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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
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or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-784
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DETREX CORPORATION
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(Exact name of registrant as specified in its charter)
Michigan 38-0480840
- ------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24901 Northwestern Hwy, Suite 500, Southfield, Michigan 48075
- ------------------------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 358-5800
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- --------------------------------- ---------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Capital Stock, $2 Par Value
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X NO
---------- ----------
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value (based upon the NASDAQ Closing Price) of Common
Capital Stock on March 27, 2003 of Detrex Corporation held by nonaffiliates was
approximately $2.7 million.
The number of shares of Common Capital Stock, $2 Par Value, outstanding on March
27, 2003 was 1,583,414.
Documents incorporated by reference:
Part and Item Number
of Form 10-K into
Document which Incorporated
-------- ---------------------
1. Detrex Corporation Part II Items 5 through 8
Annual Report to Part IV, Item 15
Shareholders for the year
ended December 31, 2002
2. Detrex Corporation Part III, Items 10, 11, 12
Notice of Annual and 13
Meeting of Shareholders
and Proxy Statement for
the Annual Meeting of
Shareholders to be held
April 24, 2003
2
PART I
ITEM 1. BUSINESS
Detrex Corporation was incorporated in Michigan in 1925. Detrex Corporation and
its subsidiaries (the Company) operate predominantly in chemicals and allied
products, and supply processes for use by manufacturing and service industries
and is comprised of the following operations:
Subsidiaries of Detrex Corporation
- Harvel Plastics, Inc. -- manufacturer of high quality PVC and
CPVC pipe and custom extrusions
- The Elco Corporation -- manufacturer of high performance
specialty chemicals including lubricant additives, fine
chemicals, and semi-conductor grade hydrochloric acid
Net sales (in thousands) of each business unit for each of the last three years
are set forth below:
2002 2001 2000
---- ---- ----
Harvel Plastics, Inc. $40,643 $40,252 $47,506
The Elco Corporation 20,299 18,832 20,807
For additional information regarding the operating segments of the Company, see
Note 15 to the Consolidated Financial Statements.
3
PART I (CONTINUED)
ITEM 1. BUSINESS (Continued)
The backlog of orders at any one time is generally not significant to the
Company's business. The Company sold its Equipment division effective January
17, 2002, and the backlog of orders at December 31, 2001 was included in the
sale.
Raw materials essential to the Company's various products are generally
commodity materials and are readily available from competitive sources.
The Company owns various patents and trademarks which aid in maintaining the
Company's competitive position; these expire at various times within the next
sixteen years. The expiration of such patents and trademarks should not have a
material adverse effect on the Company's operations. No material portion of the
Company's business is seasonal or subject to renegotiation of profits or
termination of contracts or subcontracts at the election of the government.
There are no customers to which sales were made in an amount which equals ten
percent or more of consolidated revenues.
The Company does not expect to incur significant capital expenditures for
environmental compliance in 2003. However, the Company does expect to continue
to incur significant professional fees and remediation expenses in connection
with its environmental compliance efforts. The Company maintains an
environmental reserve which at December 31, 2002 totaled $7.6 million, of which
$1.3 million is estimated to be spent in 2003. A more detailed discussion of
environmental matters is included under Item 3 - Legal Proceedings, Note 11 to
the Consolidated Financial Statements and Management's Discussion and Analysis
in the Annual Report.
The Company employed 190 persons as of December 31, 2002.
The Company is not engaged in manufacturing operations in foreign countries. For
information regarding sales by customer location, see Note 15 to the
Consolidated Financial Statements.
On September 29, 2000, Seibert-Oxidermo, Inc., a wholly-owned subsidiary of the
Company, completed the sale of assets, other than real estate, used in its paint
business. For information on the financial aspects of the transaction, see Note
8 to the Consolidated Financial Statements.
The Company announced a plan, as of December 31, 2001, to exit its Parts
Cleaning Technologies (PCT) segment. As part of this exit, the Company sold its
Equipment division (a business within this segment), effective January 17, 2002.
Effective June 1, 2002 the Company sold certain assets, including inventories,
of its solvent distribution and waste business (Solvents Division). See Note 9
to the Consolidated Financial Statements for more details on the financial
aspects of the sales of the divisions, as well as the details on the PCT exit.
4
PART I (CONTINUED)
ITEM 1. BUSINESS (Concluded)
The Company utilized a combination of internally generated funds and the
positive cash flow generated from the exit of Parts Cleaning Technologies in
2002 to finance its operations, a $500,000 principal payment on its Industrial
Development Bonds, $2.2 million in capital expenditures, and $1.8 million in
non-PCT environmental expenditures. The revolving credit balance was reduced by
$1.3 million during 2002. Working capital at December 31, 2002 decreased to
$16,000, from $496,000 million at December 31, 2001. The Company has paid no
dividend since the second quarter of 1991 and cannot forecast when the dividend
will be restored. For a discussion of the Company's Credit Agreement, see Note 5
to the Consolidated Financial Statements and Management's Discussion and
Analysis in the Annual Report. For further discussion of the exit from PCT, see
Note 9 to the Consolidated Financial Statements and Management's Discussion and
Analysis in the Annual Report.
The Company has market risks which could arise from fluctuations in interest
rates under both its Credit Agreement and the Industrial Development Bonds
issued by the California Economic Development Financial Authority (see Notes 5
and 6 to the Consolidated Financial Statements). Under the Credit Agreement with
Comerica Bank, and assuming an average balance of $9,000,000 on the revolving
credit facility, a 1% change in the prime interest rate could impact the
Company's pretax earnings by approximately $90,000, and for the Industrial
Development Bonds, a 1% increase in tax-exempt bond interest rates could affect
pretax earnings by a maximum of $18,000.
ITEM 2. PROPERTIES
The Company's administrative offices are located in approximately 5000 square
feet of leased space at 24901 Northwestern Hwy., Suite 500, Southfield,
Michigan.
Detrex and its subsidiaries conduct manufacturing and research operations in
numerous locations of which nine are owned as follows:
1) The Company's lubricants subsidiary, The Elco Corporation ("Elco"),
manufactures gear and oil additives in a plant located in Cleveland, Ohio on 5
acres of land and 59,000 square feet of office, research and plant space. This
plant is equipped with mixing and blending equipment and storage facilities.
2) Facilities located on 57 acres in Ashtabula, Ohio are used in connection with
the manufacture of hydrochloric acid, reagent grade chemicals, N-methyl pyrrole,
and zinc-based lubricant additives. These facilities are owned by Detrex
Corporation and managed by Elco.
3) The Company's plastic pipe subsidiary, Harvel Plastics, Inc. ("Harvel"),
manufactures plastic pipe in a plant located on 20 acres of land and 228,500
square feet of office and plant space located in Easton, Pennsylvania. Extruders
and special dies are used to manufacture the plastic PVC pipe from resin.
Production and warehouse facilities have been expanded several times since this
subsidiary was acquired in 1968.
Harvel expanded its manufacturing capacity in 1998 by leasing a new 100,000
square feet facility in California, which was built to suit Harvel's warehouse
and manufacturing needs. This facility was expanded in October 2001 to a total
of 138,000 square feet. The lease term is for an initial period of fifteen years
expiring in the year 2013, with provision for three five-year extensions.
5
PART I (CONTINUED)
ITEM 2. PROPERTIES (Concluded)
4) The Company owned a building used as a research laboratory and office in
Bowling Green, Kentucky. This property was sold on January 17, 2002 in
connection with the sale of the Equipment Division (a business within the PCT
segment). In addition, the Company owns a separate warehouse building in Bowling
Green.
5) The Company owns a warehouse and sales office facility located in Detroit,
Michigan. The building area is approximately 20,000 square feet and is located
on approximately one-half acre of land.
6) The Company owned a warehouse and sales office facility located in Los
Angeles, California. The building area is approximately 10,000 square feet and
is located on one acre of land in the industrial section of the city. This
building was sold in a transaction that closed on January 29, 2003.
7) The Company owns a warehouse and sales office facility located in Charlotte,
North Carolina. The building area is approximately 11,000 square feet and is
located on one acre of land.
8) The Company owns a warehouse and sales office facility located in
Indianapolis, Indiana. The building area is approximately 8,600 square feet and
is located on one acre of land.
9) The Company owns a warehouse and sales office facility located in Chicago,
Illinois. The building area is approximately 10,000 square feet and is located
on one acre of land.
Properties 4-9 above are part of the PCT segment, and will be exited,
remediated, and/or disposed of as the PCT exit is executed.
In addition to the above, the Company owns the real estate formerly utilized by
Seibert-Oxidermo, Inc. This real estate consists of approximately 40 acres of
land in Romulus, Michigan and a warehouse facility in Detroit, Michigan, both of
which are currently held for sale.
ITEM 3. LEGAL PROCEEDINGS
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. Some
of these studies have been completed; others are ongoing. In some cases, the
methods of remediation remain to be agreed upon. At one such site, the Company
has been a potentially responsible party for sharing the costs in a proceeding
to clean up contaminated sediments in the Fields Brook watershed in Ashtabula,
Ohio. The Fields Brook clean up was completed in the fourth quarter of 2002.
During the final stages of the project, unanticipated additional contamination
was discovered, making it necessary to perform additional remediation, which
drove costs significantly over previous estimates. The Company's share of the
increased costs totaled $860,000. Primarily as a result of this occurrence, and
the reevaluation of other amounts within the environmental reserve, a pre-tax
charge of $725,000 was recorded, and the reserve was increased by a like amount.
6
PART I (CONTINUED)
ITEM 3. LEGAL PROCEEDINGS (Continued)
In addition, the company added $250,000 to its environmental reserves to cover
the cost of operating and maintaining extraction test wells for source control
installed on its Ashtabula, Ohio property to accomplish remediation of the site.
These test wells will operate for approximately the next two years, at which
time their performance will be evaluated for effectiveness. At that time it may
be necessary to add provisions to the reserve for installation of additional
extraction wells and for operation and maintenance of those wells in the future.
The Company has not accrued for these costs because, at this time, it is not
probable that they will be incurred.
The Company performs regular reviews of its reserves for environmental matters.
The amounts of the reserve at December 31, 2002 and 2001 were $7.6 million and
$8.5 million, respectively. The Company had environmental expenditures of
approximately $1.9 million in 2002. The Company increased the reserve by
approximately $5.7 million at year end 2001. This action was taken to provide
for $3.7 million in estimated costs associated with the eventual closure of the
sites operated by the PCT segment, including site investigation, engineering
studies, remediation, and, in general, compliance with regulatory closure
requirements, and $2.0 million in costs primarily for the Fields Brook superfund
project and associated sites, including capital costs associated with Ashtabula
source control test wells. A portion of the increase to the reserve is
anticipated to cover the completion of remediation and a risk transfer to third
parties of ongoing liabilities associate with Fields Brook, allowing the Company
to exit from the site. With respect to ongoing operation and maintenance
responsibility for the Fields Brook site, in 2002 it became unlikely the Company
would be successful in transferring its liability to third parties, and will
fund its share of the operation and maintenance costs on an ongoing basis.
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. One of those lawsuits involves the
division of costs between several potentially responsible companies for
reimbursement to the EPA for costs it incurred to conduct environmental
remediation at a drum and barrel recycler, which the Company had utilized in the
late 1980's. The potentially responsible companies entered into an Agreement to,
among other things, jointly defend the cost claims of the EPA. A dispute arose
amongst the potentially responsible companies over the Agreement which resulted
in the filing of a lawsuit. The matter went to trial before a jury in June of
1999 and a judgment was entered against the Company in the amount of
approximately $750,000, plus interest and attorney fees. The Company took an
appeal to the Michigan Court of Appeals, which affirmed the decision of the
lower court. The Company has negotiated an agreement to pay the obligation,
which totals $1.2 million including attorney fees and accumulated interest, in
four annual installments of $300,000. The first installment was paid in February
2003, and the next installment is scheduled to be paid in January, 2004.
7
PART I (CONTINUED)
ITEM 3. LEGAL PROCEEDINGS (Concluded)
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 and could have a
material impact on the Company's consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
8
PART I (CONTINUED)
EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all executive officers of the registrant at March 31, 2003
and their positions and offices with the registrant are as follows:
Name and Age Positions and Offices
T. E. Mark (50) President and Chief Executive Officer (a)
R. M. Currie (49) Vice-President, Secretary and General Counsel (b)
S. J. Quinlan (39) Vice-President - Finance, Chief Financial Officer
and Treasurer (c)
(a) Prior to April 26, 2001, Mr. Mark held the positions of President and
Chief Operating Officer. On April 26, 2001, he was named President and
Chief Executive Officer
(b) Prior to April 26, 2001, Mr. Currie held the positions of General
Counsel and Secretary. On April 26, 2001, he was named Vice President,
General Counsel and Secretary
(c) Prior to November 21, 2002, Mr. Quinlan held the positions of
Treasurer, Controller and Chief Accounting Officer. Prior to April 26,
2001, Mr. Quinlan held the position of Controller and Chief Accounting
Officer. On November 21, 2002, he was named Vice President - Finance,
Chief Financial Officer, and Treasurer
All officers of the Company are elected annually and hold office until their
successors are chosen and qualify in their stead.
9
PART II
CROSS REFERENCE SHEET
Page (and caption) in 2002 Detrex Corporation
10-K Item Annual Report to Shareholders*
5. Market for Registrant's Common
Stock and Related Shareholder Matters:
(a) Market and market prices
of the common stock 23- Selected Quarterly Data
(b) Approximate number of
holders of common stock - Highlights
(c) Dividend history 17- Management's Discussion and
Analysis of Financial Condition
and Results of Operations
6. Selected Financial Data 24- Selected Financial Data
7. Management's Discussion and 15-22 - Management's Discussion and
Analysis of Financial Condition Analysis of Financial Condition
and Results of Operations and Results of Operations
8. Financial Statements and Supplementary
Data:
- Detrex Corporation Consolidated
Balance Sheets, December 31,
2002 and 2001 2,3
- Consolidated Statements of
Operations for the Years
Ended December 31,
2002, 2001, and 2000 1
- Consolidated Statements of Changes
In Stockholders' Equity for the Years
Ended December 31, 2002, 2001
and 2000 4
- Consolidated Statements of Cash
Flows for the Years Ended
December 31, 2002, 2001, and 2000 5
- Notes to Consolidated Financial
Statements 6-14
- Independent Auditors' Report -Independent Auditors' Report
(Immediately precedes page 1)
With the exception of the aforementioned information
and the information incorporated by reference in Items
5, 6 and 7, the Annual Report to Shareholders is not
to be deemed filed as part of this Form 10-K Annual
Report.
10
PART II
CROSS REFERENCE SHEET
(CONTINUED)
Page (and caption) in 2002 Detrex Corporation
10-K Item Annual Report to Shareholders*
9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure Not Applicable
* Detrex Corporation's Annual Report to Shareholders for the year ended December
31, 2002 is incorporated herein as Exhibit 13 under Item 14(a) 3 of Part IV.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
information set forth under the caption "Election of Directors" in the Detrex
Corporation Proxy Statement (the "Proxy Statement") for the Annual Meeting of
Shareholders to be held April 24, 2003. The information required for Executive
Officers of the Company is included in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
information set forth under the caption "Executive Compensation and Other
Transactions" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 is incorporated by reference from the
information set forth under the caption "Election of Directors" in the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
information set forth under the captions "Election of Directors" and "Executive
Compensation and Other Transactions" in the Proxy Statement.
ITEM 14. CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and Chief Financial Officer, the
Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures within 90 days of the filing date of this
annual report, and based on their evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that these disclosures and procedures are
effective. There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
12
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. All Financial Statements
Detrex Corporation and Subsidiaries (incorporated by reference
to the Company's Annual Report to Shareholders for the year
ended December 31, 2002-see Part II)
(a) 2. Financial Statement Schedules Page
----
Independent Auditors' Report 18
Schedule II - Valuation and Qualifying Accounts for the Years
Ended December 31, 2002, 2001, and 2000. 20
13
PART IV (CONTINUED)
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (Continued)
(a) 3. Exhibits
3(i) Articles of Incorporation, as amended, are hereby --
incorporated by reference to Commission file #0-784,
Annual Report on Form 10-K for the year ended
December 31, 1987, as Exhibit 3(a)
3(ii) Bylaws, as amended and restated as of --
April 26, 2001 are hereby incorporated by reference to
Commission file #0-784, Annual Report on Form 10-K for
The year ended December 31, 2001, as Exhibit 3(a)
an Exhibit
4(a) Amended and Restated Rights Agreement dated as of --
April 27, 2000, between the Company and State Street
Bank and Trust Company is hereby incorporated by
Reference to Commission file #0-784 8-K Report
dated April 27, 2000, as Exhibit 4
4(b) Amendment to Amended and Restated Rights Agreement, --
dated as of December 13, 2001, by and among the Company
State Street Bank and Trust Company, and EquiServe Trust
Company, N.A. is hereby incorporated by reference to Commission
File #0-784, Annual Report on Form 10-K for the year ended
December 31, 2001 as Exhibit
Executive Compensation Plans and Arrangements
10(a) 1993 Stock Option Plan is hereby incorporated by reference to --
Commission file #0-784 1993 Proxy Statement dated March 26,
1993, as Exhibit 10(a)
10(b) 1993 Stock Option Plan for outside directors is hereby --
incorporated by reference to Commission file #0-784 1993
Proxy Statement dated March 2, 1993, as Exhibit 10(b)
10(c) Employment Agreement - Robert M. Currie, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1994, as Exhibit 10(g)
14
PART IV (CONTINUED)
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (Continued)
(a) 3. Exhibits (Continued)
10(d) Employment Agreement - William C. King, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1995, as Exhibit 10(j)
10(e) Employment Agreement - Thomas E. Mark, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1995, as Exhibit 10(k)
--
Other Material Contracts
10(f) Credit Agreement with Comerica Bank dated as of --
June 13, 1996, (the "Credit Agreement"), is hereby
incorporated by reference to Commission file #0-784
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, as Exhibit 10(p)
10(g) First Amendment to Credit Agreement, dated --
December 5, 1996, is hereby incorporated by reference to
Commission file #0-784 Annual Report on Form 10-K for
the year ended December 31, 1996 as Exhibit 10(o)
10(h) Second Amendment to the Credit Agreement, dated as of --
March 31, 1997 is hereby incorporated by
reference to Commission file #0-784 Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, as Exhibit 10(q)
10(i) Third Amendment to the Credit Agreement, dated --
April 22, 1998 is hereby incorporated by reference to
Commission file #0-784 Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 as Exhibit 10(o)
15
PART IV (CONTINUED)
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (Concluded)
(a) 3. Exhibits (Concluded)
10(j) Fourth Amendment to the Credit Agreement, dated --
March 15, 1999 is hereby incorporated by reference to
Commission file #0-784 Annual Report on Form 10-K for the
year ended December 31, 1998 as Exhibit 10(m)
10(k) Fifth Amendment to the Credit Agreement, dated May 20, 1999 --
is hereby incorporated by reference to Commission file #0-784
Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 as Exhibit 10(n)
10(l) Sixth Amendment to the Credit Agreement, dated --
February 29, 2000 is hereby incorporated by reference to
Commission file # 0-784 Annual Report on Form 10-K for the
year ended December 31, 1999 as Exhibit 10(o)
10(m) Seventh Amendment to the Credit Agreement, dated --
September 29, 2000 is hereby incorporated by reference to
Commission file # 0-784 Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000 as Exhibit 10(p)
10(n) Amended and Restated Credit Agreement, dated as of April 25, 2001,
by and between the Company and Comerica Bank, is hereby
incorporated by reference to Commission file # 0-784 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001 as Exhibit 10
10(o) First Amendment to Credit Agreement, dated as of November 2,
2001, by and between the Company and Comerica Bank, is hereby
incorporated by reference to Commission file # 0-784 Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001
as Exhibit 10(p)
10(p) Second Amendment to Credit Agreement, dated as of February 28,
2002, by and between the Company and Comerica Bank is hereby
incorporated by reference to Commission file #0-784 Annual
Report on Form 10-K for the year ended December 31, 2001 as
Exhibit 10(p)
10(q) Third Amendment to Credit Agreement, dated as of December 2, 2002, Attached as
by and between the Company and Comerica Bank an Exhibit
16
PART IV (CONCLUDED)
10(r) Asset Purchase and Sale Agreement dated as of September --
1, 2000, by and among Seibert-Oxidermo, Inc., the Company
and Red Spot Paint and Varnish Co., is hereby incorporated
by reference to Commission file # 0-784 8-K Report dated
October 16, 2000, as Exhibit 99
13 Annual Report to Shareholders for the year ended December 31, 2002 Attached as
an Exhibit
21 Subsidiaries of the Registrant Attached as
an Exhibit
23 Consent of Auditors Attached as
an Exhibit
99 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Attached as
an Exhibit
(b) There were no reports on Form 8-K filed during the fourth quarter.
17
[DELOITTE & TOUCHE LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Detrex Corporation
We have audited the consolidated financial statements of Detrex Corporation and
its subsidiaries (the "Company") as of December 31, 2002 and 2001, and for each
of the three years in the period ended December 31, 2002, and have issued our
report thereon dated March 21, 2003; such consolidated financial statements and
the report are included in your 2002 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedule of the Company, listed in Item 14(a)(2). This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Deloitte & Touche LLP
Detroit, Michigan
March 21, 2003
18
DETREX CORPORATION AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE
19
SCHEDULE II
DETREX CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
Additions
---------------------------
Balance Charged to Charged Balance
Beginning Costs and to Other at End
Description of Year Expenses Accounts Deductions of Year
----------- --------- ---------- -------- ---------- -------
Year Ended December 31, 2002
Inventory Valuation Reserves $333,384 333,384 $0
Finished Machines Valuation
Reserves $279,823 279,823 $0
Allowance for Uncollectible
Accounts $715,089 474,153 688,185 $501,057
Year Ended December 31, 2001
Inventory Valuation Reserves $133,384 200,000 $333,384
Finished Machines Valuation
Reserves $433,131 109,014 262,322 $279,823
Allowance for Uncollectible
Accounts $351,064 355,310 325,525 316,810 $715,089
Year Ended December 31, 2000
Inventory Valuation Reserves $227,873 120,259 214,748 $133,384
Finished Machines Valuation
Reserves $241,608 191,523 $433,131
Allowance for Uncollectible
Accounts $244,268 176,832 70,036 $351,064
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Detrex Corporation
--------------------------------
(Registrant)
Date March 28, 2003 By W. C. King
---------------- ----------------------------
W. C. King
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on this twenty eighth day of March 2003 by the following
persons on behalf of the Registrant and in the capacities indicated.
Signature Title
--------- -----
W. C. King Chairman
- -----------------------------------
W. C. King
T. E. Mark President and Chief Executive
- ----------------------------------- Officer
T. E. Mark
S. J. Quinlan Vice President-Finance, Chief
- ----------------------------------- Financial Officer and Treasurer
S. J. Quinlan
B. W. Cox Director
- -----------------------------------
B. W. Cox
R. A. Emmett, III Director
- -----------------------------------
R. A. Emmett, III
B. W. McCleary Director
- -----------------------------------
B. W. McCleary
A. R. Thalacker Director
- -----------------------------------
A. R. Thalacker
D. R. Zimmer Director
- -----------------------------------
D. R. Zimmer
21
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Thomas E. Mark, President and Chief Executive Officer of Detrex Corporation,
certify that:
1. I have reviewed this annual report on Form 10-K of Detrex Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Dated: March 28, 2003
By: /s/ Thomas E. Mark
----------------------------------------
Thomas E. Mark
President and Chief Executive Officer
22
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Steven J. Quinlan, Vice President-Finance, Chief Financial Officer and
Treasurer of Detrex Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of Detrex Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Dated: March 28, 2003
By: /s/ Steven J. Quinlan
-----------------------------------------------
Steven J. Quinlan
Vice President -- Finance, Chief Financial Officer, and Treasurer
23
EXHIBIT INDEX
Exhibit Description
3(i) Articles of Incorporation, as amended, are hereby --
incorporated by reference to Commission file #0-784,
Annual Report on Form 10-K for the year ended
December 31, 1987, as Exhibit 3(a)
3(ii) Bylaws, as amended and restated as of --
April 26, 2001 are hereby incorporated by reference to
Commission file #0-784, Annual Report on Form 10-K for
The year ended December 31, 2001, as Exhibit 3(a)
4(a) Amended and Restated Rights Agreement dated as of --
April 27, 2000, between the Company and State Street
Bank and Trust Company is hereby incorporated by
Reference to Commission file # 0-784 8-K Report
dated April 27, 2000, as Exhibit 4
4(b) Amendment to Amended and Restated Rights Agreement, --
dated as of December 13, 2001, by and among the Company
State Street Bank and Trust Company, and EquiServe Trust
Company, N.A.is hereby incorporated by reference to Commission
File #0-784, Annual Report on Form 10-K for the year ended
December 31, 2001 as Exhibit
Executive Compensation Plans and Arrangements
10(a) 1993 Stock Option Plan is hereby incorporated by reference to --
Commission file # 0-784 1993 Proxy Statement dated March 26,
1993, as Exhibit 10(a)
10(b) 1993 Stock Option Plan for outside directors is hereby --
incorporated by reference to Commission file #0-784 1993
Proxy Statement dated March 2, 1993, as Exhibit 10(b)
10(c) Employment Agreement - Robert M. Currie, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1994, as Exhibit 10(g)
10(d) Employment Agreement - William C. King, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1995, as Exhibit 10(j)
10(e) Employment Agreement - Thomas E. Mark, is hereby --
incorporated by reference to Commission file #0-784
Annual Report on Form 10-K for the year ended December 31,
1995, as Exhibit 10(k)
--
Other Material Contracts
10(f) Credit Agreement with Comerica Bank dated as of --
June 13, 1996, (the "Credit Agreement"), is hereby
incorporated by reference to Commission file #0-784
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, as Exhibit 10(p)
10(g) First Amendment to Credit Agreement, dated --
December 5, 1996, is hereby incorporated by reference to
Commission file #0-784 Annual Report on Form 10-K for
the year ended December 31, 1996 as Exhibit 10(o)
10(h) Second Amendment to the Credit Agreement, dated as of --
March 31, 1997 is hereby incorporated by
reference to Commission file #0-784 Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, as Exhibit 10(q)
10(i) Third Amendment to the Credit Agreement, dated --
April 22, 1998 is hereby incorporated by reference to
Commission file #0-784 Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 as Exhibit 10(o)
10(j) Fourth Amendment to the Credit Agreement, dated --
March 15, 1999 is hereby incorporated by reference to
Commission file #0-784 Annual Report on Form 10-K for the
year ended December 31, 1998 as Exhibit 10(m)
10(k) Fifth Amendment to the Credit Agreement, dated May 20, 1999 --
is hereby incorporated by reference to Commission file #0-784
Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 as Exhibit 10(n)
10(l) Sixth Amendment to the Credit Agreement, dated --
February 29, 2000 is hereby incorporated by reference to
Commission file # 0-784 Annual Report on Form 10-K for the
year ended December 31, 1999 as Exhibit 10(o)
10(m) Seventh Amendment to the Credit Agreement, dated --
September 29, 2000 is hereby incorporated by reference to
Commission file # 0-784 Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000 as Exhibit 10(p)
10(n) Amended and Restated Credit Agreement, dated as of April 25, 2001,
by and between the Company and Comerica Bank, is hereby
incorporated by reference to Commission file # 0-784 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001 as Exhibit 10
10(o) First Amendment to Credit Agreement, dated as of November 2,
2001, by and between the Company and Comerica Bank, is hereby
incorporated by reference to Commission file # 0-784 Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001
as Exhibit 10(p)
10(p) Second Amendment to Credit Agreement, dated as of February 28,
2002, by and between the Company and Comerica Bank is hereby
incorporated by reference to Commission file #0-784 Annual
Report on Form 10-K for the year ended December 31, 2001 as
Exhibit 10(p)
10(q) Third Amendment to Credit Agreement, dated as of December 2, 2002, Attached as
by and between the Company and Comerica Bank an Exhibit
10(r) Asset Purchase and Sale Agreement dated as of September --
1, 2000, by and among Seibert-Oxidermo, Inc., the Company
and Red Spot Paint and Varnish Co., is hereby incorporated
by reference to Commission file # 0-784 8-K Report dated
October 16, 2000, as Exhibit 99
13 Annual Report to Shareholders for the year ended December 31, 2002 Attached as
an Exhibit
21 Subsidiaries of the Registrant Attached as
an Exhibit
23 Consent of Auditors Attached as
an Exhibit
99 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Attached as
an Exhibit
(b) There were no reports on Form 8-K filed during the fourth quarter.