SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission File Number: 001-14649
Trex Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 54-1910453
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 South Cameron Street
Winchester, Virginia 22601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 678-4070
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [_] No [x]
The number of shares of the registrant's common stock, par value $.01
per share, outstanding at May 14, 1999 was 14,115,450 shares.
TREX COMPANY, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Trex Company, Inc. (Registrant)
------------------------------
Balance Sheets as of December 31, 1998
and March 31, 1999 (unaudited) 3
Notes to Balance Sheets 4
TREX Company, LLC (Predecessor)
------------------------------
Consolidated Balance Sheets as of December 31, 1998
and March 31, 1999 (unaudited) 6
Consolidated Statements of Operations for the three months
ended March 31, 1998 and 1999 (unaudited) 7
Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1999 (unaudited) 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures 18
About Market Risk
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 18
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
Exhibit Index
-2-
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
TREX COMPANY, INC.
Balance Sheets
December 31, March 31,
1998* 1999
----------- -----------
(unaudited)
Assets
Cash......................................................................... $1,000 $1,000
------ ------
Total assets...................................................................... $1,000 $1,000
====== ======
Stockholder's equity
Preferred stock, $0.01 par value, 3,000,000 shares authorized, none issued and
outstanding....................................................................... $ -- $ --
Common stock, $0.01 par value, 40,000,000 shares authorized, 100 shares issued
issued and outstanding.......................................................... 1 1
Additional capital............................................................... 999 999
Retained earnings................................................................ -- --
------ ------
Total stockholder's equity........................................................ $1,000 $1,000
====== ======
* The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
SEE ACCOMPANYING NOTES TO BALANCE SHEETS.
-3-
TREX COMPANY, INC
Notes to Balance Sheets
December 31, 1998 and March 31, 1999
1. BUSINESS AND ORGANIZATION
Trex Company, Inc. (the "Company"), a Delaware corporation, was incorporated
on September 4, 1998 for the purpose of acquiring 100% of the membership
interests and operating the business of TREX Company, LLC, a Delaware
limited liability company, in connection with an initial public offering
("IPO") of the Company's common stock. The IPO was consummated on April 13,
1999. On March 22, 1999, the Company amended its certificate of incorporation
to increase its authorized capital to 40,000,000 shares of common stock (the
"Common Stock") and 3,000,000 shares of preferred stock. All references in the
accompanying balance sheets have been restated to reflect the increase in the
Company's authorized capital.
Reorganization
Trex Company, Inc., TREX Company, LLC and the holders of membership interests in
TREX Company, LLC completed certain transactions (the "Reorganization") on
April 7, 1999, prior to the consummation of the IPO. In the Reorganization,
the junior members of TREX Company, LLC contributed their membership interests
to Trex Company, Inc. in exchange for 9,500,000 shares of Common Stock of Trex
Company, Inc. Concurrently with such exchange, the preferred member of TREX
Company, LLC exchanged its preferred membership interest for a $3.1 million
note of Trex Company, Inc. As a result of such exchanges, TREX Company, LLC
became a wholly owned subsidiary of Trex Company, Inc. The Company has
accounted for the Reorganization as an exchange of shares between entities
under common control at historical cost in a manner similar to a pooling of
interests. After the Reorganization, the ownership percentage of each Trex
Company, Inc. common stockholder was the same as its ownership percentage in
the junior membership interests of TREX Company, LLC.
As part of the Reorganization, the Company made a special cash distribution (the
"LLC Distribution") to its junior members in the amount of $12.6 million, of
which $6.7 million was paid prior to the consummation of the IPO. A deferred
income tax liability of $2.6 million was recognized as a result of the
conversion of TREX Company, LLC in the Reorganization from a partnership for
federal income tax purposes to a corporation taxed in accordance with Subchapter
C of the Internal Revenue Code.
Immediately prior to the Reorganization, TREX Company, LLC exercised an option
to repurchase 667 units of junior membership interest from certain members at
a price of $.01 per unit.
Initial Public Offering
In the IPO, the Company sold 4,615,450 shares of Common Stock at a public
offering price of $10.00 per share. Of such shares, the Company sold 4,000,000
shares on April 13, 1999 and 615,450 shares on May 6, 1999 pursuant to the
underwriters' exercise in full of their over-allotment option. The net proceeds
from the IPO, after deducting underwriting discounts and commissions and
offering expenses payable by the Company, totaled approximately $41.2 million.
The net proceeds of approximately $35.5 million from the sale of shares on April
13, 1999 were used as follows: approximately $28.1 million was used to repay
approximately $26.3 million of senior and subordinated notes, accrued interest
thereon and a related prepayment premium of approximately $1.5 million;
approximately $3.1 million was used to repay the note issued to the preferred
member of TREX Company, LLC in the Reorganization; and approximately $4.3
million was used to fund a portion of the LLC Distribution. The net proceeds of
approximately $5.7 million from the over-allotment exercise were used as
follows: approximately $4.4 million was used to repay borrowings under the
Company's revolving credit facility and approximately $1.3 million has been
temporarily invested pending application for working capital and general
corporate purposes.
-4-
2. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, the accompanying financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normally recurring accruals, except as described below)
considered necessary for a fair presentation have been included in the
accompanying financial statements. These financial statements should be read in
conjunction with the Company's audited financial statements as of December 31,
1998 included in the Company's registration statement on Form S-1 (File No. 333-
63287), as filed with the Securities and Exchange Commission.
The Company had no operations or activity from inception on September 4, 1998
through April 7, 1999, immediately prior to the Reorganization.
3. STOCKHOLDER'S EQUITY
Subsequent to March 31, 1999, the Company granted certain employees stock
options to acquire a total of 105,050 shares of the Company's Common Stock at an
exercise price of $10.00 per share and its two non-employee directors stock
options to acquire a total of 3,000 shares of Common Stock at an exercise price
of $13.75 per share. Each option vests with respect to 25% of the shares
subject to the option on each of the first, second, third and fourth
anniversaries of the date of grant. The options are forfeitable upon
termination of an option holder's service as an employee or director under
certain circumstances.
4. PRO FORMA DATA (Unaudited)
The unaudited consolidated financial statements and related notes of TREX
Company, LLC included elsewhere in this report set forth the pro forma
consolidated statements of operations data on the face of TREX Company, LLC's
Consolidated Statements of Operations and the pro forma consolidated balance
sheet data, supplemental pro forma consolidated balance sheet data and
supplemental pro forma consolidated statements of operations data in Note 7 to
such financial statements. The pro forma financial information gives effect to
the Reorganization and the supplemental pro forma financial information gives
effect to the Reorganization and the IPO.
-5-
TREX COMPANY, LLC
Consolidated Balance Sheets
December 31, March 31,
----------- -----------
1998* 1999
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 1,200,000 $ 3,439,000
Trade accounts receivable........................................ 34,000 4,746,000
Inventories...................................................... 6,007,000 3,111,000
Prepaid expenses and other assets................................ 673,000 1,065,000
----------- -----------
Total current assets............................................... 7,914,000 12,361,000
----------- -----------
Property, plant and equipment, net................................. 33,886,000 41,118,000
Intangible assets, net............................................. 9,298,000 9,089,000
Deferred financing charges, net.................................... 233,000 221,000
----------- -----------
Total assets....................................................... $51,331,000 $62,789,000
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Trade accounts payable........................................... $ 2,577,000 $ 6,007,000
Accrued expenses................................................. 1,086,000 971,000
Other current liabilities........................................ 1,314,000 734,000
Current portion of long-term debt................................ 6,109,000 7,599,000
----------- -----------
Total current liabilities.......................................... 11,086,000 15,311,000
Long term debt..................................................... 26,954,000 26,905,000
----------- -----------
Total liabilities.................................................. 38,040,000 42,216,000
----------- -----------
Members' equity:
Preferred units, 1,000 units authorized, issued and
outstanding.................................................... 3,000,000 3,000,000
Junior units, 4,000 units authorized, issued and
outstanding.................................................... 2,350,000 2,350,000
Undistributed income............................................. 7,941,000 15,223,000
----------- -----------
Total members' equity.............................................. 13,291,000 20,573,000
----------- -----------
Total liabilities and members' equity.............................. $51,331,000 $62,789,000
=========== ===========
* The consolidated balance sheet at December 31, 1998 has been derived from
the audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-6-
TREX COMPANY, LLC
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
--------------------------------
1998 1999
--------------- ---------------
Net sales.............................................................. $15,525,000 $22,365,000
Cost of sales.......................................................... 7,378,000 9,942,000
----------- -----------
Gross profit........................................................... 8,147,000 12,423,000
Selling, general, and administrative expenses.......................... 2,414,000 4,065,000
----------- -----------
Income from operations................................................. 5,733,000 8,358,000
Interest income........................................................ 34,000 19,000
Interest (expense)..................................................... (693,000) (819,000)
----------- -----------
Net income............................................................. $ 5,074,000 $ 7,558,000
=========== ===========
Basic earnings per junior unit......................................... $1,243.25 $1,864.25
=========== ===========
Weighted average junior units outstanding.............................. 4,000 4,000
=========== ===========
Pro forma data (unaudited, see Note 7):
Historical net income................................................ $ 5,074,000 $ 7,558,000
Pro forma income taxes............................................... (2,030,000) (3,023,000)
----------- -----------
Pro forma net income................................................. $ 3,044,000 $ 4,535,000
=========== ===========
Pro forma income per share, basic.................................... $0.32 $0.48
=========== ===========
Pro forma weighted average shares outstanding........................ 9,500,000 9,500,000
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-7-
TREX COMPANY, LLC
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
----------------------------------
1998 1999
--------------- -----------------
OPERATING ACTIVITIES
Net income........................................................ $ 5,074,000 $ 7,558,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization................................... 724,000 933,000
Amortization of deferred financing charges...................... 13,000 12,000
Loss on disposal of property, plant and
equipment..................................................... -- 151,000
Changes in operating assets and liabilities
Trade accounts receivable.................................... (1,582,000) (4,712,000)
Inventories.................................................. 2,568,000 2,896,000
Prepaid expenses and other assets............................ (23,000) (392,000)
Trade accounts payable....................................... 523,000 3,430,000
Accrued expenses............................................. (13,000) (115,000)
Other current liabilities.................................... (554,000) (580,000)
----------- -----------
Net cash provided by operating activities......................... 6,730,000 9,181,000
----------- -----------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment.................... (386,000) (8,107,000)
----------- -----------
Net cash used in investing activities............................. (386,000) (8,107,000)
----------- -----------
FINANCING ACTIVITIES
Borrowings under mortgages and notes.............................. -- 1,487,000
Principal payments under mortgages and notes...................... -- (46,000)
Preferred distributions paid...................................... (101,000) (101,000)
Tax distributions paid............................................ (69,000) (175,000)
----------- -----------
Net cash (used in) provided by financing activities............... (170,000) 1,165,000
----------- -----------
Net increase in cash and cash
equivalents...................................................... 6,174,000 2,239,000
Cash and cash equivalents at beginning of period.................. 2,000,000 1,200,000
----------- -----------
Cash and cash equivalents at end of period........................ $ 8,174,000 $ 3,439,000
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-8-
TREX COMPANY, LLC
Notes to Consolidated Financial Statements
For The Three Months Ended March 31, 1998 and 1999 (Unaudited)
1. BUSINESS AND ORGANIZATION
TREX Company, LLC (the "Company") manufactures and distributes wood/plastic
composite products primarily for residential and commercial decking
applications. Trex Wood-Polymer(TM) lumber is manufactured in a proprietary
process that combines waste wood fibers and reclaimed polyethylene.
Organization
The Company 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, the Company acquired substantially all of the assets and
assumed certain liabilities of the Composite Products Division of Mobil Oil
Corporation for a cash purchase price of approximately $29.5 million. The
acquisition was accounted for using the purchase accounting method.
On September 4, 1998, the Company formed a wholly owned subsidiary, Trex
Company, Inc., for the purpose of acquiring 100% of the membership interests and
operating the business of the Company in connection with the subsidiary's
initial public offering (the "IPO") of common stock (the "Common Stock"). The
IPO was consummated on April 13, 1999. As of December 31, 1998 and March 31,
1999, the Company had capitalized its subsidiary with an initial capital
contribution of $1,000 and the subsidiary had no other assets or operations as
of those dates or for the periods then ended. The Company has reflected its
investment in its subsidiary as a component of other assets as of December 31,
1998 and March 31, 1999.
Reorganization
Trex Company, Inc., TREX Company, LLC and the holders of membership interests in
TREX Company, LLC completed certain transactions (the "Reorganization") on
April 7, 1999, prior to the consummation of the IPO. In the Reorganization,
the junior members of TREX Company, LLC contributed their membership interests
(or "units") to Trex Company, Inc. in exchange for 9,500,000 shares of Common
Stock of Trex Company, Inc. Concurrently with such exchange, the preferred
member of TREX Company, LLC exchanged its preferred membership interest for a
$3.1 million note of Trex Company, Inc. As a result of such exchanges, TREX
Company, LLC became a wholly owned subsidiary of Trex Company, Inc. The
Company has accounted for the Reorganization as an exchange of shares between
entities under common control at historical cost in a manner similar to a
pooling of interests. After the Reorganization, the ownership percentage of
each Trex Company, Inc. common stockholder was the same as its ownership
percentage in the junior membership interests of TREX Company, LLC.
As part of the Reorganization, the Company made a special cash distribution (the
"LLC Distribution") to its junior members in the amount of $12.6 million, of
which $6.7 million was paid prior to the consummation of the IPO. A deferred
income tax liability of $2.6 million was recognized as a result of the
conversion of TREX Company, LLC in the Reorganization from a partnership for
federal income tax purposes to a corporation taxed in accordance with Subchapter
C of the Internal Revenue Code (a "C corporation").
Immediately prior to the Reorganization, TREX Company, LLC exercised an option
to repurchase 667 units of junior membership interest from certain members at
a price of $.01 per unit.
-9-
Initial Public Offering
In the IPO, Trex Company, Inc. sold 4,615,450 shares of Common Stock at a public
offering price of $10.00 per share. Of such shares, Trex Company, Inc. sold
4,000,000 shares on April 13, 1999 and 615,450 shares on May 6, 1999 pursuant to
the underwriters' exercise in full of their over-allotment option. The net
proceeds from the IPO, after deducting underwriting discounts and commissions
and offering expenses payable by Trex Company, Inc., totaled approximately $41.2
million. The net proceeds of approximately $35.5 million from the sale of shares
on April 13, 1999 were used as follows: approximately $28.1 million was used to
repay approximately $26.3 million of senior and subordinated notes, accrued
interest thereon and a related prepayment premium of approximately $1.5 million;
approximately $3.1 million was used to repay the note issued to the preferred
member of TREX Company, LLC in the Reorganization; and approximately $4.3
million was used to fund a portion of the LLC Distribution. The net proceeds of
approximately $5.7 million from the over-allotment exercise were used as
follows: approximately $4.4 million was used to repay borrowings under the
Company's revolving credit facility and approximately $1.3 million has been
temporarily invested pending application for working capital and general
corporate purposes.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the accompanying consolidated financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normally recurring accruals,
except as described below) considered necessary for a fair presentation have
been included in the accompanying consolidated financial statements. The
consolidated results of operations for the three-month period ended March 31,
1999 are not necessarily indicative of the results that may be expected for the
full fiscal year. These consolidated financial statements should be read in
conjunction with the consolidated audited financial statements as of December
31, 1998 and 1997 and for the period from July 1, 1996 (inception) to December
31, 1996 and for each of the two years in the period ended December 31, 1998
included in the registration statement of Trex Company, Inc. on Form S-1 (File
No. 333-63287), as filed with the Securities and Exchange Commission.
3. Inventory
Inventories consist of the following:
December 31, 1998 March 31, 1999
--------------------- ---------------------
Finished goods..................................................... $4,847,000 $1,731,000
Raw materials...................................................... 1,160,000 1,380,000
--------------------- ---------------------
$6,007,000 $3,111,000
===================== ======================
4. Debt
On March 23, 1999, the Company revised the terms of its bank revolving credit
facility. The new terms of the revolving credit facility provide for borrowings
of up to $10.0 million for working capital and general corporate purposes. In
addition, under this facility, the Company may obtain a total of $7.5 million of
term loans to finance equipment purchases. Amounts drawn under the revolving
credit facility and any term loans bear interest at an
-10-
annual rate equal to LIBOR plus 2%. The revolving credit facility will mature on
May 31, 2001. The unpaid principal balance of term loans outstanding on August
31, 1999 will be payable in consecutive monthly payments beginning on October 1,
1999 and the entire unpaid principal balance of the term loans and all accrued
interest thereon will be payable in full on April 1, 2000.
In the three-month period ended March 31, 1999, the Company borrowed $1.5
million under a $4.6 million construction loan for application to the
construction of its second manufacturing facility. The loan accrues interest at
7.5% per annum and is payable in November 1999. The Company intends to refinance
this construction loan with long-term borrowings upon completion of the
manufacturing facility.
5. Members' Equity
The following table sets forth the computation of basic earnings per junior
unit:
Three Months Ended March 31,
-----------------------------------
1998 1999
---------------- ----------------
Numerator:
Net income...................................... $5,074,000 $7,558,000
Preferred dividends............................. (101,000) (101,000)
---------------- ---------------
Net income available to junior unitholders...... $4,973,000 $7,457,000
================ ===============
Denominator:
Denominator for basic earnings per junior unit
-weighted average units outstanding........... 4,000 4,000
================ ===============
Basic earnings per junior unit.................... $ 1,243.25 $ 1,864.25
================ ===============
The basic earnings per junior unit amounts shown above have not been adjusted to
reflect (i) the Reorganization, (ii) the issuance of 9,500,000 shares of Trex
Company, Inc. Common Stock in exchange for the junior units in the Company or
(iii) the effect of federal and state income taxes, since the Company was not
subject to income taxes for the periods presented. Fully diluted earnings per
junior unit is the same as basic earnings per junior unit, and, therefore, is
not separately presented.
6. Seasonality
The Company's net sales and income from operations have historically varied from
quarter to quarter. Such variations are principally attributable to seasonal
trends in the demand for Trex. The Company typically experiences lower net sales
during the fourth quarter due to holidays and adverse weather conditions in
certain regions, which reduce the level of home improvement and new construction
activity. Net sales during the first quarter of 1998 accounted for approximately
33% of annual sales in the year ended December 31, 1998.
7. Pro Forma Data (Unaudited)
The unaudited pro forma consolidated balance sheet data set forth in the
following table give effect to the Reorganization (see Note 1) as if the
Reorganization had occurred on March 31, 1999 and reflect (i) the issuance of a
$3.1 million note by Trex Company, Inc. in exchange for the preferred units in
the Company, (ii) the distribution of previously taxed earnings of the Company
of approximately $10.2 million and a return of capital totaling approximately
$2.4 million and (iii) the issuance of 9,500,000 shares of Trex Company, Inc.
Common Stock in exchange for the junior units in the Company.
-11-
The unaudited supplemental pro forma consolidated balance sheet data set forth
in the following table give effect to (i) the LLC Distribution of approximately
$12.6 million at March 31, 1999, (ii) the issuance of a $3.1 million note by
Trex Company, Inc. in exchange for the preferred units in the Company, (iii) a
net deferred tax liability of approximately $2.6 million that would have been
recorded by the Company if it had converted to C corporation status on March 31,
1999, (iv) a $1.1 million extraordinary charge for the extinguishment of
debt repaid from the net proceeds of the IPO, (v) the issuance of 9,500,000
shares of Trex Company, Inc. Common Stock in exchange for the junior units in
the Company and (vi) the sale by Trex Company, Inc. of 4,615,450 shares of
Common Stock in the IPO and the application of the net proceeds therefrom.
March 31, 1999
------------------------------------------------------------------
TREX Company, LLC Trex Company, Inc.
----------------- --------------------------------------
Supplemental Pro
Historical Pro Forma Forma
---------- --------- ----------------
(in thousands)
Cash and cash equivalents................ $ 3,439 $ 0 $ 1,884
Accounts receivable, net................. 4,746 4,746 4,746
Inventories.............................. 3,111 3,111 3,111
Prepaid expenses......................... 1,065 1,065 839
------- ------- -------
Total current assets................... 12,361 8,922 10,580
-------
Property, plant and equipment, net....... 41,118 41,118 41,118
Intangible assets, net................... 9,089 9,089 9,089
Deferred financing charges, net.......... 221 221 -
------- ------- -------
Total assets........................... $62,789 $59,350 $60,787
======= ======= =======
Accounts payable......................... $ 6,007 $ 6,007 $ 6,007
Other current liabilities................ 9,304 21,456 5,126
------- ------- -------
Total current liabilities.............. 15,311 27,463 11,133
Deferred taxes........................... - - 2,586
Long term debt........................... 26,905 26,905 4,505
------- ------- -------
Total liabilities...................... 42,216 54,368 18,224
------- ------- -------
Preferred units.......................... 3,000 - -
Junior units............................. 2,350 - -
Preferred stock.......................... - - -
Common stock............................. - 95 141
Additional capital....................... - - 41,178
Undistributed income/retained earnings... 15,223 4,887 1,244
------- ------- -------
Total members'/stockholders' equity 20,573 4,982 42,563
------- ------- -------
Total liabilities and members'/
stockholders' equity............... $62,789 $59,350 $60,787
======= ======= =======
The pro forma consolidated statement of operations data set forth in the
accompanying consolidated statements of operations give effect to the
Reorganization as if the Reorganization had occurred on January 1 of each
period presented. The pro forma 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 three months ended
March 31, 1998 and 1999. Pro forma weighted average shares outstanding reflect
9,500,000 shares of Trex Company, Inc. Common Stock outstanding, which assumes
that the shares issued in the Reorganization were outstanding for the three-
month periods ended March 31, 1998 and 1999 (See Note 1). Fully diluted income
per share is the same as basic income per share, and, therefore, is not
separately presented.
-12-
The following table sets forth the computation of basic earnings per common
share on a supplemental pro forma basis:
Three Months Ended
March 31,
----------------------------------
1998 1999
-------------- ---------------
Numerator:
Net income.................................................................. $ 5,074,000 $ 7,558,000
Reduction in interest expense, net.......................................... 694,000 694,000
Pro forma income tax provision.............................................. (2,307,000) (3,301,000)
----------- -----------
Supplemental pro forma net income available to common shareholders.......... $ 3,461,000 $ 4,951,000
=========== ===========
Denominator:
Denominator for pro forma basic earnings per common
share-weighted average shares outstanding................................. 14,115,450 14,115,450
=========== ===========
Supplemental pro forma basic earnings per common share...................... $0.25 $0.35
=========== ===========
The foregoing supplemental pro forma basic earnings per common share amounts
have been adjusted to reflect the Reorganization (see Note 1) as if the
Reorganization had occurred on January 1, 1998 and 1999, respectively. The
supplemental pro forma reduction in interest expense gives effect to the
repayment of the senior and subordinated notes of the Company (see Note 1) as if
such repayments had been made as of January 1, 1998 and 1999, respectively. The
supplemental pro forma income tax provision reflects federal and state income
taxes (assuming a 40% combined effective tax rate) as if the Company had been
taxed as a C corporation as of January 1, 1998 and 1999, respectively.
Supplemental pro forma net income available to common shareholders assumes the
preferred units were exchanged for a note of Trex Company, Inc. as of January 1,
1998 and 1999, and excludes one-time charges relating to the Reorganization and
IPO, including (i) a net deferred tax liability of approximately $2.6 million
and (ii) $1.1 million extraordinary charge for the extinguishment of debt repaid
from the net proceeds of the IPO. Supplemental pro forma weighted average shares
outstanding assumes that the shares issued in the Reorganization and the IPO
were outstanding for the entire period. Supplemental pro forma fully diluted
earnings per share is the same as supplemental pro forma basic earnings per
share, and therefore, is not separately presented.
-13-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. All statements regarding the Company's expected financial position and
operating results, its business strategy and its financing plans are forward-
looking statements. These statements are subject to risks and uncertainties
that could cause the Company's actual results to differ materially. Such risks
and uncertainties include the Company's ability to increase market acceptance of
its Trex product; the Company's lack of product diversification; the Company's
current dependence on a single manufacturing facility and its ability to
increase its manufacturing capacity in its existing facility and its proposed
new facility; the Company's reliance on the supply of raw materials used in its
production process; the Company's sensitivity to economic conditions, which
influence the level of activity in home improvements and new home construction;
the Company's ability to manage its growth; the Company's significant capital
requirements; and the Company's dependence on its largest distributors to market
and sell its products.
References to the "Company" in the following discussion mean TREX Company, LLC
until the consummation of the reorganization on April 7, 1999 (the
"Reorganization") and Trex Company, Inc. and its wholly owned subsidiary, TREX
Company, LLC, at all times thereafter. See Note 1 to the Balance Sheets of Trex
Company, Inc. and Note 1 to the Consolidated Financial Statements of TREX
Company, LLC included elsewhere in this report.
Overview
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 ("Trex") is a wood/plastic composite which is manufactured in
a proprietary process that combines waste wood fibers and reclaimed
polyethylene. Trex is used primarily for residential and commercial 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.
Net sales consists of sales net of returns and discounts. Cost of sales consists
of raw material costs, direct labor costs and manufacturing costs, including
depreciation. 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.
The Company did not record an income tax provision for any period through March
31, 1999. Until the Reorganization, the Company elected to be treated as a
partnership for federal and state income tax purposes. Accordingly, the
Company's income through April 7, 1999 has been taxed directly to the Company's
members, rather than to the Company.
Three Months Ended March 31, 1999 Compared with Three Months Ended March 31,
1998
Net Sales. Net sales in the three months ended March 31, 1999 (the "1999
quarter") increased 44.1% to $22.4 million from $15.5 million in the three
months ended March 31, 1998 (the "1998 quarter"). The increase in net sales was
primarily attributable to the growth in sales volume, which increased to 68.9
million pounds of finished product in the 1999 quarter from 51.1 million pounds
in the 1998 quarter, and, to a lesser extent, to a price increase of
approximately 6%. Production line rate increases and the addition of three
production lines since March 31, 1998 significantly increased the Company's
production capacity in the 1999 quarter. The increase in the number of
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dealer outlets, from approximately 1,600 at March 31, 1998 to approximately
2,000 at March 31, 1999, contributed to the growth in sales volume.
Cost of Sales. Cost of sales increased 34.8% to $9.9 million in the 1999
quarter from $7.4 million in the 1998 quarter. 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 44.5% in the 1999 quarter from 47.5% in the
1998 quarter. The decline principally reflected operating efficiencies from
improved production line rates and the economies of scale resulting from the
three additional production lines.
Gross Profit. Gross profit increased 52.5% to $12.4 million in the 1999
quarter from $8.1 million in the 1998 quarter. The increase in gross profit was
attributable to the higher sales volume and improved operating efficiencies.
Gross profit as a percentage of net sales increased to 55.5% in the 1999 quarter
from 52.5% in the 1998 quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 68.4% to $4.1 million in the 1999 quarter from
$2.4 million in the 1998 quarter. The increase was primarily attributable to
higher sales and marketing expenses, which increased 47.7% to $2.1 million in
the 1999 quarter from $1.4 million in the 1998 quarter. The largest component of
the increase was advertising costs, which increased 122.4% as the Company
expanded its advertising and promotional activities. General and administrative
expenses increased 90% to $1.9 million in the 1999 quarter from $1.0 million in
the 1998 quarter. The increase was primarily attributable to costs associated
with an increase in staffing necessary to support the Company's growth, the
Company's second manufacturing facility, which is scheduled to start production
in the fourth quarter of 1999, and an increase in research and development
activities. Selling, general and administrative expenses as a percentage of net
sales increased to 18.2% in the 1999 quarter from 15.5% in the 1998 quarter.
Interest Expense. Net interest expense increased 21.4% to $.8 million in the
1999 quarter from $.7 million in the 1998 quarter. The increase reflected higher
average borrowings resulting from indebtedness incurred to finance the Company's
purchase of its Winchester manufacturing facility and Trex Technical Center in
June and November 1998, respectively, its purchase in December 1998 of the site
in Nevada for its second manufacturing facility and commencement of construction
of the Nevada facility in the 1999 quarter.
Net Income. Net income increased 49.0% to $7.6 million in the 1999 quarter
from $5.1 million in the 1998 quarter.
Liquidity and Capital Resources
The Company's total assets increased from $51.3 million at December 31, 1998 to
$62.8 million at March 31, 1999. Higher receivables balances resulting from an
increase in net sales in the 1999 quarter accounted for $4.7 million of the
increase. Inventories decreased $2.9 million in relation to the increased net
sales. Property, plant and equipment, net, increased $7.2 million as the Company
incurred the balance of the costs of installing two additional production lines
in its Winchester, Virginia facility and began construction of its second
manufacturing facility in Nevada.
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 credit facility.
The Company's cash flow from operating activities for the 1999 quarter was
$9.2 million compared to $6.7 million for the 1998 quarter. Higher sales
volume accounted for the significant increase in cash flows in the 1999 quarter.
The Company's working capital generally averages between 12% and 18% of 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. The Company
currently maintains a
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revolving credit facility which provides for borrowings of up to $10.0 million
for working capital. In addition, under this facility, the Company may obtain a
total of $7.5 million of term loans to finance equipment purchases. Amounts
drawn under the revolving credit facility and any term loans bear interest at an
annual rate equal to LIBOR plus 2.0%. The revolving credit facility will mature
on May 31, 2001. The unpaid principal balance of term loans outstanding on
August 31, 1999 will be payable in consecutive monthly payments beginning
October 1, 1999, and the entire unpaid principal balance of the term loans and
all accrued interest thereon will be payable in full on April 1, 2000.
The Company substantially reduced its overall long-term indebtedness on
April 13, 1999 following its repayment of $26.3 million principal amount of
senior and subordinated notes with the net proceeds of the Company's initial
public offering. As of March 31, 1999, the Company's long-term indebtedness
(excluding such indebtedness repaid on April 13, 1999) had an overall weighted
average interest rate of approximately 7.2% per annum.
The Company financed its purchase of its Winchester, Virginia facility in June
1998 with a ten-year term loan of $3.8 million. Pursuant to an interest rate
swap agreement, the Company pays interest on this loan at an annual rate of
7.12%.
The Company financed its purchase of the Trex Technical Center in November 1998
in part with the proceeds of a ten-year term loan of $1.0 million. Pursuant to
an interest rate swap agreement, the Company pays interest on this loan at an
annual rate of 6.8%.
The Company financed its acquisition of the site for its second manufacturing
facility located in Nevada in December 1998 in part with a $2.1
million loan which is payable in September 1999. The Company will finance
construction of the facility in part with proceeds of up to $4.6 million under a
construction loan which is payable in November 1999. The site acquisition and
construction loans accrue interest at an annual rate of 7.5%. The Company
intends to refinance both loans with long-term borrowings. As of April 30,
1999, the Company had expended approximately $9.8 million of the approximately
$19.6 million it estimates will be required to complete construction and
equipping of the Nevada facility. The Company will fund the remaining $9.8
million of expenditures from cash on hand, cash flow from operations and
borrowings under its construction loan and credit facility.
As part of the Reorganization, TREX Company, LLC in April 1999 made the LLC
Distribution of approximately $12.6 million to certain of its members. See Note
1 to the Balance Sheets of Trex Company, Inc. and Note 1 to the Consolidated
Financial Statements of TREX Company, LLC included elsewhere in this report.
The LLC Distribution was funded from $3.9 million of cash on hand, $4.4 million
of borrowings under the credit facility and $4.3 million of net proceeds from
the initial public offering.
Expansion of the Company's production capacity will require significant capital
expenditures. The Company currently estimates that its aggregate capital
requirements in 1999 and 2000 will total approximately $23.8 million, of which
approximately $20.3 million is expected to be incurred in 1999 and approximately
$3.5 million in 2000. Capital expenditures in the first quarter of 1999 totaled
approximately $8.1 million. Capital expenditures will be used primarily for the
construction and equipping of the Company's new manufacturing facility in
Nevada. The Company believes that cash on hand, cash flow from operations and
borrowings expected to be available under the Company's credit agreements and
construction loan for the new facility will provide sufficient funds to enable
the Company to expand its business as currently planned for at least the next 12
months. 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.
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Year 2000 Issue
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 and the
testing of such remedies and (iii) 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. To determine the extent to which such systems are
vulnerable to the Year 2000 issue, the Company has completed an evaluation of
its software applications and began remediation and testing activities for such
applications in the first quarter of 1999. In addition, in the fourth quarter of
1998, the Company completed its distribution of 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 is currently processing the responses to those
inquiries and re-soliciting responses from those entities that have not yet
responded.
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 June 30, 1999. 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 such
worst case scenarios after it has received and analyzed responses to
substantially all of the inquiries it has made of third parties and completed
its remediation and testing activities. The Company expects to complete
development of its contingency plans by August 31, 1999.
Costs Related to the Year 2000 Issue. To date, the Company has incurred
approximately $10,000 in costs for its Year 2000 program. Such costs do not
include internal staff costs, consisting principally of payroll costs, incurred
on Year 2000 matters, because the Company does not separately track such costs.
The Company currently estimates that it will incur additional costs (excluding
internal staff costs), which are not expected to exceed approximately $45,000,
to complete its Year 2000 compliance work. Such costs will constitute
approximately 40% of the Company's budgeted expenditures for information
technology. Actual costs may vary from the foregoing estimates based on the
Company's evaluation of responses to its third-party inquiries and on the
results of its remediation and testing activities. The Company expects to fund
its Year 2000 remediation costs out of the cash flows generated by its
operations. The Company has not deferred any of its information technology
projects to date as a result of the Year 2000 issue.
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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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's major market risk exposure is to changing interest rates. The
Company's policy is to manage interest rates through a combination of fixed-rate
and variable-rate debt. As of March 31, 1999, excluding the indebtedness repaid
on April 13, 1999 with the net proceeds of the initial public offering of Trex
Company, Inc., the Company's long-term debt consisted of fixed-rate debt of
$3.6 million and variable-rate debt of $4.7 million. Substantially all
of the Company's variable-rate debt is based on LIBOR. The Company uses
interest rate swap contracts to manage its exposure to fluctuations in interest
rates on its variable-rate debt. As of March 31, 1999, the Company had
effectively fixed its interest rate exposure at approximately 7% on
approximately $4.7 million of its variable-rate debt through 2008.
The Company does not use foreign currency forward contracts or commodity
contracts and does not have any material foreign currency exposure.
Part II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The following information is furnished by Trex Company, Inc. with respect to the
initial public offering by the Company and certain stockholders of the Company
(the "Selling Stockholders") of 4,718,450 shares of the Company's Common Stock.
Of such shares, 4,615,450 shares were sold by the Company and 103,000 shares
were sold by the Selling Stockholders.
The offering and sale of the Common Stock was effected pursuant to registration
statement no. 333-63287, which was declared effective by the Securities and
Exchange Commission on April 8, 1999.
The offering commenced on April 8, 1999 following declaration of effectiveness
of the Company's registration statement. The offering has terminated following
the sale of all 4,718,450 shares of Common Stock registered. Of the shares sold
by the Company, 4,000,000 shares were sold on April 13, 1999 and 615,450 shares
were sold on May 6, 1999 pursuant to the underwriters' exercise in full of their
over-allotment option. The managing underwriter of the offering was J.C.
Bradford & Co. The sole class of securities registered was Common Stock, par
value $.01 per share, of the Company.
The following information is provided with respect to the shares of Common Stock
registered for the account of the Company:
Amount registered 4,615,450 shares
Aggregate price of offering amount registered $46,154,500
Amount sold 4,615,450 shares
Aggregate offering price of amount sold $46,154,500
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The following information is provided with respect to the shares of Common Stock
registered for the account of the Selling Stockholders:
Amount registered 103,000 shares
Aggregate price of offering amount registered $1,030,000
Amount sold 103,000 shares
Aggregate offering price of amount sold $1,030,000
The foregoing information reflects the initial public offering price of $10.00
per share before deducting underwriting discounts and commissions of $0.70 per
share and expenses of the offering. Of the shares offered and sold for the
Company's account, 200,000 shares were sold to certain individuals, including
directors, executive officers and employees of the Company, members of their
families or friends, and other persons having business relationships with the
Company, at the initial public offering price less the underwriting discounts
and commissions.
In connection with the offering, the Company incurred for its own account total
expenses of approximately $4.9 million. Such expenses consisted of underwriting
discounts and commissions of approximately $3.2 million and other expenses,
including legal, accounting, financial advisory, printing and filing fees, of
approximately $1.7 million. The amount of other expenses constitutes the
Company's reasonable estimate. All of the foregoing expenses involved direct or
indirect payments to persons who were not directors or officers of the Company
or their associates, owners of 10% or more of any class of equity securities of
the Company, or affiliates of the Company.
After deducting the total expenses of approximately $4.9 million referred to
above, the net proceeds of the offering to the Company were approximately $41.2
million. The net proceeds of approximately $35.5 million from the sale of
4,000,000 shares on April 13, 1999 were used as follows: approximately $28.1
million was used to repay approximately $26.3 million of senior and subordinated
notes of TREX Company, LLC, accrued interest thereon and a related prepayment
premium of approximately $1.5 million; approximately $3.1 million was used to
repay the note issued to the preferred member of TREX Company, LLC in the
Reorganization described in Note 1 to the Balance Sheets of Trex Company, Inc.
and Note 1 to the Consolidated Financial Statements of TREX Company, LLC
included elsewhere in this report; and approximately $4.3 million was used to
fund a portion of the LLC Distribution described in Note 1 to the Balance Sheets
of Trex Company, Inc. and Note 1 to the Consolidated Financial Statements of
TREX Company, LLC included elsewhere in this report. The net proceeds of
approximately $5.7 million from the sale of 615,450 shares pursuant to the
underwriters' exercise of their over-allotment option were used as follows:
approximately $4.4 million was used to repay borrowings under the Company's
revolving credit facility and approximately $1.3 million has been temporarily
invested in short-term, investment grade repurchase obligations pending
application for working capital and general corporate purposes.
Of the net offering proceeds, the $28.1 million used to repay the senior and
subordinated notes of TREX Company, LLC constituted direct payments to persons
who collectively owned 10% of the Company's Common Stock immediately prior to
the IPO. Such persons (collectively, the "Institutional Investors") are
Connecticut General Life Insurance Company, Life Insurance Company of North
America and The Lincoln National Life Insurance Company. In addition, of the net
offering proceeds, the $4.3 million used to fund a portion of the LLC
Distribution constituted direct payments to the Institutional Investors and to
the Company's four directors and executive officers prior to the IPO, each of
whom owns more than 10% of the Company's Common Stock (collectively, the
"Management Holders"). The Management Holders are Robert G. Matheny, Anthony J.
Cavanna, Andrew U. Ferrari and Roger A. Wittenberg. The application of net
offering proceeds to repay borrowings under the Company's revolving credit
facility used to fund a portion of the LLC Distribution may be deemed to
constitute indirect payments to the Institutional Investors and the Management
Holders.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarterly period ended March 31, 1999 covered by this report, all of
the outstanding capital stock of the Company was owned by TREX Company, LLC. As
the Company's sole stockholder during this period, TREX Company, LLC held
special meetings on March 23, 1999 and March 27, 1999 and took action by written
consent in lieu of a meeting on March 12, 1999 and March 20, 1999.
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By a written consent dated March 12, 1999, the stockholder voted to approve
matters relating to the reorganization consummated on April 7, 1999 (the
"Reorganization") and the Company's proposed initial public offering, the
amendment and restatement of the Company's certificate of incorporation and
by-laws, the Company's 1999 Stock Option and Incentive Plan, 1999 Incentive
Plan for Outside Directors and 1999 Employee Stock Purchase Plan, the
classification of the Company's Board of Directors and the election of William
F. Andrews and William H. Martin, III to the Board of Directors effective upon
the consummation of the Company's initial public offering. The terms of Robert
G. Matheny, Anthony J. Cavanna, Andrew U. Ferrari and Roger A. Wittenberg as
directors of the Company continued after the effective date of the written
consent.
By a written consent dated March 20, 1999, the stockholder voted to approve
matters relating to the Reorganization and the Company's proposed initial public
offering and the amendment and restatement of the Company's certificate of
incorporation.
At a special meeting held on March 23, 1999, the stockholder voted to approve
matters relating to the Reorganization and the Company's proposed initial public
offering, the classification of the Company's Board of Directors and the
election of William F. Andrews and William H. Martin, III to the Board of
Directors effective upon the consummation of the Company's initial public
offering. The terms of Robert G. Matheny, Anthony J. Cavanna, Andrew U. Ferrari
and Roger A. Wittenberg as directors of the Company continued after the meeting.
At a special meeting held on March 27, 1999, the stockholder voted to approve
matters relating to the Reorganization and the Company's proposed initial public
offering.
Item 6. Exhibits and Reports on Form 8-K
(a) The Company files herewith the following exhibits:
3.1 Restated Certificate of Incorporation of the Company. Filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-1
(No. 333-63287) and incorporated herein by reference.
3.2 Amended and Restated By-Laws of the Company. Filed as
Exhibit 3.2 to the Company's Registration Statement on Form S-1
(No. 333-63287) and incorporated herein by reference.
4.1 Specimen certificate representing the Common Stock. Filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-1
(No. 333-63287) and incorporated herein by reference.
10.1 Registration Rights Agreement, dated as of April 7, 1999, among
Trex Company, Inc. and each of the persons named on the schedule
thereto. Filed herewith.
10.2 Trex Company, Inc. 1999 Stock Option and Incentive Plan. Filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-8
(No. 333-76847) and incorporated herein by reference.
10.3 Trex Company, Inc. 1999 Incentive Plan for Outside Directors.
Filed herewith.
10.4 Form of Distributor Agreement of the Company. Filed as Exhibit
10.6 to the Company's Registration Statement on Form S-1
(No. 333-63287) and incorporated herein by reference.
10.5 $3,780,000 Promissory Note, dated June 15, 1998, made by TREX
Company, LLC payable to First Union National Bank of Virginia.
Filed as Exhibit 10.7 to the Company's Registration Statement
on Form S-1 (No. 333-63287) and incorporated herein by
reference.
10.6 $1,035,000 Promissory Note, dated November 20, 1998, made by
TREX Company, LLC payable to First Union National Bank of
Virginia. Filed as Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (No. 333-63287) and incorporated herein
by reference.
10.7 Business Loan Agreement, dated December 2, 1998, between TREX
Company, LLC and Pioneer Citizens Bank of Nevada. Filed as
Exhibit 10.9 to the Company's Registration Statement on
Form S-1 (No. 333-63287) and incorporated herein by reference.
10.8 Construction Loan Agreement, dated February 5, 1999, between
TREX Company, LLC and Pioneer Citizens Bank of Nevada. Filed
as Exhibit 10.10 to the Company's Registration Statement on
Form S-1 (No. 333-63287) and incorporated herein by reference.
10.9 Amended and Restated Credit Agreement, dated as of March 23,
1999, between the Company and First Union National Bank of
Virginia. Filed as Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (No. 333-63287) and incorporated herein
by reference.
27. Financial Data Schedule. Filed herewith.
(b) The Company did not file any Current Reports on Form 8-K during
the quarterly period ended March 31, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TREX COMPANY, INC.
(Registrant)
Date: May 17, 1999 /s/ Anthony J. Cavanna
-----------------------
Anthony J. Cavanna, Executive Vice
President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
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EXHIBIT INDEX
-------------
(Pursuant to Item 601 of Regulation S-K)
3.1 Restated Certificate of Incorporation of the Company. Filed as Exhibit
3.1 to the Company's Registration Statement on Form S-1 (No. 333-63287)
and incorporated herein by reference.
3.2 Amended and Restated By-Laws of the Company. Filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1 (No. 333-63287) and
incorporated herein by reference.
4.1 Specimen certificate representing the Common Stock. Filed as Exhibit 4.1
to the Company's Registration Statement on Form S-1 (No. 333-63287) and
incorporated herein by reference.
10.1 Registration Rights Agreement, dated as of April 7, 1999, among Trex
Company, Inc. and each of the persons named on the schedule thereto.
Filed herewith.
10.2 Trex Company, Inc. 1999 Stock Option and Incentive Plan. Filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-8
(No. 333-76847) and incorporated herein by reference.
10.3 Trex Company, Inc. 1999 Incentive Plan for Outside Directors. Filed
herewith.
10.4 Form of Distributor Agreement of the Company. Filed as Exhibit 10.6 to
the Company's Registration Statement on Form S-1 (No. 333-63287) and
incorporated herein by reference.
10.5 $3,780,000 Promissory Note, dated June 15, 1998, made by TREX Company,
LLC payable to First Union National Bank of Virginia. Filed as Exhibit
10.7 to the Company's Registration Statement on Form S-1 (No. 333-63287)
and incorporated herein by reference.
10.6 $1,035,000 Promissory Note, dated November 20, 1998, made by TREX
Company, LLC payable to First Union National Bank of Virginia. Filed as
Exhibit 10.8 to the Company's Registration Statement on Form S-1 (No.
333-63287) and incorporated herein by reference.
10.7 Business Loan Agreement, dated December 2, 1998, between TREX Company,
LLC and Pioneer Citizens Bank of Nevada. Filed as Exhibit 10.9 to the
Company's Registration Statement on Form S-1 (No. 333-63287) and
incorporated herein by reference.
10.8 Construction Loan Agreement, dated February 5, 1999, between TREX
Company, LLC and Pioneer Citizens Bank of Nevada. Filed as Exhibit 10.10
to the Company's Registration Statement on Form S-1 (No. 333-63287) and
incorporated herein by reference.
10.9 Amended and Restated Credit Agreement, dated as of March 23, 1999,
between the Company and First Union National Bank of Virginia. Filed as
Exhibit 10.14 to the Company's Registration Statement on Form S-1 (No.
333-63287) and incorporated herein by reference.
27 Financial Data Schedule. Filed herewith.