<PAGE>   1
                                                                      EXHIBIT 13


                                      ------------------------------------------

                                                        DETREX
                                                     CORPORATION

                                                  2000 ANNUAL REPORT

                                      ------------------------------------------
<PAGE>   2

HIGHLIGHTS(1)

<TABLE>
<CAPTION>
                                                   2000              1999              1998
                                                -----------       -----------       -----------
<S>                                             <C>               <C>               <C>
Net sales from continuing operations..........  $85,670,000       $76,896,000       $73,802,000
Net income (loss) from continuing
  operations..................................      640,777        (1,114,520)         (432,081)
Net income (loss) per common share from
  continuing operations.......................          .40              (.71)             (.27)
Net income (loss).............................    3,489,331        (1,132,919)         (796,527)
Net income (loss) per common share............         2.20              (.72)             (.50)
Stockholders' equity per common share.........        12.87             10.67             11.38
Additions to land, buildings and equipment
  (including capital leases)..................    2,500,000         4,800,000         7,100,000
Current ratio.................................     1.4 to 1          1.1 to 1          1.3 to 1
Number of round-lot stockholders..............          544               567               443
Number of employees...........................          315               327               366
</TABLE>

(1) This information should be considered in conjunction with
    the Consolidated Financial Statements and Management's
    Discussion and Analysis.
--------------------------------------------------------------------------------

DETREX GROUP OF COMPANIES

    -- Detrex Corporation -- a specialty chemicals company

       - Parts Cleaning Technologies -- provide solutions for production parts
         cleaning needs, including equipment, solvents, recycling of waste, and
         contract parts cleaning

    -- 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
<PAGE>   3

TO OUR SHAREHOLDERS:

     In 2000 we embarked on a plan to improve the strategic position of the
company in order to grow shareholder value. We made significant progress in
several areas but continued to face strategic issues in others. We accomplished
the first step of the plan which was a return to profitability; however, more
progress needs to be made in this area. We divested Seibert-Oxidermo,
recognizing that this business had more value to a company where there was a
stronger strategic fit. We capitalized on investments made in prior years for
growing sales and reducing costs at both Harvel and Elco. The area in which we
did not achieve our goals was in the newly formed Parts Cleaning Technologies
Division, which continued to lose money despite cost reduction efforts.

     We achieved revenue growth of $8.8 million or 11% to $85.7 million. This
was primarily the result of investments made in Harvel's California plant.
Driven in part by this revenue growth, income from continuing operations
improved by almost $1.8 million to a profit of $640,777. Supporting this growth
in earnings was a gross margin improvement of 2% of sales resulting from volume
related manufacturing efficiencies and the consolidation of Elco's manufacturing
facilities. In addition, expenses were down 2% as a percent of sales due to
expense control, cost reduction actions and the favorable effect of changes in
the company's retiree health programs.

     During the year we made significant improvements at Harvel and Elco. Harvel
successfully launched its new California plant and reported revenue of $47.5
million which represents 33% growth over the prior year. Operating margins also
improved significantly, and Harvel generated before tax earnings of $4.8
million. Elco successfully transferred manufacturing operations from a leased
facility to facilities owned by the company in Ashtabula, Ohio. Elco's revenue
and earnings both increased from 1999 levels in spite of the effect of the
strong dollar on exports and very difficult conditions in the domestic lubricant
additives market.

     We did not achieve profitability in all businesses as we had expected. As
manufacturing volumes declined and we experienced severe year-end weather in the
Midwest, we incurred losses in our Parts Cleaning Technologies Division. Results
deteriorated late in the fourth quarter and conditions continue soft into the
new year. We are taking steps to address under-performing regions and to narrow
the focus of this business so that we can achieve profitability on a smaller but
more stable base.

     During the year we continued to position the company for enhanced
shareholder value. The principal action was the divestiture of Seibert-Oxidermo
in a manner which unlocked the value of this asset. We sold the operating assets
of Seibert for $11.1 million generating an after-tax gain of $2.6 million. In
addition, we anticipate receiving a royalty over the next two years and expect
to sell the real estate formerly occupied by Seibert. The funds from this
transaction enabled us to discharge certain liabilities in the fourth quarter
and should provide flexibility for future expansion. This move serves to sharpen
the company's strategic focus.

     The balance sheet at December 31(st) is significantly stronger than a year
ago. Working capital at December 31(st) is $6.9 million compared to $3.7 million
a year ago. We have reduced our debt by almost $3.7 million, stabilized our
accounts payable, and extinguished $2.3 million of our environmental
liabilities.

     While we are making progress, there is more to be done as we continue to
focus on growing shareholder value.

               Thomas E. Mark                  William C. King
               President and                     Chairman and
          Chief Operating Officer          Chief Executive Officer




                                                                               1
<PAGE>   4

          --------------- 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 (the Company) as of December 31, 2000 and 1999
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, 2000.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated
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, 2000 and 1999 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America.

/s/ DELOITTE & TOUCHE LLP

February 28, 2001

Deloitte & Touche Logo

 2
<PAGE>   5

DETREX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31

<TABLE>
<CAPTION>
                                                                   2000              1999              1998
                                                                -----------       -----------       -----------
<S>                                                             <C>               <C>               <C>
NET SALES...................................................    $85,670,205       $76,896,439       $73,801,896
Cost of sales (exclusive of depreciation)...................     64,620,266        59,517,063        55,078,830
Selling, general and administrative expenses................     15,192,169        15,324,813        15,483,322
Provision for depreciation and amortization.................      3,401,707         3,362,043         2,981,873
Other (income) expense -- net...............................       (272,282)         (201,195)         (260,712)
Minority interest...........................................        467,255           212,879           246,352
Interest expense............................................      1,190,173           876,848           594,990
Net (gain) loss from property transactions..................        106,837          (285,039)           92,857
                                                                -----------       -----------       -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
  TAXES.....................................................        964,080        (1,910,973)         (415,616)
Provision (credit) for income taxes.........................        323,303          (796,453)           16,465
                                                                -----------       -----------       -----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS................        640,777        (1,114,520)         (432,081)
DISCONTINUED OPERATIONS:
Income (loss) from operations of Seibert-Oxidermo, Inc. net
  of tax....................................................        200,846           (18,399)         (364,446)
Gain on sale of Seibert-Oxidermo, Inc. net of tax...........      2,647,708           --                --
                                                                -----------       -----------       -----------
NET INCOME (LOSS)...........................................      3,489,331        (1,132,919)         (796,527)
RETAINED EARNINGS AT BEGINNING OF YEAR......................     13,703,479        14,836,398        15,632,925
                                                                -----------       -----------       -----------
RETAINED EARNINGS AT END OF YEAR............................    $17,192,810       $13,703,479       $14,836,398
                                                                ===========       ===========       ===========
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
From continuing operations..................................    $       .40       $      (.71)      $      (.27)
From discontinued operations................................           1.80              (.01)             (.23)
                                                                -----------       -----------       -----------
Net income (loss) per share.................................    $      2.20       $      (.72)      $      (.50)
                                                                ===========       ===========       ===========
Number of Shares Outstanding (basic and diluted)............      1,583,414         1,583,414         1,583,414
</TABLE>

See Notes to Consolidated Financial Statements.
                                                                               3
<PAGE>   6

DETREX CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31

<TABLE>
<CAPTION>
ASSETS
                                                                 2000              1999
                                                              -----------       -----------
<S>                                                           <C>               <C>
CURRENT ASSETS:
Cash and cash equivalents...................................  $   363,829       $   381,269
Accounts receivable (net of allowance for uncollectible
  accounts of $351,000 in 2000 and $244,000 in 1999)........   11,591,331        13,363,021
Inventories.................................................   10,384,396        12,423,426
Prepaid expenses and other..................................      786,915           991,888
Deferred income taxes.......................................    1,955,959         1,419,370
                                                              -----------       -----------
       TOTAL CURRENT ASSETS.................................   25,082,430        28,578,974

LAND, BUILDINGS AND EQUIPMENT:
Land........................................................      914,602           914,602
Buildings and improvements..................................   19,945,331        19,589,641
Machinery and equipment.....................................   37,008,701        38,795,472
Construction in progress....................................      361,975         2,134,039
                                                              -----------       -----------
                                                               58,230,609        61,433,754
Less allowance for depreciation and amortization............   33,992,115        34,746,609
                                                              -----------       -----------
       LAND, BUILDINGS AND EQUIPMENT -- NET.................   24,238,494        26,687,145
PREPAID PENSIONS............................................    2,253,947         1,760,243
DEFERRED INCOME TAXES.......................................      --              1,454,663
OTHER ASSETS................................................      442,204         1,136,948
                                                              -----------       -----------
                                                              $52,017,075       $59,617,973
                                                              ===========       ===========
</TABLE>

See Notes to Consolidated Financial Statements.
 4
<PAGE>   7

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                        2000              1999
                                                                     -----------       -----------
<S>                                                                  <C>               <C>
CURRENT LIABILITIES:
Loans payable.....................................................   $ 6,830,335       $ 8,313,749
Current portion of long-term debt.................................       600,000           866,000
Current maturities of capital lease obligations...................       168,414           214,349
Accounts payable..................................................     5,227,072        11,403,039
Environmental reserve.............................................     2,100,000         1,500,000
Accrued compensation..............................................       656,442           300,362
Other accruals....................................................     2,583,040         2,258,978
                                                                     -----------       -----------
       TOTAL CURRENT LIABILITIES..................................    18,165,303        24,856,477

LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS....................       194,418           267,942
LONG-TERM DEBT....................................................     2,900,000         4,802,775
ACCRUED POSTRETIREMENT BENEFITS...................................     3,728,027         4,702,822
ENVIRONMENTAL RESERVE.............................................     2,937,103         5,834,555
ACCRUED PENSION...................................................       551,198           100,696
MINORITY INTEREST.................................................     2,507,635         2,160,379
DEFERRED INCOME TAXES.............................................       651,733           --
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.................................................    17,192,810        13,703,479
                                                                     -----------       -----------
       TOTAL STOCKHOLDERS' EQUITY.................................    20,381,658        16,892,327
                                                                     -----------       -----------
                                                                     $52,017,075       $59,617,973
                                                                     ===========       ===========
</TABLE>

See Notes to Consolidated Financial Statements.
                                                                               5
<PAGE>   8

DETREX CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31

<TABLE>
<CAPTION>
                                                                 2000              1999              1998
                                                              -----------       -----------       -----------
<S>                                                           <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss).......................................  $ 3,489,331       $(1,132,919)      $  (796,527)
                                                              -----------       -----------       -----------
    Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:
         (Income) loss from discontinued operations.........   (2,848,554)           18,399           364,446
         Depreciation and amortization......................    3,401,707         3,362,043         2,981,873
         Loss/(gain) on disposal of assets..................      106,837          (286,886)           92,857
         Deferred income taxes..............................      102,370          (251,024)         (382,536)
         Minority interest..................................      347,256            92,879           126,353
         Changes to operating assets and liabilities that
             provided (used) cash:
           Accounts receivable..............................     (218,153)         (965,720)        4,412,830
           Inventories......................................     (189,757)       (1,377,875)       (1,255,496)
           Prepaid expenses and other.......................     (308,098)         (408,157)         (301,394)
           Other assets.....................................      684,250            (7,863)          100,648
           Accounts payable.................................   (3,996,940)        1,017,628          (340,446)
           Environmental reserve............................   (2,297,452)         (704,262)       (1,537,135)
           Accrued compensation.............................      395,930            13,008          (910,335)
           Accrued postretirement benefits..................     (974,795)           31,447           182,393
           Other accruals...................................     (647,469)           97,291          (960,654)
                                                              -----------       -----------       -----------
             TOTAL ADJUSTMENTS..............................   (6,442,868)          630,908         2,573,404
                                                              -----------       -----------       -----------
             NET CASH (USED IN) PROVIDED BY CONTINUING
                  OPERATING ACTIVITIES......................   (2,953,537)         (502,011)        1,776,877
                                                              -----------       -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures....................................   (2,362,516)       (4,770,333)       (6,709,393)
    Sale/disposal of fixed assets...........................       84,626           504,414         1,395,549
    Used (unused) proceeds from bond issue-restricted for
       capital expenditures.................................      --              1,247,902        (1,247,902)
    Proceeds from insurance settlement......................      --                --              1,250,000
                                                              -----------       -----------       -----------
             NET CASH USED IN CONTINUING INVESTING
                  ACTIVITIES................................   (2,277,890)       (3,018,017)       (5,311,746)
    Proceeds from sale of Seibert-Oxidermo, Inc. ...........   11,060,516           --                --
    Net cash (used in) provided by discontinued investing
       activities...........................................   (1,953,892)          251,361          (707,251)
                                                              -----------       -----------       -----------
    Net cash provided by (used in) investing activities.....    6,828,734        (2,766,656)       (6,018,997)
CASH FLOWS FROM FINANCING ACTIVITIES:
    Long term debt..........................................   (2,168,775)        1,668,775         4,000,000
    Debt issuance costs.....................................      --                --               (222,985)
    Net (repayments) borrowings under revolving credit
       facility.............................................   (1,483,414)        2,023,975           589,938
    Principal payments under capital lease obligations......     (240,448)         (235,503)         (330,237)
                                                              -----------       -----------       -----------
             NET CASH (USED IN) PROVIDED BY FINANCING
                  ACTIVITIES................................   (3,892,637)        3,457,247         4,036,716
                                                              -----------       -----------       -----------
Net (decrease) increase in cash and cash equivalents........      (17,440)          188,580          (205,404)
Cash and cash equivalents at beginning of year..............      381,269           192,689           398,093
                                                              -----------       -----------       -----------
Cash and cash equivalents at end of year....................  $   363,829       $   381,269       $   192,689
                                                              ===========       ===========       ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the year for:
         Interest...........................................  $ 1,335,438       $ 1,073,896       $   809,809
         Income taxes.......................................  $    47,148       $   208,283       $   282,413
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:
    Capital lease obligations incurred in connection with
     the acquisition of equipment...........................  $   107,767       $   --            $   425,322
    Capital lease terminations..............................      --            $    33,472       $   243,080
</TABLE>

See Notes to Consolidated Financial Statements.
 6
<PAGE>   9

DETREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND CUSTOMER CONCENTRATION

     Detrex Corporation and its subsidiaries (the Company) operate predominantly
in chemicals and allied products, services, and processes for use by
manufacturing and service industries. The principal products and services
include specialty chemicals, lubricant additives, parts cleaning, cleaning
solvents, hydrochloric acid, PVC and CPVC plastic pipe, and degreasing
equipment.

     All three of the Company's business units operate in highly competitive
markets which are mainly national in scope, although approximately 14% of the
Company's business in 2000 and 12% in 1999 was done outside the United States,
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. 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, one of the Company's business units sells primarily to
petro-chemical companies.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statements

     The consolidated financial statements comprise those of the Company and its
subsidiaries. All intercompany balances and transactions have been eliminated.
Certain amounts for 1998 and 1999 have been reclassified to conform with 2000
classifications.

Inventories and Accounts Receivable

     Inventories are stated at lower of cost or market. Approximately 90% of raw
materials, including raw materials in work in process and finished goods
inventories, is valued 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, 2000 totals $554,000 and costs incurred on these contracts amounts
to $388,000. Included in accounts receivable is $204,000 that has not been
billed to customers due to contractual arrangements.

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:

<TABLE>
<S>                                          <C>
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%
</TABLE>

Research and Development

     Research and development costs are charged to operations as incurred.
Research and development costs for 2000, 1999 and 1998 were approximately
$343,000, $383,000, and $518,000, 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, debt under the Revolving Credit Agreement,
and the Industrial Development Bonds approximated fair values.

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 and the reported amounts of revenues and

                                                                               7
<PAGE>   10

expenses during the reporting period. Actual results could differ from those
estimates.

New Accounting Standards
     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) Number 133, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which the Company adopted effective
January 1, 2001. The Company does not expect the adoption of SFAS 133 to have a
significant impact on its financial position, results of operations, or cash
flows.

3. INVENTORIES

     Inventories at December 31 consist of the following:

<TABLE>
<CAPTION>
                                     2000           1999
                                  -----------    -----------
<S>                               <C>            <C>
Raw materials.................    $ 3,185,785    $ 4,981,780
Work in progress..............        398,430        343,427
Finished goods................      6,920,821      7,109,459
Less: Progress billings on
  work in progress............       (120,640)       (11,240)
                                  -----------    -----------
                                  $10,384,396    $12,423,426
                                  ===========    ===========
</TABLE>

     The excess of current cost over the stated last-in, first-out value is
approximately $714,000 and $572,000 at December 31, 2000 and 1999.

4. CAPITAL AND OPERATING LEASES

     Capitalized lease assets included in machinery and equipment at December 31
are as follows:

<TABLE>
<CAPTION>
                                       2000         1999
                                     --------    ----------
<S>                                  <C>         <C>
Machinery and equipment..........    $948,700    $1,204,201
Accumulated amortization.........     627,536       778,903
                                     --------    ----------
Leased assets -- net.............    $321,164    $  425,298
                                     ========    ==========
</TABLE>

     Rent expense applicable to operating leases for 2000, 1999 and 1998 was
$826,000, $975,000 and $598,000, respectively.

     Minimum annual lease payments for leases in effect at December 31, 2000 are
as follows:

<TABLE>
<S>                                <C>        <C>
Minimum Lease Payments:             Capital    Operating
                                   --------   ----------
    2001.........................   198,463      843,255
    2002.........................   130,497      764,517
    2003.........................    51,748      579,415
    2004.........................    21,075      451,382
    2005.........................    12,900      436,641
    2006 and thereafter..........        --    3,573,288
                                   --------   ----------
Total minimum lease payments.....   414,683    6,648,498
                                              ==========
Less amount representing
  interest.......................    51,851
                                   --------
Present value of net minimum
  lease payments.................   362,832
Less current portion.............   168,414
                                   --------
Non-current portion..............  $194,418
                                   ========
</TABLE>

5. REVOLVING CREDIT AGREEMENT AND TERM LOAN

     The Company has a Credit Agreement (the Agreement) with Comerica Bank with
a current expiration date of May 1, 2001. The Agreement provides for a credit
facility of up to $13.0 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, 2001 expiration date. The current
Agreement also provides for a $2.0 million Term Loan facility; the outstanding
balance under the term loan facility was fully repaid in September, 2000.

     The weighted average interest rate for short term borrowings under the
Agreement for the year ended December 31, 2000 was 9.91%, compared to 8.35% for
the year ended December 31, 1999 and 8.77% for the year ended December 31, 1998.

6. INDUSTRIAL DEVELOPMENT BONDS

     In connection with the expansion of Harvel Plastics, Inc.'s manufacturing
capacity, $4.0 million of industrial development bonds were issued by the
California Economic Development Financial Authority on March 24, 1998. Interest
rates for these bonds are established weekly based on tax-exempt bond interest
rates. The rate at the end of 2000 was 5%. The obligation is backed by a Letter
of Credit issued by Comerica Bank for the total amount of the bonds. The Letter
of Credit is in effect until January 2006 and affords protection against failed
remarketing efforts if any were to occur. The amount and timing of redemption of
the bonds is as follows:

<TABLE>
<CAPTION>
         December 31               Amount
------------------------------    --------
<S>                               <C>
2000..........................     600,000
2001..........................     500,000
2002..........................     600,000
2003..........................     500,000
2004..........................     600,000
2005..........................     700,000
</TABLE>

     Due to December 31 being a holiday, the actual redemption will take place
on the first business day of the following year.

 8
<PAGE>   11

7. OTHER INCOME -- NET

     Other income includes interest income of approximately $1,400, $700, and
$2,100 for 2000, 1999 and 1998, respectively.

8. INCOME TAXES

     Income taxes from continuing operations include the following components:

<TABLE>
<CAPTION>
                                   2000         1999         1998
                                 ---------   -----------   ---------
<S>                              <C>         <C>           <C>
Current for tax purposes:
  Federal......................         --            --   $  56,951
  State and local..............    229,635        70,805     178,306
                                 ---------   -----------   ---------
    Total current..............    229,635        70,805     235,257
                                 ---------   -----------   ---------
Deferred income taxes:
  Federal......................    255,595      (867,258)   (218,792)
  State and local..............   (161,927)           --          --
                                 ---------   -----------   ---------
    Total deferred.............     93,668      (867,258)   (218,792)
                                 ---------   -----------   ---------
Provision (credit) for income
  taxes........................  $ 323,303   $  (796,453)  $  16,465
                                 =========   ===========   =========
</TABLE>

     Deferred tax assets (liabilities) at December 31, 2000 and 1999 relate to
the following temporary differences and carryforwards:

<TABLE>
<CAPTION>
                                              2000          1999
                                           -----------   -----------
<S>                                        <C>           <C>
Net operating loss carryforward..........  $   454,080   $ 1,274,800
Alternative minimum tax credit
  carryforward...........................      432,027       432,027
Accruals for:
  Postretirement benefits................    1,426,429     1,800,711
  Environmental..........................    1,928,707     2,808,400
  Self insurance reserve.................      128,272       125,334
Inventory related........................      586,081       544,888
Other....................................      671,424       298,033
                                           -----------   -----------
    Gross deferred tax assets............    5,627,020     7,284,193
                                           -----------   -----------
Depreciation.............................   (2,393,251)   (2,440,044)
Undistributed earnings of the Company's
  DISC...................................   (1,031,313)   (1,178,644)
Other....................................     (898,230)     (791,472)
                                           -----------   -----------
    Gross deferred tax liabilities.......   (4,322,794)   (4,410,160)
                                           -----------   -----------
    Net deferred tax assets..............  $ 1,304,226   $ 2,874,033
                                           ===========   ===========
</TABLE>

     The Company has a net operating loss carryforwards of approximately $1.3
million that expires in 2019.

     The reasons for the difference between the income tax provision and income
taxes computed at the statutory rate of 34% for 2000, 1999 and 1998 are
summarized below:

<TABLE>
<CAPTION>
                                       2000       1999        1998
                                     --------   ---------   ---------
<S>                                  <C>        <C>         <C>
Computed "expected" tax
  provision........................  $327,787   $(649,731)  $(141,309)
State and local income taxes, net
  of federal tax benefit...........    44,688      46,731     117,682
Nondeductible meal and
  entertainment expense............    44,478      65,005      65,724
Reserve adjustment.................        --    (169,739)     --
Other -- net.......................   (93,650)    (88,719)    (25,632)
                                     --------   ---------   ---------
                                     $323,303   $(796,453)  $  16,465
                                     ========   =========   =========
</TABLE>

9. SALE OF SEIBERT-OXIDERMO, INC. ASSETS
     On September 29, 2000, Seibert-Oxidermo, Inc. ("Seibert"), a wholly-owned
subsidiary of the Company, completed the sale of assets, other than real estate,
used in its paint business. The buyer was Red Spot Paint & Varnish Co., Inc.
("Red Spot") of Evansville, Indiana. A net gain of $2.6 million resulted from
the sale.

     The purchase price for the assets and a non-compete covenant was $11.1
million. Seibert retained responsibility for liabilities at September 30, 2000.

     In addition, Seibert and Red Spot entered into an agreement whereby Seibert
manufactured for Red Spot for a period of four months commencing October 1, 2000
and ending January 31, 2001. Also, Seibert and Red Spot entered into a Royalty
Agreement whereby Red Spot will pay Seibert royalties for incremental sales of
certain products over the next two years.

10. 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 7.75% and 4.0%, at December 31, 2000 and 1999, 6.75% and 4.0% at December
31, 1998. The expected long-term rate of return on assets was 9.25% in 1998 and
1999 and 8.5% in 2000. The following tables set forth the information required
under Statement of Financial Accounting Standards No. 132:

<TABLE>
<CAPTION>
                                             2000           1999
                                          -----------    -----------
<S>                                       <C>            <C>
A. CHANGE IN PROJECTED BENEFIT OBLIGATION
  Benefit obligation at January 1.......  $28,653,015    $31,108,165
  Service cost..........................    1,033,699        740,960
  Interest cost.........................    2,083,874      2,050,569
  Amendments............................      187,030             --
  Actuarial (gain)/loss.................     (966,280)    (3,568,490)
  Benefits paid in measurement year.....   (2,099,372)    (1,678,189)
                                          -----------    -----------
  Benefit obligation at December 31.....  $28,891,966    $28,653,015
                                          ===========    ===========
B. CHANGE IN PLAN ASSETS
  Market value of assets at January 1...  $34,807,278    $33,712,925
  Actual return on assets...............      161,716      2,772,542
  Benefits paid in measurement Year.....   (2,099,372)    (1,678,189)
                                          -----------    -----------
  Market value of assets at December
    31..................................  $32,869,622    $34,807,278
                                          ===========    ===========
C. RECONCILIATION OF FUNDED STATUS
  Funded status as of December 31.......  $ 3,977,656    $ 6,154,263
  Unrecognized transition asset.........     (169,509)      (357,237)
  Unrecognized prior service cost.......      511,946        388,775
  Unrecognized net gain.................   (2,617,344)    (4,524,252)
                                          -----------    -----------
  Net pension asset.....................  $ 1,702,749    $ 1,661,549
                                          ===========    ===========
</TABLE>

                                                                               9
<PAGE>   12

<TABLE>
<CAPTION>
                                 2000           1999           1998
                              -----------    -----------    -----------
<S>                           <C>            <C>            <C>
D. NET PERIODIC PENSION CREDIT
  Service cost............    $ 1,033,699    $   740,960    $   684,709
  Interest cost...........      2,083,874      2,050,569      1,992,556
  Expected return on
    assets................     (2,853,074)    (3,028,580)    (2,952,562)
  Net amortization........       (305,699)      (158,659)      (323,903)
                              -----------    -----------    -----------
  Net periodic pension
    credit................    $   (41,200)   $  (395,710)   $  (599,200)
                              ===========    ===========    ===========
</TABLE>

     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 programs for certain retirees, subject to various
conditions and limitations. These programs were amended in 2000 to provide
benefits only to those eligible individuals who retire on or before December 31,
2005. The effect of changes to the programs contributed $771,915 to before tax
income from continuing operations. In addition, $200,000 ($132,000 after-tax) of
income was reflected in discontinued operations.

     Net periodic postretirement benefit costs included the following
components:

<TABLE>
<CAPTION>
                                       2000        1999        1998
                                     --------    --------    --------
<S>                                  <C>         <C>         <C>
Service cost attributed to
  service during the period......    $116,856    $149,240    $107,647
Interest cost on accumulated
  postretirement benefit
  obligation.....................     291,846     294,711     249,066
Net amortization.................     (40,495)    (13,058)    (42,301)
                                     --------    --------    --------
Net periodic postretirement
  benefit cost...................    $368,207    $430,893    $314,412
                                     ========    ========    ========
</TABLE>

     The Company's postretirement benefit plans are not funded. The status of
the plans at December 31, 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                 2000         1999
                                              ----------   ----------
<S>                                           <C>          <C>
Accumulated postretirement benefit
  obligation:
  Retirees..................................  $2,572,036   $2,444,287
  Fully eligible active plan participants...     247,508      257,106
  Other active plan participants............     376,891    1,313,300
                                              ----------   ----------
    Subtotal................................   3,196,435    4,014,693
Unrecognized net gain and prior service
  cost......................................     531,592      688,129
                                              ----------   ----------
    Total accrued postretirement benefits...  $3,728,027   $4,702,822
                                              ==========   ==========
</TABLE>

     The change in accumulated benefit obligation is as follows:

<TABLE>
<CAPTION>
                                                2000          1999
                                             -----------   ----------
<S>                                          <C>           <C>
Accumulated postretirement benefit
  obligation - January 1...................    4,014,693    3,822,206
Service cost...............................      116,856      149,240
Interest cost..............................      291,846      294,711
Amendment..................................   (1,278,024)          --
Actuarial loss.............................      422,151      147,982
Benefits paid in measurement year(1).......     (371,087)    (399,446)
                                             -----------   ----------
Accumulated postretirement benefit
  obligation - December 31.................  $ 3,196,435   $4,014,693
                                             ===========   ==========
</TABLE>

     For measurement purposes, a 6% annual rate of increase in the per capita
cost of covered health care benefits (other than prescription drugs where the
rate was 6.26%) was assumed for 2000. The rate is assumed to decrease gradually
over the next 2 years to 5.75% 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, 2000 by approximately 10.6%
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by approximately 11.33%.

     The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.75% at December 31, 2000, 7.75% at
December 31, 1999 and 6.75% at December 31, 1998.

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 clean-up is currently in progress and is expected to
be completed by the end of 2001. The Company's share of future costs is
anticipated to be approximately $1.3 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, 2000 and 1999 were $5.0 million and $7.3
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. 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

 10
<PAGE>   13

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
is taking an appeal to the Michigan Court of Appeals and believes it has
reasonable grounds to seek reversal of the judgment.

     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, 2000, 1999 and 1998.

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 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 $30, 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 or group 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 after a person or group becomes the
beneficial owner of 15% or more of the Company's outstanding Common Stock 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, 2010 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, 2000, 1999 and 1998, 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, 6,000 remain available for
future grants under the Management Plan; the time for granting options under the
Directors Plan has expired.

<TABLE>
<CAPTION>
                                 Management Plan            Directors Plan
                             ------------------------   -----------------------
                             Shares                     Shares
                              Under    Weighted Ave.    Under    Weighted Ave.
                             Option    Exercise Price   Option   Exercise Price
                             ------    --------------   ------   --------------
<S>                          <C>       <C>              <C>      <C>
1998
  Outstanding at beginning
    of year................  121,000        6.72        42,000        9.27
  Granted..................   22,000       13.38          --        --
  Outstanding at end of
    year...................  143,000        7.74        42,000        9.27
1999
  Granted..................    3,000        9.00          --        --
  Forfeited................    2,000       11.19
  Outstanding at end of
    year...................  144,000        7.72        42,000        9.27
2000
  Granted..................    --         --              --        --
  Outstanding at end of
    year...................  144,000        7.72        42,000        9.27
</TABLE>

                                                                              11
<PAGE>   14

     Of the 186,000 options outstanding at December 31, 2000, the weighted
average remaining life is 4.25 years; 174,000 of the options are exercisable at
December 31, 2000. 8,000 of the options are in-the-money. The range of exercise
prices is from $5.00 to $13.38. The following table summarizes information about
stock options outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                      Options Outstanding         Options Exercisable
                 ------------------------------   --------------------
                           Weighted    Weighted              Weighted
    Range of     Shares     Average    Average     Shares     Average
    Exercise      Under    Remaining   Exercise    Under     Exercise
      Price      Option      Life       Price      Option      Price
    --------     -------   ---------   --------   --------   ---------
  <S>            <C>       <C>         <C>        <C>        <C>
  $ 5.00- 8.00    92,000     5.00       $ 5.86     92,000     $ 5.86
  $ 8.01-11.00    64,000     3.68         8.97     59,000       8.96
  $11.01-13.38    30,000     3.18        12.94     23,000      12.80
  -------------  -------     ----       ------    -------     ------
  $ 5.00-13.38   186,000     4.25       $ 8.01    174,000     $ 7.83
</TABLE>

     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. There were no stock options
granted in 2000. The pro-forma effect in 1999 and 1998 of applying the
Black-Scholes option valuation model as well as the underlying weighted average
Black-Scholes assumptions are as follows:

<TABLE>
<CAPTION>
                                                    1999      1998
                                                   -------   -------
<S>                                                <C>       <C>
Net income (loss) as reported (in thousands).....  $(1,133)  $  (797)
Pro-forma net income (loss) (in thousands).......   (1,227)     (888)
Earnings (loss) per share as reported -- basic...    (0.72)    (0.50)
Pro-forma earnings (loss) per share..............    (0.78)     (.56)
Expected Volatility..............................     0.57      0.50
Risk-Free Rate of Return.........................     5.23      5.62
Expected Life....................................  5 Years   6 Years
</TABLE>

     Using the assumptions underlying the Black-Scholes model, the per share
weighted average fair value of options granted in 1999 and 1998 is $5.31 and
$7.31.
15. SEGMENT REPORTING

     As of December 31, 2000, the Company has three operating segments that meet
the quantitative thresholds of Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information."

     - Harvel Plastics -- manufactures PVC and CPVC pipe and custom extrusions

     - Elco Corporation -- produces lubricant additives, hydrochloric acid and
       fine chemicals

     - Parts Cleaning Technologies -- provides solutions for production parts
       cleaning needs, including equipment, solvents, recycling of waste, and
       contracts parts cleaning.

     The other category includes property transactions, consulting fees,
businesses sold in 1999, minority interest and certain employee benefit items.
Data (in thousands) for 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                         2000       1999       1998
                                        -------    -------    -------
<S>                                     <C>        <C>        <C>
Net sales:
  Harvel Plastics.....................  $47,506    $35,710    $29,656
  Elco Corporation....................   20,807     19,910     19,873
  Parts Cleaning Technologies.........   17,036     19,836     21,793
  Other...............................      321      1,440      2,480
                                        -------    -------    -------
    Total.............................  $85,670    $76,896    $73,802
                                        =======    =======    =======
Earnings (loss) from continuing
  operations and before income taxes:
  Harvel Plastics.....................  $ 4,839    $ 2,106    $ 2,710
  Elco Corporation(1).................    1,823        814      1,237
  Parts Cleaning Technologies.........   (1,615)      (788)      (462)
                                        -------    -------    -------
    Sub-total.........................  $ 5,047    $ 2,132    $ 3,485
  Corporate administrative expense....   (3,334)    (3,747)    (3,912)
  Corporate interest expense..........     (900)      (660)      (469)
  Other(2)............................      151        364        480
                                        -------    -------    -------
    Total.............................  $   964    $(1,911)   $  (416)
                                        =======    =======    =======
Depreciation and amortization:
  Harvel Plastics.....................  $ 1,639    $ 1,506    $ 1,204
  Elco Corporation....................    1,057      1,022        924
  Parts Cleaning Technologies.........      362        382        366
  Other...............................      344        452        488
                                        -------    -------    -------
    Total.............................  $ 3,402    $ 3,362    $ 2,982
                                        =======    =======    =======
Total assets:
  Harvel Plastics.....................  $23,807    $21,983    $21,630
  Elco Corporation....................   20,789     19,143     15,139
  Parts Cleaning Technologies.........    9,498     10,901      9,091
  Other(3)............................   (2,077)     7,591     10,194
                                        -------    -------    -------
    Total.............................  $52,017    $59,618    $56,054
                                        =======    =======    =======
Sales by customer location:
  United States.......................  $73,869    $66,716    $63,941
  Outside United States...............   11,801     10,181      9,861
                                        -------    -------    -------
    Total.............................  $85,670    $76,897    $73,802
                                        =======    =======    =======
</TABLE>

(1) 1999 includes the effect of a one-time charge of $637,000.

(2) 1999 includes $1.0 million of losses applicable to a sold business, which
    was more than offset by pension credits, consulting fees and gain on sale of
    property.

(3) Includes intercompany eliminations and discontinued operations.

 12
<PAGE>   15

--------------------------------------------------------------------------------

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Detrex Corporation and its consolidated subsidiaries ( the "Company")
achieved net income from continuing operations of $640,777 in 2000. Significant
operating improvements at two of the Company's business units were able to more
than offset poor results in the Parts Cleaning Technologies Division ("Parts
Cleaning Technologies"). Also, amendments made to the company's retiree health
care programs, partially offset by a charge to operations in conjunction with
the vesting provisions of a supplemental pension plan, had a favorable effect of
approximately $220,000 on income from continuing operations.

     Investments made in 1998 and 1999 to expand Harvel Plastics Inc. ("Harvel")
manufacturing and warehouse capabilities, coupled with continued high demand for
its high quality plastic pipe, enabled Harvel to substantially improve operating
results in 2000. Harvel's sales increased $11.8 million over 1999 and earnings
before tax increased by $1.7 million. In addition, Harvel carefully controlled
its selling, general and administrative expenses.

     The Elco Corporation ("Elco") was able to grow domestic sales volumes by
enough to offset declining international revenues caused by the negative impact
of the strong dollar, resulting in a 4.5% overall increase in sales. This,
coupled with manufacturing efficiency gained through the elimination in late
1999 of a redundant production facility, helped Elco increase operating
earnings.

     Parts Cleaning Technologies, formed in April 2000 as a combination of the
Solvents and Equipment divisions, struggled in 2000. In response to the
depressed market for parts cleaning equipment, the organization was downsized in
the second quarter; however, order intake was still below break-even levels.
Slowdown in the manufacturing industry, particularly in the fourth quarter,
negatively impacted the product distribution and contract parts cleaning
business. Overall, revenues for Parts Cleaning Technologies declined by $2.8
million, and operating losses totalled $1.6 million.

COMPARATIVE OPERATING DATA (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     2000               1999               1998
                                                                ---------------    ---------------    ---------------
                                                                  $         %        $         %        $         %
                                                                ------    -----    ------    -----    ------    -----
<S>                                                             <C>       <C>      <C>       <C>      <C>       <C>
Net sales...................................................    85,670    100.0    76,896    100.0    73,802    100.0
Gross margin................................................    21,050     24.6    17,379     22.6    18,723     25.4
Selling, general and administrative expenses................    15,192     17.7    15,325     19.9    15,483     21.0
Depreciation and amortization...............................     3,402      4.0     3,362      4.4     2,982      4.0
Net income (loss) from continuing operations................       641      0.7    (1,115)    (1.5)     (432)    (0.6)
</TABLE>

     2000 Compared to 1999 -- Net sales from continuing operations increased by
$8.8 million compared to the prior year. This 11.4% increase was driven by
Harvel, which successfully brought to market the increased capacity of its
California production facility. This plant was launched in the first quarter of
1999, and in its first full year of production contributed to revenue growth of
$11.8 million over 1999. Elco was able to overcome a very difficult export
market, given the relative strength of the dollar, and posted a 4.5% increase in
sales, primarily through increases in its domestic additives business.

     These increases were partially offset by a $2.8 million decrease in sales
for the Parts Cleaning Technologies Division, which continued to be adversely
affected by a weak capital equipment market in 2000, and a slowdown in
manufacturing in the fourth quarter. Gross margins improved to 24.6% for the
year, compared to 22.6% for 1999. The improvement was attributable to
manufacturing efficiencies primarily at Elco, which closed a redundant
production facility in 1999, and Harvel, where manufacturing efficiencies from
the volume increase drove the improvement.

     Although the decline in selling, general and administrative expenses in
absolute terms was minor, the 2.2% decrease as a percentage of sales was
significant. Harvel carefully controlled expenses which as a percentage of sales
declined to 8.2% in 2000 from 9.3% a year ago. The effect of amendments made to
the company's retiree health care programs also contributed to the reduction.
However, the company's pension credit decreased in 2000 as a result of vesting
provisions of a non-qualified supplemental pension plan. This had an impact of
increasing selling, general and administrative expenses.

     The provision for depreciation and amortization remained approximately the
same in 2000, compared to 1999.

     Interest expense increased in 2000, as borrowing levels under both the
revolving credit facility and the equipment term loan were higher through the
first three quarters of 2000 than in the comparable period in 1999. In addition,
interest rates increased in

                                                                              13
<PAGE>   16
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED

2000. Due to the cash generated from the sale of Seibert-Oxidermo, Inc. (See
"Liquidity, Financial Condition and Capital Resources" and Footnote 9 to Notes
to Consolidated Financial Statements) borrowings and interest expense decreased
in the fourth quarter.

     The provision for income taxes in 2000 reflects federal and state income
tax expense based upon the pretax income while the income tax credit in 1999
reflects credit for federal income tax, offset by state and local income
expense.

     1999 Compared to 1998 -- Net sales in 1999 for the Company reflect a $3.1
million increase from the previous year. Harvel benefitted from strong demand in
the building industry and having a new manufacturing operation in California to
meet the increased demand. Harvel's sales increase on a year-to-year basis was
$6.0 million. Sales for Elco were approximately the same as 1998 while Parts
Cleaning Technologies sales decreased by $2.0 million.

     Gross margin in 1999 was 22.6%, compared to 25.4% in 1998. The major
reasons for the decline were costs involved in closing a redundant Elco
manufacturing plant and costs associated with a business that was sold in 1999.
In addition, Harvel incurred a reduction in margins as raw material costs
increased, and finished goods price increases lagged. Parts Cleaning
Technologies incurred a reduction in margin as a result of unfavorable product
mix and offsite competition.

     Selling, general and administrative expenses were approximately the same in
1999 and 1998. Economic increases averaging 4% occurred in all of the Company
operating units, but production improvements more than offset the economics.
Expenses were 19.9% of sales, as compared to 21.0% in 1998.

     The provision for depreciation and amortization is higher than 1998 as a
result of depreciation of new plants in Ashtabula, Ohio and Bakersfield,
California, and the new management information system at the Corporate
headquarters.

     Interest expense was higher in 1999 due to increased borrowings and higher
interest rates from a year ago.

     The income tax credit in 1999 reflects credits for federal income tax,
partially offset by state and local income tax expense.

LIQUIDITY, FINANCIAL CONDITION, AND CAPITAL RESOURCES

     The Company utilized internally generated funds and increased borrowings
under its revolving credit agreement to finance its operations and provide for
capital expenditures of $1.5 million during the first nine months of 2000.
Following the sale of Seibert Oxidermo, Inc. (See Footnote 9 to the Notes to
Consolidated Financial Statements), in the fourth quarter, the Company was able
to significantly strengthen its balance sheet by reducing outstanding trade
accounts payable by $4.1 million, and extinguishing $1.6 million of
environmental liabilities. In addition, $700,000 was spent on capital
expenditures. Borrowings under the revolving credit facility decreased by $1.5
million during the year and the term loan of $1.7 million was completely repaid.

     The Company's capital expenditures for 2001 are estimated to be $5.0
million. It is anticipated that these expenditures will be financed through a
combination of internally generated funds, borrowings under existing financing
arrangements, and the sale of real estate that will become available for sale at
the end of the first quarter.

     Working capital at December 31, 2000 was $6.9 million, compared to $3.7
million at December 31, 1999. The Company has paid no dividends since the second
quarter of 1991 and cannot forecast when the dividend will be restored.

OTHER

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) Number 133, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which the Company adopted effective
January 1, 2001. The Company does not expect the adoption of SFAS 133 to have a
significant impact on its financial position, results of operations, or cash
flows.

 14
<PAGE>   17

SUPPLEMENTARY INFORMATION (Unaudited)
Selected Quarterly Data (Thousands of dollars except per share amounts)
<TABLE>
<CAPTION>
                                                       2000 Quarters
                                    ----------------------------------------------------
                                      4th            3rd            2nd            1st
                                    -------        -------        -------        -------
<S>                                 <C>            <C>            <C>            <C>
Net sales from continuing
  operations....................    $19,489        $21,022        $22,211        $22,948
Gross margin on sales...........      4,710          5,223          5,378          5,739
Net income (loss) from
  continuing operations.........        130             70            219            222
Net income (loss)...............        170          2,766            261            292
Basic and diluted earnings
  (loss) per common share:
  From continuing operations....        .08            .04            .14            .14
  From discontinued
     operations.................        .04           1.70            .02            .04
  Net income (loss) per share...        .12           1.74            .16            .18
Stock price range(1)
  High..........................          6 3/8        7.5              5 1/2          4 1/8
  Low...........................          4              3 1/4          3 1/2          2 1/4

<CAPTION>
                                                     1999 Quarters
                                  ----------------------------------------------------
                                    4th            3rd            2nd            1st
                                  -------        -------        -------        -------
<S>                               <C>            <C>            <C>            <C>
Net sales from continuing
  operations....................  $19,593        $19,982        $18,708        $18,613
Gross margin on sales...........    3,703          4,699          4,289          4,688
Net income (loss) from
  continuing operations.........     (700)          (222)          (375)           182
Net income (loss)...............     (742)          (268)          (327)           204
Basic and diluted earnings
  (loss) per common share:
  From continuing operations....     (.44)          (.14)          (.22)           .12
  From discontinued
     operations.................     (.03)          (.03)           .01            .01
  Net income (loss) per share...     (.47)          (.17)          (.21)           .13
Stock price range(1)
  High..........................        6 1/4          7 1/4          7 7/16         7
  Low...........................        3 5/8          4 1/2          5 1/2          5 1/2
</TABLE>

(1) Stock price range was obtained from NASDAQ quotations.

                                                                              15
<PAGE>   18

SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                               2000      1999      1998      1997      1996
                                                              -------   -------   -------   -------   -------
<S>                                                           <C>       <C>       <C>       <C>       <C>
Net sales from continuing operations........................  $85,670   $76,896   $73,802   $81,974   $83,339
Net income (loss) from continuing operations................      641    (1,115)     (432)    1,468       136
Net income (loss)...........................................    3,489    (1,133)     (797)    1,514       415
Basic and diluted earnings (loss) per common share:
     From continuing operations.............................      .40      (.71)     (.27)      .93       .08
     From discontinued operations...........................     1.80      (.01)     (.23)      .03       .18
     Net income (loss)......................................     2.20      (.72)     (.50)      .96       .26
Total assets................................................   52,017    59,618    55,991    55,571    55,592
Net working capital.........................................    6,917     3,723     5,925     9,274     8,515
Capital expenditures........................................    2,363     4,770     6,709     4,230     1,991
Long term portion of capital lease obligations..............      194       268       468       569       394
Total bank debt.............................................    6,830     9,983     6,290     5,700     5,627
Industrial development bonds................................    3,500     4,000     4,000     --        --
Stockholders' equity........................................   20,382    16,892    18,025    18,822    17,309
Stockholders' equity per common share.......................    12.87     10.67     11.38     11.89     10.93
Number of employees.........................................      315       327       366       353       345
Percentages to net sales:
     Gross margin...........................................     24.6      22.6      25.4      26.1      23.9
     Net income (loss) from continuing operations...........       .7      (1.4)      (.6)      1.8        .2
Net income (loss) from continuing operations as a percent
  of:
     Average total assets...................................      1.1      (1.9)      (.8)      2.6        .2
     January 1st stockholders' equity.......................      3.8      (6.2)     (2.3)      8.5        .8
Current ratio...............................................      1.4       1.1       1.3       1.4       1.4
</TABLE>

 16
<PAGE>   19

DIRECTORS
BRUCE W. COX
President, B. W. Cox Company,
  Manufacturers Representative
ROBERT A. EMMETT, III
Former Deputy General Counsel for Environment
  and Nuclear Programs, U.S. Department of Energy
WILLIAM C. KING
Chairman and Chief Executive Officer
JOHN F. MANGOLD
Manufacturing Consultant
THOMAS E. MARK
President and Chief Operating Officer
BENJAMIN W. McCLEARY
Member, McFarland Dewey & Co., LLC
  Investment Bankers, New York City
ARBIE R. THALACKER
Of Counsel, Shearman & Sterling,
  Attorneys, New York City
JOHN D. WITHROW
Retired President and Chief Operating Officer,
  Lectron Products Inc.
DAVID R. ZIMMER
Chief Executive Officer,
  Twitchell Corporation

AUDIT COMMITTEE
DAVID R. ZIMMER, Chairman
JOHN F. MANGOLD
ARBIE R. THALACKER

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

S. J. QUINLAN
Controller

BUSINESS UNIT EXECUTIVES

D. R. CRANDELL
President, Parts
  Cleaning Technologies

E. E. WISMER
President, Harvel Plastics, Inc.

D. A. CHURCH
President, The Elco Corporation and

  General Manager, Chemicals Division

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR 2000 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.
<PAGE>   20

                               DETREX CORPORATION

  GENERAL OFFICES -- 24901 NORTHWESTERN HWY., SUITE 500, SOUTHFIELD, MICHIGAN
                                     48075
--------------------------------------------------------------------------------

                           Telephone: (248) 358-5800
                   INTERNET ADDRESS -- http://www.detrex.com
                                                                     DETCM-AR-00