1
EXHIBIT 13
------------------------------------------
DETREX
CORPORATION
1994 ANNUAL REPORT
------------------------------------------
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HIGHLIGHTS(1)
1994 1993 1992
------------ ------------ -----------
Net sales................................... $100,096,000 $105,578,000 $96,754,000
Net loss.................................... (5,639,000) (1,570,000) (4,794,000)(2)
Loss per common share....................... (3.56) (.99) (3.03)(2)
Cash dividends per common share............. -- -- --
Stockholders' equity per common share....... 11.85 15.42 16.42
Additions to land, buildings and equipment
(including capital leases)................ 2,860,000 2,434,000 3,897,000
Current ratio............................... 1.3 to 1 1.5 to 1 1.4 to 1
Percent long-term debt to stockholders'
equity.................................... 3.7 12.4 17.7
Number of stockholders...................... 477 544 593
Number of employees......................... 367 388(3) 495
(1) This information should be considered in conjunction with
the Consolidated Financial Statements and Management's
Discussion and Analysis.
(2) Includes a one-time charge of $1,812,600, net of income
taxes, reflecting the adoption of Statement of Financial
Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, effective
January 1, 1992, and electing immediate recognition of the
obligation. This represents $1.15 per common share.
(3) Represents number of employees at January 1, 1994.
DETREX CORPORATE
MISSION STATEMENT
Detrex Corporation is a producer and supplier of industrial and specialty
chemicals, services and supply processes to the industrial market place,
including lubricant additives, coatings, process equipment, high quality plastic
pipe, and environmental and analytical laboratory services.
Our core business is in the specialty chemical field, providing process
design and equipment, plus chemical products and services. Our services and
products are designed to fulfill our customers' requirements in lubricating,
cleaning and surface finishing, and the handling of waste generated in the
production process.
Our mission is to meet or exceed our customers' needs by providing cost
effective and technically superior products, systems, and services in an
environmentally sound manner.
We will continue to be responsible to our customers, employees, suppliers,
communities and the environment while providing long term growth and a superior
return to our shareholders.
3
TO OUR SHAREHOLDERS:
Detrex incurred a net loss of $5,639,000 for the year ended December 31,
1994, compared to a net loss of $1,570,000 for the year ended December 31, 1993.
1994 was adversely impacted by an $8.5 million addition to the Environmental
Reserve which increased the net loss by approximately $5.6 million. The net loss
for 1994, excluding the effect of this adjustment, was $39,000.
In my letter to you last year, I informed you that the Company added $4.0
million to its Environmental Reserve during the second half of 1993. We also
indicated that certain remediation studies were to become available in 1994 and
at that time, the Company would have a more complete basis for estimating
anticipated remediation costs. As a result of these studies and other recent
developments, during the fourth quarter of 1994, the Company made adjustments to
the Environmental Reserve that resulted in an $8.5 million charge to income.
This brings the total amount of the reserve to $12.6 million at December 31,
1994. We anticipate annual cash expenditures of $1.0 to $2.0 million from this
reserve over the next several years. The Company will continue to analyze this
reserve and make adjustments to reflect changes from updated or new studies and
any other significant developments.
While our 1994 results are a disappointment, they do not fully reflect the
achievements of the year or the steps we have taken to improve the Company's
future profitability. The obvious short-term mission of Detrex is to generate
sufficient operating income to overcome the burden placed on the Company as a
result of the environmental problems incurred over the last several decades.
Selling, General and Administrative expense has been reduced from 21.4% of sales
to 18.4%, a $4.2 million reduction. Six of eight business units had significant
improvement in 1994 operating income, and the results before income taxes and
the addition to the Environmental Reserve was an improvement from a loss of $2.8
million to a profit of $200,000 (see Management's Discussion and Analysis).
Solvents & Environmental Services division did not enjoy this progress partially
due to changing environmental laws reducing the market for our solvent based
products.
In addition, the Board of Directors has approved the establishment of a
Commercial Development department whose objective is to pursue new business
opportunities that will generate additional sales and above average profit
margins with minimal capital expenditures. While we anticipate continued
operating expense cuts across the Company, the key focus at this time is higher
volume and higher margin sales.
During 1995, our primary objective is to become a more cost competitive
performer in the markets we serve. I am confident that this can be achieved.
With the steps that we have already taken, and additional steps planned in 1995,
we will be better able to sell our products and service our customers more
effectively than a year ago.
It is important that all of our employees focus on the challenges ahead. We
need to continue the efforts to improve our profitability in each business unit
in order to generate positive cash flow. We need the patience and support of
you, our shareholders, as we continue our efforts to return Detrex to
profitability.
Joseph L. Wenzler
President and Chief Executive Officer
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--------------- INDEPENDENT AUDITORS' REPORT ---------------
[DELOITTE & TOUCHE LLP LETTERHEAD]
To the Board of Directors and Stockholders of
Detrex Corporation
We have audited the accompanying consolidated balance sheets of Detrex
Corporation and its subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of operations and retained earnings and of cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these statements based on our audits.
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, such consolidated financial statements present fairly, in all
material respects, the financial position of Detrex Corporation and its
subsidiaries at December 31, 1994 and 1993 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.
As discussed in Notes 5 and 6 to the financial statements, effective January 1,
1992 the Company changed its methods of accounting for income taxes and for
postretirement health care benefits.
[SIG]
February 22, 1995
(March 9, 1995 as to Note 4)
2
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DETREX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
1994 1993 1992
------------ ------------ -----------
NET SALES.................................... $100,096,443 $105,578,469 $96,754,158
Cost of sales................................ 77,640,002 80,461,988 73,813,265
Selling, general and administrative
expenses................................... 18,404,812 22,625,345 20,928,445
Provision for depreciation and
amortization............................... 3,405,273 4,241,314 4,125,131
Provision for plant closing and
restructuring.............................. -- 4,158,794 685,000
Provision for environmental reserve.......... 8,500,000 4,230,007 --
Other (income) expense -- net................ (494,384) (46,079) (198,215)
Minority interest............................ 262,488 164,456 167,059
Interest expense............................. 681,920 979,938 1,284,561
Gain on sale of Industrial Chemical
Specialties Division....................... -- (9,123,114) --
------------ ------------ -----------
Loss before income taxes..................... (8,303,668) (2,114,180) (4,051,088)
Credit for income taxes...................... (2,664,788) (544,501) (1,069,840)
------------ ------------ -----------
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE..................................... (5,638,880) (1,569,679) (2,981,248)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
POSTRETIREMENT BENEFITS.................... -- -- (1,812,564)
------------ ------------ -----------
NET LOSS..................................... (5,638,880) (1,569,679) (4,793,812)
RETAINED EARNINGS AT BEGINNING OF YEAR....... 21,212,637 22,782,316 27,576,128
------------ ------------ -----------
RETAINED EARNINGS AT END OF YEAR............. $ 15,573,757 $ 21,212,637 $22,782,316
=========== =========== ==========
PER COMMON SHARE:
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE..................................... $(3.56) $(0.99) $(1.88)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
POSTRETIREMENT BENEFITS.................... -- -- $(1.15)
------------ ------------ -----------
NET LOSS..................................... $(3.56) $(0.99) $(3.03)
=========== =========== ==========
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
ASSETS
1994 1993
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 2,015,962 $ 2,852,104
Accounts receivable (less allowance for uncollectible accounts
of $330,000 in 1994 and $240,000 in 1993)................... 18,059,177 16,729,976
Accounts receivable -- other.................................. -- 1,650,000
Inventories................................................... 8,977,084 7,468,513
Prepaid expenses, deferred income taxes and other............. 2,780,657 2,701,520
----------- -----------
TOTAL CURRENT ASSETS................................... 31,832,880 31,402,113
LAND, BUILDINGS AND EQUIPMENT:
Land.......................................................... 1,032,102 1,004,402
Buildings and improvements.................................... 18,668,472 18,315,083
Machinery and equipment....................................... 31,768,126 30,295,612
Construction in progress...................................... 242,708 346,532
----------- -----------
51,711,408 49,961,629
Less allowance for depreciation and amortization.............. 29,258,155 27,008,272
----------- -----------
LAND, BUILDINGS AND EQUIPMENT -- NET................... 22,453,253 22,953,357
LAND, BUILDINGS AND EQUIPMENT HELD FOR SALE................... 1,187,889 1,339,570
PREPAID PENSIONS.............................................. 1,121,169 1,088,089
DEFERRED INCOME TAXES AND OTHER............................... 5,179,655 2,268,572
----------- -----------
$61,774,846 $59,051,701
=========== ===========
See Notes to Consolidated Financial Statements.
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LIABILITIES AND STOCKHOLDERS' EQUITY
1994 1993
----------- -----------
CURRENT LIABILITIES:
Loans payable -- short-term................................... $ 5,500,000 $ 2,000,000
Current maturities of long-term debt and capital leases....... 1,848,080 1,823,711
Accounts payable.............................................. 11,765,191 10,213,033
Environmental reserve......................................... 1,548,000 1,207,000
Accrued compensation.......................................... 822,650 984,915
Accrued expenses -- non active locations...................... 736,446 2,630,143
Other accruals................................................ 2,644,769 1,822,788
----------- -----------
TOTAL CURRENT LIABILITIES.............................. 24,865,136 20,681,590
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS.................. 701,505 3,030,499
ACCRUED POSTRETIREMENT BENEFITS............................... 3,636,316 3,314,282
ENVIRONMENTAL RESERVE......................................... 11,042,937 3,793,000
MINORITY INTEREST............................................. 1,554,112 2,476,623
OTHER ACCRUALS................................................ 1,212,235 1,382,242
STOCKHOLDERS' EQUITY:
Common capital stock, $2 par value, authorized 4,000,000
shares, outstanding 1,583,414 shares in 1994 and 1,580,414
in 1993..................................................... 3,166,828 3,160,828
Additional paid-in capital.................................... 22,020 --
Retained earnings............................................. 15,573,757 21,212,637
----------- -----------
TOTAL STOCKHOLDERS' EQUITY............................. 18,762,605 24,373,465
----------- -----------
$61,774,846 $59,051,701
=========== ===========
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1994 1993 1992
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before cumulative effect of accounting
change......................................... $(5,638,880) $(1,569,679) $(2,981,248)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Gain on sale of Industrial Chemical Specialties
Division................................... -- (9,123,114) --
Depreciation and amortization.................. 3,405,273 4,241,314 4,125,131
(Gain) Loss on sale or write-off of buildings,
machinery and equipment.................... (209,102) 1,487,718 30,799
Deferred income taxes.......................... (3,067,559) (908,595) (1,203,063)
Changes to operating assets and liabilities
that provided (used) cash:
Accounts receivable.......................... (1,329,201) (2,653,599) (2,758,421)
Tax refund receivable........................ -- -- 2,545,281
Inventories.................................. (1,508,571) 1,961,297 1,142,226
Prepaid expenses and other................... 12,685 165,504 (269,306)
Other assets................................. (52,426) 99,137 472,728
Accounts payable............................. 1,552,158 2,194,204 719,879
Environmental reserve........................ 7,590,937 2,813,484 203,443
Accrued compensation......................... (162,265) (13,296) 27,911
Postretirement benefits...................... 322,034 293,447 83,605
Accrued expenses -- non active locations..... (1,893,697) 2,230,143 --
Net assets and liabilities of Industrial
Chemical Specialties Division............ -- (876,886) --
Other accruals............................... (270,543) 571,071 184,499
----------- ----------- -----------
TOTAL ADJUSTMENTS.......................... 4,389,723 2,481,829 5,304,712
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................ (1,249,157) 912,150 2,323,464
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................ (2,200,669) (1,463,843) (2,166,282)
Proceeds from disposal of machinery and
equipment...................................... 309,036 -- --
Proceeds from sale of Industrial Chemical
Specialties Division........................... 1,650,000 10,000,000 --
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES............................ (241,633) 8,536,157 (2,166,282)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings..................................... 3,500,000 -- 3,500,000
Repayment of long-term debt......................... (2,001,361) (1,008,128) (1,008,057)
Repayment of short-term debt........................ -- (6,400,000) (600,000)
Principal payments under capital lease
obligations.................................... (872,011) (905,053) (1,041,479)
Common stock issued................................. 28,020 -- --
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES............................ 654,648 (8,313,181) 850,464
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents.... (836,142) 1,135,126 1,007,646
Cash and cash equivalents at beginning of year.......... 2,852,104 1,716,978 709,332
----------- ----------- -----------
Cash and cash equivalents at end of year................ $ 2,015,962 $ 2,852,104 $ 1,716,978
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest....................................... $ 633,767 $ 1,031,948 $ 1,292,510
Income taxes................................... $ 261,825 $ 228,298 $ 61,691
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Capital lease obligations incurred in connection
with the acquisition of equipment................. $ 658,967 $ 970,265 $ 1,730,390
Capital lease terminations.......................... $ 90,220 $ 808,587 $ 241,205
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statements
The consolidated financial statements comprise those of the Company and its
subsidiaries. All balances and transactions between the companies have been
eliminated. Certain amounts for 1992 and 1993 have been reclassified to conform
with 1994 classifications.
Inventories
Inventories are stated at lower of cost or market. Cost of raw materials,
including raw materials in work in process and finished goods inventories,
generally is determined by using the last-in, first-out method. Labor and burden
in inventory are determined by using the average cost method. Inventories
relating to fixed-price contracts are stated at the accumulated cost of
material, labor and burden less related progress billings. The completed
contract method is used to recognize revenue. Contract retentions are included
in accounts receivable.
Land, Buildings and Equipment
Land, buildings and equipment are stated at cost. Depreciation and
amortization are provided over the estimated useful lives of the assets using
the straight-line method for financial reporting purposes. Leased equipment is
amortized over the lease term or estimated useful life of the asset.
Annual depreciation rates are as follows:
Buildings................................ 2.5-20%
Leasehold improvements................... 2.5-20%
Yard facilities.......................... 5-6 2/3%
Machinery and equipment.................. 6 2/3-33 1/3%
Office furniture and fixtures............ 10-25%
Research and Development
Research and development costs are charged to operations as incurred.
Research and development costs for 1994, 1993 and 1992 were approximately
$1,784,000, $2,532,000, and $2,458,000, respectively.
Earnings (Loss) Per Common Share
Earnings (loss) per common share are based upon the average number of
common shares outstanding during the year. Shares subject to stock options are
not considered in per share calculations since the Company is in a loss position
and the effect would be antidilutive.
Industry Segment
The Company and its subsidiaries operate predominantly in a single
industry: chemicals and allied products, services, and supply processes for use
by manufacturing and service industries.
Cash Flows
For purposes of the consolidated statements of cash flows, cash equivalents
are defined as short-term highly-liquid investments with a maturity of three
months or less at date of purchase.
2. INVENTORIES
Inventories at December 31 consist of the following:
1994 1993
---------- ----------
Raw materials................ $2,279,750 $2,420,764
Work in progress............. 1,971,608 846,587
Finished goods............... 4,914,802 4,591,277
Less: Progress billings on
work in progress........... (189,076) (390,115)
---------- ----------
$8,977,084 $7,468,513
========== ==========
The excess of current cost over the stated last-in, first-out value is
approximately $2,280,000 and $1,873,000 at December 31, 1994 and 1993.
3. CAPITAL AND OPERATING LEASES
Capitalized lease assets (primarily automobiles, trucks and lab equipment)
included in machinery and equipment at December 31 are as follows:
1994 1993
---------- ----------
Machinery and equipment...... $3,930,407 $3,543,814
Accumulated amortization..... 2,067,052 1,513,933
---------- ----------
Leased assets -- net......... $1,863,355 $2,029,881
========== ==========
Rent expense applicable to operating leases for 1994, 1993 and 1992 was
$925,000, $974,000 and $912,000, respectively.
7
10
Minimum annual lease payments for leases in effect at December 31, 1994 are as
follows:
Minimum Lease Payments: Capital Operating
---------- ----------
1995.................... $1,016,228 $ 492,300
1996.................... 543,251 442,200
1997.................... 202,107 366,400
1998.................... 55,118 339,000
1999.................... 18,218 243,800
2000 and thereafter..... -- 281,200
---------- ----------
Total minimum lease
payments................... 1,834,922 $2,164,900
==========
Less amount representing
estimated executory costs
(such as taxes, maintenance
and insurance) and profit
thereon included in total
minimum lease payments..... 150,524
----------
Net minimum lease payments... 1,684,398
Less amount representing
interest................... 134,813
----------
Present value of net minimum
lease payments............. 1,549,585
Less current portion......... 848,080
----------
Non-current portion.......... $ 701,505
==========
4. LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT
The composition of long-term debt, exclusive of current maturities, as of
December 31 is as follows:
1994 1993
-------- ----------
Term note at interest rate of
9.04%, due through 1995...... $ -- $2,000,000
Capitalized lease obligations
at interest rates from 5.7%
to 14.9%, due through 1999
(see Note 3)................. 701,505 1,030,499
-------- ----------
$701,505 $3,030,499
======== ==========
On March 11, 1994, the Company entered into a three year Revolving Credit
Agreement (the Agreement) with Comerica Bank and NBD Bank, N.A. The Agreement
provides for a credit facility of up to $12.0 million collateralized by the
Company's inventory and accounts receivable. The terms of the Agreement contain,
among other provisions, requirements for maintaining defined levels of tangible
net worth and various financial statement ratios, including working capital and
debt to equity ratios, and a cash flow ratio.
At December 31, 1994, the Company was not in compliance with certain
requirements of the Agreement. The Agreement was subsequently amended
retroactively to December 31, 1994. The Company is in compliance with the
modified Agreement and expects to be in compliance with the terms of such
Agreement throughout 1995.
The weighted average interest rate for short term borrowings for the year
ended December 31, 1994 was 7.94% compared to 5.66% for the year ended December
31, 1993 and 5.59% for the year ended December 31, 1992.
5. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, "ACCOUNTING FOR INCOME TAXES", effective as of January 1, 1992. The
Statement requires the use of the liability method of accounting for income
taxes. There was no cumulative effect on net earnings resulting from this
change. For years prior to 1992, the Company accounted for income taxes in
accordance with Statement of Financial Standards (SFAS) No. 96, "ACCOUNTING FOR
INCOME TAXES".
The net credit for income taxes, calculated in accordance with SFAS No. 109
for 1994, 1993 and 1992, included the following components:
1994 1993 1992
----------- --------- -----------
Current for tax
purposes:
Federal............ $ -- $ 41,658 $ (105,372)
State and local.... 336,199 322,871 238,595
----------- --------- -----------
Total Current.... 336,199 364,529 133,223
----------- --------- -----------
Deferred income
taxes:
Federal............ (2,647,688) (732,912) (1,273,108)
State and local.... (353,299) (176,118) 70,045
----------- --------- -----------
Total Deferred... (3,000,987) (909,030) (1,203,063)
----------- --------- -----------
Credit for income
taxes.............. $(2,664,788) $(544,501) $(1,069,840)
============ ========== ============
8
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Deferred tax assets (liabilities) at December 31, 1994 and 1993 relate to
the following temporary differences and carryforwards:
1994 1993
----------- -----------
Net operating loss carryforward........ $ 2,119,710 $ 1,754,943
Alternative minimum tax credit
carryforward......................... 383,144 383,144
Accruals for:
Postretirement benefits.............. 1,392,345 1,269,039
Environmental........................ 4,821,070 1,914,500
Restructuring........................ 281,985 629,105
Self insurance reserve............... 171,539 173,454
Inventory related...................... 671,402 931,960
Other.................................. 253,156 204,746
----------- -----------
Gross deferred tax assets.......... 10,094,351 7,260,891
----------- -----------
Depreciation........................... (2,749,520) (2,643,783)
Undistributed earnings of the Company's
DISC................................. (1,050,586) (923,728)
Gain on sale of ICSD................... -- (479,726)
Other.................................. (169,029) (155,999)
----------- -----------
Gross deferred tax liabilities..... (3,969,135) (4,203,236)
----------- -----------
Net deferred tax assets............ $ 6,125,216 $ 3,057,655
========== ==========
Net current deferred tax assets........ $ 1,945,401 $ 1,820,499
Net noncurrent deferred tax assets..... 4,179,815 1,237,156
----------- -----------
Net deferred tax assets.............. $ 6,125,216 $ 3,057,655
========== ==========
The Company has net operating loss carryforwards of $511,131, $4,524,423
and $1,198,888 that expire in 2006, 2007 and 2009, respectively.
The reasons for the difference between the income tax provision and income
taxes computed at 34% for 1994, 1993 and 1992 are summarized below:
1994 1993 1992
----------- --------- -----------
Computed 'expected' tax
provision.................. $(2,823,247) $(718,821) $(1,377,370)
State and local income taxes,
net of federal tax
benefit.................... (14,193) 96,857 203,524
Nondeductible meal and
entertainment expense...... 48,098 34,058 39,895
Other -- net................. 124,554 43,405 64,111
----------- --------- -----------
$(2,664,788) $(544,501) $(1,069,840)
========== ========= ==========
6. PENSION AND POSTRETIREMENT COSTS
The Company and its subsidiaries have several non-contributory, defined
benefit pension plans which cover substantially all employees. Benefits for
salaried employees are based on years of service and the employee's average
monthly compensation using the highest five consecutive years preceding
retirement. Benefits for hourly employees are generally based on a specified
payment per month for each year of service. The Company's funding policy is to
contribute amounts sufficient to provide for benefits earned to date and those
expected to be earned in the future.
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit obligations
were 8.5% and 4.0%, respectively, at December 31, 1994 and 7.5% and 4.0%,
respectively, at December 31, 1993. The expected long-term rate of return on
assets was 8.5% in both years. The following table sets forth the plans' funded
status and amounts recognized in the Company's balance sheet at December 31:
1994 1993
----------- -----------
Actuarial present value of benefit
obligations:
Accumulated benefit obligations:
Vested benefits.................... $18,836,805 $20,118,169
Non-vested benefits................ 659,032 746,552
----------- -----------
Total............................ $19,495,837 $20,864,721
========== ==========
Projected benefit obligations for
service rendered to date............. $21,464,248 $23,174,426
Plan assets at fair value -- primarily
equity and fixed income bond funds... 25,204,658 27,586,718
----------- -----------
Excess of plan assets over projected
benefit obligations.................. 3,740,410 4,412,292
Unrecognized net asset at January 1,
1986 being recognized principally
over 15 years........................ (1,405,334) (1,657,581)
Unrecognized net gain from past
experience different from that
assumed.............................. (2,316,447) (3,057,321)
Additional minimum liability........... (109,695) --
----------- -----------
Pension liability...................... $ (91,066) $ (302,610)
========== ==========
As recorded in the balance sheet:
Prepaid pensions..................... $ 1,121,169 $ 1,088,089
Other accruals (non-current)......... (1,212,235) (1,390,699)
----------- -----------
Net................................ $ (91,066) $ (302,610)
========== ==========
Net pension cost (credit) included the following components:
1994 1993 1992
----------- ----------- -----------
Service cost-benefits
earned during the year... $ 556,058 $ 650,412 $ 688,700
Interest cost on projected
benefit obligations...... 1,671,239 1,864,318 1,856,200
Actual return on plan
assets................... 885,828 (2,962,981) (1,457,296)
Net amortization and
deferral................. (3,366,137) 379,464 (1,121,977)
----------- ----------- -----------
Net pension cost
(credit)................. $ (253,012) $ (68,787) $ (34,373)
========== ========== ==========
Certain divisions and subsidiaries of the Company provide contributory
defined benefit health care plans for retirees, subject to various conditions
and limitations.
The Company adopted SFAS No. 106, "EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS," effective as of January 1, 1992. The Statement
requires accounting for postretirement benefits on an accrual basis which
necessitates measurement of the obligation to provide future benefits and
accrual of the cost during the years that employees provide service. The Company
elected to record a one-time charge to recognize its accumulated postretirement
benefit obligation as of January 1, 1992. The cumulative effect of this
accounting change was to increase the 1992
9
12
net loss by $1,813,000 which is net of a tax benefit of $1,125,000.
Net periodic postretirement benefit costs included the following
components:
1994 1993 1992
-------- -------- --------
Service cost-benefits attributed
to service during the period... $156,144 $115,576 $ 74,079
Interest cost on accumulated
postretirement benefit
obligation..................... 264,224 292,903 255,961
Amortization..................... -- 2,840 --
-------- -------- --------
Net periodic postretirement
benefit cost................... $420,368 $411,319 $330,040
======== ======== ========
The Company's postretirement plans are not funded. The status of the plans
at December 31, 1994 and 1993 follows:
1994 1993
---------- ----------
Accumulated postretirement benefit
obligation:
Retirees................................. $1,874,226 $1,983,349
Fully eligible active plan
participants........................... 231,079 239,684
Other active plan participants........... 1,545,580 1,301,389
Unrecognized net loss.................... (14,569) (210,140)
---------- ----------
Total accrued postretirement
benefits............................. $3,636,316 $3,314,282
========= =========
For measurement purposes, a 10.1% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1995. The rate is assumed
to decrease gradually over the next 8 years to 6.5% in 2002 and thereafter. The
assumption for the health care cost trend rate has a significant effect on the
amount of the obligation and periodic cost reported. An increase in the assumed
health care cost trend rates by 1.0% in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1994 by approximately
$567,300 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year then ended by approximately
$88,300.
The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 8.5% at December 31, 1994, 7.5% at
December 31, 1993 and 8.5% at December 31, 1992.
Prior to 1992, the cost of providing health care and life insurance
benefits to retired employees was recognized as expense primarily as claims and
premiums were paid. These costs were not significant.
7. SALE OF INDUSTRIAL CHEMICAL SPECIALTIES DIVISION
Effective September 30, 1993, the Company sold its Industrial Chemical
Specialties Division to Novamax Technologies Corporation for $11,650,000 of
which $10.0 million was received on October 1, 1993 and $1,650,000 was received
on June 30, 1994. The Company reported a pre-tax gain of $9,123,000, including
the gain on curtailment of pensions of $279,000, on the sale of this Division.
For the nine months of 1993 prior to the sale, this Division reported Sales of
$10,340,000 and Income Before Tax of $460,000.
8. PROVISION FOR PLANT CLOSINGS AND RESTRUCTURING
In 1993, the Company phased out manufacturing of chemical equipment at its
Bowling Green, Kentucky plant. This operation had a total before tax loss of
approximately $6.1 million for the year. The provision for plant closing and
restructuring of $4.2 million reflects the amounts attributable to asset
write-downs, termination pay, and the costs associated with the winding down of
production.
In 1992, $685,000 was charged to income to complete restructuring of
certain operations.
9. OTHER INCOME -- NET
Other income includes interest income of approximately $46,000, $42,000 and
$70,000 for 1994, 1993 and 1992, respectively.
10. CONTINGENCIES
The Environmental Protection Agency ('EPA') has notified the Company and at
least seventeen other companies that they may be potentially responsible for
sharing the costs in a proceeding to clean up contaminated sediments in the
Fields Brook watershed in Ashtabula, Ohio. The EPA issued a Record of Decision
in 1986 concerning the methods it recommends using to accomplish this task at an
estimated total cost of $48,000,000. The Company and the other potentially
responsible parties have expressed their disagreement with this recommendation
and are continuing to negotiate with the EPA as to how best to effect the clean
up operation. The Company believes that the Fields Brook remedial investigation
and feasibility studies referred to below will be an important factor in the
negotiation with the EPA.
The Company maintains a reserve for anticipated expenditures over the next
several years in connection with remedial investigations, feasibility studies,
remedial design, and remediation relating to the clean up of contamination at
several sites, including properties owned by the Company. The Company conducted
a comprehensive review of its reserves during the fourth quarter of 1994 and
added $8.5 million to this reserve. The total amount of the reserve at December
31, 1994 is $12.6 million, which amount was calculated without taking into
consideration any possible insurance recoveries.
The reserve includes a provision for the Company's anticipated share of
remedial investigation and feasibility studies to determine sources of
contamination and methods of remediation in the Fields Brook watershed referred
to above, as well as a provision for costs that may be incurred in connection
with remediation of the Fields Brook watershed and other sites. Some of these
studies have been completed;
10
13
others are ongoing. In many cases, the methods of remediation remain to be
agreed upon.
The Company expects to continue to incur professional fees, expenses and
capital expenditures in connection with its environmental compliance efforts.
In addition to the above, there are several other claims and lawsuits
pending against the Company and its subsidiaries.
The amount of liability to the Company with respect to costs of remediation
of contamination of the Fields Brook watershed and of other sites, and the
amount of liability with respect to several other claims and lawsuits against
the Company, was based on available data. The Company has established its
reserves in accordance with its interpretation of the principles outlined in
Statement of Financial Accounting Standards No. 5 and Securities and Exchange
Commission Staff Accounting Bulletin No. 92. In the event that any additional
accruals should be required in the future with respect to such matters, the
amounts of such additional accruals could have a material impact on the results
of operations to be reported for a specific accounting period but should not
have a material impact on the Company's consolidated financial position.
11. PREFERRED STOCK
The Company has authorized 1,000,000 shares of $2 par value preferred
stock, issuable in series. No shares were issued or outstanding as of December
31, 1994, 1993 and 1992.
12. STOCK PURCHASE RIGHTS
The Company has in place a Shareholder Rights Plan, under which preferred
stock purchase rights were distributed to shareholders as a dividend of one
Right for each outstanding share of Common Stock. Each Right will entitle
shareholders to buy one one-hundredth of a newly issued share of Series A
Preferred Stock of the Company at an exercise price of $80, subject to
adjustment. The Rights will be exercisable only if a person or group acquires
beneficial ownership of 15% or more of the Company's outstanding Common Stock or
commences a tender or exchange offer upon consummation of which a person or
group would beneficially own 30% or more of the Company's outstanding Common
Stock. Until they become exercisable, the Rights will be evidenced by the Common
Stock certificates and will be transferred only with such certificates.
If any person becomes the beneficial owner of 15% or more of the Company's
outstanding Common Stock, or if a holder of 15% or more of the Company's Common
Stock engages in certain self-dealing transactions or a merger transaction in
which the Company is the surviving corporation and its Common Stock remains
outstanding, then each Right not owned by such person or certain related parties
will entitle its holder to purchase, at the Right's then-current exercise price,
shares of the Company's Common Stock (or, in certain circumstances, units of the
Company's Series A Preferred Stock, cash, property or other securities of the
Company) having a market value equal to twice the then-current exercise price.
In addition, if the Company is involved in a merger or other business
combination transaction with another person after which its Common Stock does
not remain outstanding, or sells 50% or more of its assets or earning power to
another person, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, shares of common stock of such other person having
a market value equal to twice the then-current exercise price. The Company will
generally be entitled to redeem the Rights at $.01 per Right at any time until
the tenth business day following public announcement that a person or group has
acquired 15% or more of the Company's Common Stock. The Plan will expire on May
4, 2000 unless the Rights are earlier redeemed by the Company.
13. STOCK OPTIONS
On April 22, 1993, the shareholders of the Company approved the
Corporation's 1993 Stock Option Plan (the Management Plan) and the Corporation's
1993 Stock Option Plan for Outside Directors (the Directors' Plan). Pursuant to
the Management Plan and employment agreements, four key executives have been
granted options totaling 95,000 shares, at exercise prices ranging from $8.625
to $9.50. Pursuant to the Directors' Plan, options for 21,000 shares in 1993 and
6,000 shares in 1994 have been granted at exercise prices ranging from $9.34 to
$13.20. Options for 3,000 of these shares were exercised in 1994 at $9.34 a
share.
The total number of shares reserved for issuance upon exercise of options
under the Management Plan is 150,000 shares and under the Directors' Plan is
50,000 shares. No options have expired under either plan.
11
14
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Detrex Corporation and its consolidated subsidiaries (the Company) incurred
a net loss of $5,639,000 for the year ended December 31, 1994, compared to a net
loss of $1,570,000 for the year ended December 31, 1993. 1994 was adversely
impacted by a $8.5 million addition to the Company's environmental reserve which
increased the net loss by approximately $5.6 million. The net loss for 1994,
excluding the effect of this adjustment, was $39,000. A tabular breakdown of
results for the last two years reflects the following (in thousands):
1994 1993
------------------ ------------------
Income Income
(Loss) (Loss)
before Net Before Net
Income Income Income Income
Taxes (Loss) Taxes (Loss)
------- ------- ------- -------
Gain on sale of ICSD............................................... $ -- $ -- $ 9,123 $ 6,021
Provision for plant closing and restructuring...................... -- -- (4,159) (2,745)
Additions to environmental reserve................................. (8,500) (5,600) (4,230) (2,790)
Operations (excluding the above)................................... 196 (39) (2,848) (2,056)
------- ------- ------- -------
Total............................................................ $(8,304) $(5,639) $(2,114) $(1,570)
======= ======= ======= =======
Footnotes 7 and 8 to the Consolidated Financial Statements explain the
actions in 1993 to sell the Industrial Chemical Specialties Division (ICSD) and
to phase out manufacturing of chemical equipment at the Company's Bowling Green,
Kentucky plant.
The $196,000 profit before tax is attributable to significant increases in
income from the Company's Industrial Furnace division and from three
subsidiaries: Harvel Plastics, Inc.; The Elco Corporation; and Seibert-Oxidermo,
Inc. The Company also reduced the loss at its Equipment division and had a small
increase in profits from its analytical laboratory. In addition, the Company had
a reduction in profits at its Solvents & Environmental Services division and
incurred a small loss at its Chemicals division.
In 1993, the Company conducted a review of its liabilities for
environmental matters. Based on that review, the Company added $4.2 million to
its environmental reserve. The Company indicated in last year's annual report
that certain remediation studies would become available in 1994 and as they
became available, the Company would have a more complete basis for estimating
anticipated remediation costs. Some of this information became available in the
latter part of the year and served as a basis for a comprehensive review of
environmental matters, including its own properties, in the fourth quarter of
1994. The result of that review was the $8.5 million addition to the
environmental reserve referred to above. The Company will continue to analyze
this reserve and make adjustments to reflect changes from updated or new studies
and any other significant developments. For a more detailed explanation of the
Company's liabilities for environmental matters, refer to Footnote 10 of the
Consolidated Financial Statements.
COMPARATIVE OPERATING DATA (IN THOUSANDS)
1994 1993 1992
---------------- ---------------- ---------------
$ % $ % $ %
------- ----- ------- ----- ------ -----
Net sales............................................... 100,096 100.0 105,578 100.0 96,754 100.0
Gross margin............................................ 22,456 22.4 25,116 23.8 22,941 23.7
Selling, general and administrative expenses............ 18,405 18.4 22,625 21.4 20,928 21.6
Depreciation and amortization........................... 3,405 3.4 4,241 4.0 4,125 4.3
Provision for plant closing and restructuring........... -- -- 4,159 3.9 685 0.7
Gain on sale of ICSD.................................... -- -- 9,123 8.6 -- --
Income (loss) before effect of accounting change........ (5,639) (5.6) (1,570) (1.5) (2,981) (3.1)
Cumulative effect of accounting change for
postretirement benefits............................... -- -- -- -- (1,813) 1.9
Net income (loss)....................................... (5,639) (5.6) (1,570) (1.5) (4,794) (5.0)
12
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
1994 COMPARED TO 1993 -- In 1994, Net sales decreased to $100 million, a
5.2% decrease from 1993. However, when 1993 sales were adjusted for the sale of
ICSD, the Company realized a 5.1% increase in sales from its ongoing operations.
The Company had significant sales increases in its industrial furnace division
and in its subsidiary producing plastic pipe and more modest increases in the
sales of its paint subsidiary and its lubricants subsidiary. The increase more
than offset lower sales in the Company's equipment and solvents divisions.
Gross margin in 1994 equaled 22.4% of sales, compared to 23.8% in 1993. The
decline in gross margin is primarily attributable to lower margins within the
Company's solvents division, its general chemicals division and its subsidiary
producing plastic pipe.
The reduction in selling, general and administrative expenses reflects the
inclusion of ICSD for the first nine months of 1993, and reductions in this
category of expenses for 1994 in the Company's equipment division and its
solvents division.
The reduction in depreciation and amortization in 1994 is a result of the
ICSD sale and the discontinuance of manufacturing at the Company's plant in
Bowling Green, Kentucky.
Interest expense in 1994 is lower than in 1993 due to decreased average
borrowings in 1994. The reduction due to lower borrowings was partially offset
by increases in interest rates during the second half of the year.
The Company recorded income tax benefits in both years due to the
significant before tax losses. The Company has net operating loss carryforwards
of $6,234,442 at December 31, 1994, representing a federal income tax benefit of
$2,119,710. The net operating loss carryforwards expire as follows:
2006 $ 511,131
2007 4,524,423
2009 1,198,888
----------
Total $6,234,442
==========
The Company reported taxable income before the benefit of net operating
loss carryforwards of approximately $1.8 million on its 1993 tax return. The
Company has evaluated its forward plans, including the efforts of its recently
organized Commercial Development department, and has concluded that realization
of the net operating loss carryforwards is more likely than not. A major
consideration in reaching that conclusion is that none of the carryforwards
expires for 12 years and a portion does not expire for 15 years.
1993 COMPARED TO 1992 -- During 1993, major operating decisions were made
that had a significant impact on financial results for the year. First, the
Company sold its Industrial Chemical Specialties Division to Novamax
Technologies Corporation for $11,650,000 of which $10,000,000 was received on
October 1, 1993 and $1,650,000 was received on June 30, 1994. The Company
reported a pre-tax gain of $9,123,000 on the sale of this division. Prior to the
sale, this division reported sales of $10,340,000 and Income before Tax of
$460,000 for the Nine Months Ended September 30, 1993.
Second, the Company phased out manufacturing of chemical equipment at its
Bowling Green, Kentucky plant on December 31, 1993. This operation had a total
before tax loss of $6.1 million for the year, including a $4.2 million charge
attributable to asset write downs, termination pay, and the costs associated
with the winding down of production. Of the $4.2 million charge, $1.5 million
remained as a reserve in accrued expenses as of December 31, 1993 and
approximately $500,000 remained as of December 31, 1994. The Company retained
its design engineers, service, and sales personnel to continue the development
and sales of chemical equipment that is now manufactured by outside
sub-contractors.
During 1993, the Company also conducted a review of its liabilities for
environmental matters. As more fully explained in Footnote 10 to the
Consolidated Financial Statements, the Company maintains a reserve for
anticipated expenditures over the next several years in connection with remedial
investigations, feasibility studies, remedial design, and remediation relating
to the clean up of contamination at several sites. The Company added $4.2
million to this reserve in 1993.
In 1993, Net sales increased to $106 million, a 9.1% increase from 1992,
reflecting a modest expansion in the economy. All operating units other than
ICSD, which was sold as of September 30th, showed an increase in sales. The
largest increase in sales
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
took place in the Company's solvents division and in its subsidiary producing
plastic pipe. This subsidiary continues to have favorable operating results and
positive cash flow.
Gross margin in 1993 equaled 23.8% of sales, compared with a gross margin
of 23.7% in 1992. The Company's chemical products operations, which in total
account for approximately 81% of the Company's revenue, reported gross margin of
25.9% in 1993 and 26.4% in 1992.
Selling, general and administrative expenses (which also include Research
and Development costs) increased from $20,928,000 in 1992 to $22,625,000 in
1993. Research and Development costs amounted to $2,532,000 in 1993 compared to
$2,458,000 in 1992 and represents amounts expended to develop new products and
services.
The $116,000 increase in depreciation and amortization is a result of the
additions to machinery and equipment and capital leases over the last few years
and faster amortization of machines used for promotional purposes.
Interest expense decreased as the amount of short-term debt dropped from
$8.4 million on December 31, 1992 to $2.0 million on December 31, 1993. Also,
long-term bank debt decreased by $1.0 million during 1993.
Income taxes for both 1993 and 1992 reflect a credit for federal income
taxes, partially offset by state and local income tax expense.
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
During 1994, the Company financed its operations by utilizing a combination
of internally generated funds, which included the collection in June of a
$1,650,000 receivable from the sale of ICSD, and net additional bank borrowings
of $1.5 million. The Company reduced borrowings under its 9.04% Term Loan by
$2.0 million but increased borrowings under its Revolving Credit Agreement by
$3.5 million. During the first quarter of 1995, the Company further increased
its borrowings under its Revolving Credit Agreement by $1.0 million to partially
alleviate some delays in making payments to vendors. The Company has utilized
approximately $431,000 of its Revolving Credit Agreement to satisfy letter of
credit obligations.
During 1995, the Company expects to again utilize a combination of
internally generated funds and bank borrowings to finance its activities. In
addition, the Company expects to realize in late 1995 or early 1996,
approximately $1.2 million from the pending sale of its former manufacturing
plant in Bowling Green, Kentucky. The Company will spend approximately $500,000
(accrued on the December 31 balance sheet) in 1995 to remediate the property.
As of December 31, 1994, the Company was not in compliance with certain of
the financial covenants contained in its Revolving Credit Agreement. The
financial covenants were subsequently amended with retroactive effect to
December 31, 1994 and the Company is in full compliance with the new covenants.
Working capital was $6,968,000 at December 31, 1994, compared to
$10,721,000 at December 31, 1993.
The Company's capital expenditures (including capital leases) totaled
$2,860,000 in 1994. This compares to $2,434,000 in 1993 and $3,897,000 in 1992.
In order to expand certain portions of its business, the Company anticipates
that 1995 capital expenditures will be in the $4.0 million range.
The Company made cash payments of $1.3 million that were charged to its
Environmental Reserve in 1994. It is anticipated that cash expenditures of
approximately $1.5 million will be charged to this reserve in 1995.
The Company has paid no dividends since the second quarter of 1991 and
cannot forecast when the dividend will be restored.
14
17
DESCRIPTION OF BUSINESS
Detrex Corporation and its subsidiaries operate predominantly in a single
industry: chemicals and allied products, services, and processes for use by
manufacturing and service industries. The principal products include specialty
chemicals, industrial cleaners, process equipment, coatings, lubricant
additives, chlorinated solvents, hydrochloric acid, PVC plastic pipe, industrial
finishing materials and paints, industrial furnaces, degreasing equipment, and
environmental and analytical laboratory services. The products are primarily
sold by sales-service engineers and most sales are direct to industrial users.
Net sales by product line for each of the last five years are set forth below:
Product Line
----------------------------
Chemical
Products
and Chemical
Services Equipment Total
----------- ----------- ------------
1994..................................... $79,975,998 $20,120,445 $100,096,443
1993..................................... 85,895,760 19,682,709 105,578,469
1992..................................... 79,326,021 17,428,137 96,754,158
1991..................................... 70,092,135 11,305,378 81,397,513
1990..................................... 75,904,572 20,232,975 96,137,547
SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
1994 1993 1992 1991 1990
-------- -------- ------- ------- -------
Net sales................................................ $100,096 $105,578 $96,754 $81,398 $96,138
Income (loss) before accounting change................... (5,639) (1,570) (2,981) (7,018) 346
Cumulative effect of accounting change................... -- -- (1,813) -- --
Net income (loss)........................................ (5,639) (1,570) (4,794)(1) (7,018) 346
Earnings (loss) per common share before accounting
change................................................. (3.56) (.99) (1.88) (4.44) .22
Cumulative effect of accounting change per common
share.................................................. -- -- (1.15) -- --
Earnings (loss) per common share......................... (3.56) (.99) (3.03)(1) (4.44) .22
Dividends per common share............................... -- -- -- .30 1.20
Total assets............................................. 61,775 59,052 59,662 58,113 61,966
Net working capital...................................... 6,968 10,721 8,164 11,260 16,607
Capital expenditures..................................... 2,201 1,464 2,166 3,956 6,843
Long-term debt........................................... 702 3,030 4,602 5,360 6,010
Stockholders' equity..................................... 18,763 24,373 25,943 30,737 38,229
Stockholders' equity per common share.................... 11.85 15.42 16.42 19.45 24.19
Number of employees...................................... 367 388(2) 495 447 505
Percentages to net sales:
Gross margin........................................ 22.4 23.8 23.7 23.3 25.3
Net income (loss)................................... (5.6) (1.5) (5.0)(1) (8.6) 0.4
Net income (loss) as a percent of:
Average total assets................................ (9.3) (2.6) (8.1)(1) (11.7) 0.6
First of year stockholders' equity.................. (23.1) (6.1) (15.6)(1) (18.4) 0.9
Current ratio............................................ 1.3 1.5 1.4 1.7 2.0
Percent long-term debt to equity......................... 3.7 12.4 17.7 17.4 15.7
NOTES FOR SELECTED FINANCIAL DATA
(1) Includes a one time charge of $1,812,600 reflecting the adoption of
Statement of Financial Accounting Standards No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions, effective January 1, 1992.
(2) At January 1, 1994.
15
18
PRODUCTS OF DETREX AND DETREX SUBSIDIARIES
CHEMICALS DIVISION EQUIPMENT DIVISION HARVEL PLASTICS, INC.
P.O. BOX 1398, 325 EMMETT AVENUE, P.O. BOX 757,
ASHTABULA, OHIO 44004 BOWLING GREEN, EASTON, PENNSYLVANIA 18042
C.U. GUY, General Manager KENTUCKY 42101 E. E. WISMER, President
N-Methyl Pyrrole and Pyrrole B. B. RUSSELL, Business Rigid PVC Plastic Pipe
Semi-conductor Grade Manager (Normal Impact)
Hydrochloric Acid Aqueous and Semi-Aqueous (High Impact)
Equipment Solid Bar, Heavy Wall Tubular Stock,
SOLVENTS AND Electronic Component Cleaning Angle Stock, Custom Extrusions
ENVIRONMENTAL SERVICES and Defluxing Machines
DIVISION SEIBERT-OXIDERMO, INC.
26000 CAPITOL AVENUE, PACIFIC INDUSTRIAL 16255 WAHRMAN,
REDFORD TWP., MICHIGAN FURNACE DIVISION ROMULUS, MICHIGAN
48239 26000 CAPITOL AVENUE, 48174
A.E. PORTER, Acting General Manager REDFORD TWP., D.A. CHURCH,
Virgin or Recycled Solvents MICHIGAN 48239 General Manager
Solvent Reclamation and J.T. O'NEAL, General Manager Industrial and Automotive Coatings
Waste Management Industrial Furnaces Conductive Primers for Rigid and
Automation Equipment Flexible Plastics
RTI LABORATORIES DIVISION Adhesion Promoters for Plastics
31628 GLENDALE, Automotive Parts Enamels
LIVONIA, MICHIGAN Solvent and Water-Borne Coatings
48050
J. G. SINGH, General Manager THE ELCO CORPORATION
Analytical Laboratory Services 1000 BELT LINE ST.,
CLEVELAND, OHIO 44109
R.D. WYVILL, General Manager
Petroleum Additives for
Hydraulic Fluids, Industrial
Gear Oils, Greases and
Metalworking Fluids
SUPPLEMENTARY INFORMATION (Unaudited)
Selected Quarterly Data (Thousands of dollars except per share amounts)
1994 Quarters 1993 Quarters
------------------------------------------ ------------------------------------------
4th 3rd 2nd 1st 4th 3rd 2nd 1st
------- ------- ------- ------- ------- ------- ------- -------
Net sales................... $25,566 $25,017 $26,142 $23,371 $23,553 $27,168 $29,084 $25,773
Gross margin on sales....... 5,510 5,533 6,181 5,232 5,673 5,652 6,922 6,869
Net income (loss)........... (5,894) 46 323 (114) (1,259) 258 (260) (309)
Common share................ (3.72) .03 .20 (.07) (.79) .16 (.16) (.20)
Stock price range(1)
High...................... 13 13 3/8 11 7/8 12 1/4 13 7/8 15 9 3/4 9 3/4
Low....................... 10 1/4 11 1/8 11 10 1/4 11 3/8 8 1/4 8 1/4 7 1/2
(1) Stock price range was obtained from NASDAQ quotations.
16
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DIRECTORS OFFICERS
ARBIE R. THALACKER J. L. WENZLER
Chairman of the Board of Detrex President and Chief Executive Officer
Corporation (Non-Executive) and
Partner, Shearman & Sterling, D. R. CRANDELL
Attorneys, New York City Vice President-Commercial Development
BRUCE W. COX G. J. ISRAEL
President, B. W. Cox Company, Vice President-Finance, Treasurer and
Manufacturers Representative Chief Financial Officer
A. E. PORTER
ROBERT A. EMMETT, III Vice President-Operations
Partner, Reed Smith Shaw & McClay,
Attorneys, Washington, D.C.
J. F. SCHATT
Vice President-Human Resources
JOHN F. MANGOLD
Manufacturing Consultant R. M. CURRIE
Secretary and General Counsel
BENJAMIN W. McCLEARY
Partner, McFarland Dewey & Co., E. R. RONDEAU
Investment Bankers, New York City Controller
JOSEPH L. WENZLER
President and Chief
Executive Officer
JOHN D. WITHROW
Retired President and Chief
Operating Officer,
Lectron Products Inc.
AUDIT COMMITTEE
JOHN F. MANGOLD, Chairman
ARBIE R. THALACKER
JOHN D. WITHROW
TRANSFER AGENT AND
REGISTRAR
STATE STREET BANK AND TRUST COMPANY
AUDITORS
DELOITTE & TOUCHE LLP
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR 1994 WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS UPON WRITTEN REQUEST. REQUESTS ARE TO BE SENT TO VICE
PRESIDENT-FINANCE, DETREX CORPORATION, 24901 NORTHWESTERN HWY., SUITE 500,
SOUTHFIELD, MICHIGAN 48075.
20
DETREX CORPORATION
GENERAL OFFICES -- 24901 NORTHWESTERN HWY., SUITE 500, SOUTHFIELD, MICHIGAN
48075
--------------------------------------------------------------------------------
MAILING ADDRESS -- P.O. BOX 5111, SOUTHFIELD, MI 48086-5111
Telephone: (810) 358-5800