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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, 2001
[ ] 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
- ------------------------------- ------------------------
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 1, 2002 $1,641,227,630
Number of the registrant's Common Shares, without par value,
outstanding as of March 1, 2002 51,232,974
Documents Incorporated by Reference
-----------------------------------
Portions of the registrant's 2001 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 13, 2002
(Incorporated into Part III of this Form 10-K)
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PART I
------
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 global fluid technology company
that develops, produces and sells high-performance chemicals, systems and
services for industry and transportation. The company creates these products,
including specialty additive packages and related equipment, for use in
transportation and industrial lubricants and other markets. The company does
this by applying advanced chemical and mechanical technologies in order to
enhance the performance, quality and value and reduce the environmental impact
of the customer products in which our products are used. The company groups its
product lines into two operating segments: fluid technologies for transportation
and fluid technologies for industry.
PRINCIPAL PRODUCTS. Fluid technologies for transportation is comprised
of additives for lubricating engine oils, such as for gasoline, diesel, marine
and stationary gas engines and additive components; 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. Fluid technologies 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, defoamers and process chemicals; and
performance systems, comprised principally of fluid metering devices and
particulate emission trap devices.
Revenues within the fluid technologies for transportation segment
comprised 83%, 82% and 83% of consolidated revenues in 2001, 2000 and 1999,
respectively. Additives for lubricating engine oils comprised 55%, 53% and 53%
of consolidated revenues in 2001, 2000 and 1999, respectively. Additives for
driveline oils comprised 22%, 23% and 23% 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 2001 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. The company sells a proprietary
dispersant/surfactant additive package that enables the emulsion of water in
diesel fuel, resulting in a low-emission fuel (PuriNOxTM) for diesel engines.
The company also manufactures and sells or leases the specialized blending units
to blend the additive, water and diesel fuel into the stable emulsion.
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
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fluids, industrial oils, metalworking fluids, and gasoline, diesel and residual
fuels.
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 fluid technologies for transportation
segment and fluid technologies for industry segment are highly competitive in
terms of price, technology development, product performance and customer
service. The company's principal competitors within its fluid technologies for
transportation segment, both in the United States and overseas, are Infineum, a
joint venture involving two major petroleum companies (Shell Oil Company and
Exxon Mobil Corporation); Chevron Oronite Company, a subsidiary of Chevron
Corporation, a major petroleum company; and one chemical company (Ethyl
Corporation). The petroleum companies either directly or indirectly produce
lubricant and fuel additives for their own use and also sell additives to
others. These 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. In fluid technologies for industry, we compete
primarily in the metalworking fluids, hydraulic fluids and additives for paints,
coatings and inks markets with numerous competitors within each market.
CUSTOMERS. In the United States, the company markets its fluid
technologies for transportation and fluid technologies 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 2001, approximately 45% of the company's consolidated
sales were made to customers in North America, 30% 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 53% of consolidated sales in 2001. The loss of one or more of
these customers could have a material adverse effect on the company's business,
specifically in the fluid technologies for transportation segment. There was no
single customer, including any group of affiliated entities, that accounted for
more than 10% of 2001 consolidated revenues. The company's fluid technologies
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 2002.
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 $87.6 million
in 2001, $86.4 million in 2000 and $78.3 million in 1999. These amounts were
equivalent to 4.7%, 4.9% and 4.4% 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, $70.9 million, $64.4 million and $67.7 million was
spent in 2001, 2000 and 1999, 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):
2001 2000 1999
------- ------- -------
Research and development expenditures:
Fluid technologies for transportation $74,415 $74,632 $66,268
Fluid technologies for industry 13,167 11,763 11,984
------- ------- -------
Total $87,582 $86,395 $78,252
======= ======= =======
Testing expenditures:
Fluid technologies for transportation $57,616 $55,035 $58,978
Fluid technologies for industry 13,275 9,375 8,697
------- ------- -------
Total $70,891 $64,410 $67,675
======= ======= =======
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. We utilize patents in
both the fluid technologies for transportation segment and the fluid
technologies for industry segment.
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
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regulations requires continuing management effort and expenditures by the
company. Capital expenditures for environmental projects were $2.5 million in
2001, which represented 3.8% of 2001 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
such remedial cleanups 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 such known environmental liabilities. 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, 2001, the company and its subsidiaries had
4,530 employees of which approximately 54% were in the U.S.
GEOGRAPHIC AREA INFORMATION. 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 2001 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 and market risk related to changes in interest rates and
foreign currency exchange rates. The company believes the political and economic
risks related to its foreign operations are mitigated due to the stability of
the countries in which its largest foreign operations are located.
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,
currency mix and use of U.S. dollar-based pricing in certain countries. 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
Anaheim, California; Houston, Texas; Naperville, Illinois; Wilmington, Delaware;
Southfield, Michigan; Oakville, Ontario; and London, England. The
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company leases office and laboratory space in Spartanburg, South Carolina. 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 Kinuura, 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;
a manufacturing plant in Fareham, Hampshire, England, that manufactures additive
injection equipment; and manufacturing plants in Fountain Inn, South Carolina,
and Cheyenne, Wyoming, that manufacture antifoam and defoaming agents to the
coatings, inks, textile, food, fermentation, mining, wastewater and metalworking
industries. The company leases space in Countryside, Illinois, at which
specialty chemical additives for the coatings and specialty metalworking fluid
and industrial lubricant markets are manufactured.
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 49% to 50.05%.
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 participants in ordinary routine
litigation incidental to the business but are not defendants in any material
pending legal proceedings.
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, 2001.
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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, 2002.
Name Business Experience
---- -------------------
W. G. Bares Mr. Bares, age 60, became Chairman of the Board on
April 22, 1996, and Chief Executive Officer on
January 1, 1996. He has been President since 1982.
J. R. Ahern Mr. Ahern, age 55, 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 48, has been Vice President and
General Counsel since April 1992.
D. W. Bogus Mr. Bogus, age 54, joined the company and became Vice
President in May, 2000. He is responsible for fluid
technologies for industry. Prior to joining the
company, he was with PPG Industries, Inc., where he
was Vice President of Governmental Affairs from May
1999 to February 2000, Vice President-Packaging
Coatings from October 1998 to May 1999, and Vice
President Industrial Coatings from September 1996 to
October 1998.
C. P. Cooley Mr. Cooley, age 46, has been Vice President and Chief
Financial Officer since he joined the company in
April 1998. In addition, he was Treasurer from April
1998 to September 2001. 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 49, has been Vice President since
September 1993. He has been responsible for
emulsified products since October 2001. Prior to
that, he was responsible for research and
development.
J. L. Hambrick Mr. Hambrick, age 47, was elected Vice President
responsible for managing corporate strategies in the
Asia-Pacific region in May, 2000. From October 1998
to April 2000 he was global business manager - engine
oils. From January 1994 to September 1998 he was FSU
and China business development manager.
G. R. Hill Dr. Hill, age 60, has been Senior Vice President
since 1988. He has been responsible for research and
development since October 2001 and 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 59, has been Vice President since
September 1993. He is responsible for operations.
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Name Business Experience
- ---- -------------------
K. H. Hopping Mr. Hopping, age 55, has been Vice President since
April 1991. He is responsible for global
communications and investor relations. From 1991 to
April 2001 he was also Corporate Secretary.
S. F. Kirk Mr. Kirk, age 52, has been Vice President since
September 1993. Since January 1999, he has been
responsible for sales and marketing. From April 1996
to January 1999, he was responsible for sales.
Y. Le Couedic Mr. Le Couedic, age 54, has been Vice President since
September 1993. He is responsible for management
information systems.
G.R. Lewis Mr. Lewis, age 42, was named Assistant Secretary in
April 2001, and has been Assistant to the General
Counsel since October 1997. From September 1993 to
October 1997 he was Corporate Counsel.
G. P. Lieb Mr. Lieb, age 49, 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.
M. W. Meister Mr. Meister, age 47, has been Vice President since
April 1993, and was named Chief Ethics Officer in
April 1998. He is responsible for human resources.
R. S. Potter Ms. Potter, age 42, joined the company and was named
Treasurer in September 2001. Prior to joining the
company, she was Vice President and Treasurer at
Dexter Corporation from 1999 to 2000, Leader of
Facilities Integration at Hercules, Inc. from 1998 to
1999, and Assistant Vice President and Treasurer at
BetzDearborn Corporation from 1996 to 1998.
L. M. Reynolds Ms. Reynolds, age 41, was named Corporate Secretary
in April 2001, and has been Counsel since February
1991. From April 1995 until April 2001, she was
Assistant Secretary.
R. D. Robins Dr. Robins, age 59, became Vice President in April
1996. From January 1999 to October 2001 he was
responsible for performance systems functions. From
April 1996 to January 1999, he was responsible for
segment management.
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 4,268 as of March 1, 2002.
Information relating to the recent price and dividend history
of the company's common shares follows:
Common Share Price History
--------------------------- Dividends
2001 2000 Per Common Share
---- ---- ----------------
High Low High Low 2001 2000
---- --- ---- --- ---- ----
1st quarter $33.65 $24.13 $33.50 $23.75 $ .26 $ .26
2nd quarter 33.69 28.25 28.06 21.00 .26 .26
3rd quarter 37.69 28.00 24.12 18.56 .26 .26
4th quarter 35.75 27.75 26.00 19.06 .26 .26
----- -----
$1.04 $1.04
===== =====
On November 16, 2001, the company issued 725 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 2001 Annual Report to its shareholders is incorporated herein by
reference. Other income for 2000 includes a litigation settlement gain of $19.4
million and credits of $4.5 million for adjustments to the second program of the
company's cost reduction initiative. Other income (charges) for 1999 includes
litigation settlement gains of $17.6 million and special charges of $19.6
million for the second program of the company's cost reduction initiative and
adjustments to the first program of the company's cost reduction initiative.
Other income (charges) for 1998 includes litigation settlement gain of $16.2
million and special charges of $23.3 million for the first program of the
company's cost reduction initiative and of $13.6 million for the write-off of
purchased technology under development resulting from the acquisition of Adibis.
Total debt reported in the Historical Summary includes the
following amounts classified by maturity date as long-term at December 31:
$388.1 million in 2001, $378.8 million in 2000, $365.4 million in 1999, $390.4
million in 1998 and $182.2 million in 1997.
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 information appearing under the heading
"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 2001 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 heading "Quantitative and
Qualitative Disclosures about Market Risk" contained on page 23 of the company's
2001 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 2001 Annual Report
to its shareholders, and the Quarterly Financial Data (Unaudited) contained on
page 24 of such 2001 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, and under "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 20 of the company's Proxy Statement
dated March 13, 2002, 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 9, "Executive Compensation
- - Summary Compensation Table" and "- Stock Incentive Plans" on pages 12 through
14, inclusive, and under "Employee and Executive Officer Benefit Plans - Pension
Plans" and "- Executive Agreements" on pages 18 through 20, inclusive, of the
company's Proxy Statement dated March 13, 2002, 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 10 and 11 of the company's Proxy Statement dated
March 13, 2002, 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 11 of the company's Proxy Statement
dated March 13, 2002, 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
2001 Annual Report to its shareholders, and
incorporated herein by reference:
Independent Auditors' Report
Consolidated Statements of Income for the years
ended December 31, 2001, 2000 and 1999
Consolidated Balance Sheets at December 31, 2001
and 2000
Consolidated Statements of Cash Flows for the
years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 2001, 2000 and
1999
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. (Reference is made
to Exhibit (3)(a) to The Lubrizol
Corporation's Annual Report on Form
10-K for the year ended December 31,
1999, which Exhibit is incorporated
herein by reference.)
(3)(b) Regulations of The Lubrizol
Corporation, as amended effective April
27, 1992. (Reference is made to Exhibit
(3)(b) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year
ended December 31, 1999, which Exhibit
is incorporated herein by reference.)
(4)(a) Amendment to Article Fourth of Amended
Articles of Incorporation. (Reference
is made to Exhibit (4)(a) to The
Lubrizol Corporation's Annual Report on
Form 10-K for the year ended December
31, 1999, which Exhibit is incorporated
herein by reference.)
(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,
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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, 2000, 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
March 31, 2000, which Exhibit is
incorporated herein by reference.)
(10)(c)* Form of Employment Agreement between
The Lubrizol Corporation and certain of
its senior executive officers.
(Reference is made to Exhibit (10)(c)
to The Lubrizol Corporation's Quarterly
Report on Form 10-Q for the quarterly
period ended September 30, 2000, which
Exhibit is incorporated herein by
reference.)
(10)(d)* The Lubrizol Corporation Excess Defined
Benefit Plan, as amended.
(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, 2000, which
Exhibit is incorporated herein by
reference.)
(10)(f)* The Lubrizol Corporation Performance
Pay 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 Annual
Report on Form 10-K for the year ended
December 31, 2000, 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 March 31,
-12-
2000, 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
March 31, 2000, which Exhibit is
incorporated herein by reference.)
(10)(j)* The Lubrizol Corporation Officers'
Supplemental Retirement Plan, as
amended. (Reference is made to Exhibit
(10)(j) to The Lubrizol Corporation's
Annual Report on Form 10-K for the year
ended December 31, 2000, which Exhibit
is incorporated herein by reference.)
(10)(k)* The Lubrizol Corporation Deferred
Compensation Plan for Officers, as
amended.
(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 March 31, 2000,
which Exhibit is incorporated herein by
reference.)
(10)(m)* Supplemental Retirement Plan for Donald
W. Bogus.
(12) Computation of Ratio of Earnings to
Fixed Charges.
(13) The following portions of The Lubrizol
Corporation 2001 Annual Report to its
shareholders:
Pages 14-23 Management's Discussion
and Analysis of Financial
Condition and Results of
Operations
Page 24 Quarterly Financial Data
(Unaudited)
Page 24 Independent Auditors'
Report
Page 25 Consolidated Statements
of Income for the years
ended December 31, 2001,
2000 and 1999
Page 26 Consolidated Balance
Sheets at December 31,
2001 and 2000
Page 27 Consolidated Statements
of Cash Flows for the
years ended December 31,
2001, 2000 and 1999
Page 28 Consolidated Statements
of Shareholders' Equity
for the years ended
December 31, 2001, 2000
and 1999
Pages 29-41 Notes to Financial
Statements
Pages 42-43 Historical Summary
(21) List of Subsidiaries of The Lubrizol
Corporation
-13-
(23) Consent of Independent Auditors
*Indicates management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three
months ended December 31, 2001.
-14-
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 25, 2002, 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 25, 2002, 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 and Chief Financial Officer
- ------------------------------- (Principal Financial Officer)
C. P. Cooley
/s/J. R. Ahern Controller, Accounting and Financial
- ------------------------------- Reporting
J. R. Ahern (Principal Accounting Officer)
/s/Jerald A. Blumberg Director
- -------------------------------
Jerald A. Blumberg
/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/Peggy Gordon Miller Director
- -------------------------------
Peggy Gordon Miller
/s/Ronald A. Mitsch Director
- -------------------------------
Ronald A. Mitsch
/s/M. Thomas Moore Director
- -------------------------------
M. Thomas Moore
/s/Daniel E Somers Director
- -------------------------------
Daniel E. Somers
EXHIBIT INDEX
-------------
Exhibits
(3)(a) Amended Articles of Incorporation of The Lubrizol
Corporation, as adopted September 23, 1991.
(Reference is made to Exhibit (3)(a) to The Lubrizol
Corporation's Annual Report on Form 10-K for the year
ended December 31, 1999, which Exhibit is
incorporated herein by reference.)
(3)(b) Regulations of The Lubrizol Corporation, as amended
effective April 27, 1992. (Reference is made to
Exhibit (3)(b) to The Lubrizol Corporation's Annual
Report on Form 10-K for the year ended December 31,
1999, which Exhibit is incorporated herein by
reference.)
(4)(a) Amendment to Article Fourth of Amended Articles of
Incorporation. (Reference is made to Exhibit (4)(a)
to The Lubrizol Corporation's Annual Report on Form
10-K for the year ended December 31, 1999, which
Exhibit is incorporated herein by reference.)
(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, 2000,
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 March 31, 2000, which Exhibit is
incorporated herein by reference.)
(10)(c)* Form of Employment Agreement between The Lubrizol
Corporation and certain of its senior executive
officers. (Reference is made to Exhibit (10)(c) to
The Lubrizol Corporation's Quarterly Report on Form
10-Q for the quarterly period ended September 30,
2000, which Exhibit is incorporated herein by
reference.)
(10)(d)* The Lubrizol Corporation Excess Defined Benefit Plan,
as amended.
(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, 2000, which Exhibit is incorporated
herein by reference.)
(10)(f)* The Lubrizol Corporation Performance Pay 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 Annual Report
on Form 10-K for the year ended December 31, 2000,
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 March 31, 2000,
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 March 31, 2000, which Exhibit is
incorporated herein by reference.)
(10)(j)* The Lubrizol Corporation Officers' Supplemental
Retirement Plan, as amended. (Reference is made to
Exhibit (10)(j) to The Lubrizol Corporation's Annual
Report on Form 10-K for the year ended December 31,
2000, which Exhibit is incorporated herein by
reference.)
(10)(k)* The Lubrizol Corporation Deferred Compensation Plan
for Officers, as amended.
(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 March 31, 2000, which Exhibit is
incorporated herein by reference.)
(10)(m)* Supplemental Retirement Plan for Donald W. Bogus.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) The following portions of The Lubrizol Corporation
2001 Annual Report to its shareholders:
Pages 14-23 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Page 24 Quarterly Financial Data
(Unaudited)
Page 24 Independent Auditors' Report
Page 25 Consolidated Statements of Income for the years ended
December 31, 2001, 2000 and 1999
Page 26 Consolidated Balance Sheets at December 31, 2001 and
2000
Page 27 Consolidated Statements of Cash Flows for the years
ended December 31, 2001, 2000 and 1999
Page 28 Consolidated Statements of Shareholders' Equity for
the years ended December 31, 2001, 2000 and 1999
Pages 29-41 Notes to Financial Statements
Pages 42-43 Historical Summary
(21) List of Subsidiaries of The Lubrizol Corporation
(23) Consent of Independent Auditors
*Indicates management contract or compensatory plan or arrangement.