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TRANSCRIPT
S T E V E M O R E Y
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A R T D I R E C T O R
Align the qualities listed on the inner scale with those on the outer scale to reveal the
position that demands my experience, creativity and whatever-it-takes attitude.
440-655-9550 [email protected]
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Designed by Dix & Eaton
Printing by Watt Printers and Underground Print
Solutions
ROCK AND ROLL HALL OF FAME + MUSEUM
Report to the Community
D E S T I N A T I O N
smoothTO BE A MARKET LEADERTHERE HAS NEVER BEEN A BETTER TIME
IN SPECIALTY CHEMICALS
2007
THE LUBRIZOL CORPORATION ANNUAL REPORT
NORTH COAST 99
Award Pos ter – 2008
Designed by Dix & Eaton
Printing by Watt Printers and Underground Print Solutions
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Designed by Dix & Eaton
Printing by Watt Printers and Underground Print Solutions
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ROCK AND ROLL HALL OF FAME AND MUSEUM
Repor t to the Communi ty – 2006
ROCK AND ROLL HALL OF FAME + MUSEUM
Report to the Community
D E S T I N A T I O N
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ROCK AND ROLL HALL OF FAME + MUSEUM
Report to the Community
D E S T I N A T I O N
IN EACH OF OUR LIVES , THERE ARE T IMES OF TRANSIT ION — T IMES WHEN
WE HAVE ATTAINED A CERTAIN LEVEL OF ACCOMPLISHMENT OR SATISFACTION
AND SET OUR SIGHTS ON WHAT WE WANT TO DO NEXT .
Dear Friends of the Museum:
2006
D E S T I N A T I O NEvery destination is a new beginning.
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IN THE LIFE OF THE ROCK AND ROLL HALL OF FAME AND MUSEUM, WAS SUCH A TIME.
1995SOMETIMES, WE MUST GO FORWARD without the continued guidance of someone who has nurtured us, but with the comfort that countless others believe in us. Sadly, the world lost Ahmet Ertegun, whose vision and passion for this institution were unsurpassed.
T IMES OF TRANSIT ION CAN BE DAUNTING OR EXCIT ING .
WE ARE TREMENDOUSLY EXCITED ABOUT THE FUTURE OF
THE ROCK AND ROLL HALL OF FAME AND MUSEUM.
In 2006, the Museum remained the world’s most-visited hall of fame as never-before-seen special exhibits and programs made it a destination for visitors from around the world – driving a substantial economic engine for the benefit of Cleveland and Northeast Ohio.
The Museum’s educational programming continued to grow and achieve acclaim, including recognition from the President’s Committee on the Arts and Humanities and its distinguished partner agencies.
And careful fiscal management allowed the Museum to remain self-sustaining, a comparatively rare feat for a nonprofit cultural institution.
At the same time, we looked to the future with guidance from our Board of Trustees and other key stakeholders and developed a strategic plan that will serve as a roadmap to guide our next three years. We sought and received broad support for a $35 million capital campaign that will provide for a permanent Library and Archives, renovation of the Museum’s interior and the beginnings of an endowment that will solidify our future.
Terry Stewart (left) and Joel Peresman
E X H I B I T S2 0 0 6 S P E C I A L
THE COLOR OF ROCK: THE ART OF PHILIP BURKE, featuring 33 portraits by the famed painter, including paintings of the Beatles, Jimi Hendrix, Annie Lennox, Bonnie Raitt, Korn, Ramones, Bono, Little Richard, Prince and Jim Morrison.
HAUNTING & YEARNING: THE LIFE AND MUSIC OF ROY ORBISON, which featured personal artifacts covering the legendary artist’s life and career, including clothing, instruments, rare records and pieces from his model plane collection.
REVOLUTION ROCK: THE STORY OF THE CLASH, celebrating the formidable body of work of a group that helped define punk rock’s sound and fury.
BOB DYLAN’S AMERICAN JOURNEY, 1956-1966, showcased artifacts, including Dylan’s 1949 Martin 00-17 guitar, typed and handwritten lyrics, rare concert posters and handbills, signed albums, dozens of photographs and four films exploring different facets of his career. This exhibit was curated by Experience Music Project.
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TOM PETTY AND THE HEARTBREAKERS: THIRTY YEARS OF ROCK AND ROLL, honoring the 30th anniversary of the debut release from one of the quintessential American rock bands (featured above).
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DIX & EATON
Media Re la t ions Micros i te
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THE LUBRIZOL CORPORATION
2007 Annua l Repor t
TO BE A MARKET LEADERTHERE HAS NEVER BEEN A BETTER TIME
IN SPECIALTY CHEMICALS
2007
THE LUBRIZOL CORPORATION ANNUAL REPORT
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*Non-GAAP Disclosure Reconciliation – As adjusted income from continuing operations per share, diluted (non-GAAP) is a measure of earnings that differs from income from continuing operations per share, diluted measured in accordance with generally accepted accounting principles (GAAP). As adjusted income from continuing operations per share, diluted is earnings from continuing operations per share, diluted per the company’s consolidated results adjusted for exclusion of restructuring and impairment charges. Management believes that both income from continuing operations per share, diluted and as adjusted income from continuing operations per share, diluted, which excludes these special charges, assist the investor in understanding the results of operations of The Lubrizol Corporation. In addition, management and the board evaluate results using both income from continuing operations per share, diluted and as adjusted income from continuing operations per share, diluted.
FINANCIAL HIGHLIGHTS Increase(In Millions Except Per Share and Employee Data) 2007 2006 (Decrease)
OperationsRevenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,499 .0 $ 4,040 .8 11%Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 .4 179 .8 58%Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 .4 103 .6 174%Income from continuing operations per share, diluted . . . . . . . . . . . . . . . . 4 .05 2 .59 56%Net income per share, diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .05 1 .49 172%Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 .16 1 .04 12%Cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 .4 334 .8 42%Return on average shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 16% 6% 167%
As Adjusted Income From Continuing Operations Per Share, Diluted*Income from continuing operations per share, diluted as reported . . . . . . $ 4 .05 $ 2 .59 56%Restructuring and impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 .01 0 .47As adjusted income from continuing operations per share, diluted . . . . . $ 4 .06 $ 3 .06 33%
Financial PositionTotal assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,643 .8 $ 4,390 .9 6%Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,951 .3 1,683 .1 16%Debt as a percent of capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42% 48% (13%)
OtherCapital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 182 .8 $ 130 .9 40%Shares outstanding at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 .4 69 .0 (1%)Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,921 6,746 3%
CONVERGING MARKET FORCES —RAPID GLOBALIZATION, INDUSTRY RATIONALIZATION AND GREATER DEMAND
FOR PERFORMANCE TECHNOLOGY — ARE CREATING AN ENVIRONMENT
WHERE PROGRESSIVE AND F ISCALLY RESPONSIBLE COMPANIES WILL
COMMON SHARE PRICE HISTORY 2007 2006
High Low High Low
1st quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $54 .13 $48 .76 $46 .44 $41 .70 2nd quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 .89 51 .40 45 .20 38 .52 3rd quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 .46 52 .38 46 .25 38 .03 4th quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 .95 54 .16 50 .75 44 .16
CONTENTS
Financial Highlights 1 n Letter to Shareholders 2 n Technology Leadership 4
Global Success 6 n Leveraging Size and Strength 8 n Financial Results 10
CONTINUE TO PROSPERTHE LUBRIZOL CORPORATION INTENDS TO CONTINUE TO PROSPER by providing advanced chemical
formulations designed to meet specific customer needs . Building upon decades of technical knowledge, a
powerful global organization and leading positions in the markets we serve, we’ll continue to offer customers
the best overall solutions to the challenges of a complex and evolving marketplace that enable them to become
even more successful .
T H E L U B R I Z O L C O R P O R A T I O N 1
As we enter our 80th year of providing innovative technologies to the global transportation, industrial and consumer markets, we are more enthusiastic than ever about our future and the future of the industry .
SUCCESS IN TODAY’S
REQUIRES THE RIGHT RESOURCESIN THE RIGHT PLACES
GLOBAL MARKET
As customers increasingly take a singular, global
view of their businesses, they demand partners who
can provide consistently strong products and services
anywhere in the world at any time . To address this rapidly
changing view of the marketplace, we are strategically
deploying our physical and human resources around the
globe, while investing to ensure that our systems are net-
worked to facilitate quick and consistent customer response .
A worldwide partner
GLOBAL DEMOGRAPHICS DRIVE GROWTH
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2 0 0 7 A N N U A L R E P O R T 7
As the focus of the specialty chemicals
industry moves beyond North America
and Western Europe, sustained growth
requires a global supply chain in
the broadest sense.
Around the world, an emerging middle class is starting to enjoy an enhanced standard of living that
is fueling increased demand for a wide range of products – from health and beauty products to new vehicles to
sports equipment . With this enhanced standard of living also comes a longer life expectancy, which is creating the
need for equally enhanced medical care . With a broad product line that includes Carbopol® polymer technology for
hair care products, Estane® thermoplastic polyurethanes for active wear, Thermedic® polymer lines for medical
devices and much more, Lubrizol is helping customers meet this increased demand from Memphis to Mumbai .
TO BE A MARKET LEADERTHERE HAS NEVER BEEN A BETTER TIME
IN SPECIALTY CHEMICALS
2007
THE LUBRIZOL CORPORATION ANNUAL REPORT
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UNIVERSITY COMPCARE
Ad, D i rec t Ma i l , M icros i te
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W E M A K E T H I N G Ssmooth, T O O .smooth HEAR THAT? IT’S THE SOUND OF UNIVERSITY COMPCARE SMOOTHING OUT the workers’ compensation process for thousands of Ohio employers. They’re already enjoying what every organization wants:- Discounts on treatment by our Corporate Health provider network- Nationally accredited workers’ compensation case management- Aggressive return-to-work program- Hassle-free cost containment service- Customized reporting, plus Web access to claims and case information
Which brings us to your managed care organization. Is your company’s MCO as efficient and easy to work with as you’d like? Would you recommend your current MCO? Take a look at University CompCare before May 26th.
See how smooth the whole process could be. And should be.
University CompCare.
smooth?L I K E T H I S ?
S Y O U R R E T U R N - T O - W O R K P R O C E S SISee how smooth thewhole process could be.And should be.
Choose University CompCare.
Make it smooth. Over the years, we’ve developed and refined a highly efficient workers’ compensation MCO process for thousands of Ohio employers. These employers are already enjoying what every organization wants:
- Discounts on treatment by our Corporate Health provider network- Nationally accredited workers’ compensation case management- Aggressive return-to-work program- Hassle-free cost containment service- Customized reporting, plus Web access to claims and case information
WHICH BRINGS US TO YOUR MANAGED CARE ORGANIZATION. Is your company’s MCO as efficient and easy to work with as you’d like? Would you recommend your current MCO? Take a look at University CompCare before May 26th. Fill out the attached open enrollment form, sign it, then FAX it to us at 216.983.1182, and that’s all it takes to make University CompCare your MCO.
before May 26• •
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