<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31,1995 Commission File Number 1-584
FERRO CORPORATION
An Ohio Corporation IRS Number 34-0217820
1000 LAKESIDE AVENUE
CLEVELAND, OHIO 44114-1183
216/641-8580
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
At April 30, 1995, there were 27,814,481 shares of Ferro common stock, par
value $1.00, outstanding.
<PAGE> 2
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
The consolidated Balance Sheets as of March 31, 1995 (unaudited) and December
31, 1994, and the Consolidated Statements of Income and Consolidated Statements
of Cash Flows for the three months ended March 31, 1995 and 1994 (unaudited) of
Ferro Corporation and Subsidiaries are set forth in Exhibit 20 hereof which is
incorporated by reference herein.
Those financial statements, which are subject to year-end audit adjustments,
should be read in conjunction with financial statements and notes thereto
included in the Company's annual report for the fiscal year ended December 31,
1994.
Cash dividends were paid at the rate of $0.135 per common share in the first
quarter of 1995 and 1994. Cash dividends on preferred shares were paid at the
rate of $0.81 per preferred share in the first quarter of 1995 and 1994.
Net sales and net income for the three months ended March 31, 1995 were
$342,947,000 and $13,096,000 ($0.44 primary earnings per common share) as
compared with net sales and net income of $283,324,000 and $11,324,000 ($0.35
primary earnings per common share) for the corresponding 1994 period.
Excluding severance charges of $5,600,000 in the period ended March 31, 1995,
operating income was $30,597,000 as compared with $20,438,000 for the
corresponding 1994 quarter. The foregoing figures are unaudited, but in the
opinion of Management of the Company, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation thereof have been made.
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Net Sales. First quarter 1995 sales of $342.9 million were 21 percent greater
than the $283.3 million of the comparable 1994 period.
Sales increased for all business segments and all geographic regions. Sales
for Coatings, colors and ceramics, Plastics and Chemicals increased 22.3
percent, 14.9 percent and 24.7 percent, respectively. Chemicals made good
progress in obtaining new business to replace the fuel additive volume lost in
1994.
The variety of products sold by the Company makes it difficult to determine
with certainty the increases or decreases in sales resulting from changes in
physical volume of products sold and selling prices. However, Management's
best estimate is that the 21.0 percent increase in sales is comprised of:
volume, 11.5 percent; exchange, 2.5 percent; price/mix, 7.2 percent;
acquisitions, 2.0 percent; and divestitures, (2.2) percent.
Cost of Sales. Gross profit as a percent of sales was 25.0 percent in the
first quarter of
<PAGE> 3
both 1995 and 1994.
Selling, administrative and general expenses. Including a $5.6 million pre-tax
severance cost charge, such expenses increased 20.2 percent in absolute terms,
but were comparable as a percent of sales. Excluding the severance charges,
such expenses represented 16.1 percent of sales.
Interest expense. Interest expense of $3.1 million increased by only $0.2
million, mainly due to somewhat higher borrowing levels in Brazil.
Net foreign currency gain or loss. Net foreign currency was a loss of $0.1
million compared with a loss in the comparable 1994 quarter of $0.3 million,
reflecting continued weakness in the U.S. dollar.
Other income/expense. Net other expense increased by $1.4 million and is
comprised of numerous income and expense items, none of which are material.
Income taxes. Income taxes increased $1.4 million, reflecting higher income
level.
Geographic discussion. Sales in each of the geographic regions increased in
double digits. Operating profit for each of the regions was also improved.
Europe continued to benefit from the general economic recovery, while
operations in the United States were aided by improved fuel additive volume and
completion on the powder coatings assimilation late in 1994.
Liquidity and Capital Resources
Working capital. Working capital was $6.2 million greater at March 31, 1995
than at year-end 1994 largely due to an increase in cash and higher levels of
receivables and inventories associated with higher level of sales.
Cash flow. Net cash provided from operating activities for the three month
period ended March 31, 1995 was $20.0 million.
Financing requirements and resources. The long-term debt to equity ratio was
21.1 percent at March 31, 1995, excluding the loan guarantee of the Employee
Stock Ownership Plan adopted in April 1989. The Company expects to be able to
meet the financial requirements of its existing businesses from existing cash
and cash equivalents and future cash flow. The Company has available to it a
$150 million five-year revolving credit facility with four banks. There have
been no borrowings drawn under this facility. The Company also may issue $75.0
million of additional debt under the Shelf Registration filed with the
Securities and Exchange Commission in August 1992. The Company's $50,000,000
11 3/4% debentures due 2005 become redeemable at par at the option of the
Company in October, 1995. The Company is studying the redemption of such
debentures, which, if done, would be financed with the proceeds of other
borrowing sources available
<PAGE> 4
to The Company. Additionally, the foreign subsidiaries have credit facilities
available.
Other Significant Developments
None.
PART II OTHER INFORMATION
Item 1 Legal Proceedings. No change.
Item 2 Change in Securities. No change.
Item 3 Default Upon Senior Securities. No change.
Item 4 Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders held on April 28, 1995, the
shareholders:
a. Re-elected three current Ferro directors - Albert C.
Bersticker, Paul S. Brentlinger and A. James Freeman - to the
Board to serve until the 1998 meeting.
The results of the voting for directors are as follows:
<TABLE>
<CAPTION>
For Against
--- --------
<S> <C> <C>
Bersticker 26,393,286 209,323
Brentlinger 26,381,773 220,836
Freeman 26,387,045 215,564
</TABLE>
The terms of office for Sandra Harden Austin, Glenn R. Brown,
Werner F. Bush, William E. Butler, John C. Morley, Hector R.
Ortino, Adolph Posnick, Rex A. Sebastian and Dennis W.
Sullivan continued after the meeting.
b. Approved a proposal for the adoption of the 1995 Performance
Share Plan.
Shareholders approved the adoption of the 1995 Performance
Share Plan by a vote of 24,310,208 shares for, 627,268 shares
against and 1,665,133 shares that were present but did not
vote on this proposal.
<PAGE> 5
c. Approved a proposal to adopt an amendment to the Employee
Stock Option Plan.
Shareholders approved the proposal to amend the Employee
Stock Option Plan by a vote of 25,864,386 shares for, 541,163
shares against and 197,060 shares that were present
but did not vote on this proposal.
d. Adopted a resolution to ratify the designation of KPMG Peat
Marwick LLP as independent auditors of Ferro's books and
accounts.
Shareholders approved the designation of KPMG Peat Marwick LLP
by a vote of 26,397,704 shares for, 139,194 shares against and
65,711 shares that were present but did not vote on this
issue.
Item 5 Other information. None.
Item 6 Exhibits and Reports on Form 8-K.
The Company has not filed any reports on Form 8-K for the quarter ended
March 31, 1995.
Exhibit 11 - Statement regarding computation of earnings per share.
Exhibit 12 - Ratio of Earnings to Fixed Charges.
Exhibit 20- The Consolidated Balance Sheets as of March 31, 1995
(Unaudited) and December 31, 1994, and the Consolidated Statements of
Income and Consolidated Statements of Cash Flows for the three months
ended March 31, 1995 and 1994 (Unaudited) of Ferro Corporation and
subsidiaries.
Exhibit 27 - Financial Data Schedule.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRO CORPORATION
(Registrant)
H. R. Ortino
_______________________________
Date: May 15, 1995 H. R. Ortino
Executive Vice President and
Chief Financial-Administrative Officer
G. H. Ritondaro
________________________________
Date: May 15, 1995 G. H. Ritondaro
Vice President, Finance
<PAGE> 1
<TABLE>
EXHIBIT 11
FERRO CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
3 Months 3 Months
(Dollars in Thousands) March March
1995 1994
---------- ----------
<S> <C> <C>
PRIMARY:
Weighted average shares and common stock equivalents 27,985,977 29,610,820
Net Income $13,096 $11,324
Less Preferred Stock Dividend, Net of Tax (911) (886)
---------- ----------
Income Available to Common Shareholders $12,185 $10,438
PRIMARY EARNINGS PER COMMON SHARE $0.44 $0.35
FULLY DILUTED:
Weighted average shares and common stock equivalents 27,985,977 29,610,820
Adjustments (primarily assumed conversion of
convertible preferred stock) 2,432,577 2,473,420
---------- ----------
30,418,554 32,084,240
Net Income $13,096 $11,324
Additional ESOP Contribution, Net of Tax (511) (520)
---------- ----------
Adjusted Net Income $12,585 $10,804
FULLY DILUTED EARNINGS PER SHARE $0.41 $0.34
</TABLE>
<PAGE> 1
<TABLE>
EXHIBIT 12
FERRO CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
MARCH MARCH
(Dollars in Thousands) 1995 1994
------ ------
<S> <C> <C>
Earnings:
Pre-Tax Income 21,403 18,220
Add: Fixed Charges 3,487 3,312
Less: Interest Capitalization (211) (245)
------ ------
Total Earnings 24 679 21,287
====== ======
Fixed Charges:
Interest Expense 3,076 2,867
Interest Capitalization 211 245
Interest Portion of Rental Expense 200 200
------ ------
Total Fixed Charges 3,487 3,312
====== ======
Total Earnings 24,679 21,287
Divided By:
Total Fixed Charges 3,487 3,312
------ ------
Ratio 7.08 6.43
<FN>
Note: Preferred dividends are excluded. Amortization of debt expense and
discounts and premiums were deemed immaterial to the above calculation.
Interest portion of rental expense are conservative estimates based on
actual amounts from prior years.
</TABLE>
<PAGE> 1
EXHIBIT 20
FERRO CORPORATION
Consolidated Balance Sheets
As of March 31, 1995 (Unaudited) and December 31, 1994
Consolidated Statements of Income
For the Three Months Ended
March 31, 1995 and 1994 (Unaudited)
Consolidated Statements of Cash Flows
For the Three Months Ended
March 31, 1995 and 1994 (Unaudited)
<PAGE> 2
CONSOLIDATED BALANCE SHEET
FERRO CORPORATION AND SUBSIDIARIES
MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
(Dollars in Thousands)
(Unaudited) (Audited)
ASSETS 1995 1994
- ------ ----------- ---------
<S> <C> <C>
Current Assets:
Cash $ 28,730 $ 19,822
Net Receivables 238,756 217,889
Inventories 162,079 142,133
Other Current Assets 31,133 35,571
-------- --------
Total Current Assets $460,698 $415,415
Investments in Affiliated Companies 8,684 8,923
Unamortized Excess of Cost Over Net Assets Acquired 51,979 50,629
Other Assets 36,114 37,820
Net Plant & Equipment 302,732 288,589
-------- --------
$860,207 $801,376
======== ========
LIABILITIES
- -----------
Current Liabilities
Notes and Loans Payable $ 25,344 $ 18,752
Account Payable, Trade 136,945 120,308
Income Taxes 13,683 8,553
Accrued Payrolls 18,153 15,553
Accrued Expenses and Other Current Liabilities 73,259 65,170
-------- --------
Total Current Liabilities $267,384 $228,336
Long-Term Debt 81,013 77,611
ESOP Loan Guarantee 35,580 37,503
Deferred Income Taxes 17,611 17,309
Postretirement Liabilities 42,756 42,076
Other Liabilities 32,523 31,797
Shareholders' Equity 383,340 366,744
-------- --------
$860,207 $801,376
======== ========
</TABLE>
<PAGE> 3
CONSOLIDATED STATEMENTS OF INCOME
FERRO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited) (Unaudited)
(Dollars in Thousands) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Segment Sales
Coatings, Colors and Ceramics $ 202,819 $ 165,801
Plastics 75,478 65,683
Chemicals 64,650 51,840
------------ ------------
Total Net Sales $ 342,947 $ 283,324
Cost of Sales 257,215 212,382
Selling, Administrative and General Expenses 60,735 50,504
------------ ------------
Operating Income 24,997 20,438
Interest Expense 3,076 2,867
Net Foreign Currency (Gain) Loss 143 344
Other (Income) Expense - Net 375 (993)
------------ ------------
Income Before Taxes 21,403 18,220
Taxes on Income 8,307 6,896
------------ ------------
Net Income 13,096 11,324
Dividend on Preferred Stock, Net of Tax 911 886
------------ ------------
Net Income Available to Common Shareholders $ 12,185 $ 10,438
============ ============
Per Common Share Data:
Primary Earnings $ 0.44 $ 0.35
Fully Diluted Earnings $ 0.41 $ 0.34
Average Shares Outstanding 27,985,977 29,610,820
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FERRO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited) (Unaudited)
(Dollars in Thousands) 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net Cash Provided from Operating Activities $ 20,050 $ 18,782
Cash Flow from Investing Activities:
Investment in Marketable Securities 0 (4,424)
Capital Expenditures for Plant and Equipment (13,540) (11,199)
Proceeds From Divestitures 928 3,156
Other Investing Activities 650 473
- -----------------------------------------------------------------------------------
Net Cash (Used for) Provided by Investing Activities (11,962) (11,994)
Cash Flow from Financing Activities:
Net Borrowings (Payments) Under Short-Term Lines 6,248 (2,556)
Purchase of Treasury Stock (588) (262)
Cash Dividend Paid (4,896) (5,102)
Other Financing Activities 146 1,241
- -----------------------------------------------------------------------------------
Net Cash (Used for) Provided by Financing Activities 910 (6,679)
Effect of Exchange Rate Changes on Cash (90) 153
- -----------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 8,908 262
Cash and Cash Equivalents at Beginning of Period 19,822 25,116
- -----------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 28,730 $ 25,378
- -----------------------------------------------------------------------------------
Cash Paid During the Period for:
Interest $ 854 $ 716
Income Taxes $ 3,794 $ 3,376
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000035214
<NAME> FERRO CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 28,730
<SECURITIES> 0
<RECEIVABLES> 238,756
<ALLOWANCES> 0
<INVENTORY> 162,079
<CURRENT-ASSETS> 460,698
<PP&E> 632,963
<DEPRECIATION> 330,231
<TOTAL-ASSETS> 860,207
<CURRENT-LIABILITIES> 267,384
<BONDS> 81,013
<COMMON> 32,523
0
0
<OTHER-SE> 479,287
<TOTAL-LIABILITY-AND-EQUITY> 860,207
<SALES> 342,947
<TOTAL-REVENUES> 342,947
<CGS> 257,215
<TOTAL-COSTS> 317,950
<OTHER-EXPENSES> 518
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,076
<INCOME-PRETAX> 21,403
<INCOME-TAX> 8,307
<INCOME-CONTINUING> 13,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,096
<EPS-PRIMARY> .44
<EPS-DILUTED> .41
</TABLE>
