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EXHIBIT 13
DETREX CORPORATION AND SUBSIDIARIES
1997 ANNUAL REPORT TO SHAREHOLDERS
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------------------------------------------
DETREX
CORPORATION
1997 ANNUAL REPORT
------------------------------------------
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HIGHLIGHTS(1)
1997 1996 1995
----------- ----------- -----------
Net sales..................................... $95,757,000 $96,825,000 $94,302,000
Net income (loss)............................. 1,513,000 415,000 (1,869,000)
Income (loss) per common share -- basic....... .96 .26 (1.18)
Stockholders' equity per common share......... 11.89 10.93 10.67
Additions to land, buildings and equipment
(including capital leases).................. 5,360,000 2,770,000 2,662,000
Current ratio................................. 1.4 to 1 1.4 to 1 1.3 to 1
Number of stockholders........................ 441 387 425
Number of employees........................... 353 345 347
(1) This information should be considered in conjunction with
the Consolidated Financial Statements and Management's
Discussion and Analysis.
- --------------------------------------------------------------------------------
DETREX GROUP OF COMPANIES(1)
-- Detrex Corporation -- a specialty chemicals company
- Solvents and Environmental Services Division -- distributes and
recycles parts cleaning solvents and disposes of industrial wastes
- Equipment Division -- designs, engineers and sells industrial parts
cleaning equipment
- Automation Division -- engineers and sells automation and material
handling equipment
- RTI Laboratories -- provides analytical and environmental laboratory
services
-- Subsidiaries of Detrex Corporation
- Harvel Plastics, Inc. -- manufactures PVC and CPVC pipe and custom
extrusions
- The Elco Corporation -- produces petroleum additives, pharmaceutical
intermediates, and hydrochloric acid
- Seibert-Oxidermo, Inc. -- produces industrial and automotive paint and
other coatings
(1) For more information about the products of Detrex and its subsidiaries, see
page 16 of this Annual Report or visit our Web Site at http://www.detrex.com
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TO OUR SHAREHOLDERS:
We are pleased to report that your company achieved earnings of $1.5
million in 1997. This marks Detrex's second consecutive year of earnings
improvement and represents a significant increase over last year's earnings of
$415,000. The dedication and enthusiasm of the Detrex team generated profitable
results in all business units and a strong 1997 fourth quarter performance has
brought our consecutive string of profitable quarters to eight. As we enter
1998, the turnaround continues with our focus shifting to creating and
sustaining long-term profitable growth for your company.
Net sales in 1997 reflect a $3.5 million revenue increase which replaced
nearly all of the $4.6 million sales revenue associated with the industrial
furnace division which was sold in 1996. Our plastic pipe subsidiary, Harvel
Plastics, Inc., was the main contributor to the revenue growth.
Harvel generated solid bottom-line performance by capitalizing on the
demand for high quality PVC and CPVC products. The Elco Corporation also made an
important contribution to our profitability and responded effectively to
customer demand and changing market conditions. Cost reductions in the Solvents
and Environmental Services Division yielded much needed improvements, with the
business returning to profitability after two years of losses. Its sister
division, the Equipment Division, improved upon last year's profitable
performance with enhanced business processes and controls. Seibert-Oxidermo,
Inc., our paint subsidiary, achieved QS-9000 certification, introduced several
new custom products, and generated a profit in a highly competitive market. The
Automation Division successfully executed six major orders in its first year as
a stand-alone unit, and RTI Laboratories effectively accommodated on-going
changes in the analytical testing field.
Cash flow from operations enabled Detrex to fund $4.7 million in capital
expenditures internally in 1997. In addition, working capital has improved to
$9.3 million as of December 31, 1997. We are projecting capital expenditures of
nearly $8.5 million for 1998, including almost $4.0 million for the expansion of
Harvel's operations on the West Coast, as well as several other investments for
growth. Our capital expenditures will be financed primarily through internally
generated funds and industrial development bonds.
The Harvel expansion, slated for 1998, should provide your company an
outstanding platform to expand its geographical presence and distribution in the
western region of the United States. By reducing transportation costs and
improving order turnaround time, a new manufacturing and distribution facility
will enhance Harvel's ability to ship product to Pacific Rim countries, as well
as to customers on the West Coast. We believe this new facility should provide
an outstanding growth opportunity for both Harvel and Detrex.
Our Elco subsidiary is working on products and market opportunities with
strong potential for growth as well. The new plant in Ashtabula has been
launched and will provide much needed additional capacity in 1998. We are
currently developing new products, including an extremely high-purity
hydrochloric acid. In addition, we are enhancing our facilities and capabilities
for manufacturing of fine chemicals including pharmaceutical intermediates for
use in a broad range of products.
During 1997, we accelerated the recovery that began in 1996 and further
stabilized Detrex. Our goal for the new year is to continue building shareholder
value through growth and continuing improvements in plant, equipment, people and
processes. We thank our shareholders and the entire Detrex family for their
continued backing and support and look forward to continued progress.
Thomas E. Mark William C. King
President and Chief Operating Officer Chairman and Chief Executive Officer
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--------------- INDEPENDENT AUDITORS' REPORT---------------
------------------------------------
Suite 900
600 Renaissance Center
Deloitte & Touche LLP Letterhead Detroit, Michigan 48243-1704
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, 1997 and 1996 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, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our 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, 1997 and 1996 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
February 25, 1998
Deloitte & Touche Logo
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DETREX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995
----------- ----------- -----------
NET SALES................................................... $95,756,801 $96,825,436 $94,301,999
Cost of sales............................................... 71,356,262 74,147,179 73,062,297
Selling, general and administrative expenses................ 17,816,042 18,923,660 20,027,863
Provision for depreciation and amortization................. 3,242,789 3,188,758 3,393,721
Net environmental (income) expense.......................... -- (100,000) 100,039
Other (income) expense -- net............................... 293,961 (571,118) (689,350)
Minority interest........................................... 314,912 280,014 242,110
Interest expense............................................ 723,893 919,947 886,106
Gain on sale of Pacific Industrial Furnace Division......... -- (368,985) --
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES........................... 2,008,942 405,981 (2,720,787)
Provision (Credit) for income taxes......................... 495,839 (9,387) (851,484)
----------- ----------- -----------
NET INCOME (LOSS)........................................... 1,513,103 415,368 (1,869,303)
RETAINED EARNINGS AT BEGINNING OF YEAR...................... 14,119,822 13,704,454 15,573,757
----------- ----------- -----------
RETAINED EARNINGS AT END OF YEAR............................ $15,632,925 $14,119,822 $13,704,454
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE:
Basic....................................................... $.96 $.26 $(1.18)
=========== =========== ===========
Diluted..................................................... $.94 $.26 $(1.18)
=========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic....................................................... 1,583,414 1,583,414 1,583,414
Effects of Dilutive Stock Options........................... 28,056 11,222 --
----------- ----------- -----------
Diluted..................................................... 1,611,470 1,594,636 1,583,414
=========== =========== ===========
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
ASSETS
1997 1996
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents................................... $ 398,093 $ 1,311,045
Accounts receivable (less allowance for uncollectible
accounts of $372,000 in 1997 and $395,000 in 1996)........ 16,296,172 15,203,184
Note receivable............................................. -- 1,562,665
Refundable U.S. income taxes................................ -- 1,003,827
Inventories................................................. 9,742,109 9,058,167
Land and building held for sale............................. 1,425,000 --
Prepaid expenses and other.................................. 692,543 878,263
Deferred income taxes....................................... 1,349,842 759,063
----------- -----------
TOTAL CURRENT ASSETS................................. 29,903,759 29,776,214
LAND, BUILDINGS AND EQUIPMENT:
Land........................................................ 993,602 993,602
Buildings and improvements.................................. 16,555,248 15,938,390
Machinery and equipment..................................... 31,298,526 29,539,130
Construction in progress.................................... 2,541,084 819,122
----------- -----------
51,388,460 47,290,244
Less allowance for depreciation and amortization............ 30,040,031 27,916,193
----------- -----------
LAND, BUILDINGS AND EQUIPMENT -- NET................. 21,348,429 19,374,051
LAND, BUILDING AND EQUIPMENT HELD FOR SALE.................. 1,350,239 2,820,125
PREPAID PENSIONS............................................ 1,338,951 1,280,886
DEFERRED INCOME TAXES....................................... 693,406 1,367,265
OTHER ASSETS................................................ 935,978 973,858
----------- -----------
$55,570,762 $55,592,399
=========== ===========
See Notes to Consolidated Financial Statements.
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LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
----------- -----------
CURRENT LIABILITIES:
Loans payable............................................... $ 5,699,836 $ 5,627,453
Current maturities of capital lease obligations............. 303,464 385,366
Accounts payable............................................ 9,843,411 11,123,341
Environmental reserve....................................... 1,485,000 1,027,000
Accrued compensation........................................ 1,184,740 699,520
Other accruals.............................................. 2,113,776 2,398,802
----------- -----------
TOTAL CURRENT LIABILITIES............................ 20,630,227 21,261,482
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS.............. 569,396 393,800
ACCRUED POSTRETIREMENT BENEFITS............................. 4,488,982 4,293,584
ENVIRONMENTAL RESERVE....................................... 8,090,952 9,244,297
ACCRUED PENSION AND OTHER................................... 1,028,285 1,344,330
MINORITY INTEREST........................................... 1,941,147 1,746,236
STOCKHOLDERS' EQUITY:
Common capital stock, $2 par value, authorized 4,000,000
shares,
outstanding 1,583,414 shares.............................. 3,166,828 3,166,828
Additional paid-in capital.................................. 22,020 22,020
Retained earnings........................................... 15,632,925 14,119,822
----------- -----------
TOTAL STOCKHOLDERS' EQUITY........................... 18,821,773 17,308,670
----------- -----------
$55,570,762 $55,592,399
=========== ===========
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)....................................... $ 1,513,103 $ 415,368 $(1,869,303)
----------- ----------- -----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization...................... 3,242,789 3,188,758 3,393,721
(Gain) Loss on sale or write-off of buildings,
machinery and equipment........................ 42,255 107,488 (189,066)
Deferred income taxes.............................. 83,080 1,277,731 2,721,155
Changes to operating assets and liabilities that
provided (used) cash:
Accounts receivable.............................. (1,092,988) (1,247,167) 4,103,160
Note receivable.................................. 1,562,665 (1,562,665) --
Refundable U.S. income taxes..................... 1,003,827 2,036,945 (3,040,772)
Inventories...................................... (683,942) (620,662) 509,579
Prepaid expenses and other....................... 185,720 46,018 (248,742)
Other assets..................................... (34,177) 20,761 (133,535)
Accounts payable................................. (1,279,930) 2,115,738 (2,757,588)
Environmental reserve............................ (695,345) 63,098 (2,382,738)
Accrued compensation............................. 485,220 56,431 (179,561)
Postretirement benefits.......................... 195,398 307,699 349,569
Other accruals................................... (406,160) (1,806,234) 1,148,045
----------- ----------- -----------
TOTAL ADJUSTMENTS.............................. 2,608,412 3,983,939 3,293,227
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES...... 4,121,515 4,399,307 1,423,924
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................... (4,710,327) (2,324,663) (2,095,379)
Proceeds from disposal of machinery and equipment....... 2,125 1,615 235,321
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES.......... (4,708,202) (2,323,048) (1,860,058)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings......................................... -- -- 3,000,000
Repayment of long-term debt............................. -- -- (1,000,000)
Borrowing (repayment) of short-term debt -- net......... 72,383 (2,872,547) --
Principal payments under capital lease obligations...... (398,648) (657,027) (815,468)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES................................ (326,265) (3,529,574) 1,184,532
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents........ (912,952) (1,453,315) 748,398
Cash and cash equivalents at beginning of year.............. 1,311,045 2,764,360 2,015,962
----------- ----------- -----------
Cash and cash equivalents at end of year.................... $ 398,093 $ 1,311,045 $ 2,764,360
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest........................................... $ 797,756 $ 1,023,564 $ 771,564
Income taxes....................................... $ 205,472 $ 223,044 $ 284,579
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Capital lease obligations incurred in connection with
the acquisition of equipment........................... $ 649,665 $ 445,649 $ 566,628
Capital lease terminations.............................. $ 440,149 $ 152,931 $ 175,708
Sale of PIFCO........................................... $ -- $ 1,562,665 --
See Notes to Consolidated Financial Statements.
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DETREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND CUSTOMER CONCENTRATION
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, lubricant additives, pharmaceutical intermediates, cleaning solvents,
hydrochloric acid, PVC and CPVC plastic pipe, industrial finishing materials and
paints, automation equipment, 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.
All of the Company's business units operate in highly competitive markets
which are mainly national in scope, although approximately 12% of the Company's
business in 1996 and 1997 is done internationally, principally by its lubricants
subsidiary and its plastic pipe subsidiary. Generally, for all products there
are numerous competitors with no one company or a small number of companies
being dominant. The Company operates in niche markets and its principal methods
of competition in various markets include service, price and quality, depending
on the market serviced. No material part of the business is dependent upon a
single customer or a few customers and therefore vulnerability from this aspect
is not a factor. However, certain of the Company's business units sell primarily
to automotive or automotive related companies.
2. 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 1995 and 1996 have been reclassified to conform
with 1997 classifications.
Inventories and Accounts Receivable
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 equipment contracts are stated at the accumulated cost of material,
labor and burden less related progress billings.
Revenue from the Company's equipment contracts is recognized using the
percentage-of-completion method except when use of the completed contract method
does not have a material impact on the results of operations.
For sales reported under the percentage of completion method, the percent
of revenues is recognized based on the ratio of costs incurred to date to total
costs expected for each project. Revenue recognized for jobs in process at
December 31, 1997 totals $1,454,000 and costs incurred on these contracts
amounts to $1,071,000. Included in accounts receivable is $947,310 that has not
been billed to customers.
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 1997, 1996 and 1995 were approximately
$1,365,000, $1,114,000, and $1,272,000, respectively.
Earnings (Loss) Per Common Share
Basic earnings (loss) per common share is based upon the average number of
common shares outstanding during the year. Shares subject to in-the-money stock
options are the only items impacting diluted earnings per share.
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.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable,
notes receivable, accounts payable, and debt under the Revolving Credit
Agreement approximated fair values.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the balance sheet date
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and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. INVENTORIES
Inventories at December 31 consist of the following:
1997 1996
---------- -----------
Raw materials............... $3,390,407 $ 3,005,399
Work in progress............ 359,819 1,785,310
Finished goods.............. 5,996,243 5,768,376
Less: Progress billings on
work in progress.......... (4,360) (1,500,918)
---------- -----------
$9,742,109 $ 9,058,167
========== ===========
The excess of current cost over the stated last-in, first-out value is
approximately $1,345,000 and $1,635,000 at December 31, 1997 and 1996.
4. CAPITAL AND OPERATING LEASES
Capitalized lease assets included in machinery and equipment at December 31
are as follows:
1997 1996
---------- ----------
Machinery and equipment...... $1,420,319 $2,140,025
Accumulated amortization..... 611,394 1,151,240
---------- ----------
Leased assets -- net......... $ 808,925 $ 988,785
========== ==========
Rent expense applicable to operating leases for 1997, 1996 and 1995 was
$591,000, $565,000 and $569,000, respectively.
Minimum annual lease payments for leases in effect at December 31, 1997 are
as follows:
Minimum Lease Payments: Capital Operating
---------- ----------
1998.................... $ 413,017 $ 463,565
1999.................... 314,188 306,028
2000.................... 212,537 128,181
2001.................... 127,614 64,186
2002.................... 56,654 60,607
2003 and thereafter..... -- 75,000
---------- ----------
Total minimum lease
payments................... 1,124,010 $1,097,567
==========
Less amount representing
interest................... 251,150
----------
Present value of net minimum
lease payments............. 872,860
Less current portion......... 303,464
----------
Non-current portion.......... $ 569,396
==========
5. REVOLVING CREDIT AGREEMENT AND TERM LOAN
The Company finalized a new Credit Agreement (the Agreement) with Comerica
Bank on June 13, 1996. The Agreement provides for a credit facility of up to
$12.0 million, collateralized by the Company's inventory, accounts receivable,
certain fixed assets, and stock of subsidiaries. The Agreement contains, among
other provisions, requirements for maintaining defined levels of tangible net
worth and various financial statement ratios. Interest under the Agreement is
based on the prime interest rate. The Company has received a commitment from
Comerica Bank to extend the current facility to at least one year beyond the
current May 1, 1998 expiration date. The current Agreement also provides for a
$2.0 million Term Loan facility.
The weighted average interest rate for short term borrowings under the
Agreement for the year ended December 31, 1997 was 9.92%, compared to 10.07% for
the year ended December 31, 1996 and 8.10% for the year ended December 31, 1995.
6. INCOME TAXES
The income taxes, calculated in accordance with SFAS No. 109 for 1997, 1996
and 1995, included the following components:
1997 1996 1995
--------- ----------- -----------
Current for tax purposes:
Federal.................... $ 42,032 $(1,146,060) $(4,318,066)
State and local............ 194,559 74,381 278,427
--------- ----------- -----------
Total Current............ 236,591 (1,071,679) (4,039,639)
--------- ----------- -----------
Deferred income taxes:
Federal.................... 723,261 948,152 2,609,310
Valuation allowance........ (467,000) -- 467,000
State and local............ 2,987 114,140 111,845
--------- ----------- -----------
Total Deferred........... 259,248 1,062,292 3,188,155
--------- ----------- -----------
Provision (Credit) for income
taxes...................... $ 495,839 $ (9,387) $ (851,484)
========= =========== ===========
Deferred tax assets (liabilities) at December 31, 1997 and 1996 relate to
the following temporary differences and carryforwards:
1997 1996
----------- -----------
Net operating loss carryforward.......... $ 244,815 $ 1,049,617
Alternative minimum tax credit
carryforward........................... 425,176 383,144
Accruals for:
Postretirement benefits................ 1,718,831 1,644,013
Environmental.......................... 3,666,633 3,932,879
Restructuring.......................... 41,463 43,268
Self insurance reserve................. 150,097 187,621
Inventory related........................ 429,790 460,635
Other.................................... 184,367 225,875
----------- -----------
Gross deferred tax assets............ 6,861,172 7,927,052
----------- -----------
Valuation allowance...................... -- (467,000)
----------- -----------
Depreciation............................. (3,021,329) (2,919,663)
Undistributed earnings of the Company's
DISC................................... (1,484,017) (1,484,017)
Insurance Refund......................... -- (344,610)
Other.................................... (312,578) (585,434)
----------- -----------
Gross deferred tax liabilities....... (4,817,924) (5,333,724)
----------- -----------
Net deferred tax assets.............. $ 2,043,248 $ 2,126,328
=========== ===========
The Company has a net operating loss carryforward of $720,044 that expires
in 2010.
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The reasons for the difference between the income tax provision and income
taxes computed at 34% for 1997, 1996 and 1995 are summarized below:
1997 1996 1995
--------- --------- ---------
Computed 'expected' tax
provision..................... $ 683,040 $ 138,034 $(925,068)
State and local income taxes,
net of federal tax benefit.... 130,380 124,424 257,580
Nondeductible meal and
entertainment expense......... 68,655 63,504 57,324
Tax refund carryback tax rate
differential.................. -- (364,319) (791,805)
Deferred tax asset valuation
allowance..................... (467,000) -- 467,000
Other -- net.................... 80,764 28,970 83,485
--------- --------- ---------
$ 495,839 $ (9,387) $(851,484)
========= ========= =========
In 1995, the Company established a valuation allowance of $467,000 against
its deferred tax assets. The Company returned this reserve to income in 1997.
7. LAND, BUILDINGS AND EQUIPMENT HELD FOR SALE
In 1993, the Company sold one division and outsourced manufacturing at
another location. As a result, the Company has two facilities available for
sale. Neither facility is currently utilized and the Company is actively
pursuing the sale of both. One facility is under contract to sell and it is
anticipated that the transaction will be finalized during the first half of
1998.
8. 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 7.0% and 4.0%, at December 31, 1997, 7.5% and 4.0% at December 31, 1996 and
7.25% and 4.0% at December 31, 1995. The expected long-term rate of return on
assets was 8.5% in all years. The following table sets forth the plans' funded
status and amounts recognized in the Company's balance sheet at December 31:
1997 1996
----------- -----------
Actuarial present value of benefit
obligations:
Accumulated benefit obligations:
Vested benefits.................... $25,430,985 $23,253,400
Non-vested benefits................ 1,121,041 1,065,066
----------- -----------
Total............................ $26,552,026 $24,318,466
=========== ===========
Projected benefit obligations for
service
rendered to date..................... $29,056,309 $26,515,239
Plan assets at fair value -- primarily
equity and fixed income bond funds... 32,834,181 29,678,284
----------- -----------
Excess of plan assets over projected
benefit obligations.................. 3,777,872 3,163,045
Unrecognized net asset at January 1,
1986 being recognized principally
over 15 years........................ (752,700) (950,426)
Unrecognized net gain from past
experience different from that
assumed.............................. (2,364,432) (1,888,671)
Additional minimum liability........... (180,335) (156,892)
----------- -----------
Net pension asset...................... $ 480,405 $ 167,056
=========== ===========
For plans included above where projected benefits exceed plan assets the
following data is set forth:
1997 1996
-------- --------
Accumulated benefit obligations.............. $918,272 $844,844
Projected benefit obligations................ 946,925 881,981
Plan assets at fair value.................... 737,182 639,326
Net pension credit included the following components:
1997 1996 1995
----------- ----------- -----------
Service cost-benefits
earned during the year... $ 570,823 $ 584,825 $ 467,594
Interest cost on projected
benefit obligations...... 1,942,248 1,869,757 1,755,902
Actual return on plan
assets................... (4,872,550) (3,506,258) (4,310,407)
Net amortization and
deferral................. 2,104,491 979,521 1,956,305
----------- ----------- -----------
Net pension credit......... $ (254,988) $ (72,155) $ (130,606)
=========== =========== ===========
The Company has a 401(k) plan covering its salaried employees. Employees
can contribute up to 15% of their salaries. The Company makes no contribution to
this plan.
Certain divisions and subsidiaries of the Company provide contributory
defined benefit health care plans for retirees, subject to various conditions
and limitations.
Net periodic postretirement benefit costs included the following
components:
1997 1996 1995
-------- -------- --------
Service cost-benefits attributed
to service during the period... $100,341 $171,286 $161,389
Interest cost on accumulated
postretirement benefit
obligation..................... 246,921 284,266 290,573
Net amortization................. (48,580) -- --
-------- -------- --------
Net periodic postretirement
benefit cost................... $298,682 $455,552 $451,962
======== ======== ========
9
13
The Company's postretirement benefit plans are not funded. The status of
the plans at December 31, 1997 and 1996 follows:
1997 1996
---------- ----------
Accumulated postretirement benefit
obligation:
Retirees.................................. $2,121,546 $2,149,113
Fully eligible active plan participants... 248,040 283,839
Other active plan participants............ 1,113,065 1,653,460
Unrecognized net gain and prior service
cost...................................... 1,006,331 207,172
---------- ----------
Total accrued postretirement benefits... $4,488,982 $4,293,584
========== ==========
For measurement purposes, a 8.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1997. The rate is assumed
to decrease gradually over the next 8 years to 5.0% 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, 1997 by approximately
$640,129 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year then ended by approximately
$54,659.
The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.0% at December 31, 1997, 7.5% at
December 31, 1996 and 7.25% at December 31, 1995.
9. SALE OF PACIFIC INDUSTRIAL FURNACE DIVISION
On October 21, 1996, the Company completed the sale of the net assets of
its Pacific Industrial Furnace Company (PIFCO) division. A portion of the
consideration was received as a $1,562,665 note which was paid in 1997. Also,
the Company entered into a consulting agreement which provides that it will
receive compensation for providing certain services to the buyer over a four
year period. The 1996 pre-tax gain on the sale of this division was $369,000.
Included in 1996 results are sales of $4.6 million and a before tax loss of
$573,000 applicable to PIFCO.
10. OTHER INCOME -- NET
Other income includes interest income of approximately $7,000, $182,000 and
$272,000 for 1997, 1996 and 1995, respectively.
11. CONTINGENCIES
The Company and at least seventeen other companies are potentially
responsible for sharing the costs in a proceeding to clean up contaminated
sediments in the Fields Brook watershed in Ashtabula, Ohio. The Environmental
Protection Agency ('EPA') issued a Record of Decision in 1986 concerning the
methods it recommends using to accomplish this task. The Company and the other
potentially responsible parties negotiated with the EPA as to how best to effect
the clean up operation. After negotiation, an agreement was reached with EPA on
clean-up methodology. The Company's share of clean-up costs is anticipated to be
in the range of approximately $3.0 to $3.5 million.
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 environmental
contamination at several sites, including properties owned by the Company. The
amounts of the reserve at December 31, 1997 and 1996 were $9.6 million and $10.3
million respectively. The reserve includes a provision for the Company's
anticipated share of remediation in the Fields Brook watershed referred to
above, as well as a provision for costs that are expected to be incurred in
connection with remediation of other sites. Some of these studies have been
completed; others are ongoing. In some 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.
12. 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, 1997, 1996 and 1995.
13. 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
10
14
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.
14. 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). A summary of
the fixed stock option grants under Detrex's Management Plan and Directors Plan
as of December 31, 1997, 1996, and 1995, and changes during the years is
presented below.
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. Of the 200,000 options reserved, 34,000 remain available for
future grants.
Management Plan Directors Plan
------------------------ -----------------------
Shares Shares
Under Weighted Ave. Under Weighted Ave.
Option Exercise Price Option Exercise Price
------ -------------- ------ --------------
1995
Outstanding at beginning
of year................ 95,000 $9.01 24,000 $10.30
Granted.................. 3,000 8.00 6,000 8.25
Exercised................ -- -- -- --
Forfeited................ 75,000 9.00 -- --
Outstanding at end of
year................... 23,000 8.90 30,000 9.89
1996
Granted.................. 101,000 6.27 6,000 7.31
Exercised................ -- -- -- --
Forfeited................ 5,000 8.625 -- --
Outstanding at end of
year................... 119,000 6.68 36,000 9.46
1997
Granted.................. 2,000 9.00 6,000 8.13
Exercised................ -- -- -- --
Forfeited................ -- -- -- --
Outstanding at end of
year................... 121,000 6.72 42,000 9.27
Of the 163,000 options outstanding at December 31, 1997, the weighted
average remaining life is 7.5 years, and 97,700 of such options are exercisable
at December 31, 1997. Also, of the 163,000 options outstanding, 104,000 are
in-the-money and 59,000 are out-of-the-money. The range of exercise prices is
from $5.00 to $13.20.
In accordance with the Statement of Financial Accounting Standard No. 123,
Accounting for Stock-Based Compensation, the Company has elected to continue to
report compensation by applying the requirements of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees and therefore has
recorded no charge to income for stock options. The pro-forma effect of applying
the Black-Scholes option valuation model to options granted in 1995, 1996 and
1997 as well as the underlying weighted average Black-Scholes assumptions are as
follows:
1997 1996 1995
---- ---- ----
Net income (loss) as reported (in
thousands)........................ $1,513 $415 $(1,869)
Pro-forma net income (loss) (in
thousands)........................ 1,434 347 (1,890)
Earnings (loss) per share as
reported.......................... 0.96 0.26 (1.18)
Pro-forma earnings (loss) per
share............................. 0.91 0.22 (1.19)
Expected Volatility................. 0.37 0.36 0.42
Risk-Free Rate of Return............ 6.54 5.99 7.23
Expected Life....................... 6-10 Years 10 Years 10 Years
Using the assumptions underlying the Black-Scholes model, the per share
weighted average fair value of options granted in 1997, 1996 and 1995 is $4.60,
$3.51 and $5.56, respectively.
11
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Detrex Corporation and its consolidated subsidiaries (the Company) earned
$1,513,000 for the year ended December 31, 1997, compared to a net profit of
$415,000 for the year ended December 31, 1996 and a net loss of $1,869,000 for
the year ended December 31, 1995. All of the Company's business units were
profitable in 1997 and the Company has achieved eight consecutive quarters of
profitability. In 1997 the Company earned $868,000, or approximately 57% of its
annual net income, in the fourth quarter, compared with 1996 where the Company
earned $256,000, or approximately 62% of its annual net income in the fourth
quarter. The fourth quarter of 1997 was favorably impacted by high earnings from
the Company's Equipment Division, favorable inventory adjustments, and the
return to income of a portion of the Company's tax valuation reserve.
The year-to-year improvement was achieved through a combination of actions
in the business units and the corporate office. The Elco Corporation ("Elco")
improved its operations by rationalizing its product lines and introducing new
products. Harvel Plastics, Inc. ("Harvel") took advantage of new production
equipment and tooling to maintain its edge in quality and to introduce new
products to the market, resulting in substantial volume growth.
Seibert-Oxidermo, Inc. ("Seibert") achieved QS-9000 certification, introduced
several new custom products, and generated a profit in a highly competitive
market. The Equipment Division returned to profitability in 1996 and continued
the improvement in 1997 as it reestablished its position in the marketplace; in
addition, process improvements in engineering and project management contributed
to improved results. Cost cutting at the corporate office and the Solvents and
Environmental Division provided significant bottom line savings. The Solvents
Division also succeeded in increasing market share in a shrinking market through
intense customer focus. In general, the Company has benefited from an emphasis
on sales, service and support to its customer base.
COMPARATIVE OPERATING DATA (IN THOUSANDS)
1997 1996 1995
--------------- --------------- ----------------
$ % $ % $ %
------ ----- ------ ----- ------- -----
Net sales................................................ 95,757 100.0 96,825 100.0 94,302 100.0
Gross margin............................................. 24,401 25.5 22,678 23.4 21,240 22.5
Selling, general and administrative expenses............. 17,816 18.6 18,924 19.5 20,028 21.2
Depreciation and amortization............................ 3,243 3.4 3,189 3.3 3,394 3.6
Gain on sale of PIFCO.................................... -- -- 369 .4 -- --
Net income (loss)........................................ 1,513 1.6 415 .4 (1,869) (2.0)
1997 COMPARED TO 1996 -- Net sales in 1997 reflect a $3.5 million revenue
increase which replaced nearly all of the $4.6 million sales revenue associated
with the industrial furnace division (PIFCO) which was sold in 1996. Our plastic
pipe subsidiary, Harvel was the main contributor to the revenue growth.
Gross margin in 1997 was 25.5%, compared to 23.4% in 1996. Improved cost
control at the Company's Equipment Division and its Solvents and Environmental
Services Division accounted for most of the margin improvement.
The $1.1 million decrease in selling, general and administrative expenses
is primarily attributable to a division being sold in the fourth quarter of
1996, the cost cutting activities that took place at the Company's Solvents and
Environmental Services Division and reduction in outside commissions at Elco.
The provision for depreciation and amortization is approximately the same
as the prior year for all of the Company's business units.
In 1996, the "Other income" category reflects royalty income received by
Seibert that ended in early 1997, whereas in 1997 the expense is primarily a
write-down of a plant facility in anticipation of its sale.
During 1997, the Company kept its borrowings under its Credit Agreement at
a lower level than during 1996; consequently interest expense was lower in 1997
than in 1996.
Income tax expense in 1997 reflects state, local and federal income taxes,
partially offset by returning to income the deferred tax valuation allowance
that was established in 1995. Income tax expense in 1996 reflects the normal
provisions, completely offset
12
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
by a credit to reflect the recognition of a rate differential resulting from the
carry-back of certain components of prior year net operating losses to tax years
in which the statutory rate was 46%.
1996 COMPARED TO 1995 -- Net sales in 1996 increased $2.5 million over 1995
amounts. Revenue increases occurred at the Company's Equipment Division,
Seibert, Harvel, and Elco. Revenue decreases occurred at the Solvents and
Environmental Services Division and at PIFCO which was sold in October.
Gross margin in 1996 was 23.4%, compared to 22.5% in 1995. The increase is
attributable to improved margins at the Company's Equipment Division and Elco.
These two business units had the largest increase in sales, were able to control
costs, and therefore benefitted from economies of scale. In addition, Elco
entered the pharmaceutical intermediate market where margins are better than
Elco's traditional product lines.
The $1.1 million decrease in selling, general and administrative expenses
is attributable to cost cutting and control activities that took place, and a
reduction in termination and severance pay. Cost cutting was most prevalent in
the Company's Solvents and Environmental Services Division. This cost cutting
action contributed to a smaller loss for this division in 1996 than the one that
occurred in 1995.
The 1996 provision for depreciation and amortization is approximately the
same as in 1995 for all of the Company's current business units. The overall
reduction in depreciation expense is primarily attributable to no depreciation
in 1996 on a former production facility currently held for sale.
Interest expense increased in 1996 as a result of higher interest rates
being incurred on the short-term borrowings under the Company's credit facility.
This rate increase was partially offset by lower borrowings.
The income tax credit in 1996 reflects the normal federal income tax
provision, state and local income taxes, and a credit reflecting the recognition
of a rate differential resulting from the carry-back of certain components of
this year's taxable loss to a tax year in which the statutory rate was 46%.
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
The Company utilized a combination of internally generated funds and the
receipt of a federal income tax refund to finance its activities during 1997.
The Company funded $4.7 million in capital expenditures without utilizing any of
its $2.0 million term loan commitment.
Working capital was $9.3 million at December 31, 1997, compared to $8.5
million at December 31, 1996.
The Company is projecting capital expenditures of approximately $8.5
million for 1998, including almost $4.0 million for the expansion of Harvel's
operations and $400,000 for replacing and upgrading the Company's computer
systems. These capital expenditures will be financed through internally
generated funds and industrial development bonds.
The Company has paid no dividends since the second quarter of 1991 and
cannot forecast when dividend payments will be restored.
13
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
OTHER
The Company implemented AICPA Statement of Position 96-1, Environmental
Remediation Liabilities, and Statement of Financial Accounting Standards No.
128, Earning per Share. Implementation had no material impact on the results of
operations, the Company's consolidated financial position, or earnings per
share. The Company will be implementing Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information, in 1998 but at the current time cannot determine how many segments
it will be reporting.
During the last half of 1997, the Company undertook a study to determine
its future computer and software requirements. Included in this study were the
Year 2000 (Y2K) compliance considerations. The Company will be upgrading its
systems over the next two years and, by the second half of 1999, will only be
utilizing programs that are Y2K compliant. Also, since the Company relies on
electronic data from its vendors, financial institutions, customers, and other
constituents, the Company will conduct surveys to determine if these entities
are on schedule to become Y2K compliant. The outcome of these surveys cannot be
predicted.
In order to place a high priority on Y2K compliance, the Company has
designated a project manager and a supporting team to assume responsibility for
implementation. A software vendor has been selected and a consultant has been
engaged to assist in the process. All internal costs associated with the project
have not been identified; however, total capital expenditures for the project
could approximate $800,000.
14
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SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
1997 1996 1995 1994 1993
------- ------- ------- -------- --------
Net sales.............................................. $95,757 $96,825 $94,302 $100,096 $105,578
Net income (loss)...................................... 1,513 415 (1,869) (5,639) (1,570)
Earnings (loss) per common share -- basic.............. .96 .26 (1.18) (3.56) (.99)
Earnings (loss) per common share -- diluted............ .94 .26 (1.18) (3.56) (.99)
Total assets........................................... 55,571 55,592 57,659 61,775 59,052
Net working capital.................................... 9,274 8,515 6,317 6,968 10,721
Capital expenditures................................... 4,710 2,325 2,095 2,201 1,464
Long term portion of capital lease obligations......... 569 394 518 702 1,030
Total bank debt........................................ 5,700 5,627 8,500 5,500 4,000
Stockholders' equity................................... 18,822 17,309 16,893 18,763 24,373
Stockholders' equity per common share.................. 11.89 10.93 10.67 11.85 15.42
Number of employees.................................... 353 345 347 367 388(1)
Percentages to net sales:
Gross margin...................................... 25.5 23.4 22.5 22.9 23.8
Net income (loss)................................. 1.6 .4 (2.0) (5.6) (1.5)
Net income (loss) as a percent of:
Average total assets.............................. 2.7 .7 (3.1) (9.3) (2.6)
January 1st stockholders' equity.................. 8.7 2.5 (10.0) (23.1) (6.1)
Current ratio.......................................... 1.4 1.4 1.3 1.3 1.5
(1) At January 1, 1994.
15
19
PRODUCTS OF THE DETREX GROUP OF COMPANIES
CHEMICALS DIVISION(1) EQUIPMENT DIVISION
P.O. BOX 1398, 325 EMMETT AVENUE,
ASHTABULA, OHIO 44004 BOWLING GREEN,
R. D. WYVILL, General Manager KENTUCKY 42101
N-Methyl Pyrrole and Pyrrole D. R. CRANDELL,
Semi-conductor Grade Division President
Hydrochloric Acid Aqueous and Semi-Aqueous
Pharmaceutical Intermediates Cleaning Equipment
(1) Operated by The Elco Corporation Electronic Component Cleaning
and Defluxing Machines
SOLVENTS AND Vapor Degreasers
ENVIRONMENTAL SERVICES
DIVISION AUTOMATION DIVISION
24901 NORTHWESTERN HWY, 24901 NORTHWESTERN HWY,
SUITE 512 SOUTHFIELD, MICHIGAN
SOUTHFIELD, MICHIGAN 48075
48075 C. K. UTZ, General Manager
D. R. CRANDELL, Division President Automation and Material
Virgin or Recycled Solvents Handling Equipment
Solvent Reclamation and
Waste Management
RTI LABORATORIES DIVISION
31628 GLENDALE,
LIVONIA, MICHIGAN
48150
J. G. SINGH, General Manager
Analytical Laboratory Services
HARVEL PLASTICS, INC.
P.O. BOX 757,
EASTON, PENNSYLVANIA 18042
E. E. WISMER, President
PVC and CPVC Plastic Pipe
Solid Bar, Heavy Wall Tubular Stock,
Angle Stock, Custom Extrusions
SEIBERT-OXIDERMO, INC.
16255 WAHRMAN,
ROMULUS, MICHIGAN
48174
D. A. CHURCH, President
Industrial and Automotive Coatings
Conductive Primers for Rigid and
Flexible Plastics
Adhesion Promoters for Plastics
Automotive Parts Enamels
Solvent and Water-Borne Coatings
THE ELCO CORPORATION
1000 BELT LINE ST.,
CLEVELAND, OHIO 44109
R. D. WYVILL, President
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)
1997 Quarters 1996 Quarters
---------------------------------------- ----------------------------------------
4th 3rd 2nd 1st 4th 3rd 2nd 1st
------- ------- ------- ------- ------- ------- ------- -------
Net sales....................... $25,972 $22,908 $23,716 $23,161 $23,453 $25,060 $24,312 $24,000
Gross margin on sales........... 7,221 5,798 5,786 5,596 5,617 5,639 5,847 5,575
Net income...................... 868 173 336 136 256 35 113 11
Per common share -- basic....... .55 .11 .21 .09 .16 .02 .07 .01
Per common share -- diluted..... .53 .11 .21 .09 .16 .02 .07 .01
Stock price range(1)
High.......................... 11 1/4 9 7/8 9 1/4 8 1/4 7 7 1/4 8 1/2 8 3/4
Low........................... 8 3/4 7 1/4 7 1/4 5 3/4 5 3/4 5 1/4 5 4 3/4
(1) Stock price range was obtained from NASDAQ quotations.
16
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DIRECTORS
BRUCE W. COX
President, B. W. Cox Company,
Manufacturers Representative
ROBERT A. EMMETT, III
Partner, Reed Smith Shaw & McClay,
Attorneys, Washington, D.C.
WILLIAM C. KING
Chairman and Chief Executive Officer
JOHN F. MANGOLD
Manufacturing Consultant
THOMAS E. MARK
President and Chief Operating Officer
BENJAMIN W. McCLEARY
Partner, McFarland Dewey & Co.,
Investment Bankers, New York City
ARBIE R. THALACKER
Partner, Shearman & Sterling,
Attorneys, New York City
JOHN D. WITHROW
Retired President and Chief Operating Officer,
Lectron Products Inc.
AUDIT COMMITTEE
JOHN F. MANGOLD, Chairman
ARBIE R. THALACKER
ROBERT A. EMMETT, III
TRANSFER AGENT AND
REGISTRAR
STATE STREET BANK AND TRUST COMPANY
AUDITORS
DELOITTE & TOUCHE LLP
OFFICERS
W. C. KING
Chairman and Chief Executive Officer
T. E. MARK
President and Chief Operating Officer
G. J. ISRAEL
Vice President-Finance, Treasurer and
Chief Financial Officer
R. M. CURRIE
Secretary and General Counsel
E. R. RONDEAU
Controller
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR 1997 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.
21
DETREX CORPORATION
GENERAL OFFICES -- 24901 NORTHWESTERN HWY., SUITE 500, SOUTHFIELD, MICHIGAN
48075
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MAILING ADDRESS -- P.O. BOX 5111, SOUTHFIELD, MI 48086-5111
Telephone: (248) 358-5800
INTERNET ADDRESS -- http://www.detrex.com