PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Operations



	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2016		2015		2017		2016
	(Dollars in thousands, except per share amounts)				(Dollars in thousands, except per share amounts)
Net sales	$	277,451	$	262,772	$	320,555	$	277,451
Cost of sales		193,222		192,137		221,761		193,222
Gross profit		84,229		70,635		98,794		84,229
Selling, general and administrative expenses		52,646		49,456		58,958		52,646
Restructuring and impairment charges		881		509		3,018		881
Other expense (income):
Interest expense		4,847		3,150		6,224		4,847
Interest earned		(85)		(37)		(180)		(85)
Foreign currency losses, net		1,611		1,728
Miscellaneous (income) expense, net		(3,453)		399
Foreign currency (gains) losses, net						(314)		1,611
Loss on extinguishment of debt						3,905		—
Miscellaneous income, net						(2,076)		(3,453)
Income before income taxes		27,782		15,430		29,259		27,782
Income tax expense		8,018		2,459		7,138		8,018
Income from continuing operations		19,764		12,971		22,121		19,764
Loss from discontinued operations, net of income taxes		(29,494)		(3,956)		—		(29,494)
Net (loss) income		(9,730)		9,015
Less: Net income (loss) attributable to noncontrolling interests		236		(1,955)
Net (loss) income attributable to Ferro Corporation common shareholders	$	(9,966)	$	10,970
Net income (loss)						22,121		(9,730)
Less: Net income attributable to noncontrolling interests						223		236
Net income (loss) attributable to Ferro Corporation common shareholders					$	21,898	$	(9,966)
Earnings (loss) per share attributable to Ferro Corporation common shareholders:
Basic earnings (loss):
Continuing operations	$	0.23	$	0.17	$	0.26	$	0.23
Discontinued operations		(0.35)		(0.05)		—		(0.35)
	$	(0.12)	$	0.12	$	0.26	$	(0.12)
Diluted earnings (loss):
Continuing operations	$	0.23	$	0.17	$	0.26	$	0.23
Discontinued operations		(0.35)		(0.04)		—		(0.35)
	$	(0.12)	$	0.13	$	0.26	$	(0.12)

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Ferro Corporation and Subsidiaries

Condensed Consolidated Balance Sheets



		March 31,		December 31,			March 31,		December 31,
		2016		2015			2017		2016
		(Dollars in thousands)					(Dollars in thousands)
ASSETS	ASSETS					ASSETS
Current assets
Cash and cash equivalents		$	55,865	$	58,380		$	92,829	$	45,582
Accounts receivable, net			261,435		231,970			289,476		259,687
Inventories			195,416		184,854			250,590		229,847
Deferred income taxes			11,964		12,088
Other receivables			33,247		34,088			38,280		37,814
Other current assets			10,613		15,695			10,183		9,087
Current assets held-for-sale			19,973		16,215
Total current assets			588,513		553,290			681,358		582,017
Other assets
Property, plant and equipment, net			258,752		260,429			257,993		262,026
Goodwill			150,564		145,669			148,203		148,296
Intangible assets, net			111,429		106,633			136,030		137,850
Deferred income taxes			88,995		87,385			109,555		106,454
Other non-current assets			48,298		48,767			51,094		47,126
Non-current assets held-for-sale			226		23,178
Total assets		$	1,246,777	$	1,225,351		$	1,384,233	$	1,283,769
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt		$	11,148	$	7,446		$	16,632	$	17,310
Accounts payable			130,444		120,380			139,880		127,655
Accrued payrolls			24,922		28,584			29,858		35,859
Accrued expenses and other current liabilities			59,917		54,664			70,433		65,203
Current liabilities held-for-sale			6,968		7,156
Total current liabilities			233,399		218,230			256,803		246,027
Other liabilities
Long-term debt, less current portion			493,212		466,108			618,335		557,175
Postretirement and pension liabilities			150,123		148,249			163,279		162,941
Other non-current liabilities			64,911		66,990			59,489		62,594
Non-current liabilities held-for-sale			1,592		1,493
Total liabilities			943,237		901,070			1,097,906		1,028,737
Equity
Ferro Corporation shareholders’ equity:
Common stock, par value $1 per share; 300.0 million shares authorized; 93.4 million shares issued; 83.2 million and 84.0 million shares outstanding at March 31, 2016, and December 31, 2015, respectively			93,436		93,436
Common stock, par value $1 per share; 300.0 million shares authorized; 93.4 million shares issued; 83.6 million and 83.4 million shares outstanding at March 31, 2017, and December 31, 2016, respectively								93,436		93,436
Paid-in capital			306,824		314,854			303,304		306,566
Retained earnings			125,541		135,507			136,588		114,690
Accumulated other comprehensive loss			(62,760)		(61,318)			(99,476)		(106,643)
Common shares in treasury, at cost			(167,591)		(166,020)			(155,707)		(160,936)
Total Ferro Corporation shareholders’ equity			295,450		316,459			278,145		247,113
Noncontrolling interests			8,090		7,822			8,182		7,919
Total equity			303,540		324,281			286,327		255,032
Total liabilities and equity		$	1,246,777	$	1,225,351		$	1,384,233	$	1,283,769

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Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Equity



	Ferro Corporation Shareholders															Ferro Corporation Shareholders
	Common Shares									Accumulated						Common Shares									Accumulated
	in Treasury									Other		Non-				in Treasury									Other		Non-
				Common		Paid-in		Retained		Comprehensive		controlling		Total					Common		Paid-in		Retained		Comprehensive		controlling		Total
	Shares	Amount		Stock		Capital		Earnings		(Loss)		Interests		Equity		Shares	Amount		Stock		Capital		Earnings		(Loss)		Interests		Equity
	(Dollars in thousands)															(In thousands)
Balances at December 31, 2014	6,445	$	(136,058)	$	93,436	$	317,404	$	71,407	$	(21,805)	$	11,632	$	336,016
Net income (loss)	—		—		—		—		10,970		—		(1,955)		9,015
Other comprehensive (loss)	—		—		—		—		—		(36,642)		(1,138)		(37,780)
Stock-based compensation transactions	(269)		7,559		—		(5,516)		—		—		—		2,043
Balances at March 31, 2015	6,176		(128,499)		93,436		311,888		82,377		(58,447)		8,539		309,294

Balances at December 31, 2015	9,431		(166,020)		93,436		314,854		135,507		(61,318)		7,822		324,281	9,431	$	(166,020)	$	93,436	$	314,854	$	135,507	$	(61,318)	$	7,822	$	324,281
Net (loss) income	—		—		—		—		(9,966)		—		236		(9,730)	—		—		—		—		(9,966)		—		236		(9,730)
Other comprehensive (loss) income	—		—		—		—		—		(1,442)		32		(1,410)	—		—		—		—		—		(1,442)		32		(1,410)
Purchase of treasury stock	1,175		(11,429)		—		—		—		—		—		(11,429)	1,175		(11,429)		—		—		—		—		—		(11,429)
Stock-based compensation transactions	(352)		9,858		—		(8,030)		—		—		—		1,828	(352)		9,858		—		(8,030)		—		—		—		1,828
Balances at March 31, 2016	10,254	$	(167,591)	$	93,436	$	306,824	$	125,541	$	(62,760)	$	8,090	$	303,540	10,254		(167,591)		93,436		306,824		125,541		(62,760)		8,090		303,540

Balances at December 31, 2016																9,996		(160,936)		93,436		306,566		114,690		(106,643)		7,919		255,032
Net income																—		—		—		—		21,898		—		223		22,121
Other comprehensive income																—		—		—		—		—		7,167		40		7,207
Stock-based compensation transactions																(195)		5,229		—		(3,262)		—		—		—		1,967
Balances at March 31, 2017																9,801	$	(155,707)	$	93,436	$	303,304	$	136,588	$	(99,476)	$	8,182	$	286,327

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Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows



	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2016		2015		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Cash flows from operating activities
Net cash used in operating activities	$	(10,161)	$	(10,269)
Net cash provided by (used in) operating activities					$	1,630	$	(10,161)
Cash flows from investing activities
Capital expenditures for property, plant and equipment and other long lived assets		(7,365)		(14,879)		(6,766)		(7,365)
Proceeds from sale of assets		3,586		91		2		3,586
Business acquisitions, net of cash acquired		(7,909)		(5,479)		—		(7,909)
Net cash used in investing activities		(11,688)		(20,267)		(6,764)		(11,688)
Cash flows from financing activities
Net borrowings (repayments) under loans payable		3,561		(2,567)
Proceeds from revolving credit facility		117,834		—
Principal payments on revolving credit facility		(40,212)		—
Principal payments on term loan facility		(50,750)		(750)
Net (repayments) borrowings under loans payable						(3,985)		3,561
Proceeds from revolving credit facility, maturing 2019						15,628		117,834
Principal payments on revolving credit facility, maturing 2019						(327,183)		(40,212)
Proceeds from term loan facility, maturing 2024						623,827		—
Principal payments on term loan facility, maturing 2021						(243,250)		(50,750)
Payment of debt issuance costs		(301)		—		(12,712)		(301)
Purchase of treasury stock		(11,429)		—		—		(11,429)
Other financing activities		497		769		(390)		497
Net cash provided by (used in) financing activities		19,200		(2,548)
Net cash provided by financing activities						51,935		19,200
Effect of exchange rate changes on cash and cash equivalents		134		(2,241)		446		134
Decrease in cash and cash equivalents		(2,515)		(35,325)
Increase (decrease) in cash and cash equivalents						47,247		(2,515)
Cash and cash equivalents at beginning of period		58,380		140,500		45,582		58,380
Cash and cash equivalents at end of period	$	55,865	$	105,175	$	92,829	$	55,865
Cash paid during the period for:
Interest	$	4,763	$	3,409	$	6,535	$	4,763
Income taxes	$	2,669	$	6,141	$	4,097	$	2,669

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Ferro Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Ferro Corporation (“Ferro,” “we,” “us” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. These statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

~~The Company owned 51% of an operating affiliate~~As discussed in ~~Venezuela that was a consolidated subsidiary of Ferro. During~~Note 3, in the ~~fourth~~third quarter of ~~2015,~~2016, we ~~sold our interest in~~completed the operating affiliate in Venezuela for a cash purchase price of $0.5 million. During the first quarter of 2015, the Ministry of Economy, Finance, and Public Banking, and the Central Bank of Venezuela published a new exchange rate, the Foreign Exchange Marginal System (“SIMADI”). We concluded in March 2015 that SIMADI was the most relevant exchange mechanism available, and began using SIMADI to translate the local currency financial statements. As a result of the revaluation, we recognized a $1.9 million foreign currency loss and a $2.6 million loss due to lower of cost or market charges against our inventory, prior to the adjustment for losses allocated to our noncontrolling interest partner, which is recorded within Foreign currency losses, net and Cost of sales, respectively, within our condensed consolidated statement of operations for the three months ended March 31, 2015.

~~During the second quarter of 2014, substantially all of the assets and liabilities~~disposition of the Europe-based Polymer Additives business ~~were classified as held-for-sale. As further discussed in Note 3, we have classified the assets and liabilities as held-for-sale in the accompanying condensed consolidated balance sheets~~ and have classified the related operating results, net of income tax, as discontinued operations in the accompanying condensed consolidated statements of operations for ~~all periods presented.~~the three months ended March 31, 2016.

During the first quarter of 2017, the Company renamed the Pigments, Powders and Oxides segment “Color Solutions” to align with our go-to-market strategy.

Operating results for the three months ended March 31, ~~2016,~~2017, are not necessarily indicative of the results expected in subsequent quarters or for the full year ending December 31, ~~2016.~~2017.

2. Recent Accounting Pronouncements

~~New~~Recently Adopted Accounting Standards

In ~~May 2014,~~March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2014-09,~~2016-09, ~~Revenue~~Compensation – Stock Compensation: (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This new guidance requires all income tax effects of awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled. Cash flow related to excess tax benefits will no longer be classified as a financing activity on the statement of cash flows but will be presented with all other income tax cash flows as an operating activity. The new guidance also provides an accounting policy election to account for forfeitures as they occur. Finally, the updated standard also allows the Company to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and clarifies that all cash tax payments made on an employee’s behalf for withheld shares should be presented as financing activities on the statement of cash flows.

The Company adopted ASU 2016-09, in the first quarter of 2017. As a result of the adoption, tax benefits of $0.3 million were recorded in income tax expense. The Company has elected to account for forfeitures as they occur. In addition, the Company elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on the statements of cash flows since the Company has historically presented such payments as financing activities.

NewAccounting Standards

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits: (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs. ASU 2017-07 requires that an employer report the service cost component in the same line item as other compensation costs arising from ~~Contracts with Customers: Topic 606~~services rendered during the period. The other components of net benefit costs are to be presented in the income statement separately from the service costs component and outside a

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subtotal of income from operations. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. This pronouncement is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted. The Company is in the process of assessing the impact that the adoption of this ASU ~~replaces nearly all~~will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 is intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This pronouncement is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations: (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 is intended to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or dispositions) of assets or businesses. This pronouncement is effective for the annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes: (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This pronouncement is effective for the annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow: (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to address eight specific cash flow issues with the objective of reducing the existing ~~U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of which will require significant judgment.~~diversity in practice. This ~~standard~~pronouncement is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal ~~years, beginning after December 15, 2017.~~years. Early adoption is permitted. The Company is in the process of assessing the impact the adoption of this ASU will have on our ~~condensed~~ consolidated financial statements.

~~In November 2015, the FASB issued ASU 2015-17,~~ ~~Income Taxes: Topic 740: Balance Sheet Classification of Deferred Taxes~~. ASU 2015-17 requires deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial position. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. ASU 2015-17 may be applied either on a retrospective or prospective basis. The Company is in the process of assessing the impact the adoption of this ASU will have on our condensed consolidated financial statements.

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In February 2016, the FASB issued ASU 2016-02, Leases: ~~Topic 842.~~(Topic 842). ASU 2016-02 requires companies to recognize a lease liability and asset on the balance sheet for operating leases with a term greater than one year. This pronouncement is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact the adoption of this ASU will have on our ~~condensed~~ consolidated financial statements.

In ~~March 2016,~~May 2014, the FASB issued ASU ~~2016-09,~~2014-09, ~~Compensation – Stock Compensation: Topic 718: Improvements to Employee Share-Based Payment Accounting.~~Revenue from Contracts with Customers: (Topic 606). This ASU ~~2016-09 is intended to simplify several aspects~~replaces nearly all existing U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of ~~the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.~~which will require significant judgment. This ~~pronouncement~~standard is effective for ~~annual periods beginning after December 15, 2016,~~fiscal years, and interim periods within those ~~annual periods. Early adoption~~fiscal years, beginning after December 15, 2017. Our evaluation of ASU 2014-09 is ~~permitted. The Company is in the process of assessing the impact the adoption of this~~ongoing. While we anticipate some changes to revenue recognition for certain customer contracts, we do not currently believe ASU 2014-09 will have a material effect on our ~~condensed~~ consolidated financial statements.

No other new accounting pronouncements issued or with effective dates during fiscal ~~2016~~2017 had or are expected to have a material impact of the Company’s ~~condensed~~ consolidated financial statements.

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3. Discontinued Operations

During ~~the second quarter of~~ 2014, we commenced a process to market for sale ~~all of the assets within~~ our Europe-based Polymer Additives ~~business, including the Antwerp, Belgium dibenzoates manufacturing assets, and related Polymer Additives European headquarters and lab facilities.~~business. We determined that the criteria to classify these assets as held-for-sale under ASC Topic 360, Property, Plant and Equipment, ~~have been~~were met. On August 22, 2016, we completed the disposition of the Europe-based Polymer Additives business to Plahoma Two AG, an affiliate of the LIVIA Group. We have classified the Europe-based Polymer Additives ~~assets and liabilities as held-for-sale in the accompanying condensed consolidated balance sheets and have classified the related~~ operating results, net of income tax, as discontinued operations in the accompanying condensed consolidated statements of operations for ~~all periods presented. Though~~ the ~~sale process of these assets has taken longer than initially expected, we continue to believe that it is probable that we will sell the Europe-based Polymer Additives assets within a year.~~three months ended March 31, 2016.

The table below summarizes results for the Europe-based Polymer Additives assets, for the three months ended March 31, 2016, ~~and 2015,~~ which are reflected in our condensed consolidated statements of operations as discontinued operations. Interest expense has been allocated to the discontinued operations based on the ratio of net assets of each business to consolidated net assets excluding debt.

Three Months Ended

March 31,

2016

2015

(Dollars in thousands)
Net sales

$
7,750

$
11,899
Cost of sales

12,030

14,555
Gross loss

(4,280)

(2,656)
Selling, general and administrative expenses

1,003

1,219
Restructuring and impairment charges

24,059

—
Interest expense

237

113
Gain on sale of business

(539)

—
Miscellaneous expense (income), net

121

(32)
(Loss) from discontinued operations before income taxes

(29,161)

(3,956)
Income tax expense

333

—
(Loss) from discontinued operations, net of income taxes

$
(29,494)

$
(3,956)



	Three Months Ended
	March 31, 2016
	(Dollars in thousands)
Net sales	$	7,750
Cost of sales		12,030
Gross loss		(4,280)
Selling, general and administrative expenses		1,003
Restructuring and impairment charges		24,059
Interest expense		237
Miscellaneous income		(418)
Loss from discontinued operations before income taxes		(29,161)
Income tax expense		333
Loss from discontinued operations, net of income taxes	$	(29,494)

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~~The following table summarizes the assets and liabilities which are classified as held-for-sale at March 31, 2016, and December 31, 2015:~~

March 31, 2016

December 31, 2015

(Dollars in thousands)
Accounts receivable, net

$
4,352

$
4,028
Inventories

11,199

9,733
Other current assets

4,422

2,454
Current assets held-for-sale

19,973

16,215
Property, plant and equipment, net

—

22,973
Other non-current assets

226

205
Total assets held-for-sale

$
20,199

$
39,393

Accounts payable

$
6,339

$
5,736
Accrued expenses and other current liabilities

629

1,420
Current liabilities held-for-sale

6,968

7,156
Other non-current liabilities

1,592

1,493
Total liabilities held-for-sale

$
8,560

$
8,649

~~Included within non-current assets is a deferred tax asset of $36.6 million at March 31, 2016, and $25.0 million at December 31, 2015, which were fully reserved for at both periods.~~

4. Acquisitions

~~Ferer~~

Cappelle

On ~~January 5,~~December 9, 2016, the Company completed the purchase of 100% of the equity of privately held Istanbul-based Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S. (“Ferer”) on a cash-free and debt-free basis for approximately $9.4 million in cash, subject to customary working capital and other adjustments. The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of March 31, 2016, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $3.2 million of amortizable intangible assets, $4.3 million of goodwill, $0.6 million of personal and real property, $0.6 million of a deferred tax liability related to the amortizable intangible assets, and $1.9 million of net working capital on the condensed consolidated balance sheet.

~~Al Salomi~~

~~On November 17, 2015,~~ the Company acquired 100% of the ~~equity~~share capital of ~~Egypt-based tile~~Belgium-based Cappelle Pigments NV (“Cappelle”), a leader in specialty, high-performance inorganic and organic pigments used in coatings, ~~manufacturer Al Salomi~~inks and plastics, for ~~Frits and Glazes (“Al Salomi”) for EGP 307~~€40.0 million (approximately ~~$38.2~~$42.4 million)~~, including the assumption of debt.~~. The acquired business contributed net sales of ~~$5.6~~$19.0 million and net income attributable to Ferro Corporation of $0.6 million for the three months ended March 31, ~~2016.~~2017.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of March 31, ~~2016,~~2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded ~~$15.0~~$28.6 million of ~~amortizable intangible assets, $14.3 million of goodwill, $10.7~~net working capital, $24.1 million of personal and real property, ~~$4.8~~$10.3 million of debt, $3.5 million of goodwill and $3.5 million of a deferred tax liability ~~related to the amortizable intangible assets, and $3.0 million of net working capital~~ on the condensed consolidated balance sheet.

~~Nubiola~~

ESL

On ~~July 7, 2015,~~October 31, 2016, the Company acquired 100% of the ~~entire share capital~~membership interest of ~~Corporación Química Vhem, S.L.~~Electro-Science Laboratories, Inc. (“ESL”), ~~Dibon USA, LLC~~a leader in electronic packaging materials, for $78.5 million. ESL is headquartered in King of Prussia, Pennsylvania. The acquisition of ESL enhances the Company’s position in the electronic packaging materials space with complementary products, and ~~Ivory~~provides a platform for growth in our Performance Colors and Glass segment. ESL produces thick-film pastes and ceramics tape systems that enable important functionality in a wide variety of industrial and consumer applications. The acquired business contributed net sales of $10.8 million and net income attributable to Ferro Corporation ~~S.A. (together with their direct and indirect subsidiaries, “Nubiola”) on a cash-free and debt-free basis~~of $0.8 million for ~~€167 million~~the three months ended March 31, 2017. The Company

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~~(approximately $184.2 million). The~~incurred acquisition ~~was funded with excess cash~~costs for the three months ended March 31, 2017, of $0.3 million, which is included in Selling, general and ~~borrowings under the Company’s existing revolving credit facility. See Note 8 for additional detail on the revolving credit facility. Nubiola is a worldwide producer~~administrative expenses in our condensed consolidated statements of specialty inorganic pigments and the world’s largest producer of Ultramarine Blue. Nubiola also produces specialty Iron Oxides, Chrome Oxide Greens and Corrosion Inhibitors. Nubiola has production facilities in Spain, Colombia, Romania, and India and a joint venture in China.operations.

~~The following table summarizes the preliminary purchase price allocations:~~


	~~July 7, 2015~~
	~~(Dollars in thousands)~~
~~Net working capital~~ ~~(1)~~	$	~~46,642~~
~~Cash and equivalents~~		~~19,966~~
~~Personal property~~		~~39,444~~
~~Real property~~		~~28,510~~
~~Intangible assets~~		~~33,152~~
~~Other assets and liabilities~~		~~(22,660)~~
~~Goodwill~~		~~39,151~~
~~Net assets acquired~~	$	~~184,205~~

~~(1)~~

~~Net working capital is defined as current assets, less cash, less current liabilities, and includes an estimate of potential transactional adjustments.~~

The acquired business contributed net sales of $33.4 million and net income attributable to Ferro Corporation of $5.2 million for the three months ended March 31, 2016. The Company incurred acquisition related costs of $0.2 million for the three months ended March 31, 2016, which is recorded within Selling, general and administrative expenses, within our condensed consolidated statements of operations.

~~The estimated fair value of the receivables acquired is $24.5 million, with a gross contractual amount of $25.2 million.~~ The Company preliminarily recorded ~~acquired~~$39.7 million of intangible assets, ~~subject to amortization of $27.0 million, which is comprised of $10.3~~$19.0 million of ~~customer relationships and $16.7~~goodwill, $18.9 million of ~~technology/know-how, which will be amortized over 20 years~~net working capital, $2.9 million of personal and ~~15 years, respectively. The Company preliminarily recorded acquired indefinite-lived intangible assets~~real property and $2.0 million of ~~$6.2 million~~a deferred tax liability related to ~~trade names and trademarks. Goodwill is calculated as~~ the ~~excess of~~amortizable intangibles assets on the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition and is a result of anticipated synergies. Goodwill is not expected to be deductible for tax purposes.

~~The following unaudited pro froma information represents the~~condensed consolidated ~~results of the Company as if the Nubiola acquisition occurred as of January 1, 2014:~~balance sheet.

Delta Performance Products

	~~Three months ended March 31, 2015~~
	~~(unaudited)~~
	~~(In thousands, except per share amounts)~~

~~Net sales~~	$	~~295,822~~
~~Net income attributable to Ferro Corporation common shareholders~~	$	~~16,184~~
~~Net earnings per share attributable to Ferro Corporation common shareholders - Basic~~	$	~~0.19~~
~~Net earnings per share attributable to Ferro Corporation common shareholders - Diluted~~	$	~~0.18~~

~~The unaudited pro forma information has been adjusted with the respect to certain aspects of the acquisition to reflect the following:~~

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~~Additional depreciation and amortization expenses that would have been recognized assuming fair value adjustments to the existing Nubiola assets acquired, including intangible assets and fixed assets.~~

~~Elimination of revenue and costs of goods sold for sales from Nubiola to the Company, which would be eliminated as intercompany transactions for Nubiola and the Company on a consolidated basis.~~

~~Increased interest expense due to additional borrowings to fund the acquisition.~~

~~Acquisition-related costs, which were included in the Company’s results.~~

~~Adjustments for the income tax effect of the pro forma adjustments related to the acquisition.~~

~~Thermark~~

~~In February 2015,~~On August 1, 2016, the Company acquired ~~TherMark Holdings, Inc., a leader in laser marking technology,~~certain assets of Delta Performance Products, LLC, for a cash purchase price of ~~$5.5~~$4.4 million. The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of March 31, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded ~~$4.6~~$3.2 million of amortizable intangible assets, ~~$2.5~~$0.6 million of net working capital, $0.4 million of goodwill ~~$1.7~~and $0.2 million of a deferred tax asset on the condensed consolidated balance sheet.

Pinturas

On June 1, 2016, the Company acquired 100% of the equity of privately held Pinturas Benicarló, S.L. (“Pinturas”) for €16.5 million in cash (approximately $18.4 million). The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. As of March 31, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $8.8 million of amortizable intangible assets, $7.7 million of net working capital, $3.9 million of goodwill, $2.7 million of a deferred tax liability related to the amortizable intangible assets, and ~~$0.1~~$0.7 million of personal and real property on the condensed consolidated balance sheet.

Ferer

On January 5, 2016, the Company completed the purchase of 100% of the equity of privately held Istanbul-based Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S. (“Ferer”) on a cash-free and debt-free basis for approximately $9.4 million in cash. The information included herein has been prepared based on the allocation of the purchase price using the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches and estimates made by management. The Company recorded $4.5 million of goodwill, $3.3 million of amortizable intangible assets, $1.7 million of net working capital, $0.7 million of a deferred tax liability related to the amortizable intangible assets and $0.6 million of personal and real property on the condensed consolidated balance sheet.

5. Inventories



	March 31,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Raw materials	$	60,060	$	56,291	$	84,913	$	72,943
Work in process		35,921		33,099		43,267		38,859
Finished goods		99,435		95,464		122,410		118,045
Total inventories	$	195,416	$	184,854	$	250,590	$	229,847

In the production of some of our products, we use precious metals, some of which we obtain from financial institutions under consignment agreements with terms of one year or less. The financial institutions retain ownership of the precious metals and charge us fees based on the amounts we consign. These fees were $0.2 million for the three months ended March 31, ~~2016~~2017 and ~~2015.~~2016. We had on-hand precious metals owned by participants in our precious metals consignment program of ~~$23.5~~$31.9 million at March 31, ~~2016,~~2017, and ~~$20.5~~$28.7 million at December 31, ~~2015,~~2016, measured at fair value based on market prices for identical assets and net of credits.

Property, plant and equipment is reported net of accumulated depreciation of ~~$435.1~~$452.2 million at March 31, ~~2016,~~2017, and ~~$421.3~~$439.4 million at December 31, ~~2015.~~2016. Unpaid capital expenditure liabilities, which are non-cash investing activities, were $2.5 million at March 31, 2017, and $3.5 million at March 31, ~~2016, and $4.0~~2016.

We recorded a $3.9 million atgain on sale of a closed site in Australia which was recorded in Miscellaneous (income), net in our condensed consolidated statements of operations for the three months ended March 31, ~~2015.~~ 2016.

As discussed in Note 3, ~~- Discontinued Operations, during the second quarter of 2014,~~ our Europe-based Polymer Additives assets ~~were~~had been classified as held-for-sale under ASC Topic 360, Property, Plant and ~~Equipment.~~Equipment until the ultimate sale of the business in August 2016. As such, at each historical reporting date, these assets ~~are~~were tested for impairment comparing the fair value of the assets, less costs to sell, to the carrying value. The fair value was determined using both the market approach and income approach, utilizing Level 3 measurements within the fair value hierarchy, which indicated the fair value, less costs to sell, was less than the carrying ~~value. As a result~~value during the first quarter of ~~the current quarter analysis, the assets had a carrying value that exceeded fair value,~~2016, resulting in an impairment charge of $24.1 million, ~~during~~representing the ~~three months ended March 31, 2016.~~remaining carrying value of long-lived assets at that reporting date. The impairment charge of $24.1 million is included in Loss from discontinued operations, net of income taxes in our condensed consolidated statements of operations for the three months ended March 31, 2016.

The following table presents information about the Company's impairment charges on assets that were measured on a fair value basis for the three months ended March 31, 2016, and for the year ended December 31, 2015. The table also indicates the fair value hierarchy of the valuation techniques used by the Company to determine the fair value:

~~The inputs to the valuation techniques used to measure fair value are classified into the following categories:~~

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

~~Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.~~

Pigments,

Performance

Performance

Powders and

Colors and

Coatings

Oxides

Glass

Total

(Dollars in thousands)
December 31, 2015

Gross goodwill

$
88,753

$
48,794

$
53,391

$
190,938
Accumulated impairment losses

(45,269)

—

—

(45,269)

43,484

48,794

53,391

145,669
Acquisitions

—

—

4,328
(1)

4,328
Foreign currency adjustments

(715)

656

626

567
March 31, 2016

Gross goodwill

88,038

49,450

58,345

195,833
Accumulated impairment losses

(45,269)

—

—

(45,269)

$
42,769

$
49,450

$
58,345

$
150,564


					Performance
	Performance		Color		Colors and
	Coatings		Solutions		Glass			Total
	(Dollars in thousands)
Goodwill, net at December 31, 2016	$	28,090	$	40,421	$	79,785		$	148,296
Acquisitions		—		—		(854)	1		(854)
Foreign currency adjustments		279		211		271			761
Goodwill, net at March 31, 2017	$	28,369	$	40,632	$	79,202		$	148,203

~~(1) During the first quarter of 2016, the Company recorded goodwill related to the Ferer acquisition. Refer to Note 4 for additional details.~~

Goodwill is calculated as the excess of the purchase price over the estimated fair values of the assets acquired and the liabilities assumed in the acquisition.

Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value. As of March 31, ~~2016,~~2017, the Company is not aware of any events or circumstances that occurred which would require a goodwill impairment test.

(1) The carrying value of the term loan facility, maturing 2021, is net of unamortized debt issuance costs of $3.7 million.

(2) The carrying value of the term loan facility, maturing 2024, is net of unamortized debt issuance costs of $8.2 million.

~~On July 31,~~In 2014, the Company entered into a credit facility ~~(the “Credit Facility”) with~~that was amended on January 25, 2016, and August 29, 2016, resulting in a ~~group of lenders to refinance the majority of its then outstanding debt. The Credit Facility consisted of a $200~~$400 million secured revolving line of credit with a term of five years and a $300 million secured term loan facility with a term of seven ~~years. On January 25, 2016,~~years from the ~~Company amended~~original issuance date (the “Previous Credit Facility”) with a group of lenders that was replaced on February 14, 2017 by the Credit Facility ~~by entering~~(as defined below). For discussion of the Company’s Previous Credit Facility, refer to Note 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

In conjunction with the refinancing of the Previous Credit Facility, we recorded a charge of $3.9 million in connection with the write-off of unamortized issuance costs, which is recorded within Loss of extinguishment of debt in our condensed consolidated statement of operations for the three months ended March 31, 2017.

On February 14, 2017, the Company entered into ~~the Incremental Assumption Agreement~~a new credit facility (the ~~“Incremental Agreement”~~“Credit Facility”) with a group of lenders to ~~increase the~~refinance its then outstanding credit facility debt and to provide liquidity for ongoing working capital requirements and general corporate purposes.

The Credit Facility consists of a $400 million secured revolving line of credit ~~commitment~~with a term of five years, a $357.5 million secured term loan facility with a term of seven years and a €250 million secured euro term loan facility with a term of seven years. The term loans are payable in equal quarterly installments in an amount ~~from $200 million~~equal to ~~$300 million. The Company then used a portion~~0.25% of the ~~increase in the revolving line of credit to repay $50 million~~original principal amount of the term ~~loan facility. The Credit Facility was amended and a portion of the outstanding term~~ loans, ~~were repaid to increase the amount of total liquidity available under the Credit Facility and reduce the total cost of borrowings.~~

~~Principal payments on the term loan facility of $0.75 million quarterly, are payable commencing December 31, 2014,~~ with the remaining balance due on the maturity ~~date. At March 31, 2016,~~date thereof. In addition, the Company ~~had borrowed $245.5 million under the term loan facility, taking into account all prior quarterly payments and the $50 million prepayment that was made in January 2016, at~~is required, on an annual ~~rate~~basis, to make a prepayment of ~~4.0%. There~~term loans until they are ~~no additional borrowings available under~~fully paid and then to the ~~term loan facility.~~ revolving loans in an amount equal to a portion of the Company’s excess cash flow, as calculated pursuant to the Credit Facility.

Subject to the satisfaction of certain conditions, the Company can request ~~up to $100 million of~~ additional commitments under ~~the Credit Facility, though the lenders are not required to provide such additional commitments. In addition, up to $100 million of~~ the revolving line of credit ~~will be available to certain of the Company’s subsidiaries~~or term loans in the ~~form~~aggregate principal amount of ~~revolving~~up to $250 million to the extent that existing or new lenders agree to provide such additional commitments and/or term loans ~~denominated in Euros.~~and, certain additional debt subject to satisfaction of certain covenant levels.

Certain of the Company’s U.S. subsidiaries have guaranteed the Company’s obligations under the Credit Facility and such obligations are secured by (a) substantially all of the personal property of the Company and the U.S. subsidiary guarantors and (b) a pledge of 100% of the stock of ~~most~~certain of the Company’s U.S. subsidiaries and 65% of ~~most of~~ the stock of certain of the Company’s ~~first tier~~direct foreign subsidiaries.

Interest Rate – Term ~~Loan:~~Loans: The interest rates applicable to the U.S. term loans will be, at the Company’s option, equal to either a base rate or a ~~London Interbank Offered Rate (“LIBOR”)~~LIBOR rate plus, in both cases, an applicable margin. The interest rates applicable to the Euro term loans will be a Euro Interbank Offered Rate (“EURIBOR”) rate plus an applicable margin.

At March 31, 2017, the Company had borrowed $357.5 million under the secured term loan facility at an interest rate of 3.54% and €250 million under the secured euro term loan facility at an interest rate of 2.75%. At March 31, 2017, there were no additional borrowings available under the term loan facilities.

Interest Rate – Revolving Credit Line: The interest rates applicable to loans under the revolving credit line will be, at the Company’s option, equal to either a base rate or a LIBOR rate plus, in both cases, an applicable variable margin. The variable margin will be based on the ratio of (a) the Company’s total consolidated net debt outstanding at such time to (b) the Company’s consolidated EBITDA computed for the period of four consecutive fiscal quarters most recently ended.

At March 31, ~~2016, the Company had borrowed $247.6 million~~2017, there were no borrowings under the revolving credit facilities at an annual weighted average interest rate of 3.4%. The borrowing on the revolving credit facilities was used to fund the acquisitions, the share repurchase program, and for other general business use.line. After reductions for outstanding letters of credit secured by these facilities, we had ~~$48.0~~$395.6 million of additional borrowings available under the revolving credit facilities at March 31, ~~2016.~~2017.

The Credit Facility contains customary restrictive covenants including, but not limited to, limitations on use of loan proceeds, limitations on the Company’s ability to pay dividends and repurchase stock, limitations on acquisitions and dispositions, and limitations on certain types of investments. The Credit Facility also contains standard provisions relating to conditions of borrowing and customary events of default, including the non-payment of obligations by the Company and the bankruptcy of the Company.

Specific to the revolving credit facility, the Company is subject to a financial ~~covenants~~covenant regarding the Company’s ~~outstanding net indebtedness and interest coverage ratios.~~

maximum leverage ratio. If an event of default occurs, all amounts outstanding under the Credit Facility may be accelerated and become immediately due and payable. At March 31, ~~2016,~~2017, we were in compliance with the covenants of the Credit Facility.

We maintain other lines of credit to provide global flexibility for our short-term liquidity requirements. These facilities are uncommitted lines for our international operations and totaled ~~$7.9~~$33.1 million and ~~$8.0~~$7.3 million at March 31, ~~2016~~2017, and December 31, ~~2015,~~2016, respectively. The unused portions of these lines provided additional liquidity of ~~$6.6~~$32.0 million at March 31, ~~2016,~~2017, and ~~$7.3~~$6.7 million at December 31, ~~2015.~~2016.

The following financial instrument assets (liabilities) are presented at their respective carrying amount, fair value and classification within the fair value hierarchy:

(1) The carrying value of the term loan facility is net of unamortized debt issuance costs.

The fair values of cash and cash equivalents are based on the fair values of identical assets. The fair values of loans payable are based on the present value of expected future cash flows and approximate their carrying amounts due to the short periods to maturity. ~~The~~At March 31, 2017, the fair ~~values~~value of the term loan facility is based on market price information and is measured using the last available bid price of the instrument on a secondary market and at December 31, 2016, is based on the present value of expected future cash flows and interest rates that would be currently available to the Company for issuance of similar types of debt instruments with similar terms and remaining maturities adjusted for the Company's non-performance risk. The revolving credit facility and other long-term notes payable are based on the present value of expected future cash flows and interest rates that would be currently available to the Company for issuance of similar types of debt instruments with similar terms and remaining maturities adjusted for the Company's non-performance risk.

Foreign currency forward contracts. We manage foreign currency risks principally by entering into forward contracts to mitigate the impact of currency fluctuations on transactions. These forward contracts are not formally designated as hedges. Gains and losses on these foreign currency forward contracts are netted with gains and losses from currency fluctuations on transactions arising from international trade and reported as Foreign currency (gains) losses, net in the condensed consolidated statements of operations. We recognized net foreign currency ~~losses~~gains of ~~$1.6 million and $1.7~~$0.3 million in the three months ended March 31, ~~2016,~~2017, and net foreign currency losses of $1.6 million in the three months ended March 31, ~~2015, respectively,~~2016, which is primarily comprised of the foreign exchange impact on transactions in countries where it is not economically feasible for us to enter into hedging arrangements and hedging inefficiencies, such as timing of transactions. We recognized net gains of $0.2 million in the three months ended March 31, 2017, and net losses of $10.6 million in the three months ended March 31, 2016, ~~and net gains of $1.6 million in the three months ended March 31, 2015,~~ arising from the change in fair value of our financial instruments, which offset the related net gains and losses on international trade transactions. The fair values of these contracts are based on market prices for comparable contracts. The notional amount of foreign currency forward contracts was ~~$332.7~~$188.2 million at March 31, ~~2016,~~2017, and ~~$338.4~~$338.2 million at December 31, ~~2015.~~2016.

The following table presents the effect on our condensed consolidated statements of operations for the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, respectively, of our foreign currency forward contracts:

The following table presents the fair values on our condensed consolidated balance sheets of foreign currency forward contracts:

~~During the first quarter of 2016, income~~Income tax expense for the three months ended March 31, 2017, was $7.1 million, or 24.4% of pre-tax income, compared with $8.0 million, or 28.9% of pre-tax ~~income. In~~income in the ~~first quarter of 2015, we recorded tax expense of $2.5 million, or 15.9% of pre-tax income.~~prior-year same period. The tax expense in the first quarter of ~~2016~~2017 and ~~2015,~~2016, as a percentage of pre-tax income, is lower than the U.S. federal statutory income tax rate of 35% primarily as a result of foreign statutory rate differences. The first quarter 2015 tax expense was further lowered as a result of a release of a portion of the net valuation allowance that was recorded against the net deferred tax assets as the consequence of accounting for an acquisition in that period.

We have recorded environmental liabilities of ~~$7.6~~$7.3 million at March 31, ~~2016,~~2017, and ~~$7.4~~$7.2 million at December 31, ~~2015,~~2016, for costs associated with the remediation of certain of our properties that have been contaminated. The ~~balance~~liability at March 31, ~~2016,~~2017, and December 31, ~~2015,~~2016, was primarily ~~comprised of liabilities~~ related to a non-operating facility in Brazil, and for retained environmental obligations related to a site in the United States that was part of the sale of our North American and Asian metal powders product lines in 2013. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities. The ultimate liability could be affected by numerous uncertainties, including the extent of contamination found, the required period of monitoring and the ultimate cost of required remediation.

In ~~the fourth quarter of~~ 2013, the Supreme Court in Argentina ruled unfavorably related to certain export taxes associated with a divested operation. As a result of this ruling, we ~~have~~ recorded ~~a $8.0 million and a $7.8~~an $8.7 million liability December 31, 2016. During the first quarter of 2017, the Company participated in a newly available tax regime, resulting in the reduction of interest on these outstanding tax liabilities of $4.5 million. The liability recorded at March 31, ~~2016,~~2017, is $4.6 million, and ~~December 31, 2015, respectively.~~will be paid down over a five-year term.

There are various lawsuits and claims pending against the Company and its consolidated subsidiaries. We do not currently expect the resolution of these lawsuits and claims to materially affect the consolidated financial position, results of operations, or cash flows of the Company.

Net periodic benefit (credit) cost of our U.S. pension plans (including our unfunded nonqualified plans), non-U.S. pension plans, and postretirement health care and life insurance benefit plans for the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, respectively, follow:

Net periodic benefit (credit) for our U.S. pension plans for the three months ended March 31, 2016, decreased from the effect of a lower expected return on plan assets. Net periodic benefit cost for our non-U.S. pension plans and our postretirement health care and life insurance benefit plans did not change significantly compared with the prior-year same period.

In 2015, the Company initiated and executed on a buyout of terminated vested participants in our U.S defined benefit pension plan. In October 2015, the buyout was funded and reduced plan assets and liability by approximately $71 million.

On May 22, 2013, our shareholders approved the 2013 Omnibus Incentive Plan (the “Plan”), which was adopted by the Board of Directors on February 22, 2013, subject to shareholder approval. The Plan’s purpose is to promote the Company’s long-term financial interests and growth by attracting, retaining and motivating high quality key employees and directors, motivating such employees and directors to achieve the Company’s short- and long-range performance goals and objectives and thereby align their interests with those of the Company’s shareholders. The Plan reserves 4,400,000 shares of common stock to be issued for grants of several different types of long-term incentives including stock options, stock appreciation rights, restricted shares, performance shares, other common ~~stock based~~stock-based awards, and dividend equivalent rights.

In the first quarter of ~~2016,~~2017, our Board of Directors granted ~~0.3~~0.2 million stock options, ~~0.3~~0.2 million performance share units and 0.2 million ~~deferred~~restricted stock units under the Plan.

We estimate the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. The following table details the weighted-average grant-date fair values and the assumptions used for estimating the fair values of stock option grants made during the three months ended March 31, ~~2016:~~2017:

The weighted average grant date fair value of our performance share units granted in the three months ended March 31, ~~2016,~~2017, was ~~$10.02.~~$14.89. We measure the fair value of performance share units based on the closing market price of our common stock on the date of the grant. These shares are evaluated each reporting period for likelihood of achieving the performance criteria.

We measure the fair value of ~~deferred~~restricted stock units based on the closing market price of our common stock on the date of the ~~grant which is when the awards immediately vest.~~grant. The restricted stock units vest over three years. The weighted-average grant date fair value per unit for grants made during the three months ended March 31, ~~2016,~~2017, was ~~$9.66.~~$14.27.

We recognized stock-based compensation expense of $2.7 million for the three months ended March 31, 2017, and $1.6 million for the three months ended March 31, ~~2016, and $2.1 million for the three months ended March 31, 2015.~~2016. At March 31, ~~2016,~~2017, unearned compensation cost related to the unvested portion of all stock-based compensation awards was approximately ~~$11.4~~$10.4 million and is expected to be recognized over the remaining vesting period of the respective grants, through the first quarter of ~~2019.~~2020.

In 2013, we initiated a Global Cost Reduction Program that was designed to address 3 key areas of the company - (1) business realignment, (2) operational efficiency and (3) corporate and back office functions. Business realignment was targeted at right-sizing our commercial management organizations globally. The operational efficiency component of the program was designed to improve the efficiency of our plant operations and supply chain. The corporate and back office initiative is principally comprised of work that we are doing with our strategic partners in the areas of finance and accounting and information technology outsourcing, and procurement. The restructuring charges for the three months ended March 31, 2016, primarily consists of implementing this strategy for our recently acquired acquisitions. The cumulative charges incurred to date associated with these programs are $50.5 million. Total costs related to the program expected to be incurred, as of March 31, 2016, are approximately $50.5 million. Total restructuring and impairment charges were ~~$0.9~~approximately $3.0 million and ~~$0.4~~$0.9 million for the three months ended March 31, ~~2016,~~2017, and March 31, ~~2015,~~2016, respectively.

The activities and accruals summarized below are primarily related to costs associated with integration of our ~~restructuring and cost reduction programs are summarized below:~~recent acquisitions:

We expect to make cash payments to settle the remaining liability for employee ~~termination~~severance benefits and other costs primarily over the next twelve months where applicable, except where legal or contractual ~~restrictions prevent us from doing so.~~obligations would require it to extend beyond that period.

Details of the calculation of basic and diluted earnings per share are shown below:

The number of anti-dilutive or unearned shares was 2.1 million for the three months ended March 31, 2017, and 2.8 million for the three months ended March 31, ~~2016, and 1.5 million for the three months ended March 31, 2015.~~2016. These shares were excluded from the calculation of diluted earnings per share due to their anti-dilutive impact.

~~On July 29, 2015, the~~The Company’s Board of Directors approved a share repurchase ~~program,~~programs, under which the Company ~~was~~is authorized to repurchase up to ~~$25~~$100 million of the Company’s outstanding shares of Common Stock on the open market, including through a Rule 10b5-1 plan, or in privately negotiated transactions. ~~On October 16, 2015, and February 18, 2016, the Company’s Board~~

The timing and amount of shares to be repurchased will be determined by the Company, based on evaluation of market and business conditions, share price, and other factors. The share repurchase ~~program does~~programs do not obligate the Company to repurchase any dollar amount or number of common shares, and may be suspended or discontinued at any time.

~~The~~For the three months ended March 31, 2016, the Company repurchased 1,175,437 shares of common stock ~~in the three months ended March 31, 2016,~~ at an average price of $9.72 per share for a total cost of $11.4 million. As of March 31, 2017, $50.0 million may still be purchased under the programs.

Changes in accumulated other comprehensive income (loss) by component, net of tax, were as follows:

Three Months Ended March 31,

Postretirement

Benefit Liability

Translation

Other

Adjustments

Adjustments

Adjustments

Total

(Dollars in thousands)
Balances at December 31, 2014

$
888

$
(22,623)

$
(70)

$
(21,805)
Other comprehensive income (loss) before reclassifications

—

(36,658)

—

(36,658)
Amounts reclassified from accumulated other comprehensive income (loss)

16

—

—

16
Net current period other comprehensive income (loss)

16

(36,658)

—

(36,642)
Balances at March 31, 2015

$
904

$
(59,281)

$
(70)

$
(58,447)

Balances at December 31, 2015

811

(62,059)

(70)

(61,318)
Other comprehensive income (loss) before reclassifications

—

(1,710)

—

(1,710)
Amounts reclassified from accumulated other comprehensive income (loss)

268

—

—

268
Net current period other comprehensive income (loss)

268

(1,710)

—

(1,442)
Balances at March 31, 2016

$
1,079

$
(63,769)

$
(70)

$
(62,760)



	Three Months Ended March 31,
		Postretirement
		Benefit Liability		Translation		Other
		Adjustments		Adjustments		Adjustments		Total
		(Dollars in thousands)
Balance at December 31, 2015		$	811	$	(62,059)	$	(70)	$	(61,318)
Other comprehensive income (loss) before reclassifications			—		(1,710)		—		(1,710)
Reclassification to earnings:
Postretirement benefit liabilities income			268		—		—		268
Net current period other comprehensive income (loss)			268		(1,710)		—		(1,442)
Balance at March 31, 2016		$	1,079	$	(63,769)	$	(70)	$	(62,760)

Balance at December 31, 2016			1,141		(107,714)		(70)		(106,643)
Other comprehensive income (loss) before reclassifications			—		7,171		—		7,171
Reclassification to earnings:
Postretirement benefit liabilities (loss)			(4)		—		—		(4)
Other			—		—		—		—
Net current period other comprehensive (loss) income			(4)		7,171		—		7,167
Balance at March 31, 2017		$	1,137	$	(100,543)	$	(70)	$	(99,476)

In the first quarter of 2017, the Company’s Pigments, Powders and Oxides segment was renamed Color Solutions.

Net sales to external customers by segment are presented in the table below. Sales between segments were not material.

Each segment’s gross profit and reconciliations to income before income taxes are presented in the table below:

On April 24, 2017, the Company acquired 100% of the equity interests of S.P.C. Group s.r.l., a company duly organized under the laws of Italy, and 100% of the equity interests of Smalti per Ceramiche, s.r.l. (“SPC”), a company duly organized under the laws of Italy, for €19.8 million, subject to customary working capital adjustments. SPC is a high-end tile coatings manufacturer based in Italy that focuses on fast-growing specialty products. SPC products, strong technology, design capabilities, and customer-centric business model are complementary to our Performance Coatings segment, and position us for continued growth in the high-end tile markets.

The operating results will be included in the Company’s condensed consolidated financial statements commencing April 24, 2017, the date of the acquisition.

Due to the timing of the acquisition, the Company’s initial purchase price accounting was incomplete at the time these financial statements were issued. As such, the Company cannot disclose the allocation of the acquisition price to acquired assets and liabilities and the related disclosures at this time.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~During~~Net sales for the three months ended March 31, ~~2016, net sales~~2017, increased by ~~$14.7~~$43.1 million, or ~~5.6%~~15.5%, compared with the prior-year same period. The increase in net sales was ~~primarily~~ driven by higher sales ~~from Nubiola~~in Color Solutions (formerly Pigments, Powders and Oxides) and Performance Colors and Glass of ~~$33.4~~$29.3 million ~~which was acquired~~and $15.3 million, respectively, partially offset by lower sales in ~~the third quarter~~Performance Coatings of ~~2015.~~$1.6 million. During the three months ended March 31, ~~2016,~~2017, gross profit increased ~~$13.6~~$14.6 million, or ~~19.2%~~17.3%, compared with the prior-year same period; ~~and,~~ as a percentage of net sales, it increased approximately ~~350~~40 basis points to ~~30.4%~~30.8%. The increase ~~was primarily driven by increased~~in gross profit ~~from Nubiola~~was attributable to increases across all of ~~$10.5 million.~~our segments, with increases in Color Solutions, Performance Colors and Glass and Performance Coatings of $7.9 million, $5.6 million and $1.4 million, respectively.

For the three months ended March 31, ~~2016,~~2017, selling, general and administrative (“SG&A”) expenses increased ~~$3.2~~$6.3 million, or ~~6.5%~~12.0%, compared with the prior-year same period. The increase was primarily driven by ~~increased SG&A~~$4.8 million of expenses ~~from Nubiola of $3.5 million.~~related to acquisitions completed within the last year.

For the three months ended March 31, ~~2016,~~2017, net ~~loss~~income was ~~$9.7~~$22.1 million, compared with net loss of $9.7 million for the prior-year same period, and net income ~~of $9.0~~attributable to common shareholders was $21.9 million, ~~in 2015, and~~compared with net loss attributable to common shareholders ~~was~~of $10.0 million ~~compared with net income attributable to common shareholders of $11.0 million in 2015.~~for the prior-year same period. Income from continuing operations was $22.1 million for the three months ended March 31, 2017, compared with income from continuing operations of $19.8 million for the three months ended March 31, ~~2016, compared with income from continuing operations of $13.0 million for the three months ended March 31, 2015.~~2016. Our total gross profit for the first quarter of ~~2016~~2017 was ~~$84.2~~$98.8 million, compared with ~~$70.6~~$84.2 million for the three months ended March 31, ~~2015.~~2016.

~~During the first quarter of 2016, the Company delivered strong performance, despite challenging economic conditions in Latin America.~~ For ~~the quarter, sales increased by 6% due to recent acquisitions. In addition,~~2017, we expect that gross profit, as a percentage of net sales, increased to 30.4% from 26.9%. Partially offsetting the higher gross profit were increased SG&A costs, primarily driven by the acquisitions. Our effective tax rate for the first quarter of 2016 was 28.9%, compared to 15.9% in the first quarter of 2015, driven by timing of the implementation of certain tax planning actions in 2016, and certain discrete items favorably impacting the first quarter of 2015. Wemargin will continue to ~~expect the full year 2016 tax rate to be in the range of 27% - 28%.~~

~~For the remainder of 2016, we anticipate benefitting from~~grow at a measured pace based on strategic actions taken to improve growth in our core businesses and ~~will continue to benefit~~contriubtions from recent acquisitions. We expect tile sales, particularly in Asia, the Middle East and Northern Africa, and Southern Europe will continue to stabilize and rebound, providing growth, in addition to recent acquisitions. Certain economies where we, or our customers, participate, however,Raw material costs are expected to ~~remain weak, including Argentina~~increase in 2017, however we expect to offset these cost increases through pricing actions, product reformulations and ~~Brazil. The net impact is expected to result in increased sales growth over the remainder of the year, before consideration of~~optimization actions. In addition, foreign currency ~~impacts. Gross profit as a percentage of net sales is expected~~exchange rates continue to be ~~greater than 2015 levels due to strong volumes~~volatile, and ~~a richer product mix,~~we anticipate that changes in ~~part due to increased sales of tile coatings.~~rates will adversely impact reported results.

We remain focused on the integration of ~~Vetriceramici, Nubiola, Al Salomi and Ferer,~~our recent acquisitions and continue to work toward achieving the identified synergies. We will continue to focus on opportunities to optimize our cost structure and make our business processes and systems more efficient, and to leverage tax planning opportunities. We continue to expect cash flow from operating activities ~~will~~to be positive for the year, providing additional ~~liquidity to fund acquisitive growth.~~

Further, we are continuing efforts to divest our Europe-based Polymer Additives assets, including the Antwerp, Belgium dibenzoates manufacturing assets, and related Polymer Additives European headquarters and lab facilities. The assets associated with this facility are currently classified as held-for-sale on our condensed consolidated balance sheets.liquidity.

Factors that could adversely affect our future performance include those described under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~

For the three months ended March 31, ~~2016,~~2017, income from continuing operations was ~~$19.8~~$22.1 million, compared with ~~$13.0~~$19.8 million income from continuing operations for the three months ended March 31, ~~2015.~~2016. Net ~~loss~~income was ~~$9.7~~$22.1 million, compared with net ~~income~~loss of ~~$9.0~~$9.7 million for the three months ended March 31, ~~2015.~~2016. For the three months ended March 31, ~~2016,~~2017, net income attributable to common shareholders was $21.9 million, or earnings per share of $0.26, compared with net loss attributable to common shareholders ~~was~~of $10.0 million, or loss ~~per share of $0.12, compared with net income attributable to common shareholders of $11.0 million, or earnings~~ per share of $0.12, for the three months ended March 31, ~~2015.~~2016.

Net sales increased by ~~$14.7~~$43.1 million, or ~~5.6%~~15.5%, in the three months ended March 31, ~~2016,~~2017, compared with the prior-year same period, driven by higher sales in ~~Pigments, Powders~~Color Solutions and ~~Oxides~~Performance Colors and Glass of ~~$34.6~~$29.3 million and $15.3 million, respectively, partially offset by lower sales in Performance ~~Colors and Glass and Performance~~ Coatings of ~~$11.3 million and $8.7 million, respectively.~~$1.6 million. The increase in net sales was ~~primarily~~ driven by the sales from ~~Nubiola~~Cappelle of ~~$33.4~~$19.0 million, ~~which was acquired in~~ESL of $10.8 million, and Pinturas of $2.0 million, all acquisitions completed after the ~~third~~first quarter of ~~2015.~~ 2016, as well as strong growth in pigment products and surface technology products of $5.6 million and $3.7 million, respectively.

Gross profit increased ~~$13.6~~$14.6 million, or ~~19.2%~~17.3%, in the three months ended March 31, ~~2016,~~2017, compared towith the prior-year same period, and as a percentage of net sales, it increased ~~350~~40 basis points to ~~30.4%~~30.8%. The increase in gross profit was ~~driven by Pigments, Powders~~attributable to increases across all of our segments, with increases in Color Solutions, Performance Colors and ~~Oxides~~Glass and Performance Coatings of ~~$12.4~~$7.9 million, $5.6 million and ~~$3.2~~$1.4 million, ~~respectively, partially offset by a decrease~~respectively. The increase in ~~Performance Colors and Glass of $2.7 million. The increase~~gross profit was primarily due to lower manufacturing costs of $9.0 million, increased gross profit from acquisitions of $7.5 million and higher sales volumes and mix of ~~$9.0~~$5.7 million, ~~lower~~partially offset by higher raw material costs of ~~$6.6~~$2.8 million, ~~and lower manufacturing costs of $5.6 million, partially offset by~~ unfavorable product pricing of ~~$5.2~~$2.4 million and unfavorable foreign currency impacts of ~~$3.1~~$2.2 million.

The increase in net sales of ~~$14.7~~$43.1 million, compared with the prior-year same period, was driven by ~~increases~~an increase in sales from all regions. The increase in sales from Europe ~~Asia Pacific~~was primarily attributable to higher sales in Color Solutions and ~~the United States~~Performance Colors and Glass of ~~$12.9 million, $4.0~~$17.6 million and ~~$1.4~~$5.5 million, respectively, partially offset by a decrease in ~~Latin America~~sales in Performance Coatings of ~~$3.5~~$2.9 million. ~~The increases in Europe and Asia Pacific were primarily attributable to Nubiola sales~~

The increase in sales from the United States was attributable to ~~Nubiola~~higher sales ~~of $8.8 million, partially offset by lower sales~~ in Color Solutions and Performance Colors and Glass of ~~$7.0~~$10.1 million and ~~Performance Coatings of $1.2~~$8.6 million. The ~~decrease~~increase in sales from Latin America was ~~due~~attributable to ~~the sale of our interest~~higher sales across all segments. The increase in ~~an operating affiliate~~sales from Asia Pacific was primarily attributable to increased sales in ~~Venezuela (“Venezuela”) in the fourth quarter of 2015, which contributed $4.5 million of the decrease.~~Color Solutions.

The following table presents our sales on the basis of where sold products were shipped.

The following table includes SG&A components with significant changes between ~~2016~~2017 and ~~2015:~~2016

SG&A expenses were ~~$3.2~~$6.3 million higher in the three months ended March 31, ~~2016,~~2017, compared with the prior-year same period. Included in SG&A expenses were ~~$3.5 million and $0.2~~$4.8 million of expenses ~~attributable~~related to ~~Nubiola and Al Salomi, which were~~acquisitions acquired inwithin the ~~third quarter of 2015 and the fourth quarter of 2015, respectively.~~last year. The increase in ~~pension and other postretirement benefits~~stock-based compensation expense of ~~$1.7~~$1.1 million is a result of the ~~effect of a lower expected return on plan assets. These increases were offset by lower stock-based compensation expense of $0.5 million and lower~~Company’s performance relative to targets for certain awards compared with the prior-year same period. The increase in business development expenses is a result of ~~$0.5 million.~~higher professional fees.

The following table presents SG&A expenses attributable to sales, research and development and operations costs as ~~Strategic~~strategic services and other SG&A costs as ~~Functional~~functional services.

SG&A expenses were $3.2 million higher in the three months ended March, 31, 2016, compared with the prior-year same period. The increase in strategic and functional services was driven by increased expenses from Nubiola

Restructuring and impairment charges increased in the first quarter of ~~2016~~2017 compared with the prior-year same period. The increase was primarily due to ~~restructuring activities~~costs associated with a restructuring plan in Italy, which includes $1.2 million of asset impairment associated with assets that have been taken out of service, as well as actions taken at our recent ~~acquisitions.~~acquisitions associated with achieving our targeted synergies.

Interest expense increased in the first quarter of ~~2016~~2017 compared with the prior-year same period. As discussed in Note 8, the Company refinanced its debt in the first quarter of 2017, which resulted in a lower interest rate. The increase in interest expense was due to an increase in the average long-term debt balance ~~for~~during the three months ended March 31, ~~2016,~~2017, compared with the prior-year same period.

During the first quarter of ~~2016,~~2017, income tax expense was ~~$8.0~~$7.1 million, or ~~28.9%~~24.4% of pre-tax income. In the first quarter of ~~2015,~~2016, we recorded tax expense of ~~$2.5~~$8.0 million, or ~~15.9%~~28.9% of pre-tax income. The tax expense in the first quarter of ~~2016~~2017 and ~~2015,~~2016, as a percentage of pre-tax income, is lower than the U.S. federal statutory income tax rate of 35%, primarily as a result of foreign statutory rate differences. The first quarter 2015 tax expense was further lowered as a result of a release of a portion of the net valuation allowance that was recorded against the net deferred tax assets as the consequence of accounting for an acquisition in that period.



	Three Months Ended											Change due to							Three Months Ended											Change due to
	March 31,												Volume /						March 31,												Volume /
	2016			2015			$ Change		% Change		Price		Mix		Currency		Other		2017			2016			$ Change		% Change		Price		Mix		Currency		Other
	(Dollars in thousands)																		(Dollars in thousands)
Segment net sales	$	128,124		$	136,786		$	(8,662)	(6.3)	%	$	(6,465)	$	8,745	$	(10,942)	$	—	$	126,565		$	128,124		$	(1,559)	(1.2)	%	$	(3,591)	$	7,420	$	(5,388)	$	—
Segment gross profit		32,115			28,875			3,240	11.2	%		(6,465)		4,945		(2,111)		6,871		33,489			32,115			1,374	4.3	%		(3,591)		2,623		(1,467)		3,809
Gross profit as a % of segment net sales		25.1	%		21.1	%														26.5	%		25.1	%

Net sales ~~declined~~decreased in Performance Coatings compared with the prior-year same period, primarily driven by a decrease in sales of ~~$10.4~~$1.6 million ~~in frits and glazes, $3.3 million in porcelain enamel and $1.4 million in other tile product lines, partially mitigated by an increase~~ of ~~$0.8 million in~~ color ~~products and $5.6 million in sales from Al Salomi, which was acquired in the fourth quarter of 2015.~~products. The decrease in net sales was driven by unfavorable foreign currency impacts of ~~$10.9~~$5.4 million and lower product pricing of ~~$6.5~~$3.6 million, partially mitigated by increased sales volume and favorable mix of ~~$8.7~~$7.4 million. Gross profit increased ~~$3.2~~$1.4 million from the prior-year same period, primarily driven by lower manufacturing costs of $5.0 million and higher sales volumes and favorable mix of ~~$5.0 million, and lower raw materials of $1.8~~$2.6 million, partially ~~mitigated~~offset by unfavorable product pricing impacts of ~~$6.5~~$3.6 million, ~~and~~ unfavorable foreign currency impacts of ~~$2.1~~$1.5 million and higher raw material costs of $1.2 million.

The net sales decrease of ~~$8.7~~$1.6 million was driven by ~~declines~~decreases in ~~Latin America, Asia Pacific and~~sales from Europe, the United States and Asia Pacific, partially mitigated by an increase from Latin America. The decrease in ~~Europe.~~sales from Europe was primarily attributable to a decrease in sales of digital inks and colors of $1.6 million and $1.3 million, respectively. The decrease in sales from the United States was fully attributable to lower sales of porcelain enamel and the decrease from Asia Pacific was driven by lower sales of frits and glazes. The sales ~~decline in~~increase from Latin America was primarily driven by ~~lower~~higher sales ~~from Venezuela~~ of ~~$4.5~~digital inks of $1.1 million ~~which was sold in the fourth quarter~~and higher sales of ~~2015, and lower sales in~~ frits and glazes of ~~$6.9~~$0.8 million. ~~The~~

Net sales ~~decline in Asia Pacific and~~increased compared with the ~~United States was~~prior-year same period, primarily driven by ~~lower~~$10.8 million of sales attributable to ESL, $2.0 million of sales attributable to Pinturas, both acquisitions completed in ~~porcelain enamel~~2016 after the first quarter, and $2.4 million from higher sales of ~~$1.6~~electronics products (excluding ESL). Net sales were impacted by favorable volume and mix of $3.5 million, ~~and $1.2 million, respectively. The~~an increase in sales ~~in Europe was primary attributable~~from acquisitions of $12.8 million and higher product pricing of $0.6 million, partially offset by unfavorable foreign currency impacts of $1.6 million. Gross profit increased from the prior-year same period, primarily due to ~~$5.6~~gross profit from acquisitions of $3.8 million, infavorable manufacturing costs of $1.1 million, higher sales ~~from Al Salomi, which was acquired in the fourth quarter~~volumes and mix of ~~2015.~~ $1.2 million and higher product pricing of $0.6 million, partially offset by unfavorable raw material costs of $0.6 million and unfavorable foreign currency impacts of $0.6 million.

Net sales decreased compared with the prior-year same period, primarily driven by lower sales of our electronics, decoration and industrial products of $5.9 million, $4.4 million and $1.7 million, respectively. Net sales were impacted by unfavorable volume and mix of $9.5 million and unfavorable foreign currency impacts of $2.8 million, partially mitigated by higher product pricing of $0.9 million. Gross profit decreased from the prior-year same period, primarily due to lower sales volumes and mix of $6.5 million and unfavorable foreign currency impacts of $0.9 million, partially mitigated by lower raw material costs of $3.6 million, higher product pricing of $0.9 million and lower manufacturing costs of $0.2 million.

The net sales ~~decline~~increase of ~~$11.3~~$15.3 million was driven by ~~lower~~higher sales from all regions. The increase in sales from the United States ~~Europe, and Latin America, partially mitigated by increased sales in Asia Pacific. The decrease in sales in the United States and Europe~~ was attributable to ~~lower sales across all product lines, and the decline~~an increase in sales ~~in Latin America was primarily due to lower sales~~ of ~~decoration~~electronics products of ~~$0.9~~$8.9 million. The increase in sales from Europe was primarily attributable to $3.8 million and $2.0 million in sales from ESL and Pinturas, respectively. The increase from Asia Pacific was primarily due to higher sales of ~~automotive~~electronics products of $0.6 million and the increase from Latin America was attributable to an increase in sales of decoration products of ~~$1.0 million and $0.3 million, respectively, partially mitigated by lower sales in electronics and industrial products of $0.3 million and $0.2 million, respectively.~~$0.9 million.



	Three Months Ended											Change due to							Three Months Ended											Change due to
	March 31,												Volume /						March 31,												Volume /
	2016			2015			$ Change		% Change		Price		Mix		Currency		Other		2017			2016			$ Change		% Change		Price		Mix		Currency		Acquisitions		Other
	(Dollars in thousands)																		(Dollars in thousands)
Segment net sales	$	61,157		$	26,522		$	34,635	130.6	%	$	389	$	34,593	$	(347)	$	—	$	90,472		$	61,157		$	29,315	47.9	%	$	603	$	9,423	$	(629)	$	19,918	$	—
Segment gross profit		20,286			7,854			12,432	158.3	%		389		10,621		(102)		1,524		28,182			20,286			7,896	38.9	%		603		1,906		(215)		3,714		1,888
Gross profit as a % of segment net sales		33.2	%		29.6	%														31.1	%		33.2	%

Net sales increased compared with the prior-year same period, primarily due to sales from Cappelle, and higher sales ~~from Nubiola~~ of ~~$33.4~~surface technology and pigment products of $19.0 million, ~~which was acquired in the third quarter of 2015.~~$3.7 million, and $5.6 million, respectively. Net sales were positively impacted by higher sales from acquisitions of $19.9 million, higher volumes and mix of ~~$34.6~~$9.4 million and ~~favorable~~higher product pricing of ~~$0.4~~$0.6 million, partially offset by unfavorable foreign currency impacts of ~~$0.3~~$0.6 million. Gross profit increased from the prior-year same period, primarily due to ~~higher~~gross profit from acquisitions of $3.7 million, lower manufacturing costs of $2.9 million, favorable sales volumes and mix of ~~$10.6~~$1.9 million ~~favorable~~and higher product pricing of $0.6 million, partially offset by unfavorable raw material costs of $1.0 million and unfavorable foreign currency impacts of $0.2 million.

The net sales increase of $29.3 million was driven by increased sales from all regions. The increased sales from Europe was primarily driven by sales from Cappelle of $15.9 million. The increase in sales from the United States was driven by sales from Cappelle of $3.1 million, surface technology products of $3.7 million and pigments of $2.4 million. The increase in sales from Asia Pacific was attributable to higher sales for all products.

~~costs of $1.2 million, lower manufacturing costs of $0.3 million and favorable product pricing of $0.4 million, partially offset by unfavorable foreign currency impacts of $0.1 million.~~

~~Net sales increased $34.7 million, primarily driven by increased sales from Nubiola of $33.4 million, which was acquired in the third quarter of 2015 and contributed sales in all regions.~~

Summary of Cash Flows for the three months ended March ~~2016~~2017 and ~~2015~~2016

~~Details~~The following table includes details of net cash provided by operating ~~activities were as follows:~~activities.



	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2016		2015		$ Change		2017		2016		$ Change
	(Dollars in thousands)						(Dollars in thousands)
Cash flows from operating activities:
Net (loss) income	$	(9,730)	$	9,015	$	(18,745)
(Gain) loss on sale of assets and business		(4,083)		294		(4,377)
Net income (loss)							$	22,121	$	(9,730)	$	31,851
Loss (gain) on sale of assets and business								419		(4,083)		4,502
Depreciation and amortization		10,672		7,814		2,858		11,375		10,672		703
Interest amortization		315		297		18		479		315		164
Restructuring and impairment		24,164		(807)		24,971		2,828		24,164		(21,336)
Devaluation of Venezuela		—		3,343		(3,343)
Loss on extinguishment of debt								3,905		—		3,905
Accounts receivable		(23,582)		(11,845)		(11,737)		(26,619)		(23,582)		(3,037)
Inventories		(7,706)		1,427		(9,133)		(17,114)		(7,706)		(9,408)
Accounts payable		5,555		921		4,634		8,188		5,555		2,633
Other current assets and liabilities, net		1,876		(23,626)		25,502		(3,265)		1,876		(5,141)
Other adjustments, net		(7,642)		2,898		(10,540)		(687)		(7,642)		6,955
Net cash (used in) operating activities	$	(10,161)	$	(10,269)	$	108
Net cash provided by (used in) operating activities							$	1,630	$	(10,161)	$	11,791

Cash flows from operating activities. Cash flows ~~from~~provided by operating activities increased $11.8 million in the first three months of ~~2016~~2017 compared with the prior-year same period. The increase was due to ~~a noncash impairment charge~~higher earnings after consideration of ~~$24.1 million associated with the Europe-based Polymer Additives assets that are classified as discontinued operations,~~non-cash items, partially offset by ~~a decrease in~~higher cash outflows for net income. Also, driving the increase were decreased payments associated with incentive compensation, income taxes and retirement benefits in the three months ended March 31, 2016 compared with the prior-year same period, offset by lower cash flow from working ~~capital.~~capital of $9.8 million.

Cash flows from investing activities. Cash flows used in investing activities decreased ~~$8.6~~$4.9 million in the first three months of ~~2016~~2017 compared with the prior-year same period. The decrease was primarily due to lower ~~capital expenditures~~cash outflows for business acquisitions of ~~$7.5~~$7.9 million, ~~and was~~partially offset by lower sales proceeds of $3.6 million, which primarily ~~driven by~~consisted of the ~~lower costs incurred for~~proceeds from a closed site in Australia during the ~~Antwerp, Belgium facility which was substantially completed in the fourth quarter of 2015.~~three months ended March 31, 2016.

Cash flows from financing activities. Cash flows provided by financing activities increased ~~$21.7~~$32.7 million in the first three months of ~~2016~~2017 compared with the prior-year same ~~period, primarily as a result~~period. As further discussed in Note 8, during the three months ended March 31, 2017, we paid off our Previous Credit Facility and entered into our Credit Facility, consisting of a $400 million secured revolving line of credit, a $357.5 million secured term loan facility and a €250 million secured euro term loan facility. This transaction resulted in additional borrowings in the first quarter of $42.1 million compared to the prior-year same period. Further, compared to the prior-year same period, net ~~borrowing increase~~repayments under loans payable was $7.5 million higher. Additionally, during the first quarter of ~~$33.8~~2017, we paid $12.7 million in debt issuance costs related to the Credit Facility entered into during the period, partially offset by ~~the purchase~~lower purchases of treasury stock during the first quarter of ~~$11.4 million.~~2017.

On ~~July 31, 2014,~~February 14, 2017, the Company entered into a new credit facility (the “Credit Facility”) with a group of lenders to refinance ~~the majority of~~ its then outstanding ~~debt.~~ credit facility debt and to provide liquidity for ongoing working capital requirements and general corporate purposes.

The Credit Facility ~~consisted~~consists of a ~~$200~~$400 million secured revolving line of credit with a term of five years, ~~and~~ a ~~$300~~$357.5 million secured term loan facility with a term of seven years and a €250 million secured euro term loan facility with a term of seven years. ~~On January 25, 2016, the Company amended the Credit Facility by entering into the Incremental Assumption Agreement (the “Incremental Agreement”)~~The term loans are payable in equal quarterly installments in an amount equal to ~~increase the revolving line of credit commitment amount from $200 million to $300 million. The Company then used a portion~~0.25% of the ~~increase in the revolving line of credit to repay $50 million~~original principal amount of the term ~~loan facility. The Credit Facility was amended and a portion of the outstanding term~~ loans, ~~were repaid to increase the amount of total liquidity available under the Credit Facility and reduce the total cost of borrowings.~~

At March 31, ~~2016, the Company had borrowed $247.6 million~~2017, there were no borrowings under the revolving credit facilities at a weighted average interest rate of 3.4%. The borrowing on the revolving credit facility was used to fund the acquisitions, the share repurchase program, and for other general business use.line. After reductions for outstanding letters of credit secured by these facilities, we had ~~$48.0~~$395.6 million of additional borrowings available under the revolving credit facilities at March 31, ~~2016.~~2017.

Specific to the revolving credit facility, the Company is subject to a financial ~~covenants~~covenant regarding the Company’s ~~outstanding net indebtedness and interest coverage ratios.~~

maximum leverage ratio. If an event of default occurs, all amounts outstanding under the Credit ~~Facility~~Agreement may be accelerated and become immediately due and payable. At March 31, ~~2016,~~2017, we were in compliance with the covenants of the Credit Facility.

Consignment and Customer Arrangements for Precious Metals. We use precious metals, primarily silver, in the production of some of our products. We obtain most precious metals from financial institutions under consignment ~~agreements (generally referred to as our precious metals consignment program).~~agreements. The financial institutions retain ownership of the precious metals and charge us fees based on the amounts we consign and the period of consignment. These fees were $0.2 million for the three months ended March 31, ~~2016~~2017 and ~~2015.~~2016. We had on hand precious metals owned by participants in our precious metals program of ~~$23.5~~$31.9 million at March 31, ~~2016,~~2017, and ~~$20.5~~$28.7 million at December 31, ~~2015,~~2016, measured at fair value based on market prices for identical assets and net of credits.

The consignment agreements under our precious metals program involve short-term commitments that typically mature within 30 to 90 days of each transaction and are typically renewed on an ongoing basis. As a result, the Company relies on the continued willingness of financial institutions to participate in these arrangements to maintain this source of liquidity. On occasion, we have been required to deliver cash collateral. While no deposits were outstanding at March 31, ~~2016,~~2017, or December 31, ~~2015,~~2016, we may be required to furnish cash collateral in the future based on the quantity and market value of the precious metals under consignment and the amount of collateral-free lines provided by the financial institutions. The amount of cash collateral required is subject to review by the financial institutions and can be changed at any time at their discretion, based in part on their assessment of our creditworthiness.

At March 31, ~~2016,~~2017, the Company and its subsidiaries had bank guarantees and standby letters of credit issued by financial institutions that totaled $~~6.1~~6.6 million. These agreements primarily relate to Ferro’s insurance programs, foreign energy purchase contracts and foreign tax payments.

We maintain other lines of credit to provide global flexibility for Ferro’s short-term liquidity requirements. These facilities are uncommitted lines for our international operations and totaled ~~$7.9~~$33.1 million and ~~$8.0~~$7.3 million at March 31, ~~2016~~2017, and December 31, ~~2015,~~2016, respectively. We had ~~$6.6~~$32.0 million and ~~$7.3~~$6.7 million of additional borrowings available under these lines at March 31, ~~2016~~2017, and December 31, ~~2015,~~2016, respectively.

Our primary sources of liquidity are available cash and cash equivalents, available lines of credit under the revolving credit facility, and cash flows from operating activities. As of March 31, ~~2016~~2017, we had ~~$55.9~~$92.8 million of cash and cash equivalents. ~~Substantially all of our cash and cash equivalents were held by foreign subsidiaries.~~ Cash generated in the U.S. is generally used to

pay down amounts outstanding under our revolving credit facility and for general corporate purposes, including acquisitions. If needed, we could repatriate the majority of cash held by foreign subsidiaries without the need to accrue and pay U.S. income taxes. We do not anticipate a liquidity need requiring such repatriation of these funds to the U.S.

Our liquidity requirements and uses primarily include debt service, purchase commitments, labor costs, working capital requirements, restructuring expenditures, acquisition costs, capital investments, precious metals cash collateral requirements, and postretirement obligations. We expect to meet these requirements in the long term through cash provided by operating activities and availability under existing credit facilities or other financing arrangements. Cash flows from operating activities are primarily driven

by earnings before ~~noncash~~non-cash charges and changes in working capital needs. We had additional borrowing capacity of ~~$54.6~~$427.6 million at March 31, ~~2016,~~2017, and ~~$32.9~~$112.0 million at December 31, ~~2015,~~2016, available under our various credit facilities, primarily our revolving credit facility.

Our revolving credit facility subjects us to a customary financial ~~covenants, including a~~covenant regarding the Company’s maximum leverage ~~ratio and an interest coverage~~ ratio. ~~These covenants~~This covenant under our credit facility ~~restrict~~restricts the amount of our borrowings, reducing our flexibility to fund ongoing operations and strategic initiatives.

~~The most critical of these ratios is the leverage ratio for the revolving credit facility.~~ As of March 31, ~~2016,~~2017, we were in compliance with our maximum leverage ratio covenant of ~~3.75x~~4.25x as our actual ratio was ~~3.23x,~~2.55x, providing ~~$21.9~~$86.4 million of EBITDA cushion on the leverage ratio, as defined within the Credit Facility. To the extent that economic conditions in key markets deteriorate or we are unable to meet our business projections and EBITDA falls below approximately $130 million for rolling four quarters, based on reasonably consistent net debt levels with those as of ~~December~~March 31, ~~2015,~~2017, we could become unable to maintain compliance with our leverage ratio covenant. In such case, our lenders could demand immediate payment of outstanding amounts and we would need to seek alternate financing sources to pay off such debts and to fund our ongoing operations. Such financing may not be available on favorable terms, if at all.

Difficulties experienced in global capital markets could affect the ability or willingness of counterparties to perform under our various lines of credit, forward contracts, and precious metals program. These counterparties are major, reputable, multinational institutions, all having investment-grade credit ~~ratings, except for one, which is not rated.~~ratings. Accordingly, we do not anticipate counterparty default. However, an interruption in access to external financing could adversely affect our business prospects and financial condition.

We assess on an ongoing basis our portfolio of businesses, as well as our financial and capital structure, to ensure that we have sufficient capital and liquidity to meet our strategic objectives. As part of this process, from time to time we evaluate the possible divestiture of businesses that are not critical to our core strategic objectives and, where appropriate, pursue the sale of such businesses and assets. We also evaluate and pursue acquisition opportunities that we believe will enhance our strategic position. Generally, we publicly announce divestiture and acquisition transactions only when we have ~~entered into definitive agreements relating to~~closed on those transactions.

There were no material changes to our critical accounting policies described in “Critical Accounting Policies” within Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Refer to Note 2 to the condensed consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for a discussion of accounting standards we recently adopted or will be required to adopt.

Certain statements contained here and in future filings with the SEC reflect the Company’s expectations with respect to future performance and constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to a variety of uncertainties, unknown risks and other factors concerning the Company’s operations and business environment, which are difficult to predict and are beyond the control of the Company. Factors that could adversely affect our future financial performance include those

described under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

3331

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our exposure to instruments that are sensitive to fluctuations in interest rates, foreign currency exchange rates, and costs of raw materials and energy.

Our exposure to interest rate risk arises from our debt portfolio. We manage this risk by controlling the mix of fixed versus variable-rate debt after considering the interest rate environment and expected future cash flows. Our objective is to limit variability in earnings, cash flows and overall borrowing costs caused by changes in interest rates, while preserving operating flexibility.

We operate internationally and enter into transactions denominated in foreign currencies. These transactions expose us to gains and losses arising from exchange rate movements between the dates foreign currencies are recorded and the dates they are settled. We manage this risk by entering into forward currency contracts that substantially offset these gains and losses.

The notional amounts, carrying amounts of assets (liabilities), and fair values associated with our exposure to these market risks and sensitivity analysis about potential gains (losses) resulting from hypothetical changes in market rates are presented ~~below:~~in the table below.



	March 31,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Variable-rate debt:
Carrying amount	$	488,792	$	461,717	$	615,594	$	551,085
Fair value		488,859		466,571		618,318		570,441
Change in annual interest expense from 1% change in interest rates		4,996		4,690		6,318		5,611
Fixed-rate debt:
Carrying amount		4,976		4,610		7,782		8,228
Fair value		4,280		3,956		6,918		7,315
Change in fair value from 1% increase in interest rates		NM		NM		NM		NM
Change in fair value from 1% decrease in interest rates		NM		NM		NM		NM
Foreign currency forward contracts:
Notional amount		332,700		338,418		188,234		338,186
Carrying amount and fair value		(4,492)		(1,207)		237		350
Change in fair value from 10% appreciation of U.S. dollar		22,283		19,814		2,469		15,589
Change in fair value from 10% depreciation of U.S. dollar		(27,242)		(24,217)		(3,018)		(19,054)

3533

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are various lawsuits and claims pending against the Company and its consolidated subsidiaries. We do not currently expect the resolution of such matters to materially affect the consolidated financial position, results of operations, or cash flows of the Company.

Item 1A. Risk Factors

There were no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our ability to pay common stock dividends is limited by certain covenants in our Credit Facility other than dividends payable solely in Capital Securities, as defined in the agreement.

The following table summarizes purchases of our common stock by the Company and affiliated purchasers during the three months ended March 31, ~~2016:~~2017:

Total Number of

Maximum Dollar

Shares Purchased

Amount that May

Total Number

as Part of Publicly

Yet Be Purchased

of Shares

Average Price

Announced Plans

Under the Plans

Purchased (1)

Paid per Share

or Programs

or Programs

(Dollars in thousands, except for per share amounts)
January 1, 2016 to January 31, 2016

1,118,463

$
9.86

1,118,463
$
518,230
February 1, 2016 to February 29, 2016

56,974

$
9.10

56,974
$
25,000,000
March 1, 2016 to March 31, 2016

—

$
—

—
$
25,000,000
Total

1,175,437

1,175,437

~~__________________________~~

	~~(1)~~		~~On July 29, 2015,~~

						Total Number of		Maximum Dollar
						Shares Purchased		Amount that May
		Total Number				as Part of Publicly		Yet Be Purchased
		of Shares		Average Price		Announced Plans		Under the ~~Company’s Board of Directors approved a stock repurchase program, authorizing the Company~~Plans
		Purchased		Paid per Share		or Programs		or Programs
		(Dollars in thousands, except for per share amounts)
January 1, 2017 to ~~repurchase up~~January 31, 2017		—		$	—	—	$	50,000,000
February 1, 2017 to $25 million of the Company’s outstanding shares of common stock on the open market, including through a Rule 10b5-1 plan, or in privately negotiated transactions. On October 16, 2015, the Company’s Board of Directors approved a follow-on share repurchase program for the repurchase of an additional $25 million of the Company’s outstanding shares of common stock on the open market, including through a Rule 10b5-1 plan, in privately negotiated transactions, or otherwise. On February 18, 2016, the Company’s Board of Directors approved an additional follow-on share repurchase program for the repurchase of an additional $25 million of the Company’s outstanding shares of common stock on the open market, including through a Rule 10b5-1 plan, in privately negotiated transactions, or otherwise.28, 2017		—		$	—	—	$	50,000,000
March 1, 2017 to March 31, 2017		—		$	—	—	$	50,000,000
Total		—				—

__________________________

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits listed in the attached Exhibit Index are the exhibits required by Item 601 of Regulation S-K.

3634

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SIGNATURES

Pursuant to the requirements of the Securities 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)

Date:	April ~~26, 2016~~25, 2017
		/s/ Peter T. Thomas
		Peter T. Thomas
		Chairman, President and Chief Executive Officer (Principal Executive Officer)

Date:	April ~~26, 2016~~25, 2017
		/s/ ~~Jeffrey L. Rutherford~~Benjamin J. Schlater
		~~Jeffrey L. Rutherford~~Benjamin J. Schlater
		Vice President and Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)

3735

Table of Contents

EXHIBIT INDEX

The following exhibits are filed with this report or are incorporated here by reference to a prior filing in accordance with Rule 12b-32 under the Securities and Exchange Act of 1934.

Exhibit:


2	Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1	Sale and Purchase Agreement, dated April 29, 2015, by and among Ferro Corporation, the sellers party thereto, Corporación Química Vhem, S.L. and Dibon USA, LLC. (incorporated by reference to Exhibit 2.1 to Ferro Corporation’s Current Report on Form 8-K, filed July 9, 2015)**
~~2.2~~	Addendum to Sale and Purchase Agreement, dated July 7, 2015, by and among Ferro Corporation, Ferro Spain Management Company, S.L.U., the sellers party thereto, Corporación Química Vhem, S.L. and Dibon USA, LLC. (incorporated by reference to Exhibit 2.2 to Ferro Corporation’s Current Report on Form 8-K, filed July 9, 2015)**
3	Articles of incorporation and by-laws:
3.1	Eleventh Amended Articles of Incorporation of Ferro Corporation (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Registration Statement on Form S‑3, filed March 5, 2008).
3.2	Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed December 29, 1994 (incorporated by reference to Exhibit 4.2 to Ferro Corporation’s Registration Statement on Form S‑3, filed March 5, 2008).
3.3	Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed on June 23, 1998 (incorporated by reference to Exhibit 4.3 to Ferro Corporation’s Registration Statement on Form S‑3, filed March 5, 2008).
3.4	Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed on October 14, 2011 (incorporated by reference to Exhibit 3.1 to Ferro Corporation’s Current Report on Form 8-K, filed October 17, 2011).
3.5	Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed on April 25, 2014 (incorporated by reference to Exhibit 3.5 to Ferro’s Quarterly Report on Form 10-Q, for the quarter ended June 30, 2014).
3.6	Ferro Corporation Amended and Restated Code of Regulations (incorporated by reference to Exhibit 3.1 to Ferro Corporation's current Report on Form 8-K filed ~~May 1, 2014.~~December 12, 2016.)
4	Instruments defining rights of security holders, including indentures:
4.1	Senior Indenture, dated as of March 5, 2008, by and between Ferro Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.5 to Ferro Corporation’s Registration Statement on Form S‑3, filed March 5, 2008).
4.2	First Supplemental Indenture, dated August 19, 2008, by and between Ferro Corporation and U.S. Bank National Association (with Form of 6.50% Convertible Senior Note due 2013) (incorporated by reference to Exhibit 4.2 to Ferro Corporation’s Current Report on Form 8‑K, filed August 19, 2008).
4.3	Form of Indenture, by and between Ferro Corporation and Wilmington Trust FSB (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Registration Statement on Form S‑3ASR, filed July 27, 2010).
4.4	First Supplemental Indenture, dated August 24, 2010, by and between Ferro Corporation and Wilmington Trust FSB (with Form of 7.875% Senior Notes due 2018) (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Current Report on Form 8‑K, filed August 24, 2010).
4.5	Second Supplemental Indenture, dated July 31, 2014, by and between Ferro Corporation and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.1 to Ferro Corporation’s current Report on Form 8-K, filed August 5, 2014).
	The Company agrees, upon request, to furnish to the U.S. Securities and Exchange Commission a copy of any instrument authorizing long-term debt that does not authorize debt in excess of 10% of the total assets of the Company and its subsidiaries on a consolidated basis.
10.1	Credit Agreement, dated as of February 14, 2017, among Ferro Corporation, the lenders party thereto, PNC Bank, National Association, as the administrative agent, collateral agent and a letter of credit issuer, Deutsche Bank AG New York Branch, as the syndication agent and as a letter of credit issuer, and the various financial institutions and other persons from time to time party thereto (incorporated by reference to Exhibit 10.1 to Ferro Corporation’s current Report on Form 8-K, filed February 17, 2017).
10.2	Second Incremental Assumption Agreement, dated ~~January 25,~~August 29, 2016, by and among Ferro Corporation, PNC Bank, National Association, as the administrative agent, the collateral agent and as an issuer, JPMorgan Chase Bank, N.A., as an issuer, and various financial institutions as ~~lenders~~lenders. (incorporated by reference to Exhibit ~~10.1~~4.1 to Ferro Corporation’s ~~Current~~current Report on Form ~~8-K,~~8K, filed August 30, 2016).
10.3	Retention Agreement, dated September 1, 2016, by and between Jeffrey L. Rutherford and Ferro Corporation (incorporated by reference to Exhibit 10.2 to Ferro Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016).*
10.4	Separation Agreement and Release, dated January ~~26, 2016.~~3, 2017, by and between Jeffrey L. Rutherford and Ferro Corporation.*
10.5	Change in Control Agreement, dated September 1, 2016, by and between Benjamin Schlater and Ferro Corporation.*

Table of Contents

Exhibit:


31	Certifications:
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350.
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350.

~~Table of Contents~~

~~Exhibit:~~


101	XBRL Documents:
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

__________________________

*Indicates management contract or compensatory plan, contract or arrangement in which one or more Directors and/or executives of Ferro Corporation may be participants.

** Certain exhibits and schedules have been omitted and the registrant agrees to furnish a copy of any omitted exhibits and schedules to the Securities and Exchange Commission

3937


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, ~~2016~~2017


	Ohio (State or other jurisdiction of incorporation or organization)		34-0217820 (I.R.S. Employer Identification No.)

	6060 Parkland Boulevard Suite 250 Mayfield Heights, OH (Address of principal executive offices)		44124 (Zip Code)

	216-875-5600 (Registrant’s telephone number, including area code)


Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐



	Three Months Ended
	March 31,
	2016		2015
	(Dollars in thousands)
Net (loss) income	$	(9,730)	$	9,015
Other comprehensive loss, net of income tax:
Foreign currency translation (loss)		(1,678)		(37,796)
Postretirement benefit liabilities gain		268		16
Other comprehensive (loss), net of income tax		(1,410)		(37,780)
Total comprehensive (loss)		(11,140)		(28,765)
Less: Comprehensive income (loss) attributable to noncontrolling interests		268		(3,093)
Comprehensive (loss) attributable to Ferro Corporation	$	(11,408)	$	(25,672)



	Three Months Ended
	March 31,
	2017		2016
	(Dollars in thousands)
Net income (loss)	$	22,121	$	(9,730)
Other comprehensive income (loss), net of income tax:
Foreign currency translation income (loss)		7,211		(1,678)
Postretirement benefit liabilities (loss) gain		(4)		268
Other comprehensive income (loss), net of income tax		7,207		(1,410)
Total comprehensive income (loss)		29,328		(11,140)
Less: Comprehensive income attributable to noncontrolling interests		263		268
Comprehensive income (loss) attributable to Ferro Corporation	$	29,065	$	(11,408)


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________


		Page
PART I
Item 1. Financial Statements (Unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures about Market Risk	32
Item 4. Controls and Procedures	33
PART II
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	34

Exhibit 10.4
Exhibit 10.5
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2



	March 31, 2016		December 31, 2015
	(Dollars in thousands)
Accounts receivable, net	$	4,352	$	4,028
Inventories		11,199		9,733
Other current assets		4,422		2,454
Current assets held-for-sale		19,973		16,215
Property, plant and equipment, net		—		22,973
Other non-current assets		226		205
Total assets held-for-sale	$	20,199	$	39,393

Accounts payable	$	6,339	$	5,736
Accrued expenses and other current liabilities		629		1,420
Current liabilities held-for-sale		6,968		7,156
Other non-current liabilities		1,592		1,493
Total liabilities held-for-sale	$	8,560	$	8,649



	Fair Value Measurements Using								Total
Description	Level 1		Level 2		Level 3		Total		(Losses)
	(Dollars in thousands)
March 31, 2016
Assets held for sale	$	—	$	—	$	11,639	$	11,639	$	(24,059)
December 31, 2015
Assets held for sale	$	—	$	—	$	33,711	$	33,711	$	(11,792)


			Pigments,		Performance
	Performance		Powders and		Colors and
	Coatings		Oxides		Glass			Total
	(Dollars in thousands)
December 31, 2015
Gross goodwill	$	88,753	$	48,794	$	53,391		$	190,938
Accumulated impairment losses		(45,269)		—		—			(45,269)
		43,484		48,794		53,391			145,669
Acquisitions		—		—		4,328	(1)		4,328
Foreign currency adjustments		(715)		656		626			567
March 31, 2016
Gross goodwill		88,038		49,450		58,345			195,833
Accumulated impairment losses		(45,269)		—		—			(45,269)
	$	42,769	$	49,450	$	58,345		$	150,564



	March 31, 2016										March 31, 2017
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)										(Dollars in thousands)
Cash and cash equivalents	$	55,865	$	55,865	$	55,865	$	—	$	—	$	92,829	$	92,829	$	92,829	$	—	$	—
Loans payable		(6,492)		(6,492)		—		(6,492)		—		(8,029)		(8,029)		—		(8,029)		—
Term loan facility(1)		(241,171)		(241,727)		—		(241,727)		—
Revolving credit facility		(247,621)		(247,132)		—		(247,132)		—
Term loan facility, maturing 2024(1)												(615,594)		(618,318)		—		(618,318)		—
Other long-term notes payable		(4,976)		(4,280)		—		(4,280)		—		(7,782)		(6,918)		—		(6,918)		—
Foreign currency forward contracts, net		(4,492)		(4,492)		—		(4,492)		—		237		237		—		237		—



	December 31, 2015										December 31, 2016
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)										(Dollars in thousands)
Cash and cash equivalents	$	58,380	$	58,380	$	58,380	$	—	$	—	$	45,582	$	45,582	$	45,582	$	—	$	—
Loans payable		(2,749)		(2,749)		—		(2,749)		—		(11,452)		(11,452)		—		(11,452)		—
Term loan facility(1)		(291,717)		(297,552)		—		(297,552)		—
Revolving credit facility		(170,000)		(169,019)		—		(169,019)		—
Term loan facility, maturing 2021(1)												(239,530)		(252,052)		—		(252,052)		—
Revolving credit facility, maturing 2019												(311,555)		(318,389)		—		(318,389)		—
Other long-term notes payable		(4,610)		(3,956)		—		(3,956)		—		(8,228)		(7,315)		—		(7,315)		—
Foreign currency forward contracts, net		(1,207)		(1,207)		—		(1,207)		—		350		350		—		350		—



	Amount of (Loss) Gain
	Recognized in Earnings
	Three Months Ended
	March 31,
	2016		2015		Location of (Loss) Gain in Earnings
	(Dollars in thousands)
Foreign currency forward contracts	$	(10,569)	$	1,645	Foreign currency losses, net



	Amount of Gain (Loss)
	Recognized in Earnings
	Three Months Ended
	March 31,
	2017		2016		Location of Gain (Loss) in Earnings
	(Dollars in thousands)
Foreign currency forward contracts	$	243	$	(10,569)	Foreign currency (gains) losses, net



	U.S. Pension Plans				Non-U.S. Pension Plans				Other Benefit Plans				U.S. Pension Plans				Non-U.S. Pension Plans				Other Benefit Plans
	Three Months Ended March 31,												Three Months Ended March 31,
	2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016
	(Dollars in thousands)												(Dollars in thousands)
Service cost	$	4	$	5	$	363	$	391	$	—	$	—	$	4	$	4	$	404	$	363	$	—	$	—
Interest cost		3,937		4,697		939		923		236		242		3,666		3,937		573		939		211		236
Expected return on plan assets		(4,935)		(7,291)		(520)		(674)		—		—		(4,740)		(4,935)		(210)		(520)		—		—
Amortization of prior service cost		3		3		11		15		—		—		2		3		10		11		—		—
Net periodic benefit (credit) cost	$	(991)	$	(2,586)	$	793	$	655	$	236	$	242	$	(1,068)	$	(991)	$	777	$	793	$	211	$	236


	March 31,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
	(Dollars in thousands)				(Dollars in thousands)
Gross amortizable intangible assets:
Patents	$	5,291	$	5,229	$	5,170	$	5,147
Land rights		4,967		4,947		4,770		4,746
Technology/know-how and other		69,150		66,558		86,028		84,837
Customer relationships		50,228		46,320		80,505		80,153
Total gross amortizable intangible assets		129,636		123,054		176,473		174,883
Accumulated amortization:
Patents		(4,983)		(4,880)		(5,023)		(4,981)
Land rights		(2,705)		(2,671)		(2,733)		(2,698)
Technology/know-how and other		(17,497)		(16,473)		(37,051)		(34,775)
Customer relationships		(3,287)		(2,234)		(6,479)		(5,311)
Total accumulated amortization		(28,472)		(26,258)		(51,286)		(47,765)
Amortizable intangible assets, net	$	101,164	$	96,796	$	125,187	$	127,118



	Stock Options
Weighted-average grant-date fair value	$	~~4.92~~7.26
Expected life, in years		6.0
Risk-free interest rate		~~1.6~~2.3	%
Expected volatility		~~53.6~~51.5	%



	Employee		Other				Employee		Other		Asset
	Severance		Costs		Total		Severance		Costs		Impairment		Total
	(Dollars in thousands)						(Dollars in thousands)
Balances at December 31, 2015	$	693	$	2,077	$	2,770
Balances at December 31, 2016							$	239	$	1,489	$	—	$	1,728
Restructuring charges		532		349		881		980		862		1,176		3,018
Cash payments		(369)		(436)		(805)		(81)		(109)		—		(190)
Non-cash items		36		75		111		—		(522)		(1,176)		(1,698)
Balances at March 31, 2016	$	892	$	2,065	$	2,957
Balances at March 31, 2017							$	1,138	$	1,720	$	—	$	2,858