EX-99.1 3 l03664aexv99w1.txt PRESS RELEASE [LUBRIZOL LOGO] Exhibit 99.1 THE LUBRIZOL CORPORATION 29400 Lakeland Boulevard, Wickliffe, Ohio 44092-2298 NEWS RELEASE FOR RELEASE: Immediately FROM: FINANCIAL/INVESTOR CONTACT MEDIA CONTACT Joanne Wanstreet Kenneth M. Iwashita 440/347-1252 440/347-5080 WEB SITE: http://www.lubrizol.com LUBRIZOL ANNOUNCES THIRD QUARTER RESULTS CLEVELAND, Ohio, October 21, 2003 - The Lubrizol Corporation (NYSE: LZ) announced that consolidated earnings for the third quarter ended September 30, 2003, were $24.3 million or $.47 per share, after a pre-tax restructuring charge of $0.4 million, or $.01 per share, related to the company's Bromborough, England manufacturing facility. Consolidated earnings for the comparable period in 2002 were $36.5 million. Excluding the restructuring charge, earnings were $.48 per share for the third quarter of 2003, compared to strong earnings of $.71 per share in 2002. In comparison to the prior year, earnings for the third quarter of 2003 were affected by lower shipment volume and higher raw material costs, which more than offset higher average selling price and lower selling, testing, administrative and research (STAR) expenses. Consolidated revenues for the quarter were $509.9 million, compared to $510.3 million in the third quarter of 2002. Excluding acquisitions, revenues for the quarter were down one percent. For the first nine months of 2003, consolidated revenues of $1.53 billion were three percent higher than revenues for the same period last year. Earnings for the first nine months of 2003 were $79.7 million, or $1.54 per share, after restructuring charges of $.10 per share. Consolidated earnings for the comparable period in 2002 were $93.0 million, or $1.81 per share after a $.15 per share write-off of goodwill related to a required accounting change. Excluding the restructuring charge and the cumulative effect of the accounting change in 2003 and 2002 respectively, earnings were $1.64 per share for the first nine months of 2003 compared to $1.96 per share in 2002. -more- The estimated annual tax rate was lowered to 31 percent from the 32 percent estimated annual tax rate of the second quarter. The rate reduction was based on higher than anticipated non-taxable currency gains. In the fluid technologies for transportation (FTT) segment, revenues of $382.3 million for the third quarter 2003 were down five percent and shipment volume declined 13 percent from the third quarter of 2002. In addition to the previously announced loss of business, FTT volume in the quarter was affected by weak worldwide demand for lubricants. Currency added three percent to FTT revenues for the quarter and the combination of higher pricing and favorable product mix added five percent to FTT revenues. Average raw material cost for FTT was 11 percent higher than the third quarter a year ago, while STAR expenses were flat. Segment contribution income for FTT of $65.4 million for the quarter declined 23 percent from the third quarter of 2002. Fluid technologies for industry (FTI) segment revenues of $117.8 million for the quarter increased 15 percent compared to the third quarter of 2002. Excluding acquisitions, FTI revenues grew nine percent from organic growth, primarily in coating and foam control additives and personal care ingredients. Segment contribution income of $19.0 million for the quarter was one-half percent higher than the third quarter a year ago. Segment contribution was adversely affected by less favorable mix, particularly in industrial hydraulic additives, as well as start-up expenditures to integrate the multipurpose manufacturing facility in Spartanburg, South Carolina that was purchased in the second quarter. Revenues in the "all other" segment, which includes emissions control systems, PuriNOx(TM) low-emissions diesel fuel technology and fluid metering equipment, were $9.7 million for the quarter, an increase of 40 percent compared to the third quarter of 2002. Segment contribution losses of $1.3 million compared to $2.4 million a year ago. Commenting on the results, W.G. Bares, Chairman and Chief Executive Officer, said, "The disappointing earnings for the third quarter point to economic weakness in the lubricant industry. Demand for finished lubricants has been soft most of the year, but dropped more in mid-summer in North America, Europe, parts of Asia and the Middle East. In addition, prices for base oil raw materials increased five percent in early August on top of a 10 percent increase in February. "Although FTT shipment volumes declined in the third quarter compared to the second quarter of this year, pricing has been stable and we believe our market share has not changed. -more- In addition, we reduced company-wide STAR expenses compared both to last quarter and to the third quarter last year. "The weak fundamentals in the lubricant additive industry reaffirm our commitment to use cash flow for expansion into higher growth fluid technology markets, including industrial performance chemicals, coating additives, personal care products and advanced fluid systems. In the third quarter we closed acquisitions of foam control product lines from BASF and ingredients for personal care products from The Dow Chemical Company. Both acquisitions build on existing FTI platforms. In addition, the foam control and specialty coating resins businesses acquired during the last year all contributed positively to earnings in the third quarter. Organic growth in FTI and in our equipment businesses also continues to be encouraging. "As we announced last week, we reduced our outlook for the rest of the year, assuming no rebound in customer demand and no easing of high petrochemical raw material prices. Nevertheless, our view of the long-term stability of the lubricant additive industry has not changed and we remain optimistic about our opportunities to achieve profitable growth for Lubrizol." An audio webcast of the third quarter earnings conference call with investors will be available today at 1:00 p.m. Eastern time on www.lubrizol.com and will be archived for 30 days. The Lubrizol Corporation (NYSE: LZ) is a global provider of specialty additives and fluid technologies. These high-performance technologies focus on chemicals, systems and services for transportation and industry. The company's customers use its technology to enhance a wide variety of end-use products, including engine lubricants and fuel; gear oils and other vehicle- related fluids; hydraulic fluids and emission control systems; greases and industrial fluids; personal care products and industrial cleaners; paints, coatings and inks; and mining chemicals. Lubrizol was founded in 1928 and owns and operates 34 manufacturing plants in 15 countries. The Wickliffe, Ohio-based company has 50 sales and technical offices and more than 5,000 employees worldwide. Its three research centers are located in Wickliffe, Ohio; Hazelwood, England; and Kinuura, Japan. The company had revenues of $1.98 billion and earnings of $118.5 million in 2002. For more information, visit www.lubrizol.com. ### This press release contains forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements relate to anticipated trends and expectations rather than -more- historical matters. Forward-looking statements are subject to uncertainties and factors relating to the company's operations and business environment that are difficult to predict and may be beyond the control of the company. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by forward-looking statements. Uncertainties and factors that could affect the future performance of the company and cause results to differ from the forward-looking statements in this press release are contained in the company's latest annual report to its shareholders, which is available upon request. THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Data)
Third Quarter Nine Months Ended September 30, September 30, ------------------------ ------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net sales.................................... $ 509,107 $ 509,427 $1,530,383 $1,483,645 Royalties and other revenues:................ 760 876 2,374 2,554 --------- --------- ---------- ---------- Total revenues........................... 509,867 510,303 1,532,757 1,486,199 Cost of sales................................ 377,486 358,850 1,118,360 1,051,830 Selling and administrative expenses.......... 48,647 49,530 149,613 146,700 Research, testing and development expenses .. 41,022 42,774 123,265 124,674 Restructuring charge......................... 409 -- 7,447 -- --------- --------- ---------- ---------- Total cost and expenses.................. 467,564 451,154 1,398,685 1,323,204 Other income (expense)-net................... (2,573) (3,042) (2,906) (7,084) Interest (expense)-net....................... (5,698) (3,995) (15,654) (11,936) --------- --------- ---------- ---------- Income before income taxes and cumulative effect of change in accounting principle....................... 34,032 52,112 115,512 143,975 Provision for income taxes................... 9,734 15,634 35,808 43,193 --------- --------- ---------- ---------- Income before cumulative effect of change in accounting principle.......... 24,298 36,478 79,704 100,782 Cumulative effect of change in accounting principle....................... (7,785) --------- --------- ---------- ---------- Net income................................... $ 24,298 $ 36,478 $ 79,704 $ 92,997 ========= ========= ========== =========== Net income per share: Net income before cumulative effect of change in accounting principle......... $ 0.47 $ 0.71 $ 1.54 $ 1.96 Cumulative effect of change in accounting principle...................... (0.15) --------- --------- ---------- ---------- Net income per share........................ $ 0.47 $ 0.71 $ 1.54 $ 1.81 ========= ========= ========== =========== Diluted net income per share: Income before cumulative effect of change in accounting principle............ $ 0.47 $ 0.71 $ 1.54 $ 1.95 Cumulative effect of change in accounting principle...................... (0.15) --------- --------- ---------- ----------- Net income per share, diluted............... $ 0.47 $ 0.71 $ 1.54 $ 1.80 ========= ========= ========== =========== Weighted average common shares outstanding 51,717 51,569 51,680 51,475
Amounts shown are unaudited. THE LUBRIZOL CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars)
September 30, December 31, ASSETS 2003 2002 ----------------- ----------------- Cash and short-term investments.................... $ 215,150 $ 266,428 Receivables........................................ 331,015 295,508 Inventories........................................ 333,773 302,968 Other current assets............................... 39,795 44,875 ----------- ----------- Total current assets........................... 919,741 909,779 Property and equipment-net......................... 676,554 679,155 Goodwill and intangible assets-net................. 269,351 211,514 Investments and other assets....................... 57,777 59,689 ----------- ----------- Total.......................................... $ 1,923,423 $ 1,860,137 =========== =========== LIABILITIES and SHAREHOLDERS EQUITY Short-term debt and current portion of long-term debt................................ $ 11,031 $ 17,046 Other current liabilities.......................... 282,608 290,695 ----------- ----------- Total current liabilities...................... 293,639 307,741 Long-term debt..................................... 382,755 384,845 Other noncurrent liabilities....................... 258,042 244,911 ----------- ----------- Total liabilities.............................. 934,436 937,497 ----------- ----------- Minority interest in consolidated companies........ 52,792 53,388 ----------- ----------- Shareholders' equity............................... 936,195 869,252 ----------- ----------- Total.......................................... $ 1,923,423 $ 1,860,137 =========== ===========
Amounts shown are unaudited. THE LUBRIZOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars)
Nine Months Ended September 30, ----------------------------- 2003 2002 ------------ ----------- Cash provided from (used for): OPERATING ACTIVITIES: Net income.................................................. $ 79,704 $ 92,997 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization............................ 74,146 70,868 Cumulative effect of change in accounting principle................................... 7,785 Restructuring charge..................................... 3,327 Net change in working capital............................ (53,506) (4,981) Other items-net.......................................... 10,028 6,453 ---------- --------- Total operating activities............................. 113,699 173,122 INVESTING ACTIVITIES: Capital expenditures........................................ (59,485) (45,976) Acquisitions and equity investments......................... (67,532) (69,438) Other-net................................................... 484 2,882 ---------- --------- Total investing activities............................. (126,533) (112,532) FINANCING ACTIVITIES: Net short and long-term borrowings (repayments)............. (6,638) 5,061 Dividends paid.............................................. (40,161) (40,043) Proceeds from termination of interest rate swaps............ 18,134 Stock options exercised..................................... 3,658 8,203 ---------- --------- Total financing activities............................. (43,141) (8,645) Effect of exchange rate changes on cash..................... 4,705 8,485 ---------- --------- Net increase (decrease) in cash and short-term investments............................................... (51,270) 60,430 Cash and short-term investments at the beginning of period....................................... 266,428 189,095 ---------- --------- Cash and short-term investments at the end of period............................................. $ 215,158 $ 249,525 ========== =========
Amounts shown are unaudited. THE LUBRIZOL CORPORATION SEGMENT INFORMATION (In Thousands of Dollars)
Third Quarter Nine Months Ended September 30, Ended September 30, --------------------------- ------------------------ 2003 2002 2003 2002 ---------- ---------- ---------- ---------- REVENUES: Fluid technologies for transportation....... $ 382,299 $ 400,736 $1,165,891 $1,187,322 Fluid technologies for industry............. 117,833 102,627 342,008 279,889 All other................................... 9,735 6,940 24,858 18,988 ---------- ---------- ---------- ---------- Total revenues............................ $ 509,867 $ 510,303 $1,532,757 $1,486,199 ========== ========== ========== ========== SEGMENT CONTRIBUTION INCOME(LOSS): Fluid technologies for transportation....... $ 65,440 $ 64,585 $ 222,556 $ 243,360 Fluid technologies for industry............. 19,005 18,922 55,491 53,565 All other................................... (1,271) (2,412) (5,192) (7,455) ---------- ---------- ---------- ---------- Total segment contribution income (loss).............. $ 83,174 $ 101,095 $ 272,855 $ 289,470 ========== ========== ========== ========== SEGMENT OPERATING PROFIT (LOSS): Fluid technologies for transportation....... $ 32,795 $ 45,703 $ 118,551 $ 129,055 Fluid technologies for industry............. 10,040 13,875 29,791 37,756 All other................................... (2,696) (3,471) (9,729) (10,900) ---------- ---------- ---------- ---------- Total segment operating profit (loss)................. $ 40,139 $ 56,107 $ 138,613 $ 155,911 ========== ========== ========== ==========
Amounts shown are unaudited.