marketed under the brand name Trex(R). Trex
Wood-Polymer(TM) lumber is a wood/plastic composite that offers an attractive
appearance and the workability of wood without wood's on-going maintenance
requirements or functional disadvantages. Trex is manufactured in a
proprietary process that combines waste wood fibers and reclaimed polyethylene
and is used primarily for residential and commercial decking. The Company
promotes Trex among consumers and contractors as a premium decking product.
Net sales of Trex increased from $0.6 million in 1992 to $34.1 million in 1997
and totaled $29.3 million in the six months ended June 30, 1998. Income from
operations increased from a loss of $5.6 million in 1992 to a profit of $8.4
million in 1997 and totaled $9.4 million in the six months ended June 30,
1998.

The Company seeks to achieve sales growth in the decking market by
converting demand for wood decking products into demand for Trex. The Company
intends to continue to develop and promote the Trex brand name as a premium
decking product and to focus on the contractor-installed market segment, since
this segment represents approximately 70% of the decking market (measured by
board feet of lumber) and since contractors generally build larger, more
elaborate residential decks than decks built by homeowners in the "do-it-
yourself" market segment. The Company sells its products through approximately
55 wholesale distribution locations, which in turn sell Trex to approximately
2,000 dealer outlets across the United States.

The Company was formed in August 1996 in a buyout of the assets of Mobil's
Composite Products Division. Mobil established the Composite Products Division
in April 1992 after purchasing the technology and related assets used to
create Trex. The buyout was led by four senior Mobil executives with over 75
years of combined management experience.

DECKING MARKET OVERVIEW

The decking market is part of the substantial home improvement market.
Expenditures for residential improvements and repairs totaled approximately
$118 billion in 1997, according to the U.S. Department of Commerce, and the
home improvement market grew at a compounded annual growth rate of 3.7% for
the seven-year period ended December 31, 1997. The primary market for Trex is
residential decking and, to a lesser extent, commercial decking. Annual
factory sales in 1997 of residential decking and commercial decking totaled
approximately $1.7 billion (approximately 2.0 billion board feet of lumber)
and approximately $200 million (approximately 225 million board feet of
lumber), respectively. For the seven-year period ended December 31, 1997,
factory sales of all residential decking increased at a compounded annual
growth rate of approximately 8%. In recent years, factory sales of non-wood
alternative decking products to the residential market have increased at a
compounded annual growth rate of over 25%.

The growth in demand for residential decking reflects the increasing
popularity of decks as a means of extending living areas and providing outdoor
recreation and entertainment spaces. Residential decking purchases include the
installation of new and replacement decks for existing homes, construction of
decks for new homes and repair of existing decks. An industry study estimates
that more than three million decks are built each year. Deck repair,
modernization and replacement are expected to increase as existing decks age.

The majority of decks are built for existing homes as new additions or to
replace other decks. During periods of economic uncertainty, when spending on
discretionary items is reduced, many homeowners forego the purchase of new
homes and choose to improve their existing residences. Adding a deck has
become one of the most popular home improvement projects. Construction of

decking is a relatively low-cost means of adding livable space, and industry
studies indicate that decking improvements generally return a significant
percentage of their cost at the time of resale. The Company estimates that the
installation cost of a majority of decks ranges from $2,000 to $5,000. More
than half of all decks are constructed one to five years after a home is
purchased. Accordingly, there is typically an increased demand for decking in
the five-year period following a peak in home sales. The Company believes
that, because residential deck construction is not primarily tied to new home
activity, the residential decking market historically has not experienced the
high level of cyclicality common to businesses in the new home construction
and building materials industries.

The Company estimates that contractors, including homebuilders, install
approximately 60% of all residential decks, accounting for approximately 70%
of the board feet used. The balance of residential decks are installed by "do-
it-yourself" homeowners. Contractors generally either specialize in deck
installation or build decks in connection with new home construction or home
improvement and remodeling projects. Contractor-installed decks on average are
larger and more elaborate than decks installed by homeowners.

Commercial decks are constructed for restaurants, hotels, nature walks and
boardwalks. These decking applications typically have more demanding design
and installation requirements than those for residential decking. Product
liability and maintenance costs are major issues for commercial installations.
As a result, safety and maintenance features of decking products particularly
influence buying decisions in this market segment.

The following table sets forth, in board feet of lumber, the percentage of
1997 factory sales to the decking market generated by each product category
indicated:

PERCENTAGE OF
PRODUCT 1997 FACTORY SALES
- ------- ------------------

Wood......................................................... 97%
100% plastic................................................. 1
Wood/plastic composites...................................... 2
---
100%
===

More than 75% of wooden decks are fabricated from southern yellow pine,
which is pressure-treated with insecticides and other chemicals to create
resistance to insect infestation and decay. The balance of the wood decking
segment is primarily divided between redwood and cedar products. The 100%
plastic decking products utilize polyethylene, fiberglass and polyvinyl
chloride ("PVC") as raw materials. Wood/plastic composites are produced from a
combination of wood fiber and polyethylene or other commonly used polymers.
Growing consumer awareness of the product attributes of non-wood decking
alternatives and the decline in lumber quality and quantity have contributed
to increased sales of 100% plastic lumber and wood/plastic composites for
decking.

Production and distribution operations in the decking market are highly
fragmented. Treated southern yellow pine is produced by wood preservers that
operate approximately 550 treatment plants in the United States. These
treated-wood suppliers are predominantly small companies with a regional
distribution focus. An estimated six to eight companies supply redwood to the
decking market, while cedar supplies are produced by a few large suppliers and
approximately 20 to 30 small, regional suppliers that market varieties of
cedar grown in their areas. In 1997, according to an industry study, non-wood
decking materials were manufactured by approximately 20 companies, of which
less than half had annual revenues of over $5 million.

Distributors of wood decking materials typically supply lumber to lumber
yards and home center outlets, who in turn supply the materials to home
builders, contractors and homeowners. Manufacturers of non-wood decking
alternatives also generally use these distribution channels, since many such
alternative products can be stacked, stored and installed like wood products.
Certain non-wood decking alternatives, however, are sold to specialty dealers
who provide the special selling support needed to build consumer awareness of
new products.

Wood decking products generally are not associated with brand
identification. The primary softwoods used for decking (treated southern
yellow pine, redwood and cedar) are sold as commodities graded according to
classifications established by the U.S. Department of Commerce. Pricing is
based on species, grade, size and level of chemical treatment, if any. There
generally is no pricing differentiation based on brand, although certain wood
preservers have attempted to brand their treated wood products. The Company
believes that these companies, which it estimates represent less than 5% of
the treated wood market, have not established meaningful brand name
recognition.

COMPETITIVE STRENGTHS

The Company believes that its primary competitive strengths are the
following:

Superior Product. Trex offers a number of significant advantages over wood
decking products. Trex eliminates many of wood's major functional
disadvantages, which include warping, splitting, rotting and other damage from
moisture. Trex requires no sealing to protect against moisture damage,
provides a splinter-free surface and needs no chemical treatment against
insect infestation. These features of Trex eliminate the on-going maintenance
requirements for a wood deck and make Trex less costly than wood over the life
of the deck. Like wood, Trex is slip-resistant, even when wet, can be painted
or stained and is not vulnerable to damage from ultraviolet rays. The special
characteristics of Trex, including resistance to splitting, flexibility and
ease and consistency of machining and finishing, facilitate deck installation,
reduce contractor call-back and afford customers a wide range of design
options.

Brand Name Development. The Company has invested over $10 million during the
last three years to develop Trex as a recognized brand name in the residential
and commercial decking market. The Company's marketing strategy has been to
promote Trex among consumers and contractors as a premium decking product. The
Company uses extensive print and television advertising to build brand
awareness among homeowners and commercial users and targets decking
contractors with advertisements in leading building and remodeling magazines.
Brand name recognition helps to generate demand for Trex directly among
consumers and also among distributors and dealers, who recommend Trex to
contractors and other consumers. The Company believes that its branding
strategy promotes product differentiation of Trex in a market which is not
generally characterized by brand identification and enables the Company both
to command premium prices and maintain price stability for Trex.

Extensive Distribution Network. The Company has developed an extensive
distribution network which complements its branding strategy and focus on the
contractor-installed market segment. At June 30, 1998, the Company sold Trex
through approximately 55 wholesale distribution locations. At the same date,
the Company's distributors marketed Trex to approximately 2,000 dealer
outlets, which directly service contractors and consumers. The Company selects
distributors based upon their anticipated commitment to Trex, and the
Company's distribution network devotes significant resources to promoting and
selling Trex. All distributors have appointed a Trex specialist, regularly
conduct dealer training sessions, fund demonstration projects and participate
in local advertising campaigns and home shows. These distributors generally
sell Trex as their only non-wood decking alternative and agree in their
distribution agreements with the Company not to market other wood/plastic
composites with the same applications as Trex.

Investment in Manufacturing Process and Product Development. Production of a
non-wood decking alternative like Trex requires significant capital
investment, special process know-how and time to develop. The Company has
invested over $23 million and five years in manufacturing process
improvements, new product development and product enhancements. The Company's
investment of time and capital has enabled it to increase its manufacturing
line production rates by more than 200% since 1992, has facilitated the
Company's development of new products and has produced improvements in the
dimensional consistency, surface texture and color uniformity of the Trex
product line.

Building Code Listing. Trex is the only non-wood decking alternative to
receive a product building code listing either from the NES or from any of the
three NES regional members that establish construction standards in the United
States. Since receiving its NES listing in 1995, Trex has been the only non-
wood alternative decking product published in all major code books throughout
the country. The Company's listing facilitates the acquisition of building
permits by residential consumers of Trex. The Company believes that its
listing promotes customer and industry acceptance of Trex as a substitute for
wood in decking.

GROWTH STRATEGIES

Continue Brand Name Development. The Company plans to increase its
investment in, and the resources devoted to, development of the Trex brand.
The Company's branding efforts will focus on implementation of enhanced
integrated advertising, public relations and trade programs. The Company's
sales growth in the decking market will largely depend on converting demand
for wood products into demand for Trex. Accordingly, the Company's branding
strategy will continue to emphasize the advantages of Trex over wood decking
products. The Company's brand building programs also are designed to support
the positioning of Trex as a premium product in the decking market.

Expand Distribution Coverage. The Company intends to establish comprehensive
national coverage for Trex. To achieve this objective, the Company expects to
increase the number of dealer outlets selling Trex over the next three years
by 50% to approximately 3,000 outlets. The Company will seek to expand its
dealer network by adding new distributors and increasing the number of its
wholesale distribution locations to approximately 75 distribution locations
from its base of approximately 55 at June 30, 1998.

Increase Production Capacity. Currently, customer demand for Trex exceeds
the Company's manufacturing capacity. To support sales growth and improve
customer service, the Company plans to increase output by adding production
lines and increasing productivity in its existing facility in Winchester,
Virginia and by establishing an additional manufacturing facility in the
Western United States. With this investment, the Company expects to increase
its current manufacturing capacity by approximately 40% in the first quarter
of 1999 and to double its current capacity by the end of 1999.

Invest in Process and Product Development. The Company will continue to make
substantial investments in process and product development to support new
products and improve product consistency, reduce manufacturing costs and
increase operating efficiencies. In September 1998, the Company centralized
its research and development operations in the Trex Technical Center, a 30,000
square foot building adjacent to its Winchester manufacturing facility.

industrial block flooring, applications for parks and recreational areas,
floating and fixed docks and other marine applications, and landscape edging.
The Company believes that the product characteristics of Trex are well suited
to satisfy the diverse appearance, performance and safety requirements of
these and other potential product applications. In expanding its geographic
scope of operations, the Company plans to increase exports to Canada, where it
currently has limited sales, and explore export opportunities in the
Caribbean, Latin America and selected parts of Europe.

PRODUCTS

The Company manufactures Trex Wood-Polymer lumber, a composite product that
offers an attractive appearance and the workability of wood without wood's on-
going maintenance requirements or functional disadvantages. Trex is
manufactured in a proprietary process that combines waste wood fibers and
reclaimed polyethylene. Trex is produced in popular lumber sizes and is
currently sold in three colors: Natural, Winchester Grey and Woodland Brown.

Approximately 85% of the Company's 1997 net sales were derived from sales of
Trex to the residential and commercial decking market. Trex also has a number
of non-decking product applications, which generated the remaining 15% of the
Company's 1997 net sales. These applications currently include blocks to cover
and protect concrete sub-floors in heavy industrial plants; applications for
parks and recreational areas, including playground structures, picnic tables
and benches, fencing and theme park applications; floating and fixed docks and
other marine applications; and landscape edging. Trex does not have the
tensile strength of wood and, as a result, is not used as a primary structural
member in posts, beams or columns.

SALES AND MARKETING

The Company's marketing activities at June 30, 1998 were conducted by 21
employees, of whom 13 were field sales representatives providing nationwide
sales coverage. The sales representatives, who are assigned to particular
geographic markets, are primarily responsible for servicing the Company's
wholesale distributors, assisting in dealer and contractor training, meeting
with architects and specifiers and providing support at regional home shows
and other consumer events. The Company maintains a commission program for its
sales force which is designed to reward achievement of sales goals and to
promote sales growth.

The Company's sales growth in the decking market will largely depend on
converting demand for wood products into demand for Trex. Accordingly, the
Company's branding strategy will continue to emphasize the advantages of Trex
over wood decking products. The Company's marketing efforts are focused on the
residential and commercial decking market. The Company has implemented a two-
pronged marketing program directed at consumers and contractors. The Company
seeks to develop consumer brand awareness and contractor preference to
generate demand for Trex among dealers and distributors, who then recommend
Trex to other contractors and consumers. The following are the key elements of
the Company's marketing program:

Consumer Advertising. The Company engages in extensive television
advertising. In the first half of 1998, the Company ran network and cable
television advertisements over an 18-week period featuring 30-second spots on
shows such as ABC's Good Morning America and NBC's Today.

The Company also advertises Trex extensively in popular magazines, including
Better Homes & Gardens, Sunset and Martha Stewart Living. The 1998 print
advertising campaign includes full-page color magazine advertisements
featuring the Company's new spokesman, Willard Scott of NBC's Today.

Public Relations. The Company employs a public relations firm to stimulate
interest in Trex by the print and broadcast media. During 1997, print and
broadcast stories featuring Trex generated a total of 125 million
"impressions," which represent potential viewings.

Trade Advertising and Promotion. To build a brand name for Trex with decking
contractors, the Company reaches a professional building audience through
advertisements in leading building and remodeling magazines, including
Builder, Building Products, Fine Homebuilding, Journal of Light Construction
and other well-known publications.

Homebuilder Program. In 1998, the Company inaugurated a program to provide
promotional allowances and display materials to homebuilders who use Trex for
their model home decks and agree to promote Trex. Over 60 homebuilders
currently participate in the program.

Trade and Home Shows. The Company annually exhibits Trex at five major trade
shows for homebuilders, contractors and specifiers that have a total
attendance of approximately 200,000. The Company also exhibits its product
line at major regional home and garden shows. Distributors, dealers and
contractors experienced in Trex provide additional support by exhibiting Trex
at smaller local home shows.

Showcase Projects. Trex obtains further brand name recognition through its
association with highly publicized showcase projects. Trex has been used in a
number of such projects, including the Presidential Trail at Mount Rushmore,
the Toronto Boardwalk on Lake Ontario Shores, the Florida Everglades Walkways
and the Grand Canyon Education Center.

Consumer Research. From time to time, the Company commissions consumer
research studies to gain a better understanding of the needs of the decking
market, the ability of Trex to meet those needs relative to competitive
products and consumer acceptance of Trex as a decking material.

DISTRIBUTION

Approximately 95% of Trex net sales are made through the Company's wholesale
distribution network. At June 30, 1998, the Company sold its Trex product line
to 22 wholesale companies operating from approximately 55 distribution
locations. At the same date, the Company's distributors marketed Trex to
approximately 2,000 dealer outlets across the United States. Although the
Company's dealers sell to both homeowners and contractors, their sales efforts
are primarily directed at professional contractors, remodelers and
homebuilders. The remaining 5% of the Company's net sales are made directly to
industrial floor fabricators, playground material distributors and other
accounts.

Wholesale Distributors. The Company believes attracting wholesale
distributors who are committed to Trex and the Trex marketing approach and who
can effectively sell Trex to contractor-oriented lumber yards is important to
its future growth. The Company believes its distributors are able to provide
value-added service in marketing Trex because they sell premium wood decking
products and other building supplies, which typically require product training
and personal selling efforts.

Pursuant to its agreement with each wholesale distributor, the Company
appoints the distributor on a non-exclusive basis to distribute Trex within a
specified area. The distributor generally purchases Trex at the Company's
prices in effect at the time the Company ships the product to the distributor.
The distributor is required to maintain specified minimum inventories of Trex
during certain portions of each year. Upon the expiration of the initial one-
year term, the agreement is automatically renewed for additional one-year
terms unless either party provides notice of termination at least 60 days
before the expiration of any renewal term. The distributor may terminate the
agreement at any time upon 90 days' notice, while the Company may terminate
the agreement upon 60 or 90 days' notice or immediately upon the happening of
certain events, including a failure by the distributor to maintain the
required minimum inventories of Trex.

The Company requires its wholesale distributors to contribute significant
resources to support Trex. All wholesale distributors have appointed a Trex
specialist, regularly conduct dealer training sessions, fund demonstration
projects and participate in local advertising campaigns and home shows. The
Company sponsors intensive two-day training seminars to help train Trex
specialists.

In 1997, five wholesale distribution companies each accounted for over 10%
of the Company's net sales: Capital Lumber Company; Furman Lumber Inc.; OrePac
Building Products Inc.; Plunkett-Webster Inc. and Snavely Forest Products Inc.
These distributors collectively accounted for approximately 68% of the
Company's 1997 net sales. In each of 1995 and 1996, four of these distributors
were among the ten distributors accounting for the highest net sales of Trex.

To augment its dealer outlets, the Company plans to add new distributors and
increase the number of its wholesale distribution locations over the next
three years to approximately 75.

Retail Lumber Dealers. Of the approximately 25,000 retail outlets in the
United States that sell lumber, approximately 5,000 are independent lumber
yards that emphasize sales to contractors and who are the primary market for
Trex. Although there is demand for Trex from both the "do-it-yourself"
homeowner and contractor, the Company's sales efforts emphasize the
contractor-installed market to achieve premium product positioning for Trex
and to ensure that the installations will have professional craftsmanship. The
Company's retail dealers generally provide sales personnel trained in Trex,
contractor training, inventory commitment and point-of-sale display support.
To establish comprehensive national coverage for Trex, the Company plans to
increase the number of its dealer outlets over the next three years from
approximately 2,000 at June 30, 1998 to approximately 3,000.

Contractor Training. The Company has provided training about Trex to over
20,000 contractors since 1995. Contractors receive a Trex Contractor Kit
containing a product handbook, sales literature and product samples as part of
their training. The Company has established a "Builders Club" to strengthen
its relationship with premium decking contractors.

Dealer Locator Service and Web Site. The Company maintains a toll-free
telephone service for use by consumers and building professionals to locate
the closest dealer offering Trex and to obtain product information. The
Company uses these calls to generate sales leads for contractors, dealers,
distributors and Trex sales representatives. The Company also analyzes caller
information to assess the effectiveness of its promotional and advertising
activities.

As an additional source of information to consumers, dealers and
distributors, the Company operates a Web site, which provides product
installation information, handling instructions, a dealer locator service,
photographs of showcase installations, technical reports and other
information.

Shipment. The Company ships Trex to distributors by truck and rail. Western
distributors principally receive shipments by rail. Distributors pay all
shipping and delivery charges.

MANUFACTURING PROCESS

Trex is manufactured at the Company's 100,000 square foot facility in
Winchester, Virginia. The facility currently has six production lines, each of
which is highly automated and on average requires fewer than five employees to
operate per shift.

The Company's facility has a total capacity of 155 million pounds per year
of finished product and is currently operating at its full capacity. To
support sales growth and improve customer service, the Company intends to
increase production capacity by adding two production lines and increasing
productivity in its Winchester facility and by establishing an additional
manufacturing facility in the Western United States. With this investment, the
Company expects to increase its manufacturing capacity by approximately 40% in
the first quarter of 1999 and to double its capacity by the end of 1999.

Trex is manufactured from waste wood fiber and reclaimed polyethylene
("poly"). The composition of Trex Wood-Polymer lumber is approximately 50%
wood fiber and 50% reclaimed poly material. The Company uses wood fiber
purchased from wood working factories, mills and pallet recyclers, most of
which are located within a 200-mile radius of the Company's Winchester
facility. Poly material used in the production of Trex consists primarily of
reclaimed grocery sacks and stretch film, which the Company purchases from
suppliers throughout the United States. See "Suppliers."

The Trex manufacturing process involves mixing wood particles with plastic,
heating and finally extruding (or forcing) the highly viscous and abrasive
material through a profile die. The extruded product is cooled in a water bath
and cut to its finished length. Waste created during manufacturing is recycled
into the production process. The finished boards are placed on a cooling
conveyor and proceed to finished goods inspection, packaging and storage.

The Company has made substantial investments in manufacturing process
improvements. As a result of these investments, production line rates, which
are measured in pounds of finished product per production hour, have increased
over 200% since 1992. The Company also has broadened the range of raw
materials that can be used to produce Trex by developing hardware capable of
utilizing different forms of poly material to produce a consistent final
product. The Company has obtained patent protection until 2015 for a process
of preparing the raw materials for the manufacturing phase of production. The
Company also has a patent pending for another manufacturing process
improvement. If this patent is issued, the patent protection will extend until
2015.

Trex is the only wood/plastic composite product to receive a building code
listing either from the NES or from any of its three regional members that
establish construction standards in the United States (Building Officials &
Code Administrators International, Inc., International Conference on Building
Officials and Southern Building Code Congress International, Inc.). In
conjunction with its NES listing, the Company maintains a quality control
testing program that is monitored by an NES-approved independent inspection
agency. Under this program, the Company tests one board from every other
production bundle to determine whether it meets the detailed, published
criteria for code listing. Representatives of the inspection agency conduct
unannounced monthly on-site audits of these program records to assure
conformity to testing and to check test results. The Company believes that
currently a minimum of 18 months would be required for a manufacturer of a
competitive product which has not yet started the listing approval process to
complete all phases of the process for its product. See "Risk Factors--
Competition."

SUPPLIERS

The production of Trex requires the supply of wood fiber and polyethylene
from reclaimed grocery sacks and stretch film. The Company satisfies virtually
all of its current wood fiber requirements from six regional suppliers. The
Company purchases its supplies of poly material from multiple locations
throughout the country, including supermarkets and distribution centers.

Wood Fiber. In 1997, the Company consumed 75 million pounds of wood fiber.
Suppliers accounting for over 90% of the Company's wood fiber purchases are
located within a 200-mile radius of the Company's existing facility.
Convenient access to available wood fiber supplies is one of the Company's
most important selection criteria for its second manufacturing facility.

Woodworking plants or mills are the Company's preferred suppliers of wood
fiber because the waste wood fiber produced by these operations contains
little contamination and is low in moisture. These facilities generate wood
fiber as a byproduct of their manufacturing operations. To minimize its
purchase costs, the Company seeks to provide the manufacturing facilities with
prompt and reliable removal service using Company-provided equipment.

Four suppliers accounted individually for more than 10% and collectively for
approximately 80% of the Company's 1997 wood fiber purchases: American
Woodmark, American Wood Fiber, Plumly Lumber and Coastal Lumber. The Company
obtains its wood fiber supplies for a fixed annual price under multi-year
contracts that are terminable by either party upon 30 days' notice. Based on
its discussions with wood fiber suppliers and its analysis of industry data,
the Company believes that, if its contracts with one or more of its current
suppliers were terminated, the Company would be able to obtain adequate
supplies of wood fiber at an acceptable cost from its other current suppliers
or from new suppliers.

Poly Material. In 1997, the Company consumed 70 million pounds of poly
material, which was primarily composed of reclaimed grocery sacks and stretch
film. Approximately two billion pounds of poly film are used in the
manufacture of grocery sacks and stretch film in the United States each year.
The Company will seek to meet its future needs for poly material from
expansion of its existing supply sources and the development of new sources,
including post-industrial waste and plastic paper laminates.

The Company purchases plastic sacks primarily from large grocery supermarket
chains, which have recycling programs that facilitate and encourage plastic
sack returns. Approximately 5% of all grocery sacks nationwide are returned.
The existing industry practice is for reclaimed sack purchasers, such as the
Company, to absorb freight and handling costs after the sacks are picked up
from the chains' distribution centers. The Company picks up the plastic
grocery sacks at the distribution centers and stores the sacks in warehouses
until it uses them in its production process.

Stretch film is used to stabilize pallet loads to avoid damage during
shipping and handling. The Company collects stretch film from distribution
centers that service the grocery and other industries, including furniture,
machinery, parts and soft goods businesses. Suppliers of stretch film save on
waste disposal costs by selling the bundled film to the Company.

No supplier sold 10% or more of the poly material purchased by the Company
in 1997. The Company generally acquires poly material by purchase order at
prices which are fixed annually.

The Company has entered into a six-year contract with a potential supplier
of poly material derived from a source not previously accessed by the Company.
The contract obligates the Company to purchase up to 30 million pounds of poly
material annually at a specified price during the contract term. The Company
is unable to determine the amount of poly material it will obtain under the
contract because the supplier has not yet commenced operations and will
utilize a new production process. The Company is scheduled to receive its
first delivery under the contract in mid-1999. The Company has the option to
renew the contract for an additional six years on the same terms and
conditions.

COMPETITION

The Company's principal competitors in the non-wood decking alternative
market include Advanced Environmental Recycling Technologies, Inc., Crane
Plastics, Eaglebrook Plastics, Inc., Royal Crown Limited and U.S. Plastic
Lumber Corporation. Trex is the only non-wood decking alternative to receive a
product building code listing from the NES or any its three regional members.
A product building code listing covers all uses of a product meeting the
specified design criteria. The Company is aware of one manufacturer of
wood/plastic composites, Advanced Environmental Recycling Technologies, Inc.,
that has publicly announced it has applied for a regional application listing
for its products and of at least four manufacturers that have applied for
regional application listings for their 100% plastic lumber products. The four
manufacturers include Outdoor Technologies, Inc., ZCL Composites, Thermal
Industries Inc. and Teck-Rail Vinyl Guardrail System. An application listing
covers specific uses of the listed products. Any non-wood decking alternative
product receiving a listing could be more competitive with Trex. The Company's
ability to compete depends, in part, upon a number of factors outside its
control, including the ability of its competitors to develop new non-wood
decking alternatives which are competitive with Trex.

The Company believes that the principal competitive factors in the decking
market include product quality, price, maintenance cost and consumer awareness
of product alternatives. The Company believes it competes favorably with
respect to these factors based on the low maintenance requirements and other
attributes of Trex compared to wood and 100% plastic products, the Trex brand
name, the Company's extensive distribution network and the Trex NES building
code listing.

Of the wood lumber which constituted approximately 97% of the total decking
market in 1997, over 75% is pressure-treated southern yellow pine. Southern
yellow pine is used for decking because its porosity allows it readily to
accept the chemicals used in the treating process that creates resistance to
rotting and insect infestation. The chemical compound used to treat wood is
typically chromated copper arsenate ("CCA"), an EPA-registered pesticide. The
same porosity makes southern yellow pine susceptible to taking on moisture,
which causes the lumber to warp, crack, splinter and expel fasteners. The
balance of the wood decking segment is primarily divided between redwood and
cedar, with some amounts of treated fir and exotic hardwoods. Because old,
slow-growth timber has been depleted, new, fast-growth varieties predominate.
These varieties do not have the natural decay resistance or close rings of
old, slow-growth timber, causing them to be more susceptible to rot, insect
infestation, splintering and warping.

Trex also competes with decks made from 100% plastic lumber. Although there
are several companies in the United States that manufacture 100% plastic
lumber, total factory sales to the decking market in 1997 are estimated at
only $20 million (18 million board feet). A number of factors have limited the
success of 100% plastic lumber manufacturers, including a less efficient
manufacturing process, inconsistent product quality, and physical properties
not considered suitable for decking, such as higher thermal expansion and
contraction, poor slip resistance and an appearance viewed by some homeowners
as unattractive.

There are approximately five manufacturers of wood/plastic composite lumber
in addition to the Company. Some of these manufacturers participate in the
decking market only on a limited basis. The Company estimates that Trex
accounted for more than 80% of 1997 total factory sales of wood/plastic
composites to the decking market.

The following chart compares certain attributes of Trex to the
characteristics of treated wood and 100% plastic products:

TREATED 100%
CHARACTERISTICS TREX WOOD PLASTIC
- --------------------------------------------------------------------

Low thermal expansion/contraction x x
- --------------------------------------------------------------------
Low thermal conductivity x x
- --------------------------------------------------------------------
Good paint adhesion x x
- --------------------------------------------------------------------
Resistance to ultraviolet damage x x
- --------------------------------------------------------------------
Easy to work with x x
- --------------------------------------------------------------------
Low moisture absorption x x
- --------------------------------------------------------------------
Splinter-free x x
- --------------------------------------------------------------------
Resistant to insect damage x x x
- --------------------------------------------------------------------
No chemical preservatives x x
- --------------------------------------------------------------------
No splitting x x
- --------------------------------------------------------------------
No rotting x x
- --------------------------------------------------------------------
No warping x x
- --------------------------------------------------------------------
No sealant required x x
- --------------------------------------------------------------------
Slip resistant x x
- --------------------------------------------------------------------
Product building code listing or acceptance x x

The Company believes that Trex offers cost advantages when compared with
certain other types of decking materials. Although a contractor-installed Trex
deck built in 1997 using a pressure-treated wood substructure generally cost
10% to 15% more than a deck made entirely from pressure-treated wood, Trex
eliminates the on-going maintenance required for a pressure-treated deck and
is, therefore, less costly over the life of the deck. The Company believes
that its manufacturing process and utilization of relatively low cost raw
material sources also provide Trex with a competitive cost advantage relative
to other wood/plastic composite products.

GOVERNMENT REGULATION

The Company is subject to federal, state and local environmental regulation.
The emissions of particulates and other substances from the Company's
manufacturing facility must meet federal and state air quality standards
implemented through air permits issued to the Company by the Department of
Environmental Quality of the Commonwealth of Virginia. The Company's facility
is regulated by federal and state laws governing the disposal of solid waste
and by state and local permits and requirements with respect to waste water
and storm water discharge. Compliance with environmental laws and regulations
has not had a material adverse effect on the Company's business, financial
condition or results of operations.

The Company's operations also are subject to work place safety regulation by
the U.S. Occupational Safety and Health Administration and the Commonwealth of
Virginia. The Company's compliance efforts include safety awareness and
training programs for its production and maintenance employees.

INTELLECTUAL PROPERTY

The Company's success depends, in part, upon its intellectual property
rights relating to its production process and other operations. The Company
relies upon a combination of trade secret, nondisclosure and other contractual
arrangements, and patent, copyright and trademark laws, to protect its
proprietary rights. The Company has made substantial investments in
manufacturing process improvements which have enabled it to increase
manufacturing line production rates, facilitated the Company's development of
new products and produced improvements in the dimensional consistency, surface
texture and color uniformity of Trex. The Company has obtained patent
protection until 2015 for a process of preparing the raw materials for the
manufacturing phase of production. The Company also has a patent pending for
another manufacturing process improvement. If this patent is issued, the
patent protection will extend until 2015. The Company has been granted a
federal registration for the Trex trademark by the U.S. Patent and Trademark
Office and has filed applications for the federal registration of its Easy
Care Decking and Wood-Polymer trademarks. Federal registration of trademarks
is effective for an initial period of 20 years and is renewable for as long as
the Company continues to use the trademarks. The Company considers its
trademarks to be of material importance to its business plans. The Company
enters into confidentiality agreements with its senior employees and limits
access to and distribution of its proprietary information. There can be no
assurance that the steps taken by the Company in this regard will be adequate
to deter misappropriation of its proprietary information or that the Company
will be able to detect unauthorized use and take appropriate steps to enforce
its intellectual property rights. See "Risk Factors--Intellectual Property."

In 1992, before the Company's buyout of Mobil's Composite Products Division,
Mobil brought an action in the U.S. District Court for the District of
Delaware seeking a declaratory judgment that four patents issued to Advanced
Environmental Recycling Technologies, Inc. ("AERT"), a manufacturer of
wood/plastic composite products, were invalid, were not infringed by Mobil in
connection with its wood/plastic composite (now known as Trex) and were
unenforceable. Mobil brought this action in response to statements by AERT
that Mobil infringed AERT's patents. AERT counterclaimed against Mobil for
alleged infringement of two of the AERT patents and for alleged violations of
antitrust and trade regulation laws.

Following a trial in early 1994, the district court held that Mobil did not
infringe either of the two AERT patents that were the subject of the
counterclaim and rendered a verdict for Mobil that each of the four AERT
patents was invalid and unenforceable. On an appeal of this judgment by AERT,
the U.S. Court of Appeals for the Federal Circuit affirmed the district
court's judgment that Mobil did not infringe the two AERT patents and that two
of the four AERT patents were invalid and unenforceable. The Federal Circuit
vacated the district court's judgment on the remaining two AERT patents on the
grounds that there was no case or

controversy between the parties regarding infringement of those patents. AERT
has filed a motion for a new trial, which is pending before the district
court. The district court also still has pending before it AERT's non-patent
counterclaims against Mobil. No proceedings on those claims are currently
scheduled.

In June 1998, the U.S. Patent and Trademark Office issued to AERT a patent
which is a continuation in part of one of the two patent applications that
resulted in the two patents held to be invalid and unenforceable in the
district court action. The Company believes, based in part on advice of its
legal counsel, that the Company does not infringe this patent.

FACILITIES AND EQUIPMENT

The Company occupies its corporate headquarters in Winchester, Virginia,
which consists of approximately 4,500 feet of office space, pursuant to a
lease which expires in December 1998. The Company is currently negotiating a
one-year extension to the lease.

The Company owns its manufacturing facility, which contains approximately
100,000 square feet of manufacturing space, and approximately 7.5 acres of
outside open storage in a lot located across from the manufacturing facility.

The Company leases storage warehouse space, which totals 75,000 square feet,
pursuant to leases with expiration dates from December 1999 to July 2000. The
Company currently occupies approximately 30,000 square feet in the Trex
Technical Center pursuant to a month-to-month lease. The Company expects to
purchase the Trex Technical Center in the third quarter of 1998.

Equipment and machinery used by the Company in its operations consist
principally of plastic and wood conveying and process equipment. The Company
owns all of its manufacturing equipment. The Company also operates
approximately 20 wood trailers pursuant to operating leases with expiration
dates from 1999 to 2003 and ten forklift trucks pursuant to operating leases
with expiration dates from 2000 to 2001.

The Company regularly evaluates the capacity of its various facilities and
equipment and makes capital investments to expand capacity where necessary. In
1997, the Company spent a total of $3.3 million on capital expenditures,
primarily for the addition of a production line to its Winchester facility.
The Company is completing its evaluation of potential sites for a second
manufacturing facility, which it expects to begin operations in mid-1999.
Costs of expanding the Winchester facility and establishing the second plant
are expected to total approximately $21.6 million in 1998 and 1999.

EMPLOYEES

At June 30, 1998, the Company had approximately 190 full-time employees, of
whom approximately 15 were employed in corporate management and
administration, 21 were employed in sales and marketing, five were employed in
research and development and 149 were employed in manufacturing operations. Of
such employees, approximately 125 were hourly employees engaged in
manufacturing activities in the Company's Winchester facility. The Company's
employees are not covered by a collective bargaining agreement. The Company
believes that its relationships with its employees are good.

LEGAL PROCEEDINGS

The Company has been named as a co-defendant in a suit filed on December 7,
1997 in the U.S. District Court for the Eastern District of Pennsylvania. The
plaintiff, the owner of a ship moored in Philadelphia, alleges that design
defects in a Trex decking product caused buckling of decking installed on the
ship as part of a renovation project. The plaintiff seeks damages in an
unspecified amount against the Company based on claims of strict liability,
misrepresentation, breach of warranties, gross negligence, indemnification and
violation of the New Jersey Consumer Fraud Act. Trex has denied liability on
the grounds, among others, that the alleged damage to the decking resulted
from poor design and improper installation. The parties have conducted certain
discovery proceedings. The Company expects that a trial date for the suit will
be set in September 1998.

From time to time, the Company is involved in litigation and proceedings
arising out of the ordinary course of its business. Except as set forth above,
there are no pending material legal proceedings to which the Company is a
party or to which the property of the Company is subject.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The table below sets forth certain information concerning the directors and
executive officers of the Company:

TERM AS
DIRECTOR
NAME AGE POSITIONS WITH COMPANY EXPIRES
- ------------------------ --- ----------------------------------------------------------- --------

Robert G. Matheny....... 53 President, Director 2000
Anthony J. Cavanna...... 58 Senior Vice President and Chief Financial Officer, Director 2001
Andrew U. Ferrari....... 51 Senior Vice President of Sales and Marketing, Director 2000
Roger A. Wittenberg..... 50 Senior Vice President of Technical Operations, Director 1999

Robert G. Matheny has served as the President and a director of the Company
since August 1996. From July 1992 to August 1996, he was the General Manager
of the Composite Products Division of Mobil Chemical Company, a division of
Mobil ("Mobil Chemical"). From August 1987 to July 1992, he served as the
General Manager of the Chemical Specialties Group of Mobil Chemical and as a
Vice President of Mobil Chemical Products International. From 1970 to August
1987, Mr. Matheny held various positions in sales, marketing and manufacturing
at Mobil. Mr. Matheny received a B.S. degree in Industrial Engineering and
Operations Research from Virginia Polytechnic Institute.

Anthony J. Cavanna has served as the Chief Financial Officer and a director
of the Company since August 1996 and as Senior Vice President since September
1998. From July 1994 to August 1996, he was a Group Vice President of Mobil
Chemical. From July 1992 to July 1994, he was the Vice President-Planning and
Finance for Mobil Chemical. From November 1986 to July 1992, Mr. Cavanna
served as a Vice President of Mobil Chemical and the General Manager of its
Films Division Worldwide. From November 1981 to November 1986, he was the Vice
President and General Manager-European Operations of Mobil Plastics Europe.
From January 1981 to November 1981, he was the Vice President-Planning and
Supply of the Films Division of Mobil Chemical. Between 1962 and 1981, Mr.
Cavanna held a variety of positions within Mobil, including engineering,
manufacturing and project/group leader positions. Mr. Cavanna received a B.S.
degree in Chemical Engineering from Villanova University and an M.S. degree in
Chemical Engineering from the Polytechnic Institute of Brooklyn.

Andrew U. Ferrari has served as the Vice President of Sales and Marketing
and a director of the Company since August 1996 and as Senior Vice President
of Sales and Marketing since September 1998. From April 1992 to August 1996,
he was the Director of Sales and Marketing of the Composite Products Division
of Mobil Chemical. From February 1990 to April 1992, Mr. Ferrari served as the
New Business Manager for Mobil Chemical. From January 1984 to February 1990,
he served as Marketing Director of the Consumer Products Division of Mobil
Chemical. Mr. Ferrari received a B.A. degree in Economics from Whitman College
and an M.B.A. degree from Columbia University.

Roger A. Wittenberg has served as the Vice President of Technical Operations
and a director of the Company since August 1996 and as Senior Vice President
of Technical Operations since September 1998. Mr. Wittenberg also serves as a
director of Elite Textiles Ltd., a textile manufacturer. From May 1992 to
August 1996, he was the Technical Manager of the Composite Products Division
of Mobil Chemical. Mr. Wittenberg founded Rivenite Corporation in 1987 and was
its Chief Executive Officer until April 1992, when Mobil Chemical acquired the
assets of Rivenite Corporation. Prior to 1987, Mr. Wittenberg founded and
operated three companies in the textile, food and animal feed supplements
industries. Mr. Wittenberg received a B.S. degree in Chemistry from High Point
College.

The Board of Directors currently consists of four directors, divided into
three classes serving staggered three-year terms. Directors and executive
officers of the Company are elected to serve until they resign or are removed,
or are otherwise disqualified to serve, or until their successors are elected
and qualified. Directors of the Company are elected at the annual meeting of
stockholders. Executive officers of the Company generally are appointed at the
Board's first meeting after each annual meeting of stockholders.

The Board of Directors reviews and recommends the compensation arrangements
for management of the Company. The Board of Directors has not established a
compensation committee and has no current plans to establish such a committee.

Upon consummation of the Offering, the Company will appoint to the Board of
Directors two directors who are not employees of the Company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established an Audit Committee. The Audit
Committee, among other things, recommends the firm to be appointed as
independent accountants to audit the Company's financial statements, discusses
the scope and results of the audit with the independent accountants, reviews
with management and the independent accountants the Company's interim and
year- end operating results, considers the adequacy of the Company's internal
accounting controls and audit procedures and reviews the non-audit services to
be performed by the independent accountants. A majority of the directors on
the Audit Committee will be non-employee directors.

DIRECTOR COMPENSATION

Directors of the Company who are also officers or employees of the Company
do not receive any additional compensation for serving on the Board of
Directors or any of its committees. Non-employee directors will receive an
annual fee of $10,000 for service on the Board of Directors. In addition, non-
employee directors will be paid $1,000 for each Board of Directors meeting
attended in person, $750 for each Board of Directors meeting attended by
telephone conference and $750 for each meeting of a committee of the Board of
Directors attended (whether in person or by telephone conference). Directors
are reimbursed for their reasonable out-of-pocket expenses in attending
meetings.

Following consummation of the Offering, each non-employee director will
receive an option to purchase 3,000 shares of Common Stock upon such
director's initial election or appointment to the Board of Directors. Annually
thereafter, each non-employee director will receive an option to purchase
1,000 shares of Common Stock on the anniversary of the initial grant. See
"1998 Stock Incentive Plan."

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid to each of the
Company's executive officers during the fiscal year ended December 31, 1997
(the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

ANNUAL
COMPENSATION (1) ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY ($) COMPENSATION ($) (2)
- ---------------------------- ---------------- --------------------

Robert G. Matheny
President.............................. 227,881 13,575
Anthony J. Cavanna
Chief Financial Officer................ 212,689 13,575
Andrew U. Ferrari
Vice President of Sales and Marketing.. 197,497 13,575
Roger A. Wittenberg
Vice President of Technical
Operations............................. 197,497 13,575

- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total annual
salary and bonus for each Named Executive Officer in 1997.

(2) The amount shown in the "All Other Compensation" column for each Named
Executive Officer consists of $2,375 and $4,800 in matching contributions
and employer discretionary contributions, respectively, to the Company's
401(k) Plan (as defined below), a defined contribution plan, and $6,400
in employer contributions to the Company's Money Purchase Pension Plan
(as defined below), a defined contribution plan.

1998 STOCK INCENTIVE PLAN

The Company's 1998 Stock Incentive Plan provides for the grant of options
that are intended to qualify as "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), to employees of
the Company and any future subsidiaries, as well as for the grant of non-
qualifying options, restricted Common Stock, restricted units of Common Stock
and stock appreciation rights (collectively, "Awards") to employees, non-
employee directors and other individuals whose participation in the 1998 Stock
Incentive Plan is determined to be in the Company's best interests. The 1998
Stock Incentive Plan authorizes issuance of the number of shares of Common
Stock equal to 10% of the shares outstanding immediately following completion
of the Offering (subject to adjustment in the event of a stock split, stock
dividend, merger, reorganization or similar transaction). The maximum number
of shares of Common Stock subject to Awards that can be granted to any
individual under the 1998 Stock Incentive Plan in a calendar year is 400,000.
The 1998 Stock Incentive Plan is administered by the Board of Directors, or a
duly authorized committee thereof, which has the authority, subject to the
provisions of the 1998 Stock Incentive Plan, to determine the terms of any
Awards. As of the date of this Prospectus, no Awards have been made under the
1998 Stock Incentive Plan, which will be effective upon consummation of the
Offering.

The exercise price per share of Common Stock for each option will generally
be 100% of the fair market value of the shares of Common Stock on the option
grant date. Options will be exercisable only to the extent they are vested on
the date of exercise, and no option will be exercisable more than ten years
from the option grant date. Options generally will vest in annual increments
based upon a specified vesting schedule, although vesting may be accelerated
upon a change in control of the Company (as defined in the 1998 Stock
Incentive Plan) or otherwise in the discretion of the Board of Directors.
Options will terminate after the expiration of specified periods following the
termination of the option holder's employment or service as a director,
whether by reason of death, disability, retirement or otherwise.

The option exercise price for incentive stock options granted under the 1998
Stock Incentive Plan may not be less than 100% of the fair market value of the
Common Stock on the option grant date (or 110% in the case of an incentive
stock option granted to an optionee beneficially owning more than 10% of the
outstanding Common Stock). The maximum option term is ten years (or five years
in the case of an incentive stock option granted to an optionee beneficially
owning more than 10% of the outstanding Common Stock). Options may be
exercised at any time after grant, except as otherwise provided in the
applicable option agreement. There is a $100,000 limit on the value of Common
Stock (determined at the time of grant) covered by incentive stock options
that become exercisable by an optionee in any year.

Restricted shares of Common Stock are awards of shares of Common Stock upon
which are imposed restricted periods and restrictions which subject the shares
to a substantial risk of forfeiture as defined in Section 83 of the Code.
Restricted Common Stock units are awards which represent a conditional right
to receive shares of Common Stock in the future and which are subject to the
same types of restrictions and risk of forfeiture as restricted shares of
Common Stock. Restricted shares of Common Stock and restricted Common Stock
units will be subject to such restrictions as the Board of Directors may
impose, including, without limitation, continuous employment with the Company
or any of its future subsidiaries or the attainment of specific corporate or
individual performance standards or goals. The restrictions and the restricted
period may differ with respect to each recipient of an Award. An Award of
restricted shares of Common Stock or restricted Common Stock units will be
subject to forfeiture if certain events specified by the Board of Directors
occur prior to the lapse of the restrictions. Subject to the provisions of the
1998 Stock Incentive Plan, the Board of Directors will determine the terms and
conditions of the agreement evidencing each Award of restricted shares of
Common Stock and restricted Common Stock units.

A stock appreciation right ("SAR") is a right to receive, in the form of
Common Stock, cash or a combination of Common Stock and cash, the spread or
difference between the fair market value of the Common Stock subject to an
option and the option exercise price. SARs may be granted in conjunction with
all or a portion of any option granted under the 1998 Stock Incentive Plan,
either at the time of the grant of such option or at any subsequent time prior
to the expiration of such option. SARs will be exercisable only at such time
and to the extent that the option to which they relate (the "related option")
is exercisable. Exercisability of SARs also may be subject to satisfaction of
performance goals or future service requirements. SARs and the related option
may be exercised concurrently only when the related option is a non-qualified
stock option. A SAR may be exercised without exercise of the related option,
but the related option will be canceled for all purposes under the 1998 Stock
Incentive Plan to the extent of the SAR exercise. A related option may be
exercised without exercise of the SAR, but the SAR will be canceled for all
purposes under the 1998 Stock Incentive Plan to the extent of the related
option exercise. SARs issued in connection with incentive stock options are
required to meet additional conditions.

The Board of Directors may authorize amendment of the 1998 Stock Incentive
Plan without stockholder approval except in circumstances prescribed by
applicable law or regulation. The 1998 Stock Incentive Plan does not have a
termination date, but no incentive stock options may be granted after the
tenth anniversary of the effective date of the plan.

EMPLOYEE STOCK PURCHASE PLAN

The 1998 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan"),
which will be implemented upon consummation of the Offering, is intended to
qualify under Section 423 of the Code. The Company has reserved an aggregate
of shares of Common Stock for issuance under the Employee Stock
Purchase Plan. The Employee Stock Purchase Plan will permit full-time
employees of the Company and any future subsidiaries who have satisfied
minimum service requirements to purchase Common Stock through payroll
deductions, provided that no employee

may purchase more than $25,000 worth of Common Stock in any calendar year. The
purchase price of the Common Stock under the Employee Stock Purchase Plan will
be no less than 85% of the market value of the Common Stock, as calculated in
accordance with the Employee Stock Purchase Plan.

EMPLOYEE BENEFIT PLANS

The Company sponsors a tax-qualified defined contribution employee profit
sharing and 401(k) plan (the "401(k) Plan"). The 401(k) Plan consists of
employee pre-tax contributions, Company matching contributions and Company
discretionary contributions, and contains provisions which are intended to
satisfy the tax qualification requirement of Section 401(a) of the Code. Each
employee may elect to defer up to 15% of such employee's compensation, subject
to a maximum of $10,000 in 1998. The Company makes matching contributions
equal to a specified percentage of each employee's contribution and may also
make discretionary contributions for any plan year. Employee, matching and
discretionary contributions and earnings are fully vested and nonforfeitable
at all times and are invested according to the direction of the employee.

The Company also sponsors a tax-qualified defined contribution employee
money purchase pension plan (the "Money Purchase Plan"). The Money Purchase
Plan contains provisions which are intended to satisfy the tax qualification
requirement of Section 401(a) of the Code. The Company makes an annual
contribution equal to 4% of employee compensation. Plan contributions and
earnings are fully vested and nonforfeitable after five full years of service
and are invested according to the direction of the employee.

ANNUAL BONUS PLAN

Following consummation of the Offering, the Company intends to establish an
annual bonus plan. All full-time employees, including executive officers, will
be eligible to receive a bonus for exceptional individual or team performance.
Management will reserve the right not to award bonuses in any year.

CERTAIN TRANSACTIONS

REORGANIZATION

Trex Company, Inc. is currently a wholly-owned subsidiary of Trex Company,
LLC, a Delaware limited liability company. Prior to the consummation of the
Offering, the members of Trex Company, LLC other than Mobil will contribute
their membership interests in Trex Company, LLC to Trex Company, Inc. in
exchange for Common Stock of Trex Company, Inc. Concurrently with such
exchange, Trex Company, Inc. will purchase Mobil's membership interest in Trex
Company, LLC for $3.1 million. As a result of the Exchange Transaction and
such purchase, Trex Company, LLC will become a wholly-owned subsidiary of Trex
Company, Inc. In connection with the Exchange Transaction, the Certificate of
Incorporation and Bylaws will be restated in their entirety. See "Description
of Capital Stock" for a description of the Certificate of Incorporation and
Bylaws that will be in effect at the time of the consummation of the Offering.

In the Exchange Transaction, the membership interests in Trex Company, LLC
will be exchanged for shares of Common Stock of Trex Company, Inc. as follows:
(i) the membership interests of the Management Holders (as defined below) will
be exchanged for a total of shares of Common Stock; and (ii) the
membership interests of the Institutional Investors will be exchanged for a
total of shares of Common Stock. The Company will receive no
additional consideration in connection with the exchange of membership
interests for shares of Common Stock.

In connection with the Exchange Transaction, Trex Company, LLC will make the
LLC Distribution to the Management Holders and the Institutional Investors.
The estimated amount of the LLC Distribution as of June 30, 1998 is $7.5
million. Such amount will be increased by the amount of any income or reduced
by the amount of any loss realized by Trex Company, LLC from July 1, 1998
through the date of the LLC Distribution. Of the LLC Distribution, which is
estimated to be approximately $6.9 million as of the expected payment date,
approximately $4.5 million represents the amount of the previously recognized
and undistributed income of Trex Company, LLC through the expected payment
date on which the members have paid, or will pay, income tax and approximately
$2.4 million represents a return of capital.

Trex Company, Inc. was organized in September 1998 under the laws of the
State of Delaware for the purpose of succeeding to the business and assets of
Trex Company, LLC. Trex Company, Inc. has not conducted, and prior to the
Exchange Transaction will not conduct, any business other than in connection
with the Offering and the other transactions described herein.

ACQUISITION TRANSACTIONS

Acquisition. In the Acquisition, the Company purchased the assets of Mobil's
Composite Products Division in a management-led buyout for a cash purchase
price of approximately $29.5 million. The Acquisition and the Company's
initial operations were financed by a combination of the following: (i)
proceeds of $29.3 million from the sale by the Company of $24.3 million
principal amount of Senior Notes, $5.0 million principal amount of
Subordinated Notes and a total of 1,000 Class B Units to Connecticut General
Life Insurance Company, Connecticut General Life Insurance Company on behalf
of one or more separate accounts and Life Insurance Company of North America;
(ii) proceeds of $3.0 million from the sale by the Company of 1,000 Preferred
Units (the "Preferred Units") to Mobil; and (iii) proceeds of $2.0 million
from the sale by the Company of 750 Class A Units to each of Robert G.
Matheny, Anthony J. Cavanna, Andrew U. Ferrari and Roger A. Wittenberg
(collectively, the "Management Holders").

On June 25, 1997, the Company prepaid $3.0 million principal amount of
Senior Notes.

In January 1998, Connecticut General Life Insurance Company transferred 333
Class B Units to Lincoln National Life Insurance Company in connection with
the sale of certain assets.

As a result of the indebtedness incurred to finance the Acquisition, the
Company has been highly leveraged. The terms of the Company's financing
agreements have required substantial debt service payments. Such financing
agreements also have required the Company to comply with various restrictive
covenants, financial ratios and other financial and operating tests.

Acquisition-Related Agreements. The Company and its members entered into
certain agreements in connection with the Acquisition relating to the members'
interests in the Company or any successor entity.

Pursuant to the Members' Agreement dated as of August 29, 1996 among the
Company, the Management Holders and the Institutional Investors, the Company
has granted certain "demand" and "piggyback" registration rights with respect
to Common Stock issuable to the Institutional Investors upon consummation of
the Reorganization. The Institutional Investors are entitled to require the
Company to register the sale of their shares under the Securities Act on up to
two occasions. In addition, if the Company proposes to register the Common
Stock under the Securities Act (other than pursuant to a registration
statement on Form S-4 or Form S-8), whether or not for its own account, the
Institutional Investors are entitled to require the Company, subject to
certain conditions, to include all or a portion of their shares in such
registration. The foregoing registration rights are subject to certain notice
requirements, timing restrictions and volume limitations which may be imposed
by the underwriters of an offering. The Company is required to bear the
expenses of all such registrations except for underwriting discounts and
commissions.

Pursuant to the Limited Liability Company Agreement dated As of August 29,
1996 among the Management Holders, the Institutional Investors and Mobil, the
Institutional Investors were granted the right to approve certain actions by
the Company outside the ordinary course of its business, including the sale of
all or a substantial part of the Company's assets and the incurrence or
payment of specified types of indebtedness. This agreement will be terminated
upon consummation of the Reorganization.

Pursuant to the Class A Members' Agreement dated as of August 29, 1996, the
Management Holders agreed to certain restrictions on the sale, transfer or
other disposition of their membership interests in the Company. This agreement
will be terminated upon consummation of the Reorganization.

In connection with the Acquisition, each Management Holder entered into an
employment agreement with the Company. The employment agreements will be
terminated upon consummation of the Reorganization.

OTHER TRANSACTIONS

The Company paid the Institutional Investors interest on the Senior Notes
and Subordinated Notes of $1.0 million for 1996, $3.0 million for 1997 and
$1.4 million for the six months ended June 30, 1998.

The Company paid Mobil dividends on the Preferred Units of $0.1 million for
1996, $0.4 million for 1997 and $0.2 million for the six months ended June 30,
1998.

The Company will use a portion of the net proceeds of the Offering to repay
the Senior Notes and the Subordinated Notes and to purchase Mobil's preferred
equity interest in the Company issued in connection with the Acquisition. See
"Use of Proceeds."

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of September 1, 1998,
on a pro forma basis after giving effect to the Reorganization, with respect
to the beneficial ownership of Common Stock by: (i) each person or entity
known by the Company to own beneficially more than 5% of the Company's Common
Stock; (ii) each director of the Company; (iii) each Named Executive Officer;
and (iv) all directors and executive officers of the Company as a group. The
address for the directors and executive officers of the Company is Trex
Company, Inc., 20 South Cameron Street, Winchester, Virginia 22601.

PERCENT OF CLASS
-----------------
NUMBER
OF PRIOR TO AFTER
NAME OF BENEFICIAL OWNER (1) SHARES OFFERING OFFERING
- ---------------------------- ------ -------- --------

Anthony J. Cavanna ....................................
Andrew U. Ferrari .....................................
Robert G. Matheny .....................................
Roger A. Wittenberg ...................................
All directors and executive officers
as a group (4 persons) ...............................

- --------
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, for purposes of this table, a person is deemed to be the
beneficial owner of any shares of Common Stock if such person has or
shares voting power or investment power with respect to such security, or
has the right to acquire beneficial ownership at any time within 60 days
of the date of the table. As used herein, "voting power" is the power to
vote or direct the voting of shares and "investment power" is the power
to dispose or direct the disposition of shares.

DESCRIPTION OF CAPITAL STOCK

The following summary description of the capital stock of the Company does
not purport to be complete and is subject to the provisions of the Certificate
of Incorporation and Bylaws, which will become effective upon consummation of
the Reorganization, and to the provisions of the applicable law. The
Certificate of Incorporation and the Bylaws are included as exhibits to the
Registration Statement of which this Prospectus forms a part.

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Upon consummation of the Reorganization, the Company will have authority to
issue shares of capital stock, consisting of shares of
Common Stock, par value $.01 per share, and shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of June 30, 1998,
after giving effect to the Reorganization and the Offering, and the
application of the net proceeds therefrom, shares of Common Stock
will be issued and outstanding and no shares of Preferred Stock will be issued
and outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share for each share
held of record on all matters submitted to a vote of stockholders. Holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors on the Common Stock out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
affairs of the Company, holders of Common Stock are entitled to share ratably
in the assets available for distribution after payments to the creditors and
to the holders of any Preferred Stock that may be outstanding at such time.
Holders of Common Stock have no preemptive rights, cumulative voting rights or
rights to convert shares of Common Stock into any other securities, and are
not subject to future calls or assessments by the Company. All outstanding
shares of Common Stock of the Company are, and the Shares issued in the
Offering will be, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized without further stockholder action to
provide for the issuance from time to time of up to shares of
Preferred Stock in one or more series with such powers, designations,
preferences and relative, participating, optional or other rights,
qualifications, limitations or restrictions as will be set forth in the
resolutions providing for the issuance of such series adopted by the Board of
Directors. The holders of Preferred Stock will have no preemptive rights
(unless otherwise provided in the applicable certificate of designation) and
will not be subject to future assessments by the Company. Such Preferred Stock
may have voting or other rights which could adversely affect the rights of
holders of the Common Stock. In addition, the issuance of Preferred Stock,
while providing the Company with financial flexibility in connection with
possible acquisitions and other corporate purposes, could, under certain
circumstances, make it more difficult for a third party to gain control of the
Company, discourage bids for the Common Stock at a premium, or otherwise
adversely affect the market price of the Common Stock. The Company presently
has no intention to issue any Preferred Stock.

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS

The Certificate of Incorporation and the Bylaws contain certain provisions
that could make it more difficult to consummate an acquisition of the Company
by means of a tender offer, a proxy contest or otherwise.

Classified Board of Directors. The Certificate of Incorporation and the
Bylaws provide that the Board of Directors will be divided into three classes
of directors, with the classes to as nearly equal in number as possible. As a
result, approximately one-third of the Board of Directors will be elected

each year. The classification of the Board of Directors will make it more
difficult for stockholders to change the composition of the Board of
Directors. The Certificate of Incorporation provides that, subject to any
rights of holders of Preferred Stock to elect additional directors under
specified circumstances, the number of directors will be fixed in the manner
provided in the Bylaws. The Bylaws provide that, subject to any rights of
holders of Preferred Stock to elect directors under specified circumstances,
the number of directors will be fixed from time to time exclusively pursuant
to a resolution adopted by directors constituting a majority of the total
number of directors that the Company would have if there were no vacancies on
the Board of Directors. In addition, the Certificate of Incorporation provides
that, subject to any rights of holders of Preferred Stock, and unless the
Board of Directors otherwise determines, any vacancies will be filled only by
the affirmative vote of a majority of the remaining directors, though less
than a quorum.

No Stockholder Action by Written Consent. The Certificate of Incorporation
provides that, subject to the rights of any holders of Preferred Stock to act
by written consent in lieu of a meeting, stockholder action may be taken only
at an annual meeting or special meeting of stockholders and may not be taken
by written consent in lieu of a meeting. Failure to satisfy any of the
requirements for a stockholder meeting could delay, prevent or invalidate
stockholder action.

Stockholder Advance Notice Procedure. The Certificate of Incorporation
establishes an advance notice procedure for stockholders to make nominations
of candidates for election as directors or to bring other business before an
annual meeting of stockholders of the Company (the "Stockholder Notice
Procedure"). The Stockholder Notice Procedure provides that only persons that
are nominated by a majority of the Board of Directors, or a duly authorized
committee thereof, or by a stockholder who has given timely written notice to
the Secretary of the Company prior to the meeting at which directors are to be
elected, will be eligible for election as directors of the Company. Any such
notice is required to set forth, among other things, specified information
about the stockholder and each proposed director nominee, a description of all
arrangements or understandings between the stockholder and each proposed
nominee and any other persons, such other information regarding each proposed
nominee as would be required to be included in a proxy statement filed
pursuant to the rules and regulations of the Securities and Exchange
Commission, and the written consent of each proposed nominee to serve as a
director of the Company if elected. The Stockholder Notice Procedure also
provides that only such business may be conducted at an annual meeting as has
been brought before the meeting by, or at the direction of, the Board of
Directors or by a stockholder who has given timely written notice to the
Secretary of the Company. Any such notice is required to set forth, among
other things, a brief description of the business desired to be brought before
the meeting, any material interest of the stockholder in such business, and
specified information about such stockholder and such stockholder's ownership
of capital stock of the Company.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to Section 203 ("Section 203") of the Delaware
General Corporation Law which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years following the time that
such stockholder became an interested stockholder unless: (i) prior to such
time, the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; or (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by persons
who are directors and also officers and (b) by employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer; or (iii) at or subsequent to such

time, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.

Section 203 defines "business combination" to include the following: (i) any
merger or consolidation of the corporation with the interested stockholder;
(ii) any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder; (iii) subject
to certain exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation that has the
effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; or
(v) any receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation. In general, Section 203 defines an interested
stockholder as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.

DIRECTOR LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware General Corporation Law provides that a corporation may limit
the liability of each director to the corporation or its stockholders for
monetary damages except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend
payments or stock redemptions or repurchases and (iv) for any transaction from
which the director derives an improper personal benefit. The Certificate of
Incorporation provides for the elimination and limitation of the personal
liability of directors of the Company for monetary damages to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Certificate of Incorporation provides that if the Delaware General Corporation
Law is amended to authorize the further elimination or limitation of the
liability of a director, then the liability of the directors will be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. The effect of this provision is to eliminate
the rights of the Company and its stockholders (through stockholder derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior), except in situations
described in clauses (i) to (iv) above. The provision does not limit or
eliminate the rights of the Company or any stockholder to seek non-monetary
relief such as an injunction or rescission in the event of a breach of
director's duty of care. This provision is consistent with Section 102(b)(7)
of the Delaware General Corporation Law, which is designed, among other
things, to encourage qualified individuals to serve as directors of Delaware
corporations. The Company believes this provision will assist it in securing
and maintaining the services of qualified individuals who are not employees of
the Company.

The Bylaws provide that the Company will, to the full extent permitted by
the Delaware General Corporation Law, as amended from time to time, indemnify,
and advance expenses to, each of its currently acting and former directors,
officers, employees and agents.

LISTING

The Company will apply for the Common Stock to be listed on the New York
Stock Exchange under the symbol " ."

TRANSFER AGENT AND REGISTRAR

The Company will designate a transfer agent and registrar for the Common
Stock prior to the consummation of the Offering.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, after giving effect to the Reorganization,
there will be shares of Common Stock outstanding. The
Shares offered hereby will be freely tradable without restriction under the
Securities Act by persons other than "affiliates" of the Company as defined in
Rule 144 under the Securities Act. The remaining shares of Common Stock will
be deemed "restricted securities" within the meaning of Rule 144 and, as such,
will not be eligible for future sale to the public unless they are sold in
transactions under the Securities Act or pursuant to an exemption from
registration, including the exemption afforded by Rule 144.

The Company and all current stockholders of the Company have entered into
"lock-up" agreements with the Underwriters pursuant to which they have agreed
that they will not, for a period of 180 days after the closing of the
Offering, offer, sell, contract to sell, issue or otherwise dispose of any
shares of Common Stock or any securities of the Company which are
substantially similar to the Common Stock, or which are convertible into or
exchangeable or exercisable for Common Stock or securities substantially
similar to the Common Stock without the prior written consent of Schroder &
Co. Inc. Such consent may be granted in whole or in part without a public
announcement. Such agreements have been expressly agreed to preclude such
parties from engaging in any hedging or other transaction which is designed to
or reasonably expected to lead to or result in a sale or disposition of
securities during the applicable period, even if such securities would be
disposed of by someone other than such party. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any such
securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from such securities. The foregoing restrictions will not apply to
the issuance of options to purchase Common Stock pursuant to the Stock
Incentive Plan, transfers of Common Stock to the Company or certain transfers
of Common Stock to family trusts or by gift, will or intestate succession. As
a condition to any such transfer to a family trust or transfer by gift, will
or intestate succession, the transferee (or trustee or legal guardian on the
transferee's behalf) will be required to execute and deliver a lock-up
agreement containing the terms described in this paragraph. Upon expiration of
the lock-up period, shares of Common Stock will be eligible for
sale under Rule 144.

In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose shares are aggregated), including an affiliate of the
Company, who has beneficially owned "restricted securities" for at least one
year is entitled to sell, within any three-month period, a number of such
shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock (approximately shares of Common Stock
immediately after the Offering) or (ii) the average weekly trading volume of
the Common Stock on the New York Stock Exchange during the four calendar weeks
preceding the filing of a notice on Form 144 with respect to such sale with
the Securities and Exchange Commission. Sales under Rule 144 also are subject
to certain other requirements regarding the manner of sale, notice and
availability of current public information about the Company. Under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company and the date they
were acquired from an affiliate of the Company, a stockholder who is not an
affiliate of the Company at the time of sale and has not been an affiliate at
any time during the 90 days prior to the sale would be entitled to sell shares
of Common Stock immediately without compliance with the requirements under
Rule 144, other than the requirements as to the availability of current public
information about the Company. All current stockholders of the Company may be
deemed to be affiliates of the Company for purposes of Rule 144. The foregoing
summary of Rule 144 is not intended to be a complete description thereof.

The Company has granted "demand" and "piggyback" registration rights with
respect to the Common Stock held by the Institutional Investors. The
Institutional Investors are entitled to require the Company to register the
sale of their shares under the Securities Act on up to two occasions. In
addition, if the Company proposes to register the Common Stock under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
Form S-8), whether or not for its own account, the Institutional Investors are
entitled to require the Company, subject to certain conditions, to include all
or a portion of their shares in such registration. The foregoing registration
rights are subject to certain notice requirements, timing restrictions and
volume limitations which may be imposed by the underwriters of an offering.
The Company is required to bear the expenses of all such registrations except
for underwriting discounts and commissions. Following consummation of the
Offering, shares of Common Stock, or % of the total number of
outstanding shares of Common Stock, will be entitled to the benefits of such
registration rights. See "Certain Transactions--Acquisition Transactions."

Prior to the Offering, there has been no public market for the Common Stock.
Future sales of a substantial number of shares of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
the prevailing market price of the Common Stock and could make it more
difficult for the Company to raise funds through a public offering of its
equity securities.

UNDERWRITING

Under the terms and subject to the conditions set forth in an underwriting
agreement, dated , 1998 (the "Underwriting Agreement"), the Company
has agreed to sell to each of the underwriters named below (collectively, the
"Underwriters"), and each of the Underwriters has severally agreed to purchase
from the Company, the respective number of shares of Common Stock set forth
opposite its name below for aggregate gross proceeds to the Company of
$ , payable in cash against delivery of a certificate or certificates
representing each share of Common Stock:

NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
----------- ----------------

Schroder & Co. Inc. ...................................
J.C. Bradford & Co. ...................................
Total .................................................

The Underwriting Agreement provides that the Underwriters' obligation to pay
for and accept delivery of the Shares is subject to certain conditions
precedent and that the Underwriters will be obligated to purchase all such
Shares if any are purchased. Schroder & Co. Inc. and J.C. Bradford & Co., as
representatives of the Underwriters (the "Representatives"), have informed the
Company that no sales of Shares will be confirmed to discretionary accounts.

The closing of the purchase and sale of the Shares is intended to occur on
or about , 1998, or such other dates as may be agreed upon by the
Company and the Representatives.

The Underwriters propose to offer the Shares in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at a price that
represents a concession not in excess of $ per Share under the initial
public offering price. The Underwriters may allow, and such dealers may re-
allow, a concession not in excess of $ per Share on sales to certain
brokers and dealers. After the Shares are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.

The Company has granted to the Underwriters the Over-Allotment Option,
exercisable for 30 days from the closing of the Offering, to purchase up to an
aggregate of additional shares of Common Stock on the same terms
and conditions as apply to purchases of the Shares. To the extent such option
is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set out next to each such Underwriter's name in the table
above bears to the total number of shares of Common Stock offered by the
Underwriters hereunder. If the Over-allotment Option is exercised in full, the
total price to public of the Shares will be $ , the total underwriting
discount will be $ and the total net proceeds to the Company will be
$ , after deducting the Underwriters' discounts and commissions but
before estimated Offering expenses.

The obligations of the Underwriters under the Underwriting Agreement may be
terminated at the discretion of the respective Underwriters upon the
occurrence of certain events.

The Company and all stockholders of the Company prior to the Offering have
entered into "lock-up" agreements with the Underwriters pursuant to which they
have agreed that they will not, for a period of 180 days after the closing of
the Offering, subject to certain limited exceptions, offer, sell, contract to
sell, issue or otherwise dispose of any shares of Common Stock or any
securities of the Company which are substantially similar to the Common Stock,
or which are convertible into or exchangeable or exercisable for Common Stock
or securities substantially similar to the Common Stock without the prior
written consent of Schroder & Co. Inc. Such consent may be granted in whole or
in part without a public announcement. Such agreements have been expressly
agreed to preclude such parties from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result
in a sale or disposition of such securities during the applicable period, even
if such securities would be disposed of by someone other than such party. Such
prohibited

hedging or other transactions would include, without limitation, any short
sale (whether or not against the box) or any purchase, sale or grant of any
right (including, without limitation, any put or call option) with respect to
any such securities or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from such securities.

At the request of the Company, up to Shares have been reserved for
sale in the Offering to certain individuals, including directors and employees
of the Company, members of their families or friends, and other persons having
business relationships with the Company. The price of such Shares to such
persons will be the initial public offering price set forth on the cover page
of this Prospectus. The number of Shares available for sale to the general
public will be reduced to the extent these persons purchase such reserved
Shares. Any reserved Shares not purchased will be offered by the Underwriters
to the general public on the same basis as the other Shares offered hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities that it may incur in connection with the sale of the Shares,
including liabilities arising under the Securities Act, and to contribute to
payments that the Underwriters may be required to make with respect thereto.

Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price of the Shares will be determined by
negotiations among the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price of the Shares,
in addition to prevailing market conditions, are the Company's historical
performance, the Underwriters' estimates of the business potential and
earnings prospects of the Company, an assessment of the Company's management
and the consideration of the above factors in relation to market valuation of
companies in related businesses.

The Company will apply to have the Common Stock listed on the New York Stock
Exchange under the symbol " ."

In connection with the Offering, the Underwriters and their affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the Shares. Such transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M, pursuant to which such
persons may bid for or purchase Shares for the purpose of stabilizing their
market price. The Underwriters also may create a short position for their
accounts by selling more shares of Common Stock in connection with the
Offering than they are committed to purchase from the Company, and in such
case may purchase shares of Common Stock in the open market following
completion of the Offering to cover all or a portion of such short position.
In addition, the Representatives, on behalf of the Underwriters, may impose
"penalty bids" under contractual arrangements with the Underwriters whereby
they may reclaim from a dealer participating in the Offering, for the account
of the Underwriters, the selling concession with respect to Shares that are
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Shares at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if such
transactions are undertaken, they may be discontinued at any time.

The Company has agreed to pay to TriCapital Corporation, a member of the
National Association of Securities Dealers, Inc. ("TriCapital"), in exchange
for certain financial advisory services in connection with the Offering, a fee
of $250,000 upon consummation of the Offering as well as a cash bonus equal to
a percentage of the amount by which the valuation of the Company for purposes
of the Offering exceeds $150 million. To the date of this Prospectus, the
Company has paid TriCapital an aggregate of $ , which will be offset
against the amounts payable by the Company upon consummation of the Offering.
The Company also has agreed to reimburse TriCapital for all its out-of-pocket
expenses incurred in connection with its performance of such services.

LEGAL MATTERS

The validity of the Shares will be passed upon for the Company by Hogan &
Hartson L.L.P., Washington, D.C. Certain matters in connection with the
Offering will be passed upon for the Underwriters by McDermott, Will & Emery,
New York, New York.

EXPERTS

The balance sheet of Trex Company, Inc. as of September 10, 1998 has been
audited by Ernst & Young LLP, independent public accountants, as set forth in
their report appearing elsewhere herein, and is included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

The financial statements of TREX Company, LLC as of December 31, 1996 and
1997 and June 30, 1998 and for the period from August 29, 1996 (inception) to
December 31, 1996, the year ended December 31, 1997 and the six-month period
ended June 30, 1998 have been audited by Ernst & Young LLP, independent public
accountants, as set forth in their reports appearing elsewhere herein, and are
included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.

The financial statements of the Composite Products Division of Mobil Oil
Corporation (the Predecessor) for the year ended December 31, 1995 and the
period from January 1, 1996 to August 28, 1996 have been audited by Ernst &
Young LLP, independent public accountants, as set forth in their reports
appearing elsewhere herein, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act with respect to the Shares being offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain items of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in
each instance reference is made to the copy of the document filed as an
exhibit to the Registration Statement, each statement made in this Prospectus
relating to such document being qualified in all respects by such reference.
For further information with respect to the Company and the Shares being
offered hereby, reference is hereby made to such Registration Statement,
including the exhibits thereto and the financial statements, notes and
schedules filed as a part thereof. The Registration Statement and the exhibits
thereto filed by the Company with the Commission may be inspected and copied
by the public at the public reference facilities maintained by the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549
and are also available for inspection and copying at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048, and at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also may be obtained form the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 at prescribed rates and, in certain cases, by
accessing the Commission's World Wide Web site at http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

PAGE
TREX COMPANY, INC.
Report of Independent Auditors........................................... F-2

Balance Sheet as of September 10, 1998................................... F-3
Notes to Balance Sheet................................................... F-4
TREX COMPANY, LLC
Report of Independent Auditors........................................... F-5
Balance Sheets as of June 30, 1997 (unaudited) and 1998.................. F-6
Statements of Income for the six months ended June 30, 1997 (unaudited)
and 1998................................................................ F-7
Statement of Members' Equity for the six months ended June 30, 1997
(unaudited) and 1998.................................................... F-8
Statements of Cash Flows for the six months ended June 30, 1997
(unaudited) and 1998.................................................... F-9
Notes to Financial Statements............................................ F-10
Report of Independent Auditors........................................... F-16
Balance Sheets as of December 31, 1996 and 1997.......................... F-17
Statements of Operations for the period from July 1, 1996 (inception) to
December 31, 1996 and for the year ended December 31, 1997.............. F-18
Statement of Members' Equity for the period from July 1, 1996 (inception)
to December 31, 1997.................................................... F-19
Statements of Cash Flows for the period from July 1, 1996 (inception) to
December 31, 1996 and for the year ended December 31, 1997.............. F-20
Notes to Financial Statements............................................ F-21

MOBIL COMPOSITE PRODUCTS DIVISION OF MOBIL OIL CORPORATION
(THE PREDECESSOR)

Report of Independent Auditors............................................ F-27

Statements of Divisional Operations and Divisional Operating Equity
Deficit for the year ended December 31, 1995 and the period from January
1, 1996 to August 28, 1996............................................... F-28
Statements of Cash Flows for the year ended December 31, 1995 and the
period from January 1, 1996 to August 28, 1996........................... F-29
Notes to Financial Statements............................................. F-30

F-1

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Trex Company, Inc.

We have audited the accompanying balance sheet of Trex Company, Inc. ("the
Company") as of September 10, 1998. The balance sheet is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
balance sheet based on our audit.

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

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Trex Company, Inc. at September
10, 1998 in conformity with generally accepted accounting principles.

Ernst & Young LLP

Vienna, Virginia,
September 10, 1998

F-2

TREX COMPANY, INC.

BALANCE SHEET

SEPTEMBER 10, 1998

ASSETS

Cash.................................................................... $1,000
------
Total assets............................................................. $1,000
======
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 1000 shares authorized, 100 shares issued
and outstanding...................................................... $ 1
Additional paid-in capital............................................. 999
Retained earnings...................................................... --
------
Total stockholders' equity.............................................. $1,000
======

See accompanying notes to balance sheet

F-3

TREX COMPANY, INC

NOTES TO BALANCE SHEET

SEPTEMBER 10, 1998

1. BUSINESS AND ORGANIZATION

Trex Company, Inc. (the "Company"), a Delaware corporation, was incorporated
on September 4, 1998, for the purpose of succeeding to the assets and
liabilities of Trex Company LLC, in conjunction with a proposed initial public
offering ("IPO") of its securities to be undertaken by the Company. The
Company is a wholly owned subsidiary of Trex Company, LLC.

Immediately prior to the Company's proposed IPO, the junior membership
interests in Trex Company, LLC will be exchanged for shares of Common Stock of
the Company and the preferred membership interests in Trex Company, LLC will
be purchased by the Company (the "Reorganization"). Subsequent to such
transactions, Trex Company, LLC will be the wholly owned subsidiary of the
Company. In conjunction with the Reorganization, Trex Company, LLC will (1)
pay a cash distribution to its members representing undistributed Trex
Company, LLC taxable earnings and a return of capital and (2) recognize a
deferred income tax liability resulting from the conversion of Trex Company,
LLC to a C corporation.

The net proceeds from the proposed IPO are planned to be used primarily to
reduce outstanding indebtedness, fund a portion of the cash distribution to
its members, purchase all outstanding preferred equity and provide funds for
expansion of operations, working capital needs, brand development and other
general corporate purposes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments purchased with
original maturities of three months or less.

INCOME TAXES

Income taxes are accounted for using the liability method required by
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes."

FAIR VALUE OF FINANCIAL STATEMENTS

The Company considers the recorded value of its financial assets consisting
of cash and cash equivalents to approximate the fair value of the respective
assets at September 10, 1998.

F-4

REPORT OF INDEPENDENT AUDITORS

Board of Managers
Trex Company, LLC

We have audited the accompanying balance sheet of Trex Company, LLC ("the
Company") as of June 30, 1998, and the related statements of income, members'
equity, and cash flows for the six months then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements as of and for the six months ended June
30, 1997 are unaudited.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trex Company, LLC at June 30,
1998, and the results of its operations and its cash flows for the six months
then ended in conformity with generally accepted accounting principles.

Vienna, Virginia,
August 31, 1998 (except Notes 11 and 12, as to
which the date is )

- -------------------------------------------------------------------------------

The foregoing report is in the form that will be signed upon the completion of
the restatement of the capital accounts for the recapitalization as described
in Note 12 to the financial statements.

Ernst & Young LLP

F-5

TREX COMPANY, LLC

BALANCE SHEETS

PRO FORMA
JUNE 30, JUNE 30, 1998
1997 1998 (SEE NOTE 11)
----------- ----------- -------------

ASSETS (UNAUDITED) (UNAUDITED)
Current Assets:
Cash and cash equivalents............ $ 2,284,000 $11,809,000 $ 4,309,000
Trade accounts receivable............ 1,972,000 1,708,000 1,708,000
Inventories.......................... 2,834,000 1,069,000 1,069,000
Prepaid expenses and other assets.... 80,000 118,000 118,000
----------- ----------- -----------
Total current assets.................. 7,170,000 14,704,000 7,204,000
----------- ----------- -----------
Property, plant and equipment:
Property, plant and equipment, at
cost................................. 19,982,000 26,181,000 26,181,000
Accumulated depreciation and
amortization......................... (1,719,000) (3,391,000) (3,391,000)
----------- ----------- -----------
Net property, plant and equipment..... 18,263,000 22,790,000 22,790,000
----------- ----------- -----------
Intangible assets, net of amortization
of $695,000 and $1,529,000,
respectively......................... 10,549,000 9,715,000 9,715,000
Deferred financing charges............ 308,000 258,000 258,000
----------- ----------- -----------
Total Assets.......................... $36,290,000 $47,467,000 $39,967,000
=========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Trade accounts payable............... $ 1,715,000 $ 1,402,000 $ 1,402,000
Accrued expenses..................... 612,000 1,046,000 1,046,000
Other current liabilities............ 1,192,000 1,188,000 1,188,000
Current portion of long-term debt.... 142,000 142,000
----------- ----------- -----------
Total current liabilities............. 3,519,000 3,778,000 3,778,000
----------- ----------- -----------
Long term debt........................ 26,250,000 29,888,000 29,888,000
----------- ----------- -----------
Total liabilities..................... 29,769,000 33,666,000 33,666,000
----------- ----------- -----------
Members' equity:
Preferred units, 1,000 units
authorized, issued and outstanding.. 3,000,000 3,000,000 3,000,000
Junior units, 4,000 units authorized,
issued and outstanding ............. 2,350,000 2,350,000 2,350,000
Undistributed income................. 1,171,000 8,451,000 951,000
----------- ----------- -----------
Total members' equity................. 6,521,000 13,801,000 6,301,000
----------- ----------- -----------
Total Liabilities and Members'
Equity............................... $36,290,000 $47,467,000 $39,967,000
=========== =========== ===========

See accompanying notes to financial statements.

F- 6

TREX COMPANY, LLC

STATEMENTS OF INCOME

SIX MONTHS ENDED JUNE
30,
1997 1998
----------- -----------

(UNAUDITED)
Net sales.............................................. $19,446,000 $29,327,000
Cost of sales.......................................... 9,513,000 13,285,000
----------- -----------
Gross profit........................................... 9,933,000 16,042,000
Selling, general, and administrative expenses.......... 5,074,000 6,672,000
----------- -----------
Income from operations................................. 4,859,000 9,370,000
Interest expense, net.................................. 1,471,000 1,257,000
----------- -----------
Net income............................................. $ 3,388,000 $ 8,113,000
=========== ===========
Pro Forma Data (Unaudited See Note 11):
$ 8,113,000
Historical net income................................. -----------

Pro forma income taxes................................ 3,245,000
-----------
Pro forma net income.................................. $ 4,868,000
===========
Pro forma income per share, basic.....................
===========
Pro forma weighted average shares outstanding.........
-----------

See accompanying notes to financial statements.

F- 7

TREX COMPANY, LLC

STATEMENTS OF MEMBERS' EQUITY

SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND 1998

PREFERRED JUNIOR UNDISTRIBUTED
UNITS UNITS INCOME TOTAL
---------- ---------- ------------- -----------

Balance, January 1, 1997...... $3,000,000 $2,350,000 $(1,400,000) $ 3,950,000
Net income.................... -- -- 3,388,000 3,388,000
Distributions declared........ -- -- (203,000) (203,000)
Tax distributions............. -- -- (614,000) (614,000)
---------- ---------- ----------- -----------
Balance, June 30, 1997........ $3,000,000 $2,350,000 $ 1,171,000 $ 6,521,000
========== ========== =========== ===========
Balance, January 1, 1998...... $3,000,000 $2,350,000 $ 2,184,000 $ 7,534,000
Net income.................... -- -- 8,113,000 8,113,000
Distributions declared........ -- -- (203,000) (203,000)
Tax distributions............. -- -- (1,643,000) (1,643,000)
---------- ---------- ----------- -----------
Balance, June 30, 1998........ $3,000,000 $2,350,000 $ 8,451,000 $13,801,000
========== ========== =========== ===========

See accompanying notes to financial statements.

F- 8

TREX COMPANY, LLC

STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE
30,
1997 1998
----------- -----------

(UNAUDITED)
OPERATING ACTIVITIES
Net income.......................................... $ 3,388,000 $ 8,113,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization...................... 1,562,000 1,447,000
Amortization of deferred financing charges......... 25,000 25,000
Changes in operating assets and liabilities
Trade accounts receivable......................... (1,446,000) (697,000)
Inventories....................................... 72,000 3,406,000
Prepaid expenses and other assets................. 79,000 (3,000)
Trade accounts payable............................ 172,000 (79,000)
Accrued expenses.................................. 10,000 247,000
Other liabilities................................. (24,000) 23,000
----------- -----------
Net cash provided by operating activities........... 3,838,000 12,482,000
----------- -----------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment...... (1,478,000) (4,607,000)
----------- -----------
Net cash used in investing activities............... (1,478,000) (4,607,000)
----------- -----------
FINANCING ACTIVITIES
Borrowings under long-term debt..................... -- 3,780,000
Repayment of long-term debt......................... (3,000,000) --
Preferred distributions paid........................ (203,000) (203,000)
Tax distributions................................... (614,000 (1,643,000)
----------- -----------
Net cash (used in) provided by financing
activities......................................... (3,817,000) 1,934,000
----------- -----------
Net (decrease) increase in cash and cash
equivalents........................................ (1,457,000) 9,809,000
Cash and cash equivalents at beginning of year...... 3,741,000 2,000,000
----------- -----------
Cash and cash equivalents at end of year............ $ 2,284,000 $11,809,000
=========== ===========

See accompanying notes to financial statements.

F- 9

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998

1. BUSINESS AND ORGANIZATION

Trex Company, LLC ("Trex" or the "Company") manufactures and distributes wood
polymer (thermo-plastic) composite products primarily for consumer and
commercial decking applications. Trex lumber is manufactured primarily from
reclaimed plastic (mainly shopping bags and stretch film) and hardwood waste.

ORGANIZATION

Trex is a Limited Liability Company formed under the laws of the State of
Delaware on July 1, 1996 (Inception). The Company initiated commercial
activity on August 29, 1996.

On August 29, 1996, Trex acquired substantially all of the assets and assumed
certain of the liabilities of Mobil Corporation's Composite Products Division
(CPD). The Company acquired these net assets for cash of approximately $29
million. The acquisition was accounted for using the purchase accounting
method.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL INFORMATION

The financial statements as of June 30, 1997 and for the six months then ended
are unaudited and have been prepared on the same basis as the audited
financial statements included herein. In the opinion of management, the
unaudited financial statements include all adjustments, consisting only of
normal recurring items, necessary to present fairly the periods indicated.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments purchased with original
maturities of three months or less.

INVENTORIES

Inventories are stated at the lower of cost (last-in, first-out) or market
value. An actual valuation of inventory under the LIFO method can be made only
at the end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO projections must be based on management's estimates
of anticipated year-end inventory levels, which are seasonal in nature.
Management has evaluated the inventory and determined that no material LIFO
inventory adjustments are necessary as of June 30, 1998.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost. The costs of
additions and improvements are capitalized, while maintenance and repairs are
charged to expense as incurred. Depreciation is provided using the straight
line method over the following estimated useful lives:

Machinery and equipment............................................... 11 years
Furniture and equipment............................................... 10 years
Forklifts and tractors................................................ 5 years
Data processing equipment............................................. 5 years

Leasehold improvements are amortized over the shorter of the lease term or the
estimated life of the asset.

F-10

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTANGIBLE ASSETS

Intangible assets consist of goodwill representing the excess of cost over net
assets acquired and organizational costs resulting from the purchase of CPD.
Goodwill and organizational costs are amortized using the straight line method
over periods of 15 and 5 years, respectively.

REVENUE RECOGNITION

The Company recognizes revenue at the point of sale, which is at the time of
shipment to the customer from the warehouse.

DEFERRED FINANCING CHARGES

Deferred financing charges represent the unamortized portion of the discount
upon the issuance of the subordinated and senior notes (See Note 5). These are
amortized as interest expense over the lives of the related debt.

INCOME TAXES

The Company is a partnership for income tax purposes. Accordingly, no
provision for income taxes has been included in these financial statements, as
taxable income or loss passes through to, and is reported by, members
individually.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. For the six months
ended June 30, 1997 and 1998, research and development costs were
approximately $478,000 and $321,000, respectively.

ADVERTISING COSTS

Advertising costs are expensed as incurred. For the six months ended June 30,
1997 and 1998, advertising costs were approximately $1,550,000 and $2,051,000,
respectively.

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 the
accompanying notes. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL STATEMENTS

The Company considers the recorded value of its financial assets and
liabilities, consisting primarily of cash and cash equivalents, accounts
payable and accrued liabilities and long term debt to approximate the fair
value of the respective assets and liabilities at June 30, 1997 and 1998.

RECENT PRONOUNCEMENTS

The Company has determined than no recent FASB accounting pronouncements will
have a material impact on the Company's financial position and results from
operations.

F-11

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SFAS 121

The Company assesses the impairment of long-lived assets including intangible
assets in accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of ("SFAS 121"). SFAS 121 requires impairment losses to be
recognized for long-lived assets when indicators of impairment are present and
the undiscounted cash flows are not sufficient to recover the assets' carrying
amount. Intangibles are also evaluated for recoverability by estimating the
projected undiscounted cash flows, excluding interest, of the related business
activities. The impairment loss of these assets, including goodwill, is
measured by comparing the carrying amount of the asset to its fair value with
any excess of carrying value over fair value written off. Fair value is based
on market prices where available, an estimate of market value, or determined
by various valuation techniques including discounted cash flow.

3. INVENTORIES

Inventories consist of the following as of June 30:

1997 1998
---------- ----------

Raw Materials............................................. $ 444,000 $ 220,000
Finished Goods............................................ 2,390,000 849,000
---------- ----------
$2,834,000 $1,069,000
========== ==========

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of June 30:

1997 1998
----------- -----------

Building and improvements............................. $ 1,463,000 $ 4,218,000
Machinery and equipment............................... 15,963,000 19,130,000
Furniture and equipment............................... 34,000 41,000
Forklifts and tractors................................ 130,000 131,000
Data processing equipment............................. 71,000 197,000
Construction in process............................... 2,321,000 1,965,000
Land.................................................. 499,000
----------- -----------
19,982,000 26,181,000
Accumulated depreciation and amortization............. (1,719,000) (3,391,000)
----------- -----------
$18,263,000 $22,790,000
=========== ===========

Depreciation expense for the six months ended June 30, 1997 and 1998 totaled
$1,145,000 and $1,030,000, respectively.

5. DEBT

The Company maintains an agreement with a bank to provide a $6,000,000 line of
credit for working capital purposes, secured by substantially all of the
Company's accounts receivable and inventories. The line of credit accrues
interest at LIBOR plus 200 basis points and matures on December 10, 1998.
There were no amounts outstanding at June 30, 1997 or 1998.

F-12

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. DEBT (CONTINUED)

During the six months ended June 30, 1998, the Company borrowed $3,780,000
under a mortgage. The mortgage provides for monthly amortization of principal
and interest over a fifteen year term, with all remaining principal due June
16, 2008. The mortgage has a floating rate of LIBOR plus 100 basis points, and
the Company entered into an interest rate swap agreement, at the notional
amounts of the amortizing principal balance, that effectively fixes the
interest rate paid by the Company at 7.12%.

Debt consists of the following as of June 30, 1998:

Senior Notes, due August 30, 2003, 10%............................. $21,250,000
Subordinated Notes, due August 30, 2004, 12%....................... 5,000,000
Mortgage, due June 16, 2008, 7.12%................................. 3,780,000
-----------
30,030,000
Less current portion............................................... 142,000
-----------
Long-term debt.................................................... $29,888,000
===========

Maturities of debt are as follows:

July 1-December 31, 1998........................................... $70,000
Years ending December 31,
1999.............................................................. 3,998,000
2000.............................................................. 4,008,000
2001.............................................................. 5,269,000
2002.............................................................. 5,284,000
2003.............................................................. 7,298,000
Thereafter......................................................... 4,103,000
-----------
$30,030,000
===========

The notes are secured by substantially all of the assets of the Company, with
the Senior Notes holding liquidation preferences. The mortgage is secured by
the Company's plant facility. The Senior and Subordinated Notes are held by
the Company's Class B Members.

The Company made interest payments in the amount of $1,512,000 and $1,362,000
during the six months ended June 30, 1997 and 1998, respectively.

6. MEMBERS' EQUITY

Trex was initially capitalized by the sale of 3,000 Class A units for
$2,000,000 and 1,000 Class B units for $350,000. In conjunction with the
acquisition of substantially all of the assets and assumption of certain of
the liabilities of CPD, and the Company issued CPD 1,000 Preferred units in
exchange for $3,000,000.

Class A members have the right to elect the members of the Company's Board of
Managers, which carries on the day-to-day business of the Company. Major
decisions of the Company, such as those outside the ordinary course of
business, require the approval of both Class A and Class B members. Class B
units are convertible pro-rata into Class A units. The Class A and Class B
units are collectively known as Junior units.

F-13

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. MEMBERS' EQUITY (CONTINUED)

The Preferred units are non-transferable and have limited voting rights as
defined in the Limited Liability Company Agreement. Preferred units are
entitled to a preferred annual return, which is cumulative and payable under
the terms of the Limited Liability Company Agreement. The Company has the
right to redeem the Preferred units upon 30 days prior notice at the original
issuance costs plus any accumulated preferred returns at the time of
redemption.

Cash distributions to member units shall be distributed upon approval of the
Board of Managers and are limited under the terms of the Limited Liability
Company Agreement. Members' liabilities are limited to their respective
capital contributions.

The Company is party to a unitholders agreement which provided for certain
additional rights such as registration, approval of certain transactions and
other rights as defined in the agreement.

7. LEASES

The Company leases office space, the plant building, storage warehouses and
certain office and plant equipment under various operating leases. Scheduled
payments under these leases are as follows as of June 30, 1998:

July 1-December 31, 1998.............................................. $260,000
Year ending December 31,
1999................................................................. 273,000
2000................................................................. 157,000
2001................................................................. 135,000
2002................................................................. 50,000
2003................................................................. 30,000
Thereafter............................................................ --
--------
$905,000
========

For the six months ended June 30, 1997 and 1998, the Company had rental
expenses of approximately $506,000 and $513,000, respectively, which included
the rental of the Company's Plant purchased during 1998.

8. 401(K) PLAN

The Company has a 401(k) Plan for the benefit of all employees who meet
certain eligibility requirements. The plan documents provide for the Company
to make defined contributions as well as matching and other discretionary
contributions, as determined by the Board of Managers. The Company contributed
$61,000 and $91,000 to the plan during the six months ended June 30, 1997 and
1998, respectively.

9. OTHER INFORMATION

The Company is from time to time party to litigation arising in the ordinary
course of its business. The Company believes that such litigation will not
have a material impact on the Company's financial position or results from
operations.

F-14

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. OTHER INFORMATION (CONTINUED)

The Company entered into a take-or-pay contract to secure an ongoing source of
raw materials at competitive, market prices. The contract requires the Company
to take or pay for raw materials in the amount of $3,300,000 annually for a
period of six years, commencing upon the counterparty's completion of its
production facility.

Approximately 66% and 73% of the Company's sales for the six months ended June
30, 1997 and 1998, respectively, were from its five largest customers.

10. IMPACT OF YEAR 2000 (UNAUDITED)

The Company is engaged in an assessment of its compliance with Year 2000
issues. Based on its assessment to date, management believes no material
impact on the Company's operations or financial condition will be necessary to
meet Year 2000 compliance.

11. PRO FORMA DATA (UNAUDITED)

The pro forma balance sheet at June 30, 1998 reflects an estimated
$7.5 million distribution of undistributed taxable earnings and a return of
capital to members (see Note 12).

The pro forma net income taxes and pro forma net income reflect federal and
state income taxes (assuming a 40% combined effective tax rate) as if the
Company had been taxed as a C corporation for the six months ended June 30,
1998. Pro forma weighted average shares outstanding reflect shares
outstanding, which assumes that the shares resulting from the recapitalization
were outstanding for the six months ended June 30, 1998 (See note 12).

12. SUBSEQUENT EVENTS

The Company plans to undertake an initial public offering of its securities.
Immediately prior to its proposed offering, the Junior units in the Company
will be exchanged for shares of Common Stock of Trex Company, Inc., a wholly
owned subsidiary of the Company, and the Preferred units in the Company will
be purchased by Trex Company, Inc. (the "Reorganization"). Subsequent to such
transactions, the Company will be the wholly owned subsidiary of Trex Company,
Inc. In conjunction with the Reorganization, the Company will (1) pay a cash
distribution to its members representing undistributed taxable earnings and a
return of capital and (2) recognize a deferred income tax liability resulting
from the conversion to a C corporation.

The net proceeds from the proposed offering are planned to be used primarily
to reduce outstanding indebtedness, fund a portion of the cash distribution to
its members, purchase all outstanding preferred equity and provide funds for
expansion of operations, working capital needs, brand development and other
general corporate purposes.

F-15

REPORT OF INDEPENDENT AUDITORS

Board of Managers
Trex Company, LLC

We have audited the accompanying balance sheets of Trex Company, LLC ("the
Company") as of December 31, 1996 and 1997, and the related statements of
operations, members' equity, and cash flows for the period from July 1, 1996
(Inception) to December 31, 1996 and for the year ended December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Trex Company, LLC at December
31, 1996 and 1997, and the results of its operations and its cash flows for
the period from July 1, 1996 (Inception) to December 31, 1996 and for the year
ended December 31, 1997 in conformity with generally accepted accounting
principles.

Vienna, Virginia,
March 6, 1998 (except Notes 10 and 11, as to
which the date is )

- -------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
the restatement of the capital accounts for the recapitalization as described
in Note 11 to the financial statements.

Ernst & Young LLP

F- 16

TREX COMPANY, LLC

BALANCE SHEETS

DECEMBER 31,
1996 1997
----------- -----------

ASSETS
Current Assets:
Cash and cash equivalents.......................... $ 3,741,000 $ 2,000,000
Trade accounts receivable.......................... 526,000 1,011,000
Inventories........................................ 2,906,000 4,475,000
Prepaid expenses and other assets.................. 159,000 115,000
----------- -----------
Total current assets................................ 7,332,000 7,601,000
----------- -----------
Property, plant and equipment:
Property, plant and equipment, at cost............. 18,504,000 21,574,000
Accumulated depreciation and amortization.......... (574,000) (2,361,000)
----------- -----------
Net property, plant and equipment................... 17,930,000 19,213,000
----------- -----------
Intangible assets, net of amortization of $278,000
and $1,112,000, respectively....................... 10,966,000 10,132,000
Deferred financing charges.......................... 333,000 283,000
----------- -----------
Total assets........................................ $36,561,000 $37,229,000
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Trade accounts payable............................. $ 1,543,000 $ 1,481,000
Accrued expenses................................... 602,000 799,000
Other current liabilities.......................... 1,213,000 1,158,000
----------- -----------
Total current liabilities........................... 3,358,000 3,438,000
----------- -----------
Other............................................... 3,000 7,000
Long term debt...................................... 29,250,000 26,250,000
----------- -----------
Total liabilities................................... 32,611,000 29,695,000
----------- -----------
Members' equity:
Preferred units, 1,000 units authorized, issued and
outstanding........................................ 3,000,000 3,000,000
Junior units, 4,000 units authorized, issued
andoutstanding ... 2,350,000 2,350,000
Members' capital (deficit)......................... (1,400,000) 2,184,000
----------- -----------
Total members' equity............................... 3,950,000 7,534,000
----------- -----------
Total liabilities and members' equity............... $36,561,000 $37,229,000
=========== ===========

See accompanying notes to financial statements.

F-17

TREX COMPANY, LLC

STATEMENTS OF OPERATIONS

PERIOD FROM JULY 1,
1996 (INCEPTION) TO YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
------------------- -----------------

Net sales............................... $ 5,708,000 $34,137,000
Cost of sales........................... 3,481,000 16,774,000
----------- -----------
Gross profit............................ 2,227,000 17,363,000
Selling, general, and administrative
expenses............................... 2,558,000 8,992,000
----------- -----------
Income (loss) from operations........... (331,000) 8,371,000
Interest expense, net................... 934,000 2,777,000
----------- -----------
Net income (loss)....................... $(1,265,000) $ 5,594,000
=========== ===========
Pro Forma Data (Unaudited See Note 10):
Historical net income.................. $ 5,594,000
Pro forma income taxes................. 2,238,000
-----------
Pro forma net income................... $ 3,356,000
===========
Pro forma income per share, basic......
===========
Pro forma weighted average shares
outstanding............................
-----------

See accompanying notes to financial statements.

F-18

TREX COMPANY, LLC

STATEMENT OF MEMBERS' EQUITY

PERIOD FROM JULY 1, 1996 (INCEPTION) TO DECEMBER 31, 1997

PREFERRED JUNIOR UNDISTRIBUTED
UNITS UNITS INCOME (LOSS) TOTAL
---------- ---------- ------------- ----------

Balance, July 1, 1996
(Inception).................. $ -- $ -- $ -- $ --
Proceeds from issuance of
units........................ 3,000,000 2,350,000 -- 5,350,000
Net loss...................... -- -- (1,265,000) (1,265,000)
Distributions declared........ -- -- (135,000) (135,000)
---------- ---------- ---------- ----------
Balance, December 31, 1996.... 3,000,000 2,350,000 (1,400,000) 3,950,000
---------- ---------- ---------- ----------
Net income.................... -- -- 5,594,000 5,594,000
Distributions declared........ -- -- (405,000) (405,000)
Tax distributions............. -- -- (1,605,000) (1,605,000)
---------- ---------- ---------- ----------
Balance, December 31, 1997.... $3,000,000 $2,350,000 $2,184,000 $7,534,000
========== ========== ========== ==========

See accompanying notes to financial statements.

F-19

TREX COMPANY, LLC

STATEMENTS OF CASH FLOWS

PERIOD FROM JULY 1,
1996 (INCEPTION) TO YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
------------------- -----------------

OPERATING ACTIVITIES
Net income (loss)....................... $(1,265,000) $5,594,000
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization.......... 857,000 2,642,000
Amortization of deferred financing
charges................................ 17,000 50,000
Loss on disposal of property, plant and
equipment.............................. 149,000 161,000
Changes in operating assets and
liabilities Trade accounts
receivable............................ 646,000 (485,000)
Inventories........................... (2,332,000) (1,569,000)
Prepaid expenses and other assets..... (115,000) 44,000
Trade accounts payable................ 280,000 (62,000)
Accrued expenses...................... 426,000 197,000
Other liabilities..................... 1,115,000 (51,000)
----------- ----------
Net cash provided by (used in) operating
activities............................. (222,000) 6,521,000
----------- ----------
INVESTING ACTIVITIES
Purchase of net assets.................. (29,191,000) --
Expenditures for property, plant and
equipment.............................. (1,062,000) (3,252,000)
----------- ----------
Net cash used in investing activities... (30,253,000) (3,252,000)
----------- ----------
FINANCING ACTIVITIES
Borrowings under long-term debt......... 28,900,000 --
Proceeds from issuance of preferred
units.................................. 3,000,000 --
Proceeds from issuance of common units.. 2,350,000 --
Repayment of long-term debt............. -- (3,000,000)
Preferred distributions paid............ (34,000) (405,000)
Tax distributions....................... -- (1,605,000)
----------- ----------
Net cash provided by (used in) financing
activities............................. 34,216,000 (5,010,000)
----------- ----------
Net increase (decrease) in cash and cash
equivalents............................ 3,741,000 (1,741,000)
Cash and cash equivalents at beginning
of year................................ -- 3,741,000
----------- ----------
Cash and cash equivalents at end of
year................................... $ 3,741,000 $2,000,000
=========== ==========

See accompanying notes to financial statements.

F-20

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO DECEMBER 31, 1996
AND THE YEAR ENDED DECEMBER 31, 1997

1. BUSINESS AND ORGANIZATION

ORGANIZATION

Trex is a Limited Liability Company formed under the laws of the State of
Delaware on July 1, 1996 (Inception). The Company initiated commercial
activity on August 29, 1996.

On August 29, 1996, Trex acquired substantially all of the assets and assumed
certain of the liabilities of Mobil Oil Corporation's Composite Products
Division (CPD). The Company acquired these net assets for cash of
approximately $29 million. The acquisition was accounted for using the
purchase accounting method.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments purchased with original
maturities of three months or less.

INVENTORIES

Inventories are stated at the lower of cost (last-in, first-out) or market
value.

PROPERTY, PLANT AND EQUIPMENT

Machinery and equipment............................... 11 years
Furniture and equipment............................... 10 years
Forklifts and tractors................................. 5 years
Data processing equipment.............................. 5 years

Leasehold improvements are amortized over the shorter of the lease term or the
estimated life of the asset.

INTANGIBLE ASSETS

REVENUE RECOGNITION

The Company recognizes revenue at the point of sale, which is at the time of
shipment to the customer from the warehouse.

F-21

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED FINANCING CHARGES

INCOME TAXES

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. For the period from
July 1, 1996 (Inception) to December 31, 1996 and for the year ended December
31, 1997, research and development costs were approximately $357,000 and
$1,076,000, respectively.

ADVERTISING COSTS

Advertising costs are expensed as incurred. For the period from July 1, 1996
(Inception) to December 31, 1996 and for the year ended December 31, 1997,
advertising costs were approximately $461,000 and $2,103,000, respectively.

USE OF ESTIMATES

FAIR VALUE OF FINANCIAL STATEMENTS

SFAS 121

F-22

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. INVENTORIES

Inventories consist of the following as of December 31:

1996 1997
---------- ----------

Raw Materials............................................. $ 361,000 $ 449,000
Finished Goods............................................ 2,545,000 4,026,000
---------- ----------
$2,906,000 $4,475,000
========== ==========

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of December 31:

1996 1997
----------- -----------

Leasehold improvements................................ $ 1,463,000 $ 1,659,000
Machinery and equipment............................... 15,966,000 19,040,000
Furniture and equipment............................... 29,000 36,000
Forklifts and tractors................................ 130,000 131,000
Data processing equipment............................. 65,000 187,000
Construction in process............................... 851,000 521,000
----------- -----------
18,504,000 21,574,000
Accumulated depreciation and amortization............. (574,000) (2,361,000)
----------- -----------
$17,930,000 $19,213,000
=========== ===========

Depreciation expense for the period from July 1, 1996 (Inception) to December
31, 1996 and for the year ended December 31, 1997 totaled $579,000 and
$1,808,000, respectively.

5. DEBT

The Company maintains an agreement with a bank to provide a $6,000,000 line of
credit for working capital purposes, secured by substantially all of the
Company's accounts receivable and inventories. There were no amounts
outstanding at December 31, 1997.

The Company prepaid $3,000,000 of its Senior Notes during the year ended
December 31, 1997. Long-term debt consists of the following as of December 31,
1997:

Senior Notes, due August 30, 2003, 10%.............................. $21,250,000
Subordinated Notes, due August 30, 2004, 12%........................ 5,000,000
-----------
$26,250,000
===========

F-23

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. DEBT (CONTINUED)

Maturities of long-term debt are as follows:

1998................................................................ $ --
1999................................................................ 3,850,000
2000................................................................ 3,850,000
2001................................................................ 5,100,000
2002................................................................ 5,100,000
Thereafter.......................................................... 8,350,000
-----------
$26,250,000
===========

The notes are secured by substantially all of the assets of the Company, with
the Senior Notes holding liquidation preferences. The Senior and Subordinated
Notes are held by the Company's Class B Members.

The Company made interest payments in the amount of $0 and $2,975,000 during
the period from July 1, 1996 (Inception) to December 31, 1996 and for the year
ended December 31, 1997, respectively.

6. MEMBERS' EQUITY

Trex was initially capitalized by the sale of 3,000 Class A units for
$2,000,000 and 1,000 Class B units for $350,000. In conjunction with the
acquisition of substantially all of the assets and assumption of certain of
the liabilities of CPD, and the Company issued 1,000 Preferred units to CPD in
exchange for $3,000,000.

The Preferred units are non-transferable and have limited voting rights as
defined in the Limited Liability Company Agreement. Preferred units are
entitled to a preferred annual return, which is cumulative and payable under
the terms of the Limited Liability Company Agreement. The Company has the
right to redeem the Preferred units upon 30 days prior notice at the initial
issuance cost plus any accumulated preferred returns at the time of
redemption.

The Company is party to a unitholders agreement which provided for certain
additional rights such as registration, approval of certain transactions and
other rights as defined in the agreement.

F-24

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. LEASES

1998................................................................. $ 907,000
1999................................................................. 710,000
2000................................................................. 639,000
2001................................................................. 630,000
2002................................................................. 544,000
Thereafter........................................................... 136,000
----------
$3,566,000
==========

For the period from July 1, 1996 (Inception) to December 31, 1996 and for the
year ended December 31, 1997, the Company had rental expenses of approximately
$257,000 and $1,020,000, respectively.

8. 401(K) PLAN

The Company has a 401(k) Plan for the benefit of all employees who meet
certain eligibility requirements. The plan documents provide for the Company
to make defined contributions as well as matching and other discretionary
contributions, as determined by the Board of Managers. The Company contributed
$15,000 and $57,000 to the plan during the period from July 1, 1996
(Inception) to December 31, 1996 and during the year ended December 31, 1997,
respectively.

9. OTHER INFORMATION

The Company entered into a take-or pay contract to secure an ongoing source of
raw materials at competitive, market prices. The contract requires the Company
to take or pay for raw materials in an amount of $3.3 million annually for a
period of six years, commencing upon the counterparty's completion of its
production facility.

Approximately 68% of the Company's sales in 1997 were from its five largest
customers.

10. PRO FORMA DATA (UNAUDITED)

The pro forma net income taxes and pro forma net income reflect federal and
state income taxes (assuming a 40% combined effective tax rate) as if the
Company had been taxed as a C corporation for the year ended December 31,
1997. Pro forma weighted average shares outstanding reflect shares
outstanding, which assumes that the shares resulting from the recapitalization
were outstanding for the year ended December 31, 1997 (See Note 11).

F-25

TREX COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

11. SUBSEQUENT EVENTS

The Company currently plans to undertake an initial public offering of its
securities. Immediately prior to its proposed offering, the Junior units in
the Company will be exchanged for shares of Common Stock of Trex Company,
Inc., a wholly owned subsidiary of the Company, and the Preferred units in the
Company will be purchased by Trex Company, Inc. (the "Reorganization").
Subsequent to such transactions, the Company will be the wholly owned
subsidiary of Trex Company, Inc. In conjunction with the Reorganization, the
Company will (1) pay a cash distribution to its members representing
undistributed taxable earnings and a return of capital and (2) recognize a
deferred income tax liability resulting from the conversion to a C
corporation.

F-26

REPORT OF INDEPENDENT AUDITORS

Board of Managers
Trex Company, LLC

We have audited the related statements of divisional operations and divisional
operating equity deficit and cash flows of Mobil Composite Products Division
of Mobil Oil Corporation for the year ended December 31, 1995 and the period
from January 1, 1996 to August 28, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Mobil
Composite Products Division for the year ended December 31, 1995 and the
period from January 1, 1996 to August 28, 1996 in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Vienna, Virginia
June 24, 1998

F-27

MOBIL COMPOSITE PRODUCTS DIVISION OF
MOBIL OIL CORPORATION (THE PREDECESSOR)

STATEMENTS OF DIVISIONAL OPERATIONS AND
DIVISIONAL OPERATING EQUITY DEFICIT

PERIOD FROM
YEAR ENDED JANUARY 1, 1996
DECEMBER 31, TO AUGUST 28,
1995 1996
------------ ---------------

Net sales........................................ $ 19,635,000 $ 18,071,000
Cost of sales.................................... 10,269,000 9,188,000
------------ ------------
Gross profit..................................... 9,366,000 8,883,000
Selling, general, and administrative expenses.... 6,943,000 5,508,000
------------ ------------
Net income....................................... $ 2,423,000 $ 3,375,000
Divisional operating equity deficit--beginning... $(29,121,000) $(26,698,000)
------------ ------------
Divisional operating equity deficit--ending...... $(26,698,000) $(23,323,000)
============ ============
Pro forma net income (Note 6):
Net income (historical)....................... $ 2,423,000 $ 3,375,000
Pro forma tax provision (unaudited)........... 969,000 1,350,000
------------ ------------
Pro forma net income (unaudited).............. $ 1,454,000 $ 2,025,000
============ ============

See accompanying notes to financial statements.

F-28

MOBIL COMPOSITE PRODUCTS DIVISION OF
MOBIL OIL CORPORATION (THE PREDECESSOR)

STATEMENTS OF CASH FLOWS

PERIOD FROM
JANUARY 1,
YEAR ENDED 1996 TO
DECEMBER 31, AUGUST 28,
1995 1996
------------ -----------

OPERATING ACTIVITIES
Net income........................................... $2,423,000 $3,375,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization....................... 1,328,000 1,117,000
Loss on disposal of property, plant and equipment... 209,000 --
Changes in operating assets and liabilities
Trade accounts receivable.......................... (101,000) (582,000)
Inventories........................................ 1,306,000 (170,000)
Prepaid expenses and other assets.................. -- (44,000)
Trade accounts payable............................. (225,000) 12,000
Accrued expenses................................... (17,000) (107,000)
Other liabilities.................................. (82,000) (753,000)
---------- ----------
Net cash provided by operating activities............ 4,841,000 2,848,000
---------- ----------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment....... (3,842,000) (3,708,000)
---------- ----------
Net cash used in investing activities................ (3,842,000) (3,708,000)
---------- ----------
FINANCING ACTIVITIES
Intercompany financing, net.......................... (1,009,000) 860,000
---------- ----------
Net cash provided by (used in) financing activities.. (1,009,000) 860,000
---------- ----------
Net decrease in cash and cash equivalents............ (10,000) --
Cash and cash equivalents at beginning of year....... 10,000 --
---------- ----------
Cash and cash equivalents at end of year............. $ -- $ --
========== ==========

See accompanying notes to financial statements.

F-29

MOBIL COMPOSITE PRODUCTS DIVISION OF
MOBIL OIL CORPORATION (THE PREDECESSOR)

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE PERIOD FROM
JANUARY 1, 1996 TO AUGUST 28, 1996

1. BUSINESS AND ORGANIZATION

Mobil Composite Products Division, ("the Predecessor" or the "Division")
manufactures and distributes wood polymer (thermo-plastic) composite products
primarily for consumer and commercial decking applications. The Division is
operated by Mobil Chemical Company, a subsidiary of Mobil Oil Corporation
("the Parent"). The Division markets its products throughout North America.

On August 29, 1996, Trex Company, LLC ("Trex") acquired substantially all of
the assets and assumed certain of the liabilities of the Division. Trex
acquired these net assets for cash of approximately $29 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments purchased with original
maturities of three months or less.

INVENTORIES

Inventories are stated at the lower of cost (last-in, first-out) or market
value.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost. The costs of
additions and improvements are capitalized, while maintenance and repairs are
charged to expense as incurred.

Depreciation is provided using the straight line method over the following
estimated useful lives:

Leasehold improvements are amortized over the shorter of the lease term or the
estimated life of the asset.

Depreciation expense for the year ended December 31, 1995 and the period from
January 1, 1996 to August 28, 1996 totaled $1,141,000 and $992,000,
respectively.

INTANGIBLE ASSET

The intangible asset consists of a non-compete agreement which is amortized
using the straight line method over a period of 7 years.

F-30

MOBIL COMPOSITE PRODUCTS DIVISION OF
MOBIL OIL CORPORATION (THE PREDECESSOR)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

REVENUE RECOGNITION

The Division recognizes revenue at the point of sale, which is at time of
shipment to the customer from the warehouse.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. For the year ended
December 31, 1995 and the period from January 1, 1996 to August 28, 1996,
research and development costs were approximately $830,000 and $710,000,
respectively. Approximately $204,000 of these costs were allocated from
another division of the Parent for the year ended December 31, 1995, while
substantially all research and development costs were incurred directly by the
Division for the period from January 1, 1996 to August 28, 1996.

ADVERTISING COSTS

Advertising costs are expensed as incurred. For the year ended December 31,
1995 and the period from January 1, 1996 to August 28, 1996, advertising costs
were approximately $1,240,000 and $1,542,000, respectively.

INCOME TAXES

Income taxes have been excluded from the accompanying financial statements as
the Division was included in the consolidated tax returns of it Parent. There
were no tax allocations to the division during the year ended December 31,
1995 and the period from January 1, 1996 to August 28, 1996.

USE OF ESTIMATES

3. LEASES

For the year ended December 31, 1995 and the period from January 1, 1996 to
August 28, 1996, the Division had rental expense of approximately $684,000 and
$451,000, respectively.

4. ALLOCATION OF EXPENSES

The Parent and certain of its subsidiaries provide the Division with various
administrative and financial services. These services include treasury,
insurance and tax administration, legal, certain payroll and employee benefit
administration, health and safety and environmental compliance. Mobil's policy
is to allocate centrally incurred costs primarily on the basis of usage or on
estimated time spent. Management believes these allocations and charges have
been made on a reasonable basis; however, they are not necessarily indicative
of the level of expenses which might have been incurred had the division been
operated as a stand-alone entity.

F-31

MOBIL COMPOSITE PRODUCTS DIVISION OF
MOBIL OIL CORPORATION (THE PREDECESSOR)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. LITIGATION

During 1995 the Division incurred approximately $600,000 in legal expenses in
connection with a patent dispute. The dispute has been resolved in favor of
the Division. In addition, the Division is from time to time party to
litigation arising in the ordinary course of its business. The Division is not
subject to any material pending litigation.

6. PRO FORMA TAX PROVISION (UNAUDITED)

The pro forma unaudited condensed information is based upon the historical
financial information of the Division adjusted to reflect estimated income tax
provisions (assuming a 40% effective rate) on historical income before taxes
which would have occurred had the Division been taxed as a stand-alone entity.

F-32

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITY OTHER THAN THE COMMON STOCK, NOR DOES IT CONSTITUTE AN OFFER OR
SOLICITATION IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION, OR AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

----------------

TABLE OF CONTENTS

PAGE
----

Summary.................................................................. 2
Risk Factors............................................................. 9
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Historical and Pro Forma Financial
Data.................................................................... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................................................. 22
Business................................................................. 29
Management............................................................... 41
Certain Transactions..................................................... 46
Principal Stockholders................................................... 48
Description of Capital Stock............................................. 49
Shares Eligible for Future Sale.......................................... 52
Underwriting............................................................. 54
Legal Matters............................................................ 56
Experts.................................................................. 56
Additional Information................................................... 56
Index to Financial Statements............................................ F-1

----------------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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[LOGO]

TREX COMPANY, INC.

COMMON STOCK

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PROSPECTUS

----------------

SCHRODER & CO. INC.

J.C. BRADFORD & CO.

, 1998

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses expected to be
incurred in connection with the sale and distribution of the securities being
registered hereby. All amounts except the SEC Registration Fee, the NASD
Filing Fee and the NYSE Listing Fee are estimated.

SEC Registration Fee............................................ $15,266.25
NASD Filing Fee................................................. *
NYSE Listing Fee................................................ *
Blue Sky Fees and Expenses...................................... *
Accounting Fees and Expenses.................................... *
Legal Fees and Expenses......................................... *
Printing and Engraving Expenses................................. *
Transfer Agent Fees and Expenses................................ *
Miscellaneous................................................... *
----------
Total......................................................... $ *
----------

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* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware General Corporation Law. Section 145(a) of the Delaware General
Corporation Law provides that a corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.

Section 145(b) of the Delaware General Corporation Law states that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that the person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the person acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which the person

II-1

shall have been adjudged to be liable to the corporation unless and only to
the extent that the Delaware Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall deem proper.

Section 145(c) of the Delaware General Corporation Law provides that to the
extent that a present or former director or officer of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of Section 145, or in
defense of any claim, issue or matter therein, the person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection therewith.

Section 145(d) of the Delaware General Corporation Law states that any
indemnification under subsections (a) and (b) of Section 145 (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145. Such determination shall be made with
respect to a person who is a director or officer at the time of such
determination (i) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, (ii) by a
committee of such directors designated by majority vote of such directors,
even though less than a quorum, or (iii) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion,
or (iv) by the stockholders.

Section 145(f) of the Delaware General Corporation Law states that the
indemnification and advancement of expenses provided by, or granted pursuant
to, the other subsections of Section 145 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

Section 145(g) of the Delaware General Corporation Law provides that a
corporation shall have the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against such person and incurred by such person in any such capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of Section 145.

Section 145(j) of the Delaware General Corporation Law states that the
indemnification and advancement of expenses provided by, or granted pursuant
to, Section 145 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

Certificate of Incorporation. Article XII of the Certificate of
Incorporation provides that, to the fullest extent permitted by the Delaware
General Corporation Law, the Company's directors will not be personally liable
to the registrant or its stockholders for monetary damages resulting from a
breach of their fiduciary duties as directors. However, nothing contained in
such Article XII will eliminate or limit the liability of directors (i) for
any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under Section
174 of the Delaware General Corporation Law or (iv) for any transaction from
which the director derived an improper personal benefit.

II-2

Bylaws. The Bylaws provide for the indemnification of the officers and
directors of the Company to the fullest extent permitted by the Delaware
General Corporation Law. Article XII of the Bylaws provides that each person
who was or is made a party to (or is threatened to be made a party to) any
civil or criminal action, suit or proceeding by reason of the fact that such
person is or was a director or officer of the Company shall be indemnified and
held harmless by the Company to the fullest extent authorized by the Delaware
General Corporation Law against all expenses, liability and loss (including,
without limitation, attorneys' fees) incurred by such person in connection
therewith, if such person acted in good faith and in a manner such person
reasonably believed to be or not opposed to the best interests of the Company
and had no reason to believe that such person's conduct was illegal.

Insurance. The directors and officers of the Company are covered by
insurance policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act, which might be incurred by them
in such capacities and against which they cannot be indemnified by the
Company.

Underwriting Agreement. The Underwriting Agreement will provide for the
indemnification against certain liabilities of the directors and officers of
the Company and certain controlling persons under certain circumstances,
including certain liabilities under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On September 10, 1998, in connection with the incorporation of Trex Company,
Inc., Trex Company, Inc. issued 100 shares of Common Stock to Trex Company,
LLC for cash consideration of $1,000. Such issuance was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

*1.1 Form of Underwriting Agreement.
*3.1 Form of Certificate of Incorporation of the Company.

*3.2 Form of Bylaws of the Company.
*4.1 Form of Stock Certificate for the Common Stock.
*5.1 Opinion by Hogan & Hartson L.L.P. regarding the validity of the Common
Stock.
*10.1 Loan Agreement, dated , 1998 between the Company and First
Union Bank.
*10.2 1998 Stock Incentive Plan of the Company.
*10.3 Employee Stock Purchase Plan of the Company.
*10.4 Members Agreement, dated as of August 29, 1996, among Trex Company,
LLC and each of the persons named in schedules thereto.

*10.5 Exchange and Purchase Agreement, dated as of , 1998,
among Trex Company, Inc. and the members of Trex Company, LLC.

*10.6 Form of Distributor Agreement of the Company.

*23.1 Consent of Ernst & Young LLP., independent accountants.
*23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).

**24.1 Power of Attorney (included in signature page).

**27.1 Financial Data Schedule.

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* To be filed by amendment.

** Previously filed.

II-3

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Winchester, Commonwealth of Virginia, on this 13th day of November 1998.

Trex Company, Inc.

By: /s/ Robert G. Matheny
---------------------------------
Robert G. Matheny
President
(Duly Authorized Representative)

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

NAME TITLE DATE
---- ----- ----

/s/ Robert G. Matheny President and Director November 13, 1998
- ---------------------------- (Principal Executive Officer)
Robert G. Matheny

/s/ Anthony J. Cavanna Senior Vice President and November 13, 1998
- ---------------------------- Chief Financial Officer and
Anthony J. Cavanna Director (Principal
Financial and Accounting
Officer)

/s/ Andrew U. Ferrari Director November 13, 1998
- ----------------------------
Andrew U. Ferrari

/s/ Roger A. Wittenberg Director November 13, 1998
- ----------------------------
Roger A. Wittenberg

II-5


 
                                                                    Exhibit 23.1

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the 
use of our reports of the Trex Company, Inc. dated September 10, 1998, the Trex 
Company LLC dated March 6, 1998 (except Notes 10 and 11, as to which the date is
____) and August 31, 1998 (except Notes 11 and 12, as to which the date is 
____), and Mobil Composite Products Division of Mobil Oil Corporation dated June
24, 1998, in the Registration Statement (Form S-1 No. 333______ ) and related 
Prospectus of the Trex Company, Inc. for the registration of __________ shares 
of its common stock.

Vienna, Virginia
November __, 1998


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The foregoing consent is in the form that will be signed upon the completion of 
the restatement of the capital amounts for the recapitalization as described in 
Note 11 to the financial statements as of and for the six months ended June 30, 
1998.

Vienna, Virginia
November 12, 1998

                                                           /s/ Ernst & Young LLP