Forward-Looking Statements

The following discussion contains forward-looking statements about future events and expectations within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future results. When we use words in this document, such as "anticipates," "intends," "plans," "believes," "estimates," "expects," "should," "could," "may," "will," and similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding future prospects of growth in the petroleum additives market, other trends in the petroleum additives market, our ability to maintain or increase our market share, and our future capital expenditure levels.

We believe our forward-looking statements are based on reasonable expectations and assumptions, within the bounds of what we know about our business and operations. However, we offer no assurance that actual results will not differ materially from our expectations due to uncertainties and factors that are difficult to predict and beyond our control.

These factors include, but are not limited to, changes in the demand for our products, increases in product cost and our ability to increase prices, timing of sales orders, gain or loss of significant customers, competition from other manufacturers and resellers, resolution of environmental liabilities, significant changes in new product introduction, the impact of fluctuations in foreign exchange rates on reported results of operations, changes in various markets, geopolitical risks in certain of the countries in which we conduct business, our ability to complete the construction of the office building for MeadWestvaco within budget and in a timely manner and obtain replacement financing for the construction loan, changes in credit market conditions, and other factors detailed from time to time in the reports we file with the SEC, including the risk factors in Item 1A, "Risk Factors," in the 2008 Annual Report. Readers are urged to review and consider carefully the disclosures we make in our filings with the SEC.

You should keep in mind that any forward-looking statement made by us in this discussion or elsewhere speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement, made in this discussion or elsewhere, might not occur.

Overview

Operations during the first nine months of 2009 continued to generate very strong results with operating profit in our petroleum additives segment increasing significantly over the first nine months of 2008. Our financial position remains strong. During the year, we have paid down $41.9 million of outstanding debt on our revolving credit facility and our cash increased to $133.8 million, which was $112.0 million higher than the December 31, 2008 balance.

Results of Operations

Net Sales

Our consolidated net sales for the third quarter 2009 amounted to $417.8 million, representing a decrease of approximately 5% from the 2008 third quarter level of $440.6 million. Nine months 2009 consolidated net sales decreased 10% to $1,125.9 million as compared to $1,248.8 million for nine months 2008. The table below shows our consolidated segment net sales.

                               Segment Net Sales

                                 (in millions)



                                     Third Quarter Ended       Nine Months Ended
                                        September 30             September 30
                                      2009          2008       2009        2008
          Petroleum additives      $     413.7    $  437.2   $ 1,116.7   $ 1,238.8
          All other                        4.1         3.4         9.2        10.0

          Consolidated net sales   $     417.8    $  440.6   $ 1,125.9   $ 1,248.8

Petroleum Additives Segment

Petroleum additives net sales for the third quarter 2009 of $413.7 million decreased $23.5 million, or approximately 5%, from $437.2 million for the third quarter 2008. The decrease in sales reflects reductions in total product shipments of 3%. A decrease in shipments in lubricant additives product lines more than offset a moderate increase in fuel additives product line shipments. Also, included in the reduction in net sales between the 2009 and 2008 third quarter periods is an unfavorable foreign currency impact of approximately $8 million. This unfavorable impact from foreign exchange reflects the strengthening of the U.S. Dollar between the two third quarter periods versus the other currencies in which we conduct business. In addition to the unfavorable impacts from lower product shipments and foreign currency, selling prices were also lower when comparing the two third quarter periods.

Nine months 2009 petroleum additive net sales of $1,116.7 million were approximately 10% lower than nine months 2008 results of $1,238.8 million. Similar to the third quarter results, the decrease between the two nine months periods reflects lower product shipments and a significant unfavorable foreign currency impact of $33.3 million. Product shipments were approximately 16% lower for nine months 2009 than the same 2008 period. The decrease was primarily in the lubricant additives product lines. These factors were partially offset by higher selling prices which were implemented during 2008. The decrease in net sales for the nine months 2009 period reflects the impact of the worldwide economic slowdown and the destocking by our customers late in 2008 and early 2009. While product shipments were lower in 2009 than in 2008, product shipments have improved each quarter in 2009 increasing 16% between the first quarter 2009 and second quarter 2009 and increasing 14% between the second quarter 2009 and third quarter 2009. We believe product shipments are now near normal levels that were typical before the worldwide economic slowdown.

The table below details the approximate components of the decrease between the two third quarter and nine months periods.

                                                          Third                   Nine
                                                         Quarter                 Months
                                                      (in millions)           (in millions)
Period ended September 30, 2008                      $         437.2         $       1,238.8
Decrease in shipments and changes in product
mix                                                             (4.1 )                (163.3 )
Change in selling prices, customer mix, and
foreign currency                                               (19.4 )                  41.2

Period ended September 30, 2009                      $         413.7         $       1,116.7

Segment Operating Profit

NewMarket evaluates the performance of the petroleum additives business based on segment operating profit. NewMarket Services Corporation (NewMarket Services) departments and other expenses are charged to NewMarket and each subsidiary pursuant to service agreements between the companies. Depreciation on segment property, plant, and equipment, as well as amortization of segment intangible assets is included in segment operating profit.

The "All other" category includes the real estate development operating segment, as well as the operations of the TEL business (primarily sales of TEL in North America) and certain contract manufacturing that Ethyl provides to Afton and to third parties. Each of these is currently immaterial to operating profit.

The table below reports segment operating profit for the third quarter and nine months ended September 30, 2009 and September 30, 2008.

                            Segment Operating Profit

                                 (in millions)



                                   Third Quarter Ended        Nine Months Ended
                                       September 30              September 30
                                    2009          2008         2009          2008
           Petroleum additives   $     96.3    $     28.1   $    214.0      $ 97.5

           All other             $      1.0    $      0.5   $     (1.3 )    $  1.0

Petroleum Additives Segment

The petroleum additives operating profit increased $68.2 million when comparing third quarter 2009 to third quarter 2008 and $116.5 million when comparing nine months 2009 to nine months 2008. The operating profit margin was 23.3% for third quarter 2009 and 6.4% for third quarter 2008. Similarly, the petroleum additives operating profit margin was 19.2% for nine months 2009 and 7.9% for nine months 2008. The 2008 nine months period included a gain of $3.2 million resulting from a legal settlement related to raw materials. The third quarter 2009 and nine months 2009 results are significantly higher across all major product lines.

While selling prices are lower when comparing third quarter 2009 and third quarter 2008, operating margins, as discussed above, for third quarter 2009 are significantly improved over third quarter 2008 due primarily to the lower raw material costs and a favorable foreign currency impact of approximately $4 million. Product shipments, which are discussed in the Net Sales section, were slightly lower during third quarter 2009 than third quarter 2008. During the third quarter 2009, we have experienced increasing raw material costs and tightening in the availability of certain raw materials, as well as compression of selling prices.

The most significant favorable factors when comparing operating profit for the two nine months periods were lower raw material costs and higher selling prices. While partially offset by selling price reductions made this year, the overall increase in selling prices for the 2009 nine months period is the result of actions taken throughout 2008 to raise selling prices in response to higher raw material costs. The key unfavorable factors were lower shipments and foreign currency impacts. Foreign currency resulted in an unfavorable impact of approximately $9 million when comparing operating profit from nine months 2009 with nine months 2008.

SG&A decreased approximately $500 thousand or 2% for third quarter 2009, while R&D increased approximately $2.1 million or 11% when compared to the same 2008 period. For nine months 2009, SG&A decreased $5.4 million or 7%, and R&D was essentially unchanged compared to nine months 2008. The changes for both the third quarter periods and nine months periods included a significant favorable foreign currency impact. We continue to invest in SG&A and R&D to support our customers' programs and to develop the technology required to remain a leader in this industry.

The following discussion references the Consolidated Financial Statements beginning on page 3 of this Quarterly Report on Form 10-Q.

Interest and Financing Expenses

Interest and financing expenses were $2.9 million for third quarter 2009 and $3.0 million for third quarter 2008. Nine months 2009 amounted to $8.7 million, while nine months 2008 was $8.9 million.

Average interest rates for the third quarter 2009 were slightly higher than third quarter 2008, while average debt during third quarter 2009 was lower as we had no debt drawn on the revolving credit facility during third quarter 2009. Amortization of deferred financing costs was higher due to the cost related to increased commitment levels achieved on the revolving credit facility. See Note 7 in the Notes to Consolidated Financial Statements.

Nine months 2009 average interest rates were essentially unchanged from the same 2008 period. The benefit of lower average debt for nine months 2009 when compared to nine months 2008 was substantially offset by higher amortization of deferred financing costs in 2009.

Other (Expense) Income, Net

Other expense, net for third quarter 2009 was $3.8 million, while nine months 2009 was $15.7 million. The amount in both 2009 periods represents an unrealized loss on a derivative instrument representing an interest rate swap recorded at fair value, which we entered into on June 25, 2009. See Note 9 in the Notes to Consolidated Financial Statements for additional information on the interest rate swap. Other income, net was $200 thousand for third quarter 2008 and $900 thousand for nine months 2008 and primarily represented investment income earned on excess cash.

Income Tax Expense

Income tax expense was $30.3 million for the third quarter 2009 and $6.4 million for third quarter 2008. The effective tax rate was 34.9% for third quarter 2009 and 28.0% for third quarter 2008.

The increase in income before income tax expense resulted in an increase of $18.0 million in income taxes, while the higher effective tax rate in 2009 as compared to 2008 resulted in an increase of approximately $5.9 million in income taxes when comparing the third quarter 2009 and 2008 periods.

Nine months 2009 income tax expense was $60.4 million with an effective tax rate of 34.2%. Income tax expense for nine months 2008 was $26.2 million with an effective tax rate of 32.7%. The increase in income before income tax expense from 2008 to 2009 resulted in an increase of $31.6 million. The higher effective tax rate for nine months 2009 resulted in an increase in income tax expense of $2.6 million.

The lower effective tax rates for both third quarter 2008 and nine months 2008 includes the benefit of $1 million related to the completion of the review of certain years by the Internal Revenue Service. The increased effective tax rates in both third quarter 2009 and nine months 2009 reflect the higher proportion of domestic earnings in 2009, which are subject to both U.S. federal and state income taxes.

Cash Flows, Financial Condition, and Liquidity

Cash and cash equivalents at September 30, 2009 were $133.8 million, which was an increase of $112.0 million since December 31, 2008 and included a $4.7 million favorable impact from foreign currency translation.

We expect that cash from operations, together with borrowing available under our revolving credit facility, will continue to be sufficient to cover our operating expenses for the foreseeable future.

Cash Flows-Operating Activities

Cash flows provided from operating activities for the nine months 2009 were $194.6 million and included a decrease of $67.3 million in working capital, including lower inventories, as well as higher accounts payable and higher income taxes payable. The decrease in working capital was partially offset by an increase in accounts receivable. The decrease in inventories reflects the results of our efforts to lower inventories in response to the decreased demand for our products. The increase in accounts payable reflects a normal increase from an unusually low level of accounts payable at December 31, 2008. The increase in income taxes payable reflects the higher earnings levels in 2009. The increase in accounts receivable is due to the increased sales levels for third quarter 2009 compared to fourth quarter 2008.

Including cash and the current portion of long-term debt, we had working capital of $300.9 million at September 30, 2009 and $310.3 million at December 31, 2008. The current ratio was 2.07 to 1 at September 30, 2009 and 3.28 to 1 at December 31, 2008. In addition to the working capital factors discussed above, the change in the current portion of long-term debt had a significant effect on working capital levels resulting from the construction loan becoming payable within one year.

Cash Flows-Investing Activities

Cash used in investing activities was $76.7 million during nine months 2009 and included a net return of funds of $10.5 million for a deposit related to the interest rate lock agreement, which is discussed below, as well as net funding of $20.0 million for a deposit related to the Goldman Sachs interest rate swap. Further information on the interest rate swap is discussed below and in

Note 9 in the Notes to Consolidated Financial Statements. Excluding the
construction of the office building by Foundry Park I, we funded capital expenditures of $26.5 million through September 30, 2009. We estimate our total capital spending during 2009, excluding the capital expenditures by Foundry Park I, will be approximately $40 million. We expect to continue to finance capital spending, excluding the expenditures for the construction of the office building by Foundry Park I, through cash on hand and cash provided from operations, together with borrowing available under our revolving credit facility.

Capital expenditures during nine months 2009 related to the Foundry Park I project amounted to $40.4 million. We expect capital expenditures in 2009 related to the construction of the office building will be approximately $59 million which will be substantially borrowed under our construction loan.

Cash Flows-Financing Activities

Cash used in financing activities during nine months 2009 amounted to $10.6 million. The use of cash included the funding of dividends of $10.6 million, as well as debt issuance costs of $400 thousand and a payment of $750 thousand on the fourth quarter 2006 acquisition of an intangible asset. Our book overdraft increased $1.9 million.

We had total long-term debt, including the current portion, of $236.4 million at September 30, 2009, representing a decrease of approximately $800 thousand in our total debt since December 31, 2008. The decrease resulted from the payment of $41.9 million under the revolving credit facility and $600 thousand on capital leases, which was substantially offset by borrowings on the construction loan of $41.7 million.

In addition to the Foundry Park I construction loan which is discussed below, at September 30, 2009, we had outstanding senior notes in the aggregate principal amount of $150 million that bear interest at a fixed rate of 7.125% and are due in 2016.

At September 30, 2009, we also had a $139.25 million revolving credit facility for general corporate purposes that bears interest at variable rates. The revolving credit facility includes a $75 million sub-facility for letters of credit. The facility matures on December 21, 2011. At September 30, 2009, we had no outstanding borrowings under the revolving credit facility. We had outstanding letters of credit of $4.6 million at September 30, 2009, resulting in the unused portion of the revolver amounting to $134.7 million.

Both the senior notes and the revolving credit facility contain covenants, representations, and events of default that management considers typical of credit agreements of this nature. We were in compliance with these covenants as of both September 30, 2009 and December 31, 2008.

As a percentage of total capitalization (total debt and shareholders' equity), our total debt percentage decreased from 44.9% at the end of 2008 to 36.4% at September 30, 2009. The change in the percentage was primarily the result of an increase in shareholders' equity, as well as the small decrease in debt. The increase in shareholders' equity reflects our earnings, partially offset by the impact of dividend payments. Normally, we repay any outstanding long-term debt with cash from operations or refinancing activities.

Foundry Park I Construction Loan and Interest Rate Swap

Foundry Park I and NewMarket Corporation entered into a construction loan agreement with a group of banks on August 7, 2007 to borrow up to $116 million to fund the development and construction of an office building. The construction loan bears interest at LIBOR plus a margin of

140 basis points. The term of the loan is for a period of 36 months and is unconditionally guaranteed by NewMarket Corporation. No principal reduction payment is due during the construction period. As a condition of the construction loan and concurrently with the closing of the loan, Foundry Park I also obtained interest rate risk protection in the form of an interest rate swap. The interest rate swap is discussed in Note 9 in the Notes to Consolidated Financial Statements.

Interest Rate Lock Agreement

The construction loan for the Foundry Park I project to construct an office building for MeadWestvaco is being financed by a group of banks and matures in August 2010. Prior to commencing construction, we took actions to identify the possible permanent lending source after construction. To that end, Foundry Park I entered into an Application with Principal dated February 26, 2007 which outlined the terms and conditions under which Principal would provide permanent, fixed-rate financing in the maximum amount of $116,000,000 amortized over 25 years with all amounts due 13.5 years after the date of the loan. The Application was not a loan commitment due to the lengthy time period of thirty-four months until the completion of the building. In order to obtain a fixed-rate loan, we entered into a rate lock agreement with Principal dated February 26, 2007. Principal simultaneously entered into a hedge with a third party based mainly on the forward rates of ten-year Treasuries. We were not a party to that hedging agreement. Under the rate lock agreement, we agreed to post a deposit with Principal and to increase the amount of that deposit if the exposure to Principal on their hedge increased.

In June 2009, Principal and Foundry Park I determined that the loan terms set forth in the Application could not be syndicated based on current market conditions. As a result, Principal and Foundry Park I terminated the loan application and related rate lock agreement and mutually released each other from their respective rights and obligations under those arrangements. While we are currently investigating alternative financing to replace the Foundry Park I project construction loan when it matures and believe that we can obtain financing on acceptable terms, we cannot predict the financing terms which will be available at that time. See Note 9 for additional information on the termination of the rate lock agreement and subsequent entry into an interest rate swap related to the Foundry Park I project. All amounts which we had deposited with Principal under the rate lock agreement have effectively been returned to us at the termination of the rate lock agreement as Principal transferred the deposited funds to Goldman Sachs as collateral for the interest rate swap related to the Foundry Park I project.

Critical Accounting Policies

This report, as well as the 2008 Annual Report, includes a discussion of our accounting principles, as well as methods and estimates used in the preparation of our financial statements. We believe these discussions and financial statements fairly represent the financial position and operating results of our company in all material respects. The purpose of this portion of our discussion is to further emphasize some of the more critical areas where a significant change in facts and circumstances in our operating and financial environment might cause a change in reported financial results.

Intangibles, Net of Amortization and Goodwill

We have certain identifiable intangibles, as well as goodwill, amounting to $47.3 million at September 30, 2009. These intangibles relate to our petroleum additives business and, except for the goodwill, are being amortized over periods with up to approximately twenty years of remaining life. We continue to assess the market related to these intangibles, as well as their specific values, and have concluded the values and amortization periods are appropriate. We also

evaluate these intangibles for any potential impairment when significant events or circumstances occur that might impair the value of these assets. These evaluations continue to support the value at which these identifiable intangibles are carried on our financial statements. However, if conditions were to substantially deteriorate in this market, it could possibly cause a reduction in the periods of the amortization charge or result in a noncash write-off of a portion of the intangibles' carrying value. A reduction in the amortization period would have no effect on cash flows. We do not anticipate such a change in the market conditions.

Environmental and Legal Proceedings

We believe our environmental accruals are appropriate for the exposures and regulatory guidelines under which we currently operate. While we currently do not anticipate significant changes to the many factors that could impact our environmental requirements, we continue to keep our accruals consistent with these requirements as they change.

While it is not possible to predict or determine with certainty the outcome of any legal proceeding, it is our opinion, based on our current knowledge, that we will not experience materially adverse effects on our results of operations or financial condition as a result of any pending or threatened proceeding.

Pension Plans and Other Postretirement Benefits

We use assumptions to record the impact of the pension and postretirement plans in the financial statements. These assumptions include the discount rate, expected long-term rate of return on plan assets, rate of compensation increase, and health care cost trend rate. A change in any one of these assumptions could result in different results for the plans. We develop these assumptions after considering available information that we deem relevant. Information is provided on the pension and postretirement plans in Note 18 of the 2008 Annual Report. In addition, further disclosure on the effect of changes in these assumptions is provided in the "Financial Position and Liquidity" section of Part II, Item 7 of the 2008 Annual Report.

Income Taxes

We file consolidated U.S. federal income and both consolidated and individual state income tax returns, as well as individual foreign income tax returns, under which assumptions may be made to determine the deductibility of certain costs. We make estimates related to the impact of tax positions taken on our financial statements when we believe the tax position is more likely than not to be upheld on audit. In addition, we make certain assumptions in the determination of the estimated future recovery of deferred tax assets.

Recently Issued Accounting Pronouncements

For a full discussion of the more significant pronouncements which may impact . . .