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 June 30, 1996
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)
(216) 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
July 31, 1996: 60,123,203
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
THE LUBRIZOL CORPORATION
<CAPTION>
CONSOLIDATED BALANCE SHEETS
June 30 December 31
(In Thousands of Dollars) 1996 1995
---------- -----------
<S> <C> <C>
ASSETS
Cash and short-term investments....................... $ 60,690 $ 30,579
Receivables........................................... 269,764 255,377
Inventories:
Finished products................................... 97,486 102,628
Products in process................................. 78,258 96,061
Raw materials....................................... 71,078 89,267
Supplies and engine test parts...................... 20,992 22,583
---------- ----------
267,814 310,539
---------- ----------
Other current assets.................................. 34,310 43,199
---------- ----------
Total current assets............... 632,578 639,694
Property and equipment - net.......................... 682,086 676,816
Investments in nonconsolidated companies.............. 27,578 100,655
Intangible and other assets........................... 76,935 74,855
---------- ----------
TOTAL.......................... $1,419,177 $1,492,020
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Short-term debt and current portion of long-term debt. $ 14,316 $ 52,685
Accounts payable...................................... 101,695 125,120
Income taxes and other current liabilities............ 104,705 87,786
---------- ----------
Total current liabilities........... 220,716 265,591
Long-term debt........................................ 184,947 194,423
Postretirement health care obligation................. 103,907 102,653
Noncurrent liabilities................................ 47,508 53,223
Deferred income taxes................................. 27,240 27,147
---------- ----------
Total liabilities................... 584,318 643,037
---------- ----------
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 - 60,234,870 shares as of June 30,
1996 after deducting 25,961,024 treasury shares,
62,951,288 shares as of December 31, 1995
after deducting 23,244,606 treasury shares........ 80,365 83,254
Retained earnings................................... 763,308 762,747
Accumulated translation adjustment.................. (8,814) 2,982
---------- ----------
Total shareholders' equity......... 834,859 848,983
---------- ----------
TOTAL.......................... $1,419,177 $1,492,020
========== ==========
<FN>
Amounts shown are unaudited.
</TABLE>
<PAGE>
<TABLE>
THE LUBRIZOL CORPORATION
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
Second Quarter Six Months
Ended June 30 Ended June 30
-------------------- -----------------------
(In Thousands Except Per Share Data) 1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................... $420,531 $436,774 $825,943 $851,705
Royalties and other revenues........ 838 1,690 2,527 3,480
-------- -------- -------- --------
Total revenues............ 421,369 438,464 828,470 855,185
Cost of sales....................... 288,524 287,909 562,119 565,465
Selling and administrative expenses. 39,618 42,166 80,226 83,090
Research, testing and development
expenses.......................... 38,849 44,922 79,545 86,178
-------- -------- -------- --------
Total cost and expenses... 366,991 374,997 721,890 734,733
Net gain on investments............. 25,353 53,280 38,459
Other income - net.................. 208 4,190 3,421 8,475
Interest income..................... 3,304 1,256 4,420 2,576
Interest expense.................... (2,314) (2,080) (5,408) (4,108)
-------- -------- -------- --------
Income before income taxes.......... 55,576 92,186 162,293 165,854
Provision for income taxes.......... 17,506 30,935 52,987 55,501
-------- -------- -------- --------
Net income.......................... $ 38,070 $ 61,251 $109,306 $110,353
======== ======== ======== ========
Net income per share................ $ .63 $ .96 $1.77 $1.71
===== ===== ===== =====
Dividends per share................. $ .24 $ .23 $ .48 $ .46
===== ===== ===== =====
Average number of shares outstanding 60,906 64,066 61,760 64,394
<FN>
Amounts shown are unaudited.
</TABLE>
<PAGE>
<TABLE>
THE LUBRIZOL CORPORATION
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30
------------------------
(In Thousands of Dollars) 1996 1995
--------- ---------
<S> <C> <C>
Cash provided from (used for):
Operating activities:
Net income................................................... $ 109,306 $ 110,353
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization............................ 39,413 35,192
Deferred income taxes.................................... 2,830 2,434
Equity (earnings) losses, net of distributions........... 1,111 (3,609)
Net gain on investments.................................. (53,280) (38,459)
Change in current assets and liabilities:
Accounts receivable.................................... (21,542) (28,116)
Inventories............................................ 38,600 7,548
Accounts payable and accrued expenses.................. (5,984) 14,982
Other current assets................................... 6,280 (1,020)
Other items - net........................................ (7,380) (4,869)
--------- ---------
Total operating activities......................... 109,354 94,436
Investing activities:
Proceeds from sale of investments............................ 128,144 40,160
Capital expenditures......................................... (51,104) (105,989)
Acquisition of subsidiary.................................... (741) (3,521)
Other - net.................................................. 2,448 1,971
--------- ---------
Total investing activities 78,747 (67,379)
Financing activities:
Short-term borrowing (repayment) - net....................... (56,298) (12,659)
Long-term borrowing.......................................... 28,325 100,064
Long-term debt repayment..................................... (16,924) (1,339)
Dividends paid............................................... (29,785) (29,651)
Common shares purchased, net of options exercised............ (81,849) (45,121)
--------- ---------
Total financing activities......................... (156,531) 11,294
Effect of exchange rate changes on cash...................... (1,459) 2,898
--------- ---------
Net increase in cash and short-term investments.............. 30,111 41,249
Cash and short-term investments at the beginning of period... 30,579 36,379
--------- ---------
Cash and short-term investments at the end of period......... $ 60,690 $ 77,628
========= =========
<FN>
Amounts shown are unaudited.
</TABLE>
<PAGE>
THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
------------------------------------------
June 30, 1996
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 June 30, 1996 and December 31,
1995, and the results of operations and cash flows for the six months ended
June 30, 1996 and 1995.
2. The company, pursuant to a definitive agreement to sell all of its interest
in Mycogen Corporation to DowElanco, exchanged its remaining interest in an
agribusiness joint venture with Mycogen and all of its Mycogen Series A
Preferred Stock for Mycogen Common Stock in January 1996. In February 1996,
the sale of the company's interest in Mycogen to DowElanco was completed,
and the company collected gross cash proceeds of $126.2 million. In
addition, in January 1996, the company sold certain rights to its SVO oil
seed technology to Mycogen for $8.0 million, of which $2.0 million was
collected in January 1996 with $2.5 million due in January 1997 and $3.5
million due in January 1998. After transaction and other related costs of
$4.9 million, the company recognized a pretax gain on these transactions of
$57.3 million. In the first quarter of 1996, the company also recognized
a $4.0 million write-down of assets related to a joint venture in Venezuela
due to the uncertainty of recoverability caused by the devaluation of that
country's local currency. These items comprise the $53.3 million "Net Gain
on Investments" reported in the income statement for the six months ended
June 30, 1996.
3. In November 1993, a federal court jury in Houston, Texas, awarded Exxon
Corporation $48 million in damages in a patent case brought, in 1989,
against the company. The damages award related to a December 1992 verdict
that the company willfully infringed an Exxon patent pertaining to an oil
soluble copper additive component. In February 1994, the trial court judge
doubled the damages amount and awarded prejudgment interest, court costs and
additional attorneys' fees to Exxon. The total amount of the judgment,
including previously awarded attorneys' fees, was $129 million.
In September 1995, the United States Court of Appeals for the Federal
Circuit in Washington, D.C., which has jurisdiction over all patent cases,
overturned the jury verdict that the company infringed the Exxon patent and
entered judgment in favor of the company as a matter of law. The ruling
also vacated an injunction against the company and the $129 million
judgment. In February 1996, the same court in Washington, D.C., denied
Exxon's request for rehearing. On June 24, 1996, the U.S. Supreme Court
denied Exxon's request to review the Appellate Court decision. The Supreme
Court decision terminates, with finality, the judgment against the company.
<PAGE>
THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
------------------------------------------
June 30, 1996
The company has prevailed in a separate case brought in Canada against
Exxon's Canadian affiliate, Imperial Oil, Ltd., for infringement of the
company's patent pertaining to dispersant, 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 Appeal's decision. The case
has returned to the trial court for an assessment of damages. In October
1994, the trial court judge awarded the company $15 million (Canadian) in
special penalty damages, plus attorneys' fees, against Imperial Oil for
disregarding an earlier injunction for the manufacture or sale of the
dispersant which is the subject of this case. Imperial Oil commenced
proceedings to appeal the award of penalty damages. The company has not
reflected the award of penalty damages within its financial statements
pending the outcome of the appeal process. The penalty damages are in
addition to compensation damages, as to which no date has been set for a
determination. A reasonable estimation of the company's potential recovery
for compensation damages cannot be made at this time.
<PAGE>
THE LUBRIZOL CORPORATION
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
The company continued to make progress during the first half of 1996 in a
challenging business environment generally marked by slow market growth,
competitive pricing and unfavorable currency effects. The company's successful
efforts to reduce operating costs and lower inventory levels resulted in
improved cash flow from operations. In addition, capital expenditures in the
first half of 1996 were substantially lower than those incurred in the first
half of 1995. Sequentially, while revenues increased only 3% from the poor
second half of 1995, net income increased 58% (63% on a per share basis) before
inclusion of the 1996 gain on investments and the 1995 asset write-off. More
detailed comments relating to the company's results of operations and financial
position follow below.
Revenues decreased $17.1 or 4% for the second quarter of 1996 compared with the
second quarter of 1995 and $26.7 million, or 3% for the six months ended
June 30, 1996 compared with the six months ended June 30, 1995. For the second
quarter comparison, volume increased 1% but average selling prices declined
5% primarily as a result of unfavorable currency and negative price/mix impacts.
For the comparable year-to-date periods, volume declined 1%, as volume gains in
most geographic zones were more than offset by lower shipments into Western
Europe caused by continued weak demand for finished lubricants, customer order
pattern and some net loss of business with certain customers. In addition, for
the comparable year-to-date periods, average selling price declined 3% due to
unfavorable price/mix/currency effects.
The company began to ship products that meet the new industry specification for
passenger car motor oils in North America during the first half of 1996. This
new specification requires approximately 10% less additive than the existing
specification and, when fully implemented and absent changes in market share, is
expected to lessen the company's annual volume in North America by 4% (1.5%
worldwide). Approximately one half of the customers have converted to this new
specification by June 30, 1996 with the remaining customers expected to convert
by September 30, 1996.
Changing priorities of customers, along with the continuing consolidation among
additive suppliers, are resulting in some customers seeking new supply
relationships for additives. This, along with a weak demand for finished
lubricants, is causing a more competitive marketplace in certain product lines.
Although the company has experienced both gains and losses of business in the
normal course of its operations, such changes may occur more frequently under
these conditions and in periods where new industry specifications are being
introduced.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
While manufacturing costs and average material costs were each lower by 4%,
gross profit (sales less cost of sales) decreased $16.9 million or 11% for the
second quarter of 1996 compared with the second quarter of 1995. This decrease
principally resulted from the effects of lower average selling prices combined
with the unfavorable effect of higher manufacturing costs per unit caused by
lower production levels as inventory quantities were reduced. For the six
months ended June 30, 1996, gross profit declined $22.4 million or 8% compared
with the first six months of 1995 principally due to the same factors
influencing the change in the second quarter comparison. Unfavorable currency
effects contributed approximately 40% and 20%, respectively, toward the decline
in gross profit amount for the respective three and six-month periods ended
June 30, 1996. Gross profit as a percent of sales decreased from 34.1% to 31.4%
for the second quarter and from 33.6% to 31.9% for the six-months ended
June 30, 1996 as compared with the year ago periods.
Continuing progress is being made to lower operating costs. Management has
various initiatives in place relating to the cost structure of the company, both
on a short-term and a long-term basis. These include a worldwide freeze on
salary increases and hiring effective January 1996 and the manufacturing
rationalization and organizational realignment initiatives that began in 1993.
Employee levels are approximately 4% lower at June 30, 1996 compared with
December 31, 1995, as retiring or departing employees were not replaced. The
company's manufacturing costs and selling, administrative, research and testing
expenses were each lower than the year ago period. Excluding currency effects,
these costs and expenses in the aggregate declined 4% for comparative second
quarter periods and 3% for the comparative year-to-date periods. Despite the
revenue decline, selling, administrative, research and testing expenses were 19%
of revenues for the quarter and six-month period ended June 30, 1996 compared
with 20% of revenues for the comparable prior year periods.
On February 20, 1996, the company sold all of its investment in Mycogen
Corporation (Mycogen) to DowElanco for cash of $126.2 million, completing the
divestiture of its former agribusiness assets other than those relating to
specialty vegetable oil operations. In addition, on January 15, 1996, the
company sold certain rights to its SVO oilseed technology to Mycogen for $8.0
million, which is payable in installments through January 1998. After
transaction and other related costs of $4.9 million, the company recognized a
pretax gain on these transactions of $57.3 million. The company also
recognized a $4.0 million write-down of its assets related to a joint venture in
Venezuela due the uncertainty of recoverability caused by the devaluation of
that country's local currency. These items were recognized in the first
quarter of 1996 and comprise the $53.3 million gain ($.55 per share after tax)
reflected in the income statement line item "Net gain on investments."
The $25.4 million gain ($.26 per share after tax) in the second quarter of
1995 and $38.5 million gain ($.39 per share after tax) for the first half of
1995 were from the sale of the Genentech common stock.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
Other income-net decreased $4.0 million and $5.1 million for the three-month and
six-month periods ended June 30, 1996 compared with the respective periods of
1995. These declines reflect the disposition of the agribusiness investment as
discussed above, the consolidation of former joint ventures in Latin America and
exchange losses due to changing currency rates.
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. During 1995, the U.S. dollar weakened primarily during the second and
third quarters and particularly against the French franc, German deutsche mark
and Japanese yen causing higher U.S. dollar revenues and earnings. During the
second quarter of 1996 the U.S. dollar strengthened compared with exchange rates
in effect during the second quarter of 1995 resulting in an unfavorable effect
on net income of approximately $3.5 million or $.06 per share. For the
six-month period ended June 30, 1996, the unfavorable currency effect on net
income was $1.9 million or $.03 per share. If exchange rates remain unchanged
from those in effect at June 30, 1996, there will be a further negative effect
on earnings for the second half on 1996 when compared with the exchange rates
that existed during the second half of 1995.
Before inclusion of the after-tax gain on investments, net income in the second
quarter of 1996 was $38.1 million or $.63 per share, which was 15% less
(10% less on a per share basis) than the record $44.8 million or $.70 per share
for the second quarter of 1995. On a year-to-date basis, net income before
inclusion of the after-tax gain on investments, was $74.7 million or $1.22 per
share for 1996, which was 13% less (8% less on a per share basis) than the
record $85.4 million or $1.32 per share for the first half of 1995.
WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES
- ------------------------------------------------
Despite lower revenues, cash provided from operating activities increased 16%
to $109.4 million for the first six months of 1996, compared with $94.4 million
generated in the first six months of 1995. This increase was principally
attributable to cash generated by reducing working capital, primarily inventory,
and the positive cash effect of lowering operating costs.
Proceeds from sale of investments reflected under "Investing Activities" in the
Consolidated Statement of Cash Flows for the six months ended June 30, 1996, are
comprised of $126.2 million cash collected from the sale of Mycogen and $2.0
million collected from the sale of certain SVO technology rights, as described
above.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
During 1995, capital expenditures reached record levels, as the company was
completing several large construction projects to enhance or maintain production
capabilities at plant facilities principally in the United States and France, as
well as investing in new corporate administrative and technical facilities. As
expected, the level of capital spending has declined sharply in 1996 due to the
completion of these projects. Capital expenditures for the first half of 1996
were $51.1 million or 52% lower than the first half of 1995. Capital
expenditures for the full year 1996 are expected to be less than $125 million as
compared with $189 million for 1995.
For 1996, the company's share repurchase program is currently planned to consist
of shares repurchased with the approximate $110 million of after-tax cash
proceeds realized from the sale of its Mycogen investment. During the first
half of 1996, the company repurchased 2,763,000 of its common shares for $82.5
million. At June 30, 1996, there was authorization remaining to repurchase 4.3
million common shares.
Financing activities reflects a net repayment of debt of $44.9 million during
the first half of 1996. Debt declined from December 31, 1995 as a result of
improved cash flow from operations, lower capital expenditures and the
utilization of approximately $28 million of cash proceeds from the sale of
Mycogen to reduce debt until such proceeds may be used in the company's common
share repurchase program. Debt as a percent of capitalization (shareholders'
equity plus short-term and long-term debt) declined to 19% as compared to 23%
at December 31, 1995. However, debt is expected to increase during the
remainder of 1996 as the company continues its share repurchase program, and
debt as a percent of capitalization is expected to return to the 20-25% range.
Primarily as a result of these activities and the payment of dividends, cash and
short-term investments increased $30.1 million to $60.7 million at June 30,
1996.
The company's financial position continues to be strong with a ratio of current
assets to current liabilities of 2.9 to 1 at June 30, 1996, compared to 2.4 to
1 at December 31, 1995. 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. In a case in the United States, the company, in 1993, had been found
by a jury verdict to have infringed an Exxon patent and a $129 million judgment
was entered against the company. On appeal, the United States Court of Appeals
for the Federal Circuit in Washington, D.C., in 1995, overturned the jury
verdict and vacated the $129 million judgment against the company. In June 1996,
the U.S. Supreme Court denied Exxon's request to review the Appellate Court
decision, which terminates, with finality, the judgment against the company.
Please refer to Note 3 to the financial statements for further discussion
regarding the company's patent litigation with Exxon.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The company was a party in a case brought by Exxon Corporation and its
affiliates, Exxon Chemical Patents, Inc. and Exxon Research & Engineering
Company, in the Southern District of Texas, Houston Division on September 19,
1989. In December 1992, the trial jury rendered a verdict that the company
willfully infringed an Exxon patent pertaining to an oil soluble copper
additive component. In early 1993, the court prohibited the company from
making or selling any additive packages in the United States that contained
this component and awarded Exxon $18.1 million for attorneys' fees. In
November 1993, another jury in the same case awarded Exxon $48 million in
damages, and in February 1994, the trial court judge doubled the damages
amount and awarded prejudgment interest, court costs and additional
attorney's fees for a total judgment of $129 million. The findings of
infringement and validity of the Exxon patent as well as the $129 million
judgment were appealed to the United States Court of Appeals for the Federal
Circuit in Washington, D.C., which has jurisdiction over all patent cases.
On September 1, 1995, the Appellate Court overturned the jury verdict that
the company infringed the Exxon patent and entered judgment in favor of the
company as a matter of law. The ruling also vacated the injunction against
the company and the $129 million judgment. On February 23, 1996, the same
court in Washington, D.C., denied Exxon's request for a rehearing. On
June 24, 1996, the U.S. Supreme Court denied Exxon's request to review the
Appellate Court judgment. The Supreme Court decision finalizes the Appellate
Court judgment.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Shareholders of the Corporation was held April 22,
1996. The following matters were voted on by the shareholders:
1. Election of directors:
(a) William G. Bares. The vote was 54,720,976 shares
for and 510,365 shares to withhold authority.
(b) Peggy Gordon Elliott. The vote was 54,513,186 shares
for and 718,155 shares to withhold authority.
(c) Gordon D. Harnett. The vote was 54,742,112 shares
for and 489,229 shares to withhold authority.
(d) Victoria F. Haynes. The vote was 54,769,599 shares
for and 461,742 shares to withhold authority.
(e) David H. Hoag. The vote was 54,789,050 shares
for and 442,291 shares to withhold authority.
(f) Thomas C. MacAvoy. The vote was 54,727,529 shares
for and 503,812 shares to withhold authority.
<PAGE>
PART II. OTHER INFORMATION
2. A proposal to amend the 1991 Stock Incentive Plan. The vote was
52,510,286 shares for; 1,916,677 against; and 804,378 shares
abstaining.
3. A proposal to confirm the appointment of Deloitte & Touche LLP as
independent auditors. The vote was 54,907,601 shares for; 168,772
shares against; and 154,968 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during
the quarter ended June 30, 1996.
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: August 13, 1996
<TABLE>
EXHIBIT 11
THE LUBRIZOL CORPORATION
Computation of Per Share Earnings
Second Quarter, 1996
The computation of primary earnings per share and fully diluted earnings per
share is as follows:
(In Thousands of Shares Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Average shares outstanding for
computation of primary
earnings per share 60,906 64,066 61,760 64,394
Add adjustment to treat shares
for options exercised as if
such shares were outstanding
during the entire period 85 20 53 55
Add equivalent shares for
unexercised options at end
of period* 196 425 196 428
------ ------ ------ ------
Average shares outstanding for
computation of fully diluted
earnings per share 61,187 64,511 62,009 64,877
====== ====== ====== ======
Primary earnings per share $.63 $.96 $1.77 $1.71
==== ==== ===== =====
Fully diluted earnings per share $.62 $.95 $1.76 $1.70
==== ==== ===== =====
</TABLE>
*Computed under the "Treasury Stock Method" using the higher of quoted
ending or average market price.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000060751
<NAME> THE LUBRIZOL CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.0
<CASH> 60,690
<SECURITIES> 0
<RECEIVABLES> 239,082
<ALLOWANCES> 1,262
<INVENTORY> 267,814
<CURRENT-ASSETS> 632,578
<PP&E> 1,474,658
<DEPRECIATION> 792,572
<TOTAL-ASSETS> 1,419,177
<CURRENT-LIABILITIES> 220,716
<BONDS> 184,947
0
0
<COMMON> 80,365
<OTHER-SE> 754,494
<TOTAL-LIABILITY-AND-EQUITY> 1,419,177
<SALES> 825,943
<TOTAL-REVENUES> 828,470
<CGS> 562,119
<TOTAL-COSTS> 562,119
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 62
<INTEREST-EXPENSE> 5,408
<INCOME-PRETAX> 162,293
<INCOME-TAX> 52,987
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109,306
<EPS-PRIMARY> 1.77
<EPS-DILUTED> 1.76
</TABLE>
