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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, 2004 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES 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.)
 29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(Address of principal executive officers, including zip code) Registrants telephone number, including area code: (440) 943-4200
Securities registered pursuant to Section 12(b) of the Act: Title of each class
    
    Name of each exchange on which registeredCommon Shares without par value
    
    New York Stock ExchangeCommon Share purchase rights
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None 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 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 þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act).
Yes þ No o Aggregate market value (on basis of closing sale price) of voting stock held by nonaffiliates as of
June 30, 2004: $1,882,287,481. Number of the registrants Common Shares, without par value, outstanding as of February 15, 2005:
67,324,555 Documents Incorporated by Reference Portions of the registrants 2004 Annual Report to its shareholders (Incorporated into Part I and II of this Form 10-K) Portions of the proxy statement for the 2005 Annual Meeting of Shareholders (Incorporated into Part III of this Form 10-K)




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 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 ANDITEM 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 PROCEDURESPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSIGNATURESEX-3.1 Certificate of Adoption of Amended Articles of IncorporationEX-3.2 Regulations of Lubrizol Meetings of ShareholdersEX-4.1 Certificate of Amendment to Amended Articles of IncorporationEX-4.2 Amended and Restated Rights AgreementEX-12.1 Computation of Ratio of Earnings to Fixed ChargesEX-13.1 Annual ReportEX-21.1 SubsidiariesEX-23.1 Consent of Ind. Reg. Public Accounting FirmEX-31.1 Section 302 CEO CertificationEX-31.2 Section 302 CFO CertificationEX-32.1 906 Certifications    Table of Contents  
 PART I 
 ITEM 1. BUSINESS References to Lubrizol, the company, we, us or our refer to The Lubrizol Corporation and
its subsidiaries, except where the context makes clear that the reference is only to The Lubrizol
Corporation itself and not its subsidiaries. Overview We are an innovative specialty chemical company that produces and supplies technologies that
improve the quality and performance of our customers products in the global transportation,
industrial and consumer markets. Our business is founded on technological leadership. Innovation
provides opportunities for us in growth markets as well as advantages over our competitors. From a
base of approximately 2,800 patents, we use our product development and formulation expertise to
sustain our leading market positions and fuel our future growth. We create additives, ingredients,
resins and compounds that enhance the performance, quality and value of our customers products,
while minimizing their environmental impact. Our products are used in a broad range of
applications, and are sold into stable markets such as those for engine oils, specialty driveline
lubricants and metalworking fluids, as well as higher growth markets such as personal care and
pharmaceutical products and performance coatings and inks. Our specialty materials products are
also used in a variety of industries, including the construction, sporting goods, medical products
and automotive industries. We are an industry leader in many of the markets in which our product lines compete. We also
produce products with well recognized brand names, such as Anglamol® (gear oil
additives), Carbopol® (acrylic thickeners for personal care products),
Estane® (thermoplastic polyurethane) and TempRite® (chlorinated polyvinyl
chloride resins and compounds used in plumbing, industrial and fire sprinkler systems). We are geographically diverse, with an extensive global manufacturing, supply chain, technical
and commercial infrastructure. We operate facilities in 27 countries, including production
facilities in 21 countries and laboratories in 9 countries, in key regions around the world through
the efforts of approximately 7,800 employees. Including the June 2004 acquisition of Noveon
International, Inc. (Noveon International) for the year ended December 31, 2004, we derived
approximately 48% of our consolidated total revenues from North America, 28% from Europe, 18% from
the Asia/Pacific and the Middle East region and 6% from Latin America. We sell our products in
more than 100 countries and believe that our customers recognize and value our ability to provide
customized, high quality, cost-effective performance formulations and solutions worldwide. We also
believe our customers value highly our global supply chain capabilities. Our consolidated results for the year ended December 31, 2004 included total revenues of
$3,159.5 million and net income of $93.5 million. We have generated consistently strong cash flows
from our diverse product lines, leading market positions, disciplined capital expenditure programs
and working capital management. We believe our strong cash flow will enable us to maintain our
leading market positions and to invest in targeted growth strategies while continuing to reduce
indebtedness. Our principal executive offices are located at 29400 Lakeland Boulevard, Wickliffe, Ohio
44092-2298 and our telephone number is 440-943-4200. Our website is located at www.lubrizol.com.
Information contained on our website does not constitute part of this Form 10-K. We make available
free of charge on our website the annual report on Form 10-K, the quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we
electronically file or furnish the material to the Securities and Exchange Commission. Acquisition History In the 1980s, growth in demand for lubricant additives slowed as innovations in engine design
and improved lubricant performance extended the service intervals between required lubricant
changes. We responded to this decline in the lubricant additive growth rate by expanding into new
markets. Our initial expansion efforts focused on discovering new applications for our additive
chemistry. We also began making selective acquisitions driven by our desire to gain access to new
market channels as well as to higher growth, adjacent markets such as coating additives and
metalworking fluids. During the 1990s and through the end of 2000, we completed 16 acquisitions.
In aggregate, the annual revenues of these companies at the time of purchase 2




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totaled approximately
$270.0 million. The largest was the acquisition of BP p.l.c.s lubricant additive business, which
we consolidated into our existing operations. In 2000, we established a vision for growth that renewed our strategy to grow our business by
broadening our end-market focus beyond our traditional lubricant additive markets. To measure our
progress toward achieving our vision, we established aggressive revenue and profitability goals. A
key element of our strategy was organic growth through continued product innovation and new
formulations for new end markets. We also increased our efforts to make larger, profitable acquisitions. Among the areas
targeted for growth through acquisitions were personal care ingredients and coating additives.
These areas fit our strength in surface-active chemistry and product innovation. We also
introduced new tools and training to improve our ability to complete acquisitions successfully,
including refinements to our due diligence and integration processes. Prior to the acquisition of
Noveon International, we made eight other acquisitions since 2000, with aggregate annual revenues
of approximately $200.0 million. By early 2004, we believe we had established the basis for acquiring Noveon International. We
had developed significant experience evaluating and integrating acquired businesses and had
expanded our presence in the personal care and coatings markets that offered potential for
synergies with Noveon International. The Noveon International Acquisition On June 3, 2004, we acquired Noveon International, a leading global producer and marketer of
technologically advanced specialty materials and chemicals used in the industrial and consumer
markets. With the acquisition of Noveon International, we have accelerated our program to attain a
substantial presence in the personal care and coatings markets by adding a number of higher-growth,
industry-leading products under highly recognizable brand names, including Carbopol®, to
our already strong portfolio of lubricant and fuel additive products and consumer product
ingredients. Additionally, Noveon International has a number of industry-leading specialty
materials businesses, including TempRite® chlorinated polyvinyl chloride (CPVC) and
Estane® thermoplastic polyurethane (TPU), that generate strong cash flow. We believe
that the Noveon International acquisition meets the core tenets of our stated strategy to:  
    maintain technology leadership;
    apply our formulation expertise to extend applications into new markets; and
    expand the global breadth of our businesses. We expect the diversity of our combined businesses, customer base and end markets to provide
greater stability for our operations, and to generate strong cash flow from operations to reduce
indebtedness while also pursuing selective future growth opportunities. The following chart sets forth the historical total revenues for the years ended December 31,
2004 and December 31, 2003 of the company attributable to each of our primary product lines,
including a pro forma combined total (in millions). For the year ended December 31, 2004, the
Lubrizol column includes revenues of Noveon International since the acquisition and the Noveon
International column includes revenues of Noveon International prior to the acquisition. 3




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Reporting Segments and
    
    December 31, 2004
    
    
    December 31, 2003Product LinesNoveon
    
    
    Pro Forma
    
    
    
    
    
    
    Noveon
    
    
    Pro FormaLubrizol
    
    
    International
    
    
    Combined
    
    
    Lubrizol
    
    
    International
    
    
    CombinedLubricant Additives:Engine additives
    
    $
    1,222.9
    
    
    
    
    
    
    $
    1,222.9
    
    
    $
    1,127.4
    
    
    
    
    
    
    $
    1,127.4Specialty driveline and industrial oil
additives
    
    
    743.2
    
    
    
    
    
    
    
    743.2
    
    
    
    622.6
    
    
    
    
    
    
    
    622.6Services and equipment
    
    
    72.7
    
    
    
    
    
    
    
    72.7
    
    
    
    48.9
    
    
    
    
    
    
    
    48.92,038.8
    
    
    
    
    
    
    
    2,038.8
    
    
    
    1,798.9
    
    
    
    
    
    
    
    1,798.9Specialty Chemicals:Consumer specialties
    
    
    481.7
    
    
    
    195.3
    
    
    
    677.0
    
    
    
    144.2
    
    
    
    411.5
    
    
    
    555.7Performance coatings
    
    
    391.9
    
    
    
    165.3
    
    
    
    557.2
    
    
    
    109.0
    
    
    
    375.5
    
    
    
    484.5Specialty materials
    
    
    247.1
    
    
    
    177.0
    
    
    
    424.1
    
    
    
    
    
    
    
    343.1
    
    
    
    343.11,120.7
    
    
    
    537.6
    
    
    
    1,658.3
    
    
    
    253.2
    
    
    
    1,130.1
    
    
    
    1,383.3Total revenues
    
    $
    3,159.5
    
    
    $
    537.6
    
    
    $
    3,697.1
    
    
    $
    2,052.1
    
    
    $
    1,130.1
    
    
    $
    3,182.2
 We have established a target of $40.0 million in annual cost savings from the integration of
Noveon International that we expect to achieve by reducing costs of raw materials and outside
services through purchasing synergies, rationalizing manufacturing operations and consolidating
corporate functions, and repositioning our commercial development activities. The savings from our
restructuring activities in 2004 were approximately $10.0 million, mostly due to workforce
reductions that were announced within a month of closing the acquisition. We are projecting annual
cost savings in 2005 of approximately $35.0 million. We currently expect to reach our target run
rate of $40.0 million in annual savings by the end of 2005, 18 months ahead of schedule. Longer
term, we seek to grow revenues and profits by pursuing cross-marketing opportunities, leveraging
our geographical infrastructure, enhancing product development capabilities and further
streamlining operations. For example, Lubrizols stronger position in the European coatings market
has been combined with Noveon Internationals greater share of the North American coatings market
to increase the cross-marketing opportunities for our products. The integration of Noveon
International has been facilitated by our companies common roots in the greater Cleveland area. Business Segments Following our acquisition of Noveon International, we reorganized our business into two
operating and reporting segments: the Lubricant Additives segment, also referred to as Lubrizol
Additives, and the Specialty Chemicals segment, also referred to as Noveon. The Lubricant
Additives segment is comprised of our previous business in fluid technologies for transportation,
advanced fluid systems, emulsified products and the former industrial additives product group of
our previous business in fluid technologies for industry. The Specialty Chemicals segment is
comprised of the product lines of Noveon International and the former performance chemicals product
group of fluid technologies for industry. For the year ended December 31, 2004, the Lubricant
Additives segment represented 65% and the Specialty Chemicals segment represented 35% of our
consolidated net sales. The following chart summarizes the product groupings within each of our key product lines. 4




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(FLOW CHART) Lubricant Additives
Segment
Engine Additives
Passenger Car Motor Oils
Heavy-duty Diesel Engine Oils
Marine Diesel, Small Engines,
Stationery Gas Oils
Viscosity Modifiers
Fuel, Refinery and Oilfield
Products
Specialty Driveline and
Industrial Oil Additives
Automatic Transmission Fluids
Gear Oils
Farm Tractor Fluids
Hydraulic Fluids
Grease Additives
Metalworking Fluids
Compressor Lubricants
Industrial Gear Oils
Services and Equipment
Custom Solutions
Fluid Metering Equipment
Diesel Oxidation Catalysts
Diesel Particulate Filters
Specialty Chemicals Segment
Consumer Specialties
Specialty Materials
Personal Care and Pharmaceuticals
Food and Beverage
Polymer Additives
Performance Coatings
Specialty Resins and Polymers
Coating Additives
TempRite®
Estane® Lubricant Additives Segment The Lubricant Additives segment is the leading global supplier of additives for transportation
and industrial lubricants. We pioneered the development of lubricant additives over 75 years ago
and continue to maintain leadership in the $5.0 billion industry today. Our customers rely on our
products to improve the performance and lifespan of critical components, such as engines,
transmissions and gear drives for cars, trucks, buses, off-highway equipment, marine engines and
industrial applications. For the year ended December 31, 2004, the Lubricant Additives segment generated revenues of
$2,038.8 million and segment operating income of $244.3 million. Our products serve to increase cost-effectiveness by reducing friction and heat, resisting
oxidation, minimizing deposit formation, and preventing corrosion and wear. Through our in-house
research, development and testing programs, we have the capability to invent and develop a broad
range of proprietary chemical components, 5




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including antioxidants, anti-wear agents,
corrosion inhibitors, detergents, dispersants, friction modifiers and viscosity modifiers. We
formulate proprietary additive packages by combining these different components to create unique
products targeting specific customer problems. We are recognized by our customers for innovative
technology, the broadest product line and high quality products. Our key components of our
additive packages include:  
    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. Our products are essential to the performance of the finished lubricant, yet represent a
relatively small portion of its volume. Our products are often designed to meet specific customer
requirements. For example, we work with customers to develop additive packages that perform in
combination with their proprietary base oil or that meet their marketing objectives to
differentiate their lubricant. Extensive testing is conducted in our world-class laboratories,
global mechanical testing facilities and in the field to determine additive performance under
actual operating conditions. With this testing, we provide proof of performance, which enables our
customers to label and certify the lubricant as meeting the exact performance specifications
required for these products by the industry. The majority of our products are designed to meet an
industry standard or specification. We have three primary product lines within our Lubricant Additives segment: engine additives,
specialty driveline and industrial oil additives, and services and equipment. Engine Additives.Our engine additives products hold a leading global position for a wide
range of additives for passenger car, heavy-duty diesel, marine diesel, stationary gas and small
engines. We also produce fuel additives and refinery and oilfield products. Our customers, who
include major global and regional oil companies, refineries and specialized lubricant producers and
marketers, blend our additive products with their base oil and distribute the finished lubricant to
end users via retail, commercial or vehicle original equipment manufacturer (OEM) channels.
Passenger car motor oils and diesel engine oils are more than 80% of our engine additive sales. In
2004, our engine additives products generated total revenues of $1,222.9 million. The following is a list of representative uses for and a description of our engine additives
products: Category
    
    Product/Brand
    
    DescriptionEngine Additives
    
    Passenger car motor oils,
heavy-duty diesel engine
oils, marine diesel,
small engines, stationery
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.
 6




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Specialty Driveline and Industrial Oil Additives.We are a global supplier of specialty
driveline and industrial oil additive products for use in driveline and industrial applications.
In 2004, our specialty driveline and industrial oil additives products generated total revenues of
$743.2 million. Specialty Driveline Additives Our specialty driveline additives products include additives for automatic transmission oils
and gear oils for cars, trucks, buses, off-highway equipment and farm tractors. Relative to engine
oils, specialty driveline additives are more complex formulations that carry higher average pricing
and value and have longer product life cycles. We sell our products to major global and regional
oil companies, specialized lubricant producers and marketers. Our customers use our products to
blend with their lubricant fluids and distribute the finished lubricant to end users via retail,
commercial or vehicle OEM channels. The specialty driveline additives industry is characterized by
well-established product lines that meet OEM specifications and carry OEM approvals. Industrial Oil Additives Our industrial oil additives products include additives for hydraulic lubricants, metalworking
fluids, industrial gear oils and grease, as well as compressor lubricants. We sell our products to
major global and regional oil companies, specialized lubricant producers and marketers. Our
customers use our products to blend with their fluid products and distribute the finished lubricant
to end users via retail, commercial or OEM channels. Because of our products are sold to
industrial end-markets, our industrial oil additives products are exposed to economic cycles more
than other products within the Lubricant Additives segment. The following is a list of representative uses for and a description of our specialty
driveline and industrial oil additives products: Category
    
    Product/Brand
    
    DescriptionSpecialty Driveline
and Industrial Oil
Additives
    
    Driveline additives
for automatic
transmission fluids,
gear oils and farm
tractor fluids
    
    OEM-specific
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.
 Services and Equipment.Services and equipment is comprised of fluid metering devices,
particulate emission trap devices, FluiPakTM sensor systems and outsourcing strategies
for supply chain and knowledge center management. In 2004, our services and equipment products
generated total revenues of $72.7 million. The following is a list of representative uses for and a description of our services and
equipment products: Category
    
    Product/Brand
    
    DescriptionServices and
Equipment
    
    Custom Solutions
    
    Custom blending of
finished lubricants
and training
services for oil
company customers.Lubrizol Performance Systems
    
    Precision blending
and additive
metering equipment
for the petroleum
and chemical
industries.Engine Control Systems
    
    A full range of
original equipment
and aftermarket
products, including
diesel oxidation
catalysts and
particulate
filters, for
treating harmful
exhaust emissions
from diesel,
propane and natural
gas engines.
 7




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Specialty Chemicals Segment The Specialty Chemicals segment represents a diverse portfolio of performance chemicals used
in consumer and industrial applications, such as ingredients for personal care and pharmaceutical
products, food and beverage products, emulsions and additives for coatings and inks, and specialty
plastics and materials. For the year ended December 31, 2004, the Specialty Chemicals segment generated revenues of
$1,120.7 million and segment operating income of $85.6 million. We have three primary product lines within our Specialty Chemicals segment: consumer
specialties, performance coatings and specialty materials. Consumer Specialties.We are a global producer of specialty chemicals targeting the personal
care, pharmaceutical and food and beverage industries and a leading provider of engineered
adhesives, polymer additives and specialty emulsifiers. Key products include Carbopol®
acrylic thickeners, film formers, fixatives, emollients, silicones, botanicals, active
pharmaceutical ingredients and intermediates, benzoate preservatives, fragrances,
synthetic food dyes, natural colorants, Hycar® reactive liquid polymers, rubber and
lubricant antioxidants, rubber accelerators and ADEX® specialty emulsifiers for mining
explosives. In 2004, our consumer specialties products generated total revenues of $481.7 million. Personal Care and Pharmaceuticals We are a global producer of specialty chemicals targeting the personal care and pharmaceutical
industries. Our products impart physical and sensory properties, such as texture, stability and
thickness to products, including lotions, shampoos, hair gels, cosmetics and personal and oral
hygiene products. Key products in this area include selected functional specialties and
formulation additives such as specialty surfactants, methyl glucoside and lanolin derivatives, and
Carbopol® acrylic thickeners, film formers and fixatives. Our products are an important
component of the functionality and aesthetics of the end product, but typically represent a small
portion of the customers total product costs. Key product families include:  
    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 care, skin
care and personal and oral hygiene 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 are
primarily used in hair care products, such as shampoos and body washes. Recent acquisitions have extended our product breadth in personal care. In September 2003, we
purchased a natural skin care ingredients business from The Dow
Chemical Company. In October 2003, Noveon
International purchased a controlling interest in SNP, a Thailand-based manufacturer and marketer
of botanical extracts used in personal care product formulations. SNP provides us with access to
products that we plan to sell throughout our global distribution system. In January 2004, Noveon
International purchased Scher Chemicals, Inc., a manufacturer of emollient and surfactant specialty
chemicals used in cosmetic and other personal care formulations. 8




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The following is a list of representative uses for and a description of our personal care and
pharmaceuticals products: Category
    
    Product/Brand
    
    DescriptionPersonal Care and
Pharmaceuticals
    
    Carbopol®
    
    Acrylic thickener, which imparts stability
and improves aesthetics. Often used as a
controlled release agent.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.Colorants
    
    Impart color in personal care products.Botanical extracts
    
    Specialty additives for cosmetic and skin
care formulations.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,
industrial and household cleaners.Polycarbophil
    
    Active agent for bulk laxatives.Amino acid-based actives
    
    Active ingredients for pharmaceuticals.Advanced intermediates
    
    Used in the production of active
pharmaceutical ingredients.Cassia gum
    
    Gelling agents for human food (Japan) and
pet food.
 Food and Beverage We are a supplier of products that preserve freshness and improve the color and consistency of
food and beverages, making them more appealing to consumers. We are a leading global producer of
benzoate preservatives, a leading U.S. supplier of synthetic colorants and an integrated producer
of flavors, fragrances and other food additives to the food and beverage industry. Benzoates
improve the shelf life of consumable goods and are the preservative of choice for manufacturers of
soft drinks, bottled beverages, fruit-based products and prepared salads due to their
antimicrobial properties. We believe that our Kalama, Washington benzoate facility is the largest
facility of its type in North America and the second largest in the world, giving us the capability
to serve large customers globally. This facility also produces a number of high-value, distinct
flavor and fragrance products for use in many food and personal care products as well as certain
intermediate products. The intermediate products include plasticizers used in adhesives, sealants
and safety glass, and phenol, a co-product, used for adhesive resins in forest-product
applications. We consolidated a series of small acquisitions that supply foam control agents, which reduce
the amount of foam generated in a variety of industrial processes. Our antifoam and defoaming
agents are based on a wide
variety of chemistries, including silicone. We specialize in defoamers and antifoam agents
for the food processing, 9




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fermentation, grain and sugar-sweetener industries, as well as for the
metalworking, coatings, ink, textile, pharmaceutical, water treatment, mining and pulp and paper
industries. We also sell a full line of FDA-approved food, drug and cosmetic primary dyes (including
blends of primary dyes), as well as lakes and natural colors. Primary end-uses for our products
within food and beverage applications include soft drinks and processed foods, such as canned soup
and pre-made meals. In addition, within the colorant operation, we produce pigment dispersions for
use in architectural coatings and technical dyes used in household dyes and other applications. We
also sell defoamer and antifoam additives that are used in food applications to manage the level
of foaming that occurs. The following is a list of representative uses for and a description of our food and beverage
products: Category
    
    Product/Brand
    
    DescriptionFood and Beverage
    
    ColorsFood, drug and cosmetic dyes,
lakes, natural colors and
pigments
    
    Colorants for beverages,
confectionary goods, cosmetics, dry
mixes/snacks, processed foods and pet
food and colorants for inks, paints
and paper dyes.BenzoatesSodium benzoate and potassium
benzoate
    
    Improves shelf life for certain
consumable goods. Preservative for
manufacturers of soft drinks, bottled
beverages, fruit-based products and
prepared salads.Flavors and FragrancesBenzaldehyde-based chemicals
    
    Food, personal care and soap products.IntermediatesPhenol, benzaldehyde, benzyl
alcohol and benzoic acid
    
    Pharmaceuticals, coatings,
agrochemical products, plasticizers,
adhesives, sealant products and alkyd
resins.Foam Control AgentsSilicone and other chemistries
    
    Reduce foam in processing of food,
grain, fermentation and a wide range
of industrial products.
 Polymer Additives We are a leading global supplier of reactive liquid polymers (RLP) sold under the trademark
Hycar®, and one of the leading North American producers of polymer additives including
rubber and lubricant antioxidants and rubber accelerators. Our products in this category extend
the life and improve the performance characteristics of rubber, lubricating oil, plastics and
thermoset resin-based formulations. RLP is a high-growth niche product for technologically
challenging applications, including structural and engineered adhesives used in aerospace,
transportation and electronics. RLP improves impact and crack resistance in composites and
coatings and improves the toughness and long-term durability of epoxy-based structural adhesives.
RLP growth is anticipated to exceed overall growth of the high-end adhesives industry, as the
product is increasingly utilized for its superior performance characteristics relative to other
binding agents. Our antioxidant products are used in rubber, plastics and lubricants and are marketed under
the Good-Rite® name, a leading industry brand. Antioxidants prevent oxidative
degradation and are primarily utilized by rubber manufacturers and, to a lesser extent, plastic
manufacturers, to impart durability and prevent the loss of functional attributes such as
flexibility. In motor oil and other lubricants, antioxidants prevent thermal breakdown and extend
product life. We also manufacture a line of accelerators marketed
under our brand Cure-Rite®, which are utilized by rubber manufacturers to reduce the vulcanization/curing time, and thereby
improve manufacturing productivity. 10




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The following is a list of representative uses for and a description of our polymer additives
products: Category
    
    Product/Brand
    
    DescriptionPolymer Additives
    
    Reactive Liquid PolymerHycar®
    
    Used as a toughener and flexibilizer
in thermoset resin formulations
(construction, composites, coatings
and structural adhesives).AntioxidantsGood-Rite®
    
    Primarily used by rubber manufacturers
to prevent oxidative degradations,
impart durability and prevent loss of
flexibility.AcceleratorsCure-Rite®
    
    Helps reduce vulcanization/curing time.
 Performance Coatings.We are a leading supplier of specialty resins and additives for the
coatings and ink markets worldwide. We offer a wide range of products for formulating paints,
coatings and inks. In 2004, our performance coatings products generated total revenues of $391.9
million. Our business strategy for performance coatings is centered on our ability to formulate and
compound polymer emulsions to create customized solutions meeting the specific needs of our
customers. Many of our coatings customers have expanded their operations around the world. In
response, Noveon International expanded its product lines and geographic coverage with a focus on
strategic international account customers. We also recognize the importance of middle tier and
local customers, who we service economically with our trained local agents and distributor network.
Noveon International had success with water-borne acrylic and polyurethane technologies as global
restrictions targeting the reduction of the volatile organic compounds prevalent in solvent-based
products have become more stringent. We continue to develop innovative products based on these
technologies to enhance our portfolio. We expect water-borne formulations to continue to grow
faster than the overall industry growth rate for the niche industries in which we participate. Specialty Resins and Polymers Our water-based polymer emulsions and dispersions, including resins and auxiliaries, are used
in the production of high-end paint and coatings for wood, paper, metal, concrete, plastic,
textiles and other surfaces. Our acrylic emulsions and polyurethane dispersions, which are
environmentally attractive substitutes for solvent-based and hydrocarbon products, are valued for
the superior gloss and durability properties they provide. In addition, our polymers are used as
ink vehicles, overprint varnishes and functional coatings for specialty paper, printing and
packaging applications. We supply acrylic emulsions used to improve the appearance, texture,
durability and flame retardance of high-end specialty textiles sold to the home furnishings,
technical fabrics and apparel industries. In addition, we believe we are the only fully integrated
U.S. supplier of glyoxal and glyoxal-based resins for durable press and wrinkle-resistant textile
additives. In addition to water-based polymers, we specialize in unique, non-aqueous acrylic and other
proprietary polymer resins for the paint and coatings, printing ink, laminating, adhesives and
sealants, and grease markets. These value-added Doresco® specialty resins not only
function as carriers for pigment, but also provide surface protection and adhesion properties. We
work closely with our customers to develop resins that address their specific problems. The following is a list of representative uses for and a description of our polymer products: 11




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Category
    
    Product-line
    
    DescriptionSpecialty Resins and
Polymers
    
    Acrylic Emulsions,
Polyurethane
Dispersions and Other
Water-based Systems,
Hycar®,
Sancure®,
Algan®,
Performax®
    
    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 and
grease.
 Coating Additives Our additives for coatings and inks are used to enhance the appearance and durability of
coatings in architectural and industrial uses, as well as to improve their processing and
application characteristics. Additives such as pigment dispersants enhance the processing and
performance of printing ink, while also maximizing color strength and stability in coatings and
plastics. We are a leading global supplier of surface modifiers that improve the abrasion
resistance properties and film characteristics of printing ink and coatings. Our products include:  
    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 are primarily 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.
    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®.
    Foam control additives for paints and coatings minimize air bubbles and are sold
under the FOAM BLAST® and Antibubble brands.
    Specialized additives for inks improve rub resistance properties and film
characteristics. The following is a list of representative uses for and a description of our coating additives
products: Category
    
    Product/Brand
    
    DescriptionCoating Additives
    
    Dispersants,
Solsperse®
Ircosperse®,
COLORBURST
    
    Improve the dispersion
of almost any solid
particulate into almost
any liquid medium.
End-markets include
coatings 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, texturing and a
silky, soft feel. End
markets include
industrial,
architectural, can and
coil, wood and powder
coatings.
 12




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Category
    
    Product/Brand
    
    DescriptionRheology Control
Additives,
Ircothix®,
Ircogel®
and
Solthix®
    
    Provide thickening, sag control and
improved surface appearance of coatings.Foam Control
Additives, FOAM
BLAST®
and Antibubble
    
    Minimize air bubbles in paints and coatings.Specialized
Additives for Inks,
Duotron®,
Liquitron®,
Fluotron®
    
    Improve the processing, performance and rub
resistance properties.
 Specialty Materials.We are a leading global supplier of chlorinated polyvinyl chloride
(CPVC) resins and compounds sold under the trademark TempRite®. We are also a leading
producer of cross-linked polyethylene compounds (PEX) sold under the trademark
TempRite®. Applications for TempRite® resins and compounds include piping
for residential and commercial plumbing and fire sprinkler systems. In addition to
TempRite®, we are also a leading producer of thermoplastic polyurethane (TPU) sold
under the trademark Estane®. Applications for Estane® TPU include plastic
film and sheet for various coatings processes. In 2004, the specialty materials product line
generated total revenues of $247.1 million. Chlorinated Polyvinyl Chloride TempRite® CPVC is a technologically advanced heat, fire and chemical resistant
polymer that we developed to serve technically demanding applications not well served by
traditional PVC and other commodity plastics. Our TempRite® CPVC polymers are sold to
customers who produce plastic piping for residential and commercial plumbing, fire sprinkler
systems and industrial piping applications. TempRite® CPVC piping has inherent
advantages over copper and other metals due to its heat and corrosion resistance, increased
insulation properties, mold resistance, ease of installation and lower installed cost. We market
our branded TempRite® CPVC products for specific applications: FlowGuard®
and FlowGuard Gold® for residential and commercial plumbing, BlazeMaster® for
fire sprinkler systems and Corzan® for industrial piping. We believe we have built
strong end-user awareness of our brands by using a direct sales force that markets directly to
builders, contractors, plumbers, architects, engineers and building owners. In 2001, Noveon International purchased select assets and technology to manufacture PEX
compounds, further used to produce PEX pipe. TempRite® PEX enables us to add a flexible
piping compound to our rigid piping product offering. TempRite® PEX is a small but
growing product for applications that demand flexible piping systems. The following is a list of representative uses for and a description of our CPVC and PEX
products: Category
    
    Product/Brand
    
    DescriptionCPVC
    
    TempRite®
    
    Residential plumbingFlowGuard®
    
    Residential and commercial plumbingFlowGuard Gold®
    
    Residential and commercial plumbingCorzan®
    
    Industrial and commercial pipingBlazeMaster®
    
    Fire sprinkler pipingPEX
    
    TempRite®
    
    Flexible piping systems
 Thermoplastic Polyurethane Estane® TPU, an engineered, highly versatile thermoplastic, provides a high
quality, lower cost alternative to rigid plastics and flexible rubber. Performance attributes of
Estane® TPU include abrasion, heat and chemical resistance, minimal fatigue from
bending, ease of processing and good paintability. These performance characteristics make
Estane® TPU attractive for use in a broad range of end-uses, including film and sheet
for various coating processes, wire and cable insulation, athletic equipment (such as footwear),
medical applications, 13




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pneumatic tubing and automotive molded parts. Noveon International recently
introduced several new product families that extend the uses for Estane® TPU. This
includes products that can be melt spun into elastic spandex fibers and materials that offer
enhanced breathability for garments. We believe that Estane® TPU is one of the
industrys leading brand names. We also market Stat-Rite® thermoplastics, which are
static dissipative materials used in packaging for the electronics industry. In addition, we
market fiber-reinforced TPU under the Estaloc® brand. Estaloc® reinforced
engineering thermoplastics offer the functional properties of traditional TPU, yet are reinforced
for higher stiffness to provide the strength, dimensional stability and impact resistance required
to withstand a variety of tough applications and harsh environments. Applications include sporting
goods, agricultural equipment and other mechanical components. In October 2003, Noveon International purchased select assets and technology of Thermedics
Polymer Products, LLC, a manufacturer of aliphatic TPU, which has
allowed us to enter high-value
optical film, medical tubing and other applications. The following is a list of representative uses for and a description of our TPU products: 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 semiconductors, sensitive
electronic components, disk drive
heads and cell phone components.Tecoflex®
    
    Aliphatic grades for optical film,
medical tubing and general industrial
applications.
 Competition Our Lubricant Additives business is highly competitive in terms of price, technology
development, product performance and customer service. Our principal competitors, both in the
United States and overseas, are Infineum, a joint venture involving Shell Oil Company and Exxon
Mobil Corporation; Chevron Oronite Company, a subsidiary of ChevronTexaco Corporation; and Afton
Chemical Corporation, a subsidiary of NewMarket Corporation (formerly Ethyl Corporation).
Petroleum companies also produce, either directly or indirectly, lubricants and fuel additives for
their own use and also sell additives to others. These petroleum companies are also our customers,
and some of them sell raw materials to us. We believe, based on volume sold, that we are a leading
supplier of performance additives for lubricants to the petroleum industry. Our Specialty Chemicals business faces a variety of competitors in each of our product lines,
but we believe no single company competes with us across all of our existing product lines. The
specialty chemicals industry is highly fragmented. Individual products or service offerings
compete on a global, regional and local level due to the nature of the businesses and products, as
well as the applications and customers served. The following chart sets forth our principal
competitors of the Specialty Chemicals business by product line: Product Line
    
    Principal CompetitorsConsumer specialties
    
    Cognis, CP Kelco, Croda, DSM, FMC,
Hercules, ISP, Nihon Junkayu, Quest,
Rhodia, Rohm and Haas, Sensient,
Sigma/3V, Sumitomo Seika, Symrise,
Tessenderlo, VelsicolPerformance coatings
    
    Avecia, BASF, Bayer, Byk, Ciba,
Clariant, Dow Chemical, Eastman,
Johnson Polymer, OMNOVA, Parachem,
PolymerLatex, Reichhold, Rohm and
Haas, Tego, UCB
 14




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Product Line
    
    Principal CompetitorsSpecialty materials
    
    Atofina, BASF, Bayer, Dow, Georgia
Gulf, Huntsman, Kaneka, Sekisui
Chemical, Victaulic
 Sales and Marketing We primarily market our lubricant and fuel additives products worldwide through our own direct
sales organization. In addition, we use sales agents and distributors where necessary. Our
additive customers primarily consist of oil refiners and independent oil blenders and are located
in more than 100 countries. Our 10 largest customers, most of which are international oil
companies and a number of which are groups of affiliated entities, accounted for approximately 38%
of our consolidated net sales in 2004. In order to maximize our understanding of customer needs as well as emerging trends, our sales
and marketing activities for our specialty chemicals products are organized by end-use
applications. Each sales team includes representatives from sales, marketing and research and
development. Most of our sales and marketing staff is technically oriented and works closely with customers
to develop products and formulations that deliver the desired product attributes. Some of our
laboratories are equipped with small-scale equipment that replicates our customers processing
capabilities, which ensure our solutions are easily and efficiently implemented at our customers
facilities. Finally, many of our sales and marketing resources are dedicated to stimulating end-use demand
for our products. For example, in the case of our TempRite® plumbing, fire sprinkler
and industrial piping applications, our resources are focused on marketing to building contractors, plumbers,
distributors and construction code officials to convince them to specify our products in their
projects or building codes. Research, Development and Technology Technology leadership in design and formulation of additives and specialty chemicals drives
our business. Historically, we have emphasized consistent investment in research. Excluding
acquisitions, research and testing expense consistently has been about 8% of sales for the last two
decades  higher than most chemical companies. Research expense alone has been 4.5% to 5.0% of
sales annually for the last 10 years. We have developed internally a large percentage of the
products we manufacture and sell. Our internal technical resources encompass chemical synthesis,
world-class physical and analytical science, statistical and computer modeling expertise and
extensive applications technology and testing laboratories. We balance centralized research
facilities with applications technology capabilities that are closely tied to their counterparts in
the commercial organizations. Our technical facilities are located all over the world. We provide
tools and processes for knowledge sharing and for leveraging our technology globally and across
product lines. Lubricant Additives. In our Lubricant Additives segment, the majority of the additives we
manufacture and sell are developed by our in-house research group. Technological advances in
materials and in the design of engines and other automotive equipment, combined with rising demands
for environmental protection and fuel economy, require increasingly sophisticated research
capabilities to meet industry performance standards. We have technical facilities in Wickliffe, Ohio; Hazelwood, United Kingdom; and Kinuura, Japan
for lubricant additives research. We also conduct a limited program of corporate research designed
to leverage technology across our product lines. We maintain mechanical testing laboratories at
those three locations, equipped with a variety of gasoline and diesel engines, driveline and other
mechanical equipment to evaluate the
performance of additives for lubricants and fuels. In addition, we make extensive use of
independent research firms. Global field testing is conducted through various arrangements with
fleet operators and others. We maintain offices in Detroit, Michigan; Hazelwood, United Kingdom; Paris, France; Hamburg,
Germany; Shanghai, China; Mumbai, India; Tokyo, Japan; and Seoul, South Korea to maintain close
contact with the principal automotive OEMs of the world and to keep us abreast of the performance
requirements for our products. These liaison activities also serve as contacts for cooperative
development and evaluation of products for future applications. Specialty Chemicals.Our Specialty Chemicals segment has had a long history as an industry
innovator, creating proprietary, high-performance materials for our customers, including
ingredients for personal care products, 15




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the invention of Carbopol® acrylic thickener,
additives for coatings and the commercial development of TempRite® CPVC. We have
leveraged our core surface activity chemistry into new specialty chemicals and materials markets
through acquisitions and application technology expertise. Our specialty chemical and materials
products are derived from a broad range of technology platforms developed either internally or
externally through licensing, acquisition or joint technological alliances with global suppliers
and customers. Our primary research facility for our Specialty Chemicals segment is located in Brecksville,
Ohio, where we develop new technologies and products and conduct applications development and
technical service for our customers. We maintain other smaller technical facilities in various
locations in the United States, Europe and Asia. Patents. We own approximately 2,800 patents worldwide relating to our products and
manufacturing processes. Although these domestic and foreign patents expire from time to time, we
continue to apply for and obtain patent protection for new products on an ongoing basis. We
believe that, in the aggregate, our patents constitute an important asset. However, we do not
regard our business as being materially dependent upon any single patent or any group of related
patents. We use patents in both of our reporting segments. Research, Testing and Development Expenditures. Our consolidated research and development
expenditures were $108.3 million in 2004, $93.9 million in 2003 and $93.5 million in 2002. These
amounts were equivalent to 3.4%, 4.6% and 4.7% of the respective consolidated total revenues for
those years. These amounts include expenditures for the performance evaluation of additive
developments in engines and other types of mechanical equipment as well as expenditures for the
development of specialty chemicals for industrial applications. In addition, we spent $82.5
million, $73.0 million and $74.8 million in 2004, 2003 and 2002, respectively, for technical
service (testing) activities, principally for evaluation in mechanical equipment of specific
lubricant formulations designed for the needs of petroleum industry customers throughout the world. Our research and development staff includes approximately 700 professionals, many of whom
possess PhDs or equivalent degrees, and approximately 450 technical service employees. Our
research and development staff works with both our sales force and customers to use our wide
spectrum of technology platforms and processing capabilities to enhance our product offerings in
the specialty chemicals industry. We have developed many of our products in cooperation with our
customers, often as a result of their specific needs, resulting in long-standing customer
relationships. Raw Materials We use a broad variety of specialty and commodity chemical raw materials in our manufacturing
processes, and use oil in processing and blending additives. These raw materials are obtainable
from several sources. The materials that we choose to purchase from a single source generally have
long-term supply contracts as a basis to guarantee supply reliability. For the most part, our raw
materials are derived from petroleum and petrochemical-based feedstocks. Lubricant base oil is our single largest purchased raw material, representing about one-third
of our purchases, by weight, for the Lubricant Additives segment. Other major categories of raw
materials for the Lubricant Additives segment include olefins and esters (approximately 15% of
purchases); inorganic acids, bases and oxides (approximately 6%); and alcohols and glycols
(approximately 5%). We believe that raw materials derived from petrochemicals are approximately
75% of our purchases for the Lubricant Additives segment. For
our Specialty Chemicals segment, no single raw material represents more than 5% of purchases.
The top seven raw materials total about 30% of purchases for the Specialty Chemicals segment.
Principal raw materials for the Specialty Chemicals segment include acrylates for personal care and
coatings, styrene for coatings, toluene for food and beverages, and PVC, PTMEG and MDI for
specialty materials. Environmental Matters We are subject to foreign, federal, state and local laws and regulations designed to protect
the environment and limit manufacturing wastes and emissions. We believe that, as a general
matter, our policies, practices and procedures are properly designed to prevent unreasonable risk
of environmental damage and the consequent financial liability to us. Compliance with
environmental laws and regulations requires continuing management effort and expenditures. We have
incurred, and will continue to incur, costs and capital expenditures in complying with these laws
and regulations and to obtain and maintain all necessary permits. We believe that the cost of
complying 16




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with environmental laws and regulations will not have a material affect on our earnings,
liquidity or competitive position, although we cannot provide you assurance in that regard. We believe that our business, operations and facilities are being operated in compliance, in
all material respects, with applicable environmental laws and regulations, many of which provide
for substantial fines, penalties and criminal sanctions for violations. The operation of
manufacturing plants entails environmental risks, and we may incur material costs or liabilities in
the future that could adversely affect us. For example, we may be required to comply with evolving
environmental laws, regulations or requirements that may be adopted or imposed in the future or to
address newly discovered contamination or other conditions or information that require a response
on our part. Among other environmental laws, we are subject to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (commonly known as Superfund), under which we have been
designated as a potentially responsible party that may be liable for cleanup costs associated
with various waste or operating sites, some of which are on the U.S. Environmental Protection
Agency Superfund priority list. Our experience, consistent with what we believe to be the
experience of others in similar cases, is that Superfund site liability tends to be apportioned
among parties based upon the contribution of materials to the Superfund site. Accordingly, we
measure our liability and carry out our financial reporting responsibilities with respect to
Superfund sites based upon this standard, even though Superfund site liability is technically joint
and several in nature. We accrue for estimated environmental liabilities with charges to cost of
sales. We believe our environmental accrual is adequate to provide for our portion of the costs of
all such known environmental liabilities. Based upon consideration of currently available
information, we believe liabilities for environmental matters will not have a material adverse
affect on our financial position, operating results or liquidity, although we cannot provide you
assurance in that regard. Noveon International is the beneficiary of agreements with Goodrich Corporation that require
Goodrich to indemnify Noveon International for, among other things, certain environmental
liabilities and costs relating to facilities of the former Performance Materials Segment of
Goodrich. However, we cannot assure you that Goodrich or other third party indemnitors will, in
the future, honor their indemnification obligations to us. Employees At December 31, 2004, we and subsidiaries had approximately 7,800 employees of which
approximately 56% were in the United States. We believe that our relationship with our employees
is good. Seven of our U.S. sites, and approximately 11% of our domestic employees, are organized
by labor unions with collective bargaining agreements that are subject to periodic renegotiation.
The durations of these collective bargaining agreements vary from three to five years, with four
agreements expiring in 2005. We expect to enter into new agreements with these unions as the
current agreements expire. Manufacturing and Properties We possess global manufacturing, laboratory and sales and technical service facilities
enabling us to provide customers with worldwide service and a reliable supply of products. Our
corporate headquarters are located in Wickliffe, Ohio. We have manufacturing facilities and
laboratories, which we own or lease, at 33 sites in the United States and 40 sites in approximately
20 other countries. We also have entered into long-term
contracts for the exclusive use of major marine terminal facilities at various ports and
leases for storage facilities. We maintain a capital expenditure program to support our operations
and believe our facilities are adequate for our present operations and for the foreseeable future. Geographic Area Information Financial information with respect to our domestic and foreign operations is contained in Note
14 to our consolidated financial statements, which is included in our 2004 Annual Report to
shareholders, and is incorporated herein by reference. We supply our customers abroad through exports from the United States and from overseas
manufacturing plants. We believe the political and economic risks related to our foreign
operations are mitigated due to the stability of the countries in which our largest foreign
operations are located. 17




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Legal Proceedings We are engaged in legal proceedings arising in the ordinary course of business. We believe
that the ultimate outcome of these proceedings will not have a material adverse impact on our
results of operations, financial position or cash flows. 18




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ITEM 2. PROPERTIES Our corporate headquarters are located in Wickliffe, Ohio. Our commercial centers for
Lubricant Additives and Specialty Chemicals are located in Wickliffe, Ohio and Brecksville, Ohio,
respectively. We have other offices and facilities around the world. The locations of our
manufacturing and laboratory facilities are indicated below in the following chart. SizeLaboratory
    
    
    (approx.)
    
    
    Reporting SegmentsOwned/
    
    
    (R&D/Testing) or
    
    
    in square
    
    
    Lubricant
    
    
    SpecialtyLocation
    
    
    Leased
    
    
    Manufacturing
    
    
    feet
    
    
    Additives
    
    
    ChemicalsSydney, Australia
    
    
    Owned
    
    
    Manufacturing
    
    
    
    45,000
    
    
    
    x
    
    
    xAntwerp, Belgium
    
    
    Owned
    
    
    Manufacturing
    
    
    
    81,000
    
    
    
    
    
    
    xOevel, Belgium
    
    
    Owned
    
    
    Manufacturing
    
    
    
    215,000
    
    
    
    
    
    
    xVilvoorde, Belgium
    
    
    Owned
    
    
    Manufacturing
    
    
    
    27,000
    
    
    
    
    
    
    xRio de Janeiro, Brazil
    
    
    Owned
    
    
    Manufacturing
    
    
    
    270,000
    
    
    
    x
    
    
    xNiagara Falls, Ontario, Canada
    
    
    Owned
    
    
    Manufacturing
    
    
    
    175,000
    
    
    
    xLondon, Ontario, Canada
    
    
    Owned
    
    
    Manufacturing
    
    
    
    22,000
    
    
    
    xNewmarket, Ontario, Canada
    
    
    Owned
    
    
    Manufacturing
    
    
    
    17,000
    
    
    
    xLanzhou, China(1)
    
    
    Plant is owned;
land is leased
    
    
    Manufacturing
    
    
    
    35,500
    
    
    
    
    
    
    xQingpu, China
    
    
    Leased
    
    
    Manufacturing
    
    
    
    45,000
    
    
    
    
    
    
    xWenzhou, China(1)
    
    
    Leased
    
    
    Manufacturing
    
    
    
    53,000
    
    
    
    
    
    
    xLe Havre, France
    
    
    Owned
    
    
    Manufacturing
    
    
    
    960,000
    
    
    
    xLyon, France
    
    
    Leased
    
    
    Laboratory
    
    
    
    13,500
    
    
    
    
    
    
    xMourenx, France
    
    
    Owned
    
    
    Manufacturing
    
    
    
    40,000
    
    
    
    xRouen, France
    
    
    Owned
    
    
    Manufacturing
    
    
    
    760,000
    
    
    
    xHamburg, Germany
    
    
    Leased
    
    
    Laboratory, Manufacturing
    
    
    
    65,000
    
    
    
    xRaubling, Germany
    
    
    Leased/Owned
    
    
    Laboratory, Manufacturing
    
    
    
    134,500
    
    
    
    
    
    
    xRitterhude, Germany
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    85,000
    
    
    
    
    
    
    xChennai, India
    
    
    Leased
    
    
    Manufacturing
    
    
    
    114,000
    
    
    
    
    
    
    xMumbai, India(1)
    
    
    Plant is owned;
land is leased
    
    
    Manufacturing
    
    
    
    230,000
    
    
    
    xVadadora, India
    
    
    Owned
    
    
    Manufacturing
    
    
    
    294,000
    
    
    
    
    
    
    xKinuura, Japan
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    710,400
    
    
    
    x
    
    
    xSenawang, Malaysia
    
    
    Owned
    
    
    Manufacturing
    
    
    
    38,000
    
    
    
    
    
    
    xApodaca, Mexico
    
    
    Owned
    
    
    Manufacturing
    
    
    
    135,000
    
    
    
    xDelfzijl, The Netherlands
    
    
    Leased
    
    
    Manufacturing
    
    
    
    50,000
    
    
    
    
    
    
    xYanbu, Saudi Arabia
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    4,900
    
    
    
    xSingapore
    
    
    Plant is owned;
land is leased
    
    
    Manufacturing
    
    
    
    500,000
    
    
    
    xSingapore
    
    
    Leased
    
    
    Laboratory
    
    
    
    1,300
    
    
    
    
    
    
    xDurban, South Africa
    
    
    Owned
    
    
    Manufacturing
    
    
    
    75,000
    
    
    
    x
    
    
    xPohang, South Korea
    
    
    Leased/Owned
    
    
    Manufacturing
    
    
    
    49,000
    
    
    
    
    
    
    xBarcelona, Spain
    
    
    Leased/Owned
    
    
    Laboratory, Manufacturing
    
    
    
    76,000
    
    
    
    
    
    
    xMalmo, Sweden
    
    
    Owned
    
    
    Manufacturing
    
    
    
    6,700
    
    
    
    xMuang, Thailand
    
    
    Jointly Owned
    
    
    Laboratory, Manufacturing
    
    
    
    15,000
    
    
    
    
    
    
    xBarnsley, United Kingdom
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    50,000
    
    
    
    
    
    
    xBlackley, Manchester,
United Kingdom
    
    
    Leased
    
    
    Laboratory
    
    
    
    13,000
    
    
    
    
    
    
    xBromborough, United Kingdom
(2)
    
    
    Owned
    
    
    Manufacturing
    
    
    
    140,000
    
    
    
    x
    
    
    xFareham, United Kingdom
    
    
    Owned
    
    
    Manufacturing
    
    
    
    13,000
    
    
    
    xHazelwood, United Kingdom
    
    
    Owned
    
    
    Laboratory
    
    
    
    77,000
    
    
    
    x
 19




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##### Table of Contents



SizeLaboratory
    
    
    (approx.)
    
    
    Reporting SegmentsOwned/
    
    
    (R&D/Testing) or
    
    
    in square
    
    
    Lubricant
    
    
    SpecialtyLocation
    
    
    Leased
    
    
    Manufacturing
    
    
    feet
    
    
    Additives
    
    
    ChemicalsHuddersfield, United Kingdom
    
    
    Plant is owned;
land is leased
    
    
    Laboratory, Manufacturing
    
    
    
    37,000
    
    
    
    
    
    
    xGrangemouth, Scotland,
United Kingdom
    
    
    Leased
    
    
    Laboratory
    
    
    
    900
    
    
    
    
    
    
    xPaso Robles, CA
    
    
    Plant is owned;
land is leased
    
    
    Laboratory, Manufacturing
    
    
    
    26,000
    
    
    
    
    
    
    xAtlanta, GA
    
    
    Owned
    
    
    Manufacturing
    
    
    
    51,400
    
    
    
    xPeachtree City, GA(3)
    
    
    Owned
    
    
    Manufacturing
    
    
    
    42,500
    
    
    
    
    
    
    xCountryside, IL
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    60,000
    
    
    
    
    
    
    xHenry, IL
    
    
    Owned
    
    
    Manufacturing
    
    
    
    100,000
    
    
    
    
    
    
    xMcCook, IL
    
    
    Leased
    
    
    Laboratory, Manufacturing
    
    
    
    68,000
    
    
    
    
    
    
    xCalvert City, KY
    
    
    Owned
    
    
    Manufacturing
    
    
    
    75,000
    
    
    
    
    
    
    xLouisville, KY
    
    
    Owned
    
    
    Manufacturing
    
    
    
    232,000
    
    
    
    
    
    
    xLawrence, MA
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    160,000
    
    
    
    
    
    
    xWilmington, MA
    
    
    Leased
    
    
    Manufacturing
    
    
    
    83,600
    
    
    
    
    
    
    xMidland, MI
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    68,700
    
    
    
    xReno, NV
    
    
    Leased
    
    
    Manufacturing
    
    
    
    54,300
    
    
    
    xLinden, NJ(4)
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    9,500
    
    
    
    
    
    
    xPedricktown, NJ
    
    
    Owned
    
    
    Manufacturing
    
    
    
    40,000
    
    
    
    
    
    
    xCharlotte, NC
    
    
    Leased
    
    
    Laboratory
    
    
    
    2,000
    
    
    
    
    
    
    xCharlotte, NC
    
    
    Owned
    
    
    Manufacturing
    
    
    
    270,000
    
    
    
    
    
    
    xGastonia, NC
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    116,000
    
    
    
    
    
    
    xAkron, OH
    
    
    Owned
    
    
    Manufacturing
    
    
    
    236,000
    
    
    
    
    
    
    xAvon Lake, OH
    
    
    Owned
    
    
    Manufacturing
    
    
    
    240,000
    
    
    
    
    
    
    xBowling Green, OH
    
    
    Owned
    
    
    Manufacturing
    
    
    
    75,000
    
    
    
    
    
    
    xBrecksville, OH
    
    
    Owned
    
    
    Laboratory
    
    
    
    142,000
    
    
    
    
    
    
    xChagrin Falls, OH
    
    
    Owned
    
    
    Manufacturing
    
    
    
    49,000
    
    
    
    
    
    
    xCincinnati, OH
    
    
    Leased
    
    
    Laboratory, Manufacturing
    
    
    
    450,000
    
    
    
    
    
    
    xPainesville, OH
    
    
    Owned
    
    
    Manufacturing
    
    
    
    450,000
    
    
    
    x
    
    
    xWickliffe, OH
    
    
    Owned
    
    
    Laboratory
    
    
    
    233,000
    
    
    
    xMountaintop, PA(5)
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    42,000
    
    
    
    
    
    
    xSpartanburg, SC
    
    
    Leased
    
    
    Laboratory
    
    
    
    22,300
    
    
    
    xSpartanburg, SC
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    71,000
    
    
    
    x
    
    
    xBayport, TX
    
    
    Owned
    
    
    Manufacturing
    
    
    
    810,000
    
    
    
    x
    
    
    xDeer Park, TX
    
    
    Owned
    
    
    Manufacturing
    
    
    
    1,570,000
    
    
    
    xHouston, TX
    
    
    Owned
    
    
    Manufacturing
    
    
    
    39,000
    
    
    
    
    
    
    xKalama, WA
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    550,000
    
    
    
    
    
    
    xCheyenne, WY
    
    
    Owned
    
    
    Laboratory, Manufacturing
    
    
    
    32,000
    
    
    
    
    
    
    x
   (1)
    
    These manufacturing plants are owned and operated by joint venture companies licensed by
Lubrizol.(2)
    
    Operations are expected to cease by the end of 2006.(3)
    
    Acquired this property in February 2005.(4)
    
    Operations are expected to cease by the end of the second quarter of 2006.(5)
    
    Operations are expected to cease by the end of the third quarter of 2005. In some cases, the ownership or leasing of these facilities is through a subsidiary or
affiliate. We have entered into long-term contracts for our exclusive use of major marine terminal
facilities at the Port of Houston, Texas. In addition, we have leases for storage facilities in
Australia, Chile, Denmark, France, the Netherlands, Singapore, Spain, South Africa, Sweden, Turkey
and United Kingdom; Paso Robles, Bakersfield and Los Angeles, California; St. Paul, Minnesota;
Bayonne and Edison, New Jersey; Perrysburg, Ohio; Oklahoma City, Oklahoma; Odessa, Texas and
Tacoma, Washington. 20




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##### Table of Contents



On January 17, 2005, we announced we will close our Lubricant Additives manufacturing plant in
Bromborough, United Kingdom and resource that plant production to other facilities primarily in
France and in the United States. Production phase-out is planned to begin in the second quarter of
2005 and is expected to be completed by the fourth quarter of 2006. A fourth quarter 2004 non-cash
restructuring charge of $17.0 million pre-tax was recorded for the impairment of property, plant
and equipment. We currently anticipate that future pre-tax charges and cash expenditures of
approximately $13.0 million to $15.0 million will be incurred in 2005 through 2006 to satisfy
anticipated severance and retention obligations, plant dismantling, site restoration and other site
environmental evaluation costs and lease-related costs. In addition, we anticipate capital
expenditures of approximately $20.0 million, which will be incurred over the next two years to
enable our plants in France and the United States to assume the production from Bromborough. When
the production transfer is fully implemented, we estimate our pre-tax operating cost savings will
approximate $10.0 million annually. We maintain a capital expenditure program to support our operations and believe our facilities
are adequate for our present operations and for the foreseeable future. 
 ITEM 3. LEGAL PROCEEDINGS Lubrizol and our subsidiaries are participants in ordinary routine litigation incidental to
the business but are not defendants in any material pending legal proceedings. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to the vote of the security holders during the three months ended
December 31, 2004. 21




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##### Table of Contents



EXECUTIVE OFFICERS OF THE REGISTRANT The following sets forth the name, age, recent business experience and certain other
information relative to each person who was an executive officer as of February 28, 2005. Name
    
    Age
    
    PositionJames L. Hambrick
    
    
    50
    
    
    Chairman of the Board, President and Chief Executive OfficerJoseph W. Bauer
    
    
    51
    
    
    Vice President and General CounselDonald W. Bogus

    
    
    57
    
    
    Senior Vice President and President  Specialty ChemicalsCharles P. Cooley
    
    
    49
    
    
    Senior Vice President and Chief Financial OfficerW. Scott Emerick
    
    
    40
    
    
    Corporate ControllerStephen F. Kirk
    
    
    55
    
    
    Senior Vice President and President  Lubricant AdditivesGregory R. Lewis
    
    
    46
    
    
    Vice President and General Counsel  Specialty ChemicalsGregory. P. Lieb
    
    
    52
    
    
    Vice President, Finance  Lubricant AdditivesAnnora C. Marcus
    
    
    42
    
    
    Assistant SecretaryScott A. McKinley
    
    
    43
    
    
    Vice President, Finance  Specialty ChemicalsMark W. Meister
    
    
    50
    
    
    Vice President and Chief Ethics OfficerLarry Norwood
    
    
    54
    
    
    Vice President, Operations Lubricant AdditivesRosanne S. Potter
    
    
    45
    
    
    TreasurerLeslie M. Reynolds
    
    
    44
    
    
    Corporate SecretaryPatrick Saunier
    
    
    49
    
    
    Vice President, Information SystemsJeffrey A. Vavruska
    
    
    44
    
    
    Chief Tax OfficerJoanne Wanstreet
    
    
    53
    
    
    Vice President, Investor Relations
 James L. Hambrickis chairman of the board of directors, president and chief executive officer of
The Lubrizol Corporation. He was elected president in January 2003, chief executive officer in
April 2004 and chairman of the board effective January 3, 2005. From May 2000 to January 2003, he
was vice president responsible for managing corporate strategies in the Asia Pacific region. From
October 1998 to April 2000, he was global business manager for engine oils. Joseph W. Bauerhas been the vice president and general counsel of The Lubrizol Corporation since
April 1992. Donald W. Bogusbecame senior vice president of The Lubrizol Corporation in July 2004 and president
of the Specialty Chemicals segment in April 2004. He joined Lubrizol in 2000 as vice president responsible for
the Fluid Technologies for Industry segment. He also led Lubrizols mergers and acquisitions
committee. Prior to joining Lubrizol, Mr. Bogus was with PPG Industries, Inc. where he was vice
president for government affairs from May 1999 to February 2000. Charles P. Cooleyis senior vice president and chief financial officer of The Lubrizol Corporation.
He joined Lubrizol in 1998 as its chief financial officer and vice president. He was also
treasurer from April 1998 to September 2001. Mr. Cooley became senior vice president in July 2004. W. Scott Emerickjoined The Lubrizol Corporation as corporate controller in June 2004. Prior to
that, Mr. Emerick was at Noveon International, Inc., where he held the positions of director of
finance  TempRite® products from September 2003 to June 2004 and director of accounting
and external financial reporting from April 2001 to September 2003. Prior to joining Noveon
International, Mr. Emerick served as director of finance for Flexalloy-Textron, a subsidiary of
Textron, Inc., where he held several management positions since 1997. Stephen F. Kirkbecame senior vice president of The Lubrizol Corporation in July 2004 and the
president of the Lubricant Additives segment in June 2004. Previously, he was vice president of
sales and marketing for Lubrizol since January 1999 and vice president of sales from April 1996 to
January 1999. Gregory R. Lewisbecame vice president and general counsel to the Specialty Chemicals segment in
June 2004. Previously, Mr. Lewis was the vice president responsible for managing corporate
strategies in the Asia Pacific
region 22




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##### Table of Contents



from January 2003 to June 2004. He was assistant secretary of Lubrizol from April 2001 to
January 2003 and assistant to the general counsel from October 1997 to January 2003. Gregory P. Liebbecame vice president of finance for the Lubricant Additives segment in June 2004.
Prior to that position, he was controller  commercial analysis and support from April 1999 until
June 2004. From 1993 to April 1999, he was controller  accounting and financial reporting. From
1994 to April 1999, he was also the principal accounting officer of Lubrizol. Annora C. Marcushas been assistant secretary of The Lubrizol Corporation since April 2003. In
addition, she has been the director  foreign audits/transfer pricing since September 2004. She
previously has held various tax positions with Lubrizol from October 1997 until September 2004. Scott A. McKinleybecame vice president of finance for the Specialty Chemicals segment in June
2004. From February 2001 to June 2004, he was vice president and controller for Noveon
International, Inc. From late 1998 until February 2001, he was the director, financial planning
and analysis, for the Performance Materials Segment of The B.F. Goodrich Company. Mark W. Meisterhas been the vice president of human resources for The Lubrizol Corporation since
1993 and chief ethics officer since 1994. Larry Norwoodis vice president for operations for the Lubricant Additives segment. He was
appointed an officer in April 2004. Mr. Norwood joined Lubrizol in 1973 and, most recently, he has
served as general manager of the Deer Park and Bayport, Texas facilities. Rosanne S. Potterjoined The Lubrizol Corporation and was named treasurer in September 2001.
Previously, she was the vice president and treasurer to Dexter Corporation from 1999 to 2000. Leslie M. Reynoldsis corporate secretary and counsel for The Lubrizol Corporation. She has been
counsel since February 1991. She served as assistant secretary from 1997 until her appointment as
corporate secretary in April 2001. Patrick H. Saunierbecame the vice president for information systems and business processes for The
Lubrizol Corporation in July 2004. Mr. Saunier joined Lubrizols manufacturing facility in Rouen,
France in 1981 and, since 1999 he led the European shared services organization. Jeffrey A. Vavruskajoined The Lubrizol Corporation as chief tax officer in April 2004.
Previously, he worked at American Greetings Corporation, where he was executive director of tax
from September 2001 to April 2004, and at Cleveland Cliffs, Inc. where he held various tax roles
from 1995 to 2001. Joanne Wanstreetwas elected vice president with responsibility for global communications and
investor relations for The Lubrizol Corporation in April 2002. From January 2001 to April 2002,
Ms. Wanstreet was manager, investor relations. From January 1999 to December 2000, she was finance
manager. All executive officers serve at the pleasure of the Board. 23




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##### Table of Contents



PART II 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common shares are listed on the New York Stock Exchange under the symbol LZ. The number
of shareholders of record of common shares was 3,682 as of February 10, 2005. Information relating to the recent price and dividend history of our common shares follows: Common Share Price History
    
    
    Dividends2004
    
    
    2003
    
    
    Per Common ShareHigh
    
    
    Low
    
    
    High
    
    
    Low
    
    
    2004
    
    
    20031st quarter
    
    $
    33.55
    
    
    $
    29.44
    
    
    $
    32.06
    
    
    $
    26.54
    
    
    $
    .26
    
    
    $
    .262nd quarter
    
    
    36.81
    
    
    
    30.67
    
    
    
    32.46
    
    
    
    29.50
    
    
    
    .26
    
    
    
    .263rd quarter
    
    
    37.37
    
    
    
    33.00
    
    
    
    34.40
    
    
    
    30.50
    
    
    
    .26
    
    
    
    .264th quarter
    
    
    37.33
    
    
    
    32.12
    
    
    
    34.31
    
    
    
    29.23
    
    
    
    .26
    
    
    
    .26$
    1.04
    
    
    $
    1.04
 On October 14, 2004, 6,794 common shares were issued in a private placement transaction exempt
from registration under the Securities Act of 1933 pursuant to Section 4(2) of that Act. We issued
the common shares to the surviving spouse of a former director under a deferred stock compensation
plan for outside directors. On December 1, 2004, 187 common shares were issued in a private placement transaction exempt
from registration under the Securities Act of 1933 pursuant to Section 4(2) of that Act. We issued
the common shares to a former officer under the deferred compensation plan for officers. The following table provides information regarding the companys purchases of its common
shares during the quarter. (d) Maximum Number(c) Total Number
    
    
    (or Approximate Dollarof Shares (or Units)
    
    
    Value) of Shares (or(a) Total Number of
    
    
    (b) Average Price
    
    
    Purchased as Part of
    
    
    Units) that May Yet beShares (or Units)
    
    
    Paid per Share
    
    
    Publicly Announced
    
    
    Purchased Under thePeriod
    
    
    Purchased1
    
    
    (or Unit)
    
    
    Plans or Programs
    
    
    Plans or ProgramsMonth #1
(Oct. 1, 2004 through
Oct. 31, 2004)
    
    
    0 Shares
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMonth #2
(Nov. 1, 2004 through
Nov. 30, 2004)
    
    
    0 Shares
    
    
    N/A
    
    
    

N/A
    
    
    

N/AMonth #3
(Dec. 1, 2004 through
Dec. 31, 2004)
    
    

1,607
Shares
    
    
    $36.60
    
    



N/A
    
    
    
    N/ATotal
    
    
    1,607 Shares
   1This column represents common shares that were purchased by the company pursuant to: (a) its option plan, whereby participants exchange already owned shares to the company to pay
for the exercise price of an option or whereby the company withholds shares upon the exercise
of an option to pay the withholding taxes on behalf of the employee. (b) its deferred compensation plans, whereby the company withholds shares upon a distribution
to pay the withholding taxes on behalf of the employee. 24




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA The summary of selected financial data for each of the last five years included in the
Historical Summary contained on pages 58-59 of our 2004 Annual Report to shareholders is
incorporated herein by reference. Total debt reported in the Historical Summary includes the following amounts classified as
long-term at December 31: $1,964.1 million in 2004, $386.7 million in 2003, $384.8 million in 2002,
$388.1 million in 2001, $378.8 million in 2000 and $365.4 million in 1999. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Managements Discussion and Analysis of Financial Condition and Results of Operations,
including the information appearing under the heading Cautionary Statements for Safe Harbor
Purposes, contained on pages 9 through 26, inclusive, of our 2004 Annual Report to shareholders is
incorporated herein by reference. 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information appearing under the heading Quantitative and Qualitative Disclosures about
Market Risk contained on page 26 of our 2004 Annual Report to shareholders is incorporated herein
by reference. 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our consolidated financial statements, together with the report of the independent registered
public accounting firm relating thereto, contained on pages 28 through 57, inclusive, of our 2004
Annual Report to shareholders, and the Quarterly Financial Data (Unaudited) contained on page 57 of
the 2004 Annual Report to shareholders, are incorporated herein by reference. 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 
 ITEM 9A. CONTROLS AND PROCEDURES We evaluated, under the supervision and with the participation of our chief executive officer
and chief financial officer, the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e)) as of December 31, 2004. Based on that evaluation, our
chief executive officer and chief financial officer concluded that, as of December 31, 2004, our
disclosure controls and procedures were effective in timely alerting them to material information
relating to Lubrizol and our consolidated subsidiaries required to be included in our periodic SEC
filings. There were no significant changes in our internal control over financial reporting that
occurred during the fourth quarter of 2004 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Managements report on internal control over financial reporting and the report of the
independent registered public accounting firm relating thereto are contained on pages 27 and 28,
inclusive, of our 2004 Annual Report to shareholders and are incorporated herein by reference. 25




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##### Table of Contents



PART III 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information contained under the headings Election of Directors and Section 16(a)
Beneficial Ownership Reporting Compliance of our proxy statement for the 2005 Annual Meeting of
Shareholders is incorporated herein by reference. Information relative to executive officers is
contained under Executive Officers of the Registrant in Part I of this Annual Report on Form
10-K. Information regarding the identification of a financial expert on the Audit Committee
contained under the heading Audit Committee in our proxy statement for the 2005 Annual Meeting of
Shareholders is incorporated herein by reference. We have a code of ethics, entitled the Ethical and Legal Conduct Guidelines, that applies to
our directors and all employees, including our chief executive officer, chief financial officer,
and controller. The Ethical and Legal Conduct Guidelines are posted at the company overview area
of our website, www.lubrizol.com. 
 ITEM 11. EXECUTIVE COMPENSATION The information relating to executive compensation contained under the headings Director
Compensation, Executive Compensation Summary Compensation Table, Executive Compensation -
Stock Incentive Plans, Executive Compensation  Long-Term Incentive Plans, Employee and
Executive Officer Benefit Plans  Pension Plans, Employee and Executive Officer Benefit Plans 
Supplemental Retirement Plan and Employee and Executive Officer Benefit Plans  Executive
Agreements in our proxy statement for the 2005 Annual Meeting of Shareholders is incorporated
herein by reference. 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information relating to security ownership set forth under the heading Share Ownership of
Directors, Executive Officers and Large Beneficial Owners in our proxy statement for the 2005
Annual Meeting of Shareholders is incorporated herein by reference. The information relating to securities authorized for issuance under equity compensation plans
set forth under the heading Equity Compensation Plan
Information in our proxy statement for the
2005 Annual Meeting of Shareholders is incorporated herein by reference. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information contained in footnote 1 under the heading Share Ownership of
Directors, Executive Officers and Large Beneficial Owners  Five
Percent Beneficial Owners in our
proxy statement for the 2005 Annual Meeting of Shareholders is incorporated herein by reference. 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information included under the heading entitled Independent Registered Public Accountant
Fees in our proxy statement for the 2005 Annual Meeting of Shareholders is incorporated herein by
reference. 26




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##### Table of Contents



PART IV 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  (a)
    Documents filed as part of this Annual Report:  1.
    Managements report on internal controls over financial reporting together with the
report of the independent registered public accounting firm relating thereto, contained on
pages 27 and 28 of our 2004 Annual Report to shareholders, and incorporated herein by
reference.2.
    The following consolidated financial statements of The Lubrizol Corporation and its
subsidiaries, together with the report of the independent registered public accounting firm
relating thereto, contained on pages 28 through 57, inclusive, of our 2004 Annual Report to
shareholders, and incorporated herein by reference:Report of Independent Registered Public Accounting Firm.Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002.Consolidated Balance Sheets at December 31, 2004 and 2003.Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002.Consolidated Statements of Shareholders Equity for the years ended December 31, 2004, 2003
and 2002.Notes to Consolidated Financial Statements.3.
    Schedule 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF THE LUBRIZOL CORPORATION We have audited the consolidated financial statements of The Lubrizol Corporation and subsidiaries
(the Company) as of December 31, 2004 and 2003, and for each of the three years in the period
ended December 31, 2004, and have issued our report thereon dated March 2, 2005 (which report
expresses an unqualified opinion and includes an explanatory paragraph concerning the adoption of a
new accounting principle in 2002). We have also audited managements assessment of the
effectiveness of the Companys internal control over financial reporting as of December 31, 2004
and the effectiveness of the Companys internal control over financial reporting as of December 31,
2004, and have issued our report thereon dated March 2, 2005. Such consolidated financial
statements and reports are included in the 2004 Annual Report to Shareholders of The Lubrizol
Corporation and are incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of the Company listed in Item 15(a)3. This consolidated financial
statement schedule is the responsibility of the Companys management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth therein. /s/ Deloitte & Touche LLP
Cleveland, Ohio
March 2, 2005 27




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##### Table of Contents



SCHEDULE II- Valuation and Qualifying AccountsFor the years ended December 31, 2004, 2003 and 2002(in millions of dollars)Balance at
    
    
    Additions
    
    
    Additions
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    Charged
    
    
    Charged to
    
    
    
    
    
    
    
    
    End ofDescription
    
    of Year
    
    
    to Expenses
    
    
    Other Accounts
    
    
    
    
    Deductions
    
    
    YearYear ended December 31, 2004Allowance for
uncollectible
accounts
    
    $
    4.2
    
    
    $
    0.4
    
    
    $
    7.7
    
    *
    
    
    $
    1.3
    
    
    $
    11.0Year ended December 31, 2003Allowance for
uncollectible
accounts
    
    $
    4.4
    
    
    $
    
    
    
    $
    
    
    
    
    
    $
    0.2
    
    
    $
    4.2Year ended December 31, 2002Allowance for
uncollectible
accounts
    
    $
    5.3
    
    
    $
    0.7
    
    
    $
    
    
    
    
    
    $
    1.6
    
    
    $
    4.4
   *
    Receivable reserves associated with the acquisition of Noveon International, Inc. All other schedules have been omitted because they are not applicable.  4.
    Exhibits  3.1
    Amended Articles of Incorporation of The Lubrizol Corporation, as adopted September 23, 1991.3.2
    Regulations of The Lubrizol Corporation, as amended effective April 27, 1992.4.1
    Amendment to Article Fourth of Amended Articles of Incorporation.4.2
    Amended and Restated Rights Agreement between The Lubrizol Corporation and
American Stock Transfer & Trust Company dated as of July 26, 1999.4.3
    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).4.4
    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).4.5
    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 1985 Employee Stock Option Plan, as amended
(incorporated by reference to Exhibit (10)(a) to The Lubrizol Corporations Annual
Report on Form 10-K for the year ended December 31, 2000).10.2*
    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). 28




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##### Table of Contents



10.3*
    The Lubrizol Corporation 2005 Stock Incentive Plan, as amended (incorporated
by reference to Exhibit 10.1 to The Lubrizol Corporations
Current Report on Form 8-K/A
filed with the SEC on March 2, 2005).10.4*
    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).10.5*
    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).10.6*
    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).10.7*
    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).10.8*
    The Lubrizol Corporation 2005 Deferred Compensation Plan for Directors
(incorporated by reference to Exhibit (10)(v) to The Lubrizol Corporations Current
Report on Form 8-K filed with the SEC on November 18, 2004).10.9*
    The Lubrizol Corporation 2005 Deferred Compensation Plan for Officers
(incorporated by reference to Exhibit (10)(x) to The Lubrizol Corporations Current
Report on Form 8-K filed with the SEC on November 18, 2004).10.10*
    The Lubrizol Corporation 2005 Executive Council Deferred Compensation Plan
(incorporated by reference to Exhibit (10)(y) to The Lubrizol Corporations Current
Report on Form 8-K filed with the SEC on November 18, 2004).10.11*
    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).10.12*
    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).10.13*
    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).10.14*
    The Lubrizol Corporation 2005 Excess Defined Benefit Plan (incorporated by reference
to Exhibit (10)(z) to The Lubrizol Corporations Current Report on Form 8-K filed with
the SEC on December 15, 2004).10.15*
    The Lubrizol Corporation 2005 Excess Defined Contribution Plan (incorporated by
reference to Exhibit (10)(aa) to The Lubrizol Corporations Current Report on Form 8-K
filed with the SEC on December 15, 2004).10.16*
    The Lubrizol Corporation 2005 Officers Supplemental Retirement Plan (incorporated by
reference to Exhibit (10)(cc) to The Lubrizol Corporations Current Report on Form 8-K
filed with the SEC on December 15, 2004).10.17*
    Supplemental Retirement for Donald W. Bogus (incorporated by reference to Exhibit
(10)(m) to The Lubrizol Corporations Annual Report on Form 10-K for the year ended
December 31, 2003). 29




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##### Table of Contents



10.18*
    The Lubrizol Corporation Executive Death Benefit Plan, as amended (incorporated by
reference to Exhibit (10)(g) to The Lubrizol Corporations Quarterly Report on Form
10-Q for the period ended March 31, 2003).10.19*
    The Lubrizol Corporation Executive Officer Long Term Incentive Plan (incorporated by
reference to Exhibit (10)(n) to The Lubrizol Corporations Annual Report on Form 10-K
for the year ended December 31, 2003).10.20*
    Form of Employment Agreement between The Lubrizol Corporation and certain of its
senior executive officers (incorporated by reference to Exhibit (10)(c) to The Lubrizol
Corporations Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2000).10.21*
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Charles P. Cooley (incorporated by reference to Exhibit (10)(o) to The Lubrizol
Corporations Quarterly Report on Form 10-Q for the period ended on March 31, 2003).10.22*
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Stephen F. Kirk (incorporated by reference to Exhibit (10)(p) to The Lubrizol
Corporations Quarterly Report on Form 10-Q for the period ended on March 31, 2003).10.23*
    Employment Agreement effective January 1, 2003, between The Lubrizol Corporation and
Donald W. Bogus (incorporated by reference to Exhibit (10)(r) to The Lubrizol
Corporations Quarterly Report on Form 10-Q for the period ended on March 31, 2003).10.24*
    Early Retirement Agreement and General Release between The Lubrizol Corporation and
George R. Hill (incorporated by reference to Exhibit (10)(u) to The Lubrizol
Corporations Quarterly Report on Form 10-Q for the period ended on September 30,
2004).10.25*
    The Lubrizol Corporation Annual Incentive Pay Plan
(incorporated by reference to Exhibit (10)(bb) to The Lubrizol
Corporations Current Report on Form 8-K filed with the SEC
on December 13, 2004).10.26*
    The Lubrizol Corporation Annual Incentive Pay Plan, as amended (incorporated by
reference to Exhibit 10.1 to The Lubrizol Corporations
Current Report on Form 8-K/A
filed with the SEC on February 23, 2005).10.27
    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).12.1
    Computation of Ratio of Earnings to Fixed Charges.13.1
    The following portions of The Lubrizol Corporation 2004 Annual Report to its
shareholders (the 2004 Annual Report is available on our website at www.lubrizol.comas
a separate pdf file):  Pages 9-26      Managements Discussion and Analysis of Financial Condition
and Results of Operations.Page 27           Managements Report on Internal Control Over Financial Reporting.Page 27           NYSE Certification.Page 28           Reports of Independent Registered Public Accounting Firm.Page 29           Consolidated Statements of Income for the years ended December
31, 2004, 2003 and 2002.Page 30           Consolidated Balance Sheets at December 31, 2004 and 2003.Page 31           Consolidated Statements of Cash Flows for the years ended
December 31, 2004, 2003 and 2002. 30




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##### Table of Contents



Page 32           Consolidated Statements of Shareholders Equity for the years
ended December 31, 2004, 2003 and 2002.Pages 33-57     Notes to Consolidated Financial Statements.Pages 58-59     Historical Summary.  21.1
    List of 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. 31




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-K to be signed on March 2, 2005, on its behalf
by the undersigned, thereunto duly authorized.


| |                                  |                       |  |  | 
| | -------------------------------- | --------------------- |  |  | 
| | THE LUBRIZOL CORPORATION         |                      
| | BY                               | /s/
James L. Hambrick | 
| | James L. Hambrick, President and |                      
| | Chief Executive Officer          |                      
| |                                 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below on February 21, 2005, by the following persons on behalf of the Registrant and in the
capacities indicated.

|                                                 |  |                                                                                           
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------
|/s/ James L. Hambrick

James L. Hambrick         |  | Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
|                                                 |  |                                                                                           
|/s/ Charles P. Cooley

Charles P. Cooley         |  | Sr. Vice President and Chief Financial Officer
(Principal Financial Officer)              
|                                                 |  |                                                                                           
|/s/ W. Scott Emerick

W. Scott Emerick           |  | Corporate Controller
(Chief Accounting Officer)                                           
|                                                 |  |                                                                                           
|/s/ Jerald A. Blumberg

Jerald A. Blumberg       |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Forest J. Farmer, Sr.

Forest J. Farmer, Sr. |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Gordon D. Harnett

Gordon D. Harnett         |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Victoria F. Haynes

Victoria F. Haynes       |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ William P. Madar

William P. Madar           |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Peggy Gordon Miller

Peggy Gordon Miller     |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Ronald A. Mitsch

Ronald A. Mitsch           |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Dominic J. Pileggi

Dominic J. Pileggi       |  | Director                                                                                  
|                                                 |  |                                                                                           
|/s/ Daniel E. Somers

Daniel E. Somers           |  | Director                                                                                  
|                                                 |  |                                                                                           

32