Ferro (FOE) 8-K Ferro Reports Third Quarter 2013 Adjusted Eps of $0.14

For Immediate Release

FERRO REPORTS THIRD QUARTER 2013 ADJUSTED EPS OF $0.14

• Full-year 2013 adjusted EPS guidance raised to $0.42 — $0.45

• Cost savings for 2013 now expected to be approximately $45 million

• Company reaffirms 2015 adjusted EPS target in excess of $1.00

CLEVELAND, Ohio – October 23, 2013– Ferro Corporation (NYSE: FOE, the “Company”) today reported results for the third quarter ended September 30, 2013. The third-quarter net income attributable to common shareholders was $0.15 per diluted share compared with a net loss of $3.66 per share in the third quarter of 2012. On an adjusted basis, earnings per diluted share were $0.14 compared with a net loss of $0.02 per share in the third quarter of 2012. The Company attributed the increase in profitability to management’s continued progress executing on its value creation strategy. The Company raised its full-year 2013 adjusted earnings guidance to $0.42 to $0.45 per diluted share, versus previous guidance of $0.35 to $0.40 per diluted share, reflecting lower selling, general and administrative (“SG&A”) expenses and improving gross profit margins, primarily as a result of successful execution of cost reduction initiatives and improved business mix. Please refer to the supplemental tables at the end of this release for additional information concerning adjusted financial results.

Peter Thomas, President and Chief Executive Officer, commented, “We continue to make progress on our value creation strategy, making Ferro more competitive and driving increased profitability. We are realizing the benefits of our cost saving initiatives more quickly than previously anticipated and are now expecting total savings for 2013 to be approximately $45 million. More importantly, we estimate that our annual savings run rate at the beginning of 2014 will be approximately $70 million.”

2013 Third-Quarter Results

Ferro reported net sales of $408.1 million in the third quarter of 2013, compared with net sales of $408.9 million in the third quarter of 2012. Value-added sales, which exclude precious metal sales, increased 3.8%, to $387.0 million from $372.9 million in the third quarter last year. Adjusting for the impact of exiting the solar pastes product line (approximately $4 million), value-added sales increased by 5.0%.

Gross profit was $84.2 million for the 2013 third quarter, compared with $60.7 million for the third quarter of 2012. Excluding special charges, adjusted gross profit was $84.8 million (21.9% of value-added sales) compared with $66.5 million (17.8% of value-added sales) in the prior-year period. During the third quarter of 2013, gross profit was reduced by special charges of $0.6 million compared with special charges of $5.8 million in the same period last year. The special charges in the 2012 period were primarily related to inventory write-downs associated with the solar pastes assets and residual costs at manufacturing sites closed as part of earlier restructuring initiatives.

SG&A expenses declined 7.5% to $59.1 million during the third quarter of 2013 from $63.9 million in the prior-year quarter. Excluding special charges in both periods, SG&A expenses declined 6.3% to $56.8 million from $60.6 million. Included in both periods is the impact of incentive compensation accruals, including a charge of approximately $7 million in the third quarter of 2013 and a credit of approximately $4 million in the same quarter last year. Excluding special charges and the impact of incentive compensation, SG&A expenses for the third quarter were reduced by over $15 million on a year-over-year basis. The Company estimates that its current normalized run-rate for quarterly SG&A expenses is approximately $54 million, adjusting for special charges, normalized incentive compensation expenses and seasonal effects.

Net income attributable to common shareholders for the quarter ended September 30, 2013, was $12.7 million, or $0.15 per diluted share compared with a net loss of $316.1 million, or $3.66 per diluted share, in the third quarter of 2012. Adjusted net income from continuing operations attributable to common shareholders was $12.5 million, or $0.14 per diluted share, compared with a net loss of $1.9 million, or $0.02 per diluted share, in the year-ago quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) were approximately $38.0 million in the third quarter of 2013, compared with $16.9 million in the same period last year. Adjusted EBITDA margins, represented as a percentage of value-added sales, were 9.8% in the third quarter of 2013 and 4.5% in the same period last year.

Total debt as of the end of the third quarter was $337.8 million, a reduction of $9.0 million from December 31, 2012. In addition, cash balances increased $6.3 million during the first nine months of the year to $35.9 million, resulting in a reduction in net debt (debt less cash) of $15.3 million during the first nine months of the year. In comparison, net debt increased by $26.2 million during the first nine months of 2012.

Outlook

The Company expects adjusted earnings for the 2013 fourth quarter to be in the range of $0.04 to $0.07 per diluted share, resulting in full-year adjusted earnings of $0.42 to $0.45 per diluted share. The expected increase in earnings compared with the Company’s previous guidance is primarily a result of the accelerated pace of cost savings during the year. Full-year cost savings are now expected to be approximately $45 million.

Adjusting for the impact of divested operations and before the impact of changes in foreign currency rates, fourth-quarter and full-year value-added sales are expected to be essentially flat compared with the prior-year periods. Guidance for fourth quarter sales has been lowered, primarily due to an increase in product deselection of phthalate-based plasticizers in the Polymer Additives segment. The pace of deselection has increased, as U.S. vinyl flooring producers have begun migrating to more eco-friendly alternatives. Ferro currently is building dibenzoates manufacturing capacity in Europe to address growing demand for eco-friendly plasticizers.

For the year, the Company expects cash flow to be $15 million to $20 million, which is expected to be used to reduce net debt.

The Company also reaffirms its financial targets for 2015, including cost savings of greater than $100 million and adjusted earnings per share in excess of $1.00 per diluted share.

Conference Call

The Company will host a conference call to discuss its third-quarter financial results and current outlook for 2013 on Thursday, October 24, 2013, at 10:00 a.m. Eastern Time. To listen to the call, dial 800-354-6885 if calling from the United States or Canada, or dial 303-223-2685 if calling from outside North America. Please call approximately 10 minutes before the conference call is scheduled to begin.

An audio replay of the call will be available through noon Eastern Time on October 30. To access the replay, dial 800-633-8284 if calling from the United States or Canada, or dial 402-977-9140 if calling from outside North America. Use the program ID #21676629 to access the audio replay.

The conference call also will be broadcast live over the Internet and will be available for replay through November 30, 2013. The live broadcast and replay can be accessed through the Investor Information portion of the Company’s Web site atwww.ferro.com. A podcast of the conference call will also be available on the site.

About Ferro Corporation

Ferro Corporation (http://www.ferro.com) is a leading global supplier of technology-based performance materials and chemicals for manufacturers. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the Company has approximately 4,550 employees globally and reported 2012 sales of $1.8 billion.

Cautionary Note on Forward-Looking Statements

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

• demand in the industries into which Ferro sells its products may be unpredictable, cyclical, or heavily influenced by consumer spending;

• Ferro’s ability to successfully implement its value creation strategy;

• Ferro’s ability to successfully implement and/or administer its cost-saving initiatives, including its restructuring programs and indirect spend optimization initiative, and to produce the desired results, including projected savings;

• restrictive covenants in the Company’s credit facilities could affect its strategic initiatives and liquidity;

• Ferro’s ability to access capital markets, borrowings, or financial transactions;

• the effectiveness of the Company’s efforts to improve operating margins through sales growth, price increases, productivity gains, and improved purchasing techniques;

• the availability of reliable sources of energy and raw materials at a reasonable cost;

• currency conversion rates and economic, social, regulatory, and political conditions around the world;

• Ferro’s presence in certain geographic regions, including Latin America and Asia-Pacific, where it can be difficult to compete lawfully;

• increasingly aggressive domestic and foreign governmental regulations on hazardous materials and regulations affecting health, safety and the environment;

• Ferro’s ability to successfully introduce new products or enter into new growth markets;

• sale of products into highly regulated industries;

• limited or no redundancy for certain of the Company’s manufacturing facilities and possible interruption of operations at those facilities;

• Ferro’s ability to complete future acquisitions or dispositions, or successfully integrate future acquisitions;

• competitive factors, including intense price competition;

• Ferro’s ability to protect its intellectual property or to successfully resolve claims of infringement brought against it;

• management of Ferro’s general and administrative expenses;

• Ferro’s multi-jurisdictional tax structure;

• the impact of the Company’s performance on its ability to utilize significant deferred tax assets;

• the effectiveness of strategies to increase Ferro’s return on capital;

• the impact of operating hazards and investments made in order to meet stringent environmental, health and safety regulations;

• stringent labor and employment laws and relationships with the Company’s employees;

• the impact of requirements to fund employee benefit costs, especially post-retirement costs;

• implementation of new business processes and information systems;

• the impact of interruption, damage to, failure, or compromise of the Company’s information systems;

• exposure to lawsuits in the normal course of business;

• risks and uncertainties associated with intangible assets;

• Ferro’s borrowing costs could be affected adversely by interest rate increases;

• liens on the Company’s assets by its lenders affect its ability to dispose of property and businesses;

• Ferro may not pay dividends on its common stock in the foreseeable future; and

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

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

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

# # #

Contacts:

Investor Contact:
John Bingle, 216-875-5411
Treasurer and Director of Investor Relations
john.bingle@ferro.com

or

Media Contact:
Mary Abood, 216-875-5401
Director, Corporate Communications
mary.abood@ferro.com

Table 1
Ferro Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
	Three months ended						Nine months ended
	September 30,						September 30,
(Dollars in thousands, except share and per share
amounts)	2013			As adjusted 2012			2013			As adjusted 2012
Net sales	$	408,104		$	408,865		$	1,261,083		$	1,344,836
Cost of sales		323,857			348,155			1,009,945			1,112,587
Gross profit		84,247			60,710			251,138			232,249
Selling, general and administrative expenses		59,078			63,863			184,986			202,675
Restructuring and impairment charges		3,834			198,695			26,738			203,734
Other expense (income):
Interest expense		6,766			6,716			21,034			19,566
Interest earned		(48	)		(57	)		(171	)		(192	)
Foreign currency losses, net		1,308			869			4,016			792
Miscellaneous (income) expense, net		(209	)		797			(9,493	)		3,038
Income (loss) before income taxes		13,518			(210,173	)		24,028			(197,364	)
Income tax expense		474			105,447			4,025			113,115
Income (loss) from continuing operations		13,044			(315,620	)		20,003			(310,479	)
(Loss) income from discontinued operations, net of income taxes		—			(118	)		(8,421	)		917
Net income (loss)		13,044			(315,738	)		11,582			(309,562	)
Less: Net income attributable to noncontrolling interests		392			376			177			830
Net income (loss) attributable to Ferro Corporation common shareholders	$	12,652		$	(316,114	)	$	11,405		$	(310,392	)
Earnings (loss) per share attributable to Ferro Corporation common shareholders:
Basic earnings (loss):
From continuing operations	$	0.15		$	(3.66	)	$	0.23		$	(3.61	)
From discontinued operations		—			—			(0.10	)		0.01
	$	0.15		$	(3.66	)	$	0.13		$	(3.60	)
Diluted earnings (loss):
From continuing operations	$	0.15		$	(3.66	)	$	0.23		$	(3.61	)
From discontinued operations		—			—			(0.10	)		0.01
	$	0.15		$	(3.66	)	$	0.13		$	(3.60	)
Shares outstanding:
Weighted-average basic shares		86,425,550			86,295,512			86,464,363			86,274,082
Weighted-average diluted shares		87,250,026			86,295,512			87,033,992			86,274,082
End-of-period basic shares		86,304,829			86,295,512			86,304,829			86,295,512

1

Table 2
Ferro Corporation and Subsidiaries
Segment Net Sales and Segment Gross Profit
(Unaudited)
	Three months ended						Nine months ended
(Dollars in thousands)	September 30,						September 30,
	2013			As adjusted 2012			2013			As adjusted 2012
Segment Net Sales
Pigments, Powders and Oxides	$	47,647		$	64,053		$	155,948		$	219,398
Performance Colors and Glass		94,059			86,398			298,633			294,806
Performance Coatings		151,873			137,228			445,969			447,065
Polymer Additives		71,599			79,881			229,266			251,055
Specialty Plastics		42,926			41,305			131,267			132,512
Total segment net sales	$	408,104		$	408,865		$	1,261,083		$	1,344,836
Segment Gross Profit
Pigments, Powders and Oxides	$	8,390		$	7,231		$	25,882		$	28,363
Performance Colors and Glass		28,713			21,086			87,203			77,220
Performance Coatings		36,410			23,858			100,237			85,328
Polymer Additives		6,251			8,907			20,616			26,871
Specialty Plastics		6,881			6,984			22,116			23,207
Other cost of sales		(2,398	)		(7,356	)		(4,916	)		(8,740	)
Total gross profit		84,247			60,710			251,138			232,249
Selling, general and administrative expenses		59,078			63,863			184,986			202,675
Restructuring and impairment charges		3,834			198,695			26,738			203,734
Other expense, net		7,817			8,325			15,386			23,204
Income (loss) before income taxes	$	13,518		$	(210,173	)	$	24,028		$	(197,364	)

2

Table 3
Ferro Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)	September 30,
	2013		December 31, 2012
ASSETS
Current assets
Cash and cash equivalents	$	35,853	$	29,576
Accounts receivable, net		331,847		306,463
Inventories		195,617		200,824
Deferred income taxes		8,011		7,995
Other receivables		32,371		31,554
Other current assets		14,571		10,802
Current assets of discontinued operations		—		6,289
Total current assets		618,270		593,503
Property, plant and equipment, net		299,619		309,374
Goodwill		63,234		62,975
Amortizable intangible assets, net		12,268		14,410
Deferred income taxes		20,527		21,554
Other non-current assets		55,444		61,941
Other assets of discontinued operations		—		15,346
Total assets	$	1,069,362	$	1,079,103
LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt	$	59,665	$	85,152
Accounts payable		183,044		182,024
Accrued payrolls		44,081		31,643
Accrued expenses and other current liabilities		67,514		76,384
Current liabilities of discontinued operations		—		1,300
Total current liabilities		354,304		376,503
Long-term debt, less current portion		278,119		261,624
Postretirement and pension liabilities		199,922		216,167
Other non-current liabilities		20,316		18,135
Total liabilities		852,661		872,429
Shareholders’ equity		203,356		193,527
Noncontrolling interests		13,345		13,147
Total liabilities and equity	$	1,069,362	$	1,079,103

3

Table 4
Ferro Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
	Three months ended						Nine months ended
(Dollars in thousands)	September 30,						September 30,
	2013			2012			2013			2012
Cash flows from operating activities
Net income (loss)	$	13,044		$	(315,738	)	$	11,582		$	(309,562	)
(Gain) loss on sale of assets and business		(291	)		277			(10,686	)		1,018
Restructuring and impairment charges		(1,602	)		306,933			4,355			311,084
Depreciation and amortization		11,940			13,727			38,000			41,734
Accounts receivable		14,091			27,617			(23,079	)		(23,006	)
Inventories		2,017			7,060			12,118			15,637
Accounts payable		(11,448	)		(19,505	)		(5,864	)		(4,254	)
Other changes in current assets and liabilities, net		(3,443	)		(317	)		(8,363	)		7,814
Other adjustments, net		(12,751	)		(5,696	)		(15,060	)		(20,929	)
Net cash provided by operating activities		11,557			14,358			3,003			19,536
Cash flows from investing activities
Capital expenditures for property, plant and equipment		(5,285	)		(10,737	)		(21,187	)		(46,245	)
Proceeds from sale of assets		586			1,194			16,034			2,386
Proceeds from sale of stock of Ferro Pfanstiehl Laboratories, Inc.		—			—			16,912			—
Dividends received from affiliates		—			(340	)		1,119			96
Net cash (used for) provided by investing activities		(4,699	)		(9,883	)		12,878			(43,763	)
Cash flow from financing activities
Net borrowings (repayments) under loans payable		17,937			(12,819	)		9,223			22,087
Proceeds from revolving credit facility		152,116			110,155			368,317			323,151
Principal payments on revolving credit facility		(136,584	)		(104,752	)		(351,404	)		(319,926	)
Extinguishment of convertible senior notes		(35,066	)		—			(35,066	)		—
Other financing activities		(347	)		1,820			(734	)		760
Net cash (used for) provided by financing activities		(1,944	)		(5,596	)		(9,664	)		26,072
Effect of exchange rate changes on cash and cash equivalents		277			571			60			(19	)
Increase (decrease) in cash and cash equivalents		5,191			(550	)		6,277			1,826
Cash and cash equivalents at beginning of period		30,662			25,367			29,576			22,991
Cash and cash equivalents at end of period	$	35,853		$	24,817		$	35,853		$	24,817
Cash paid during the period for:
Interest	$	12,088		$	12,147		$	25,484		$	25,343
Income taxes		526			1,032			2,905			3,130

4

Table 5
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income (Loss) to Adjusted Income (Loss)
for the Three Months Ended September 30 (Unaudited)
(Dollars in thousands,				Selling, general and											Net income (loss)
except per share amounts)				administrative			Restructuring and			Other expense		Income tax expense			attributable to common			Diluted earnings
	Cost of sales			expenses			impairment charges			(income), net		(benefit)			shareholders			(loss) per share
	2013
As reported	$	323,857		$	59,078		$	3,834		$	7,817	$	474		$	12,652		$	0.15
Special items:
Restructuring		—			—			(3,834	)		—		1,380			2,454			0.02
Other (1)		(601	)		(2,256	)		—			—		1,029			1,828			0.02
Taxes (2)		—			—			—			—		4,392			(4,392	)		(0.05	)
Total special items		(601	)		(2,256	)		(3,834	)		—		6,801			(110	)		(0.01	)
As adjusted	$	323,256		$	56,822		$	—		$	7,817	$	7,275		$	12,542		$	0.14
											2012
As reported	$	348,155		$	63,863		$	198,695		$	8,325	$	105,447		$	(316,114	)	$	(3.66	)
Special items:
Restructuring		—			—			(198,695	)		—		71,530			127,165			1.47
Other (1)		(5,813	)		(3,245	)		—			—		3,261			5,797			0.07
Taxes (2)		—			—			—			—		(181,109	)		181,109			2.10
Discontinued operations		—			—			—			—		—			118			—
Total special items		(5,813	)		(3,245	)		(198,695	)		—		(106,318	)		314,189			3.64
As adjusted	$	342,342		$	60,618		$	—		$	8,325	$	(871	)	$	(1,925	)	$	(0.02	)

1) Includes certain severance costs, impairments, ongoing costs at facilities that have been idled, gain/loss on divestitures, proxy contest related costs and certain business development activities.

2) Adjustment of reported earnings and of special items to a normalized 36% rate for 2013 and 2012.

It should be noted that adjusted earnings and earnings per share are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings and earnings per share presented here exclude certain special items, including restructuring and impairment charges, severance costs, ongoing costs at facilities that have been idled, gain/loss on divestitures, proxy contest related costs and certain business development costs. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees.

5

Table 6
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Reported Income (Loss) to Adjusted Income
for the Nine Months Ended September 30 (Unaudited)
				Selling, general and												Net income (loss)
(Dollars in thousands,				administrative			Restructuring and			Other expense			Income tax expense			attributable to common			Diluted earnings
except per share amounts)	Cost of sales			expenses			impairment charges			(income), net			(benefit)			shareholders			(loss) per share
	2013
As reported	$	1,009,945		$	184,986		$	26,738		$	15,386		$	4,025		$	11,405		$	0.13
Special items:
Restructuring		—			—			(26,738	)		—			9,626			17,112			0.20
Other (1)		(3,465	)		(6,782	)		—			8,856			501			890			0.01
Taxes (2)		—			—			—			—			4,625			(4,625	)		(0.05	)
Solar Pastes (3)		—			—			—			—			—			205			—
Discontinued operations		—			—			—			—			—			8,421			0.10
Noncontrolling interest		—			—			—			—			—			(394	)		(0.01	)
Total special items		(3,465	)		(6,782	)		(26,738	)		8,856			14,752			21,609			0.25
As adjusted	$	1,006,480		$	178,204		$	—		$	24,242		$	18,777		$	33,014		$	0.38
										2012
As reported	$	1,112,587		$	202,675		$	203,734		$	23,204		$	113,115		$	(310,392	)	$	(3.60	)
Special items:
Restructuring		—			—			(203,734	)		—			73,344			130,390			1.51
Other (1)		(7,204	)		(5,969	)		—			(808	)		5,033			8,948			0.10
Taxes (2)		—			—			—			—			(184,166	)		184,166			2.14
Discontinued operations		—			—			—			—			—			(917	)		(0.01	)
Total special items		(7,204	)		(5,969	)		(203,734	)		(808	)		(105,789	)		322,587			3.74
As adjusted	$	1,105,383		$	196,706		$	—		$	22,396		$	7,326		$	12,195		$	0.14

1) Includes certain severance costs, impairments, ongoing costs at facilities that have been idled, gain/loss on divestitures, proxy contest related costs and certain business development activities.

2) Adjustment of reported earnings and of special items to a normalized 36% rate for 2013 and 2012.

3) Adjustment to exclude the operations of the Solar Pastes product line prior to the completion of the transaction on February 6, 2013 where certain Solar Pastes assets were sold and the Company exited the product line. We believe this adjustment, in combination with the adjustment to exclude the gain on the sale of Solar Pastes assets of $8,954 included within the adjustments to the Other Expense, Net, provides investors with additional information on the underlying operations of the business.

It should be noted that adjusted earnings and earnings per share are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The adjusted earnings and earnings per share presented here exclude certain special items, including restructuring and impairment charges, severance costs, ongoing costs at facilities that have been idled, gain/loss on divestitures, proxy contest related costs and certain business development costs. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees.

6

Table 7
Ferro Corporation and Subsidiaries
Supplemental Information
Segment Sales Excluding Precious Metals and
Reconciliation of Segment Net Sales Excluding Precious Metals to Net Sales and Schedule of
Adjusted Gross Profit (Unaudited)
	Three months ended								Nine months ended
	September 30,								September 30,
(Dollars in thousands)	2013				As adjusted 2012				2013				As adjusted 2012
Pigments, Powders and Oxides	$	35,551			$	38,286			$	110,146			$	124,429
Performance Colors and Glass		85,076				76,204				264,822				256,931
Performance Coatings		151,873				137,228				445,969				447,065
Polymer Additives		71,599				79,881				229,266				251,055
Specialty Plastics		42,926				41,305				131,267				132,512
Total segment sales excluding precious metals		387,025				372,904				1,181,470				1,211,992
Sales of precious metals		21,079				35,961				79,613				132,844
Total net sales	$	408,104			$	408,865			$	1,261,083			$	1,344,836
Net sales excluding precious metals	$	387,025			$	372,904			$	1,181,470			$	1,211,992
Adjusted cost of sales		323,256				342,342				1,006,480				1,105,383
Cost of sales from precious metals		(21,079	)			(35,961	)			(79,613	)			(132,844	)
Adjusted cost of sales excluding precious metals		302,177				306,381				926,867				972,539
Adjusted gross profit	$	84,848			$	66,523			$	254,603			$	239,453
Adjusted gross profit percentage		21.9		%		17.8		%		21.5		%		19.8		%

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

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Table 8
Ferro Corporation and Subsidiaries
Supplemental Information
Segment Detail
Performance Materials
	Three months ended				Nine months ended
(Dollars in thousands)	September 30,				September 30,
	2013		As adjusted 2012		2013		As adjusted 2012
Sales
Pigments, Powders & Oxides	$	47,647	$	64,053	$	155,948	$	219,398
Performance Colors & Glass		94,059		86,398		298,633		294,806
Performance Coatings		151,873		137,228		445,969		447,065
Total Performance Materials Sales		293,579		287,679		900,550		961,269
Gross profit
Pigments, Powders & Oxides		8,390		7,231		25,882		28,363
Performance Colors & Glass		28,713		21,086		87,203		77,220
Performance Coatings		36,410		23,858		100,237		85,328
Total Performance Materials Gross Profit		73,513		52,175		213,322		190,911
Selling, general and administrative charges		34,205		42,620		113,700		137,393
Performance Materials Operating Profit	$	39,308	$	9,555	$	99,622	$	53,518
Performance Chemicals
	Three months ended				Nine months ended
	September 30,				September 30,
		2013	As adjusted 2012			2013	As adjusted 2012
Sales
Polymer Additives	$	71,599	$	79,881	$	229,266	$	251,055
Specialty Plastics		42,926		41,305		131,267		132,512
Total Performance Chemicals Sales		114,525		121,186		360,533		383,567
Gross Profit
Polymer Additives		6,251		8,907		20,616		26,871
Specialty Plastics		6,881		6,984		22,116		23,207
Total Performance Chemicals Gross Profit		13,132		15,891		42,732		50,078
Selling, general and administrative charges		5,864		6,709		17,575		24,294
Performance Chemicals Operating Profit	$	7,268	$	9,182	$	25,157	$	25,784

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Table 9
Ferro Corporation and Subsidiaries
Supplemental Information
Reconciliation of Operating Group Non-GAAP Measures to
Consolidated GAAP Balances
	Three months ended						Nine months ended
(Dollars in thousands)	September 30,						September 30,
	2013			As adjusted 2012			2013			As adjusted 2012
Total Sales	$	408,104		$	408,865		$	1,261,083		$	1,344,836
Performance Materials		73,513			52,175			213,322			190,911
Performance Chemicals		13,132			15,891			42,732			50,078
Other cost of sales		(2,398	)		(7,356	)		(4,916	)		(8,740	)
Total gross profit		84,247			60,710			251,138			232,249
Performance Materials		34,205			42,620			113,700			137,393
Performance Chemicals		5,864			6,709			17,575			24,294
Corporate		19,009			14,534			53,711			40,988
Total selling, general and administrative charges		59,078			63,863			184,986			202,675
Total operating profit		25,169			(3,153	)		66,152			29,574
Restructuring and impairment charges		3,834			198,695			26,738			203,734
Interest expense		6,766			6,716			21,034			19,566
Interest earned		(48	)		(57	)		(171	)		(192	)
Foreign currency losses, net		1,308			869			4,016			792
Miscellaneous (income) expense, net		(209	)		797			(9,493	)		3,038
Income (loss) from continuing operations before taxes	$	13,518		$	(210,173	)	$	24,028		$	(197,364	)

It should be noted that operating group sales, gross profit, selling, general and administrative charges, and operating profit are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). The respective information has been aggregated in a manner consistent with the operating groups of the Company. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance.

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Table 10
Ferro Corporation and Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
	Three months ended								Nine months ended
	September 30,								September 30,
(Dollars in thousands)	2013				2012				2013				2012
Net Income (Loss) Attributable to Ferro Corporation	$	12,652			$	(316,114	)		$	11,405			$	(310,392	)
Loss (Income) from Discontinued Operations, net of Income Tax		—				118				8,421				(917	)
Interest Expense		6,766				6,716				21,034				19,566
Income Tax Expense		474				105,447				4,025				113,115
Depreciation and Amortization		11,940				13,727				38,000				41,734
Less Interest Amortization Expense and Other		(545	)			(718	)			(2,616	)			(2,150	)
Cost of Sales Adjustments		601				5,813				3,465				7,204
SG&A Adjustments		2,256				3,245				6,782				5,969
Restructuring and Impairment		3,834				198,695				26,738				203,734
Other (Income) and Expense Adjustments		—				—				(520	)			808
Noncontrolling Interest Adjustments		—				—				(394	)			—
Gain on Sale of Solar Pastes Assets		—				—				(8,954	)			—
Solar Pastes Operations		—				—				323				—
Adjusted EBITDA	$	37,978			$	16,929			$	107,709			$	78,671
Net sales excluding precious metals	$	387,025			$	372,904			$	1,181,470			$	1,211,992
Adjusted EBITDA as a % of net sales excluding precious metals		9.8		%		4.5		%		9.1		%		6.5		%

It should be noted that adjusted EBITDA is a financial measure not required by, or presented in accordance with, accounting principles generally accepted in the United States (U.S. GAAP). Adjusted EBITDA is net income before the effects of discontinued operations, interest, income taxes, depreciation and amortization, nonrecurring adjustments to cost of sales, nonrecurring adjustments to SG&A, restructuring and impairment charges, nonrecurring adjustments to miscellaneous income and expense, and the gain and impact of solar pastes operations on Q1 2013. We believe this data provides investors with additional information on the underlying operations of the business and enables period-to-period comparability of financial performance. In addition, these measures are used in the calculation of certain incentive compensation programs for selected employees.

10