Ferro Reports 2012 Fourth Quarter and Full-Year Results

Tue Mar 5, 2013 8:44am EST

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Outlines Value Creation Strategy

Affirms Previously Announced 2013 EPS Guidance of $0.25 to $0.30 Per Share
CLEVELAND--(Business Wire)--
Ferro Corporation (NYSE: FOE, the "Company") today reported financial results
for the fourth quarter and full year ended December 31, 2012. The Company also
provided an outline of its strategic vision for value creation. 

Full-Year 2012 Results - Summary

For the full-year of 2012 the Company reported a net loss attributable to common
shareholders of $374 million, or $4.34 per diluted share. In comparison, for the
full year of 2011, net income attributable to common shareholders was $4
million, or $0.05 per diluted share. On a pre-tax basis, the Company reported a
loss of $264 million in 2012, versus income of $24 million in 2011. The results
in both years include a number of charges, including, among other items, asset
impairments, restructuring activities, and a pension and other postretirement
benefits mark-to-market adjustment of the related net liabilities. See the
supplemental tables attached for additional information concerning special items
that impacted reported results. 

Adjusted for charges, income before income taxes was $14 million for 2012,
compared with $103 million for 2011. The decrease was primarily attributable to
the significant decline in the Company`s Electronic Materials segment, which
reported a loss of $16 million in 2012 versus income or $68 million in 2011, as
well as continued weakness in the Eurozone. 

Results for Electronic Materials fell with declines in demand for solar pastes,
as the solar industry contracted considerably over the last 18 months and
continues to be weak. During 2012, solar paste sales declined by nearly $230
million. The segment`s results were also adversely impacted by reduced demand
for conductive metal powders and surface finishing products. 

Sales in Europe for 2012, excluding Electronic Materials sales, totaled $587
million in 2012 compared with $651 million in 2011. Profitability in the region
for 2012, excluding Electronic Materials, was $20 million, versus $37 million in
2011. The impact of changes in foreign currency rates accounted for
approximately 7% of the sales decline. The recessionary conditions in the
Eurozone during 2012 adversely impacted the Company`s business segments with
significant operations in the region, including the Color and Glass Performance
Materials, Performance Coatings and Polymer Additives segments. 

Recognizing the weak market conditions, Ferro took steps in the second quarter
of 2012 to cut the costs of the Performance Coatings business in Europe. Cost
savings efforts were subsequently expanded and accelerated in Europe and across
all other regional operations. The Company also has taken action to improve the
Electronic Materials operating results. The senior management team overseeing
the Electronic Materials product lines was removed, and restructuring activities
have been completed to significantly reduce operating costs. On February 6,
2013, the Company completed the sale of certain solar pastes assets and exited
this product line, eliminating a $16 million negative impact on 2012 earnings.
The Electronic Materials management team has been further rationalized and the
remaining product lines have been folded into the Color and Glass Segment. 

William B. Lawrence, Acting Chairman of the Ferro Board of Directors, said,
"Prior to 2012, Ferro was pursuing a growth strategy, with the expectations that
the Electronic Materials business, led by the solar pastes product line, and
portions of the Color and Glass business, together would deliver organic revenue
growth significantly greater than GDP. In 2012, it became apparent that the
strategy needed to be changed. Accordingly, the Board of Directors implemented
several management changes and refocused the strategic vision more strongly on
value creation. 

"We are restructuring certain existing infrastructure alignments and refocusing
management`s efforts to improve profitability, maximize cash flow and enhance
return on investment. The board and management team are focused on implementing
this plan, with actions targeted at reducing costs by more than $50 million over
the next two years," Mr. Lawrence added. 

Peter Thomas, Interim President and Chief Executive Officer, commented, "This is
a time of significant opportunity at Ferro. Management is driving a
comprehensive set of global actions designed to return the business to a
significantly higher level of profitability, and we have already begun to see
the benefits of these initiatives. Our near-term priorities are to simplify the
organization, streamline processes to enhance operational efficiencies, and to
substantially reduce infrastructure and support costs. We are determined to
transform the business and will continue to provide world-class product and
services to our customers. We will be relentless in reducing costs, improving
our market positions and driving shareholder value." 

Value Creation Strategy

The Company is executing on a clearly defined strategy to create shareholder
value by focusing on historical core competencies and reducing costs. The
strategy has the following three distinct components:

1
        Improve Return on Invested Capital
      2
        Streamline Core Operations and Reduce Operating Costs
      3
        Pursue High-Return Growth Investments

Improve Return on Invested Capital

Each of Ferro`s product lines is being reviewed and analyzed to determine its
current and future potential to create value and generate cash. The Company is
implementing action plans to enhance returns, including rationalization of
product portfolios and improving working capital and fixed asset utilization.
Assets that cannot generate sufficient returns are being redeployed, divested or
curtailed. Examples of successful execution on this component of value creation
include the sale of the Company`s solar paste assets, as previously reported,
and further optimization of facilities and leases, which has already generated
proceeds of approximately $7 million and annual costs savings of $4 million. 

Streamline Core Operations and Reduce Operating Costs

The Company plans to reduce operating costs by more than $50 million over the
next two years by simplifying the organizational structure, streamlining
processes to make operations more efficient, and substantially reducing
infrastructure and support costs. To facilitate this cost reduction, the
commercial and manufacturing organizational structures are being reconfigured,
reducing the need for regional management and eliminating redundancies across
product lines. The back office infrastructure also will be overhauled, with
functional support organizations moving from a local to a regional or global
model. Where applicable, transaction processing will be migrated to a global
shared service center to leverage processing technology, improve controls and
reduce costs. 

Pursue High-Return Investments

The Company will continue to pursue prudent and profitable growth opportunities
with high return potential. The Company`s investments in digital inks and glazes
for the tile market and expansion into Northern Africa, Eastern Europe and Asia
are examples of such opportunities. Future growth initiatives likewise will
focus on migrating our product technologies into higher value applications and
expanding into developing markets. Each business will be required to earn,
through its performance, opportunities for future growth capital. Growth
opportunities will be stringently assessed on their ability to generate
significant returns and create shareholder value. 

2013 Outlook

Adjusted earnings per share for 2013 are expected to be in the range of $0.25 to
$0.30 per diluted share. The expected increase in earnings compared with 2012
will be driven primarily by initiatives now underway that are expected to
generate $25 million to $30 million of cost savings in 2013 and the exit from
the solar pastes business. The expected improvements in the Company`s cost
structure will be partially offset by inflation and the normalization of
incentive compensation. Based on current market conditions, including persistent
weakness in European macroeconomic conditions, coupled with the expected timing
associated with the cost savings programs, the Company expects the first quarter
of 2013 will be the lowest earnings quarter of the year, in the range of $0.02
to $0.05 per share. 

Adjusting for the impact of the solar pastes transaction and before the impact
of changes in foreign currency rates, sales growth is expected to be
approximately 2%. For the year, cash flow is expected to be approximately
breakeven. 

2012 Fourth-Quarter Results

Net sales for the fourth quarter of 2012 were $406 million, compared with $443
million in the fourth quarter of 2011. The Company`s six segments reported lower
sales in the quarter compared to the prior year. Precious metal sales accounted
for 29% of the sales decline, or $11 million. The largest sales decline, on a
value-added basis (excluding the impact of precious metal sales), was in the
Electronic Materials segment, where net sales declined 22% primarily due to
reductions in demand for solar paste products and precious metal powders and
flakes for other electronics applications. Weakness in Europe, particularly in
southern Europe, contributed to lower sales, principally in the Performance
Coatings and Color and Glass Performance Materials segments. 

The net loss attributable to common shareholders for the 2012 fourth quarter was
$64 million, or $0.74 per diluted share, compared with a loss of $61 million, or
$0.71 per diluted share, in the fourth quarter of 2011. The adjusted net loss
attributable to common shareholders for the 2012 fourth quarter was $6 million,
or $0.07 per diluted share, versus $5 million, or $0.06, in the prior year`s
quarter. The Company recorded special charges of approximately $59 million in
the fourth quarter of 2012, compared with approximately $67 million in the
fourth quarter of 2011. See the supplemental financial information contained in
this press release for additional information about the special charges. 

Gross profit was $59 million and $74 million in for the fourth quarters of 2012
and 2011, respectively. Excluding special items and precious metal sales, gross
profit was $65 million, or 17.8% of sales during the 2012 fourth quarter,
compared with $76 million, or 19.3% of sales, during the fourth quarter of 2011.
The reduction in gross profit relates primarily to lower sales in the Electronic
Materials segment and reduced demand in Europe. 

SG&A expenses were $96 million for the fourth quarter of 2012 and $125 million
for the fourth quarter of 2011. Adjusted SG&A expenses were $65 million for the
fourth quarter of 2012, versus $74 million in the fourth quarter of 2011. 

2012 Full-Year Results

Net sales for the year ended December 31, 2012, were $1.8 billion, compared with
2011 net sales of $2.2 billion. The Company`s six segments reported lower sales
for the year compared to 2011. Precious metal sales, which declined $226
million, were the leading cause of the sales change. Value-added sales for the
Electronic Materials segment declined by $109 million, accounting for nearly 70%
of the total reduction in value-added sales. Reduced customer demand for solar
pastes and metal powders used in a variety of electronics applications drove the
significant decline in the Electronic Materials segment. Solar pastes
value-added sales totaled $22 million in 2012 and $81 million in the prior year.
Excluding the recently divested solar pastes business, value-added sales
decreased 6% from $1.7 billion in 2011 to $1.6 billion in 2012. 

The net loss attributable to common shareholders for 2012 was $374 million, or
$4.34 per diluted share, compared with net income of $4 million, or $0.05 per
diluted share, in 2011. The adjusted net income for 2012 was $7 million, or
$0.09 per diluted share, versus $69 million, or $0.80 for the prior year. The
Company recorded special charges of approximately $277 million during 2012
compared with charges of $78 million during 2011. See the supplemental financial
information contained in this press release for additional information about the
special charges and adjusted income. The pre-tax earnings contribution from the
solar product line was a loss of approximately $16 million in 2012, compared
with pre-tax earnings of approximately $26 million in 2011. 

Gross profit was $298 million and $412 million for the full years 2012 and 2011,
respectively. Excluding the special charges and precious metal sales, gross
profit for 2012 was $311 million, or 19.5% of sales. In comparison, adjusted
gross profit was $418 million, or 23.8% of sales, in 2011. The deterioration in
the Electronic Materials segment accounted for more than 80% of the decline.
Weakness in Europe also contributed to the reduction in gross profit,
particularly for the Performance Coatings, Polymer Additives and Color and Glass
Performance Materials segments. 

SG&A expenses were $303 million in 2012 and $335 million in 2011. Adjusted SG&A
expenses were $265 million for 2012, versus $280 million in 2011. 

For 2012, total debt increased by $38 million to $347, compared with $309
million at December 31, 2011. The cash balance increased by $7 million to $30
million. Cash flow from operations was $24 million during the year. Working
capital was flat for the year. 

Solar Results

Fourth quarter 2012 results for the solar pastes product line included the
following:

* Net sales of approximately $17 million 
* Value added sales of approximately $3 million 
* Loss of approximately $1 million in gross profit 
* SG&A attributable to the product line of approximately $3 million

Full year 2012 results for the solar pastes product line included the
following:

* Net sales of approximately $90 million 
* Value added sales of approximately $22 million 
* Gross profit of approximately $2 million 
* SG&A attributable to the product line of approximately $18 million

Non-GAAP Measures

Adjusted earnings per share is equal to income (loss) before taxes, adjusted for
the impact of special items, adjusted for a normalized 36 percent tax rate that
is consistent with the U.S. statutory corporate income tax rate, and divided by
the weighted-average number of diluted shares outstanding. Ferro believes the
adjusted data provides investors with additional useful information on the
underlying operations of the business and enables period-to-period comparability
of financial performance. 

Conference Call

The Company will host a conference call to discuss its 2012 fourth-quarter and
full-year financial results, its outlook for general business conditions and its
current outlook for 2013 on Tuesday, March 5, 2013, at 10:00 a.m. Eastern time.
A presentation to accompany the conference call is available on the Company`s
Web site at www.ferro.com. To participate in the call, dial 800-734-8582 if
calling from the United States or Canada, or dial 212-231-2901 if calling from
outside North America. Please call approximately 10 minutes before the
conference call is scheduled to begin. 

An audio replay of the call will be available from noon Eastern Time on March 5
through noon Eastern Time on March 12. To access the replay, dial 800-633-8284
if calling from the United States or Canada, or dial 402-977-9140 if calling
from outside North America. Use the program ID #21650229 to access the audio
replay. 

The conference call also will be broadcast live over the Internet and will be
available for replay through June 30, 2013. The live broadcast and replay can be
accessed through the Investor Information section of the Company`s Web site at
www.ferro.com. A podcast of the conference call will also be available on the
Company`s Web site. 

About Ferro Corporation

Ferro Corporation (http://www.ferro.com) is a leading global supplier of
technology-based performance materials for manufacturers. Ferro materials
enhance the performance of products in a variety of end markets, including
building and construction, automotive, appliances, electronics, household
furnishings, pharmaceuticals, and industrial products. Headquartered in Mayfield
Heights, Ohio, the Company has approximately 4,860 employees globally and
reported 2012 sales of $1.8 billion. 

Cautionary Note on Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking
statements" within the meaning of Federal securities laws. These statements are
subject to a variety of uncertainties, unknown risks and other factors
concerning the Company`s operations and business environment. Important factors
that could cause actual results to differ materially from those suggested by
these forward-looking statements and that could adversely affect the Company`s
future financial performance include the following:

* demand in the industries into which Ferro sells its products may be
unpredictable, cyclical or heavily influenced by consumer spending; 
* Ferro's ability to successfully implement its value creation strategy; 
* Ferro`s ability to successfully implement and/or administer its cost-saving
initiatives, including its restructuring programs, and to produce the desired
results, including projected savings; 
* restrictive covenants in the Company`s credit facilities could affect its
strategic initiatives and liquidity; 
* Ferro`s ability to access capital markets, borrowings, or financial
transactions; 
* the effectiveness of the Company`s efforts to improve operating margins
through sales growth, price increases, productivity gains, and improved
purchasing techniques; 
* the availability of reliable sources of energy and raw materials at a
reasonable cost; 
* currency conversion rates and economic, social, regulatory, and political
conditions around the world; 
* Ferro`s presence in certain geographic regions, including Latin America and
Asia-Pacific, where it can be difficult to compete lawfully; 
* increasingly aggressive domestic and foreign governmental regulations on
hazardous materials and regulations affecting health, safety and the
environment; 
* Ferro`s ability to successfully introduce new products or enter into new
growth markets; 
* sale of products into highly regulated industries; 
* limited or no redundancy for certain of the Company`s manufacturing facilities
and possible interruption of operations at those facilities; 
* Ferro`s ability to complete future acquisitions or dispositions, or
successfully integrate future acquisitions; 
* competitive factors, including intense price competition; 
* Ferro`s ability to protect its intellectual property or to successfully
resolve claims of infringement brought against the Company; 
* management of Ferro`s general and administrative expenses; 
* Ferro`s multi-jurisdictional tax structure; 
* the impact of the Company`s performance on its ability to utilize significant
deferred tax assets; 
* the effectiveness of strategies to increase Ferro`s return on capital; 
* the impact of operating hazards and investments made in order to meet
stringent environmental, health and safety regulations; 
* stringent labor and employment laws and relationships with the Company`s
employees; 
* the impact of requirements to fund employee benefit costs, especially
post-retirement costs; 
* implementation of new business processes and information systems; 
* the impact of interruption, damage to, failure, or compromise of the Company`s
information systems; 
* manufacture and sale of products into the pharmaceutical industry; 
* exposure to lawsuits in the normal course of business; 
* risks and uncertainties associated with intangible assets, including the final
amount of impairment and other charges described in this press release; 
* Ferro`s borrowing costs could be affected adversely by interest rate
increases; 
* liens on the Company`s assets by its lenders affect its ability to dispose of
property and businesses; 
* Ferro may not pay dividends on its common stock in the foreseeable future; and

* other factors affecting the Company`s business that are beyond its control,
including disasters, accidents, and governmental actions.

The risks and uncertainties identified above are not the only risks the Company
faces. Additional risks and uncertainties not presently known to the Company or
that it currently believes to be immaterial also may adversely affect the
Company. Should any known or unknown risks and uncertainties develop into actual
events, these developments could have material adverse effects on our business,
financial condition and results of operations. 

This release contains time-sensitive information that reflects management`s best
analysis only as of the date of this release. The Company does not undertake any
obligation to publicly update or revise any forward-looking statements to
reflect future events, information or circumstances that arise after the date of
this release. Additional information regarding these risks can be found in our
Annual Report on Form 10-K for the period ended December 31, 2012.

                                                                                                                                                                                           
 Ferro Corporation and Subsidiaries                                                                                                                                                        
 Consolidated Statements of Operations                                                                                                                                                     
                                                                                                                                                                                           
                                                                                     Three months ended                                                                                    
                                                                                     December 31,                                     Twelve months ended                                  
                                                                                     (Unaudited)                                      December 31,                                         
 (Dollars in thousands, except share and per share amounts)                          2012                      2011                   2012                         2011                    
                                                                                                                                                                                           
 Net sales                                                                           $     405,896             $     442,695          $      1,768,631             $      2,155,792        
 Cost of sales                                                                       346,541                   368,946                1,470,769                    1,743,560               
 Gross profit                                                                        59,355                    73,749                 297,862                      412,232                 
                                                                                                                                                                                           
 Selling, general and administrative expenses                                        96,352                    125,158                302,658                      335,311                 
 Restructuring and impairment charges                                                21,990                    12,986                 225,819                      17,030                  
 Other expense (income):                                                                                                                                                                   
 Interest expense                                                                    7,290                     7,201                  27,979                       28,409                  
 Interest earned                                                                     (119           )          (92            )       (311              )          (285              )     
 Losses on extinguishment of debt                                                    -                         45                     -                            45                      
 Foreign currency losses, net                                                        1,394                     709                    2,186                        4,758                   
 Miscellaneous expense, net                                                          53                        2,034                  3,080                        2,492                   
 (Loss) income before income taxes                                                   (67,605        )          (74,292        )       (263,549          )          24,472                  
 Income tax (benefit) expense                                                        (4,133         )          (13,487        )       109,485                      19,338                  
 Net (loss) income                                                                   (63,472        )          (60,805        )       (373,034          )          5,134                   
 Less: Net income attributable to noncontrolling interests                           404                       157                    1,234                        730                     
 Net (loss) income attributable to Ferro Corporation                                 (63,876        )          (60,962        )       (374,268          )          4,404                   
 Dividends on preferred stock                                                        0                         -                      -                            (165              )     
 Net (loss) income attributable to Ferro Corporation common shareholders             $     (63,876  )          $     (60,962  )       $      (374,268   )          $      4,239            
                                                                                                                                                                                           
 (Loss) earnings per share attributable to Ferro Corporation common shareholders:                                                                                                          
 Basic (loss) earnings per share                                                     $     (0.74    )          $     (0.71    )       $      (4.34      )          $      0.05             
 Diluted (loss) earnings per share                                                   (0.74          )          (0.71          )       (4.34             )          0.05                    
                                                                                                                                                                                           
 Shares outstanding:                                                                                                                                                                       
 Weighted-average basic shares                                                       86,331,679                86,174,555             86,288,481                   86,119,380              
 Weighted-average diluted shares                                                     86,331,679                86,174,555             86,288,481                   86,778,335              
 End-of-period basic shares                                                          86,367,096                86,175,117             86,367,096                   86,175,117              
                                                                                                                                                                                           


                                                                                                                                      
 Ferro Corporation and Subsidiaries                                                                                                   
 Segment Net Sales and Segment Income (Loss)                                                                                          
                                                                                                                                      
                                         Three months ended                                                                           
                                         December 31,                                   Twelve months ended                           
 (Dollars in thousands)                  (Unaudited)                                    December 31,                                  
                                         2012                     2011                  2012                         2011             
 Segment Net Sales                                                                                                                    
 Electronic Materials                    $     65,215             $     84,187          $     293,840                $     622,977    
 Performance Coatings                    140,640                  149,020               587,698                      602,566          
 Color and Glass Perf. Materials         86,137                   89,511                371,723                      396,317          
 Polymer Additives                       69,580                   74,198                320,635                      336,965          
 Specialty Plastics                      38,205                   39,283                170,717                      172,028          
 Pharmaceuticals                         6,119                    6,496                 24,018                       24,939           
 Total Segment Net Sales                 $     405,896            $     442,695         $     1,768,631              $     2,155,792  
                                                                                                                                      
 Segment Income (Loss)                                                                                                                
 Electronic Materials                    $     (5,154   )         $     (1,593   )      $     (16,122    )           $     68,024     
 Performance Coatings                    5,338                    6,120                 26,306                       34,033           
 Color and Glass Perf. Materials         2,013                    1,539                 26,115                       29,672           
 Polymer Additives                       (1,192         )         437                   12,711                       15,784           
 Specialty Plastics                      1,875                    2,012                 14,057                       9,428            
 Pharmaceuticals                         517                      219                   2,409                        3,744            
 Total Segment Income                    3,397                    8,734                 65,476                       160,685          
                                                                                                                                      
 Unallocated corporate expenses          40,394                   60,143                70,272                       83,764           
 Restructuring and impairment charges    21,990                   12,986                225,819                      17,030           
 Interest expense                        7,290                    7,201                 27,979                       28,409           
 Other expense, net                      1,328                    2,696                 4,955                        7,010            
 (Loss) income before income taxes       $     (67,605  )         $     (74,292  )      $     (263,549   )           $     24,472     
                                                                                                                                      


                                                                                                    
 Ferro Corporation and Subsidiaries                                                                 
 Consolidated Balance Sheets                                                                        
                                                                                                    
                                                        December 31,                                
 (Dollars in thousands)                                 2012                       2011             
 Assets                                                                                             
 Current assets:                                                                                    
 Cash and cash equivalents                              $     29,576               $     22,991     
 Accounts receivable, net                               306,463                    306,775          
 Inventories                                            207,091                    228,813          
 Deferred income taxes                                  7,995                      17,395           
 Other receivables                                      31,554                     37,839           
 Other current assets                                   10,824                     17,086           
 Total current assets                                   593,503                    630,899          
                                                                                                    
 Property, plant and equipment, net                     324,720                    379,336          
 Goodwill                                               62,975                     215,601          
 Amortizable intangible assets, net                     14,410                     11,056           
 Deferred income taxes                                  21,554                     117,658          
 Other non-current assets                               61,941                     86,101           
 Total assets                                           $     1,079,103            $     1,440,651  
                                                                                                    
 Liabilities and Equity                                                                             
 Current liabilities:                                                                               
 Loans payable and current portion of long-term debt    $     85,152               $     11,241     
 Accounts payable                                       182,904                    214,460          
 Accrued payrolls                                       31,690                     31,055           
 Accrued expenses and other current liabilities         76,757                     67,878           
 Total current liabilities                              376,503                    324,634          
                                                                                                    
 Long-term debt, less current portion                   261,624                    298,082          
 Postretirement and pension liabilities                 216,167                    215,732          
 Other non-current liabilities                          18,135                     19,709           
 Total liabilities                                      872,429                    858,157          
                                                                                                    
 Shareholders' equity                                   193,527                    572,262          
 Noncontrolling interests                               13,147                     10,232           
 Total liabilities and equity                           $     1,079,103            $     1,440,651  
                                                                                                    


                                                                                                                                             
 Ferro Corporation and Subsidiaries                                                                                                          
 Condensed Consolidated Statements of Cash Flows                                                                                             
                                                                                                                                             
                                              Three months ended                                                                             
                                              December 31,                                    Twelve months ended                            
 (Dollars in thousands)                       (Unaudited)                                     December 31,                                   
                                              2012                     2011                   2012                       2011                
 Cash flows from operating activities                                                                                                        
 Net (loss) income                            $     (63,472  )         $      (60,805  )      $      (373,034  )         $      5,134        
 Depreciation and amortization                15,650                   14,970                 57,384                     63,493              
 Other non-cash adjustments, net              31,864                   68,176                 323,037                    45,917              
 Precious metals deposits                     0                        0                      0                          28,086              
 Accounts receivable                          17,748                   50,289                 (5,258           )         (13,444        )    
 Inventories                                  6,650                    11,760                 22,287                     (29,790        )    
 Accounts payable                             (14,105        )         726                    (18,359          )         4,715               
 Other changes in current assets and          9,787                    (14,513         )      17,601                     (50,878        )    
 liabilities, net                                                                                                                            
 Net cash provided by operating               4,122                    70,603                 23,658                     53,233              
 activities                                                                                                                                  
                                                                                                                                             
 Cash flows from investing activities                                                                                                        
 Capital expenditures for property, plant     (12,440        )         (20,790         )      (58,685          )         (72,713        )    
 and equipment and other long-lived                                                                                                          
 assets                                                                                                                                      
 Proceeds from sale of assets and             657                      4,067                  3,043                      6,441               
 businesses                                                                                                                                  
 Other investing activities                   238                      952                    334                        1,145               
 Net cash used for investing activities       (11,545        )         (15,771         )      (55,308          )         (65,127        )    
                                                                                                                                             
 Cash flow from financing activities                                                                                                         
 Net borrowings (repayments) under loans      17,847                   (46,835         )      39,934                     8,661               
 payable                                                                                                                                     
 Proceeds from long-term debt                 72,425                   116,660                395,576                    646,834             
 Principal payments on long-term debt         (80,761        )         (122,063        )      (400,687         )         (639,128       )    
 Extinguishment of debt                       0                        (725            )      0                          (725           )    
 Redemption of convertible preferred stock    0                        0                      0                          (9,427         )    
 Cash dividends paid                          0                        0                      0                          (165           )    
 Other financing activities                   874                      34                     1,634                      (146           )    
 Net cash provided by (used for)              10,385                   (52,929         )      36,457                     5,904               
 financing activities                                                                                                                        
 Effect of exchange rate changes on cash      1,797                    (812            )      1,778                      (54            )    
 and cash equivalents                                                                                                                        
 Increase (decrease) in cash and cash         4,759                    1,091                  6,585                      (6,044         )    
  equivalents                                                                                                                                
 Cash and cash equivalents at beginning of    24,817                   21,900                 22,991                     29,035              
 period                                                                                                                                      
 Cash and cash equivalents at end of          $     29,576             $      22,991          $      29,576              $      22,991       
  period                                                                                                                                     
                                                                                                                                             
 Cash paid during the period for:                                                                                                            
 Interest                                     $     1,125              $      1,300           $      26,468              $      25,920       
 Income taxes                                 1,527                    1,414                  4,657                      22,060              
                                                                                                                                             


                                                                                                                                                                                                                                                                                                                                                                             
 Ferro Corporation and Subsidiaries                                                                                                                                                                                                                                                                                                                                          
 Supplemental Information                                                                                                                                                                                                                                                                                                                                                    
 Reconciliation of Reported Loss to Adjusted Loss                                                                                                                                                                                                                                                                                                                            
 for the Three Months Ended December 31 (Unaudited)                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                                                                             
 (Dollars in thousands, except per share amounts)        Cost of sales              Selling, general and administrative expenses           Restructuring and impairment charges             Other expense, net             Income tax (benefit) expense            Net (loss) income attributable to common shareholders           Diluted (loss) earnings per share         
                                                         Three months ended December 31, 2012                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                             
 As reported                                             $      346,541             $                96,352                                $              21,990                            $        8,618                 $           (4,133      )               $                   (63,876             )                       $             (0.74         )             
 Special items:                                                                                                                                                                                                                                                                                                                                                              
 Impairments                                             -                          -                                                      (16,403                       )                  -                              5,905                                   10,498                                                          0.12                                      
 Restructuring                                           -                          -                                                      (5,587                        )                  -                              2,011                                   3,576                                                           0.04                                      
 Pension1                                                (3,758          )          (23,480                           )                    -                                                -                              9,806                                   17,432                                                          0.20                                      
 Other2                                                  (1,861          )          (8,222                            )                    -                                                -                              3,630                                   6,453                                                           0.08                                      
 Taxes3                                                  -                          -                                                      -                                                -                              (20,205                 )               20,205                                                          0.23                                      
 Total special items                                     (5,619          )          (31,702                           )                    (21,990                       )                  -                              1,147                                   58,164                                                          0.67                                      
 As adjusted                                             $      340,922             $                64,650                                $              -                                 $        8,618                 $           (2,986      )               $                   (5,712              )                       $             (0.07         )             
                                                                                                                                                                                                                                                                                                                                                                             
                                                         Three months ended December 31, 2011                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                             
 As reported                                             $      368,946             $                125,158                               $              12,986                            $        9,897                 $           (13,487     )               $                   (60,962             )                       $             (0.71         )             
 Special items:                                                                                                                                                                                                                                                                                                                                                              
 Impairments                                             -                          -                                                      (12,129                       )                  -                              3,881                                   8,248                                                           0.09                                      
 Restructuring                                           -                          -                                                      (857                          )                  -                              274                                     583                                                             0.01                                      
 Pension1                                                (968            )          (50,792                           )                    -                                                -                              16,563                                  35,197                                                          0.41                                      
 Other2                                                  (1,137          )          (760                              )                    -                                                (397              )            734                                     1,560                                                           0.02                                      
 Taxes3                                                  -                          -                                                      -                                                -                              (10,286                 )               10,286                                                          0.12                                      
 Total special items                                     (2,105          )          (51,552                           )                    (12,986                       )                  (397              )            11,166                                  55,874                                                          0.65                                      
 As adjusted                                             $      366,841             $                73,606                                $              -                                 $        9,500                 $           (2,321      )               $                   (5,088              )                       $             (0.06         )             
                                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                             
 1 Pension and other postretirement benefits mark-to-market adjustment of the related net liabilities.                                                                                                                                                                                                                                                                       
 2 Includes certain severance costs, impairments, ongoing costs at facilities that have been idled, gain/loss on divestitures, and certain business development activities.                                                                                                                                                                                                  
 3 Adjustment of reported earnings and of special items to a normalized 36% rate for 2012 and 32% for 2011.                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                             
 It should be noted that adjusted earnings and earnings per share are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings and earnings per share presented here exclude certain special items including the mark-to-market adjustments related to our net pension and other postretirement benefit liabilities, restructuring and impairment charges, severance costs, ongoing costs at facilities that have 
 been idled, gain/loss on divestitures, and certain business development costs. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees. 


                                                                                                                                                                                                                                                                                                                                                                               
 Ferro Corporation and Subsidiaries                                                                                                                                                                                                                                                                                                                                            
 Supplemental Information                                                                                                                                                                                                                                                                                                                                                      
 Reconciliation of Reported (Loss) Income to Adjusted Income                                                                                                                                                                                                                                                                                                                   
 for the Twelve Months Ended December 31 (Unaudited)                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                               
 (Dollars in thousands, except per share amounts)        Cost of sales                Selling, general and administrative expenses           Restructuring and impairment charges             Other expense, net             Income tax expense (benefit)            Net (loss) income attributable to common shareholders           Diluted (loss) earnings per share         
                                                         Twelve months ended December 31, 2012                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                               
 As reported                                             $      1,470,769             $                302,658                               $              225,819                           $        32,934                $           109,485                     $                   (374,268            )                       $             (4.34         )             
 Special items:                                                                                                                                                                                                                                                                                                                                                                
 Impairments                                             -                            -                                                      (215,279                      )                  -                              77,500                                  137,779                                                         1.60                                      
 Restructuring                                           -                            -                                                      (10,540                       )                  -                              3,794                                   6,746                                                           0.08                                      
 Pension1                                                (3,758            )          (23,480                           )                    -                                                -                              9,806                                   17,432                                                          0.20                                      
 Other2                                                  (9,065            )          (14,191                           )                    -                                                (808              )            8,663                                   15,401                                                          0.18                                      
 Taxes3                                                  -                            -                                                      -                                                -                              (204,363                )               204,363                                                         2.37                                      
 Total special items                                     (12,823           )          (37,671                           )                    (225,819                      )                  (808              )            (104,600                )               381,721                                                         4.43                                      
 As adjusted                                             $      1,457,946             $                264,987                               $              -                                 $        32,126                $           4,885                       $                   7,453                                       $             0.09                        
                                                                                                                                                                                                                                                                                                                                                                               
                                                         Twelve months ended December 31, 2011                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                               
 As reported                                             $      1,743,560             $                335,311                               $              17,030                            $        35,419                $           19,338                      $                   4,239                                       $             0.05                        
 Special items:                                                                                                                                                                                                                                                                                                                                                                
 Impairments                                             -                            -                                                      (12,132                       )                  -                              3,882                                   8,250                                                           0.10                                      
 Restructuring                                           -                            -                                                      (4,898                        )                  -                              1,567                                   3,331                                                           0.04                                      
 Pension1                                                (968              )          (50,792                           )                    -                                                -                              16,563                                  35,197                                                          0.41                                      
 Other2                                                  (4,761            )          (4,100                            )                    -                                                (397              )            2,963                                   6,295                                                           0.07                                      
 Taxes3                                                  -                            -                                                      -                                                -                              (11,507                 )               11,507                                                          0.13                                      
 Total special items                                     (5,729            )          (54,892                           )                    (17,030                       )                  (397              )            13,468                                  64,580                                                          0.75                                      
 As adjusted                                             $      1,737,831             $                280,419                               $              -                                 $        35,022                $           32,806                      $                   68,819                                      $             0.80                        
                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                               
 1 Pension and other postretirement benefits mark-to-market adjustment of the related net liabilities.                                                                                                                                                                                                                                                                         
 2 Includes certain severance costs, impairments, ongoing costs at facilities that have been idled, gain/loss on divestitures, and certain business development activities.                                                                                                                                                                                                    
 3 Adjustment of reported earnings and of special items to a normalized 36% rate for 2012 and 32% for 2011.                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                               
 It should be noted that adjusted earnings and earnings per share are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings and earnings per share presented here exclude certain special items including the mark-to-market adjustments related to our net pension and other postretirement benefit liabilities, restructuring and impairment charges, severance costs, ongoing costs at facilities that have 
 been idled, gain/loss on divestitures, and certain business development costs. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees. 


                                                                                                                                                          
 Ferro Corporation and Subsidiaries                                                                                                                       
 Supplement Information                                                                                                                                   
                                                                                                                                                          
 Reconciliation of Segment Net Sales Excluding Precious Metals to Net Sales and Schedule of Adjusted Gross Profit(Unaudited)                              
                                                                                                                                                          
 (Dollars in thousands)                                Three months ended                              Twelve months ended                                
                                                       December 31,                                    December 31,                                       
                                                       2012                     2011                   2012                        2011                   
                                                                                                                                                          
 Electronic Materials                                  $     32,238             $     41,443           $      149,182              $      257,991         
 Performance Coatings                                  140,640                  149,020                587,698                     602,566                
 Color and Glass Perf. Materials                       79,208                   81,718                 343,631                     362,232                
 Polymer Additives                                     69,580                   74,198                 320,635                     336,965                
 Specialty Plastics                                    38,205                   39,283                 170,717                     172,028                
 Pharmaceuticals                                       6,119                    6,496                  24,018                      24,939                 
 Total segment net sales excluding precious metals     365,990                  392,158                1,595,881                   1,756,721              
 Sales of precious metals                              39,906                   50,537                 172,750                     399,071                
 Total net sales                                       $     405,896            $     442,695          $      1,768,631            $      2,155,792       
                                                                                                                                                          
 Net sales excluding precious metals                   $     365,990            $     392,158          $      1,595,881            $      1,756,721       
 Adjusted cost of sales                                340,922                  366,841                1,457,946                   1,737,831              
 Cost of sales from precious metals                    (39,906        )         (50,537        )       (172,750          )         (399,071          )    
 Adjusted cost of sales excluding precious metals      301,016                  316,304                1,285,196                   1,338,760              
 Adjusted gross margin                                 $     64,974             $     75,854           $      310,685              $      417,961         
 Adjusted gross profit percentage                      17.8           %         19.3           %       19.5              %         23.8              %    
                                                                                                                                                          


It should be noted that segment net sales excluding precious metals is a
financial measure not required by, or presented in accordance with, accounting
principles generally accepted in the United States (U.S. GAAP). The sales are
presented here to exclude the impact of volatile precious metal raw material
costs. The precious metal raw material costs are generally passed through
directly to customers with minimal margin. We believe this data, including the
adjusted gross profit, provides investors with additional useful information on
the underlying operations of the business and enables period-to-period
comparability of financial performance.

Ferro Corporation
INVESTOR CONTACT:
John Bingle, Treasurer and Director, Investor Relations, 216-875-5411
E-mail: john.bingle@ferro.com
or
MEDIA CONTACT:
Mary Abood, Director, Corporate Communications, 216-875-5401
E-mail: mary.abood@ferro.com

Copyright Business Wire 2013

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