SEGMENT REPORTING

6 Months Ended

Jun. 30, 2011

SEGMENT REPORTING

Note 3 – SEGMENT REPORTING

The company is organized into two operating and reportable segments: Lubrizol Additives and Lubrizol Advanced Materials. Lubrizol Additives consists of two product lines: (i) engine additives and (ii) driveline and industrial additives. Engine additives is comprised of additives for lubricating engine oils, such as for gasoline, diesel, marine and stationary gas engines, and additives for fuels, refinery and oil field chemicals. Driveline and industrial additives is comprised of additives for driveline oils, such as automatic transmission fluids, gear oils and tractor lubricants, and industrial additives, such as additives for hydraulic, grease and metalworking fluids, as well as compressor lubricants. Both product lines sell viscosity modifiers, as well as provide services for supply chain and knowledge center management.

The Lubrizol Advanced Materials segment consists of three product lines: (i) engineered polymers, (ii) Noveon^® consumer specialties and (iii) performance coatings. The engineered polymers product line includes products such as Estane^® thermoplastic polyurethane and TempRite^® engineered polymers. Engineered polymers products are sold to a diverse customer base comprised of major manufacturers in the construction, automotive, telecommunications, electronics and recreation industries. The Noveon consumer specialties product line includes acrylic thickeners, film formers, fixatives, emollients, silicones, specialty surfactants, conditioning polymers, methyl glucoside, lanolin derivatives and cassia hydrocolloids. The company markets products in the Noveon consumer specialties product line to major manufacturers of cosmetics, personal care and household products. The performance coatings product line includes high-performance polymers and additives for specialty paper, graphic arts, paints, textiles and coatings applications.

The company primarily evaluates performance and allocates resources based on segment operating income as well as projected future performance. Segment operating income is defined as revenues less expenses identifiable to the product lines included within each segment. Segment operating income reconciles to consolidated income before income taxes by deducting corporate expenses and other income (expense) that are not attributed to the segments, Berkshire Hathaway merger-related costs, restructuring and impairment charges (credits) and net interest expense.

The following table presents a summary of the results of the company’s reportable segments:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Millions of Dollars)	2011		2010		2011		2010
Revenues from external customers:
Lubrizol Additives	$	1,201.0	$	1,008.4	$	2,284.4	$	1,956.4
Lubrizol Advanced Materials		433.8		392.8		869.3		760.3
Total revenues	$	1,634.8	$	1,401.2	$	3,153.7	$	2,716.7
Segment operating income:
Lubrizol Additives	$	282.4	$	271.5	$	542.3	$	517.9
Lubrizol Advanced Materials		52.2		62.5		123.3		123.1
Segment operating income		334.6		334.0		665.6		641.0
Corporate expenses		(19.4)		(15.3)		(57.6)		(50.8)
Corporate other income (expense) - net		1.9		7.4		(2.9)		12.7
Berkshire Hathaway merger-related costs		(0.8)		-		(10.7)		-
Restructuring and impairment (charges) credits		(0.3)		(0.5)		0.3		(1.4)
Interest expense - net		(22.0)		(23.4)		(45.6)		(46.9)
Income before income taxes	$	294.0	$	302.2	$	549.1	$	554.6

The company’s total assets by segment were as follows:

	June 30,		December 31,
(In Millions of Dollars)	2011		2010
Segment assets:
Lubrizol Additives	$	2,319.5	$	1,998.7
Lubrizol Advanced Materials		2,065.1		1,802.7
Total segment assets		4,384.6		3,801.4
Corporate assets		1,064.7		1,165.6
Total consolidated assets	$	5,449.3	$	4,967.0