Exhibit 99.1
[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
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 FIRST QUARTER RESULTS
CLEVELAND, OHIO, April 24, 2003 - The Lubrizol Corporation (NYSE:LZ) announced
that consolidated earnings for the first quarter ended March 31, 2003, were
$26.0 million or $.50 per share, after a pre-tax restructuring charge of $3.5
million, or $.05 per share, related to the Bromborough, England manufacturing
facility. Consolidated earnings for the comparable period in 2002 were $22.0
million, or $.43 per share, after a write-off of goodwill related to a required
accounting change of $7.8 million or $.15 per share. Excluding the restructuring
charge and the cumulative effect of the accounting change in 2003 and 2002
respectively, earnings were $.55 per share for the first quarter of 2003
compared to $.58 in 2002. Earnings for 2003 were affected by accretive
acquisitions, favorable currency and higher pricing, offset by lower shipment
volume of lubricant additives, higher material costs, higher operating expenses
and a higher tax rate.
Consolidated revenues for the quarter of $508.2 million were nine
percent higher than revenues of $467.5 million in the first quarter of 2002.
Excluding the four acquisitions completed in 2002, revenues for the quarter
increased four percent.
Revenues in the fluid technologies for transportation (FTT) segment
were $390.5 million, an increase of two percent compared to the first quarter of
2002. FTT shipment volume for the quarter was affected by a shift in viscosity
modifiers from liquids to a higher value, concentrated solid form. Excluding
this mix shift, FTT shipment volume decreased one percent for the quarter due to
an expected loss of business with one customer. Higher raw material and
manufacturing costs offset price increases, reduced STAR (selling, testing,
general and administrative) expenses and favorable currency. As a result,
segment contribution income for FTT of $75.4 million declined two percent from
the first quarter a year ago.
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[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
Revenues in the fluid technologies for industry (FTI) segment were
$110.5 million in the first quarter, and increased 38 percent compared to the
first quarter of 2002. Segment contribution income of $20.6 million for the
quarter increased 27 percent compared to the first quarter of 2002. Excluding
acquisitions, FTI revenues grew 12 percent and segment contribution income
increased 14 percent for the quarter.
Revenues in the "all other" segment, which includes fluid metering
equipment, emission control devices and PuriNOx(TM) low-emissions diesel fuel
technology, were $7.2 million for the quarter, an increase of 25 percent over
the first quarter, 2002. Segment contribution losses of $2.1 million narrowed
compared to a loss of $3.0 million in the first quarter, 2002. This segment also
includes commercial development programs for sensors and systems that are
designed to extend asset life and reduce emissions.
Commenting on the results, W.G. Bares, Chairman and Chief Executive
Officer, said, "Economic conditions caused earnings to fall short of our
expectations for the quarter. Material and energy costs were higher than we
anticipated, and demand for lubricant additives was weaker than expected in the
second half of the quarter. However, we made progress with our ongoing
initiatives to improve growth and profitability. This quarter we increased
prices in FTT and FTI, restrained expenses, began restructuring a manufacturing
facility and drove growth in FTI and emerging businesses. An intermediate
production and blending facility located in Bromborough, England, is undergoing
restructuring to be more cost-competitive. The restructuring program is targeted
to be completed by year-end and annualized savings are projected to be about $4
million. In another cost-saving measure, 2003 salary increases have been delayed
six months for employees in domestic and most international locations.
"In FTT, we increased prices beginning in December for North America
and in the first quarter for the rest of the world. We also implemented a second
round of FTT price increases beginning in late March in response to additional
raw material price increases announced in late February and extreme spikes in
the cost of natural gas utilities. We continue to be optimistic about our
prospects for the next passenger car motor oil upgrade, designated GF-4, which
is targeted for initial commercialization in early 2004. Customers and auto
manufacturers have responded well to our technical approach to meeting GF-4's
challenging emissions reductions.
"Most FTI businesses performed better than their industries in 2002 and
continued to build momentum through the first quarter of 2003. New additives for
metalworking, coatings and inks enabled us to gain market share, and our 2002
acquisitions in personal care, foam
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[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
control additives and specialty coatings resins realized additional synergies.
Although no new acquisitions were completed this quarter, we remain enthusiastic
about our prospects. We are also encouraged this quarter by steady progress with
our developing businesses for reducing emissions.
"Looking ahead, April demand appears to be in line with expectations,
but current economic conditions and higher than usual volatility in raw material
costs have made projections difficult. Nevertheless, we are maintaining our
guidance for the year at $2.20 to $2.30 per share, excluding the restructuring
charge. Including the estimated full-year restructuring charge of approximately
$.07 per share, we believe we will achieve earnings per share for the year in
the range of $2.13 to $2.23. For the second quarter, we believe we will achieve
earnings per share in the range of the mid-$.50's to low-$.60's. Compared to
last year's second quarter, we believe we will realize higher revenues based on
growth in FTI and the "all other" segment, price increases and positive currency
effects. We believe these higher revenues will be partially offset by higher
material costs, higher manufacturing expense and a higher tax rate."
An audio webcast of the first 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 is a global fluid technology company
concentrating on high-performance chemicals, systems and services for
transportation and industry.
###
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 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.
[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
THE LUBRIZOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
Three Months Ended
March 31
--------------------------------
2003 2002
--------------- ------------
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 507,000 $ 466,713
Royalties and other revenues. . . . . . . . . . . . . . 1,213 799
--------------- ------------
Total revenues . . . . . . . . . . . . . . . . . . 508,213 467,512
Cost of sales . . . . . . . . . . . . . . . . . . . . . 368,263 331,210
Selling and administrative expenses . . . . . . . . . . 50,815 48,743
Research, testing and development
expenses. . . . . . . . . . . . . . . . . . . . . . . 41,633 40,566
Restructuring charge. . . . . . . . . . . . . . . . . . 3,506 -
--------------- ------------
Total cost and expenses. . . . . . . . . . . . . . 464,217 420,519
Other income (expense) - net. . . . . . . . . . . . . . (309) (719)
Interest (expense) - net. . . . . . . . . . . . . . . . (4,847) (3,678)
--------------- ------------
Income before income taxes and
cumulative effect of change
in accounting principle. . . . . . . . . . . . . . . . 38,840 42,596
Provision for income taxes. . . . . . . . . . . . . . . 12,817 12,779
--------------- ------------
Income before cumulative effect
of change in accounting principle. . . . . . . . . . . 26,023 29,817
Cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . (7,785)
--------------- ------------
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 26,023 $ 22,032
=============== ============
Net income per share:
Net income before cumulative effect
of change in accounting principle. . . . . . . . . . . $ 0.50 $ 0.58
Cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . (0.15)
--------------- ------------
Net income per share. . . . . . . . . . . . . . . . . . $ 0.50 $ 0.43
=============== ============
Diluted net income per share:
Income before cumulative effect of
change in accounting principle . . . . . . . . . . . . $ 0.50 $ 0.58
Cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . (0.15)
--------------- ------------
Net income per share, diluted . . . . . . . . . . . . . $ 0.50 $ 0.43
=============== ============
Weighted average common shares
outstanding. . . . . . . . . . . . . . . . . . . . . . 51,643 51,343
Amounts shown are unaudited.
[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
THE LUBRIZOL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
March 31 December 31
2003 2002
-------------- ---------------
ASSETS
Cash and short-term investments. . . . . . . . $ 227,146 $ 266,428
Receivables. . . . . . . . . . . . . . . . . . 332,955 295,508
Inventories. . . . . . . . . . . . . . . . . . 315,011 302,968
Other current assets . . . . . . . . . . . . . 44,510 44,875
------------ -----------
Total current assets . . . . . . . . 919,622 909,779
Property and equipment - net . . . . . . . . . 670,800 679,155
Goodwill and intangible assets - net . . . . . 210,739 211,514
Investments and other assets . . . . . . . . . 61,826 59,689
------------ -----------
Total. . . . . . . . . . . . . . . . $1,862,987 $1,860,137
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion
of long-term debt . . . . . . . . . . . . . $ 12,639 $ 17,046
Other current liabilities. . . . . . . . . . . 268,992 290,695
------------ -----------
Total current liabilities. . . . . . 281,631 307,741
Long-term debt . . . . . . . . . . . . . . . . 384,155 384,845
Other noncurrent liabilities . . . . . . . . . 247,948 244,911
------------ -----------
Total liabilities. . . . . . . . . . 913,734 937,497
------------ -----------
Minority interest in consolidated companies. . 51,616 53,388
------------ -----------
Shareholders' equity . . . . . . . . . . . . . 897,637 869,252
------------ -----------
Total. . . . . . . . . . . . . . . . $1,862,987 $1,860,137
============ ===========
Amounts shown are unaudited.
[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
THE LUBRIZOL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
Three Months Ended
March 31
-----------------------------------
2003 2002
-------------- ----------------
Cash provided from (used for):
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . $ 26,023 $ 22,032
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization . . . . . . . 24,452 22,492
Cumulative effect of change in
accounting principle . . . . . . . . . . . . 7,785
Restructuring charge . . . . . . . . . . . . 3,506
Net change in working capital . . . . . . . (59,354) (6,073)
Other items - net . . . . . . . . . . . . . (412) (786)
--------- ---------
Total operating activities . . . . . . (5,785) 45,450
INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . (15,331) (12,126)
Acquisitions and equity investments . . . . . . (17,235)
Other - net . . . . . . . . . . . . . . . . . . (235) 2,252
--------- ---------
Total investing activities . . . . . . (15,566) (27,109)
FINANCING ACTIVITIES:
Net short and long-term borrowings (repayments) (4,317) 1,514
Dividends paid . . . . . . . . . . . . . . . . . (13,379) (13,328)
Proceeds from termination of interest rate swaps
Stock options exercised . . . . . . . . . . . . 1,190 5,622
--------- ---------
Total financing activities . . . . . . (16,506) (6,192)
Effect of exchange rate changes on cash . . . . (1,425) 361
--------- ---------
Net increase (decrease)in cash and short-term .
investments . . . . . . . . . . . . . . . . . (39,282) 12,510
Cash and short-term investments at the
beginning of period . . . . . . . . . . . . . 266,428 189,095
--------- ---------
Cash and short-term investments at the
end of period . . . . . . . . . . . . . . . . $ 227,146 $ 201,605
========= =========
Amounts shown are unaudited.
[LUBRIZOL LOGO] Fluid technologies for a better world(TM)
THE LUBRIZOL CORPORATION
SEGMENT INFORMATION
(In Thousands of Dollars)
Three Months
Ended March 31
--------------------------------
2003 2002
----------- -----------
Revenues:
Fluid technologies for transportation $ 390,476 $ 381,421
Fluid technologies for industry . . . . . . . . . 110,542 80,315
All other . . . . . . . . . . . . . . . . . . . . 7,195 5,776
----------- -----------
Total revenues . . . . . . . . . . . . . . . . . $ 508,213 $ 467,512
=========== ===========
Segment contribution income(loss):
Fluid technologies for transportation . . . . . . $ 75,398 $ 77,317
Fluid technologies for industry . . . . . . . . . 20,578 16,155
All other . . . . . . . . . . . . . . . . . . . . (2,065) (3,024)
----------- -----------
Total segment
contribution income (loss) . . . . . . . . . . $ 93,911 $ 90,448
=========== ===========
Amounts shown are unaudited.