-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RMKneb0mGahafsVep9yHaxXbhwgBEtnbRbpecCJJHoqiqtLuF2EN3vNjj17K5e00 d/eXFNDpcOB728RsqMVKcg== 0000060751-97-000015.txt : 19971113 0000060751-97-000015.hdr.sgml : 19971113 ACCESSION NUMBER: 0000060751-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUBRIZOL CORP CENTRAL INDEX KEY: 0000060751 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 340367600 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05263 FILM NUMBER: 97715581 BUSINESS ADDRESS: STREET 1: 29400 LAKELAND BLVD CITY: WICKLIFFE STATE: OH ZIP: 44092 BUSINESS PHONE: 2169434200 MAIL ADDRESS: STREET 1: 29400 LAKELAND BLVD CITY: WICKLIFFE STATE: OH ZIP: 44092 10-Q 1 10-Q REPORT 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 September 30, 1997 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 [ ] Number of the registrant's common shares, without par value, outstanding, as of October 31, 1997: 57,154,682 PART I. FINANCIAL INFORMATION Item 1 Financial Statements THE LUBRIZOL CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars)
September 30 December 31 1997 1996 ------------ ----------- ASSETS Cash and short-term investments....................... $ 92,196 $ 55,073 Receivables........................................... 285,074 238,401 Inventories: Finished products................................... 91,597 88,176 Products in process................................. 60,769 77,910 Raw materials....................................... 82,780 66,590 Supplies and engine test parts...................... 18,552 19,229 ---------- ---------- 253,698 251,905 ---------- ---------- Other current assets.................................. 28,474 39,720 ---------- ---------- Total current assets............... 659,442 585,099 Property and equipment - net.......................... 701,881 707,314 Investments in nonconsolidated companies.............. 22,818 29,821 Intangible and other assets........................... 89,427 79,881 ---------- ---------- TOTAL.......................... $1,473,568 $1,402,115 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Short-term debt and current portion of long-term debt. $ 53,577 $ 40,871 Accounts payable...................................... 121,397 99,676 Income taxes and other current liabilities............ 119,864 86,563 ---------- ---------- Total current liabilities........... 294,838 227,110 Long-term debt........................................ 157,291 157,628 Postretirement health care obligation................. 106,694 105,463 Noncurrent liabilities................................ 47,196 47,284 Deferred income taxes................................. 43,859 45,254 ---------- ---------- Total liabilities................... 649,878 582,739 ---------- ---------- Contingencies and commitments Shareholders' equity: Preferred stock without par value - authorized and unissued: Serial Preferred Stock - 2,000,000 shares Serial Preferred Shares - 25,000,000 shares Common Shares without par value: Authorized 120,000,000 shares Outstanding - 57,451,221 shares as of September 30, 1997 after deducting 28,744,673 treasury shares, 58,522,676 shares as of December 31, 1996 after deducting 27,673,218 treasury shares........ 83,055 78,534 Retained earnings................................... 776,857 744,310 Accumulated translation adjustment.................. (36,222) (3,468) ---------- ---------- Total shareholders' equity......... 823,690 819,376 ---------- ---------- TOTAL.......................... $1,473,568 $1,402,115 ========== ==========
Amounts shown are unaudited. THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Data)
Third Quarter Nine Months Ended September 30 Ended September 30 -------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ---------- ---------- Net sales........................... $426,824 $392,114 $1,247,129 $1,218,057 Royalties and other revenues........ 912 811 3,137 3,338 -------- -------- ---------- ---------- Total revenues............ 427,736 392,925 1,250,266 1,221,395 Cost of sales....................... 290,284 267,183 831,404 829,302 Selling and administrative expenses. 43,259 39,064 125,603 119,290 Research, testing and development expenses.......................... 36,772 39,815 107,861 119,360 -------- -------- ---------- ---------- Total cost and expenses... 370,315 346,062 1,064,868 1,067,952 Net gain on investments............. 53,280 Other income (expense) - net........ 2,749 921 5,085 4,342 Interest income..................... 1,307 1,378 3,081 5,798 Interest expense.................... (2,840) (2,838) (7,873) (8,246) -------- -------- ---------- ---------- Income before income taxes.......... 58,637 46,324 185,691 208,617 Provision for income taxes.......... 19,985 14,591 61,278 67,578 -------- -------- ---------- ---------- Net income.......................... $ 38,652 $ 31,733 $ 124,413 $ 141,039 ======== ======== ========== ========== Net income per share................ $ .67 $ .53 $2.14 $2.31 ===== ===== ===== ===== Dividends per share................. $ .25 $ .24 $ .75 $ .72 ===== ===== ===== ===== Average number of shares outstanding 57,620 59,979 58,078 61,166
Amounts shown are unaudited. THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars
Nine Months Ended September 30 ------------------------ 1997 1996 --------- --------- Cash provided from (used for): Operating activities: Net income................................................... $ 124,413 $ 141,039 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization............................ 63,716 60,921 Deferred income taxes.................................... 742 4,800 Equity (earnings) losses, net of distributions........... (3,409) 311 Gain on investments...................................... (53,280) Change in current assets and liabilities: Receivables............................................ (55,528) 3,931 Inventories............................................ (9,454) 40,499 Accounts payable and accrued expenses.................. 61,968 8,768 Other current assets................................... 10,039 5,393 Other items - net........................................ (6,101) (9,212) --------- --------- Total operating activities......................... 186,386 203,170 Investing activities: Proceeds from sale of investments and assets................. 12,117 148,960 Capital expenditures......................................... (72,218) (71,538) Businesses acquired - net of cash............................ (22,885) (1,718) Other - net.................................................. 5,789 3,296 --------- --------- Total investing activities (77,197) 79,000 Financing activities: Short-term borrowing (repayment) - net....................... 13,517 (82,914) Long-term borrowing.......................................... 5,572 28,425 Long-term debt repayment..................................... (2,864) (17,757) Dividends paid............................................... (43,636) (44,161) Common shares purchased, net of options exercised............ (43,709) (95,523) --------- --------- Total financing activities......................... (71,120) (211,930) Effect of exchange rate changes on cash...................... (946) (1,584) --------- --------- Net increase in cash and short-term investments.............. 37,123 68,656 Cash and short-term investments at the beginning of period... 55,073 30,579 --------- --------- Cash and short-term investments at the end of period......... $ 92,196 $ 99,235 ========= =========
Amounts shown are unaudited. THE LUBRIZOL CORPORATION Notes to Consolidated Financial Statements September 30, 1997 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 September 30, 1997 and December 31, 1996, and the results of operations and cash flows for the applicable periods ended September 30, 1997 and 1996. 2. In 1996, the company sold its investments in Mycogen Corporation and Agrigenetics, Inc., for cash of $126.2 million. The company also sold certain rights to its SVO oil seed technology for $8 million, of which $2 million was received in 1996; $2.5 million was received in 1997; and $3.5 million is due in 1998. These transactions resulted in pretax gains of $57.3 million. Losses recognized on other investment activity reduced the gain on investments in 1996 to $53.3 million. 3. The Financial Accounting Standards Board (FASB) has issued several new pronouncements during 1997 that have future effective dates. In February 1997, the FASB issued Statement of Financial Standards (SFAS) 128 - Earnings Per Share which becomes effective for the company's December 31, 1997 financial statements. SFAS 128 simplifies the current standard for computing earnings per share (EPS) found in APB No. 15 and requires the dual presentation on the face of the income statement of "Basic" and "Diluted" EPS. Adoption of this standard will not significantly change the company's historically reported EPS. In June 1997, the FASB issued SFAS 130 - Reporting Comprehensive Income which becomes effective for the company in 1998. SFAS 130 requires presentation of comprehensive income(net income plus all other changes in net assets from non owner sources)and its components in the financial statements. SFAS 130 will result in a change in reporting format for certain changes in shareholders' equity that are already reported by the company in its financial statements. The company has yet to determine which of the reporting formats permitted by SFAS 130 it will use to report comprehensive income in future periods. In June 1997, the FASB issued SFAS 131 - Disclosures About Segments of an Enterprise and Related Information which becomes effective for the company in 1998. SFAS 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. Under currently effective accounting standards, the company's operations are considered to be a single reportable segment. The company has not yet completed its analysis of SFAS 131 and accordingly has not yet determined what effect, if any, it may have on future financial statement disclosures. THE LUBRIZOL CORPORATION Notes to Consolidated Financial Statements September 30, 1997 4. The company is involved in patent litigation with Exxon Corporation and/or its affiliates in various countries. The company has prevailed in a case brought in Canada against Exxon's Canadian affiliate, Imperial Oil, Ltd., for infringement of the company's patent pertaining to dispersants, the largest additive component used in motor oils. A 1990 trial court verdict in favor of the company regarding the issue of liability was upheld by the Federal Court of Appeals of Canada in December 1992, and in October 1993, the Supreme Court of Canada dismissed Imperial Oil's appeal of the Court of Appeals' decision. The case has been returned to the trial court for an assessment of compensation damages, but no date has been set for a determination of such damages. In October 1994, the trial court judge determined that Imperial Oil had violated an earlier injunction for the manufacture or sale of the dispersant which is the subject of this case. The determination of penalty damages, if any, on account of this violation will be made only after the compensation damages for patent infringement have been determined by the court. A reasonable estimation of the company's potential recovery for compensation and penalty damages cannot be made at this time and no amount has been recorded in the company's financial statements. In November 1996, a patent trial court in London declared a Lubrizol United Kingdom patent invalid, which patent is the subject of litigation brought by the company against Exxon in that country. The company is appealing this decision, which appeal is expected to be heard in March 1998. Although the trial court decision does not involve any damage payments, the court awarded Exxon its recoverable legal costs in the case, as is customary under U.K. practice. Exxon has filed with the court a request for legal costs of approximately $12 million. The determination of which of those costs may be recoverable will be subject to a separate proceeding. The company has obtained a stay of this separate proceeding pending the outcome of the appeal of the trial court decision. As a court ordered condition to obtain the stay, the company made a $3.0 million contingent payment to Exxon in July 1997. This amount was fully accrued for and expensed as of June 30, 1997. Management believes that the November 1996 trial court decision will not be upheld on appeal, in which case the recoverable legal costs would be reduced or eliminated, and amounts paid contingently by the company could be refunded in whole or in part. THE LUBRIZOL CORPORATION Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The company made significant progress during the first nine months of 1997 in growing its business at targeted accounts and in managing its cost structure. Significantly higher sales volume coupled with lower raw material and operating costs, more than offset the unfavorable effects of continued competitive pricing, changing product mix and currency. Revenues increased 9% and 2% for the three-month and nine-month periods ended September 30, 1997, respectively, as compared with the same prior year periods. Earnings per share increased 26% for the third quarter and 22% for the nine months ended September 30, 1997, as compared with the same periods of the prior year, excluding from 1996 the gain on sale of investments. More detailed comments relating to the company's results of operations and financial position follow below. Consolidated revenues increased $34.8 million for the third quarter of 1997 compared with the third quarter of 1996, and increased $28.9 million for the nine months ended September 30, 1997 as compared with the same 1996 period. The volume gains achieved in the first half of 1997 accelerated in the third quarter with specialty chemical product shipments increasing 22% over the third quarter of 1996. However, average selling prices continued to recede in the third quarter of 1997 and were 11% below those in the third quarter of 1996. The change in revenue for the comparative nine-month periods ended September 30, 1997 and 1996 was due to a 15% increase in the sales volume of specialty chemicals partially offset by a 10% decline in average selling prices. For both the comparative quarter and year-to-date periods, approximately 50% of the decline in average selling price was due to changing product mix, 25% was due to unfavorable currency effects and 25% was due to lower product pricing. In addition, the net effect of acquisition/divestiture activity between the comparative 1997 and 1996 periods increased consolidated revenues by $5.1 million or 1% for the third quarter and decreased consolidated revenues by $8.5 million or 1% for the nine months ended September 30, 1997. The company has had success in its strategy of building global and regional alliances with targeted customers and is actively pursuing strategic relationships with finished lubricant suppliers. Higher sales volumes were realized in all geographic zones and across a broad customer base. For the three-month and nine-month periods ended September 30, 1997, respectively, sales volume increased 22% and 12% to North American customers and 22% and 17% to international customers, primarily in Asia- Pacific, Western Europe and Latin America, as compared with the same periods of the prior year. The company believes its growth in sales volume is derived principally from market share gains within established markets rather than overall industry growth. The company believes sales volume for the full year 1997 will be approximately 15% higher than the full year 1996. The company anticipates the annual sales volume in 1998 will be greater than the annual sales volume in 1997, but the rate of growth will be less than the high rate of growth in 1997. THE LUBRIZOL CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations Acquisitions, mergers and joint ventures within the lubricant industry announced during 1996 coupled with customers searching for stronger, longer-term relationships with a few key suppliers and the low growth rate of finished lubricants is causing a very competitive marketplace within certain product lines. These factors along with lower raw material costs are causing continuing pressure on prices for the company's lubricant additive products. The company expects competitive pressures in the lubricant additives industry to continue. Cost of sales reflects the higher sales volume as well as lower average raw material costs and conversion costs. For the three-month and nine- month periods ended September 30, 1997, average raw material costs, including favorable currency effects and the impact of less expensive product mix, decreased by approximately 7% and 9%, respectively, compared with the same periods of the prior year. However, commencing early in the third quarter, the company experienced an increase in its raw material costs of approximately 2%, as compared to the second quarter of 1997. Also in the third quarter, delays in connection with scheduled maintenance of several production units at the company's Texas facility caused temporary increases in material costs as component production was shifted to other plants or materials were purchased from other suppliers. In addition, rail transportation disruptions in the Southwest United States caused higher freight costs as more materials were moved by truck. These items increased cost of sales by approximately $4.0 million in the third quarter of 1997 and, to a lesser extent, are expected to continue in the fourth quarter of 1997. The company's manufacturing costs do not fluctuate significantly with production volume. The effects of the company's ongoing manufacturing rationalization program and other cost initiatives have improved manufacturing efficiency as the company is operating fewer manufacturing units at higher capacity levels. Even though production activity was significantly higher, manufacturing costs were relatively flat for the quarter and year-to-date periods ended September 30, 1997 compared with the same prior year periods. Gross profit (sales less cost of sales) increased $11.6 million or 9% for the third quarter of 1997, compared with the third quarter of 1996, and increased $27.0 million or 7% for the nine-month period ended September 30, 1997 versus the same 1996 period. This improvement in gross profit amount was after unfavorable currency effects of $5.1 million and $15.1 million, respectively, for the three-month and nine-month periods ended September 30, 1997. Acquisition/divestiture activity contributed $4.5 million and $9.0 million to the increase in gross profit amount for the quarter and year-to-date periods, respectively. Gross profit percent of 32.0% in the third quarter of 1997 (which compares to 31.9% for the same period of 1996) was lower than the 34.6% achieved in the second quarter of 1997 as a result of the continued decline in average selling prices coupled with sequentially higher material costs. For the nine-month period ended September 30, 1997, manufacturing efficiencies and lower material costs more than offset lower average selling prices as the gross profit percentage improved to 33.3% from 31.9% for the same 1996 period. THE LUBRIZOL CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations Selling and administrative expenses were $4.2 million or 11% higher in the third quarter of 1997 compared with the third quarter of 1996 and $6.3 million or 5% higher for nine-month period ended September 30, 1997 compared with the same period of 1996. These increases were primarily due to higher litigation-related expenses, higher depreciation and higher accrued variable compensation reflective of greater earnings. Research, testing and development (technical) expenses were $3.0 million or 8% lower in the third quarter of 1997 and $11.5 million or 10% lower for the first nine months of 1997 compared with the same 1996 periods. This lower level of spending was due to a reduction in workforce, greater internalization of testing activity that reduced outside testing requirements and timing of testing programs, particularly within the engine oil product lines. During the first quarter of 1996, the company recognized a gain of $53.3 million ($.55 per share after taxes) primarily from the sale of its investment in Mycogen Corporation and the sale of certain rights of its SVO oilseed technology. Interest income for the nine-month period ended September 30, 1996 was higher than in the same period of the current year as proceeds from the sale of investments were temporarily invested in interest bearing instruments until such proceeds were used in the company's share repurchase program. The company transacts business in over 100 countries. As the U.S. dollar strengthens or weakens against other international currencies in which the company transacts business, the financial results of the company will be affected. The principal currencies, other than the U.S. dollar, in which the company transacts business are the French franc, German deutsche mark, British pound sterling and Japanese yen. The U.S. dollar continued to strengthen during 1997, particularly in the second quarter. As compared with exchange rates in effect during the comparable 1996 periods, currency fluctuations had an unfavorable effect of $.04 and $.12 on net income per share for the three-month and nine-month periods ended September 30, 1997, respectively. During the third quarter of 1997, the company adjusted its tax provision to reflect a legislated increase in the statutory tax rate applicable to its earnings in France, where the company has significant operations. This adjustment resulted in an effective tax rate of 34.1% for the third quarter, and increased its overall effective tax rate to 33.0% for the nine-month period ended September 30, 1997. Primarily as a result of the above factors, net income in the third quarter of 1997 was $38.7 million, or $.67 per share, which was a 22% increase (26% on a per share basis) over the $31.7 million or $.53 per share for the third quarter of 1996. Net income for the first nine months of 1997 was $124.4 million or $2.14 per share and, after excluding from 1996 the gain on investments, was 17% higher (22% on a per share basis) over the $106.4 million or $1.76 per share for the first nine months of 1996. Including the investment gain, net income for the first nine months of 1996 was $141.0 million, or $2.31 per share. THE LUBRIZOL CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES Cash provided from operating activities was $186.4 million for the first nine months of 1997 as compared with $203.2 million for the first nine months of 1996. The working capital change reflected in the cash flow statement increased cash flow from operations by $7.0 million for the nine- month period ended September 30, 1997 and increased cash flow from operations by $58.6 million for the nine-month period ended September 30, 1996. The cash flow from operations in the 1996 period was unusually high as it included approximately $22.0 million related to liquidating inventories and receivables prior to the sale of the company's former specialty vegetable oil (SVO) business and approximately $21 million resulting from management efforts to reduce specialty chemical inventory levels. During 1997 inventory turns have improved significantly as inventory levels remained flat compared with the prior year period despite higher sales volumes. Receivable balances increased in line with the higher revenues of the third quarter of 1997 versus the fourth quarter of 1996. The increase in accounts payable and accrued expenses reflect the timing of the change in operating levels of the company. In 1996, purchases of goods were low as inventories were being managed down as compared with 1997, when purchases of goods have increased to meet the higher sales demand. Proceeds from the sale of investments in the nine-month period ended September 30, 1997 reflect $9.6 million from the sale of a non-strategic investment and $2.5 million collected on a promissory note from the 1996 sale of certain SVO technology rights. Proceeds from the sale of investments for the same period of 1996 were principally comprised of $126.2 million from the sale of Mycogen and $22.8 million from the sale of SVO assets, as described in Note 2 to the financial statements. Capital expenditures in the nine-month period ended September 30, 1997 were $72.2 million as compared with $71.5 million for same 1996 period. Approximately 25% of the capital expenditures in the 1997 period relate to the company's multi-year project to implement an enterprise-wide system which will fully integrate the company's information management systems on a global basis. Capital expenditures for the full year 1997 are expected to approximate $110 million. During 1997, the company invested $22.9 million to make several acquisitions and to fund joint venture investments in China. The acquisitions were in the company's existing business areas of metalworking additives and performance systems. THE LUBRIZOL CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations The company maintains an active share repurchase program. In June 1997, the company's Board of Directors authorized an additional 4 million shares under the company's share repurchase program. During the first nine months of 1997, the company repurchased 1,312,600 of its common shares for $50.0 million and the company currently plans to expend at least $70 million during 1997 in its share repurchase program. There were 5.2 million shares remaining under the company's repurchase authorization at September 30, 1997. In addition, approximately $6.3 million was collected from the exercise of stock options during nine-months ended September 30, 1997. In 1996, the share repurchase program was escalated to utilize the after-tax proceeds from the sale of investments as the company repurchased 3,230,000 of its shares for $96.4 million for the nine months ended September 30, 1996. The company intends to continue its share repurchase program into 1998 at or above the current level. Debt increased during 1997 primarily due to timing of commercial paper borrowings and to finance several small acquisitions. During the comparable 1996 period, improved cash flow from operations, lower capital expenditures and the utilization of approximately $36 million of cash proceeds from the sales of the company's Mycogen investment and its specialty vegetable oil assets until such proceeds were used in the company's common share repurchase program, enabled $72.2 million of cash to be used to reduce debt. Debt as a percent of capitalization (shareholders' equity plus short-term and long-term debt) was 20% at September 30, 1997, the same as at December 31, 1996. Primarily as a result of these activities and the payment of dividends, the balance of cash and short-term investments increased 67% or $37.1 million during the nine-month period ended September 30, 1997 and amounted to $92.2 million at September 30, 1997. The company's financial position continues to be strong with a ratio of current assets to current liabilities of 2.2 to 1 at September 30, 1997, compared to 2.6 to 1 at December 31, 1996. Management believes the company's credit facilities and internally generated funds will be sufficient to meet its future capital needs. The company is involved in patent litigation with Exxon Corporation in various countries. Please refer to Note 4 to the financial statements for further discussion regarding the company's patent litigation with Exxon. THE LUBRIZOL CORPORATION 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 (MD&A) 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 the company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the company, that could cause actual results of the company to differ materially from those matters expressed in or implied by such forward-looking statements. The company identified certain, but not necessarily all, of these uncertainties and factors in its MD&A contained on page 21 of its 1996 Annual Report to its shareholders, to which reference is made and which are incorporated by reference herein. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10)(d)* The Lubrizol Corporation Excess Defined Benefit Plan, as amended. (10)(e)* The Lubrizol Corporation Excess Defined Contribution Plan, as amended. (10)(g)* The Lubrizol Corporation Executive Death Benefit Plan, as amended. (10)(j)* The Lubrizol Corporation Officers' Supplemental Retirement Plan, as amended. (10)(k)* The Lubrizol Corporation Deferred Compensation Plan for Officers, as amended. (10)(l)* The Lubrizol Corporation Executive Council Deferred Compensation Plan, as amended. (11) Computation of Per Share Earnings (27) Financial Data Schedule * Indicates management contract or compensatory plan or arrangement. (b) Reports on Form 8-K During the quarter ended September 30, 1997, The Lubrizol Corporation filed a Current Report on Form 8-K dated September 22, 1997, reporting under "Item 5 - Other Events," the adoption of a Rights Agreement dated as of October 13, 1997, between The Lubrizol Corporation and American Stock Transfer and Trust Company. 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/Gregory P. Lieb -------------------------------- Gregory P. Lieb Chief Accounting Officer and Duly Authorized Signatory of The Lubrizol Corporation Date: November 13, 1997 EX-10.D 2 Exhibit (10)(d) THE LUBRIZOL CORPORATION EXCESS DEFINED BENEFIT PLAN (As Amended) The Lubrizol Corporation hereby establishes, effective as of January 1, 1986, The Lubrizol Corporation Excess Defined Benefit Plan (the "Plan") for the purpose of providing supplemental benefits to certain employees, as permitted by Section 3(36) of the Employee Retirement Income Security Act of l974. ARTICLE I DEFINITIONS AND CONSTRUCTION 1.1 Definitions. For the purposes hereof, the following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: (a) Code. the term "Code" shall mean the Internal Revenue Code as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. (b) Company. The term "Company" shall mean The Lubrizol Corporation, an Ohio corporation, its corporate successors and the surviving corporation resulting from any merger of The Lubrizol Corporation with any other corporation or corporations. (c) Lubrizol Pension Plan. The term "Lubrizol Pension Plan" shall mean The Lubrizol Corporation Revised Pension Plan as the same shall be in effect on the date of a Participant's retirement, death, or other termination of employment. (d) Participant. Effective June 22, 1992, the term "Participant" shall mean any person employed by the Company who is listed on Appendix A attached hereto, or who is designated by the Board of Directors as an officer for the purposes of Section 16 of the Securities Exchange Act of 1934, or whose benefits under the Lubrizol Pension Plan are limited by the application of Section 401(a)(17) of the Internal Revenue Code of 1986, as amended. (e) Plan. The term "Plan" shall mean the excess defined benefit pension plan as set forth herein, together with all amendments hereto, which Plan shall be called "The Lubrizol Corporation Excess Defined Benefit Plan." (f) Trust. The term "Trust" shall mean The Lubrizol Corporation Excess Defined Benefit Plan Trust established pursuant to the Trust Agreement. (g) Trust Agreement. The term "Trust Agreement" shall mean The Lubrizol Corporation Excess Defined Benefit Plan Trust Agreement. 1.2. Additional Definitions. All other words and phrases used herein shall have the meanings given them in the Lubrizol Pension Plan, unless a different meaning is clearly required by the context. ARTICLE II SUPPLEMENTAL PENSION BENEFIT 2.1 Eligibility. Effective January 1, 1997, A Participant who retires, dies, or otherwise terminates his employment with the Company and its subsidiaries and (a) whose benefits under the Lubrizol Pension Plan are limited by the provisions of Section 401(a)(17) or 415 of the Code, (b) who either was a Participant on January 1, 1989 or had attained age 55 on January 1, 1989, and thereafter became a Participant, and whose benefits under the Lubrizol Pension Plan are curtailed due to the revision of the pension benefit formula, effective as of January 1, 1989, to comply with the requirements of the Tax Reform Act of 1986, as amended, (c) who participated in The Lubrizol Corporation Deferred Compensation Plan for Officers (which was adopted effective July 25, 1994), or (d) who participated in The Lubrizol Corporation Executive Council Deferred Compensation Plan (which was adopted effective January 1, 1997) shall be eligible for a supplemental pension benefit determined in accordance with the provisions of Section 2.2. 2.2 Amount. Effective January 1, 1997, subject to the provisions of Article III, the monthly supplemental pension benefit payable to an eligible Participant shall be an amount which when added to the monthly pension payable to such Participant under the Lubrizol Pension Plan (prior to any reduction applicable to an optional method of payment) equals the monthly pension benefit which would have been payable under the Lubrizol Pension Plan (prior to any reduction applicable to an optional method of payment and adjusted for any amount payable under The Lubrizol Corporation Excess Defined Contribution Plan which is attributable to The Lubrizol Corporation Employees' Profit- Sharing Plan and which would have affected the benefit that the Participant would have received under the Lubrizol Pension Plan had it been payable from The Lubrizol Corporation Employees' Profit-Sharing Plan) if the limitations of Section 401(a)(17) and 415 of the Code were not in effect and, (if he is a Participant described in Section 2.1(ii)), his benefits had not been curtailed due to the revision of the Lubrizol Pension Plan effective as of January 1989, to comply with the provisions of the Tax Reform Act of 1986, as amended, and, (if he is a Participant described in Section 2.1(iii)), if he did not participate in The Lubrizol Corporation Deferred Compensation Plan for Officers (which was adopted effective July 25, 1994) or in The Lubrizol Corporation Executive Council Deferred Compensation Plan (which was adopted effective January 1, 1997). 2.3 Payment. The terms of payment of the supplemental pension benefit shall be identical to those specified in the Lubrizol Pension Plan for the type of benefit the Participant receives under the Lubrizol Pension Plan. 2.4 Vesting. Each Participant as of December 31, 1993, shall be 100 percent vested in his supplemental pension benefit determined in accordance with the provisions of Section 2.2. Each new Participant after December 31, 1993, shall be vested in his supplemental pension benefit under this Plan as determined in accordance with the vesting provisions of the Lubrizol Pension Plan. ARTICLE III PAYMENT OF BENEFITS 3.1 Payment to Participant. (Effective November 27, 1995) (a) Each Participant who terminates employment with the Company and its related corporations shall receive payment of his supplemental pension benefit under the Plan determined as of his date of termination of employment in the standard form of benefit of a monthly retirement benefit commencing within 30 days following employment termination and payable to such Participant for his lifetime following such employment termination, with the continuance to his Beneficiary of such amount after his death for the remainder, if any, of the 120-month term that commenced with the date as of which the first payment of such monthly benefit is made, and with any such monthly benefits remaining unpaid upon the death of the survivor of the Participant and his Beneficiary to be made to the estate of such survivor. (b) Participants may instead elect within a 60 day period commencing 90 days prior to employment termination to receive the actuarial equivalent of the standard form of benefit determined under paragraph (a), on the date of employment termination, in accordance with any one of the following options: (i) for Participants hired prior to February 1, 1984, a single lump-sum payment payable within 30 days following employment termination; (ii) for Participants hired prior to February 1, 1984, a single lump-sum payment payable within 30 days following the end of the calendar year in which the Participant's employment terminated. Interest on the lump-sum deferral shall accrue and be paid with the lump-sum; such interest to be computed at the PBGC interest rate in effect of the date of employment termination. (iii) a reduced monthly retirement benefit commencing within 30 days following employment termination and payable to such Participant for his lifetime following such employment termination, with the continuance of a monthly benefit equal to fifty percent (50%) of such reduced amount after his death to the Participant's Beneficiary during the lifetime of the Beneficiary, provided that such Beneficiary is living at the time of such Participant's employment termination and survives such Participant; (iv) a reduced monthly retirement benefit commencing within 30 days following employment termination and payable to such Participant during his lifetime following his termination, with the continuance of a monthly benefit equal to one hundred percent (100%) of such reduced amount after his death to the Participant's Beneficiary during the lifetime of the Beneficiary, provided such Beneficiary is living at the time of such Participant's termination and survive such Participant. Such optional forms of payment described above shall be calculated using the same actuarial factors and interest rates used under The Lubrizol Corporation Pension Plan (or its successor) as in effect on the date of employment termination; provided, however, that for any person who was a Participant as of December 31, 1993, who elects to have his supplemental pension benefit paid in a single lump-sum payment, the interest rate used to discount the portion of the Participant's supplemental pension benefit which represents his accrued benefit as of December 31, 1993, shall be the arithmetic average of the 7-day compound yield rates for the six full calendar months prior to the month of termination as published in Donoghue's Tax-Free MONEY FUND AVERAGE which is reported weekly in Barron's; provided further that such rate with respect to any month shall be the rate reported in the first issue of Barron's published during such month. Notwithstanding the foregoing provisions of the Plan to the contrary, if the present actuarial value of any retirement benefit or survivor benefit under the Plan to any person, determined as described above, is less than $25,000, such benefit shall be paid in a single lump-sum payment to such person within 30 days following employment termination. 3.2 Payment in the Event of Death Prior to Commencement of Distribution. If a Participant dies prior to commencement of benefits under the Plan, his surviving spouse, if any, shall be eligible for a survivor benefit which is equal to one-half of the reduced monthly benefit the Participant would have received under the Plan if the Participant had retired on the day before his death and had elected to receive his benefit under the Lubrizol Pension Plan in a 50 percent joint and survivor annuity form. In making the determinations and reductions required in this Section 3.2, the Company shall apply the assumptions then in use under the Lubrizol Pension Plan. For purposes hereof, a surviving spouse shall only be eligible for a benefit under this Section 3.2, if such spouse had been married to the deceased Participant for at least one year as of the date of the Participant's death. 3.3 Special Form of Benefit for E. Victor Luoma. Notwithstanding the first sentence of Section 3.1, E. Victor Luoma may elect prior to his retirement or other termination of employment to receive payment of his supplemental pension benefit under the Plan in the form of a single sum amount, determined and payable in accordance with the second and third sentences of Section 3.1. 3.4 Lump Sum Form of Benefit for Roger Y. K. Hsu. Effective January 1, 1996, notwithstanding the provisions of Section 3.1(b), Roger Y. K. Hsu shall receive payment of his supplemental pension benefit under the Plan in the form of a single sum amount. ARTICLE IV ADMINISTRATION The Company shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making, or causing the Trust to make, any required supplemental benefit payments. The Company shall have all such powers as may be necessary to carry out the provisions of the Plan, including the power to determine all questions relating to eligibility for and the amount of any supplemental pension benefit and all questions pertaining to claims for benefits and procedures for claim review; to resolve all other questions arising under the Plan, including any questions of construction; and to take such further action as the Company shall deem advisable in the administration of the Plan. The Company may delegate any of its powers, authorities, or responsibilities for the operation and administration of the Plan to any person or committee so designated in writing by it and may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Company hereunder shall be final and binding upon all interested parties. ARTICLE V AMENDMENT AND TERMINATION The Company reserves the right to amend or terminate the Plan in whole or in part at any time and to suspend operation of the Plan, in whole or in part, at any time, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals. ARTICLE VI MISCELLANEOUS 6.1 Non-Alienation of Retirement Rights or Benefits. No Participant shall encumber or dispose of his right to receive any payments hereunder, which payments or the right thereto are expressly declared to be non- assignable and non-transferable. If a Participant attempts to assign, transfer, alienate or encumber his right to receive any payment hereunder or permits the same to be subject to alienation, garnishment, attachment. execution, or levy of any kind, then thereafter during the life of such Participant, and also during any period in which any Participant is incapable in the judgment of the Company of attending to his financial affairs, any payments which the Company is required to make hereunder may be made, in the discretion of the Company, directly to such Participant or to any other person for his use or benefit or that of his dependents, if any, including any person furnishing goods or services to or for his use or benefit or the use or benefit of his dependents, if any. Each such payment may be made without the intervention of a guardian, the receipt of the payee shall constitute a complete acquittance to the Company with respect thereto, and the Company shall have no responsibility for the proper allocation thereof. 6.2 Plan Non-Contractual. Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company, and nothing herein contained shall be construed as a commitment on the part of the Company to continue the employment or the annual rate of compensation of any such person for any period, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been established. 6.3 Trust. In order to provide a source of payment for its obligations under the Plan, the Company has established the Trust, the terms of which are governed by the Trust Agreement. 6.4 Interest of a Participant. Subject to the provisions of the Trust Agreement, the obligation of the Company under the Plan to provide a Participant with a supplemental pension benefit constitutes the unsecured promise of the Company to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Company. 6.5 Controlling Status. No Participant shall be eligible for a benefit under the Plan unless such Participant is a Participant on the date of his retirement, death, or other termination of employment. 6.6 Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the plan or are hereafter created in accordance with the terms and provisions of the Plan. 6.7 Severability. The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 6.8 Governing Law. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio. APPENDIX A TO THE LUBRIZOL CORPORATION EXCESS DEFINED BENEFIT PLAN Participants Effective Date 1. W. G. Bares December 31, 1986 2. G. R. Hill December 31, 1986 3. W. R. Jones December 31, 1986 4. R. A. Andreas December 31, 1986 5. J. R. Ahern April 1, 1990 6. K. H. Hopping April 21, 1991 7. J. W. Bauer April 27, 1992 8. D. A. Muskat April 27, 1992 9. S. F. Kirk April 26, 1993 10. Y. Le Couedic April 26, 1993 11. J. E. Hodge April 26, 1993 12. M. W. Meister April 26, 1993 13. S. A. Di Biase April 26, 1993 14. G. P. Lieb April 25, 1994 15. J. A. Thomas April 25, 1994 16. L. M. Reynolds April 24, 1995 17. R. D. Robins April 22, 1996 This listing of Participants is limited to those Participants who are also officers for purposes of Section 16 of the Securities Exchange Act of 1934. EX-10.E 3 Exhibit (10)(e) THE LUBRIZOL CORPORATION EXCESS DEFINED CONTRIBUTION PLAN (As Amended) The Lubrizol Corporation hereby establishes, effective as of December 31, 1986, The Lubrizol Corporation Excess Defined Contribution Plan (the "Plan") for the purpose of supplementing the benefits of certain employees, as permitted by Section 3(36) of the Employee Retirement Income Security Act of 1974. ARTICLE I DEFINITIONS 1.1 Definitions. For the purposes hereof, the following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: (a) Beneficiary. The term "Beneficiary" shall mean the person or persons who shall be designated by a Participant to receive distribution of such Participant's interest under the Plan in the event such Participant dies before full distribution of his interest. (b) Code The term "Code" shall mean the Internal Revenue Code as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. (c) Company. Effective December 30, 1994, the term "Company" shall mean The Lubrizol Corporation, an Ohio corporation, its corporate successors and the surviving corporation resulting from any merger of The Lubrizol Corporation with any other corporation or corporations, and any subsidiaries of The Lubrizol Corporation which adopt the Plan. (d) Fund. The term "Fund" shall mean each separate investment fund established and maintained under the Trust Agreement. (e) Lubrizol Profit-Sharing Plan. The term "Lubrizol Profit- Sharing Plan" shall mean The Lubrizol Corporation Employees' Profit-Sharing Plan as the same shall be in effect on the date of a Participant's retirement, death, or other termination of employment. (f) Participant. Effective September 30, 1994, The term "Participant" shall mean any person employed by the Company who is listed on Appendix A attached hereto, or who is designated by the Board of Directors as an officer for the purposes of Section 16 of the Securities Exchange Act of 1934, or whose benefits under the Profit-Sharing Plan are limited by the application of Section 401(a)(17) of the Internal Revenue Code of 1986, as amended. (g) Plan. The term "Plan" shall mean the excess defined contribution retirement plan as set forth herein, together with all amendments hereto, which Plan shall be called "The Lubrizol Corporation Excess Defined Contribution Plan." (h) Plan Year. The term "Plan Year" shall mean the calendar year. (i) Supplemental Company Contributions. The term "Supplemental Company Contributions" shall mean the contributions made by the Company under the Plan in accordance with the provisions of Section 2.2. (j) Trust Agreement. The term "Trust Agreement" shall mean The Lubrizol Corporation Excess Defined Contribution Plan Trust Agreement. (k) Trust Assets. The term "Trust Assets" shall mean all property held by the Trustee pursuant to the Trust Agreement. (l) Trustee. The term "Trustee" shall mean the trustee of The Lubrizol Corporation Excess Defined Contribution Trust. (m) Valuation Date. The term "Valuation Date" shall mean the last day of each Plan Year and any other date as may be agreed upon by the Company and the Trustee. (n) Separate Accounts. The term "Separate Accounts" shall mean each account established on behalf of a Participant under the Plan and credited with Supplemental Company Contributions in accordance with the provisions of Section 2.3. (o) Lubrizol Deferred Compensation Plan. Effective July 1, 1994, the term "Lubrizol Deferred Compensation Plan" shall mean The Lubrizol Corporation Deferred Compensation Plan for Officers (which was adopted effective July 1, 1994), as shall be in effect on the date of the Participant's retirement, death, or other termination of employment. (p) Executive Council Deferred Compensation Plan. Effective January 1, 1997, the term "Executive Council Deferred Compensation Plan" shall mean The Lubrizol Corporation Executive Council Deferred Compensation Plan, as shall be in effect on the date of the Participant's retirement, death, or other termination of employment. 1.2 Additional Definitions. All other words and phrases used herein shall have the meanings given them in the Lubrizol Profit-Sharing Plan, unless a different meaning is clearly required by the context. ARTICLE II SUPPLEMENTAL CONTRIBUTIONS 2.1 Eligibility. Effective January 1, 1997, a Participant whose benefits under the Lubrizol Profit-Sharing Plan are limited with respect to any Plan Year by Section 401(a)(17) or 415 of the Code, or who participated in the Lubrizol Deferred Compensation Plan or the Executive Council Deferred Compensation Plan, shall be eligible to have contributions made with respect to him under the Plan in accordance with the provisions of this Article II. 2.2 Supplemental Company Contributions. Effective January 1, 1997, in the event that Company contributions under the Lubrizol Profit-Sharing Plan with respect to a Participant are limited for any Plan Year due to the provisions of Section 401(a)(17) or 415 of the Code, or due to the Participant's participation in the Lubrizol Deferred Compensation Plan or the Executive Council Deferred Compensation Plan, the amounts by which such contributions are limited shall be credited under the Plan by the Company and shall be designated as Supplemental Company Contributions. 2.3 Allocation of Contributions. Effective September 30, 1994, Supplemental Company Contributions shall be allocated among the Separate Accounts of the Participants on whose behalf such contributions are made. 2.4 Administration of Separate Accounts. Effective September 30, 1994, each Separate Account to which contributions under Sections 2.2 and 2.3 are credited and allocated shall be credited monthly with the net monthly increase experienced by the General Fund of the Lubrizol Profit-Sharing Plan. ARTICLE III DISTRIBUTION 3.1 Vesting. Each Participant as of December 31, 1993, shall be 100 percent vested in the value of his Separate Accounts. Each new Participant after December 31, 1993, shall be vested in the value of his Separate Accounts under this Plan as determined in accordance with the vesting provisions of the underlying qualified plans. 3.2 Distribution. (Effective November 27, 1995) (a) Each Participant who terminates employment with the Company and its related corporations shall receive payment of the balance in his Separate Account in the standard form of payment of a single lump-sum payment payable within 30 days following employment termination; (b) Participants may instead elect within a 60 day period commencing 90 days prior to employment termination to receive the balance of his Separate Account in any one of the following payment options: (i) a single lump-sum payment payable within 30 days following the calendar year in which the Participant's employment terminated. Interest shall accrue and be paid with the lump-sum; such interest to be computed at the PBGC interest rate in effect of the date of employment termination. (ii) annual installments of up to ten payments, the first of which shall be paid within 30 days of the Participant's employment termination, and subsequent installments of which shall be paid on the anniversary date of the payment of the first installment. Such installments shall be determined by dividing the value of the Participant's Separate Account (determined in the same manner as under the Lubrizol Profit-Sharing Plan by the number of installments to be paid and adjusting for interest based on the PBGC interest rate in effect on the date of employment termination. Installments after the first installment shall include such interest which accrues during the 12-month period occurring since the date the prior installment was paid. Notwithstanding the foregoing provisions of the Plan to the contrary, if the present value of the Separate Account is less than $25,000, such benefit shall be paid in a single lump-sum payment to such person within 30 days following employment termination. 3.3 Distribution in the Event of Death. Effective September 30, 1994, in the event of the death of a Participant prior to distribution in full of his interest under the Plan, his Beneficiary shall receive distribution of such interest. In the event of death of a Participant prior to making an election for benefits, such Beneficiary shall receive distribution of such interest as soon as practicable after such Participant's death in the form elected by such Beneficiary pursuant to Section 3.2. The Beneficiary under this Section 3.3 shall be the person designated as the Participant's beneficiary under the Lubrizol Profit-Sharing Plan. If no Beneficiary survives such Participant or if no Beneficiary has been designated by such Participant, the estate of such Participant shall be the Beneficiary and receive distribution thereof. If any Beneficiary dies after becoming entitled to receive distribution hereunder and before such distribution is made in full, and if no other person or persons have been designated to receive the balance of such distribution upon the happening of such contingency, the estate of such deceased Beneficiary shall become the Beneficiary as to such balance. ARTICLE IV ADMINISTRATION The Company shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making any required supplemental benefit payments. The Company shall have all such powers as may be necessary to carry out the provisions of the Plan, including the power to determine all questions relating to eligibility for and the amount of any supplemental retirement benefits and all questions pertaining to claims for benefits and procedures for claim review; to resolve all other questions arising under the Plan, including any questions of construction; and to take such further action as the Company shall deem advisable in the administration of the Plan. The Company may delegate any of its powers, authorities, or responsibilities for the operation and administration of the Plan to any person or committee so designated in writing by it and may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions made by the Company hereunder shall be final and binding upon all interested parties. ARTICLE V AMENDMENT AND TERMINATION The Company reserves the right to amend or terminate the Plan in whole or in part at any time and to suspend operation of the Plan, in whole or in part, at any time, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals. ARTICLE VI MISCELLANEOUS 6.1 Non-Alienation of Retirement Rights or Benefits. No Participant shall encumber or dispose of his right to receive any payments hereunder, which payments or the right thereto are expressly declared to be non- assignable and non-transferable. If a Participant or Beneficiary attempts to assign, transfer, alienate or encumber his right to receive any payment under the Plan or permits the same to be subject to alienation, garnishment, attachment, execution, or levy of any kind, then thereafter during the life of such Participant or Beneficiary and also during any period in which any Participant or Beneficiary is incapable in the judgment of the Company of attending to his financial affairs, any payments which the Company is required to make hereunder may be made, in the discretion of the Company, directly to such Participant or Beneficiary or to any other person for his use or benefit or that of his dependents, if any, including any person furnishing goods or services to or for his use or benefit or the use or benefit of his dependents, if any. Each such payment may be made without the intervention of a guardian, the receipt of the payee shall constitute a complete acquittance to the Company with respect thereto, and the Company shall have no responsibility for the proper allocation thereof. 6.2 Plan Non-Contractual. Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company, and nothing herein contained shall be construed as a commitment on the part of the Company to continue the employment or the annual rate of compensation of any such person for any period, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been established. 6.3 Trust. In order to provide a source of payment for its obligations under the Plan, the Company has established The Lubrizol Corporation Excess Defined Contribution Plan Trust. 6.4 Interest of a Participant. Subject to the provisions of the Trust Agreement, the obligation of the Company under the Plan to provide a Participant or Beneficiary with supplemental retirement benefits merely constitutes the unsecured promise of the Company to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Company. 6.5 Controlling Status. No Participant shall be eligible for a benefit under the Plan unless such Participant is a Participant on the date of his retirement, death, or other termination of employment. 6.6 Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 6.7 Severability. The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 6.8 Governing Law. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio. APPENDIX A TO THE LUBRIZOL CORPORATION EXCESS DEFINED CONTRIBUTION PLAN Participants Effective Date 1. W. G. Bares December 31, 1986 2. G. R. Hill December 31, 1986 3. W. R. Jones December 31, 1986 4. R. A. Andreas December 31, 1986 5. J. R. Ahern April 1, 1990 6. K. H. Hopping April 21, 1991 7. J. W. Bauer April 27, 1992 8. D. A. Muskat April 27, 1992 9. S. F. Kirk April 26, 1993 10. Y. Le Couedic April 26, 1993 11. J. E. Hodge April 26, 1993 12. M. W. Meister April 26, 1993 13. S. A. Di Biase April 26, 1993 14. G. P. Lieb April 25, 1994 15. J. A. Thomas April 25, 1994 16. L. M. Reynolds April 24, 1995 17. R. D. Robins April 22, 1996 This listing of Participants is limited to those Participants who are also officers for purposes of Section 16 of the Securities Exchange Act of 1934. EX-10.G 4 Exhibit (10)(g) THE LUBRIZOL CORPORATION EXECUTIVE DEATH BENEFIT PLAN (As Amended) The Lubrizol Executive Death Benefit Plan (hereinafter referred to as the "Plan") shall provide death benefits to the designated beneficiaries of certain executives of The Lubrizol Corporation (hereinafter referred to as the "Corporation") in accordance with the provisions hereinafter set forth. Section 1. Eligibility. Participation in the Plan shall be limited to those executives of the Corporation who are designated by the Organization and Compensation Committee of the Board of Directors of the Corporation (hereinafter referred to as the "Committee") to participate in the Plan; who complete a physical examination to the satisfaction of the Corporation as soon as reasonably possible after being so designated; and who waive participation and benefits in the basic term- life insurance coverage sponsored by the Corporation or any of its affiliates, in a form satisfactory to the Corporation. Any executive so designated shall be listed in Appendix A attached hereto and shall hereinafter be referred to as a "Participant". Section 2. Benefits. Effective July 25, 1994, upon the death of a Participant, a death benefit shall be made to the Participant's Beneficiary (as defined in Section 5) equal to a percentage of the Participant's bi-weekly salary multiplied by 26, plus quarterly pay, including any such bi-weekly salary or quarterly pay which is deferred under The Lubrizol Corporation Deferred Compensation Plan for Officers (hereinafter referred to as "Covered Pay") rounded to the nearest $1,000.00. Covered Pay for the Participants designated by the Board to participate in the Plan shall have the meaning as described in Appendix A, attached hereto. The Committee will periodically review the Plan and may, at its discretion, change the level of Covered Pay for any Participant. A death benefit shall be calculated in accordance with Paragraph (a) or (b) below, whichever is applicable. (a) The amount of the death benefit payable with respect to a Participant, who at the time of his death, (i) is employed by the Corporation, or (ii) has retired under the normal retirement provisions of a qualified defined benefit plan maintained by the Corporation, shall be as follows: Age of Participant at Death Death Benefit ------------------------- ------------------------ Less than age 70 250% of Covered Pay At least age 70, but less than age 75 150% of Covered Pay Age 75 and over 100% of Covered Pay (b) The amount of the death benefit payable with respect to a Participant who (i) has retired under the early retirement provisions of a qualified defined benefit plan maintained by the Corporation, or (ii) has voluntarily terminated his employment with the Corporation but has not obtained competitive employment with another employer, shall be as follows: Years after Early Retirement or Voluntary Termination Death Benefit --------------------- ------------------- 0 through 5 250% of Covered Pay 6 through 10 150% of Covered Pay 11 or more 100% of Covered Pay Section 3. Funding. The obligation of the Corporation to pay benefits provided hereunder shall be satisfied by the Corporation out of its general funds. In order to provide a source of payment for its obligations under the Plan, the Corporation will cause a trust fund to be maintained and/or arrange for insurance contracts. Subject to the provisions of the trust agreement governing any such trust fund or the insurance contract, the obligation of the Corporation under the Plan to provide a benefit shall nonetheless constitute the unsecured promise of the Corporation to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Corporation. Section 4. Payment of Benefits. Payment of any death benefit under the Plan shall be made to the decreased Participant's beneficiary in a single lump sum as soon as practicable after the Participant's death. Section 5. Beneficiaries. A Participant may designate any person or person as a beneficiary (hereinafter referred to as a "Beneficiary") to receive payment of the death benefit provided under the Plan. Such designation shall be made in writing in the form prescribed by the plan administrator and shall become effective only when filed by the Participant with the Corporation. A Participant may change or revoke his Beneficiary designation at any time by completing and filing with the Corporation a new Beneficiary designation. If at the time of the Participant's death there is no Beneficiary designation on file with the Corporation, or the Beneficiary does not survive to the date of distribution, the death benefit provided hereunder shall be paid to the Participant's estate. Section 6. Plan Administrator. The Corporation shall be the administrator of the Plan. The plan administrator shall perform all ministerial functions with respect to the Plan. The plan administrator shall employ such advisors or agents as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The plan administrator shall have full power and authority to interpret and construe the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination shall be conclusive and binding on all persons. Section 7. Reduction or Termination of Benefits. The Committee reserves the right to reduce or eliminate the benefit of any Participant who is dismissed for cause, or who voluntarily terminates employment to obtain competitive employment. For Plan purposes, "Cause" means (i) willful violation of a Corporation policy, or (ii) willful misconduct or gross negligence in the performance of duties, as determined by the Corporation in good faith consistently, if applicable, with its existing personnel practices. For Plan purposes, "Competitive employment" shall include employment with any employer (firm, business, or individual) engaged in selling or furnishing any product similar to that available from the Corporation at the time of termination of employment with the Corporation. Section 8. Employment. This Plan shall not constitute a contract of employment. Section 9. Severability. In the event any provision of the Plan is deemed invalid, such provision shall be deemed to be severed from the Plan, and the remainder of the Plan shall continue in full force and effect. Section 10. Governing Law. The provisions of the Plan shall be construed and enforced in accordance with the laws of the State of Ohio. Section 11. Effective Date. The Plan is effective as of June 1, 1990. THE LUBRIZOL CORPORATION EXECUTIVE DEATH BENEFIT PLAN APPENDIX A January 1, 1996 PARTICIPANT COVERED PAY 1. R. A. Andreas January 1, 1996 Covered Pay 2. W. G. Bares January 1, 1996 Covered Pay 3. L. E. Coleman January 1, 1996 Covered Pay 4. G. R. Hill January 1, 1996 Covered Pay 5. R. Y. K. Hsu January 1, 1993 Covered Pay 6. W. D. Manning January 1, 1993 Covered Pay 7. R. J. Senz January 1, 1993 Covered Pay 8. W. T. Beargie June 1, 1990 Covered Pay 9. P. L. Krug June 1, 1990 Covered Pay 10. J. A. Studebaker June 1, 1990 Covered Pay EX-10.J 5 Exhibit (10)(j) THE LUBRIZOL CORPORATION OFFICERS' SUPPLEMENTAL RETIREMENT PLAN (As Amended) The Lubrizol Corporation hereby establishes, effective as of January 1, 1993, The Lubrizol Corporation Officers' Supplemental Retirement Plan (the "Plan") for the purpose of providing deferred compensation benefits to a select group of management or highly compensated employees. Section 1. Definitions. For the purposes hereof, the following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: (a) Beneficiary. The term "Beneficiary" shall mean a person who is designated by a Participant to receive benefits payable upon his death pursuant to the provisions of Section 6. (b) Code. The term "Code" shall mean the Internal Revenue Code as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. (c) Company. The term "Company" shall mean The Lubrizol Corporation, an Ohio corporation, its corporate successors and the surviving corporation resulting from any merger of The Lubrizol Corporation with any other corporation or corporations. (d) Credited Service. The term "Credited Service" shall mean a Participant's years of service with the Company equal to the number of full and fractional years of service (to the nearest twelfth of a year) beginning on the date the Participant first performed an hour of service for the Company and ending on the date he is no longer employed by the Company. (e) Final Average Pay. Effective, January 1, 1997, the term "Final Average Pay" shall mean the aggregated amount of Basic Compensation (as that term is defined in the Lubrizol Pension Plan modified to add deferrals, if any, under The Lubrizol Corporation Deferred Compensation Plan for Officers (which was adopted effective July 25, 1994) and deferrals, if any, under The Lubrizol Corporation Executive Council Deferred Compensation Plan (which was adopted effective January 1, 1997), received by the Participant during the three consecutive calendar years during which such Participant received the greatest aggregate amount of Basic Compensation, as defined above, within the most recent ten years of employment, divided by 36. (f) Lubrizol Pension Plan. The term "Lubrizol Pension Plan" shall mean The Lubrizol Corporation Pension Plan as the same shall be in effect on the date of a Participant's retirement, death, or other termination of employment. (g) Normal Retirement Date. The term "Normal Retirement Date" shall mean the first day of the month following the date on which a Participant attains age sixty-five (65). (h) Participant. The term "Participant" shall mean the Chief Executive Officer, the Chief Operating Officer and any other officer of the Company who is designated by the Board of Directors of the Company and the Chief Executive Officer to participate in the Plan, and who has not waived participation in the Plan. (i) Plan. The term "Plan" shall mean a deferred compensation plan set forth herein, together with all amendments hereto, which Plan shall be called "The Lubrizol Corporation Officers' Supplemental Retirement Plan." Section 2. Vesting. The Participant shall be 100 percent vested in his accrued supplemental retirement benefit hereunder. Section 3. Normal Retirement Benefit. Each Participant who retires from employment with the Company on or after his Normal Retirement Date shall receive, subject to the provisions of Sections 6 and 7, a monthly supplemental retirement benefit which shall be equal to two percent (2%) of his Final Average Pay multiplied by his Credited Service (up to 30 years) offset by the following amounts: (a) Benefits payable to the Participant under the Lubrizol Pension Plan; (b) Benefits payable to the Participant under The Lubrizol Corporation Employees' Stock Purchase and Savings Plan, including benefits attributable to Matching Contributions, but excluding benefits attributable to CODA Contributions, Supplemental Contributions, Rollover Contributions or Transferred Contributions, as defined thereunder; (c) Benefits payable to the Participant under The Lubrizol Corporation Employees' Profit-Sharing Plan; (d) Benefits payable to the Participant under The Lubrizol Corporation Excess Defined Contribution Plan; (e) Benefits payable to the Participant under The Lubrizol Corporation Excess Defined Benefit Plan; (f) The Participant's Social Security benefits; (g) Any other employer-provided benefits not specifically excluded herein which are payable to the Participant pursuant to any qualified or nonqualified retirement plan maintained by the Company. Such offsets shall be determined using the actuarial factors provided in the Lubrizol Pension Plan. Section 4. Early Retirement Eligibility and Determination of Benefit. Each Participant who retires from employment with the Company at or after age 55, but prior to his Normal Retirement Date, shall receive a percentage of his supplemental retirement benefit determined under Section 3, in accordance with the early retirement schedule provided in the Lubrizol Pension Plan. Section 5. Termination of Employment. If a Participant terminates employment prior to age 55, he shall receive the actuarial equivalent of his supplemental retirement benefit determined under Section 3 in a single lump-sum payment; such actuarial equivalent of which shall be calculated using the same actuarial factors and interest rates used in the Lubrizol Pension Plan as in effect on the date the Participant terminates employment in accordance with this Section 5. Section 6. Payment to Participant. (Effective November 27, 1995) (a) Each Participant who retires in accordance with Sections 3 or 4 shall receive payment of his supplemental pension benefit under the Plan determined as of his date of retirement in the standard form of benefit of a monthly retirement benefit commencing within 30 days following retirement and payable to such Participant for his lifetime following such retirement, with the continuance to his Beneficiary of such amount after his death for the remainder, if any, of the 120-month term that commenced with the date as of which the first payment of such monthly benefit is made, and with any such monthly benefits remaining unpaid upon the death of the survivor of the Participant and his Beneficiary to be made to the estate of such survivor. (b) Participants may instead elect within a 60 day period commencing 90 days prior to retirement to receive the actuarial equivalent of the standard form of benefit determined under paragraph a, on the date of retirement, in accordance with any one of the following options: (i) a single lump-sum payment payable within 30 days following retirement; (ii) a single lump-sum payment payable within 30 days following the end of calendar year in which the Participant retired. Interest on the lump-sum deferral shall accrue and be paid with the lump-sum; such interest to be computed at the PBGC interest rate in effect of the date of retirement. (iii) a reduced monthly retirement benefit commencing within 30 days following retirement and payable to such Participant for his lifetime following his retirement, with the continuance of a monthly benefit equal to fifty percent (50%) of such reduced amount after his death to his Beneficiary during the lifetime of the Beneficiary, provided that such Beneficiary is living at the time of such Participant's retirement and survives him; (iv) a reduced monthly retirement benefit commencing within 30 days following retirement and payable to such Participant for his lifetime following his retirement, with the continuance of a monthly benefit equal to one hundred percent (100%) of such reduced amount after his death to his Beneficiary during the lifetime of the Beneficiary, provided such Beneficiary is living at the time of such Participant's retirement and survives him. (v) annual installments of up to ten payments, the first of which shall be paid within 30 days following retirement, and subsequent installments of which shall be paid on the anniversary date of the payment of the first installment. Such installments shall be determined by dividing the commuted lump-sum equivalent of the supplemental retirement benefit (determined in the same manner as under the Lubrizol Pension Plan) by the number of installments to be paid and adjusting for interest based on the interest rate used to determine the commuted lump-sum payment. Installments after the first installment shall include such interest which accrues during the 12-month period occurring since the date the prior installment was paid. Notwithstanding the foregoing provisions of the Plan to the contrary, if the present actuarial value of any retirement benefit or survivor benefit under the Plan to any person, determined as described above, is less than $25,000, such benefit shall be paid in a single lump-sum payment to such person within 30 days following retirement. Section 7. Payment in the Event of Death Prior to Commencement of Distribution. If a Participant dies prior to commencement of benefits under the Plan, his surviving spouse, if any, shall be eligible for a survivor benefit which is equal to one-half of the reduced monthly benefit the Participant would have received under the Plan if the Participant had terminated employment on the day before his death and had elected to receive his benefit hereunder in the form of a 50 percent joint and survivor annuity. In making the determinations and reductions required in this Section 7, the Company shall apply the assumptions then in use under the Lubrizol Pension Plan. For purposes hereof, a surviving spouse shall only be eligible for a benefit under this Section 7, if such spouse had been married to the deceased Participant for at least one year as of the date of the Participant's death. Section 8. Actuarial Factors. All actuarial assumptions and factors used in this Plan shall be the same as those used in the Lubrizol Pension Plan. Section 9. Funding. The obligation of the Company to pay benefits provided hereunder shall be unfunded and unsecured and such benefits shall be paid by the Company out of its general funds. In order to provide a source of payment for its obligations under the Plan, the Company may cause a trust fund to be maintained and/or arrange for insurance contracts. Subject to the provisions of the trust agreement governing any such trust fund or the insurance contract, the obligation of the Company under the Plan to provide a Participant with a benefit shall nonetheless constitute the unsecured promise of the Company to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Company. Section 10. Plan Administrator. The Company shall be the plan administrator of the Plan. The plan administrator shall perform all ministerial functions with respect to the Plan. Further, the plan administrator shall have full power and authority to interpret and construe the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination shall be conclusive and binding on all persons. The plan administrator shall employ such advisors or agents as it may deem necessary or advisable to assist it in carrying out its duties hereunder. Section 11. Not a Contract of Continuing Employment. Nothing herein contained shall be construed as a commitment or agreement on the part of the Participant to continue his employment with the Company, and nothing herein contained shall be construed as a commitment or agreement on the part of the Company to continue the employment or the annual rate of compensation of the Participant for any period, and the Participant shall remain subject to discharge to the same extent as if this Plan had never been put into effect. Section 12. Right of Amendment and Termination. Effective October 1, 1994, the Company reserves the right to amend or terminate the Plan in whole or in part at any time and to suspend operation of the Plan, in whole or in part, at any time, by resolution or written action of its Board of Directors or by action of a committee to which such authority has been delegated by the Board of Directors; provided, however, that no amendment shall result in the forfeiture or reduction of the interest of any Participant or person claiming under or through any one or more of them pursuant to the Plan. Any amendment of the Plan shall be in writing and signed by authorized individuals. Section 13. Termination and Distribution of Accrued Benefits. The Plan may be terminated at any time by the Company, and in that event the amount of the accrued benefits as of the date of such termination shall remain an obligation of the Company and shall be payable as if the Plan had not been terminated. Section 14. Construction. Where necessary or appropriate to the meaning hereof, the singular shall be deemed to include the plural, the plural to include the singular, the masculine to include the feminine, and the feminine to include the masculine. Section 15. Severability. In the event any provision of the Plan is deemed invalid, such provision shall be deemed to be severed from the Plan, and the remainder of the Plan shall continue to be in full force and effect. Section 16. Governing Law. Except as otherwise provided, the provisions of the Plan shall be construed and enforced in accordance with the laws of the State of Ohio. EX-10.K 6 Exhibit (10)(k) THE LUBRIZOL CORPORATION DEFERRED COMPENSATION PLAN FOR OFFICERS (As Amended) 1. Purpose. The purpose of this Deferred Compensation Plan For Officers (the "Plan") is to permit an officer (as identified by the Company for Section 16 purposes under the Securities Exchange Act of 1934) (sometimes hereinafter referred to as "officer" or as the "Participant") of The Lubrizol Corporation (the "Company"), who wishes, to defer a portion of such officer's compensation until retirement or other termination of employment all as provided in the Plan. 2. Administration. The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors of the Company (the "Committee"). The Committee's interpretation and construction of all provisions of the Plan shall be binding and conclusive upon all Participants and their heirs and/or successors. 3. Right to Defer Compensation. (a) An officer of the Company may, at any time prior to January 1 of a given calendar year, elect, for one or more future successive calendar years, to defer under the Plan a pre-selected amount of such officer's cash compensation, including bonus, which such officer may thereafter be entitled to receive for services performed during such elected calendar year or years. (b) The election under this Section 3 shall take effect on the first day of the calendar year following the date on which the election is made and such election shall be irrevocable for any elected calendar year after such elected calendar year shall have commenced. (c) The pre-selected amount that an officer may elect to defer shall be one or more of the following: (i) a fixed dollar amount or percentage of the officer's bi- weekly base salary; (ii) a fixed dollar amount or percentage of the officer's quarterly pay; (iii) a fixed dollar amount or percentage of the officer's share in the variable compensation component, if any; (iv) a fixed dollar amount or percentage of the officer's participation in the performance pay plan (formerly the variable award plan), if any. (d) Notwithstanding paragraphs (a),(b) and (c), where an officer first becomes eligible to participate in the Plan, the newly eligible officer may make the election under this Section 3 to defer the specified compensation for services to be performed subsequent to the election and for the remainder of the calendar year in which the election under this Section 3 is made provided such election is made within 30 days after the date the officer first becomes eligible. (e) Within such periods of time as the Committee shall designate, and in addition to the provisions of paragraphs (a) through (d), an officer may elect to defer that portion or all of the officer's cash and/or stock compensation (i) described in paragraphs (a) through (d), (ii) the performance share program, and/or (iii) any other future plan or program that provides for cash or stock compensation, to the extent that such amounts would otherwise be nondeductible by the Company pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. For purposes of the preceding sentence, the amount to be deferred with respect to the performance share program shall be determined by taking into consideration any fixed cash compensation (including biweekly and quarterly pay) to be received subsequent to the date on which shares are distributable under the performance share program. Any deferral of stock compensation shall be subject to the procedures set forth in Section 5. (f) All elections under this Plan shall be made by written notice delivered to the Vice President, Human Resources, of the Company specifying (i) the number of calendar years, one or more, during which the election shall apply, (ii) the portion, if any, determined under paragraph (c), of each category of the Participant's compensation to be deferred for such year or years, as described above, and (iii) the periodic payment schedule selected subject to (x) the installment period limitation and (y) the computation of each installment payment, as provided in Section 6. (g) A Participant may designate that the election under this Section 3 shall remain in effect until the Participant, on a prospective basis, withdraws the election or changes the amount to be deferred; provided that, if the Participant changes only the amount to be deferred, the periodic payment schedule selected under paragraph (f)(iii) shall continue to apply. Any notice of the withdrawal of the election shall be effective on the first day of the calendar year following the date on which such notice is given to the Company's Vice President, Human Resources; provided that, such notice shall not change, alter or terminate the deferral of the officer's participation in the performance pay plan for the year in which such notice of withdrawal is given which, except for the deferral, would be payable in the calendar year following the date on which such notice of withdrawal is given. Notwithstanding paragraph (f) and the first sentence of this paragraph (g), any compensation earned after the end of the first month in which a Participant under this Plan no longer is an officer of the Company, as defined in Section 1, but continues to be employed by the Company, shall not be deferred, provided however, the balance in the Participant's Accounts shall continue to be held and administered pursuant to the Plan. 4. Cash Deferral Accounts. (a) On the last day of each month during which the cash compensation deferred under the Plan would have become payable to the Participant in the absence of an election under the Plan to defer payment thereof, the amount of such deferred compensation shall be credited to a Cash Deferral Account which shall be established and maintained for each Participant in the Company's accounting books and records. To the extent that, at the time amounts are credited to a Participant's Cash Deferral Account, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority. (b) Interest shall accrue on the month-end balance in each Participant's Cash Deferral Account as of the last day of each month and shall be computed at the Federal Reserve 90-day Composite Rate in effect for the previous calendar quarter. Such interest amount so determined shall be credited monthly to such Participant's Cash Deferral Account; provided that no interest shall be credited as to the cash compensation for the month on the last day of which such cash compensation is first credited to the Participant's Cash Deferral Account. 5. Stock Deferral Accounts. (a) At the time that Common Shares are distributable to a Participant, who has elected to defer the receipt thereof under Section 3(e), in lieu of Common Shares being issued, there shall be credited to a separate Stock Deferral Account for the Participant, full stock equivalent units ("Units") which shall be established and maintained on the Company's records. One Unit shall be allocated to the Stock Deferral Account for each such Common Share. (b) As of each dividend record date established by the Company for the payment of cash dividends with respect to its Common Shares, the Company shall credit each separate Stock Deferral Account of a Participant with an additional number of whole and/or fractional Units equal to: (i) the product of (x) the dividend per Common Share which is payable with respect to such dividend record date, multiplied by (y) the number of whole and fractional Units credited to the separate Stock Deferral Account of a Participant as of such record date; divided by (ii) The closing price of a Common Share on the dividend record date (or if Common Shares were not traded on that date, on the next preceding day on which Common Shares were so traded), as reported on the NYSE- composite tape. (c) At no time prior to actual delivery of Common Shares pursuant to the Plan, shall the Company be obligated to purchase or reserve Common Shares for delivery of a Participant and the Participant shall not be a shareholder nor have any of the rights of a shareholder with respect to the Units credited to the Participant's Stock Deferral Account. (d) To the extent that, at the time Units are credited to a Stock Deferral Account of a Participant, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority. (e) In the event of any change in the number of outstanding Company Common Shares by reason of any stock dividend, stock split up, recapitalization, merger, consolidation, exchange of shares or other similar corporate change, the number of Units in each separate Stock Deferral Account of a Participant shall be appropriately adjusted to take into account any such event. 6. Payment of Deferred Compensation. (a) The total amount standing as a credit in a Participant's Cash Deferral Account shall, upon termination of employment, be payable to the Participant either in a lump sum or in periodic installments over such period, not exceeding ten years, as the Participant shall have selected pursuant to Section 3(f)(iii). Such periodic payments shall begin or the lump sum payment shall be made, as the case may be, from the Participant's Cash Deferral Account, at such time, not more than twelve (12) months after the Participant ceases to be an employee of the Company, as the Participant shall have selected pursuant to Section 3 (f)(iii) . All amounts payable in accordance with this Section 6(a) shall be subject to applicable federal, state and/or local payroll withholding taxes then in effect. (b) The amount of each installment payable to a Participant shall be determined by dividing the balance of such Participant's Cash Deferral Account by the number of periodic installments (including the current installment) remaining to be paid. Until a Participant's Cash Deferral Account has been completely distributed, the balance thereof remaining, from time to time, shall bear interest on a monthly basis calculated as provided in Section 4(b). (c) The total number of Units credited to the Participant's Stock Deferral Account shall be payable to the Participant as set forth in paragraph (e), either in a lump sum or in periodic installments, over such period, not exceeding ten years, as the Participant shall have selected pursuant to section 3(f)(Iii). Such periodic payments shall begin or the lump sum payment shall be made, as the case may be, at such time, not more than twelve (12) months after the Participant ceased to be an employee of the Company, as the Participant may have selected pursuant to Section 3. The Participant may, under Section 3, have separate and distinct elections as to how the Participant's Cash Deferral Account and Stock Deferral Account shall be distributed under this Plan. (d) Payments from the Cash Deferral Account shall be in cash and payments from the Stock Deferral Account shall be in the form of Company Common Shares. (e) The amount of any installment payable from the Stock Deferral Account to a Participant shall be determined by dividing the balance of the number of Units in the Participant's Stock Deferral Account by the number of periodic installments (including the current installment) remaining to be paid and the quotient shall be the number of Company Common Shares that are payable. If the determination of the installment payable from the Participant's Stock Deferral Account results in a fractional Common Share being payable, the installment payment shall exclude any such fractional Common Share payment except that, in the final installment payment, any such fractional Common Share shall be paid in cash in an amount as determined by the Committee. Until the Participant's Stock Deferral Account has been completely distributed, the balance in the Stock Deferral Account shall continue to be credited with the dividend equivalents on such balance as provided in Section 5(b). (f) If the Participant elects to satisfy tax withholding with Company Common Shares, then such withholding shall be from those Common Shares otherwise issuable pursuant to paragraphs (c) and (e) above, and shall be such number of Common Shares that will provide for the federal, state and/or local income tax at the rates then applicable for supplemental wages, unless otherwise requested by the Participant, but in no event less than the statutory minimums for tax withholding. (g) For purposes under paragraph (f) of determining the number of Company Common Shares that are to be withheld to provide for the tax withholding, Company Common Shares shall be valued at the closing price on the New York Stock Exchange of a Company Common Share on the date the Common Shares are distributable (or if the Common Shares were not traded on that date, on the next preceding day on which the Common Shares were so traded). If the determination of the tax withholding would require the withholding of a fractional Company Common Share, the Participant shall remit cash to the Company in lieu of the such fractional Share. (h) In the event a Participant dies prior to receiving payment of the entire amount in that Participant's Cash Deferral Account and/or Stock Deferral Account, as the case may be, the unpaid balance shall be paid to such beneficiary as the Participant may have designated in writing to the Vice President, Human Resources, of the Company as the beneficiary to receive any such post-death distribution under the Plan or, in the absence of such written designation, to the Participant's legal representative or to the beneficiary designated in the Participant's last will as the one to receive such distributions. Distributions subsequent to the death of a Participant may be made either in a lump sum or in periodic installments in such amounts and over such period, not exceeding ten years from the date of death, as the Committee may direct and the amount of each installment shall be computed as provided in Section 6(a), (c) and (e) as the case may be. 7. Acceleration of Payments. (a) The Committee may accelerate the distribution of part or all, in any or all, of a Participant's accounts for reasons of severe financial hardship. For purposes of the Plan, severe financial hardship shall be deemed to exist in the event the Committee determines that a Participant needs a distribution to meet immediate and heavy financial needs resulting from a sudden or unexpected illness or accident of the Participant or a member of the Participant's family, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. A distribution based on financial hardship shall not exceed the amount required to meet the immediate financial need created by the hardship. (b) Upon application by a Participant to the Committee, made no later than thirty (30) days prior to the Participant's retirement or other termination of employment (other than as a result of death), nor earlier than ninety (90) days prior thereto, the Participant may request that the Committee accelerate the Participant's distribution schedule under Section 6 as previously selected by the Participant, including accelerating to a lump sum payment. The Committee shall have sole and exclusive discretionary authority to grant or deny a Participant's request. 8. Non-assignability. None of the rights or interests in any of the Participant's accounts shall, at any time prior to actual payment or distribution pursuant to the Plan, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and such rights and interest shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner; provided that, upon the occurrence of any such assignment or transfer or the attempted assignment or transfer, all payments under Section 6 shall be payable in the sole and unrestricted judgment and discretion of the Committee, as to time and amount (including a lump sum amount), and shall be distributable to the person who would have received the payment but for this Section 8 only at such time or times and in such amounts as the Committee, from time to time, and in its sole and unrestricted judgment and discretion, shall determine. Should an event covered by this Section 8 occur prior to the death of a Participant, the balance, if any, in the Participant's accounts shall, after such death, be thereafter distributed as provided in Section 6 subject to the provisions of this Section 8. 9. Plan to be Unfunded. The Company shall be under no obligation to segregate or reserve any funds or other assets for purposes relating to the Plan and, except as set forth in this Plan, no Participant shall have any rights whatsoever in or with respect to any funds or other assets held by the Company for purposes of the Plan or otherwise. Each Participant's accounts maintained for purposes of the Plan merely constitute bookkeeping entries on records of the Company, constitute the unsecured promise and obligation of the Company to make payments as provided herein, and shall not constitute any allocation whatsoever of any cash, shares or other assets of the Company or be deemed to create any trust or special deposit with respect to any of the Company's assets. 10. Amendment. The Board of Directors of the Company, or the Organization and Compensation Committee may, from time to time, amend or terminate the Plan, provided that no such amendment or termination of the Plan shall adversely affect a Participant's accounts as they existed immediately before such amendment or termination or the manner of distribution thereof, unless such Participant shall have consented thereto in writing. Any reduction in the quarterly interest rate set forth in Section 4(b), by amendment to the Plan, shall affect only contributions made to the Plan for calendar years subsequent to the adoption of the amendment. The balance in a Participant's Cash Deferral Account prior to the effective date of any such interest rate reduction shall continue to bear interest at the rate in effect prior to any such reduction in interest rate. Notice of any amendment or termination of the Plan shall be given promptly to all Participants. 11. Plan Implementation. This Plan is adopted and effective on the 25th day of July, 1994, as amended on June 17, 1995, as further amended September 25, 1995, effective as of January 1, 1995 and further amended on September 22, 1997. EX-10.L 7 Exhibit (10)(l) THE LUBRIZOL CORPORATION EXECUTIVE COUNCIL DEFERRED COMPENSATION PLAN (As Amended) 1. Purpose. The purpose of this Executive Council Deferred Compensation Plan (the "Plan") is to permit a member of the Executive Council (sometimes hereinafter referred to as the "Member" or as the "Participant") who is employed by The Lubrizol Corporation (the "Company"), to defer a portion of such Member's compensation as provided in this Plan. 2. Administration. The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors of the Company (the "Committee"). The Committee's interpretation and construction of all provisions of the Plan shall be binding and conclusive upon all Participants and their heirs and/or successors. 3. Right to Defer Compensation. (a) A Member may, at any time prior to January 1 of a given calendar year, elect, for one or more future successive calendar years commencing with the calendar year immediately following the election (each a "Participation Year"), to defer under the Plan a pre-selected fixed dollar amount or percentage of such Member's variable compensation, if any (the "deferred compensation"), under The Lubrizol Corporation Performance Pay Plan ("Performance Pay Plan"), which such Participant may thereafter be entitled to receive for services performed during each elected Participation Year. (b) The election under this Section 3 shall take effect on the first day of the first elected Participation Year and such election shall be irrevocable for any elected Participation Year once such Participation Year shall have commenced. (c) Notwithstanding paragraphs (a) and (b), when an individual Member first becomes eligible to participate in the Plan, the newly eligible Member may make the election under this Section 3 to defer the specified compensation for services to be performed subsequent to the date specified in the election and for the remainder of the calendar year in which the election under this Section 3 is made, provided that such election is made within 30 days after the date that the Member is notified of the Member's eligibility. (d) All elections under this Plan shall be made by written notice (on a form provided by the Company) specifying (i) the number of calendar years, one or more, during which the election shall apply, and (ii) the deferred compensation determined under paragraph (a). (e) A Participant may designate that the election under this Section 3 shall remain in effect until the Participant, on a prospective basis, withdraws the election or changes the amount to be deferred. Any notice of the withdrawal or change in the amount of the election shall be effective on the first day of the calendar year next following the year in which such notice is given; provided that, such notice shall not change, alter or terminate the deferral of the Member's participation in the Performance Pay Plan for the year in which such notice of withdrawal or change is given which, except for the deferral, would be payable in the calendar year next following the year in which such notice of withdrawal or change is given. Notwithstanding paragraph (b) and the first sentence of this paragraph (e), any variable compensation earned after the end of the month in which a Participant under this Plan ceases to be a Member, as defined in Section 1, but continues to be employed by the Company, shall not be deferred, provided however, the balance in the Participant's Stock Deferral Accounts shall continue to be held and administered pursuant to the Plan. (f) All notices by a Participant under the Plan shall be in writing and shall be given to the Company's Vice President, Human Resources. 4. Stock Deferral Accounts. (a) At the close of business of the day on which the Performance Pay Plan deferred compensation would have been payable to the Participant in the absence of the election under the Plan to defer payment thereof, there shall be credited to a separate Stock Deferral Account for each Participant full and fractional stock equivalent units ("Units") which shall be established as hereinafter provided and shall be maintained for each Participant on the Company's records. (b) The number of full and fractional Units that shall be credited to a separate Stock Deferral Account for a Participant shall be equal to an amount determined by: (i) Dividing the Participant's deferred compensation for the applicable Participation Year by the average closing price for Lubrizol Common Shares ("Shares") on the New York Stock Exchange ("NYSE") composite transactions reporting system ("composite tape") for the ten trading days immediately prior to the date described in paragraph (a); and (ii) multiplying the quotient determined in subparagraph (i) by 1.25. (c) To the extent that, at the time Units are credited to a Stock Deferral Account of a Participant, any federal, state or local payroll withholding tax applies (e.g., Medicare withholding tax), the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority. (d) The amount of deferred compensation used in the formula set forth in paragraph (b) shall not constitute a sum due and owing to a Participant. Such amount shall be used solely as part of the formula to determine the number of full and fractional Units. (e) As of each dividend record date established by the Company for the payment of cash dividends with respect to its Shares, the Company shall credit each separate Stock Deferral Account of a Participant with an additional number of whole and/or fractional Units equal to: (i) the product of (x) the dividend per Share which is payable with respect to such dividend record date, multiplied by (y) the number of whole and fractional Units credited to the separate Stock Deferral Account of the Participant as of such record date; divided by (ii) the closing price of a Share on the dividend record date (or if Shares were not traded on that date, on the next preceding day on which Shares were so traded), as reported on the NYSE composite tape. (f) At no time prior to actual delivery of Shares pursuant to the Plan shall the Company be obligated to purchase or reserve Shares for delivery to any Participant and a Participant shall not be a shareholder or have any of the rights of a shareholder with respect to the Units credited to each separate Stock Deferral Account of a Participant. 5. Payment of Deferred Compensation. (a) All Units credited to a separate Stock Deferral Account of Participant, including dividend equivalents thereon, shall be payable to the Participant at the end of three years from the first date Units were credited to such separate Stock Deferral Account of the Participant under Section 4(a); provided, however, that if a Participant's employment is terminated for any reason other than retirement or death, the Units credited to each separate Stock Deferral Account of a Participant as of the Participant's termination of employment date, including all dividend equivalents thereon, shall be payable to the Participant within 30 days of such termination of employment. (b) All distributions or payments of Units to a Participant shall be made in Shares equal to the number of whole Units credited to the separate Stock Deferral Account(s) of the Participant which become payable in accordance with Section 5(a). Any fractional number of Units shall be paid in cash in lieu of Shares. (c) To the extent that, at the time Shares are distributed to a Participant, any federal, state or local payroll withholding tax applies, the Participant shall be responsible for the payment of such amount to the Company and the Company shall promptly remit such amount to the proper taxing authority. Such payment may be made in cash, in Shares, or in any combination of cash and Shares, at the election of the Participant. All elections must be made in writing and be submitted to the Vice President - Human Resources. If no election is made prior to the first distribution of Shares, the Company shall withhold a sufficient number of Shares to pay the withholding taxes at the highest marginal tax rate in effect for such Participant. In no event shall the withholding be less than the statutory minimum for tax withholding. (d) In the event a Participant dies prior to receiving payment of the entire amount in each separate Stock Deferral Account of the Participant, the unpaid balance shall be paid to such beneficiary as the Participant may have designated in writing to the Vice President, Human Resources, of the Company as the beneficiary to receive any such post- death distribution under the Plan or, in the absence of such written designation, to the Participant's legal representative or to the beneficiary designated in the Participant's last will as the one to receive such distributions. Distributions subsequent to the death of a Participant may be made either in accordance with Section 5(a) and (b) or earlier, as determined by the Committee. (e) To the extent the Committee deems necessary, the Shares distributed to a Participant pursuant to Section 5(a) and (b) or 6(a) or to a successor pursuant to Section 5(d) may contain such restrictions on the right of immediate transfer as the Committee may reasonably determine. 6. Acceleration of Payments. (a) The Committee may accelerate the distribution of part or all of one or more of a Participant's separate Stock Deferral Accounts for reasons of severe financial hardship. For purposes of the Plan, severe financial hardship shall be deemed to exist in the event the Committee determines that a Participant needs a distribution to meet immediate and heavy financial needs resulting from a sudden or unexpected illness or accident of the Participant or a member of the Participant's family, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. A distribution based on financial hardship shall not exceed the amount required to meet the immediate financial need created by the hardship. 7. Non-assignability. None of the rights or interests in any of the Participant's separate Stock Deferral Accounts shall, at any time prior to actual payment or distribution pursuant to the Plan, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, and such rights and interest shall not be subject to payment of debts by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner; provided that, upon the occurrence of any such assignment or transfer or the attempted assignment or transfer, all payments under Section 5 shall be payable in the sole and unrestricted judgment and discretion of the Committee, as to time and amount, and shall be distributable to the person who would have received the payment but for this Section 7 only at such time or times and in such amounts as the Committee, from time to time, and in its sole and unrestricted judgment and discretion, shall determine. Should an event covered by this Section 7 occur prior to the death of a Participant, the balance, if any, in each of the Participant's Stock Deferral Accounts shall, after such death, be thereafter distributed as provided in Section 5(d) subject to the provisions of this Section 7. 8. Plan to be Unfunded. The Company shall be under no obligation to segregate or reserve any funds or other assets for purposes relating to the Plan and, except as set forth in this Plan, no Participant shall have any rights whatsoever in or with respect to any funds or other assets held by the Company for purposes of the Plan or otherwise. Each Participant's separate Stock Deferral Accounts maintained for purposes of the Plan merely constitute a bookkeeping entry on records of the Company, constitute the unsecured promise and obligation of the Company to make payments as provided herein, and shall not constitute any allocation whatsoever of any cash or other assets of the Company or be deemed to create any trust or special deposit with respect to any of the Company's assets. 9. Miscellaneous. In the event of any change in the number of outstanding Shares by reason of any stock dividend, stock split up, recapitalization, merger, consolidation, exchange of shares or other similar corporate change, the number of Units credited to each separate Stock Deferral Account of a Participant shall be appropriately adjusted to take into account any such event. 10. Amendment. The Board of Directors of the Company, or the Organization and Compensation Committee, may, from time to time, amend or terminate the Plan, provided that no such amendment or termination of the Plan shall adversely affect any Stock Deferral Account of a Participant as it existed immediately before such amendment or termination or the manner of distribution thereof, unless such Participant shall have consented thereto in writing. Notice of any amendment or termination of the Plan shall be given promptly to all Participants. 11. Plan Implementation. This Plan is adopted and effective as of the 1st day of January, 1997. EX-11 8 EXHIBIT 11 THE LUBRIZOL CORPORATION Computation of Per Share Earnings Third Quarter 1997 The computation of primary earnings per share and fully diluted earnings per share is as follows: (In Thousands of Shares Except Per Share Data)
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1997 1996 1997 1996 ------ ------ ------ ------ Average shares outstanding for computation of primary earnings per share 57,620 59,979 58,078 61,166 Add adjustment to treat shares for options exercised as if such shares were outstanding during the entire period 97 13 216 51 Add equivalent shares for unexercised options at end of period* 876 148 800 178 ------ ------ ------ ------ Average shares outstanding for computation of fully diluted earnings per share 58,593 60,140 59,094 61,395 ====== ====== ====== ====== Primary earnings per share $ .67 $ .53 $2.14 $2.31 ===== ===== ===== ===== Fully diluted earnings per share $ .66 $ .53 $2.11 $2.30 ===== ===== ===== =====
*Computed under the "Treasury Stock Method" using the higher of quoted ending or average market price. EX-27 9
5 This schedule contains summary financial information extracted from consolidated balance sheet and consolidated statements of income and is qualified in its entirety by reference to such financial statements 0000060751 THE LUBRIZOL CORPORATION 1,000 U.S. DOLLARS 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1.0 92,196 0 254,186 1,237 253,698 659,442 1,543,127 841,246 1,473,568 294,838 157,291 0 0 83,055 740,635 1,473,568 1,247,129 1,250,266 831,404 831,404 0 132 7,873 185,691 61,278 0 0 0 0 124,413 2.14 2.11
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