The company has reported a consolidated loss for the fourth quarter ended December 31, 2008 of $243 million, or $3.59 per diluted share, including pre-tax restructuring and estimated impairment charges of $331 million, or $4.30 per diluted share, and a write-off of acquired in-process research and development for $1.6 million, or $.01 per diluted share. The restructuring and impairment charges consisted primarily of $325 million preliminary non-cash goodwill impairment charge related to the company’s Performance Coatings and Engineered Polymers product lines as announced on January 16, 2009. Comparable earnings for the fourth quarter of 2007 were $59.7 million, or $.86 per diluted share, which included pre-tax restructuring and impairment charges of $0.9 million, or $.01 per diluted share.

Fourth Quarter Consolidated Results:

Consolidated revenues for the fourth quarter decreased 5% to $1.09 billion compared with $1.15 billion in the fourth quarter of 2007. The year-over-year decrease in revenues was attributable to lower volume and unfavorable currency that more than offset improvement in the combination of price and product mix. Included in these factors was the incremental impact from the refrigeration lubricants acquisition completed in November 2007, which had a small contribution to consolidated revenues in the fourth quarter of 2008.

Excluding the special charges in both periods, adjusted earnings were $50.0 million, or $.74 per diluted share, for the fourth quarter of 2008 compared with $60.3 million, or $.87 per diluted share, for the fourth quarter of 2007.

Commenting on the results, chief executive officer James Hambrick stated, “As we advised in our earnings guidance issued last month, both of Lubrizol’s operating segments experienced significant and sudden declines in volume at year end due to the weak global economy and inventory reductions by some of our customers. Nevertheless, I am pleased with our accomplishments in 2008, particularly our ability to successfully manage through a period of unprecedented material cost volatility.”

Lower volume was the most significant factor in the 15% decrease in adjusted earnings per share for the fourth quarter of 2008 compared with the prior-year quarter. Other negative factors were higher raw material costs and unfavorable currency impact. The unfavorable factors to earnings offset improvement in the combination of price and product mix, reduced selling, technical, administrative and research (STAR) expenses and lower manufacturing costs.

Fourth Quarter Segment Results:

In the fourth quarter of 2008, Lubrizol Additives segment revenues of $789 million were 1% higher than the fourth quarter of 2007. Compared with the year-earlier quarter, the increase in revenues was attributable to improvement in the combination of price and product mix, which offset a volume decrease and an unfavorable currency impact. The incremental impact from the 2007 refrigeration lubricants acquisition had a small contribution to segment revenues in the fourth quarter of 2008. The decrease in volume largely was equivalent across all geographic regions and was attributable to economic weakness as well as inventory destocking. Compared with the prior-year quarter, Lubrizol Additives segment operating income increased to $93 million in the fourth quarter of 2008 reflecting positive contributions from the improvement in the combination of price and product mix and lower STAR expenses. These positive factors partially were offset by lower volume and higher unit raw material and operating costs.

The Lubrizol Advanced Materials segment reported revenues of $298 million in the fourth quarter of 2008, a decrease of 18% compared with the prior-year results, as lower volumes and unfavorable currency more than offset the improvement in the combination of price and product mix. All product lines in the segment experienced double-digit volume declines, particularly in North America, as this segment also was impacted significantly by weak product demand and some inventory destocking. The Lubrizol Advanced Materials segment recorded an operating loss of $1.5 million in the fourth quarter of 2008 compared with operating income of $21 million in the fourth quarter of 2007. This year-over-year decrease in operating income primarily was due to the lower volume and higher raw material costs. These factors offset improvement in the combination of price and product mix and lower STAR expenses.

Consolidated 2008 Results:

The consolidated loss for the full year of 2008 includes preliminary pre-tax restructuring and impairment charges of $356 million, or $4.48 per diluted share, and a $1.6 million, or $.01 per diluted share, write-off for in-process research and development (IPR&D) that accompanied the thermoplastic polyurethane business acquisition that closed on December 31, 2008. Earning for the full year of 2007 includes pre-tax restructuring and impairment charges of $1.5 million, or $.01 per diluted share. Excluding the restructuring and impairment charges from the respective periods and the IPR&D write-off, earnings of $4.09 per diluted share increased 1% in 2008 compared with $4.06 per diluted share for the full year of 2007.

Included in the full-year restructuring and impairment charges for 2008 is a preliminary estimate of goodwill impairment. As the company indicated in the January 16, 2009 earnings guidance announcement, this estimate of $325 million in goodwill impairment will be refined prior to the filing of the company’s 2008 Form 10-K after valuation procedures have been completed.

Cash flow from operations for the year ended 2008 was $218 million compared with $476 million for the year ended 2007. The reduction in cash flow from operations from the prior year primarily was driven by higher year-end inventory quantities and inventory costs, reflecting the impact of raw material cost increases during the year. The company repurchased $75 million in shares outstanding through the first nine months of 2008 under the company’s share repurchase authorization, but suspended the program in the fourth quarter of 2008. Lubrizol repaid with cash $200 million in senior notes that were due on December 1, 2008.

Financing Activities:

On January 27, 2009, the company completed the issuance of $500 million of 8.875% senior notes due February 1, 2019. Proceeds from the offering will be used to retire at maturity $382 million of notes due October 1, 2009 and for general corporate purposes. On February 2, 2009, the company closed a $150 million three-year bank term loan. Proceeds from the bank term loan will be used for general corporate purposes and to finance the acquisition of The Dow Chemical Company’s thermoplastic polyurethane business, which closed on December 31, 2008.