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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 o
    
    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
  OHIO
    
    34-0367600(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 
   Title of each class
    
    Name of each exchange on which registeredCommon Shares without par value
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 o
   Large accelerated
    filer þ

Accelerated
    filer oNon-accelerated

filer o (Do not check if a smaller reporting company)

Smaller reporting
    company o  o þ
   Documents Incorporated by Reference




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEX-10.2EX-10.7EX-10.8EX-10.9EX-10.13EX-10.14EX-10.15EX-10.16EX-10.17EX-10.18EX-10.19EX-10.20EX-10.21EX-10.22EX-10.24EX-10.26EX-12.1EX-13.1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1    Table of Contents  
 PART I
 
 ITEM 1. BUSINESS
  Overview
 .
 ® ® ® ®
    www.lubrizol.com
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Acquisitions and Divestitures
   ®
 ®
  Business Segments
  3




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Lubrizol Additives Segment
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
    
    antioxidants that retard oil thickening;
    
    anti-wear agents that prevent surfaces metal-to-metal contact;
    
    corrosion inhibitors that prevent rust;
    
    detergents that prevent deposit build-up;
    
    dispersants that protect equipment by suspending contaminant particles;
    
    friction modifiers that control friction at surfaces;
    
    polymer-based viscosity modifiers that allow lubricants to operate over broad
temperature ranges; and
    
    pour point depressants that control low temperature fluid thickening.
   Engine Additives.
  Category
    
    Product/Brand
    
    DescriptionEngine Additives
    
    Passenger car motor oils,
heavy-duty diesel engine
oils, marine diesel,
small engines, stationary
gas and viscosity
modifiers
    
    Additives that extend
engine life, lower
emissions and enhance
fuel economy.Fuel, refinery and
oilfield products and
other components
    
    Additives designed to
eliminate deposits and
provide fuel system
cleanliness, prevent rust
and corrosion, enhance
fuel economy, provide
anti-knock, lower
volatility and improve
storage stability.
 Driveline and Industrial Additives.
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Driveline Additives
  Industrial Additives
   Category
    
    Product/Brand
    
    DescriptionDriveline and
Industrial Additives
    
    Driveline additives
for automatic
transmission fluids,
gear oils and farm
tractor fluids
    
    Additives that
provide multiple and
complex performance
properties, including
reducing friction in
order to prevent wear
of transmissions,
gears and farm
tractor components.Additives for
industrial fluids,
including hydraulics,
metalworking,
industrial gear,
grease and compressor
fluids
    
    A wide range of
additives to meet the
lubricant performance
requirements of
industrial equipment.
 Lubrizol Advanced Materials Segment
    Noveon Consumer Specialties.
  
    
    Carbopol acrylic thickener, which is a global leader in synthetic thickeners due to its
efficient stabilizing properties and superior thickening capabilities. Primary end-uses in
the personal care industry include hair
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care, skin care and personal and oral care products. Pharmaceutical primary end-uses include
topical and controlled-release applications.
    
    Methyl glucoside and lanolin derivatives that enhance the functional and aesthetic
properties of personal care products by delivering characteristics such as emulsification,
thickening and moisturizing, as well as imparting the elegant feel to lotions and creams.
    
    AMPS® specialty monomers that are used in the manufacture of polymers for a
variety of applications such as dishwashing detergents to reduce spotting, skin creams to
improve lubricity and feel, medical gels for defibrillator pads to enhance conductivity and
coatings and adhesives to improve adhesion.
    
    Specialty surfactants and additives that enhance the functional and aesthetic
properties of personal care products and household and industrial cleaners by improving
characteristics such as foaming, cleansing, conditioning and mildness. Surfactants
primarily are used in hair care products, such as shampoos and body washes.
  Category
    
    Product/Brand
    
    DescriptionPersonal Care and
Pharmaceuticals
    
    Carbopol®
    
    Acrylic thickener, which imparts
stability and improves
aesthetics. Also used as a
controlled release agent in
pharmaceuticals.Pemulen®
    
    Polymeric emulsifier reducing
formulation irritancy and
providing unique sensory
properties.Avalure®
    
    Polymers for color cosmetics and
skin care.Specialty silicones
    
    Polymers affecting slip-and-feel.Fixate®
    
    Resin for hair styling.Emollients
    
    Improve skin feel and appearance.Methyl glucoside
derivatives, including
Glucamate®
    
    Natural thickeners, emulsifiers
and moisturizers for shampoos,
liquid cleansers, face and body
creams and lotions.Lanolin derivatives
    
    Natural emollients, emulsifiers
and conditioners for creams,
lotions and color cosmetics.AMPS® monomers
    
    Specialty monomer for high
performance polymers.Specialty surfactants,
including
Sulfochem®
    
    Enhance cleansing, foaming and
moisturizing of shampoos, body
washes and industrial and
household cleaners.Calcium polycarbophil
    
    Active agent for bulk laxatives.Cassia gum
    
    Gelling agents for human food
(select approvals) and pet food.
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Performance Coatings.
  Specialty Resins and Polymers
 ®
  Category
    
    Product/Brand
    
    DescriptionSpecialty Resins
and Polymers
    
    Acrylic Emulsions, Polyurethane Dispersions and
Other Water-based Systems, Hycar®,
Sancure®, Algan®,
Performax®, Vycar®,
Stycar®, Myflam®
    
    Provide superior
gloss and
durability
properties to
paints and
coatings. End
markets include
wood, paper, metal,
concrete, plastic
and textiles.Acrylic and Other Polymer Resins, Doresco®
    
    Function as
carriers for
pigments, and
provide surface
protection and
adhesion
properties. End
markets include
paint and coatings,
printing ink,
laminating,
adhesives and
sealants.
 Coating Additives
  
    
    High-performance hyperdispersants for coatings, inks, thermoplastics and thermoset
composites. We are a world leader in polymeric hyperdispersant technology, sold under the
Solsperse® and Solplus® trade names. Hyperdispersants improve the
dispersion of almost any solid particulate (including pigments, fillers, flame retardants
and fibers) into almost any liquid medium (water, solvents and resins). They primarily are
used to achieve even color saturation. They enrich and strengthen color, while reducing
production costs and solvent emissions. We also produce Ircosperse® pigment
dispersants for coatings and COLORBURST pigment dispersants for printing inks.
    
    Surface modifiers improve the performance of industrial, architectural, can, coil, wood
and powder coatings by enhancing and protecting surfaces. Lanco®,
Lanco® Glidd, Lanco® Matt and Aquaslip surface modifiers impart a
variety of properties to a coating, including enhanced slip, improved abrasion and scratch
resistance, matting, texturing and a silky, soft feel.
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
    
    Rheology control additives improve the performance of coatings by providing thickening,
sag control, pigment anti-settling and improved surface appearance. Rheology control
additives are sold under the brand names Ircothix®, Ircogel® and
Solthix®.
    
    Specialized additives for inks improve rub resistance properties and film
characteristics.
  Category
    
    Product/Brand
    
    DescriptionCoating Additives
    
    Dispersants,
Solsperse®
Ircosperse®,
COLORBURST
    
    Improve the dispersion
of solid particulates
into liquid mediums.
End markets include
paints and printing
inks.Surface Modifiers
Lanco®,
Lanco® Glidd,
Lanco® Matt,
Aquaslip
    
    Impart a variety of
properties to a coating,
including enhanced slip,
improved abrasion and
scratch resistance,
matting and texturing.
End markets include
industrial,
architectural, can and
coil, wood and powder
coatings.Rheology Control
Additives,
Ircothix®,
Ircogel®,
Solthix®
    
    Provide thickening, sag
control and improved
surface appearance of
coatings.Specialized Additives
for Inks,
Duotron®,
Liquitron®,
Fluotron®
    
    Improve the processing,
performance and rub
resistance properties.
 Engineered Polymers. TM
 TempRite Engineered Polymers
 ® ® ® ®
 ® ®
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Category
    
    Product/Brand
    
    DescriptionEP
    
    TempRite®
    
    Residential plumbingFlowGuard®
    
    Residential and commercial plumbingFlowGuard Gold®
    
    Residential and commercial plumbingCorzan®
    
    Industrial and commercial pipingBlazeMaster®
    
    Fire sprinkler pipingFlowGuard® Flex
    
    Flexible piping systems
 ADEX
  Estane Engineered Polymers
 ®
 ®
  Category
    
    Product/Brand
    
    DescriptionTPU
    
    Estane®
    
    Aromatic grades for
film and sheet,
wire and cable
insulation,
athletic equipment,
medical
applications,
pneumatic tubing,
automotive molded
parts and
adhesives.Estaloc®
    
    Automotive trim,
sporting goods,
agricultural
equipment and other
mechanical
components.Stat-Rite®
    
    Packaging of
sensitive
electronic
components and
various clean room
applications.Tecoflex®, Carbothane®
    
    Aliphatic grades
for medical tubing
and other devices,
optical grade film
and specialty
industrial
applications where
maintaining
aesthetic
properties is
required.
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Competition
   Product Line
    
    Principal CompetitorsNoveon consumer specialties
    
    BASF, Cognis, Croda, Evonik (Degussa
Goldschmidt), ISP, NK Chemicals, Rhodia, Rohm
and Haas, Stepan, Sumitomo Seika, 3V Sigma,
Toagosei, VinatiPerformance coatings
    
    BASF, Bayer, Byk, Ciba, Clariant, Cytec, Dow
Chemical, DSM, Eastman, OMNOVA, Parachem,
Reichhold, Rohm and Haas, TegoEngineered polymers
    
    Atofina, BASF, Bayer, Dow, Georgia Gulf,
Huntsman, Kaneka, Merquinsa, Sekisui Chemical,
SK, Vanguard, Victaulic, Wirsbo
 Sales and Marketing
     Backlog
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Research, Development and Technology
  Lubrizol Additives
   Lubrizol Advanced Materials
  Patents
 Research, Testing and Development Expenditures
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Raw Materials
   Environmental Matters
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Employees
  Manufacturing and Properties
  Geographic Area Information
   
 ITEM 1A. RISK FACTORS
 If any of the events contemplated by the following discussion of risks should occur, our
business, results of operations and financial condition could suffer significantly.
 Risks Relating to our Business
 Volatility in raw material prices could reduce our profitability and reductions in the availability
of raw material supplies could disrupt our operations.
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We face competition from other chemical companies, which could adversely affect our business,
financial condition and consolidated results of operations.
   Failure to make continued improvements in our technology and productivity could hurt our
competitive position.
  Our and our suppliers production facilities are subject to operating risks that could affect
adversely our operations.
  Some of our businesses are cyclical and demand by our customers for our products weakens during
economic downturns.
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Failure to implement our common information system platform successfully could impact negatively
our ability to conduct business in our Lubrizol Advanced Materials segment.
   We face numerous risks relating to our foreign operations, including exchange rate fluctuations,
exchange controls and currency devaluations, that may affect adversely our results of operations.
   International social, political and economic conditions could affect adversely our operating
performance.
  Our production facilities are of the type that could attract terrorist attacks, and any attack
could disrupt our operations and cause us to incur significant costs and liabilities.
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The applicability of numerous environmental laws to our manufacturing facilities could cause us to
incur significant costs and liabilities.
     If we are unable to protect our intellectual property rights, our product sales and financial
performance could be affected adversely.
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Some of our employees are covered by collective bargaining agreements, and the failure to renew
these agreements could result in labor disruptions and increased labor costs.
  Financial Risks
 The limits imposed on us by the restrictive covenants contained in our credit facilities could
prevent us from making acquisitions or capital improvements or cause us to lose access to these
facilities, and if we are unable to obtain necessary waivers and our debt is accelerated, our
financial condition could be affected adversely.
  
    
    borrow money or guarantee the debts of others;
    
    use assets as security in other transactions;
    
    materially change the nature of our business; and
    
    sell assets or merge with or into other companies.
   We may not have access to capital in the future.
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We could be affected adversely if our debt is downgraded.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
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ITEM 2. PROPERTIES
  Reportable SegmentsLubrizolOwned/
    
    Laboratory (R&D/Testing)
    
    
    
    AdvancedLocation
    
    Leased
    
    or Manufacturing
    
    Lubrizol Additives
    
    MaterialsSydney, Australia
    
    Owned
    
    Manufacturing
    
    x
    
    xAntwerp, Belgium
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xLouvain-la-Neuve, Belgium
    
    Leased
    
    Laboratory
    
    
    
    xOevel, Belgium
    
    Owned
    
    Manufacturing
    
    
    
    xVilvoorde, Belgium
    
    Owned
    
    Manufacturing
    
    
    
    xRio de Janeiro, Brazil
    
    Owned
    
    Manufacturing
    
    x
    
    xSao Paulo, Brazil
    
    Leased
    
    Laboratory
    
    
    
    xNiagara Falls, Canada
    
    Owned
    
    Manufacturing
    
    xHong Kong, China
    
    Leased
    
    Laboratory
    
    
    
    xLanzhou, China(1)
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    xQingpu, China
    
    Plant is owned; 
land is leased
    
    Laboratory, Manufacturing
    
    
    
    xShanghai, China
    
    Leased
    
    Laboratory
    
    
    
    xShanghai, China
    
    Leased
    
    Laboratory
    
    xSongjiang, China
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    
    
    xTianjin, China (1)
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    xZhejiang, China(1)
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    
    
    xLe Havre, France
    
    Owned
    
    Manufacturing
    
    xMourenx, France
    
    Owned
    
    Manufacturing
    
    xRouen, France
    
    Owned
    
    Manufacturing
    
    x
    
    xHamburg, Germany
    
    Leased
    
    Laboratory, Manufacturing
    
    xRitterhude, Germany
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xTurbhe, India(1)
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    xVadodara, India
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xKinuura, Japan
    
    Owned
    
    Laboratory, Manufacturing
    
    x
    
    xSembilan, Malaysia
    
    Owned
    
    Manufacturing
    
    
    
    xApodaca, Mexico(1)
    
    Owned
    
    Laboratory, Manufacturing
    
    xCuautitlan Izcalli, Mexico
    
    Leased
    
    Laboratory
    
    x
    
    xDelfzijl, The Netherlands
    
    Leased
    
    Manufacturing
    
    
    
    xYanbu, Saudi Arabia(1)
    
    Owned
    
    Laboratory, Manufacturing
    
    xSingapore
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    x
    
    xSingapore
    
    Leased
    
    Laboratory
    
    
    
    xDurban, South Africa
    
    Owned
    
    Manufacturing
    
    x
    
    xPohang, South Korea
    
    Plant is owned; 
land is leased
    
    Manufacturing
    
    
    
    x
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Reportable SegmentsLubrizolOwned/
    
    Laboratory (R&D/Testing)
    
    
    
    AdvancedLocation
    
    Leased
    
    or Manufacturing
    
    Lubrizol Additives
    
    MaterialsBarcelona, Spain
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xBarnsley, United Kingdom
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xBlackley, United Kingdom
    
    Leased
    
    Laboratory
    
    
    
    xHazelwood, United Kingdom
    
    Owned
    
    Laboratory
    
    xHuddersfield, United Kingdom
    
    Plant is owned; 
land is leased
    
    Laboratory, Manufacturing
    
    
    
    xPaso Robles, CA
    
    Plant is owned; 
land is leased
    
    Laboratory, Manufacturing
    
    
    
    xPeachtree City, GA
    
    Owned
    
    Manufacturing
    
    
    
    xCountryside, IL
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xMcCook, IL
    
    Leased
    
    Laboratory, Manufacturing
    
    
    
    xCalvert City, KY
    
    Owned
    
    Manufacturing
    
    
    
    xLouisville, KY
    
    Owned
    
    Manufacturing
    
    
    
    xLawrence, MA
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xWilmington, MA
    
    Leased
    
    Manufacturing
    
    
    
    xMidland, MI
    
    Owned
    
    Laboratory, Manufacturing
    
    xPedricktown, NJ
    
    Owned
    
    Manufacturing
    
    
    
    xGastonia, NC
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xAvon Lake, OH
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xBowling Green, OH
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xBrecksville, OH
    
    Owned
    
    Laboratory
    
    
    
    xChagrin Falls, OH
    
    Owned
    
    Laboratory, Manufacturing
    
    
    
    xPainesville, OH
    
    Owned
    
    Manufacturing
    
    x
    
    xWickliffe, OH
    
    Owned
    
    Laboratory
    
    xSpartanburg, SC
    
    Leased
    
    Laboratory
    
    xSpartanburg, SC
    
    Owned
    
    Laboratory, Manufacturing
    
    x
    
    xBayport, TX
    
    Owned
    
    Manufacturing
    
    x
    
    xDeer Park, TX
    
    Owned
    
    Manufacturing
    
    x
    
    xHouston, TX
    
    Owned
    
    Manufacturing
    
    
    
    x
 (1)
    
    These manufacturing plants are owned and operated by joint venture companies licensed by
Lubrizol.
   
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionJames L. Hambrick
    
    
    53
    
    
    Chairman of the Board, President and Chief Executive OfficerJoseph W. Bauer
    
    
    54
    
    
    Vice President and General CounselDonald W. Bogus
    
    
    60
    
    
    Senior Vice President and President  Lubrizol Advanced MaterialsCharles P. Cooley
    
    
    52
    
    
    Senior Vice President, Treasurer and Chief Financial OfficerW. Scott Emerick
    
    
    43
    
    
    Corporate ControllerStephen F. Kirk
    
    
    58
    
    
    Senior Vice President and President  Lubrizol AdditivesMark W. Meister
    
    
    53
    
    
    Vice President and Chief Ethics OfficerLeslie M. Reynolds
    
    
    47
    
    
    Corporate SecretaryPatrick Saunier
    
    
    52
    
    
    Vice President, Information SystemsJulian M. Steinberg
    
    
    53
    
    
    Lubrizol Advanced Materials  Senior Vice President and Chief Operating OfficerGregory D. Taylor
    
    
    49
    
    
    Vice President, Corporate Planning, Development and CommunicationsJeffrey A. Vavruska
    
    
    47
    
    
    Chief Tax Officer
 James L. Hambrick
 Joseph W. Bauer
 Donald W. Bogus
 Charles P. Cooley
 W. Scott Emerick
 Stephen F. Kirk
 Mark W. Meister
 Leslie M. Reynolds
 Patrick H. Saunier
 Julian M. Steinberg
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Gregory D. Taylor
 Jeffrey A. Vavruska
  23




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
   Common Share Price History
    
    Dividends2007
    
    2006
    
    Per Common ShareHigh
    
    Low
    
    High
    
    Low
    
    2007
    
    20061st quarter
    
    $
    54.13
    
    
    $
    48.76
    
    
    $
    46.44
    
    
    $
    41.70
    
    
    
    $
    .26
    
    
    
    $
    .262nd quarter
    
    
    69.89
    
    
    
    51.40
    
    
    
    45.20
    
    
    
    38.52
    
    
    
    
    .30
    
    
    
    
    .263rd quarter
    
    
    68.46
    
    
    
    52.38
    
    
    
    46.25
    
    
    
    38.03
    
    
    
    
    .30
    
    
    
    
    .264th quarter
    
    
    69.95
    
    
    
    54.16
    
    
    
    50.75
    
    
    
    44.16
    
    
    
    
    .30
    
    
    
    
    .26$
    1.16
    
    
    
    $
    1.04
       Maximum NumberTotal Number
    
    (or Approximate Dollarof Shares (or Units)
    
    Value) of Shares (or Units)Total Number of
    
    Average Price
    
    Purchased as Part of
    
    that May Yet be PurchasedShares (or Units)
    
    Paid per Share
    
    Publicly Announced
    
    Under thePeriod
    
    Purchased1
    
    (or Unit)
    
    Plans or Programs2
    
    Plans or ProgramsMonth #1
(Oct. 1, 2007
through Oct. 31,
2007)
    
    120 Shares
    
    $
    65.06
    
    
    
    N/A
    
    
    
    5,401,918Month #2
(Nov. 1, 2007
through Nov. 30,
2007)
    
    292,466 Shares
    
    $
    63.00
    
    
    
    290,000
    
    
    
    5,111,918Month #3
(Dec. 1, 2007
through Dec. 31,
2007)
    
    28 Shares
    
    $
    64.14
    
    
    
    N/A
    
    
    
    5,111,918Total
    
    292,614 Shares
    
    
    
    
    
    
    290,000
    
    
    
    5,111,918
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1
    
    This column includes common shares (120 in October; 2,466 in November and 28 in
December) that we purchased pursuant to our deferred compensation plans whereby we withhold
shares upon a distribution to pay the withholding taxes on behalf of the employee and pursuant
to our stock incentive plan in which participants exchange already owned shares to us to pay
for the exercise price of an option or whereby we withhold shares upon the exercise of an
option to pay the withholding taxes on behalf of the employee.2
    
    This column represents common shares that we purchased at a cost of $18.2 million
pursuant to a share repurchase program announced on June 23, 1997. On April 23, 2007, our
board of directors authorized an enhanced share repurchase program that permits the company to
repurchase up to 5.0 million of its common shares upon completion of repurchases under the
previous share repurchase program. These shares may be repurchased in the open market or
through negotiated transactions. The program does not have an expiration date.
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ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
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ITEM 9B. OTHER INFORMATION
  27




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  www.lubrizol.com
 
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
   (a)
    
    (b)
    
    (c)Number of SecuritiesRemaining AvailableNumber of Securities to
    
    Weighted-Average
    
    for Future Issuance underbe Issued upon Exercise
    
    Exercise Price of
    
    Equity Compensation Plansof Outstanding Options,
    
    Outstanding Options,
    
    (excluding SecuritiesPlan Category
    
    Warrants and Rights
    
    Warrants and Rights
    
    reflected in Column (a))Equity compensation plans
approved by security
holders
    
    
    2,593,837
    
    
    $
    35.07
    
    
    
    2,673,725
    (1)Equity compensation
plans not
approved by security
holders
    
    
    (2
    )
    
    
    N/A
    
    
    
    
    (2)Total
    
    
    2,593,837
    
    
    $
    35.07
    
    
    
    2,673,725
    (1)
 (1)
    
    The 1991 Stock Incentive Plan was terminated with respect to future grants effective November
15, 2004. The shares shown are with respect to the 2005 Stock Incentive Plan. In addition to
the shares shown, during 2008, pursuant to grants under the 1991 Stock Incentive Plan, Donald
W. Bogus, Charles P. Cooley and Stephen F. Kirk each will be issued 15,000 shares since each
of them remained an employee until January 1, 2008. There are no voting or dividend rights
associated with these common shares until they are issued.(2)
    
    Under the Executive Council Deferred Compensation Plan, certain executive officers may defer
any amount of their variable pay under the annual incentive pay plan. Deferred amounts are
converted into share units based on the current market price of Lubrizols common shares.
There is a 25% company match. Additional share units are credited for quarterly dividends
paid on Lubrizol common shares. At the end of the deferral period,
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which is at least three years, common shares are issued equal to the number of share units in
the participants account. Amounts attributable to the company match credited after January 1,
2004 will be paid in cash. As of December 31, 2007, there were 113,849 share units outstanding
that are payable in shares.Prior to January 1, 2004, under the Deferred Stock Compensation Plan for Outside Directors, each
director who was not a Lubrizol employee received 500 share units on each October 1st and was
credited with additional share units for quarterly dividends paid on Lubrizol common shares.
When a person is no longer a director, Lubrizol common shares are issued equal to the number of
share units in the persons account. As of December 31, 2007, there were 28,543 share units
outstanding that are payable in shares. No additional share units other than those credited for
quarterly dividends have been or will be granted after January 1, 2004.Under the Deferred Compensation Plan for Directors, each director who is not a Lubrizol employee
may defer all or any portion of his or her yearly fee and meeting attendance fees and have these
amounts credited to various cash investment accounts and/or a share unit account. The number of
share units credited to the share unit account is based on the price of Lubrizol common shares
on the day the share units are credited to the account and includes share units credited for
quarterly dividends paid on Lubrizol common shares. When a person is no longer a director,
Lubrizol shares are issued equal to the number of share units in the persons share unit
account. As of December 31, 2007, there were 69,289 share units outstanding, 36,620 of which
must be paid in Lubrizol shares and the remainder of which may be invested in the various cash
investment accounts at the discretion of the director, and paid in cash.Under the Senior Management Deferred Compensation Plan, each executive officer may defer all or
any portion of his or her total annual pay and have these amounts credited to various cash
investment accounts and/or a share unit account. The number of share units credited to the
share unit account is based on the price of Lubrizol common shares on the day the share units
are credited to the account and includes share units credited for quarterly dividends paid on
Lubrizol common shares. Upon the distribution date, Lubrizol common shares are issued equal to
the number of share units in the persons share unit account. As of December 31, 2007, there
were 161,699 share units outstanding.Under the Supplemental Retirement Plan for Donald W. Bogus, 500 share units are credited each
anniversary date of the officers employment to an officers account and includes share units
credited for quarterly dividends paid on Lubrizol common shares. Upon retirement, Mr. Bogus may
elect to receive cash or Lubrizol shares equal to the number of share units in the account. As
of December 31, 2007, there were 2,381 share units outstanding that could be paid in shares.
For units credited after January 1, 2004, the payment will be made in cash only.
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Documents filed as part of this Annual Report:
 1.
    
    The following consolidated financial statements of The Lubrizol Corporation and its
subsidiaries, together with the reports of the independent registered public accounting
firm relating thereto, contained on pages 11 through 56, inclusive, of our 2007 Annual
Report to shareholders, and incorporated herein by reference:Managements Report on Internal Controls over Financial Reporting.Reports of Independent Registered Public Accounting Firm.Consolidated Statements of Income for the years ended December 31, 2007, 2006 and 2005.Consolidated Balance Sheets at December 31, 2007 and 2006.Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005.Consolidated Statements of Shareholders Equity for the years ended December 31, 2007, 2006
and 2005.Notes to Financial Statements.
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  
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SCHEDULE II   (in millions of dollars)
 Charged
    
    ChargedBalance at
    
    /(Credited)
    
    /(Credited) to
    
    
    
    
    
    Balance atBeginning
    
    to
    
    Other
    
    
    
    
    
    End ofDescription
    
    of Year
    
    Expenses
    
    Accounts*
    
    Deductions
    
    YearYear ended December 31, 2007Allowance for
uncollectible
accounts
    
    $
    7.5
    
    
    $
    1.1
    
    
    
    
    
    
    $
    2.3
    
    
    $
    6.3Inventory reserves
    
    $
    16.1
    
    
    $
    12.9
    
    
    
    
    
    
    $
    14.0
    
    
    $
    15.0Deferred tax asset
valuation allowance
    
    $
    17.8
    
    
    $
    1.5
    
    
    $
    (0.6
    )
    
    
    
    
    
    $
    18.7Year ended December 31, 2006Allowance for
uncollectible
accounts
    
    $
    10.1
    
    
    $
    0.8
    
    
    $
    (1.2
    )
    
    $
    2.2
    
    
    $
    7.5Inventory reserves
    
    $
    18.2
    
    
    $
    9.1
    
    
    $
    1.2
    
    
    $
    12.4
    
    
    $
    16.1Deferred tax asset
valuation allowance
    
    $
    18.1
    
    
    $
    (0.1
    )
    
    $
    (0.2
    )
    
    
    
    
    
    $
    17.8Year ended December 31, 2005Allowance for
uncollectible
accounts
    
    $
    11.0
    
    
    $
    1.9
    
    
    $
    (0.9
    )
    
    $
    1.9
    
    
    $
    10.1Inventory reserves
    
    $
    19.1
    
    
    $
    10.9
    
    
    $
    (2.8
    )
    
    $
    9.0
    
    
    $
    18.2Deferred tax asset
valuation allowance
    
    $
    18.8
    
    
    $
    4.0
    
    
    $
    (4.7
    )
    
    
    
    
    
    $
    18.1
 *
    
    Valuation and qualifying accounts of acquired and divested companies.
  31




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##### Table of Contents



3.1
    
    Amended Articles of Incorporation of The Lubrizol Corporation, as adopted September 23,
1991 (incorporated by reference to Exhibit 3.1 to The Lubrizol Corporations annual report
on Form 10-K for the year ended December 31, 2004).3.2
    
    Regulations of The Lubrizol Corporation, as amended effective April 27, 1992
(incorporated by reference to Exhibit 3.2 to The Lubrizol Corporations annual report on
Form 10-K for the year ended December 31, 2004).4.1
    
    Amendment to Article Fourth of Amended Articles of Incorporation (incorporated by
reference to Exhibit 4.1 to The Lubrizol Corporations annual report on Form 10-K for the
year ended December 31, 2004).4.2
    
    Amended and Restated Indenture dated September 28, 2004 (originally dated June 1, 1995)
by and among The Lubrizol Corporation, all of The Lubrizol Corporations wholly owned
direct and indirect domestic subsidiaries, as guarantors, and J.P. Morgan Trust Company,
National Association, as successor trustee (incorporated by reference to Exhibit 99.1 of
the Form 8-K of The Lubrizol Corporation filed with the SEC on September 29, 2004).4.3
    
    Amended and Restated Indenture dated September 28, 2004 (originally dated November 25,
1998), by and among The Lubrizol Corporation, all of The Lubrizol Corporations wholly
owned direct and indirect domestic subsidiaries, as guarantors, and J.P. Morgan Trust
Company, National Association, as successor trustee (incorporated by reference to Exhibit
99.2 of the Form 8-K of The Lubrizol Corporation filed with the SEC on September 29, 2004).4.4
    
    Form of Indenture for Debt Securities of The Lubrizol Corporation (incorporated by
reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-3 of
The Lubrizol Corporation filed with the SEC on August 24, 2004).10.1*
    
    The Lubrizol Corporation 1991 Stock Incentive Plan, as amended (incorporated by
reference to Exhibit (10)(h) to The Lubrizol Corporations current report on Form 8-K filed
with the SEC on November 18, 2004).10.2*
    
    The Lubrizol Corporation 2005 Stock Incentive Plan, as amended.10.3*
    
    The Lubrizol Corporation Amended Deferred Compensation Plan for Directors
(incorporated by reference to Exhibit (10)(b) to The Lubrizol Corporations current report
on Form 8-K filed with the SEC on November 18, 2004).10.4*
    
    The Lubrizol Corporation Deferred Stock Compensation Plan for Outside Directors, as
amended (incorporated by reference to Exhibit (10)(i) to The Lubrizol Corporations annual
report on Form 10-K for the year ended December 31, 2003).10.5*
    
    The Lubrizol Corporation Deferred Compensation Plan for Officers, as amended
(incorporated by reference to Exhibit (10)(k) to The Lubrizol Corporations current report
on Form 8-K filed with the SEC on November 18, 2004).10.6*
    
    The Lubrizol Corporation Executive Council Deferred Compensation Plan, as amended
(incorporated by reference to Exhibit (10)(l) to The Lubrizol Corporations current report
on Form 8-K filed with the SEC on November 18, 2004).10.7*
    
    The Lubrizol Corporation 2005 Deferred Compensation Plan for Directors, as amended.
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##### Table of Contents



10.8*
    
    The Lubrizol Corporation Senior Management Deferred Compensation Plan, as amended.10.9*
    
    The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan, as amended.10.10*
    
    The Lubrizol Corporation Excess Defined Benefit Plan, as amended (incorporated by
reference to Exhibit (10)(d) to The Lubrizol Corporations current report on Form 8-K filed
with the SEC on December 15, 2004).10.11*
    
    The Lubrizol Corporation Excess Defined Contribution Plan, as amended (incorporated by
reference to Exhibit (10)(e) to The Lubrizol Corporations current report on Form 8-K filed
with the SEC on December 15, 2004).10.12*
    
    The Lubrizol Corporation Officers Supplemental Retirement Plan, as amended (incorporated
by reference to Exhibit (10)(j) to The Lubrizol Corporations current report on Form 8-K
filed with the SEC on December 15, 2004).10.13*
    
    The Lubrizol Corporation 2005 Excess Defined Benefit Plan, as amended.10.14*
    
    The Lubrizol Corporation 2005 Excess Defined Contribution Plan, as amended.10.15*
    
    The Lubrizol Corporation 2005 Officers Supplemental Retirement Plan, as amended.10.16*
    
    Supplemental Retirement for Donald W. Bogus, as amended.10.17*
    
    The Lubrizol Corporation Executive Death Benefit Plan, as amended.10.18*
    
    Form of Employment Agreement between The Lubrizol Corporation and certain of its senior
executive officers, as amended.10.19*
    
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Charles P. Cooley, as amended.10.20*
    
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Stephen F. Kirk, as amended.10.21*
    
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Donald W. Bogus, as amended.10.22*
    
    The Lubrizol Corporation Annual Incentive Pay Plan, as amended.10.23*
    
    The Lubrizol Corporation Annual Incentive Pay Plan Award Letter, as amended (incorporated
by reference to Exhibit 10.2 to The Lubrizol Corporations current report on Form 8-K filed
with the SEC on December 13, 2005).10.24*
    
    The Lubrizol Corporation Financial Planning Program, as amended.10.25*
    
    Form of Indemnification Agreement between The Lubrizol Corporation and certain of its
senior executive officers (incorporated by reference to Exhibit 10.26 to The Lubrizol
Corporations annual report on Form 10-K for the period ended December 31, 2006).10.26*
    
    Employment Agreement effective June 3, 2004 between Noveon, Inc. and Julian M. Steinberg,
as amended.10.27
    
    Asset Purchase Agreement, dated March 16, 2006, by and among Noveon, Inc., Noveon
Hilton Davis, Inc., Noveon Kalama, Inc., Noveon Textile Chemicals, Inc., Lubrizol Foam
Control Additives, Inc., Lubrizol do Brasil Aditivos Ltda., and SPM Group Holdings LLC
(incorporated by reference to
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Exhibit 10.1 to The Lubrizol Corporations current report on Form 8-K filed with the
SEC on May 5, 2006).10.28
    
    Credit Agreement dated as of August 24, 2004 among The Lubrizol Corporation, the
Initial Lenders named therein, Citigroup Global Markets Inc. and KeyBanc Capital Markets,
as co-lead arrangers and co-bookrunners, KeyBank National Association and ABN Amro Bank
N.V., as co-syndication agents, Wachovia Bank, National Association, as documentation
agent, and Citicorp North America, Inc., as agent (incorporated by reference to Exhibit
10.1 to The Lubrizol Corporations current report on Form 8-K filed with the SEC on August
30, 2004).10.29
    
    Amended and Restated Credit Agreement dated as of March 29, 2005 among The Lubrizol
Corporation, the Initial Lenders named therein, Citicorp North America, Inc., as
administrative agent, and Citigroup Global Markets, Inc., as arranger and syndication agent
(incorporated by reference to Exhibit 10.5 to The Lubrizol Corporations quarterly report
on Form 10-Q for the period ended March 31, 2005).10.30
    
    Amendment No. 2 to the Credit Agreement among The Lubrizol Corporation, the banks,
financial institutions and other institutional lenders who are parties to the Credit
Agreement dated as of August 24, 2004, as amended and restated as of March 29, 2005, and as
further amended as of August 23, 2005, and Citicorp North America, Inc. as agent
(incorporated by reference to Exhibit 10.1 to The Lubrizol Corporations current report on
Form 8-K filed with the SEC on September 22, 2006).10.31
    
    Five Year Credit Agreement dated as of September 14, 2005 among Europe Chemical
Holdings C.V., Noveon Holdings France S.A.S. and Noveon Europe BVBA, The Lubrizol
Corporation, the Initial Lenders named therein, ABN AMRO Bank N.V. as administrative agent,
and ABN AMRO Bank N.V., Calyon, Citigroup Global Markets Inc., and
Fortis Capital Corp., as
mandated lead arrangers and bookrunners (incorporated by reference to Exhibit 10.1 to The
Lubrizol Corporations current report on Form 8-K filed with the SEC on September 16,
2005).10.32
    
    Letter Amendment dated as of September 20, 2006 among Lubrizol Holdings France S.A.S.
(formerly known as Noveon Holdings France S.A.S.) and Noveon Europe BVBA (collectively, the
Borrowers), The Lubrizol Corporation, the Lenders named therein, ABN AMRO Bank N.V. as
agent, to the Five Year Credit Agreement dated as of September 14, 2005 among the
Borrowers, The Lubrizol Corporation, the Initial Lenders named therein, ABN AMRO Bank N.V.,
Calyon, Citigroup Global Markets Inc. and Fortis Capital Corp. (incorporated by reference
to Exhibit 10.2 to The Lubrizol Corporations current report on Form 8-K filed with the SEC
on September 22, 2006).12.1
    
    Computation of Ratio of Earnings to Fixed Charges.13.1
    
    The following portions of The Lubrizol Corporation 2007 Annual Report to its
shareholders (the 2007 Annual Report is available on our website at www.lubrizol.comas a
separate pdf file):
 Pages 11-27
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.Page 28
    
    Managements Report on Internal Control Over Financial Reporting.Page 28
    
    New York Stock Exchange Certifications.Pages 29-30
    
    Reports of Independent Registered Public Accounting Firm.Page 31
    
    Consolidated Statements of Income for the years ended December 31, 2007,
2006 and 2005.Page 32
    
    Consolidated Balance Sheets at December 31, 2007 and 2006.
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Page 33
    
    Consolidated Statements of Cash Flows for the years ended December 31, 2007,
2006 and 2005.Page 34
    
    Consolidated Statements of Shareholders Equity for the years ended December
31, 2007, 2006 and 2005.Pages 35-56
    
    Notes to Financial Statements.Page 57
    
    Historical Summary.
 21.1
    
    List of Significant Subsidiaries of The Lubrizol Corporation.23.1
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Rule 13a-14(a) Certification of the Chief Executive Officer, as created by Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    Rule 13a-14(a) Certification of the Chief Financial Officer, as created by Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer of The Lubrizol
Corporation pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the
Sarbanes-Oxley Act of 2002.
 *
    
    Indicates management contract or compensatory plan or arrangement.
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SIGNATURES
  THE LUBRIZOL CORPORATIONBY       /s/ James L. HambrickJames L. Hambrick, President andChief Executive Officer  /s/ James L. Hambrick
    
    Chairman of the Board, President and Chief Executive OfficerJames L. Hambrick
    
    (Principal
Executive Officer)/s/ Charles P. Cooley
    
    Sr. Vice President, Treasurer and Chief Financial OfficerCharles P. Cooley
    
    (Principal
Financial Officer)/s/ W. Scott Emerick
    
    Corporate ControllerW. Scott Emerick
    
    (Chief
Accounting Officer)/s/ Robert E. Abernathy
    
    DirectorRobert E. Abernathy/s/ Jerald A. Blumberg
    
    DirectorJerald A. Blumberg/s/ Forest J. Farmer, Sr.
    
    DirectorForest J. Farmer, Sr./s/ Gordon D. Harnett
    
    DirectorGordon D. Harnett/s/ William P. Madar
    
    DirectorWilliam P. Madar/s/
Dominic J. Pileggi
    
    DirectorDominic J. Pileggi/s/ James E. Sweetnam
    
    DirectorJames E. Sweetnam/s/ Harriett Tee Taggart
    
    DirectorHarriett Tee Taggart
 36