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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from ..... to .....
Commission file number 1-5263
THE LUBRIZOL CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-0367600
(State of incorporation) (I.R.S. Employer Identification No.)
29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(Address of principal executive officers, including zip code)
Registrant's telephone number, including area code: (440) 943-4200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Shares without par value New York Stock Exchange
Common Share purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value (on basis of closing sale price) of voting stock
held by nonaffiliates as of March 10, 2000 $1,327,201,977
Number of the registrant's Common Shares, without par value,
outstanding as of March 10, 2000 54,175,929
Documents Incorporated by Reference
-----------------------------------
Portions of the registrant's 1999 Annual Report to its shareholders
(Incorporated into Part I and II of this Form 10-K)
Portions of the registrant's Proxy Statement dated March 22, 2000
(Incorporated into Part III of this Form 10-K)
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PART I
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ITEM 1. BUSINESS
The Lubrizol Corporation was organized under the laws of Ohio
in 1928. The company began business as a compounder of special-purpose
lubricants, and in the early 1930's was among the first to commence research in
the field of lubricant additives. Today, the company is a fluid technology
company concentrating on high performance chemicals, systems and services to
diverse markets worldwide. The company develops, produces and sells specialty
additive packages and related equipment used in transportation and industrial
finished lubricants. The company's products are created through the application
of advanced chemical and mechanical technologies to enhance the performance,
quality and value of the customer products in which they are used. The company
groups its product lines into two operating segments: chemicals for
transportation and chemicals for industry.
PRINCIPAL PRODUCTS. Chemicals for transportation is comprised
of additives for lubricating engine oils, such as those used in gasoline,
diesel, marine and stationary gas engines, and additive components to its larger
customers; additives for driveline oils, such as automatic transmission fluids,
gear oils and tractor lubricants; and additives for fuel products and refinery
and oil field chemicals. In addition, the company sells additive components and
viscosity improvers within its lubricant and fuel additives product lines.
Chemicals for industry includes industrial additives, such as additives for
hydraulic fluids, metalworking fluids and compressor lubricants; performance
chemicals, such as additives for coatings and inks and process chemicals; and
performance systems, comprised principally of fluid metering devices and
particulate emission trap devices.
Revenues within the chemicals for transportation segment
comprised 83%, 84% and 86% of consolidated revenues in 1999, 1998 and 1997,
respectively. Additives for lubricating engine oils comprised 53%, 52% and 55%
of consolidated revenues in 1999, 1998 and 1997, respectively. Additives for
driveline oils comprised 23%, 24% and 24% of consolidated revenues for these
same respective periods. Further financial information for the company's
operating segments is contained in Note 12 to the Financial Statements, which is
included in the company's 1999 Annual Report to its shareholders and is
incorporated herein by reference.
Additives improve the lubricants and fuels used in cars,
trucks, buses, off-highway equipment, marine engines and industrial
applications. In lubricants, additives enable oil to withstand a broader range
of temperatures, limit the buildup of sludge and varnish deposits, reduce wear,
inhibit the formation of foam, rust and corrosion, and retard oxidation. In
fuels, additives help maintain efficient operation of the fuel delivery system,
help control deposits and corrosion, improve combustion and assist in preventing
decomposition during storage.
Due to the variety of oil properties and applications, a
number of different chemicals are used to formulate the company's products. Each
additive combination is designed to fit the characteristics of the customer's
base oil and the level of performance specified. Engine oils for passenger cars
contain a combination of chemical additives which usually includes one or more
detergents, dispersants, oxidation inhibitors and wear inhibitors, pour point
depressants and viscosity improvers. Other chemical combinations are used in
specialty additive systems for heavy duty engine oils used by trucks and
off-highway equipment and in formulations for gear oils, automatic transmission
fluids, industrial oils, metalworking fluids, and gasoline, diesel and residual
fuels.
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The company's performance systems products principally involve
products used in emission controls, such as catalyst, exhaust and filter systems
and precision metering devices used in blending and additive injection
operations.
COMPETITION. The company's chemicals for transportation
segment and chemicals for industry segment are highly competitive in terms of
price, technology development, product performance and customer service. The
company's principal competitors within its chemicals for transportation segment,
both in the United States and overseas, are three major petroleum companies, and
one chemical company. Two of the major petroleum companies, which previously
participated in the lubricant additive industry through separate divisions, have
combined their efforts by forming a separate joint venture company that began
commercial operations in 1999. The petroleum companies produce lubricant and
fuel additives for their own use, and also sell additives to others. These
competing petroleum companies are also customers of the company and may also
sell base oil to the company. The company believes, based on volume sold, that
it is the largest supplier to the petroleum industry of performance additive
packages for lubricants.
CUSTOMERS. In the United States, the company markets its
chemicals for transportation and chemicals for industry products through its own
sales organization. The company's additive customers consist primarily of oil
refiners and independent oil blenders and are located in more than 100
countries. In 1999, approximately 42% of the company's consolidated sales were
made to customers in North America, 33% to customers in Europe and the Middle
East and 25% to customers in Asia-Pacific and Latin America. The company's ten
largest customers, most of which are international oil companies and a number of
which are groups of affiliated entities, accounted for approximately 46% of
consolidated sales in 1999. The loss of one or more of these customers could
have a material adverse effect on the company's business. Mobil Corporation,
together with its affiliates, has been the company's largest customer within its
chemicals for transportation segment during the past three years, comprising 12%
of consolidated sales in 1999, 9% in 1998 and 10% in 1997. Mobil Corporation and
Exxon Corporation completed a merger during the latter part of 1999, and the
1999 percentage includes sales to Mobil, Exxon and their affiliates prior to the
merger as well as sales to the combined entity, Exxon Mobil Corporation,
following the consummation of the merger. The company's chemicals for industry
segment is not materially dependent on a single customer or on a few customers.
RAW MATERIALS. The company utilizes a broad variety of
chemical raw materials in the manufacture of its additives and uses oil in
processing and blending additives. These materials are obtainable from several
sources, and for the most part are derived from petroleum. Political and
economic conditions in the Middle East have, in the past, caused and may
continue to cause the cost of raw materials to fluctuate significantly; however,
the availability of raw materials to the company has not been significantly
affected when these conditions occurred. The company expects raw materials to be
available in adequate quantities during 2000.
RESEARCH, TESTING AND DEVELOPMENT. The company has
historically emphasized research and has developed a large percentage of the
additives it manufactures and sells. Technological developments in the design of
engines and other automotive equipment, combined with rising demands for
environmental protection and fuel economy, require increasingly sophisticated
chemical additives to meet industry performance standards. The frequency of
changes in industry performance affects the company's technical spending
patterns.
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Consolidated research and development expenditures were $78.3
million in 1999 and 1998, and $88.4 million in 1997. These amounts were
equivalent to 4.5%, 4.8% and 5.3% of the respective revenues for such years.
These amounts include expenditures for the performance evaluation of additive
developments in engines and other types of mechanical equipment as well as
expenditures for the development of specialty chemicals for industrial
applications. In addition, $67.7 million, $72.7 million and $58.2 million was
spent in 1999, 1998 and 1997, respectively, for technical service (testing)
activities, principally for evaluation in mechanical equipment of specific
lubricant formulations designed for the needs of petroleum industry customers
throughout the world.
Research, testing and development expenditures by operating
segment were as follows (in thousands of dollars):
1999 1998 1997
---- ---- ----
Research and development expenditures:
Chemicals for transportation $66,268 $67,018 $76,259
Chemicals for industry 11,984 11,265 12,185
------- ------- -------
Total $78,252 $78,283 $88,444
======= ======= =======
Testing expenditures:
Chemicals for transportation $58,978 $64,641 $51,260
Chemicals for industry 8,697 8,056 6,974
------- ------- -------
Total $67,675 $72,697 $58,234
======= ======= =======
The company has two research facilities at Wickliffe, Ohio,
one of which is principally for lubricant additive research and the other for
research in the field of other specialty chemicals. The company also maintains a
mechanical testing laboratory at Wickliffe, equipped with a variety of gasoline
and diesel engines and other mechanical equipment to evaluate the performance of
additives for lubricants and fuels. The company has similar mechanical testing
laboratories in England and Japan and, in addition, makes extensive use of
independent contract research firms. Extensive field testing is also conducted
through various arrangements with fleet operators and others.
Liaison offices in Detroit, Michigan; Hazelwood, England;
Hamburg, Germany; Tokyo, Japan; and Paris, France, maintain close contact with
the principal automotive and equipment manufacturers of the world and keep the
company abreast of the performance requirements for its products in the face of
changing technologies. These liaison activities also serve as contacts for
cooperative development and evaluation of products for future applications.
Contacts with the automotive and equipment industry are important so that the
company may have the necessary direction and lead time to develop products for
use in engines, transmissions, gear sets, and other areas of equipment that
require lubricants of advanced design.
PATENTS. The company owns a variety of United States and
foreign patents relating to lubricant and fuel additives, lubricants, chemical
compositions and processes, and protective coating materials and processes.
While such domestic and foreign patents expire from time to time, the company
continues to apply for and obtain patent protection on an ongoing basis.
Although the company believes that, in the aggregate, its patents constitute an
important asset, it does not regard its business as being materially dependent
upon any single patent or any group of related patents.
The company previously filed claims against Exxon Corporation
and its affiliates ("Exxon") relating to various commercial matters, including
alleged infringements by Exxon of certain of the company's patents. On March 31,
1999, the company and Exxon Corporation reached a settlement of all pending
intellectual property litigation between the two companies and their affiliates,
except for litigation pending in Canada. In the suit in Canada, the company is
alleging infringement of a patent that corresponds to a United States patent
admitted as valid by Exxon in a settlement in 1988. A
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determination of liability has been made by the Canadian courts against Exxon in
favor of the company, and the case has been returned to the trial court for an
assessment of damages, but no date has been set for a determination of such
damages. Further information regarding litigation with Exxon is contained in
Note 16 to the Financial Statements, which is included in the company's 1999
Annual Report to its shareholders, and is incorporated herein by reference.
ENVIRONMENTAL MATTERS. The company is subject to federal,
state and local laws and regulations designed to protect the environment and
limit manufacturing wastes and emissions. The company believes that as a general
matter its policies, practices and procedures are properly designed to prevent
unreasonable risk of environmental damage and the consequent financial liability
to the company. Compliance with the environmental laws and regulations requires
continuing management effort and expenditures by the company. Capital
expenditures for environmental projects approximated $3 million in 1999, which
represented 4.6% of 1999 capital expenditures. The company believes that the
cost of complying with environmental laws and regulations will not have a
material affect on the earnings, liquidity or competitive position of the
company.
The company is engaged in the handling, manufacture, use,
transportation and disposal of substances that are classified as hazardous or
toxic by one or more regulatory agencies. The company believes that its
handling, manufacture, use, transportation and disposal of such substances
generally have been in accord with environmental laws and regulations.
Among other environmental laws, the company is subject to the
federal "Superfund" law, under which the company has been designated as a
"potentially responsible party" that may be liable for cleanup costs associated
with various waste sites, some of which are on the U.S. Environmental Protection
Agency Superfund priority list. The company's experience, consistent with what
it believes to be the experience of others in similar cases, is that Superfund
site liability tends to be apportioned among parties based upon contribution of
materials to the Superfund site. Accordingly, the company measures its liability
and carries out its financial reporting responsibilities with respect to
Superfund sites based upon this standard, even though Superfund site liability
is technically joint and several in nature. The company views the expense of
remedial cleanup as a part of its product cost, and accrues for estimated
environmental liabilities with charges to cost of sales. The company considers
its environmental accrual to be adequate to provide for its portion of costs for
all known environmental matters, including Superfund sites. Based upon
consideration of currently available information, the company believes
liabilities for environmental matters will not have a material adverse affect on
the company's financial position, operating results or liquidity.
EMPLOYEES. At December 31, 1999, the company and its
wholly-owned subsidiaries had 4,074 employees of which approximately 61% were in
the U.S.
INTERNATIONAL OPERATIONS. Financial information with respect
to domestic and foreign operations is contained in Note 12 to the Financial
Statements which is included in the company's 1999 Annual Report to its
shareholders and is incorporated herein by reference.
The company supplies its additive customers abroad through
export from the United States and from overseas manufacturing plants. Sales and
technical service offices are maintained in more than 30 countries outside the
United States. As a result, the company is subject to business risks inherent in
non-U.S. activities, including political and economic uncertainty, import and
export limitations, exchange controls and currency fluctuations. The company
believes risks related to its foreign operations are mitigated due to the
political and economic stability of the countries in which its largest foreign
operations are located.
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While changes in the U.S. dollar value of foreign currencies
will affect earnings from time to time, the longer-term economic effect of these
changes should not be significant given the company's net asset exposure and
currency mix, including its use of U.S. dollar based pricing in certain
countries relative to its revenues and expenses. The company's consolidated net
income will generally benefit as foreign currencies increase in value compared
to the U.S. dollar and will generally decline as foreign currencies decrease in
value.
ITEM 2. PROPERTIES
The general offices of the company are located in Wickliffe,
Ohio. The company has various leases for general office space primarily located
in Houston, Texas; and London, England. The company owns three additive
manufacturing plants in the United States; one located in the Cleveland, Ohio
area, at Painesville, and two near Houston, Texas, at Deer Park and Bayport.
Outside the United States, the company owns additive manufacturing/blending
plants in Australia, Brazil, Canada, England, France (three locations), Japan,
South Africa and Singapore. All of these plants, other than Singapore, are owned
in fee. In Singapore, the company owns the plant but leases the land on which
the plant is located. The company owns in fee research, development and testing
facilities in Wickliffe, Ohio; Hazelwood, England; and Atsugi, Japan. The
company also owns in fee a facility in Midland, Michigan, at which air and
refrigeration compressor lubricants are developed and marketed; manufacturing
plants in Countryside, Illinois; Mountaintop, Pennsylvania; and Germany that
manufacture performance specialty chemical additives for the coatings and
specialty metalworking fluid and industrial lubricant markets; a manufacturing
plant in Atlanta, Georgia, that manufactures fluid metering devices;
manufacturing plants in Newmarket and London, Ontario, Canada, and Reno, Nevada,
that manufacture particulate emission control devices; and a manufacturing plant
in Fareham, Hampshire, England, that manufactures additive injection equipment.
Additive manufacturing/blending plants in India, Saudi Arabia,
and China are owned and operated by joint venture companies licensed by
Lubrizol. Lubrizol's ownership of each of these companies ranges from 40% to
50%.
The company has entered into long-term contracts for its
exclusive use of major marine terminal facilities at the Port of Houston, Texas.
In addition, Lubrizol has leases for storage facilities in Australia, Chile,
Denmark, Ecuador, England, Finland, France, Holland, Singapore, Spain, South
Africa, Sweden and Turkey; Los Angeles, California; St. Paul, Minnesota;
Bayonne, New Jersey; and Tacoma, Washington. In some cases, the ownership or
leasing of such facilities is through certain of its subsidiaries or affiliates.
The company maintains a capital expenditure program to support
its operations and believes its facilities are adequate for its present
operations and for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The company and its subsidiaries are not defendants in any
material pending legal proceeding other than ordinary routine litigation
incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the vote of the security holders
during the three months ended December 31, 1999.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the name, age, recent business experience and
certain other information relative to each person who is an executive officer of
the company as of March 1, 2000.
Name Business Experience
---- -------------------
W. G. Bares Mr. Bares, age 58, became Chairman of the Board on
April 22, 1996, and Chief Executive Officer on January
1, 1996. He has been President since 1982. From 1987
through 1995, he was also Chief Operating Officer.
J. R. Ahern Mr. Ahern, age 53, has been Controller - Accounting and
Financial Reporting and Principal Accounting Officer
since April 26, 1999. From 1993 to April 1999 he was
Controller - Operations.
J. W. Bauer Mr. Bauer, age 46, has been Vice President and General
Counsel since April 1992.
C. P. Cooley Mr. Cooley, age 44, joined the company and became Vice
President, Treasurer and Chief Financial Officer in
April 1998. In June 1998 he also became responsible for
Corporate Strategic Planning. Prior to joining the
company, he was Assistant Treasurer - Corporate Finance
at Atlantic Richfield Company.
S. A. Di Biase Dr. Di Biase, age 47, has been Vice President since
September 1993. He is responsible for Research and
Development.
G. R. Hill Dr. Hill, age 58, has been Senior Vice President since
1988. He has been responsible for Business Development
since October 1993. From 1996 to June 1998 he was also
responsible for Corporate Strategic Planning.
J. E. Hodge Mr. Hodge, age 57, has been Vice President since
September 1993. He is responsible for Operations.
K. H. Hopping Mr. Hopping, age 53, has been Vice President and
Secretary of the Corporation since April 1991.
S. F. Kirk Mr. Kirk, age 50, has been Vice President since
September 1993. On January 1, 1999, he became
responsible for Sales and Marketing. From April 1996 to
January 1, 1999, he was responsible for Sales. From
1993 to April 1996, he was responsible for Segment
Management.
Y. Le Couedic Mr. Le Couedic, age 52, has been Vice President since
September 1993. He is responsible for Management
Information Systems.
G. P. Lieb Mr. Lieb, age 47, has been Controller - Commercial
Analysis and Support since April 26, 1999. From 1993 to
April 1999 he was Controller - Accounting and Financial
Reporting. From 1994 to April 1999 he was also
Principal Accounting Officer.
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Name Business Experience
- ---- -------------------
M. W. Meister Mr. Meister, age 45, has been Vice President since
April 1993, and was named Chief Ethics Officer in April
1998. He is responsible for Human Resources.
L. M. Reynolds Ms. Reynolds, age 39, was named Assistant Secretary in
April 1995, and has been Counsel since February 1991.
R. D. Robins Dr. Robins, age 57, became Vice President in April
1996. Since January 1, 1999, he has been responsible
for Performance Systems functions. From April 1996 to
January 1999, he was responsible for Segment
Management. From October 1993 to April 1996 he was
Passenger Car Segment Manager.
J. A. Thomas Mr. Thomas, age 61, has been Vice President since April
1994. In 1996, he became responsible for managing
Corporate Strategies in the Asia Pacific Region. From
April 1994 through April 1996, he was responsible for
Corporate Planning and Development.
All executive officers serve at the pleasure of the Board.
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The common shares of the company are listed on the New York
Stock Exchange under the symbol LZ. The number of shareholders of record of
common shares was 4,992 as of March 10, 2000.
Information relating to the recent price and dividend history
of the company's common shares follows:
Common Share Price History
-------------------------- Dividends
1999 1998 Per Common Share
---- ---- ----------------
HIGH LOW HIGH LOW 1999 1998
---- --- ---- --- ---- ----
1st quarter $26 7/8 $18 $40 3/16 $33 1/4 $ .26 $ .26
2nd quarter 30 3/4 21 3/8 38 3/4 30 1/4 .26 .26
3rd quarter 29 11/16 24 3/8 32 3/8 22 3/8 .26 26
4th quarter 31 3/8 23 29 9/16 23 1/2 .26 .26
----- -----
$1.04 $1.04
===== =====
On May 1, 1999, the company issued 5,462 common shares in private placement
transactions exempt from registration under the Securities Act of 1933 pursuant
to Section 4(2) of that Act. The company issued the shares to former directors
pursuant to deferred compensation plans for directors.
On April 22, 1999, the company issued 1,306 common shares in a transaction
exempt from registration under the Securities Act of 1933 pursuant to Regulation
S. The common shares were issued pursuant to an employee benefit plan to an
employee of a wholly-owned UK subsidiary of the company.
ITEM 6. SELECTED FINANCIAL DATA.
The summary of selected financial data for each of the last
five years included in the Historical Summary contained on pages 42 and 43 of
the company's 1999 Annual Report to its shareholders is incorporated herein by
reference. Other income (charges) for 1999 includes litigation settlement gains
of $17.6 million and special charges of $19.6 million for the second phase of
the company's cost reduction program and adjustments to the first phase of the
company's cost reduction program. Other income (charges) for 1998 includes
litigation settlement gain of $16.2 million and special charges of $23.3 million
for the first phase of the company's cost reduction program and of $13.6 million
for the write-off of purchased technology under development resulting from the
acquisition of Adibis. Other income (charges) for 1996 and 1995 includes $53.3
million and $38.5 million, respectively, for gains on sale of investments.
Total debt reported in the Historical Summary includes the
following amounts classified as long-term at December 31: $365.4 in 1999, $390.4
in 1998, $182.2 million in 1997, $157.6 million in 1996 and $194.4 million in
1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Management's Discussion and Analysis of Financial Condition
and Results of Operations, including the company's cautionary statement for
"safe harbor" purposes under the Private Securities Litigation Reform Act of
1995, contained on pages 14 through 23, inclusive, of the company's 1999 Annual
Report to its shareholders is incorporated herein by reference.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information appearing under the caption "Quantitative and
Qualitative Disclosures about Market Risk" contained on page 23 of the company's
1999 Annual Report to its shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the company and its
subsidiaries, together with the independent auditors' report relating thereto,
contained on pages 24 through 41, inclusive, of the company's 1999 Annual Report
to its shareholders, and the Quarterly Financial Data (Unaudited) contained on
page 41 of such 1999 Annual Report, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information contained under the heading "Election of
Directors" on pages 3 to 7, inclusive, of the company's Proxy Statement dated
March 22, 2000, is incorporated herein by reference. Information relative to
executive officers of the company is contained under "Executive Officers of the
Registrant" in Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation contained
under the headings "Director Compensation" on page 8, "Executive Compensation
- -Summary Compensation Table" and "- Stock Incentive Plans" on pages 11 through
13, inclusive, and under "Employee and Executive Officer Benefit Plans - Pension
Plans" and "- Executive Agreements" on pages 17 through 19, inclusive, of the
company's Proxy Statement dated March 22, 2000, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information relating to security ownership set forth under
the heading "Share Ownership of Directors, Executive Officers and Large
Beneficial Owners" on pages 9 and 10 of the company's Proxy Statement dated
March 22, 2000, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained in footnote (1) under the heading
"Share Ownership of Directors, Executive Officers and Large Beneficial Owners -
Five Percent Beneficial Owners" on page 10 of the company's Proxy Statement
dated March 22, 2000, is incorporated herein by reference.
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PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Annual Report:
1. The following consolidated financial statements
of The Lubrizol Corporation and its
subsidiaries, together with the independent
auditors' report relating thereto, contained on
pages 24 through 41, inclusive, of Lubrizol's
1999 Annual Report to its shareholders and
incorporated herein by reference:
Independent Auditors' Report
Consolidated Statements of Income for the years
ended December 31, 1999, 1998 and 1997
Consolidated Balance Sheets at December 31, 1999
and 1998
Consolidated Statements of Cash Flows for the
years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 1999, 1998 and
1997
Notes to Financial Statements
Quarterly Financial Data (Unaudited)
2. Schedules
No financial statement schedules are required to
be filed as part of this Annual Report.
3. Exhibits
(3)(a) Amended Articles of Incorporation of The
Lubrizol Corporation, as adopted September
23, 1991.
(3)(b) Regulations of The Lubrizol Corporation, as
amended effective April 27, 1992.
(4)(a) Amendment to Article Fourth of Amended
Articles of Incorporation.
(4)(b) Indenture dated as of November 25, 1998,
between The Lubrizol Corporation and The
First National Bank of Chicago as Trustee.
(Reference is made to Exhibit (4)(b) to The
Lubrizol Corporation's Annual Report on
Form 10-K for the year ended December 31,
1998, which Exhibit is incorporated herein
by reference). The company agrees, upon
request, to furnish to the Securities and
Exchange Commission a copy of any
instrument authorizing long-term debt that
does not authorize debt in excess of 10% of
the total assets of the company and its
subsidiaries on a consolidated basis.
(4)(c) Amended and Restated Rights Agreement
between The Lubrizol Corporation and
American Stock Transfer &
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Trust Company dated as of July 26, 1999.
(Reference is made to Exhibit 4.l to The
Lubrizol Corporation's Registration
Statement on Form 8-A/A dated August 17,
1999, which Exhibit is incorporated herein
by reference.)
(10)(a)* The Lubrizol Corporation 1985 Employee
Stock Option Plan, as amended. (Reference
is made to Exhibit (10)(a) to The Lubrizol
Corporation's Annual Report on Form 10-K
for the year ended December 31, 1998, which
Exhibit is incorporated herein by
reference.)
(10)(b)* The Lubrizol Corporation Amended Deferred
Compensation Plan for Directors. (Reference
is made to Exhibit (10)(b) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q
for the quarterly period ended September
30, 1999, which Exhibit is incorporated
herein by reference.)
(10)(c)* Form of Employment Agreement between The
Lubrizol Corporation and certain of its
senior executive officers.
(10)(d)* The Lubrizol Corporation Excess Defined
Benefit Plan, as amended. (Reference is
made to Exhibit (10)(d) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q
for the quarterly period ended September
30, 1997, which Exhibit is incorporated
herein by reference.)
(10)(e)* The Lubrizol Corporation Excess Defined
Contribution Plan, as amended. (Reference
is made to Exhibit (10)(e) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q
for the quarterly period ended September
30, 1997, which Exhibit is incorporated
herein by reference.)
(10)(f)* The Lubrizol Corporation Performance Pay
Plan (formerly Variable Award Plan), as
amended. (Reference is made to Exhibit
(10)(f) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year
ended December 31, 1998, which Exhibit is
incorporated herein by reference.)
(10)(g)* The Lubrizol Corporation Executive Death
Benefit Plan, as amended. (Reference is
made to Exhibit (10)(g) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q
for the quarterly period ended September
30, 1997, which Exhibit is incorporated
herein by reference.)
(10)(h)* The Lubrizol Corporation 1991 Stock
Incentive Plan, as amended. (Reference is
made to Exhibit (10)(h) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q
for the quarterly period ended September
30, 1999, which Exhibit is incorporated
herein by reference.)
(10)(i)* The Lubrizol Corporation Deferred Stock
Compensation Plan for Outside Directors, as
amended. (Reference is made to Exhibit
(10)(i) to The Lubrizol Corporation's
Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999,
which Exhibit is incorporated herein by
reference.)
-12-
13
(10)(j)* The Lubrizol Corporation Officers'
Supplemental Retirement Plan, as amended.
(Reference is made to Exhibit (10)(g) to
The Lubrizol Corporation's Annual Report on
Form 10-K for the year ended December 31,
1998, which Exhibit is incorporated herein
by reference.)
(10)(k)* The Lubrizol Corporation Deferred
Compensation Plan for Officers, as amended.
(Reference is made to Exhibit (10)(k) to
The Lubrizol Corporation's Quarterly Report
on Form 10-Q for the quarterly period ended
September 30, 1999, which Exhibit is
incorporated herein by reference.)
(10)(l)* The Lubrizol Corporation Executive Council
Deferred Compensation Plan, as amended.
(Reference is made to Exhibit (10)(l) to
The Lubrizol Corporation's Quarterly Report
on Form 10-Q for the quarterly period ended
September 30, 1999, which Exhibit is
incorporated herein by reference.)
(12) Computation of Ratio of Earnings to Fixed
Charges.
(13) The following portions of The Lubrizol
Corporation 1999 Annual Report to its
shareholders:
Pages 14-23 Management's Discussion and
Analysis of Financial
Condition and Results of
Operations
Page 24 Independent Auditors' Report
Page 25 Consolidated Statements of
Income for the years ended
December 31, 1999, 1998 and
1997
Page 26 Consolidated Balance Sheets
at December 31, 1999 and 1998
Page 27 Consolidated Statements of
Cash Flows for the years
ended December 31, 1999, 1998
and 1997
Page 28 Consolidated Statements of
Shareholders' Equity for the
years ended December 31,
1999, 1998 and 1997
Pages 29-41 Notes to Financial Statements
Page 41 Quarterly Financial Data
(Unaudited)
Pages 42-43 Historical Summary
(21) List of Subsidiaries of The Lubrizol
Corporation
(23) Consent of Independent Auditors
(27) Financial Data Schedule for the year ended
December 31, 1999
*Indicates management contract or compensatory plan or arrangement.
-13-
14
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended December 31, 1999.
-14-
15
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
March 27, 2000, on its behalf by the undersigned, thereunto duly authorized.
THE LUBRIZOL CORPORATION
BY /s/W. G. Bares
--------------------
W. G. Bares, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below on March 27, 2000, by the following
persons on behalf of the Registrant and in the capacities indicated.
/s/W. G. Bares Chairman of the Board, President and Chief
- ------------------------------- Executive Officer
W. G. Bares (Principal Executive Officer)
/s/C. P. Cooley Vice President, Treasurer and Chief
- ------------------------------- Financial Officer
C. P. Cooley (Principal Financial Officer)
/s/J. R. Ahern Controller, Accounting and Financial
- ------------------------------- Reporting
J. R. Ahern (Principal Accounting Officer)
/s/Jerald A. Blumberg Director
- -------------------------------
Jerald A. Blumberg
/s/Peggy G. Elliott Director
- -------------------------------
Peggy G. Elliott
/s/Forest J. Farmer, Sr. Director
- -------------------------------
Forest J. Farmer, Sr.
/s/Gordon D. Harnett Director
- -------------------------------
Gordon D. Harnett
/s/Victoria F. Haynes Director
- -------------------------------
Victoria F. Haynes
/s/David H. Hoag Director
- -------------------------------
David H. Hoag
/s/William P. Madar Director
- -------------------------------
William P. Madar
/s/Ronald A. Mitsch Director
- -------------------------------
Ronald A. Mitsch
/s/M. Thomas Moore Director
- -------------------------------
M. Thomas Moore
/s/Daniel E Somers Director
- -------------------------------
Daniel E. Somers
16
EXHIBIT INDEX
-------------
Exhibits
(3)(a) Amended Articles of Incorporation of The
Lubrizol Corporation, as adopted September 23,
1991.
(3)(b) Regulations of The Lubrizol Corporation, as
amended effective April 27, 1992.
(4)(a) Amendment to Article Fourth of Amended Articles
of Incorporation.
(4)(b) Indenture dated as of November 25, 1998, between
The Lubrizol Corporation and The First National
Bank of Chicago as Trustee. (Reference is made
to Exhibit (4)(b) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1998, which Exhibit is incorporated
herein by reference).
The company agrees, upon request, to furnish to
the Securities and Exchange Commission a copy of
any instrument authorizing long-term debt that
does not authorize debt in excess of 10% of the
total assets of the company and its subsidiaries
on a consolidated basis.
(4)(c) Amended and Restated Rights Agreement between
The Lubrizol Corporation and American Stock
Transfer & Trust Company dated as of July 26,
1999. (Reference is made to Exhibit 4.l to The
Lubrizol Corporation's Registration Statement on
Form 8-A/A dated August 17, 1999, which Exhibit
is incorporated herein by reference.)
(10)(a)* The Lubrizol Corporation 1985 Employee Stock
Option Plan, as amended. (Reference is made to
Exhibit (10)(a) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1998, which Exhibit is incorporated
herein by reference.)
(10)(b)* The Lubrizol Corporation Amended Deferred
Compensation Plan for Directors. (Reference is
made to Exhibit (10)(b) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1999,
which Exhibit is incorporated herein by
reference.)
(10)(c)* Form of Employment Agreement between The
Lubrizol Corporation and certain of its senior
executive officers.
(10)(d)* The Lubrizol Corporation Excess Defined Benefit
Plan, as amended. (Reference is made to Exhibit
(10)(d) to The Lubrizol Corporation's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1997, which Exhibit is
incorporated herein by reference.)
17
(10)(e)* The Lubrizol Corporation Excess Defined
Contribution Plan, as amended. (Reference is
made to Exhibit (10)(e) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1997,
which Exhibit is incorporated herein by
reference.)
(10)(f)* The Lubrizol Corporation Performance Pay Plan
(formerly Variable Award Plan), as amended.
(Reference is made to Exhibit (10)(f) to The
Lubrizol Corporation's Annual Report on Form
10-K for the year ended December 31, 1998, which
Exhibit is incorporated herein by reference.)
(10)(g)* The Lubrizol Corporation Executive Death Benefit
Plan, as amended. (Reference is made to Exhibit
(10)(g) to The Lubrizol Corporation's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1997, which Exhibit is
incorporated herein by reference.)
(10)(h)* The Lubrizol Corporation 1991 Stock Incentive
Plan, as amended. (Reference is made to Exhibit
(10)(h) to The Lubrizol Corporation's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1999, which Exhibit is
incorporated herein by reference.)
(10)(i)* The Lubrizol Corporation Deferred Stock
Compensation Plan for Outside Directors, as
amended. (Reference is made to Exhibit (10)(i)
to The Lubrizol Corporation's Quarterly Report
on Form 10-Q for the quarterly period ended
September 30, 1999, which Exhibit is
incorporated herein by reference.)
(10)(j)* The Lubrizol Corporation Officers' Supplemental
Retirement Plan, as amended. (Reference is made
to Exhibit (10)(g) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year ended
December 31, 1998, which exhibit is incorporated
herein by reference.)
(10)(k)* The Lubrizol Corporation Deferred Compensation
Plan for Officers, as amended. (Reference is
made to Exhibit (10)(k) to The Lubrizol
Corporation's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1999,
which Exhibit is incorporated herein by
reference.)
(10)(l)* The Lubrizol Corporation Executive Council
Deferred Compensation Plan, as amended.
(Reference is made to Exhibit (10)(l) to The
Lubrizol Corporation's Quarterly Report on Form
10-Q for the quarterly period ended September
30, 1999, which Exhibit is incorporated herein
by reference.)
(12) Computation of Ratio of Earnings to Fixed
Charges.
18
(13) The following portions of The Lubrizol
Corporation 1998 Annual Report to its
shareholders:
Pages 14-23 Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Page 24 Independent Auditors' Report
Page 25 Consolidated Statements of Income
for the years ended December 31,
1999, 1998 and 1997
Page 26 Consolidated Balance Sheets at
December 31, 1999 and 1998
Page 27 Consolidated Statements of Cash
Flows for the years ended December
31, 1999, 1998 and 1997
Page 28 Consolidated Statements of
Shareholders' Equity for the years
ended December 31, 1999, 1998 and
1997
Pages 29-41 Notes to Financial Statements
Page 41 Quarterly Financial Data (Unaudited)
Pages 42-43 Historical Summary
(21) List of Subsidiaries of The Lubrizol Corporation
(23) Consent of Independent Auditors
(27) Financial Data Schedule for the year ended
December 31, 1999
*Indicates management contract or compensatory plan or arrangement.