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, 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)
(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, 1997: 57,690,178
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
THE LUBRIZOL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
---------- -----------
<S> <C> <C>
ASSETS
Cash and short-term investments....................... $ 74,764 $ 55,073
Receivables........................................... 284,864 238,401
Inventories:
Finished products................................... 97,276 88,176
Products in process................................. 57,246 77,910
Raw materials....................................... 82,622 66,590
Supplies and engine test parts...................... 19,162 19,229
---------- ----------
256,306 251,905
---------- ----------
Other current assets.................................. 31,245 39,720
---------- ----------
Total current assets............... 647,179 585,099
Property and equipment - net.......................... 697,922 707,314
Investments in nonconsolidated companies.............. 22,157 29,821
Other assets.......................................... 86,899 79,881
---------- ----------
TOTAL.......................... $1,454,157 $1,402,115
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion of long-term debt. $ 54,317 $ 40,871
Accounts payable...................................... 122,425 99,676
Income taxes and other current liabilities............ 98,141 86,563
---------- ----------
Total current liabilities........... 274,883 227,110
Long-term debt........................................ 159,694 157,628
Postretirement health care obligation................. 106,462 105,463
Noncurrent liabilities................................ 44,890 47,284
Deferred income taxes................................. 44,479 45,254
---------- ----------
Total liabilities................... 630,408 582,739
---------- ----------
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 - 57,804,548 shares as of June 30,
1997 after deducting 28,391,346 treasury shares,
58,522,676 shares as of December 31, 1996
after deducting 27,673,218 treasury shares........ 80,399 78,534
Retained earnings................................... 772,001 744,310
Accumulated translation adjustment.................. (28,651) (3,468)
---------- ----------
Total shareholders' equity......... 823,749 819,376
---------- ----------
TOTAL.......................... $1,454,157 $1,402,115
========== ==========
Amounts shown are unaudited.
</TABLE>
<PAGE>
THE LUBRIZOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
-------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................... $432,556 $420,531 $820,305 $825,943
Royalties and other revenues........ 965 838 2,225 2,527
-------- -------- -------- --------
Total revenues............ 433,521 421,369 822,530 828,470
Cost of sales....................... 283,013 288,524 541,120 562,119
Selling and administrative expenses. 42,330 39,618 82,344 80,226
Research, testing and development
expenses.......................... 36,107 38,849 71,089 79,545
-------- -------- -------- --------
Total cost and expenses... 361,450 366,991 694,553 721,890
Gain on investments................. 53,280
Other income (expense) - net........ (909) 208 2,336 3,421
Interest income..................... 908 3,304 1,774 4,420
Interest expense.................... (2,589) (2,314) (5,033) (5,408)
-------- -------- -------- --------
Income before income taxes.......... 69,481 55,576 127,054 162,293
Provision for income taxes.......... 22,581 17,506 41,293 52,987
-------- -------- -------- --------
Net income.......................... $ 46,900 $ 38,070 $ 85,761 $109,306
======== ======== ======== ========
Net income per share................ $ .81 $ .63 $1.47 $1.77
===== ===== ===== =====
Dividends per share................. $ .25 $ .24 $ .50 $ .48
===== ===== ===== =====
Average number of shares outstanding 58,111 60,906 58,307 61,760
====== ====== ====== ======
Amounts shown are unaudited.
</TABLE>
<PAGE>
THE LUBRIZOL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------
(In Thousands of Dollars) 1997 1996
-------- ---------
<S> <C> <C>
Cash provided from (used for):
Operating activities:
Net income................................................... $ 85,761 $ 109,306
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization............................ 42,257 39,413
Deferred income taxes.................................... 294 2,830
Equity (earnings) losses, net of distributions........... (1,384) 1,111
Gain on investments...................................... (53,280)
Change in current assets and liabilities:
Receivables............................................ (52,979) (21,542)
Inventories............................................ (10,063) 38,600
Accounts payable and accrued expenses.................. 39,770 (5,984)
Other current assets................................... 8,144 6,280
Other items - net........................................ (8,395) (7,380)
-------- ---------
Total operating activities......................... 103,405 109,354
Investing activities:
Proceeds from sale of investments............................ 12,117 128,144
Capital expenditures......................................... (43,905) (51,104)
Businesses acquired - net of cash............................ (14,864) (741)
Other - net.................................................. 3,576 2,448
-------- ---------
Total investing activities (43,076) 78,747
Financing activities:
Short-term borrowing (repayment)............................. 13,427 (56,298)
Long-term borrowing.......................................... 5,572 28,325
Long-term debt (repayment)................................... (2,058) (16,924)
Dividends paid............................................... (29,209) (29,785)
Common shares purchased, net of options exercised............ (26,996) (81,849)
-------- ---------
Total financing activities......................... (39,264) (156,531)
Effect of exchange rate changes on cash...................... (1,374) (1,459)
-------- ---------
Net increase in cash and short-term investments.............. 19,691 30,111
Cash and short-term investments at the beginning of period... 55,073 30,579
-------- ---------
Cash and short-term investments at the end of period......... $ 74,764 $ 60,690
======== =========
Amounts shown are unaudited.
</TABLE>
<PAGE>
THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
June 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 June 30, 1997 and December 31,
1996, and the results of operations and cash flows for the applicable
periods ended June 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. In February 1997, the Financial Accounting Standards Board issued
SFAS 128, Earnings Per Share. SFAS 128 becomes effective for interim and
annual financial statements issued after December 15, 1997. 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 and certain footnote
disclosures. "Basic" EPS excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of
common shares outstanding during the period. The EPS currently reported
for the company excludes the effect of outstanding stock options and
awards as the dilution effect is less than 3%. Therefore, EPS to be
reported by the company under "Basic" EPS will be the same amount as
calculated under the current standard. "Diluted" EPS reflects the
potential dilution that could occur if securities or other contracts to
issue common shares were exercised or converted into common shares or
resulted in the issuance of common shares. For the three and six month
periods ended June 30, 1997, the company's outstanding stock options and
awards, would have an insignificant effect when reporting "Diluted" EPS.
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
returned to the trial court for an assessment of compensation damages,
and a tentative trial date has been set for late 1997 regarding the
determination of such damages. In October 1994, the trial court judge
<PAGE>
THE LUBRIZOL CORPORATION
Notes to Consolidated Financial Statements
June 30, 1997
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 lower 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. As a court
ordered condition in the company's efforts to obtain a stay of this
proceeding, 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 would be refunded in whole or in
part.
<PAGE>
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 half of 1997 in
growing its business at targeted accounts and in continuing to reduce
its cost structure. Higher sales volume, particularly during the second
quarter, coupled with lower raw material and operating costs, more than
offset continued competitive pricing, unfavorable effects of changing
product mix and unfavorable currency effects. As a result, the company
improved its overall gross profit percentage and net income for the
second quarter and the first half of 1997. Earnings per share increased
29% and 20% for the second quarter and the first half of 1997,
respectively, 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 $12.2 million or 3% for the second
quarter of 1997 compared with the second quarter of 1996, and decreased
$5.9 million, or 1%, for the first half of 1997 compared with the first
half of 1996. In each of the respective comparative periods, the effect
of higher sales volume was substantially offset by lower average selling
prices per metric ton. The change in revenue for the comparative second
quarter periods was due to a 17% increase in the sales volume of
specialty chemicals while lower average selling prices unfavorably
affected revenues by 12%, of which 3% was due to currency. The change
in revenue for the comparative first half periods was due to an 11%
increase in the sales volume of specialty chemicals while lower average
selling prices unfavorably affected revenues by 10%, of which 3% was
currency related. In addition, consolidated revenues declined 2% in
both the second quarter and the first half of 1997 due to the net effect
of acquisition/divestiture activity between the comparative 1996
periods.
Higher sales volumes were realized in most geographic zones and across a
broad customer range. For the second quarter and the first half of 1997,
respectively, sales volume increased 11% and 8% to North American customers
and 21% and 14% to international customers, primarily in Asia-Pacific and
Western Europe, as compared with the same periods of the prior year. The
company believes these business gains were a result of actively pursuing
strategic relationships with finished lubricant suppliers and being well
positioned to compete within the current industry environment, which led to
market share gains from these opportunities. The volume gains in North
America more than offset the impact of a new engine oil standard to which
customers converted during the first nine months of 1996, which requires
approximately 10% less additive than the previous specification. The company
believes sales volume for the full year 1997 will be at least 10% higher than
the full year 1996.
<PAGE>
THE LUBRIZOL CORPORATION
Item 2 - 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.
Cost of sales reflect lower average raw material costs and conversion costs.
Average raw material costs, including favorable currency effects and the
impact of less expensive product mix, were approximately 10% lower for both
the second quarter and the first half of 1997 as compared with the same prior
year periods. The company's manufacturing costs do not fluctuate
significantly with production volume. Manufacturing costs were lower in each
of the comparative periods, despite higher production levels to meet the
increased sales volume, primarily as a result of the ongoing effects of
manufacturing rationalization and other cost management initiatives coupled
with favorable currency effects on manufacturing costs.
Gross profit (sales less cost of sales) increased $17.5 million or 13% for
the second quarter of 1997, compared with the second quarter of 1996, and
increased $15.4 million or 6% for the first half of 1997 versus the first
half of 1996. This improvement in gross profit amount includes unfavorable
currency effects of $5.4 million and $9.9 million, respectively, for the
second quarter and the first half of 1997. Gross profit as a percent of sales
increased to 34.6% from 31.4% for the second quarter and to 34.0% from 31.9%
for the first half of 1997 as compared with the same 1996 periods.
The company has continued to lower its operating costs despite lifting the
freeze on salary increases that was in place throughout 1996. At June 30,
1997, employee levels were approximately 4% lower as compared with June 30,
1996 as retiring or departing employees have not been replaced.
Selling and administrative expenses were $2.7 million or 7% higher in the
second quarter of 1997 compared with the second quarter of 1996 and $2.1
million or 3% higher for the first half of 1997 compared with the first half
of 1996. Selling and administration expenses were higher primarily due to an
increase in accrued variable compensation expenses reflecting greater
earnings, higher litigation-related expenses and higher depreciation.
Research, testing and development expenses were $2.7 million or 7% lower in
the second quarter of 1997 and $8.5 million or 11% lower for the first half
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
and timing of testing programs, particularly within the engine oil product
lines. Although the rate of technical spending may increase during the
second half of 1997 due to the timing of testing activities, the company
believes technical spending for the full year 1997 will be lower than in
1996.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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 in 1997 was lower by $2.4 million for the second quarter and
$2.6 million lower for the first half of 1997 as compared with the same 1996
periods. Interest income in the 1996 periods was higher as a result of
temporarily investing proceeds from the sale of investments in interest-
bearing instruments until such proceeds could be 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 $.06 and $.08 on net income per
share for the second quarter and the first half of 1997, respectively.
Primarily as a result of the above factors, offset by a slightly higher
effective tax rate, net income in the second quarter of 1997 was $46.9
million, or $.81 per share, which was a 23% increase (29% on a per share
basis) over the $38.1 million or $.63 per share for the second quarter of
1996. Net income for the first half of 1997 was $85.8 million or $1.47 per
share and, after excluding from 1996 the gain on investments, was 15% higher
(20% on a per share basis) over the $74.7 million or $1.22 per share for the
first half 1996. Including the investment gain, net income for the first six
months of 1996 was $109.3 million, or $1.77 per share.
WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities was $103.4 million for the first six
months of 1997 as compared with $109.4 million for the first six months of
1996. The working capital change reflected in the cash flow statement
decreased cash flow from operations by $15.1 million for the six-month period
ended June 30, 1997 and increased cash flow from operations by $17.4 million
for the six-month period ended June 30, 1996. The 1996 period included
approximately $16.4 million related to liquidating inventories and
receivables in preparation of the sale of company's former specialty
vegetable oil (SVO) business and approximately $27 million resulting from
management efforts to reduce the specialty chemical inventory levels. During
1997 inventory levels increased slightly to support higher sales volumes and
receivable balances increased in line with the higher revenues of the second
quarter of 1997 versus the fourth quarter of 1996.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Proceeds from the sale of investments in the six-month period ended June 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 collected from the sale
of Mycogen and $2.0 million initially collected from the sale of certain SVO
technology rights.
Capital expenditures in the first half of 1997 were $43.9 million as compared
with $51.1 million for the first half of 1996. Capital expenditures for the
full year 1997 are expected to approximate $110 million, including
approximately $30 million to be expended in 1997 as a part of a multi-year
project to implement an enterprise-wide system which will fully integrate the
company's information management systems on a global basis.
During the first half of 1997, the company invested net cash of $14.9 million
to acquire a company specializing in the development and supply of performance
additives to the metal-working fluids and industrial lubricant markets, and to
fund joint venture investments in China.
The company maintains an active share repurchase program. During the first
half of 1997, the company repurchased 850,400 of its common shares for $30.0
million. In June 1997, the company's Board of Directors authorized an
additional 4 million shares under the company's share repurchase program
resulting in 5.7 million shares remaining under the repurchase authorization
at June 30, 1997. The company currently plans to expend at least $70 million
during 1997 in its share repurchase program. In addition, approximately $3.0
million was collected from the exercise of stock options during the first half
of 1997. During the first half of 1996, the share repurchase program was
expanded to utilize the after-tax proceeds from the sale of investments as the
company repurchased 2,763,000 shares for $82.5 million.
During the first half of 1997, debt increased primarily due to timing of
commercial paper borrowings and to finance a small acquisition that closed
July 1, 1997. During the first half of 1996, improved cash flow from
operations, lower capital expenditures and the utilization of approximately
$28 million of cash proceeds from the sale of Mycogen until such proceeds were
used in the company's common share repurchase program, enabled $44.9 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 21% at June 30,
1997 as compared to 20% at December 31, 1996.
Primarily as a result of these activities and the payment of dividends, the
balance of cash and short-term investments of $74.8 million at June 30, 1997
was 36% higher than the $55.1 million at December 31, 1996.
The company's financial position continues to be strong with a ratio of
current assets to current liabilities of 2.4 to 1 at June 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.
<PAGE>
THE LUBRIZOL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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.
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.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Corporation was held April 28, 1997.
The following matters were voted on by the shareholders:
1. Election of directors:
(a) Edward F. Bell. The vote was 48,944,466 shares
for and 401,892 shares to withhold authority.
(b) Lester E. Coleman. The vote was 48,901,429 shares
for and 444,929 shares to withhold authority.
(c) Forest J. Farmer, Sr. The vote was 48,919,038 shares
for and 427,320 shares to withhold authority.
(d) Ronald A. Mitsch. The vote was 48,944,469 shares
for and 401,889 shares to withhold authority.
2. A proposal to confirm the appointment of Deloitte & Touche LLP as
independent auditors. The vote was 49,160,412 shares for; 105,120
shares against; and 80,824 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, 1997.
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 14, 1997
EXHIBIT 11
THE LUBRIZOL CORPORATION
Computation of Per Share Earnings
Second 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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Average shares outstanding for
computation of primary
earnings per share 58,111 60,906 58,307 61,760
Add adjustment to treat shares
for options exercised as if
such shares were outstanding
during the entire period 113 85 141 53
Add equivalent shares for
unexercised options at end
of period* 826 196 826 196
------ ------ ------ ------
Average shares outstanding for
computation of fully diluted
earnings per share 59,050 61,187 59,274 62,009
====== ====== ====== ======
Primary earnings per share $.81 $.63 $1.47 $1.77
==== ==== ===== =====
Fully diluted earnings per share $.79 $.62 $1.45 $1.76
==== ==== ===== =====
</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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.0
<CASH> 74,764
<SECURITIES> 0
<RECEIVABLES> 259,034
<ALLOWANCES> 1,247
<INVENTORY> 256,306
<CURRENT-ASSETS> 647,179
<PP&E> 1,526,584
<DEPRECIATION> 828,662
<TOTAL-ASSETS> 1,454,157
<CURRENT-LIABILITIES> 274,883
<BONDS> 159,694
0
0
<COMMON> 80,399
<OTHER-SE> 743,350
<TOTAL-LIABILITY-AND-EQUITY> 1,454,157
<SALES> 820,305
<TOTAL-REVENUES> 822,530
<CGS> 541,120
<TOTAL-COSTS> 541,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 5,033
<INCOME-PRETAX> 127,054
<INCOME-TAX> 41,293
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,761
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.45
</TABLE>
