PRESS RELEASE

Detrex Corporation Reports Year 2002 Results

Southfield, Michigan – March 24, 2003 - Detrex Corporation (NASDAQ: DTRX), a diversified manufacturer of chemicals and allied products, today announced results for the year ended December 31, 2002.

During the past year, significant progress was made in the Company’s long-term plan to improve its core profitable businesses, to divest non-core businesses and to discharge liabilities. Both operating units, Elco and Harvel, succeeded in generating profitable performance in a very difficult economy while improving products and internal processes. The Company exited the operations of the unprofitable Parts Cleaning Technologies (PCT) segment in the first half of the year by selling portions of the business and closing the remaining operations. In conjunction with this exit, progress was made in preparing owned and leased properties for regulatory closure, completing a clean-up and sale of one property which closed in January 2003. In addition, several other legacy matters were brought to a conclusion, including the completion of remediation at the Fields Brook Superfund Site. 

Financial performance improved year-over-year as sales grew from $58.9 million to $61.0 million, or 3.6% in a challenging economic environment. Elco’s sales increased by approximately 8% in 2002 compared to 2001 and earnings improved by 33%. Harvel sales increased marginally and earnings decreased due to highly competitive conditions. Corporate administrative expenses were reduced by $550,000 in 2002 to $2.4 million as the result of streamlining and cost control; this improvement was more than offset by increases in pension and other employee benefit costs. Royalty income increased from $460,0000 in 2001 to $1.1 million in 2002, and the 2002 provision for environmental charges of $975,000 was approximately $1 million less than the $2 million charge recorded in 2001. The operational improvements combined with higher royalty income and the smaller provision for environmental costs resulted in an improvement in pre-tax earnings from continuing operations. In 2002 pre-tax earnings from continuing operations was $668,357 compared to a pre-tax loss from continuing operations of $1,077,980 in 2001.


Royalty income, provisions for environmental costs and a valuation allowance against deferred tax assets had a significant impact on net income from continuing operations in 2002. During the year the Company realized pre-tax income of $1.1 million from royalties. The royalty agreement related to this income expired at the end of 2002 and payment was received in February 2003. Offsetting this non-recurring income was a charge to increase the environmental reserve by approximately $1 million. During the final stages of the Fields Brook Superfund project, additional contamination was discovered which made it necessary to perform further remediation; this drove costs significantly over previous estimates. The Company’s share of the increased costs was approximately $900,000 which will be paid in 2003. The reserve was further increased to provide for future operating costs associated with a remediation system installed at our Ashtabula site. A non-cash valuation allowance of $500,000 was recorded against deferred tax assets in the fourth quarter 2002. Management believes that the prospects for the company are good; however, the allowance was recorded because of uncertainty about whether all the deferred tax assets will ultimately be recovered. Including the valuation allowance, the net loss from continuing operations in 2002 was $163,081, or $0.10 per share, compared to a net loss from continuing operations in 2001 of $890,427, or $0.56 per share.

In 2001, the Company adopted a plan to exit its Parts Cleaning Technologies segment (PCT) and recorded a net loss of $7.3 million in discontinued operations for the year. In 2002 a net charge of $536,794 was made to overall discontinued operations for new developments during the year: the Company revised its estimates of future environmental project management costs for the PCT properties and recorded a charge for additional workers’ compensation exposure related to its former paint subsidiary. As the result of these charges in discontinued operations, the net loss in 2002 was $699,875, or $0.44 per share, compared to a net loss of $8,207,626, or $5.18 per share, in 2001. 

In addition to the net loss, shareholders’ equity was reduced by $3.8 million to reflect an increase in the additional minimum pension liability. This non-cash charge to equity is the result of market losses in the pension asset portfolio and a reduction in the discount rate used to calculate the pension obligation.

Commenting on the Company’s results, President and CEO Tom Mark said, “We are disappointed that although progress has been made with operational improvements, the exit from PCT and conclusion of several legacy matters, these have been obscured by unanticipated developments which have resulted in the need to increase reserves. We are reviewing strategic actions to unlock shareholder value while we execute our operational plans.”

Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports filed with the SEC. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, liquidation value of assets, and marketability of real estate. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.