April 1999

To Our Shareholders:

Nineteen Ninety-Eight may well be remembered as the year in which U.S. Plastic Lumber Corp. ("USPL") came of age.

It was a year in which the Company:

• Established its position as the nation’s leading producer of 100% recycled plastic lumber and     related products; and

• Established its prominence in the sector of the environmental industry that deals with keeping the nation’s waterways clean by positioning it to manage major contracts to remove dredge waste from New York Harbor and beneficially reuse the material in strip mines and "Brownsfield sites."

As the Company reaches for new pinnacles, its financial position and its operating results follow suit. Some of the achievements in the past year were:

-Revenues in 1998 exceeded $45 million, nearly double those of the preceding year. Operating profits were achieved for the first time in the Company’s history. Its earnings before interest, depreciation and amortization (a key measure of a company’s operating viability) grew significantly from $308,000 in 1997 to over $3,492,000 in 1998.

-An increase in the Company’s bank line to $30 million and the addition of $10 million in equity and equity-like instruments provided it with the capital resources needed to continue its exceptional rate of growth.

Indeed, for 1999, even at this relatively early stage of the year, it appears that USPL could more than double last year’s revenue. Since December 30, 1998, the Company has acquired three companies, which, in aggregate, had unaudited 1998 sales of $43.9 million. Importantly, the rate of growth in profits could be even greater as the Company reaps some of the benefits of its increasing size and the efficiencies that come with it.

A review of the financial statements that follow this report will give you a more complete picture of USPL’s business position and why management is so optimistic about the Company’s future. But the numbers tell only part of the story and the effectiveness of USPL’s corporate strategy.

Recognizing the enormous growth potential that exists in plastic lumber, and the multiple markets which are collectively estimated at over $10 billion annually, the Company has moved aggressively to expand both its manufacturing capabilities and distribution network, highlighted by its acquisition of Chicago-based Eaglebrook Industries, its largest competitor.

As of the end of March, 1999, USPL’s products were being sold nationally through over 100 distributors of lumber products, including two major chains, and growing. Revenues from plastic lumber in 1998 were $15 million, but are anticipated to rise to over $50 million in 1999.

The Company’s manufacturing capabilities have increased significantly as USPL can today produce most of the 1999 forecast with minimal further capital investment. Building the Company’s manufacturing capabilities has been a priority in this segment of the business and was done primarily through acquisitions like Eaglebrook so as to give USPL optimum market position. While manufacturing improvements continue to be important, the Company is giving increasing emphasis now to taking maximum advantage of our marketing opportunities. One example is the sudden increase in demand for Eaglebrook’s Smart Deck^®. The Company has added additional capacity to meet the overwhelming demand for this new product.

The Company’s second major operating entity, the environmental services group which is involved in the beneficial reuse of various waste materials, last year increased its prominence in the Northeast with the assistance of three acquisitions.

Importantly, the Company embarked on dredge projects, the scope of which presents an opportunity of considerable magnitude. The dredging of New York Harbor and the beneficial reuse of the dredge waste "inland" represent a challenge, to be sure. Beyond New York Harbor, which in itself is a major on going project, there are many other waterways that are in need of similar service.

The Company’s environmental businesses, while probably not as glamorous as its manufacture of plastic lumber, none the less continue to be critical to USPL’s overall success. Apart from the fact that it provides more than half of the Company’s revenues, its profitability and cash generation have provided much of the necessary capital that has allowed USPL to dramatically expand in plastic lumber.

Going forward, management will continue to aggressively pursue the kind of geometric growth that exemplified 1998 and will characterize the current year. While it will continue to search for acquisition candidates whose businesses fit in with USPL’s existing operations, more emphasis will be placed on growing from within.

Although it doesn’t appear on the financial statements, it is important to recognize that U.S. Plastic Lumber Corp. today has one of the most dynamic, experienced and capable management teams in its specific businesses as well as in its generic industries.

Coupled with its exciting business prospects, strong financial position and supporting shareholder base, is it any wonder why we are so excited about the future of the Company?

I thank all our shareholders for your continued support.