Ferro Reports 2011 Fourth-Quarter And Full-Year Results

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, 2011.

Ferro Corporation and Subsidiaries Consolidated Statements of Operations
					Three months endedDecember 31,(Unaudited)					Twelve months endedDecember 31,
(Dollars in thousands, except share and per share amounts)					2011		2010			2011		2010
Net sales					$442,695		$536,951			$2,155,792		$2,101,865
Cost of sales					367,991		427,846			1,742,605		1,643,200
Gross profit					74,704		109,105			413,187		458,665
Selling, general and administrative expenses					76,906		78,101			294,802		293,736
Restructuring and impairment charges					12,986		19,625			17,030		63,732
Other expense (income):
Interest expense					7,201		7,372			28,409		44,568
Interest earned					(92)		(109)			(285)		(651)
Losses on extinguishment of debt					45		3,670			45		23,001
Foreign currency losses, net					709		1,080			4,758		4,724
Miscellaneous expense, net					2,034		3,291			2,492		5,814
(Loss) income before income taxes					(25,085)		(3,925)			65,936		23,741
Income tax expense (benefit)					3,582		(6,778)			33,569		16,468
Net (loss) income					(28,667)		2,853			32,367		7,273
Less: Net income attributable to noncontrolling interests					157		844			730		1,577
Net (loss) income attributable to Ferro Corporation					(28,824)		2,009			31,637		5,696
Dividends on preferred stock					0		(165)			(165)		(660)
Net (loss) income attributable to Ferro Corporation common shareholders					$(28,824)		$1,844			$31,472		$5,036
(Loss) earnings per share attributable to Ferro Corporation common shareholders:
Basic (loss) earnings per share					$(0.33)		$0.02			$0.37		$0.06
Diluted (loss) earnings per share					(0.33)		0.02			0.36		0.06
Shares outstanding:
Weighted-average basic shares					86,174,555		85,867,752			86,119,380		85,822,887
Weighted-average diluted shares					86,771,135		86,517,511			86,778,335		86,539,924
End-of-period basic shares					86,175,117		85,873,376			86,175,117		85,873,376

Ferro Corporation and Subsidiaries Segment Net Sales and Segment Income
(Dollars in thousands)					Three months endedDecember 31,(Unaudited)					Twelve months endedDecember 31,
					2011		2010			2011		2010
Segment Net Sales
Electronic Materials					$84,187		$186,687			$622,977		$675,401
Performance Coatings					149,020		140,477			602,566		555,023
Color and Glass Perf. Materials					89,511		93,959			396,317		382,155
Polymer Additives					74,198		70,921			336,965		302,352
Specialty Plastics					39,283		38,693			172,028		163,058
Pharmaceuticals					6,496		6,214			24,939		23,876
Total Segment Net Sales					$442,695		$536,951			$2,155,792		$2,101,865
Segment Income
Electronic Materials					$612		$35,312			$74,869		$132,585
Performance Coatings					7,526		4,190			37,988		39,416
Color and Glass Perf. Materials					2,538		5,057			32,327		31,514
Polymer Additives					414		4,590			15,221		18,387
Specialty Plastics					2,140		1,773			9,521		11,348
Pharmaceuticals					73		426			3,050		814
Total Segment Income					13,303		51,348			172,976		234,064
Unallocated corporate expenses					15,505		20,344			54,591		69,135
Restructuring and impairment charges					12,986		19,625			17,030		63,732
Interest expense					7,201		7,372			28,409		44,568
Other expense, net					2,696		7,932			7,010		32,888
(Loss) income before income taxes					$(25,085)		$(3,925)			$65,936		$23,741

Ferro Corporation and Subsidiaries Consolidated Balance Sheets
(Dollars in thousands)					December 31,2011			December 31,2010
Assets
Current assets:
Cash and cash equivalents					$22,991			$29,035
Accounts receivable, net					306,775			302,448
Inventories					228,813			202,067
Deposits for precious metals					0			28,086
Deferred income taxes					17,395			24,924
Other receivables					37,839			27,762
Other current assets					17,086			7,432
Total current assets					630,899			621,754
Property, plant and equipment, net					379,336			391,496
Goodwill					215,601			219,716
Amortizable intangible assets, net					11,056			11,869
Deferred income taxes					117,658			121,640
Other non-current assets					86,101			67,880
Total assets					$1,440,651			$1,434,355
Liabilities and Equity
Current liabilities:
Loans payable and current portion of long-term debt					$11,241			$3,580
Accounts payable					214,460			207,770
Accrued payrolls					31,055			49,590
Accrued expenses and other current liabilities					67,878			84,735
Total current liabilities					324,634			345,675
Long-term debt, less current portion					298,082			290,971
Postretirement and pension liabilities					215,732			189,058
Other non-current liabilities					19,709			25,044
Total liabilities					858,157			850,748
Series A convertible preferred stock					0			9,427
Shareholders' equity					572,262			563,409
Noncontrolling interests					10,232			10,771
Total liabilities and equity					$1,440,651			$1,434,355

Ferro Corporation and Subsidiaries Consolidated Statements of Cash Flows
(Dollars in thousands)					Three months endedDecember 31,(Unaudited)					Twelve months endedDecember 31,
					2011		2010			2011		2010
Cash flows from operating activities
Net income (loss)					$(28,667)		$2,853			$32,367		$7,273
Depreciation and amortization					14,970		17,426			63,493		76,936
Other non-cash adjustments, net					36,038		5,924			18,684		29,181
Precious metals deposits					0		(28,086)			28,086		84,348
Accounts receivable					50,289		27,167			(13,444)		(24,697)
Inventories					11,760		7,898			(29,790)		(22,654)
Accounts payable					726		(19,968)			4,715		12,618
Other changes in current assets and liabilities, net					(14,513)		5,196			(50,878)		35,860
Net cash provided by operating activities					70,603		18,410			53,233		198,865
Cash flows from investing activities
Capital expenditures for property, plant and equipment and other long-lived assets					(20,790)		(17,004)			(72,713)		(44,737)
Expenditures for acquisitions, net of cash acquired					0		(6,938)			0		(6,938)
Proceeds from sale of assets and businesses					4,067		4,902			6,441		18,214
Other investing activities					952		0			1,145		139
Net cash used for investing activities					(15,771)		(19,040)			(65,127)		(33,322)
Cash flow from financing activities
Net (repayments) borrowings under loans payable					(46,835)		1,005			8,661		(21,495)
Proceeds from long-term debt					116,660		55,559			646,834		632,299
Principal payments on long-term debt					(122,063)		(55,559)			(639,128)		(392,061)
Extinguishment of debt					(725)		(36,310)			(725)		(362,997)
Debt issue costs					0		612			0		(9,848)
Redemption of convertible preferred stock					0		0			(9,427)		0
Cash dividends paid					0		(165)			(165)		(660)
Other financing activities					34		(1,714)			(146)		(2,502)
Net cash (used for) provided by financing activities					(52,929)		(36,572)			5,904		(157,264)
Effect of exchange rate changes on cash and cash equivalents					(812)		881			(54)		2,249
Increase (decrease) in cash and cash equivalents					1,091		(36,321)			(6,044)		10,528
Cash and cash equivalents at beginning of period					21,900		65,356			29,035		18,507
Cash and cash equivalents at end of period					$22,991		$29,035			$22,991		$29,035
Cash paid during the period for:
Interest					$1,300		$1,590			$25,920		$31,881
Income taxes					1,414		4,656			22,060		20,379

Ferro Corporation and Subsidiaries Supplemental Information
Reconciliation of Adjusted Earnings to Reported Earnings for the Three Months Ended December 31 (Unaudited)
					Three months endedDecember 31, 2011							Three months endedDecember 31, 2010
(Dollars in thousands, except per share amounts)					AsReported		Adjust-ments		Non-GAAP			AsReported		Adjust-ments		Non-GAAP
Net sales					$442,695				$442,695			$536,951				$536,951
Cost of sales					367,991		$(1,137)		366,854			427,846		$(4,053)		423,793
Gross profit					74,704				75,841			109,105				113,158
Selling, general and administrative expenses					76,906		(760)		76,146			78,101		(4,565)		73,536
Restructuring and impairment charges					12,986		(12,986)		0			19,625		(19,625)		0
Other expense, net					2,696		(397)		2,299			7,932		(9,203)		(1,271)
(Loss) earnings before interest, taxes and noncontrolling interest					(17,884)				(2,604)			3,447				40,893
Interest expense					7,201				7,201			7,372				7,372
Total adjustments							$(15,280)							$(37,446)
(Loss) income before taxes					(25,085)				(9,805)			(3,925)				33,521
Income tax expense (benefit)					3,582							(6,778)
Income tax benefit 1									(3,138)
Income tax expense 2																12,068
Net (loss) income					(28,667)				(6,667)			2,853				21,453
Less: Net income attributable to noncontrolling interest					157				157			844				844
Net (loss) income attributable to Ferro					(28,824)				(6,824)			2,009				20,609
Dividends on preferred stock					0				0			(165)				(165)
Net (loss) income attributable to Ferro common shareholders					$(28,824)				$(6,824)			$1,844				$20,444
Diluted (loss) earnings per share					$(0.33)				$(0.08)			$0.02				$0.24

¹ 2011 tax rate of 32%, consistent with the Company’s expectation for future effective tax rates, excluding discrete items. The Company’s expected future effective tax rate is lower than the U.S. statutory rate because of expected earnings in foreign jurisdictions with lower tax rates. ² 2010 tax rate of 36%, consistent with the Company’s 2010 expectation for normalized effective tax rates, excluding discrete items.

It should be noted that adjusted earnings is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings presented here exclude certain special charges including restructuring and impairment charges, charges related to debt refinancing, and other charges that are not related to production of products for sale. We believe this data provides investors with additional useful 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 Adjusted Earnings to Reported Earnings for the Twelve Months Ended December 31 (Unaudited)
					Twelve months endedDecember 31, 2011							Twelve months endedDecember 31, 2010
(Dollars in thousands, except per share amounts)					AsReported		Adjust-ments		Non-GAAP			AsReported		Adjust-ments		Non-GAAP
Net sales					$2,155,792				$2,155,792			$2,101,865				$2,101,865
Cost of sales					1,742,605		$(4,761)		1,737,844			1,643,200		$(8,965)		1,634,235
Gross profit					413,187				417,948			458,665				467,630
Selling, general and administrative expenses					294,802		(4,100)		290,702			293,736		(18,064)		275,672
Restructuring and impairment charges					17,030		(17,030)		0			63,732		(63,732)		0
Other expense, net					7,010		(397)		6,613			32,888		(32,336)		552
Earnings before interest, taxes and noncontrolling interest					94,345				120,633			68,309				191,406
Interest expense					28,409				28,409			44,568		(2,280)		42,288
Total adjustments							$(26,288)							$(125,377)
Income before taxes					65,936				92,224			23,741				149,118
Income tax expense					33,569							16,468
Income tax expense 1									29,512
Income tax expense 2																53,682
Net income					32,367				62,712			7,273				95,436
Less: Net income attributable to noncontrolling interest					730				730			1,577				1,577
Net income attributable to Ferro					31,637				61,982			5,696				93,859
Dividends on preferred stock					(165)				(165)			(660)				(660)
Net income attributable to Ferro common shareholders					$31,472				$61,817			$5,036				$93,199
Diluted earnings per share					$0.36				$0.71			$0.06				$1.08

¹ 2011 tax rate of 32%, consistent with the Company’s expectation for future effective tax rates, excluding discrete items. The Company’s expected future effective tax rate is lower than the U.S. statutory rate because of expected earnings in foreign jurisdictions with lower tax rates. ² 2010 tax rate of 36%, consistent with the Company’s 2010 expectation for normalized effective tax rates, excluding discrete items.

It should be noted that adjusted earnings is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings presented here exclude certain special charges including restructuring and impairment charges, charges related to debt refinancing, and other charges that are not related to production of products for sale. We believe this data provides investors with additional useful 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
Segment Net Sales Excluding Precious Metals and Reconciliation of Sales Excluding Precious Metals to Net Sales (Unaudited)
(Dollars in thousands)					Three months endedDecember 31,					Twelve months endedDecember 31,
					2011		2010			2011		2010
Electronic Materials					$41,443		$78,621			$257,991		$321,990
Performance Coatings					149,020		140,349			602,566		554,796
Color and Glass Performance Materials					81,718		87,967			362,232		357,359
Polymer Additives					74,198		70,921			336,965		302,352
Specialty Plastics					39,283		38,693			172,028		163,058
Pharmaceuticals					6,496		6,214			24,939		23,876
Total segment net sales excluding precious metals					392,158		422,765			1,756,721		1,723,431
Sales of precious metals					50,537		114,186			399,071		378,434
Total net sales					$442,695		$536,951			$2,155,792		$2,101,865

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 provides investors with additional useful information on the underlying operations of the business and enables period-to-period comparability of financial performance.

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