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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE 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 or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)


29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(Address of principal executive offices)
(Zip Code)

(440) 943-4200
(Registrant's telephone number, including area code)

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 and 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

Number of the registrant's common shares, without par value, outstanding, as of
March 31, 2003: 51,491,270.


PART I. FINANCIAL INFORMATION

Item 1 Financial Statements

THE LUBRIZOL CORPORATION



CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------------------------------
March 31 December 31
(In Thousands of Dollars) 2003 2002
- -----------------------------------------------------------------------------------------------------

ASSETS
Cash and short-term investments ...................... $ 227,146 $ 266,428
Receivables .......................................... 332,955 295,508
Inventories:
Finished products .................................. 143,119 148,478
Products in process ................................ 80,249 58,643
Raw materials ...................................... 72,395 76,779
Supplies and engine test parts ..................... 19,248 19,068
----------- -----------
315,011 302,968
----------- -----------
Other current assets ................................. 44,510 44,875
----------- -----------
Total current assets ............. 919,622 909,779
Property and equipment - net ......................... 670,800 679,155
Goodwill ............................................. 168,807 168,352
Intangible assets - net .............................. 41,932 43,162
Investments in nonconsolidated companies ............. 7,298 6,690
Other assets ......................................... 54,528 52,999
----------- -----------
TOTAL ....................... $ 1,862,987 $ 1,860,137
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion of long-term debt $ 12,639 $ 17,046
Accounts payable ..................................... 129,480 140,424
Accrued expenses and other current liabilities ....... 139,512 150,271
----------- -----------
Total current liabilities ........ 281,631 307,741
----------- -----------
Long-term debt ....................................... 384,155 384,845
Postretirement health care obligation ................ 96,973 96,495
Noncurrent liabilities ............................... 94,810 92,655
Deferred income taxes ................................ 56,165 55,761
----------- -----------
Total liabilities ................ 913,734 937,497
----------- -----------

Minority interest in consolidated companies .......... 51,616 53,388
Contingencies and commitments
Shareholders' equity:
Preferred stock without par value - authorized
and unissued:
Serial Preferred Stock - 2,000,000 shares
Serial Preference Shares - 25,000,000 shares
Common shares without par value:
Authorized 120,000,000 shares
Outstanding - 51,491,270 shares as of Mar. 31,
2003 after deducting 34,704,624 treasury
shares, 51,457,642 shares as of December 31,
2002 after deducting 34,738,252 treasury shares 120,197 118,985
Retained earnings .................................. 854,341 828,318
Accumulated other comprehensive loss ............... (76,901) (78,051)
----------- -----------
Total shareholders' equity ....... 897,637 869,252
----------- -----------
TOTAL ....................... $ 1,862,987 $ 1,860,137
=========== ===========


Amounts shown are unaudited.


2


THE LUBRIZOL CORPORATION



CONSOLIDATED STATEMENTS OF INCOME
- -----------------------------------------------------------------------------------------
Three Month Period
Ended March 31
--------------------------------------
(In Thousands Except Per Share Data) 2003 2002
- -----------------------------------------------------------------------------------------

Net sales .................................. $ 507,000 $ 466,713
Royalties and other revenues ............... 1,213 799
--------- ---------
Total revenues ................... 508,213 467,512

Cost of sales .............................. 368,263 331,210
Selling and administrative expenses ........ 50,815 48,743
Research, testing and development expenses . 41,633 40,566
Restructuring charge ....................... 3,506 --
--------- ---------
Total cost and expenses .......... 464,217 420,519

Other income (expense) - net ............... (309) (719)
Interest income ............................ 1,041 1,709
Interest expense ........................... (5,888) (5,387)
--------- ---------
Income before income taxes and cumulative
effect of change in accounting principle .. 38,840 42,596
Provision for income taxes ................. 12,817 12,779
--------- ---------
Income before cumulative effect of change
in accounting principle ................... 26,023 29,817
Cumulative effect of change in accounting
principle ................................. -- (7,785)
--------- ---------
Net income ................................. $ 26,023 $ 22,032
========= =========

Net income per share .......................
Income before cumulative effect of
change in accounting principle ........... $ 0.50 $ 0.58
Cumulative effect of change in accounting
principle ................................ -- (0.15)
--------- ---------
Net income per share ....................... $ 0.50 $ 0.43
========= =========

Net income per share, diluted ..............
Income before cumulative effect of
change in accounting principle ........... $ 0.50 $ 0.58
Cumulative effect of change in accounting
principle ................................ -- (0.15)
--------- ---------
Net income per share, diluted ............. $ 0.50 $ 0.43
========= =========
Dividends per share ........................ $ 0.26 $ 0.26
========= =========
Weighted average common shares outstanding . 51,643 51,343



Amounts shown are unaudited.



3




THE LUBRIZOL CORPORATION




CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------
Three Month Period
Ended March 31
-------------------------------------
(In Thousands of Dollars) 2003 2002
- ---------------------------------------------------------------------------------------------------

Cash provided from (used for):
Operating activities:
Net income .......................................... $ 26,023 $ 22,032
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization ..................... 24,452 22,492
Deferred income taxes ............................. 1,535 (365)
Restructuring charge .............................. 3,506
Cumulative effect of change in accounting principle 7,785

Change in current assets and liabilities:
Receivables ..................................... (34,228) (22,496)
Inventories ..................................... (10,566) 10,650
Accounts payable and accrued expenses ........... (13,558) 10,596
Other current assets ............................ (1,002) (4,823)
Other items - net ................................. (1,947) (421)
--------- ---------
Total operating activities .................. (5,785) 45,450
Investing activities:
Capital expenditures ................................ (15,331) (12,126)
Acquisitions and investments in nonconsolidated
companies ......................................... (17,235)
Other - net ......................................... (235) 2,252
--------- ---------
Total investing activities .................. (15,566) (27,109)
Financing activities:
Short-term borrowings,(repayments) net .............. (4,225) 1,528
Long-term repayments ................................ (103) (14)
Long-term borrowings ................................ 11
Dividends paid ...................................... (13,379) (13,328)
Stock options exercised ............................. 1,190 5,622
--------- ---------
Total financing activities .................. (16,506) (6,192)
Effect of exchange rate changes on cash ............... (1,425) 361
--------- ---------
Net increase (decrease) in cash and short-term
investments ......................................... (39,282) 12,510
Cash and short-term investments at beginning of period 266,428 189,095
--------- ---------
Cash and short-term investments at end of period ...... $ 227,146 $ 201,605
========= =========



Amounts shown are unaudited.



4





THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
Amounts in thousands (except per share data)
March 31, 2003

1. The accompanying unaudited consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of March 31, 2003 and December 31,
2002, and the results of operations and cash flows for the applicable
periods ended March 31, 2003 and 2002.

2. Net income per share is computed by dividing net income by average common
shares outstanding during the period, including contingently issuable
shares. Net income per diluted share includes the dilutive effect resulting
from outstanding stock options and stock awards.

Per share amounts are computed as follows:



Three Month Period
Ended March 31
-----------------------------
2003 2002
---------- ---------

Numerator:
Income before cumulative effect of change
in accounting principle ............................ $ 26,023 $ 29,817
Cumulative effect of change in accounting
principle .......................................... -- (7,785)
---------- --------
Net income ........................................... $ 26,023 $ 22,032
========== ========
Denominator:
Weighted average common shares outstanding ........... 51,643 51,343
Dilutive effect of stock options and awards .......... 89 401
---------- --------
Denominator for net income per share, diluted ......... 51,732 51,744
========== ========

Net Income Per Share:
Net income before cumulative effect of
change in accounting principle ..................... $ 0.50 $ 0.58
========== ========
Net income per share ................................. $ 0.50 $ 0.43
========== ========

Diluted Net Income Per Share:
Income per share before cumulative effect of
change in accounting principle ..................... $ 0.50 $ 0.58
========== ========
Net income per share, diluted ........................ $ 0.50 $ 0.43
========== ========




Weighted average shares issuable upon the exercise of stock options which
were excluded from the diluted earnings per share calculations because they
were antidilutive were 4.0 million in 2003 and 1.0 million in 2002.



5


THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
Amounts in thousands (except per share data)
March 31, 2003


3. Total comprehensive income for the three-month periods ended March 31, 2003
and 2002 is comprised as follows:



Three Month Period
Ended March 31
2003 2002
-------- --------

Net income $ 26,023 $ 22,032
Foreign currency translation adjustment 872 (3,028)

Unrealized gains - interest rate swaps 278 511
-------- --------
Total comprehensive income $ 27,173 $ 19,515
======== ========




4. The company aggregates its product lines into four principal operating
segments: fluid technologies for transportation, fluid technologies for
industry, advanced fluid systems and emulsified products. Fluid
technologies for transportation (FTT) 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, this segment sells additive components and
viscosity improvers within its lubricant and fuel additives product lines.
The company's fluid technologies for transportation product lines are
generally produced in shared manufacturing facilities and sold largely to a
common customer base. Fluid technologies for industry (FTI) includes
industrial additives, such as additives for hydraulic, grease and
metalworking fluids and compressor lubricants; and performance chemicals,
such as additives for coatings and inks, defoamers and process chemicals.
The advanced fluid systems and emulsified products operating segments do
not constitute reportable business segments. The results of these two
operating segments have been aggregated into the all other segment.
Advanced fluid systems is comprised of fluid metering devices, particulate
emission trap devices, and FluiPakTM sensor systems, and emulsified
products is comprised of PuriNOxTM low-emissions diesel fuel.

The company primarily evaluates performance and allocates resources based
on segment contribution income, defined as revenues less expenses directly
identifiable to the product lines aggregated within each segment, as well
as projected future returns. In addition, in calculating segment operating
profit before tax, the company allocates corporate research, testing,
selling and administrative expenses, primarily based upon revenues, and
assigns excess capacity costs to the segments to which it applies.

The following table presents a summary of the company's reportable segments
for the three months ended March 31, 2003 and 2002 based on the current
reporting structure. Prior-year amounts have been restated to reflect
reclassifications of products between reporting segments and changes in
allocation methodology of corporate expenses.



6


THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
Amounts in thousands (except per share data)
March 31, 2003




Three Month Period
Ended March 31
------------------------------
2003 2002
--------- ---------

Revenues from external customers:
Fluid technologies for transportation (FTT) $ 390,476 $ 381,421
Fluid technologies for industry (FTI) 110,542 80,315
All other 7,195 5,776
--------- ---------
Total revenues $ 508,213 $ 467,512
========= =========

Segment contribution income(loss):
Fluid technologies for transportation (FTT) $ 75,398 $ 77,317
Fluid technologies for industry (FTI) 20,578 16,155
All other (2,065) (3,024)
--------- ---------
Total segment contribution income $ 93,911 $ 90,448
========= =========

Segment operating profit(loss):
Fluid technologies for transportation (FTT) $ 38,530 $ 39,777
Fluid technologies for industry (FTI) 12,057 10,608
All other (3,394) (4,111)
--------- ----------
Total segment operating profit 47,193 46,274


Restructuring charge (3,506)

Interest expense - net (4,847) (3,678)
--------- ---------
Income before income taxes and cumulative
effect of change in accounting principle $ 38,840 $ 42,596
========= =========





5. In February, 2003, the company notified employees at its Bromborough,
England facility of plans to restructure and reduce operational costs to
remain competitive. The facility is planning to consolidate various
operational activities to achieve greater efficiency through improved
business processes. There will be a reduction by the end of 2003 of 40
employees, or approximately 35% of the facility's headcount. These changes
began during the first quarter of 2003 and are expected to be completed by
the end of 2003. As a result of these changes, the company recorded a
restructuring charge of $3.5 million during the first quarter of 2003,
which consisted of $2.1 million in severance costs and $1.4 million in
asset impairment for production units taken out of service. The charge is
reported as a separate line item in the consolidated income statement,
entitled "Restructuring charge" and is included in the "Total cost and
expenses" subtotal on the consolidated income statement. Cash expenditures
of $.6 million were made in the first quarter of 2003 and $1.5 million
remains as an accrued liability at March 31, 2003, relating to employees to
be separated within the legal notification period of 90 days of the
restructuring announcement date. Additional severance costs of
approximately $1.0 million are expected to be incurred during the remainder
of 2003 for those employees that will be separated after 90 days of the
legal notification date of the restructuring. Additionally, further
production equipment may be written off, having a book value in the range
of $1.0 million to $2.0 million.




7




THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
Amounts in thousands (except per share data)
March 31, 2003


6. The company has elected the intrinsic value method to account for employee
stock options. The following table shows the pro forma effect on net income
and earnings per share if the company had applied the fair value
recognition provisions of SFAS 123, "Accounting for Stock-Based
Compensation," to stock-based employee compensation.



Three Month Period
Ended March 31
-----------------------------
2003 2002
--------- ---------

Reported net income $ 26,023 $ 22,032
Plus: Stock-based employee compensation (net of
tax) included in net income 181 9
Less: Stock-based employee compensation (net of
tax) using the fair value method (1,400) (1,508)
--------- ---------
Pro forma net income $ 24,804 $ 20,533
========= =========

Reported net income per share $ 0.50 $ 0.43
========= =========
Pro forma net income per share $ 0.47 $ 0.40
========= =========
Reported net income per share, diluted $ 0.50 $ 0.43
========= =========
Pro forma net income per share, diluted $ 0.47 $ 0.40
========= =========





8



THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


RESULTS OF OPERATIONS

Our revenues increased in the first quarter of 2003 as compared with the first
quarter of 2002, primarily due to higher average selling price caused by
favorable currency, and the impact of acquisitions made in 2002. The increased
revenues were partially offset by higher raw material costs and higher
manufacturing expenses. Slightly higher STAR (selling, testing, administration
and research) expenses and a restructuring charge resulted in a decrease in
total revenues less total costs and expenses in 2003 compared with 2002. Higher
interest expense along with an increased effective tax rate in the first quarter
of 2003, compared with the same period in 2002, resulted in lower income before
the cumulative effect of a change in accounting principle. Net income increased
in the first quarter of 2003, compared with the same period in 2002, due to the
absence in 2003 of the cumulative effect of a change in accounting principle
that was recorded in the prior year for goodwill impairment.

We group our product lines into three reportable segments: fluid technologies
for transportation, fluid technologies for industry and all other. Fluid
technologies for transportation comprised approximately 77% of our consolidated
revenues and 80% of our segment pre-tax operating profits for the first quarter
of 2003. See Note 4 to the financial statements for further financial
disclosures by reporting segment.

Our consolidated revenues increased $40.7 million, or 9%, for the first quarter
of 2003 compared with the same period in 2002. The increase was due to a 3%
increase in our shipment volume from acquisitions along with a 6% increase in
average selling price. Excluding 2002 acquisitions (Kabo Unlimited, Inc., Dock
Resins Corporation, Chemron Corporation and Intermountain Specialties, Inc.,
also known as Brose Chemical Company), revenues increased $20.1 million, or 4%,
due to higher average selling price primarily driven by favorable currency.

Changes in our shipment volume vary in different geographic areas. The following
table shows our 2003 first quarter shipment volume by geographic area as well as
the corresponding changes compared with first quarter 2002:



1st Qtr 1st Qtr
1st Qtr 2003 vs. 2002 2003 vs. 2002
2003 Total Excluding Acquisitions
Volume Increase/(Decrease) Increase/(Decrease)
------ ------------------- ----------------------


North America 45% 10% (5%)
Europe 29% (3%) (3%)
Asia-Pacific/Middle East 19% (3%) (3%)
Latin America 7% 7% 7%
-----
Total 100% 3% (3%)



Excluding 2002 acquisitions, volume decreased 3% in the first quarter of 2003
compared with the first quarter of 2002. Approximately 2% of the decrease was
due to a shift in our viscosity modifier product line from liquids to a
higher-value concentrated solid form. The remaining volume decrease was due to
losses associated with a major international customer. See the "Segment
Analysis" section for additional explanation of shipment volume variances by
zone for the first quarter of 2003 compared with the comparable period in 2002.

Our average additive selling price increased 6% in the first quarter of 2003
compared with the first quarter of 2002. The increase was primarily due to 5%




9


THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


favorable currency effects as the dollar weakened against the euro, along with a
slight increase in the combination of price and mix. Sequentially, first quarter
2003 average additive selling price was 4% higher than the fourth quarter of
2002 equally due to an increase in the combination of price and mix and
favorable currency effects.

Royalties and other revenues increased $.4 million, or 52%, primarily due to
higher royalties for synthetic refrigerant lubricants and third party toll
processing fees at our Canadian subsidiary.

Our cost of sales for the first quarter of 2003 increased $37.1 million, or 11%
($21.6 million, or 7%, excluding 2002 acquisitions), compared with the first
quarter of 2002, primarily due to increases in average raw material cost and
total manufacturing expenses. Average raw material cost increased 6% primarily
due to a 3.5% increase in the combination of raw material prices and higher
priced product mix along with 2.5% unfavorable currency effects. Sequentially,
average raw material cost increased 2% from the fourth quarter of 2002. We
believe raw material costs will continue to increase in the second quarter of
2003. Total manufacturing expenses increased 16% primarily due to unfavorable
currency, higher utility and maintenance expenses and higher shipment volume
associated with acquisitions. Total manufacturing expenses also included a
reclassification of approximately $1.5 million in expenses at certain
subsidiaries of our fluid technologies for industry (FTI) and advanced fluid
systems (AFS) segments that were previously charged to selling and
administrative expenses. We estimate the total impact of the reclassification of
expenses for 2003 will be approximately $5.0 million.

In April 2003, an after working hours fire destroyed a metalworking additive
blending facility we leased in Detroit. There were no injuries, nor any damage
to a nearby warehouse where we store finished goods, and we have been able to
supply customers from this warehouse and by shifting production to our
Painesville, Ohio plant. The costs associated with the fire have been estimated
to be in the $1.5 million to $2.0 million range. In April 2003, a fire
associated with a maintenance shutdown also occurred in a dispersant production
unit in our plant in Le Havre, France. Based upon our initial assessment, the
costs for this fire may reach up to $2.5 million. The costs for both fires will
be included in costs of sales as manufacturing expenses, most of which will be
incurred in the second quarter of 2003.

Gross profit (net sales less cost of sales) for the first quarter of 2003
increased $3.2 million, or 2% (decreased $1.8 million, or 1%, excluding 2002
acquisitions), compared with the first quarter of 2002. The increase was
primarily due to higher volume from acquisitions and higher average selling
price, partially offset by higher average raw material cost and higher
manufacturing expenses. Our gross profit percentage (gross profit divided by net
sales) decreased to 27.4% in the first quarter of 2003, compared with 29.0% in
the first quarter of 2002. The decrease was primarily due to higher average raw
material cost, higher unit manufacturing cost (manufacturing expenses per metric
ton sold) and the reclassification of the FTI and AFS selling and administrative
expenses to manufacturing expenses. The impact of 2002 acquisitions and the
expense reclassification accounted for a decrease of 40 basis points in our
gross profit percentage. Sequentially, the gross profit percentage increased
from 26.6% in the fourth quarter of 2002. We anticipate our full year 2003 gross
profit percentage could decrease in the range of 100 to 125 basis points from
our 2002 annual average of 28.5%.

Selling and administrative expenses increased by $2.1 million, or 4% ($.2
million, or less than 1%, excluding 2002 acquisitions), for the first quarter of
2003 compared with the same period in 2002. The increase excluding acquisitions
was due to unfavorable currency and higher salaries and employee



10


THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


benefit costs, partially offset by the absence of the $2.0 million charge which
occurred in 2002 for a contract claim related to an employee offsite personal
injury.

Our research, testing and development expenses (technology expenses) increased
$1.1 million, or 3% ($.5 million, or 1%, excluding 2002 acquisitions), for the
first quarter of 2003 compared with the same period in 2002, primarily due to
unfavorable currency as a result of the weaker dollar. In addition, there was a
write-down of $.9 million in the value of a former technical facility in Japan
that we expect to sell this year, partially offset by lower outside testing
expenses.

In the first quarter of 2003, we recorded a restructuring charge of $3.5
million, or $.05 per share, for our Bromborough, England intermediate production
and blending facility. We have eliminated some capacity at this facility and
have planned a reduction of 40 positions, or approximately 35% of this
facility's headcount, by the end of 2003. The restructuring charge included $2.1
million in employee separation benefits and a $1.4 million asset impairment for
production units taken out of service. We estimate the Bromborough restructuring
will be completed by year-end and will cost an additional $2.0 to $3.0 million.
Total annualized savings are projected to be $4.0 million, of which $1.5 million
will be realized in 2003.

The change in other income (expense) favorably affected pre-tax income by $.4
million for the first quarter of 2003 compared to the first quarter of 2002.
Higher currency translation gains were partially offset by higher intangibles
amortization expense and minor losses at our Asian joint ventures.

Interest income decreased $.7 million for the first quarter of 2003 compared to
the first quarter of 2002, due to lower interest rates. Interest expense
increased by $.5 million for the first quarter of 2003 compared with the first
quarter of 2002, due to the absence of the interest rate swap agreements we
utilized in 2002. The swap agreements reduced 2002 interest expense by
approximately $1.2 million, calculated as the difference in interest expense
between our fixed rate interest and the lower variable rate interest per the
swap agreements. As a result of the interest rate swaps that were terminated in
2002, the unrecognized gain is being amortized as a reduction of interest
expense through December 1, 2008. Amortization of the unrealized gain reduced
interest expense in the first quarter of 2003 by approximately $.7 million.

As a result of the above factors, our income before income taxes and the
cumulative effect of a change in accounting principle for the first quarter of
2003 decreased 9% to $38.8 million, compared with $42.6 million for the first
quarter of 2002.

We had an effective tax rate of 33% for the first quarter of 2003, compared with
30% for the first quarter of 2002. The higher effective tax rate in 2003, which
reduced first quarter earnings by $.02 per share, was primarily due to the
absence of a U.S. tax benefit from a charitable contribution of technology made
in 2002 that is not expected to recur in 2003.

As a result of the factors described above, income before the cumulative effect
of a change in accounting principle decreased $3.8 million, or 13%, for the
first quarter of 2003, compared with the same period in 2002. Income per share,
before the cumulative effect of a change in accounting principle, was $.50 for
the first quarter of 2003, compared with $.58 for the corresponding period in
2002.



11



THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


During the first half of 2002, we completed the impairment analysis required for
Statement of Financial Accounting Standards 142 (SFAS 142), "Goodwill and Other
Intangible Assets," which we adopted on January 1, 2002. There was no impairment
either in the fluid technologies for transportation segment or in the fluid
technologies for industry operating segment. However, for the advanced fluid
systems operating segment, which is included in the all other reporting segment,
we recorded an impairment of $7.8 million, thus eliminating all the goodwill for
the all other reporting segment. The charge was recorded as a cumulative effect
of a change in accounting principle as of January 1, 2002.

Primarily as a result of the above factors, our net income for the first quarter
of 2003 increased 18% to 26.0 million ($.50 per share) compared with $22.0
million ($.43 per share) for the first quarter of 2002.


SEGMENT ANALYSIS

A description of the company's operating segments along with the products,
services and markets for each of the operating segments is included in Note 4 to
the financial statements. Prior year amounts have been restated to reflect
reclassifications of products among the reportable segments.

OPERATING RESULTS BY SEGMENT
(in Millions of Dollars)



Three Month Period
Ended March 31
2003 2002
--------- ---------

Revenues:
Fluid technologies for transportation $ 390.5 $ 381.4
Fluid technologies for industry 110.5 80.3
All other 7.2 5.8
-------- --------
Total $ 508.2 $ 467.5
======== ========

Gross Profit:
Fluid technologies for transportation $ 112.1 $ 114.5
Fluid technologies for industry 36.1 29.1
All other 1.9 1.1
-------- --------
Total $ 150.1 $ 144.7
======== ========

Segment Contribution Income:
Fluid technologies for transportation $ 75.4 $ 77.3
Fluid technologies for industry 20.6 16.2
All other (2.1) (3.0)
-------- --------
Total $ 93.9 $ 90.5
======== ========





Fluid Technologies for Transportation Segment

In the first quarter of 2003, segment revenues increased $9.1 million, or 2%,
compared with the same period in 2002. Shipment volume decreased 3%, but was
more than offset by a 6% increase in average selling price. The increase in
average selling price was due to 5% favorable currency impact and a 1% increase
in the combination of price and product mix effects.


12



THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


The following table shows the corresponding changes in shipment volume by
geographic zone in the first quarter of 2003 compared with the same period in
2002:

1st Qtr
2003 vs. 2002
Total
Increase/(Decrease)
-------------------
North America (5%)
Europe (3%)
Asia-Pacific, Middle East (3%)
Latin America 6%
Total (3%)

Over half of the volume decrease occurred in our engine oils additives business
and was a result of lower unit sales of viscosity modifiers, caused principally
by a shift from liquid polymers to solid polymers. Generally, solids are
one-tenth the volume of liquids. Excluding this shift in our viscosity modifier
product line, total volume decreased 1%. The volume decreases in North America
and Europe were due to losses in our passenger car additives business and
specialty driveline business associated with a major international customer. The
losses were partially offset by business gains in our heavy duty diesel
additives business associated with the current U.S. heavy duty motor oil
technical standard, PC-9, which was implemented in September 2002. The decrease
in Asia-Pacific, Middle East zone is the result of the weak business environment
and competitive intensity in Asia. Latin America, our smallest zone, experienced
some volume gains in our engine oil additives business.

The fluid technologies for transportation segment implemented a price increase
in December, 2002 for the North America zone and in January, 2003 for the rest
of the world. The objective of the increase was to restore material margins to
their levels prior to the 2002 increases in raw material costs. In March, 2003
we began to implement a second price increase to offset continued raw material
increases since the beginning of 2003 and the higher cost of natural gas used
for utilities at our U.S. plants.

Segment gross profit decreased $2.4 million, or 2%, for the first quarter of
2003 compared with the same period in 2002. The decrease was due to higher
material and manufacturing expenses and lower shipment volume, partially offset
by higher average selling price. In calculating gross profit at the operating
segment level, we exclude our estimate of the cost of excess capacity from
product costs (See Note 4 to the financial statements). The gross profit
percentage for this segment was 28.7% for the first quarter of 2003 compared
with 30.0% for the first quarter of 2002. The decrease was primarily due to
higher average raw material cost and higher unit manufacturing cost.

Direct selling, marketing and technical expenses decreased $.9 million, or 2%
for the first quarter of 2003 compared with the first quarter of 2002, primarily
due to lower technical spending at outside test laboratories. As a result,
segment contribution income (revenues less expenses directly identifiable to the
product lines aggregated within each segment) decreased $1.9 million, or 2%, for
the first quarter of 2003 compared with the same period in 2002.




13



THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


Fluid Technologies for Industry Segment

In the first quarter of 2003, segment revenues increased $30.2 million, or 38%,
compared with the same period in 2002, primarily due to a 67% increase in total
shipment volume. 2002 acquisitions contributed $20.5 million to the increase in
segment revenues, primarily due to Chemron and Dock Resins. Segment revenues,
excluding 2002 acquisitions, increased $9.6 million, or 12%, primarily due to
10% ongoing volume growth as a result of new business gains and the introduction
of new products and a 1% increase in average selling price. Favorable currency
effects contributed 5.5% to higher average selling price, but were partially
offset by a 4.5% decrease in the combination of price and product mix. The
decrease in price and mix occurred in our inks additives business, process
chemicals business and synthetic refrigerant lubricants business and was
primarily due to lower priced product mix. Higher royalty income of $.2 million
in the first quarter of 2003, compared with the first quarter of 2002, also
contributed to the increased segment revenues. The favorable increase in
royalties was in our synthetic refrigerant lubricants business.

The following table shows the corresponding changes in shipment volume by
geographic zone in the first quarter of 2003 compared with the same period in
2002:




1st Qtr 1st Qtr
2003 vs. 2002 2003 vs. 2002
Total Excluding Acquisitions
Increase/(Decrease) Increase/(Decrease)
------------------- ----------------------

North America 115% 8%
Europe 9% 9%
Asia-Pacific, Middle East 27% 26%
Latin America 11% 11%
Total 67% 10%


The increases in North America and Europe in the first quarter of 2003, compared
with the same period in 2002, were primarily due to the 2002 acquisitions of
Chemron and Dock Resins. Excluding 2002 acquisitions, increases in North America
and Europe were partially due to increases in our metalworking and synthetic
refrigerant lubricants businesses from market share gains. Additionally, the
introduction of new products in the inks business in North America and new
applications in our specialty monomers business in Europe contributed to the
volume increases for these zones. The increase in the first quarter of 2003 for
the Asia-Pacific, Middle East zone was partially due to increased shipments in
our metalworking business as a result of a distributor relationship that was
terminated at the beginning of 2002. Our metalworking sales in this zone for the
first half of 2002 were below normal levels because our customers were buying
from the distributor's inventory. Our customers have subsequently resumed
purchasing the products from us, beginning in the second half of 2002. The
increase in the Latin America zone in the first quarter of 2003, compared with
the same period in 2002, was due to a shift of our specialty emulsifiers
business with some of our existing customers from North America to Latin
America, along with some business gains in our coatings and inks business.

Segment gross profit increased $7.0 million, or 24% ($1.9 million, or 7%,
excluding acquisitions), in the first quarter of 2003 compared with the same
period in 2002. The increases were primarily due to higher shipment volume and
higher average selling price, partially offset by higher manufacturing expenses.
The gross profit percentage for this segment was 32.9% in the first quarter of




14


THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


2003, compared with 36.4% in the same period of 2002. The decrease in the gross
profit percentage was partially due to the impact of the Chemron acquisition,
due to its lower-priced product mix, the reclassification of the FTI selling
and administrative expenses to manufacturing expense along with higher raw
material costs.

Segment contribution income increased $4.4 million, or 27%, in the first quarter
of 2003, compared with the same period in 2002, due to higher gross profit,
partially offset by higher direct technical and selling expenses.



WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

Cash used by operating activities was $5.8 million for the first quarter of 2003
as compared with cash provided by operating activities of $45.5 million for the
first quarter of 2002. The decrease in cash from operating activities of $51.2
million in the first quarter of 2003 was primarily due to higher receivables and
inventory balances. Receivables increased by $34 million because sales in March,
2003 were higher than December, 2002 sales and days sales outstanding increased
by two days, partially due to a delay in payment by one of our large customers
resulting from its conversion to a new computer system. Inventory increased by
$11 million, primarily due to higher unit values. Inventory quantities were
approximately the same as of December 31, 2002.

Our capital expenditures in the first three months of 2003 were $15.3 million,
as compared with $12.1 million for same period in 2002. In 2003, we estimate
capital expenditures will be in the range of $95 million to $100 million as
compared with $65.3 million in 2002. On April 30, 2003, we purchased a
multipurpose chemical production facility in Spartanburg, South Carolina for
$2.5 million. The facility is capable of producing several products used in a
variety of applications for the fluid technologies for industry segment.

Our net debt to capitalization ratio at March 31, 2003 was 17.8%. Net debt is
the total of short- and long-term debt, reduced by cash and short-term
investments in excess of an assumed operating cash level of $40 million and
excluding unrealized gains and losses on derivative instruments designated as
fair value hedges of fixed rate debt. Capitalization is shareholders' equity
plus net debt. Total debt as a percent of capitalization was 29.8% at March 31,
2003.

Our share repurchase program has been suspended indefinitely as we are holding
our financial resources in reserve for future acquisitions. As a result of these
activities and the payment of dividends, our balance of cash and short-term
investments decreased $39.3 million at March 31, 2003 compared with December 31,
2002.

Our financial position remains strong with a ratio of current assets to current
liabilities of 3.3 to 1 at March 31, 2003, compared with 3.0 to 1 at December
31, 2002. We currently have $525 of committed revolving credit facilities; $175
million expire in July, 2003 and $350 million expire in July, 2006. We do not
anticipate renewing the $175 million of committed revolving credit facilities
that expire in July, 2003. We believe our remaining credit facilities,
internally generated funds and ability to obtain additional financing, if
desired, will be sufficient to meet our future capital needs, including
acquisitions to expand into new and existing fluid technology markets.




15


THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


CAUTIONARY STATEMENT FOR SAFE HARBOR PURPOSES

This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of the federal
securities laws. As a general matter, forward-looking statements are those
focused upon future plans, objectives or performance as opposed to historical
items and include statements of anticipated events or trends and expectations
and beliefs relating to matters not historical in nature. Such forward-looking
statements are subject to uncertainties and factors relating to our operations
and business environment, all of which are difficult to predict and many of
which are beyond our control. These uncertainties and factors could cause our
actual results to differ materially from those matters expressed in or implied
by such forward-looking statements.

We believe that the following factors, among others, could affect our future
performance and cause our actual results to differ materially from those
expressed or implied by forward-looking statements made in this quarterly
report:

- - the overall demand for lubricant and fuel additives on a worldwide basis,
which has a slow growth rate in mature markets such as North America and
Europe;

- - the effect on our business resulting from economic and political
uncertainty within the Asia-Pacific, Middle East and Latin American
regions;

- - the lubricant additive demand in developing regions such as China and
India, which geographic areas are an announced focus of our activities;

- - the potential negative impact on product pricing and volume demand from the
consolidation of finished lubricant marketers;

- - the degree of competition resulting from lubricant additive industry
overcapacity;

- - technology developments that affect longer-term trends for lubricant
additives, such as improved equipment design, fuel economy, longer oil
drain intervals, alternative fuel powered engines and emission system
compatibility;

- - the overall global economic environment, which affects the operating
results of fluid technologies for industry in particular;

- - the extent to which we are successful in expanding our business in new and
existing fluid technology markets incorporating chemicals, systems and
services for industry and transportation;

- - our ability to identify, complete and integrate acquisitions for profitable
growth;

- - our success at continuing to develop proprietary technology to meet or
exceed new industry performance standards and individual customer and
original equipment manufacturers' expectations;

- - the frequency of change in industry performance standards, which affects
the level and timing of our technology costs, the product life cycles and
the relative quantity of additives required for new specifications;

- - our ability to continue to reduce complexities and conversion costs and
modify our cost structure to maintain and enhance our competitiveness;

- - our success in strengthening relationships and growing business with our
largest customers, including those with affiliated lubricant additive
companies, and retaining the business of our largest customers over
extended time periods;

- - the cost, availability and quality of raw materials, including
petroleum-based products;

- - the cost and availability of energy, including natural gas and electricity;




16


THE LUBRIZOL CORPORATION

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations


- - the effects of fluctuations in currency exchange rates upon our reported
results from international operations, together with non-currency risks of
investing in and conducting significant operations in foreign countries,
including those relating to political, social, economic and regulatory
factors;

- - the extent to which we achieve market acceptance of our PuriNOx(TM)
low-emission, water-blend fuel product;

- - significant changes in government regulations affecting environmental
compliance.





17



THE LUBRIZOL CORPORATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk


We operate manufacturing and blending facilities, laboratories and offices
around the world and utilize fixed and variable rate debt to finance our
global operations. As a result, we are subject to business risks inherent
in non-U.S. activities, including political and economic uncertainties,
import and export limitations, and market risks related to changes in
interest rates and foreign currency exchange rates. We believe the
political and economic risks related to our foreign operations are
mitigated due to the stability of the countries in which our largest
foreign operations are located.

In the normal course of business, we use derivative financial instruments
including interest rate swaps and forward foreign currency exchange
contracts to manage our market risks. Our objective in managing our
exposure to changes in interest rates is to limit the impact of such
changes on earnings and cash flow and to lower our overall borrowing costs.
Our objective in managing our exposure to changes in foreign currency
exchange rates is to reduce volatility on our earnings and cash flow
associated with such changes. Our principal currency exposures are the
euro, the pound sterling, the Japanese yen and certain Latin American
currencies. We do not hold derivatives for trading purposes.

A quantitative and qualitative discussion about our market risk is
contained on page 21 of our 2002 Annual Report to our shareholders. There
have been no material changes in the market risks faced by us since
December 31, 2002.


Item 4. Controls and Procedures

Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our chief
executive officer and chief financial officer, of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rule
13a-(14c)). Based on that evaluation, our chief executive officer and chief
financial officer concluded that, as of the evaluation date, our disclosure
controls and procedures are effective in timely alerting them to material
information relating to the company and its consolidated subsidiaries
required to be included in our periodic SEC filings. Subsequent to the date
of their evaluation, there have been no significant changes in our internal
controls or in other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.



18


THE LUBRIZOL CORPORATION

PART II. OTHER INFORMATION


Item 2. Changes in Securities and Use of Proceeds


(c) On January 24, 2003, 1,894 common shares were issued in
transactions 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 21 employees
of a wholly-owned Canadian subsidiary of the company.

On February 3, 2003, 250 common shares were issued in a
private placement transaction exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2) of that
Act. We issued the common shares to the surviving spouse of
a former director pursuant to a deferred compensation plan
for directors.

On March 10, 2003, 11,024 common shares were issued in
private placement transactions exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) of
that Act. We issued the common shares to three officers
pursuant to a deferred compensation plan for officers.

Item 5 Other Information

The following information is being furnished pursuant to Item 11
"Temporary Suspension of Trading Under Registrant's Benefit
Plans."




Reason for the blackout: The transition of the record keeper of The Lubrizol
Corporation Employees' Profit Sharing and Savings Plan
from Victory Capital Management to CitiStreet LLC.

Suspended Plan Transactions: Investment reallocations

Class of Equity Securities Affected: Common Shares of The Lubrizol Corporation

Length of Blackout Period: Blackout began January 28, 2003 and ended February 21,
2003

Contact Information for Questions: Leslie M. Reynolds
The Lubrizol Corporation
29400 Lakeland Boulevard
Wickliffe OH 44092
440-943-4200


We received notice required by Section 101(i)(2)(E) of the
Employment Retirement Income Security Act of 1974 (29 U.S.C.
1021(i)(2)(E)) on December 20, 2002.




19



Item 6. Exhibits and Reports on Form 8-K


(a) Exhibits

(10)(g)* The Lubrizol Corporation Executive Death Benefit
Plan, as amended.

(10)(j)* The Lubrizol Corporation Deferred Officers'
Supplemental Retirement Plan, as amended.

(10)(k)* The Lubrizol Corporation Deferred Compensation
Plan for Officers, as amended.

(10)(o)* Employment Agreement effective January 1, 2003,
between The Lubrizol Corporation and Charles P.
Cooley.

(10)(p)* Employment Agreement effective January 1, 2003,
between The Lubrizol Corporation and Stephen F.
Kirk.

(10)(q)* Employment Agreement effective January 1, 2003,
between The Lubrizol Corporation and Stephen A.
Di Biase.

(10)(r)* Employment Agreement effective January 1,
2003, between The Lubrizol Corporation and
Donald W. Bogus


* Indicates management contract or compensatory plan or
arrangement.


(b) Reports on Form 8-K

There were no reports on Form 8-K filed during the three
months ended March 31, 2003.



Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

THE LUBRIZOL CORPORATION


/s/John R. Ahern
------------------------------------
John R. Ahern
Chief Accounting Officer and
Duly Authorized Signatory of
The Lubrizol Corporation
Date: May 7, 2003



20



THE LUBRIZOL CORPORATION


Part II. Other Information
CERTIFICATIONS


I, William G. Bares, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Lubrizol
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the consolidated financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


/s/ William G. Bares
- -------------------------
William G. Bares
Chief Executive Officer
May 2, 2003


21




THE LUBRIZOL CORPORATION


Part II. Other Information
CERTIFICATIONS


I, Charles P. Cooley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Lubrizol
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the consolidated financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


/s/ Charles P. Cooley
- ---------------------------
Charles P. Cooley
Chief Financial Officer
May 2, 2003



22


THE LUBRIZOL CORPORATION

Certification of Chief Executive Officer and Chief Financial Officer of
The Lubrizol Corporation Pursuant to 18 U.S.C. Section 1350




I certify that, to the best of my knowledge and belief, the Quarterly Report on
Form 10-Q of The Lubrizol Corporation for the period ending March 31, 2003:

(1) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of The Lubrizol Corporation.



/s/ William G. Bares
- ----------------------------------
William G. Bares
Chief Executive Officer
May 2, 2003






I certify that, to the best of my knowledge and belief, the Quarterly Report on
Form 10-Q of The Lubrizol Corporation for the period ending March 31, 2003:

(1) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of The Lubrizol Corporation.




/s/ Charles P. Cooley
- -------------------------------
Charles P. Cooley
Chief Financial Officer
May 2, 2003



23