<PAGE>   1





                                                                      EXHIBIT 13

                      DETREX CORPORATION AND SUBSIDIARIES

                                      1995
                                 ANNUAL REPORT





<PAGE>   2
 
                                      ------------------------------------------
 
                                                        DETREX
                                                     CORPORATION
 
                                                  1995 ANNUAL REPORT
 
                                      ------------------------------------------
<PAGE>   3
 
HIGHLIGHTS(1)
 
<TABLE>
<CAPTION>
                                                 1995              1994              1993
                                              -----------      ------------      ------------
<S>                                           <C>              <C>               <C>
Net sales...................................  $93,596,000      $100,096,000      $105,578,000
Net loss....................................   (1,869,000)       (5,639,000)       (1,570,000)
Loss per common share.......................        (1.18)            (3.56)             (.99)
Stockholders' equity per common share.......        10.67             11.85             15.42
Additions to land, buildings and equipment
  (including capital leases)................    2,662,000         2,860,000         2,434,000
Current ratio...............................     1.3 to 1          1.3 to 1          1.5 to 1
Number of stockholders......................          425               477               544
Number of employees.........................          347               367               388(2)
</TABLE>
 
(1) This information should be considered in conjunction with
    the Consolidated Financial Statements and Management's
    Discussion and Analysis.
 
(2) Represents number of employees at January 1, 1994.
 
                                DETREX CORPORATE
                               MISSION STATEMENT
 
     Detrex Corporation is a producer and supplier of industrial and specialty
chemicals, services and supply processes to the industrial market place,
including lubricant additives, coatings, process equipment, high quality plastic
pipe, and environmental and analytical laboratory services.
 
     Our core business is in the specialty chemical field, providing process
design and equipment, plus chemical products and services. Our services and
products are designed to fulfill our customers' requirements in lubricating,
cleaning and surface finishing, and the handling of waste generated in the
production process.
 
     Our mission is to meet or exceed our customers' needs by providing cost
effective and technically superior products, systems, and services in an
environmentally sound manner.
 
     We will continue to be responsible to our customers, employees, suppliers,
communities and the environment while providing long term growth and a superior
return to our shareholders.
<PAGE>   4
 
TO OUR SHAREHOLDERS:
 
     1995 was a year of mixed results for Detrex. While the lack of earnings was
a disappointment, we invested significant expense and effort in positioning the
organization for profitability in the years to come.
 
     During 1995 the Company took significant actions to position Detrex for a
return to profitability in 1996. We developed new marketing strategies,
strengthened the sales organization, improved our quality and cost structure,
streamlined our organization and implemented a new top management team.
Non-recurring costs of approximately $1.0 million were incurred which included
costs related to disbanding corporate functions in marketing and sales,
commercial development, operations and engineering. This reorganization will
shift the management focus of the company to the individual business units close
to our customers, employees and suppliers. I feel we now have a strong
management team which will lead Detrex into the next century.
 
     Detrex incurred a net loss of $1,869,000 for the year ended December 31,
1995 compared to a net loss of $5,639,000 for the year ended December 31, 1994.
Changing environmental laws reduced the market for some of our solvent-based
products and equipment which resulted in losses for both the equipment division
and the solvent and environmental services division. We have taken steps to
compensate for adverse market developments and expect significantly improved
performance from these units during the coming year. In 1995, we achieved
operating profitability in our five other business units. Our plastic pipe
subsidiary, our lubricant additive subsidiary, our industrial furnace division,
our paint subsidiary and our analytical laboratory all made a positive profit
contribution and I expect continued growth and performance from these units in
the future.
 
     During the year we improved cash management through working capital
management techniques and tight capital expenditure control. As a result, we
paid off $3.5 million in long term debt and environmental obligations and re-
invested $3.9 million in the business through R&D and capital expenditures while
keeping the increase in short term borrowing to $3.0 million. Actions were taken
to improve the cash position by filing for tax refunds which will result in
additional cash of $3.0 million in 1996.
 
     During the past year we positioned Detrex for a return to profitability. I
thank all of our employees for their support and dedication to making this a
successful company. While many challenges remain ahead, I believe we have the
right team to return Detrex to the position it once held in the market place.
 
                                                   William C. King
                                           Chairman and Chief Executive Officer
 
                                        1
<PAGE>   5
 
          --------------- INDEPENDENT AUDITORS' REPORT ---------------
 
                                            ------------------------------------
                                            Suite 900
                                            600 Renaissance Center
Deloitte & Touche LLP Letterhead            Detroit, Michigan 48243-1704
 
To the Board of Directors and Stockholders of
  Detrex Corporation
 
We have audited the accompanying consolidated balance sheets of Detrex
Corporation and its subsidiaries as of December 31, 1995 and 1994 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, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these statements based on our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Detrex Corporation and its
subsidiaries at December 31, 1995 and 1994 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
 
February 21, 1996
(March 22, 1996 as to Note 5)
 
Deloitte & Touche Logo
 
                                        2
<PAGE>   6
 
DETREX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
 
<TABLE>
<CAPTION>
                                                   1995              1994              1993
                                                -----------      ------------      ------------
<S>                                             <C>              <C>               <C>
NET SALES....................................   $93,595,645      $100,096,443      $105,578,469

Cost of sales................................    72,373,603        77,640,002        80,461,988
Selling, general and administrative
  expenses...................................    20,010,203        18,404,812        22,625,345
Provision for depreciation and
  amortization...............................     3,393,721         3,405,273         4,241,314
Provision for plant closing and
  restructuring..............................       --                --              4,158,794
Provision for environmental reserve..........       100,039         8,500,000         4,230,007
Other (income) expense -- net................      (689,350)         (494,384)          (46,079)
Minority interest............................       242,110           262,488           164,456
Interest expense.............................       886,106           681,920           979,938
Gain on sale of Industrial Chemical
  Specialties Division.......................       --                --             (9,123,114)
                                                -----------      ------------      ------------
LOSS BEFORE INCOME TAXES.....................    (2,720,787)       (8,303,668)       (2,114,180)
Credit for income taxes......................      (851,484)       (2,664,788)         (544,501)
                                                -----------      ------------      ------------
NET LOSS.....................................    (1,869,303)       (5,638,880)       (1,569,679)
RETAINED EARNINGS AT BEGINNING OF YEAR.......    15,573,757        21,212,637        22,782,316
                                                -----------      ------------      ------------
RETAINED EARNINGS AT END OF YEAR.............   $13,704,454      $ 15,573,757      $ 21,212,637
                                                ===========      ============      ============
PER COMMON SHARE:
NET LOSS.....................................        $(1.18)           $(3.56)           $(0.99)
                                                     ======            ======            ======
</TABLE>
 
See Notes to Consolidated Financial Statements.
 
                                        3
<PAGE>   7
 
DETREX CORPORATION
 
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
 
<TABLE>
<CAPTION>
ASSETS                                                              1995             1994
                                                                 -----------      -----------
<S>                                                              <C>              <C>
CURRENT ASSETS:
Cash and cash equivalents.....................................   $ 2,764,360      $ 2,015,962
Accounts receivable (less allowance for uncollectible accounts
  of $459,000 in 1995 and $330,000 in 1994)...................    13,956,017       18,059,177
Refundable U.S. income taxes..................................     3,040,772          --
Inventories...................................................     8,437,505        8,977,084
Prepaid expenses and other....................................       978,819          835,256
Deferred income taxes.........................................     1,991,087        1,945,401
                                                                 -----------      -----------
       TOTAL CURRENT ASSETS...................................    31,168,560       31,832,880

LAND, BUILDINGS AND EQUIPMENT:
Land..........................................................       993,602        1,032,102
Buildings and improvements....................................    15,914,676       18,668,472
Machinery and equipment.......................................    28,668,642       31,768,126
Construction in progress......................................       762,885          242,708
                                                                 -----------      -----------
                                                                  46,339,805       51,711,408
Less allowance for depreciation and amortization..............    26,203,114       29,258,155
                                                                 -----------      -----------
       LAND, BUILDINGS AND EQUIPMENT -- NET...................    20,136,691       22,453,253
LAND, BUILDINGS AND EQUIPMENT HELD FOR SALE OR LEASE..........     2,664,773        1,187,889
PREPAID PENSIONS..............................................     1,226,348        1,121,169
DEFERRED INCOME TAXES.........................................     1,412,973        4,179,815
OTHER ASSETS..................................................     1,049,376          999,840
                                                                 -----------      -----------
                                                                 $57,658,721      $61,774,846
                                                                 ===========      ===========
</TABLE>
 
See Notes to Consolidated Financial Statements.
 
                                        4
<PAGE>   8
 
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY                                1995             1994
                                                                 -----------      -----------
<S>                                                              <C>              <C>
CURRENT LIABILITIES:
Loans payable -- short-term...................................   $ 8,500,000      $ 5,500,000
Current maturities of long-term debt and capital leases.......       606,779        1,848,080
Accounts payable..............................................     9,007,603       11,765,191
Environmental reserve.........................................     1,527,000        1,548,000
Accrued compensation..........................................       643,089          822,650
Accrued expenses -- non active locations......................       558,319          736,446
Other accruals................................................     4,008,678        2,644,769
                                                                 -----------      -----------
       TOTAL CURRENT LIABILITIES..............................    24,851,468       24,865,136
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS................       518,258          701,505
ACCRUED POSTRETIREMENT BENEFITS...............................     3,985,885        3,636,316
ENVIRONMENTAL RESERVE.........................................     8,681,199       11,042,937
MINORITY INTEREST.............................................     1,586,221        1,554,112
ACCRUED PENSION...............................................     1,142,388        1,212,235
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.............................................    13,704,454       15,573,757
                                                                 -----------      -----------
       TOTAL STOCKHOLDERS' EQUITY.............................    16,893,302       18,762,605
                                                                 -----------      -----------
                                                                 $57,658,721      $61,774,846
                                                                 ===========      ===========
</TABLE>
 
See Notes to Consolidated Financial Statements.
 
                                        5
<PAGE>   9
 
DETREX CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
 
<TABLE>
<CAPTION>
                                                              1995              1994              1993
                                                           -----------       -----------       -----------
<S>                                                        <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss............................................   $(1,869,303)      $(5,638,880)      $(1,569,679)
                                                           -----------       -----------       -----------
    Adjustments to reconcile net loss to net cash
         provided by operating activities:
         Gain on sale of Industrial Chemical Specialties
             Division...................................       --                --             (9,123,114)
         Depreciation and amortization..................     3,393,721         3,405,273         4,241,314
         (Gain) Loss on sale or write-off of buildings,
             machinery and equipment....................      (189,066)         (209,102)        1,487,718
         Deferred income taxes..........................     2,721,155        (3,067,559)         (908,595)
         Changes to operating assets and liabilities
             that provided (used) cash:
           Accounts receivable..........................     4,103,160        (1,329,201)       (2,653,599)
           Refundable U.S. income taxes.................    (3,040,772)          --                --
           Inventories..................................       509,579        (1,508,571)        1,961,297
           Prepaid expenses and other...................      (248,742)           12,685           165,504
           Other assets.................................      (133,535)          (52,426)           99,137
           Accounts payable.............................    (2,757,588)        1,552,158         2,194,204
           Environmental reserve........................    (2,382,738)        7,590,937         2,813,484
           Accrued compensation.........................      (179,561)         (162,265)          (13,296)
           Postretirement benefits......................       349,569           322,034           293,447
           Accrued expenses -- non active locations.....      (178,127)       (1,893,697)        2,230,143
           Net assets and liabilities of Industrial
               Chemical Specialties Division............       --                --               (876,886)
           Other accruals...............................     1,326,172          (270,543)          571,071
                                                           -----------       -----------       -----------
             TOTAL ADJUSTMENTS..........................     3,293,227         4,389,723         2,481,829
                                                           -----------       -----------       -----------
             NET CASH PROVIDED BY (USED IN) OPERATING
                  ACTIVITIES............................     1,423,924        (1,249,157)          912,150
                                                           -----------       -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures................................    (2,095,379)       (2,200,669)       (1,463,843)
    Proceeds from disposal of machinery and
         equipment......................................       235,321           309,036           --
    Proceeds from sale of Industrial Chemical
         Specialties Division...........................       --              1,650,000        10,000,000
                                                           -----------       -----------       -----------
             NET CASH PROVIDED BY (USED IN) INVESTING
                  ACTIVITIES............................    (1,860,058)         (241,633)        8,536,157
                                                           -----------       -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Bank borrowings.....................................     3,000,000         3,500,000           --
    Repayment of long-term debt.........................    (1,000,000)       (2,001,361)       (1,008,128)
    Repayment of short-term debt........................       --                --             (6,400,000)
    Principal payments under capital lease
         obligations....................................      (815,468)         (872,011)         (905,053)
    Common stock issued.................................       --                 28,020           --
                                                           -----------       -----------       -----------
             NET CASH PROVIDED BY (USED IN) FINANCING
                  ACTIVITIES............................     1,184,532           654,648        (8,313,181)
                                                           -----------       -----------       -----------
Net increase (decrease) in cash and cash equivalents....       748,398          (836,142)        1,135,126
Cash and cash equivalents at beginning of year..........     2,015,962         2,852,104         1,716,978
                                                           -----------       -----------       -----------
Cash and cash equivalents at end of year................   $ 2,764,360       $ 2,015,962       $ 2,852,104
                                                           ===========       ===========       ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the year for:
         Interest.......................................   $   771,564       $   633,767       $ 1,031,948
         Income taxes...................................   $   284,579       $   261,825       $   228,298
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:
    Capital lease obligations incurred in connection
      with the acquisition of equipment.................   $   566,628       $   658,967       $   970,265
    Capital lease terminations..........................   $   175,708       $    90,220       $   808,587
</TABLE>
 
See Notes to Consolidated Financial Statements.
 
                                        6
<PAGE>   10
 
DETREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. NATURE OF OPERATIONS AND CUSTOMER CONCENTRATION
 
     Detrex Corporation and its subsidiaries operate predominantly in a single
industry: chemicals and allied products, services, and processes for use by
manufacturing and service industries. The principal products include specialty
chemicals, industrial cleaners, process equipment, coatings, lubricant
additives, chlorinated solvents, hydrochloric acid, PVC plastic pipe, industrial
finishing materials and paints, industrial furnaces, degreasing equipment, and
environmental and analytical laboratory services. The products are primarily
sold by sales-service engineers and most sales are direct to industrial users.
 
     All of the Company's business units operate in highly competitive markets
which are mainly national in scope, although some business is done
internationally by its lubricants subsidiary and its plastic pipe subsidiary.
Generally, for all products there are numerous competitors with no one company
or a small number of companies being dominant. The Company operates in niche
markets and its principal methods of competition in various markets include
service, price and quality, depending on the market serviced. No material part
of the business is dependent upon a single customer or a few customers and
therefore vulnerability from this aspect is not a factor. However, certain of
the Company's business units sell primarily to automotive or automotive related
companies.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     Basis of Financial Statements
 
     The consolidated financial statements comprise those of the Company and its
subsidiaries. All balances and transactions between the companies have been
eliminated. Certain amounts for 1993 and 1994 have been reclassified to conform
with 1995 classifications.
 
     Inventories and Accounts Receivable
 
     Inventories are stated at lower of cost or market. Cost of raw materials,
including raw materials in work in process and finished goods inventories,
generally is determined by using the last-in, first-out method. Labor and burden
in inventory are determined by using the average cost method. Inventories
relating to fixed-price contracts are stated at the accumulated cost of
material, labor and burden less related progress billings. The completed
contract method is used to recognize revenue.
 
     Contract retentions of $984,000 in 1995 and $671,000 in 1994 are included
in accounts receivable.
 
     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 1995, 1994 and 1993 were approximately
$1,272,000, $1,784,000, and $2,532,000, respectively.
 
     Loss Per Common Share
 
     Loss per common share is based upon the average number of common shares
outstanding during the year. Shares subject to stock options are not considered
in per share calculations since the Company is in a loss position and the effect
would be antidilutive.
 
     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,
accounts payable, and debt under the Revolving Credit Agreement approximated
fair values.
 
     Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the balance sheet date and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
                                        7
<PAGE>   11
 
3. INVENTORIES
 
     Inventories at December 31 consist of the following:
 
<TABLE>
<CAPTION>
                                  1995           1994
                               -----------    ----------
<S>                            <C>            <C>
Raw materials...............   $ 2,861,900    $2,279,750
Work in progress............     1,989,115     1,971,608
Finished goods..............     4,897,266     4,914,802
Less: Progress billings on
  work in progress..........    (1,310,776)     (189,076)
                               -----------    ----------
                               $ 8,437,505    $8,977,084
                               ===========    ==========
</TABLE>
 
     The excess of current cost over the stated last-in, first-out value is
approximately $1,855,000 and $2,280,000 at December 31, 1995 and 1994. As a
result of liquidating inventories carried at costs incurred in prior years, the
Company's 1995 net loss before income taxes was decreased by $502,000.
 
4. CAPITAL AND OPERATING LEASES
 
     Capitalized lease assets (primarily automobiles, trucks and lab equipment)
included in machinery and equipment at December 31 are as follows:
 
<TABLE>
<CAPTION>
                                   1995          1994
                                ----------    ----------
<S>                             <C>           <C>
Machinery and equipment......   $3,081,776    $3,930,407
Accumulated amortization.....    1,654,301     2,067,052
                                ----------    ----------
Leased assets -- net.........   $1,427,475    $1,863,355
                                ==========    ==========
</TABLE>
 
     Rent expense applicable to operating leases for 1995, 1994 and 1993 was
$569,000, $925,000 and $974,000, respectively.

     Minimum annual lease payments for leases in effect at December 31, 1995 are
as follows:
 
<TABLE>
Minimum Lease Payments:            Capital     Operating
                                ----------    ----------
<S>                             <C>           <C>
     1996....................   $  707,157    $  495,536
     1997....................      382,131       419,674
     1998....................      148,422       392,305
     1999....................       56,181       297,096
     2000....................       18,168        99,565
     2001 and thereafter.....       --           195,000
                                ----------    ----------
Total minimum lease
  payments...................    1,312,059    $1,899,176
                                              ==========
Less amount representing
  estimated executory costs
  (such as taxes, maintenance
  and insurance) and profit
  thereon included in total
  minimum lease payments.....       79,343
                                ----------
Net minimum lease payments...    1,232,716
Less amount representing
  interest...................      107,679
                                ----------
Present value of net minimum
  lease payments.............    1,125,037
Less current portion.........      606,779
                                ----------
Non-current portion..........   $  518,258
                                ==========
</TABLE>
 
5. REVOLVING CREDIT AGREEMENT
 
     On March 11, 1994, the Company entered into a three year Revolving Credit
Agreement (the Agreement). The Agreement provides for a credit facility of up to
$12.0 million collateralized by the Company's inventory and accounts receivable.
The terms of the Agreement contain, among other provisions, requirements for
maintaining defined levels of tangible net worth and various financial statement
ratios, including working capital and debt to equity ratios, and a cash flow
ratio.
 
     At December 31, 1995, the Company was not in compliance with certain
provisions contained in the Agreement. However, the Company has received a
commitment letter which will amend the existing Agreement. The amendment to the
Agreement will contain revised covenants which the Company expects to be in
compliance with during 1996. It is anticipated that the amendment will be
finalized by April 30, 1996.
 
     The weighted average interest rate for short term borrowings for the year
ended December 31, 1995 was 8.10% compared to 7.94% for the year ended December
31, 1994 and 5.66% for the year ended December 31, 1993.
 
6. INCOME TAXES
 
     The net credit for income taxes, calculated in accordance with SFAS No. 109
for 1995, 1994 and 1993, included the following components:
 
<TABLE>
<CAPTION>
                           1995           1994          1993
                        -----------    -----------    ---------
<S>                     <C>            <C>            <C>
Current for tax
  purposes:
  Federal............   $(3,851,066)   $   --         $  41,658
  State and local....       278,427        336,199      322,871
                        -----------    -----------    ---------
    Total Current....    (3,572,639)       336,199      364,529
                        -----------    -----------    ---------
Deferred income
  taxes:
  Federal............     2,609,310     (2,647,688)    (732,912)
  State and local....       111,845       (353,299)    (176,118)
                        -----------    -----------    ---------
    Total Deferred...     2,721,155     (3,000,987)    (909,030)
                        -----------    -----------    ---------
Credit for income
  taxes..............   $  (851,484)   $(2,664,788)   $(544,501)
                        ===========    ===========    =========
</TABLE>
 
                                        8
<PAGE>   12
 
     Deferred tax assets (liabilities) at December 31, 1995 and 1994 relate to
the following temporary differences and carryforwards:
 
<TABLE>
<CAPTION>
                                             1995           1994
                                          -----------    -----------
<S>                                       <C>            <C>
Net operating loss carryforward........   $ 1,077,543    $ 2,119,710
Alternative minimum tax credit
  carryforward.........................       383,144        383,144
Accruals for:
  Postretirement benefits..............     1,526,195      1,392,345
  Environmental........................     3,908,719      4,821,070
  Restructuring........................       213,780        281,985
  Self insurance reserve...............       414,681        171,539
Inventory related......................       556,773        671,402
Other..................................       221,165        253,156
                                          -----------    -----------
    Gross deferred tax assets..........     8,302,000     10,094,351
                                          -----------    -----------
Valuation allowance....................      (467,000)       --
                                          -----------    -----------
Depreciation...........................    (2,788,135)    (2,749,520)
Undistributed earnings of the Company's
  DISC.................................    (1,234,345)    (1,050,586)
Pension................................      (130,911)       --
Other..................................      (277,549)      (169,029)
                                          -----------    -----------
    Gross deferred tax liabilities.....    (4,430,940)    (3,969,135)
                                          -----------    -----------
    Net deferred tax assets............   $ 3,404,060    $ 6,125,216
                                          ===========    ===========
</TABLE>
 
     The Company has net operating loss carryforwards of $511,131, $1,669,081
and $989,032 that expire in 2006, 2007 and 2010, respectively.
 
     The reasons for the difference between the income tax provision and income
taxes computed at 34% for 1995, 1994 and 1993 are summarized below:
 
<TABLE>
<CAPTION>
                                  1995          1994          1993
                                ---------    -----------    ---------
<S>                             <C>          <C>            <C>
Computed 'expected' tax
  provision...................  $(925,068)   $(2,823,247)   $(718,821)
State and local income taxes,
  net of federal tax
  benefit.....................    257,580        (14,193)      96,857
Nondeductible meal and
  entertainment expense.......     57,324         48,098       34,058
1992, 94 and 95 tax refund
  carryback tax rate
  differential................   (791,805)
Deferred tax asset valuation
  allowance...................    467,000
Other -- net..................     83,485        124,554       43,405
                                ---------    -----------    ---------
                                $(851,484)   $(2,664,788)   $(544,501)
                                =========    ===========    =========
</TABLE>
 
     Since the Company has experienced pretax losses in recent years, the
Company is not able to conclude that realization of all its deferred tax assets
is more likely than not. Accordingly, the Company has provided a valuation
allowance of $467,000. The valuation allowance will be adjusted when, in the
opinion of management, significant positive evidence exists which indicates it
is more likely than not that the Company will be able to realize the deferred
tax assets. Such reduction in the valuation allowance, if any, will be reflected
as a component of income tax expense in future years.
 
7. 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 7.25% and 4.0%, respectively, at December 31, 1995 and 8.5% and 4.0%,
respectively, at December 31, 1994. The expected long-term rate of return on
assets was 8.5% in both years. The following table sets forth the plans' funded
status and amounts recognized in the Company's balance sheet at December 31:
 
<TABLE>
<CAPTION>
                                             1995           1994
                                          -----------    -----------
<S>                                       <C>            <C>
Actuarial present value of benefit
  obligations:
  Accumulated benefit obligations:
    Vested benefits....................   $22,094,843    $18,836,805
    Non-vested benefits................     1,042,117        659,032
                                          -----------    -----------
      Total............................   $23,136,960    $19,495,837
                                          ===========    ===========
Projected benefit obligations for
  service rendered to date.............   $25,360,581    $21,464,248
Plan assets at fair value -- primarily
  equity and fixed income bond funds...    27,923,010     25,204,658
                                          -----------    -----------
Excess of plan assets over projected
  benefit obligations..................     2,562,429      3,740,410
Unrecognized net asset at January 1,
  1986 being recognized principally
  over 15 years........................    (1,246,551)    (1,405,334)
Unrecognized net gain from past
  experience different from that
  assumed..............................    (1,102,264)    (2,316,447)
Additional minimum liability...........      (129,654)      (109,695)
                                          -----------    -----------
Net pension asset (liability)..........   $    83,960    $   (91,066)
                                          ===========    ===========
</TABLE>
 
Net pension credit included the following components:
 
<TABLE>
<CAPTION>
                                1995           1994           1993
                             -----------    -----------    -----------
<S>                          <C>            <C>            <C>
Service cost-benefits
  earned during the year...  $   467,594    $   556,058    $   650,412
Interest cost on projected
  benefit obligations......    1,755,902      1,671,239      1,864,318
Actual return on plan
  assets...................   (4,310,407)       885,828     (2,962,981)
Net amortization and
  deferral.................    1,956,305     (3,366,137)       379,464
                             -----------    -----------    -----------
Net pension credit.........  $  (130,606)   $  (253,012)   $   (68,787)
                             ===========    ===========    ===========
</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.
 
                                        9
<PAGE>   13
 
     Certain divisions and subsidiaries of the Company provide contributory
defined benefit health care plans for retirees, subject to various conditions
and limitations.
 
     Net periodic postretirement benefit costs included the following
components:
 
<TABLE>
<CAPTION>
                                      1995        1994        1993
                                    --------    --------    --------
<S>                                 <C>         <C>         <C>
Service cost-benefits attributed
  to service during the period...   $161,389    $156,144    $115,576
Interest cost on accumulated
  postretirement benefit
  obligation.....................    290,573     264,224     292,903
Amortization.....................      --          --          2,840
                                    --------    --------    --------
Net periodic postretirement
  benefit cost...................   $451,962    $420,368    $411,319
                                    ========    ========    ========
</TABLE>
 
     The Company's postretirement plans are not funded. The status of the plans
at December 31, 1995 and 1994 follows:
 
<TABLE>
<CAPTION>
                                                1995          1994
                                             ----------    ----------
<S>                                          <C>           <C>
Accumulated postretirement benefit
  obligation:
  Retirees.................................  $1,866,703    $1,874,226
  Fully eligible active plan
    participants...........................     273,351       231,079
  Other active plan participants...........   1,596,113     1,545,580
  Unrecognized net loss....................     249,718       (14,569)
                                             ----------    ----------
    Total accrued postretirement
      benefits.............................  $3,985,885    $3,636,316
                                             ==========    ==========
</TABLE>
 
     For measurement purposes, a 9.4% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1995. The rate is assumed
to decrease gradually over the next 8 years to 5.3% 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, 1995 by approximately
$630,200 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year then ended by approximately
$86,300.
 
     The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% at December 31, 1995, 8.5% at
December 31, 1994 and 7.5% at December 31, 1993.
 
8. SALE OF INDUSTRIAL CHEMICAL SPECIALTIES DIVISION
 
     Effective September 30, 1993, the Company sold its Industrial Chemical
Specialties Division to Novamax Technologies Corporation for $11,650,000 of
which $10.0 million was received on October 1, 1993 and $1,650,000 was received
on June 30, 1994. The Company reported a pre-tax gain of $9,123,000, including
the gain on curtailment of pensions of $279,000, on the sale of this Division.
For the nine months of 1993 prior to the sale, this Division reported Sales of
$10,340,000 and Income Before Tax of $460,000.
 
9. PROVISION FOR PLANT CLOSINGS AND RESTRUCTURING
 
     In 1993, the Company phased out manufacturing of chemical equipment at its
Bowling Green, Kentucky plant. This operation had a total before tax loss of
approximately $6.1 million in 1993. The provision for plant closing and
restructuring of $4.2 million reflects the amounts attributable to asset
write-downs, termination pay, and the costs associated with the winding down of
production.
 
10. OTHER INCOME -- NET
 
     Other income includes interest income of approximately $272,000, $46,000
and $42,000 for 1995, 1994 and 1993, respectively.
 
11. CONTINGENCIES
 
     The Environmental Protection Agency ('EPA') has notified the Company and at
least seventeen other companies that they may be potentially responsible for
sharing the costs in a proceeding to clean up contaminated sediments in the
Fields Brook watershed in Ashtabula, Ohio. The EPA issued a Record of Decision
in 1986 concerning the methods it recommends using to accomplish this task at an
estimated total cost of $48,000,000. The Company and the other potentially
responsible parties have expressed their disagreement with this recommendation
and are continuing to negotiate with the EPA as to how best to effect the clean
up operation. The Company believes that the Fields Brook remedial investigation
and feasibility studies referred to below will be an important factor in the
negotiation with the EPA.
 
     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
Company conducted a comprehensive review of its reserves during the fourth
quarter of 1994 and added $8.5 million to this reserve. The total amount of the
reserve at December 31, 1995 and 1994 is $10.2 and $12.6 million, respectively,
which amounts were calculated without taking into consideration any possible
insurance recoveries.
 
     The reserve described above includes a provision for the Company's
anticipated share of remedial investigation and feasibility studies to determine
sources of contamination and methods of remediation in the Fields Brook
watershed referred to above, as well as a provision for costs that may be
incurred in connection with remediation of the Fields Brook watershed and other
sites. Some of these studies have been completed; others are ongoing. In many
cases, the methods of remediation remain to be agreed upon.
 
                                       10
<PAGE>   14
 
     The Company expects to continue to incur professional fees, expenses and
capital expenditures in connection with its environmental compliance efforts.
 
     In addition to the above, there are several other claims and lawsuits
pending against the Company and its subsidiaries.
 
     The amount of liability to the Company with respect to costs of remediation
of contamination of the Fields Brook watershed and of other sites, and the
amount of liability with respect to several other claims and lawsuits against
the Company, was based on available data. The Company has established its
reserves in accordance with its interpretation of the principles outlined in
Statement of Financial Accounting Standards No. 5 and Securities and Exchange
Commission Staff Accounting Bulletin No. 92. In the event that any additional
accruals should be required in the future with respect to such matters, the
amounts of such additional accruals could have a material impact on the results
of operations to be reported for a specific accounting period but should not
have a material impact on the Company's consolidated financial position.
 
12. PREFERRED STOCK
 
     The Company has authorized 1,000,000 shares of $2 par value preferred
stock, issuable in series. No shares were issued or outstanding as of December
31, 1995, 1994 and 1993.
 
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 $80, subject to
adjustment. The Rights will be exercisable only if a person or group acquires
beneficial ownership of 15% or more of the Company's outstanding Common Stock or
commences a tender or exchange offer upon consummation of which a person or
group would beneficially own 30% or more of the Company's outstanding Common
Stock. Until they become exercisable, the Rights will be evidenced by the Common
Stock certificates and will be transferred only with such certificates.
 
     If any person becomes the beneficial owner of 15% or more of the Company's
outstanding Common Stock, or if a holder of 15% or more of the Company's Common
Stock engages in certain self-dealing transactions or a merger transaction in
which the Company is the surviving corporation and its Common Stock remains
outstanding, then each Right not owned by such person or certain related parties
will entitle its holder to purchase, at the Right's then-current exercise price,
shares of the Company's Common Stock (or, in certain circumstances, units of the
Company's Series A Preferred Stock, cash, property or other securities of the
Company) having a market value equal to twice the then-current exercise price.
In addition, if the Company is involved in a merger or other business
combination transaction with another person after which its Common Stock does
not remain outstanding, or sells 50% or more of its assets or earning power to
another person, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, shares of common stock of such other person having
a market value equal to twice the then-current exercise price. The Company will
generally be entitled to redeem the Rights at $.01 per Right at any time until
the tenth business day following public announcement that a person or group has
acquired 15% or more of the Company's Common Stock. The Plan will expire on May
4, 2000 unless the Rights are earlier redeemed by the Company.
 
14. STOCK OPTIONS
 
     On April 22, 1993, the shareholders of the Company approved the
Corporation's 1993 Stock Option Plan (the Management Plan) and the Corporation's
1993 Stock Option Plan for Outside Directors (the Directors' Plan). Pursuant to
the Management Plan and employment agreements, key executives have options
outstanding totaling 23,000 shares, at December 31, 1995 and 106,000 shares at
January 31, 1996. The 106,000 shares have exercise prices ranging from $5.00 to
$9.50. Pursuant to the Directors' Plan, options for 21,000 shares in 1993 and
6,000 shares in both 1994 and 1995 have been granted at exercise prices ranging
from $8.25 to $13.20. Options for 3,000 of these shares were exercised in 1994
at $9.34 a share.
 
     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. No options have expired under the Directors' Plan. Options for
75,000 shares were forfeited in 1995 under the Management Plan.
 
                                       11
<PAGE>   15
 
--------------------------------------------------------------------------------
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     Detrex Corporation and its consolidated subsidiaries (the Company) incurred
a net loss of $1,869,000 for the year ended December 31, 1995, compared to a net
loss of $5,639,000 for the year ended December 31, 1994 and a net loss of
$1,570,000 for the year ended December 31, 1993. A tabular breakdown of results
for the last three years reflects the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                 1995                  1994                  1993
                                                          ------------------    ------------------    ------------------
                                                          Income                Income                Income
                                                          (Loss)                (Loss)                (Loss)
                                                          Before       Net      Before       Net      Before       Net
                                                          Income     Income     Income     Income     Income     Income
                                                           Taxes     (Loss)      Taxes     (Loss)      Taxes     (Loss)
                                                          -------    -------    -------    -------    -------    -------
      <S>                                                <C>        <C>        <C>         <C>       <C>         <C>
      Gain on sale of ICSD.............................   $ --       $ --       $    --    $    --    $ 9,123    $ 6,021
      Provision for plant closing and restructuring....     --         --            --         --     (4,159)    (2,745)
      Additions to environmental reserve...............      (100)       (66)    (8,500)    (5,600)    (4,230)    (2,790)
      Operations (excluding the above).................    (2,621)    (1,803)       196        (39)    (2,848)    (2,056)
                                                          -------    -------    -------    -------    -------    -------
        Total..........................................   $(2,721)   $(1,869)   $(8,304)   $(5,639)   $(2,114)   $(1,570)
                                                          =======    =======    =======    =======    =======    =======
</TABLE>
 
     Footnotes 8 and 9 to the Consolidated Financial Statements explain the
actions in 1993 to sell the Industrial Chemical Specialties Division (ICSD) and
to phase out manufacturing of chemical equipment at the Company's Bowling Green,
Kentucky plant.
 
     In 1995, the Company incurred a significant loss in its solvents and
environmental services division, partially due to changing environmental laws.
Also included in the 1995 loss are provisions for termination pay, legal claims
and worker's compensation which totaled approximately $1.0 million dollars.
 
     In 1993, the Company began a review of its liabilities for environmental
matters. Based on that review, the Company added $4.2 million to its
environmental reserve. The Company indicated that certain remediation studies
would become available in 1994 and as they became available, the Company would
have a more complete basis for estimating anticipated remediation costs. Some of
this information became available in the latter part of 1994 and served as a
basis for a comprehensive review of environmental matters, including its own
properties, in the fourth quarter of 1994. The result of that review was the
$8.5 million addition to the environmental reserve referred to above. A minor
adjustment of $0.1 million was made to the reserve in 1995. The Company will
continue to analyze this reserve and make adjustments to reflect changes from
updated or new studies and any other significant developments. For a more
detailed explanation of the Company's liabilities for environmental matters,
refer to Footnote 11 of the Consolidated Financial Statements.
 
COMPARATIVE OPERATING DATA (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                      1995                1994                1993
                                                                 ---------------    ----------------    ----------------
                                                                   $         %         $         %         $         %
                                                                 ------    -----    -------    -----    -------    -----
      <S>                                                        <C>       <C>      <C>        <C>      <C>        <C>
      Net sales...............................................   93,596    100.0    100,096    100.0    105,578    100.0
      Gross margin............................................   21,222     22.7     22,456     22.4     25,116     23.8
      Selling, general and administrative expenses............   20,010     21.4     18,405     18.4     22,625     21.4
      Depreciation and amortization...........................    3,394      3.6      3,405      3.4      4,241      4.0
      Provision for plant closing and restructuring...........                           --       --      4,159      3.9
      Gain on sale of ICSD....................................                           --       --      9,123      8.6
      Net loss................................................   (1,869)    (2.0)    (5,639)    (5.6)    (1,570)    (1.5)
</TABLE>
 
     1995 COMPARED TO 1994 -- In 1995, net sales decreased $6.5 million. The
major reason for the decrease was a significant reduction in revenue at the
Company's solvents and environmental services division, along with smaller
decreases at the Company's industrial furnace division, its equipment division,
and its paint subsidiary. The Company's plastic pipe and lubricant additives
subsidiaries both had increases in revenue.
 
                                       12
<PAGE>   16
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
 
     Gross margin in 1995 was approximately the same as in 1994. The small
increase in the gross margin percentage was primarily attributable to margin
improvements at the Company's lubricant additives subsidiary.
 
     The increase in selling, general and administrative expenses reflects a
$500,000 provision for termination pay, increases in the provision for bad debts
and increases in selling expenses at most of the Company's business units.
 
     The provision for depreciation and amortization is approximately the same
as the prior year for all of the Company's major business units.
 
     Interest expense for 1995 was higher than in 1994 due to increased
borrowings in 1995 and higher interest rates.
 
     The income tax credit for both 1995 and 1994 reflects a credit for federal
income taxes, partially offset by state and local income tax expense. In
addition, during 1995 a credit of $792,000 was recorded to reflect a rate
differential resulting from the carry-back of certain components of prior year
net operating losses to tax years in which the statutory rate was 46%.
 
     Since the Company has experienced pretax losses in recent years, the
Company is not able to conclude that realization of all its deferred tax assets
is more likely than not. Accordingly, the Company has provided a valuation
allowance of $467,000. The valuation allowance will be adjusted when, in the
opinion of management, significant positive evidence exists which indicates it
is more likely than not that the Company will be able to realize the deferred
tax assets. Such reduction in the valuation allowance, if any, will be reflected
as a component of income tax expense in future years.
 
     The Company has net operating loss carryforwards of $3,169,244 at December
31, 1995, representing a federal income tax benefit of $1,077,543. The net
operating loss carryforwards expire as follows:

<TABLE>
                            <S>          <C>   
                            2006           $ 511,131
                            2007           1,669,081
                            2010             989,032
                                          ----------
                            Total         $3,169,244
                                          ==========
</TABLE>
   

     1994 COMPARED TO 1993 -- In 1994, Net sales decreased to $100 million, a
5.2% decrease from 1993. However, when 1993 sales were adjusted for the sale of
ICSD, the Company realized a 5.1% increase in sales from its ongoing operations.
The Company had significant sales increases in its industrial furnace division
and in its subsidiary producing plastic pipe and more modest increases in the
sales of its paint subsidiary and its lubricants subsidiary. The increase more
than offset lower sales in the Company's equipment and solvents divisions.
 
     Gross margin in 1994 equaled 22.4% of sales, compared to 23.8% in 1993. The
decline in gross margin is primarily attributable to lower margins within the
Company's solvents division, its general chemicals division and its subsidiary
producing plastic pipe.
 
     The reduction in selling, general and administrative expenses reflects the
inclusion of ICSD for the first nine months of 1993, and reductions in this
category of expenses for 1994 in the Company's equipment division and its
solvents division.
 
     The reduction in depreciation and amortization in 1994 is a result of the
ICSD sale and the discontinuance of manufacturing at the Company's plant in
Bowling Green, Kentucky.
 
     Interest expense in 1994 is lower than in 1993 due to decreased average
borrowings in 1994. The reduction due to lower borrowings was partially offset
by increases in interest rates during the second half of the year.
 
     The Company recorded income tax benefits in both years due to the
significant before tax losses.
 
LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
 
     During 1995, the Company financed its operations by utilizing a combination
of internally generated funds and net additional bank borrowings of $2.0
million. The Company paid the remaining $1.0 million due under its 9.04% term
loan but increased borrowings under its Revolving Credit Agreement by $3.0
million. At December 31, 1995, the Company was not in compliance with certain
provisions contained in its Revolving Credit Agreement.
 
                                       13
<PAGE>   17
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
 
     The Company has received a commitment letter from its lead bank which, once
formalized, will amend the existing Revolving Credit Agreement. It is expected
that this amendment will be finalized by April 30th and will contain revised
covenants which the Company expects to be in compliance with during 1996. With
the amendment to the Revolving Credit Agreement in place, the Company intends to
finance its operations by utilizing a combination of internally generated funds
and borrowings under its Revolving Credit Agreement. The interest rate outlined
in the commitment letter is prime rate plus one percent.
 
     Working capital was $6,317,000 at December 31, 1995, compared to $6,968,000
at December 31, 1994.
 
     The Company's capital expenditures (including capital leases) totaled
$2,662,000 in 1995. This compares to $2,860,000 in 1994 and $2,434,000 in 1993.
 
     The Company made cash payments of $2.5 million that were charged to its
Environmental Reserve in 1995. It is anticipated that cash expenditures for
environmental matters will be reduced to approximately $1.5 million in 1996.
 
     The Company has paid no dividends since the second quarter of 1991 and
cannot forecast when the dividend will be restored.
 
OTHER
 
     The Company will adopt Statement of Financial Accounting Standard (SFAS)
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and SFAS No. 123, Accounting for Stock-Based
Compensation, in 1996. It is not expected that adoption of these Statements will
have a significant impact on the Company's consolidated financial position or
the results of operations.
 
                                       14
<PAGE>   18
 
SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
 
<TABLE>
<CAPTION>
                                                              1995        1994        1993        1992         1991
                                                             -------    --------    --------     -------      -------
<S>                                                          <C>        <C>         <C>          <C>          <C>
Net sales.................................................   $93,596    $100,096    $105,578     $96,754      $81,398
Income (loss) before accounting change....................    (1,869)     (5,639)     (1,570)     (2,981)      (7,018)
Cumulative effect of accounting change....................     --          --          --         (1,813)       --
Net income (loss).........................................    (1,869)     (5,639)     (1,570)     (4,794)(1)   (7,018)
Earnings (loss) per common share before accounting
  change..................................................     (1.18)      (3.56)       (.99)      (1.88)       (4.44)
Cumulative effect of accounting change per common share...     --          --          --          (1.15)       --
Earnings (loss) per common share..........................     (1.18)      (3.56)       (.99)      (3.03)(1)    (4.44)
Dividends per common share................................     --          --          --          --             .30
Total assets..............................................    57,659      61,775      59,052      59,662       58,113
Net working capital.......................................     6,317       6,968      10,721       8,164       11,260
Capital expenditures......................................     2,095       2,201       1,464       2,166        3,956
Long-term debt............................................       518         702       3,030       4,602        5,360
Stockholders' equity......................................    16,893      18,763      24,373      25,943       30,737
Stockholders' equity per common share.....................     10.67       11.85       15.42       16.42        19.45
Number of employees.......................................       347         367         388(2)      495          447
Percentages to net sales:
     Gross margin.........................................      22.7        22.4        23.8        23.7         23.3
     Net income (loss)....................................      (2.0)       (5.6)       (1.5)       (5.0)(1)     (8.6)
Net income (loss) as a percent of:
     Average total assets.................................      (3.1)       (9.3)       (2.6)       (8.1)(1)    (11.7)
     First of year stockholders' equity...................     (10.0)      (23.1)       (6.1)      (15.6)(1)    (18.4)
Current ratio.............................................       1.3         1.3         1.5         1.4          1.7
</TABLE>
 
NOTES FOR SELECTED FINANCIAL DATA
 
(1) Includes a one time charge of $1,812,600 reflecting the adoption of
    Statement of Financial Accounting Standards No. 106, Employers' Accounting
    for Postretirement Benefits Other Than Pensions, effective January 1, 1992.
 
(2) At January 1, 1994.
 
                                       15
<PAGE>   19
 
                   PRODUCTS OF DETREX AND DETREX SUBSIDIARIES
 
<TABLE>
<S>                                           <C>                               <C>
 CHEMICALS DIVISION                           EQUIPMENT DIVISION                HARVEL PLASTICS, INC.
 P.O. BOX 1398,                               325 EMMETT AVENUE,                P.O. BOX 757,
   ASHTABULA, OHIO 44004                        BOWLING GREEN,                    EASTON, PENNSYLVANIA 18042
 C.U. GUY, General Manager                        KENTUCKY 42101                E. E. WISMER, President
 N-Methyl Pyrrole and Pyrrole                 B. B. RUSSELL, Business           Rigid PVC Plastic Pipe
 Semi-conductor Grade                           Manager                           (Normal Impact)
   Hydrochloric Acid                          Aqueous and Semi-Aqueous            (High Impact)
 Pharmaceutical Intermediates                   Equipment                       Solid Bar, Heavy Wall Tubular Stock,
                                              Electronic Component Cleaning       Angle Stock, Custom Extrusions
 SOLVENTS AND                                   and Defluxing Machines            
 ENVIRONMENTAL SERVICES                                                         SEIBERT-OXIDERMO, INC.
 DIVISION                                     PACIFIC INDUSTRIAL                16255 WAHRMAN,
 24901 NORTHWESTERN HWY,                      FURNACE DIVISION                    ROMULUS, MICHIGAN
      SUITE 512                               26000 CAPITOL AVENUE,                 48174
   SOUTHFIELD, MICHIGAN                         REDFORD TWP.,                   D.A. CHURCH, President
      48075                                       MICHIGAN 48239                Industrial and Automotive Coatings
 D.R. CRANDELL, Division President            J.T. O'NEAL, General Manager      Conductive Primers for Rigid and
 Virgin or Recycled Solvents                  Industrial Furnaces                 Flexible Plastics
 Solvent Reclamation and                      Automation Equipment              Adhesion Promoters for Plastics
   Waste Management                                                             Automotive Parts Enamels
                                                                                Solvent and Water-Borne Coatings
 RTI LABORATORIES DIVISION                                                      
 31628 GLENDALE,                                                                THE ELCO CORPORATION
   LIVONIA, MICHIGAN                                                            1000 BELT LINE ST.,
      48050                                                                       CLEVELAND, OHIO 44109
 J. G. SINGH, General Manager                                                   R.D. WYVILL, President
 Analytical Laboratory Services                                                 Petroleum Additives for
                                                                                  Hydraulic Fluids, Industrial
                                                                                  Gear Oils, Greases and
                                                                                  Metalworking Fluids
</TABLE>

SUPPLEMENTARY INFORMATION (Unaudited)
Selected Quarterly Data (Thousands of dollars except per share amounts)
 
<TABLE>
<CAPTION>
                                                1995 Quarters                                 1994 Quarters
                                   ----------------------------------------      ----------------------------------------
                                     4th        3rd        2nd        1st          4th        3rd        2nd        1st
                                   -------    -------    -------    -------      -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>          <C>        <C>        <C>        <C>
Net sales.......................   $21,341    $25,172    $22,480    $24,603      $25,566    $25,017    $26,142    $23,371
Gross margin on sales...........     4,918      5,439      5,262      5,603        5,510      5,533      6,181      5,232
Net income (loss)...............      (970)      (192)      (339)      (368)      (5,894)        46        323       (114)
Common share....................      (.62)      (.12)      (.21)      (.23)       (3.72)       .03        .20       (.07)
Stock price range(1)
  High..........................         6 3/4      7 1/2      9 1/2     10 1/2       13         13 3/8     11 7/8     12 1/4
  Low...........................         3 1/2      5 3/4      6 3/4      7 1/2       10 1/4     11 1/8     11         10 1/4
</TABLE>
 
(1) Stock price range was obtained from NASDAQ quotations.
 
                                       16
<PAGE>   20
                                           
DIRECTORS                                       OFFICERS
                                           
BRUCE W. COX                                    W. C. KING
President, B. W. Cox Company,                   Chairman and Chief Executive 
  Manufacturers Representative                    Officer 

                                                T. E. MARK
ROBERT A. EMMETT, III                           President and Chief Operating 
Partner, Reed Smith Shaw & McClay,                Officer
  Attorneys, Washington, D.C.                   
                                                G. J. ISRAEL
WILLIAM C. KING                                 Vice President-Finance,   
Chairman and Chief Executive Officer              Treasurer and Chief Financial 
                                                  Officer
JOHN F. MANGOLD                                 
Manufacturing Consultant                        J. F. SCHATT
                                                Vice President-Administration
THOMAS E. MARK                                  
President and Chief Operating Officer           R. M. CURRIE
                                                Secretary and General Counsel
BENJAMIN W. McCLEARY                            
Partner, McFarland Dewey & Co.,                 E. R. RONDEAU
  Investment Bankers, New York City             Controller
                                           
ARBIE R. THALACKER
Partner, Shearman & Sterling,
  Attorneys, New York City

JOHN D. WITHROW
Retired President and Chief Operating Officer,
  Lectron Products Inc.

AUDIT COMMITTEE
JOHN F. MANGOLD, Chairman
ARBIE R. THALACKER
JOHN D. WITHROW

TRANSFER AGENT AND
  REGISTRAR
STATE STREET BANK AND TRUST COMPANY

AUDITORS
DELOITTE & TOUCHE LLP
 
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR 1995 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>   21
 
                               DETREX CORPORATION
 
             GENERAL OFFICES -- 24901 NORTHWESTERN HWY., SUITE 500,
                           SOUTHFIELD, MICHIGAN 48075
--------------------------------------------------------------------------------
 
          MAILING ADDRESS -- P.O. BOX 5111, SOUTHFIELD, MI 48086-5111
 
                           Telephone: (810) 358-5800