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:
For additional information regarding the operating segments of the Company, see Note 15 to the Consolidated Financial Statements.
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.
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.
