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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ............ to ............
Commission file number 1-584
FERRO CORPORATION
An Ohio Corporation 1000 LAKESIDE AVENUE I.R.S. No. 34-0217820
CLEVELAND, OHIO 44114
Registrant's telephone number, including area code:
216-641-8580
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Class on which registered
--------------------------- ---------------------
Shares of Common Stock of
the Par Value of $1.00 each New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
11-3/4% Debentures due October 15, 2000
7-5/8% Debentures due May 1, 2013
Series A ESOP Convertible Preferred Stock,
without Par Value
2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES __X__ NO _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
On February 25, 1994, there were 29,229,116 shares of Ferro Common Stock, Par
Value $1.00 outstanding. As of the same date, the aggregate market value
(based on closing sale price) of Ferro's common stock held by nonaffiliates was
$1,002,186,065.
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An Exhibit Index listing all Exhibits hereto is found on page
27 hereof. This Form 10-K (including all Exhibits hereto and all other
documents filed herewith) consists of 73 pages.
Documents Incorporated by Reference
-----------------------------------
Portions of Annual Report to Shareholders for the Year Ended December 31, 1993
(Incorporated into Parts I, II and IV of this Form 10-K)
Portions of Ferro Corporation's Proxy Statement dated March 14, 1994
(Incorporated into Parts II and III of this Form 10-K)
PART I
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ITEM 1 Business
- ---------------
Ferro Corporation ("Ferro"), which was incorporated under the
laws of Ohio in 1919, is a worldwide producer of specialty materials by organic
and inorganic chemistry for industry. It operates (either directly or through
wholly owned subsidiaries or partially owned affiliates) in 22 countries
worldwide. Ferro produces a variety of specialty coatings, specialty colors,
specialty chemicals, specialty ceramics, specialty plastics and related
products and services. Ferro's most important product is frit produced for use
in porcelain enamels and ceramic glazes.
Most of the products produced by Ferro are classified as
specialty materials, rather than commodities, because they are formulated or
designed to perform a specific and important function in the manufacturing
processes of Ferro customers or in their end products. These specialty
materials are not sold in the high volume normally associated with commodity
businesses.
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Ferro specialty materials require a high degree of technical
service on an individual customer basis. The value of these specialty
materials stems not just from their raw materials composition, but from the
result and performance they achieve in actual use.
A further description of Ferro's business, its principal products,
their markets and applications is contained under all headings on pages 4
through 13 of Ferro's 1993 Annual Report to Shareholders which is attached
hereto as Exhibit 13 (the "Annual Report"). The information contained under
the aforementioned headings on pages 4 through 13 of the Annual Report
(excluding those pages on which only pictures appear and the pictures and text
describing such pictures on pages 7, 9, 11, and 13) is incorporated herein by
reference. Information concerning Ferro's business during 1993, 1992, and 1991
and certain transactions consummated during those years is included under the
heading "Management's Discussion and Analysis" on pages 15 through 20 of the
Annual Report and in Note 6 to Ferro's Consolidated Financial Statements, which
are included in the Annual Report. Note 6 appears at page 29 of the Annual
Report. Such information is incorporated herein by reference. Additional
information about Ferro's industry segments, including financial information
relating thereto, is set forth in Note 11 to Ferro's Consolidated Financial
Statements, which appears on pages 33 through 35 of the Annual Report and is
incorporated herein by reference.
Raw Materials
-------------
For the most part the raw materials essential to Ferro's
operations both in the United States and overseas are obtainable from multiple
sources worldwide. Ferro did not encounter significant raw material shortages
in 1993 and does not anticipate such shortages in 1994.
Patents and Licenses
--------------------
Ferro owns a substantial number of patents relating to its
various products and their uses. While these patents are of importance to
Ferro, it does not consider that the invalidity or expiration of any single
patent or group of patents would have a material adverse effect on its
business. Ferro patents expire at various dates through the year 2010.
Ferro does not hold any licenses, franchises or concessions
which it considers to be material.
Customers
---------
Ferro does not consider that a material part of its business
is dependent on any single customer or group of customers.
Backlog of Orders
-----------------
In general there is no significant lead time between order and
delivery in any of Ferro's business segments. As a result, Ferro does not
consider that the dollar amount of
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backlog of orders believed to be firm as of any particular date is material for
an understanding of its business. Ferro does not regard any material part of
its business to be seasonal.
Competition
-----------
With respect to most of its products, Ferro competes with a
substantial number of companies, none of which is dominant. An exception is
frit, as to which Ferro believes that it is the largest worldwide supplier.
The details of foreign competition necessarily vary with respect to each
foreign market.
Because of the specialty nature of Ferro's products, product
performance characteristics and customer service are the most important
components of the competition which Ferro encounters in the sale of nearly all
of its products. However, in some of the markets served by Ferro, strong price
competition is encountered from time to time.
Research and Development
------------------------
A substantial number of Ferro's employees are involved in
technical activities concerned with products required by the ever-changing
markets of its customers. Laboratories are located at each of Ferro's major
subsidiaries around the globe, where technical efforts are applied to the
customer and market needs of that geographical area. In the United States,
laboratories are maintained in each of its divisions. Backing up these
divisional customer services laboratories is Corporate research activity
involving approximately 52 scientists and support personnel in the Cleveland
area.
Expenditures for research and development activities relating
to the development or significant improvement of new and/or existing products,
services and techniques were approximately $19,334,000, $15,440,000, and
$17,643,000 in 1993, 1992 and 1991, respectively. Expenditures for
individual customer requested research and development were not material.
Environmental Matters
---------------------
Ferro's manufacturing facilities, like those of industry
generally, are subject to numerous laws and regulations designed to protect the
environment, particularly in regard to plant wastes and emissions. In general,
Ferro believes that it is in substantial compliance with the environmental
regulations to which its operations are subject and that, to the extent Ferro
may not be in compliance with such regulations, such non-compliance has not had
a material adverse effect on Ferro. Moreover, while Ferro has not generally
experienced substantial difficulty in complying with environmental
requirements, compliance has required a continuous management effort and
significant expenditures.
Ferro and its international subsidiaries authorized
approximately $8,970,000, $9,622,000 and $3,287,000 in capital expenditures
for environmental control during 1993, 1992
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and 1991, respectively. Three major projects accounted for the high level of
environmental control capital expenditures in 1992. They were:
a. Wastewater treatment plant at a Ferro chemical
facility in Bedford, Ohio $2,700,000
b. Bulk Unloading/Loading Stations for spill
containment at a Ferro chemical facility in
Hammond, Indiana 900,000
c. Scrubbers at the Ferro facility in Taiwan 2,100,000
---------
Total -- Major Projects (1992) $5,700,000
Three major projects accounted for the high level of environmental control
capital expenditures in 1993. They were:
a. Wastewater treatment plant at a Ferro chemical
facility in France $2,300,000
b. Replacement of underground tank farms at a Ferro
chemical facility in Bedford, Ohio 1,600,000
c. Scrubbers at a Ferro facility in Brazil 1,400,000
----------
Total -- Major Projects (1993) $5,300,000
During 1993, the Company became involved in two separate
environmental claims regarding Keil Chemical, a production facility owned and
operated by Ferro in Hammond, Indiana. The Company has been named as one of
several defendants, including three local municipalities, one local government
agency (a sewer district) and four other area industrial concerns in a suit
filed by the United States Environmental Protection Agency alleging violation
of the Clean Water Act and the River and Harbors Act. The suit was filed in
the Federal District Court for the Northern District of Indiana on August 2,
1993. The suit alleges violation of pre-treatment requirements for removal of
pollutants prior to discharge of wastewater into the Grand Calumet and Little
Calumet Rivers. Relief sought includes orders to comply with environmental
regulations, civil penalties of up to $25,000 per day for each violation, and
contribution to the cost of removing contaminated sediments from the west
branch of the Grand Calumet River. The Company believes it is in substantial
compliance with applicable law and intends to vigorously defend this
litigation. However, the Company will also explore settlement
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possibilities, and if it is more economical to settle than to defend, the
Company will pursue that course of action.
In a separate matter, in late July 1993, the United States
Environmental Protection Agency, the Indiana Department of Environmental
Management and the Hammond Department of Environmental Management alleged
violation of air emission regulations by the Keil Chemical facility. The
allegations relate to materials used in the manufacture of flame retardants.
The notices from the governmental authorities threaten the possibility of
proceedings to suspend operations in the manufacture of flame retardants and
threaten civil penalties of up to $25,000 per day of violation. The Company
has voluntarily commenced a capital program, estimated to cost $3.0 million, to
reduce air emissions related to its flame retardant process at Keil Chemical
and in consultation with the agencies, has taken interim measures to reduce air
emissions pending completion of the capital program. The Company has been
working with the appropriate environmental agencies and is exploring whether
the agencies' claims can be settled on reasonable terms. If reasonable
settlement cannot be reached, the Company intends to vigorously defend against
the agencies' claims.
Employees
---------
At December 31, 1993, Ferro employed approximately 6,627
full-time employees, including 4,325 employees in its foreign subsidiaries and
affiliates and 2,302 in the United States.
Set forth below is a table of union contracts showing name of
union, expiration date of union agreement, number of employees covered by the
union agreement, and percentage of United States work force covered by the
union agreement.
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Percentage of
Expiration Number of Domestic
Name of Union Date Employees Work Force
- ------------- ---------- --------- -------------
Glass, Pottery, Plastics
& Allied Workers Int'l
Union
-- Local #274-Louthan 10/12/95 61 2.6%
-Porcelain 6/24/96 57 2.3%
-- Local #207-A-Cesco 12/1/95 53 2.3%
United Glass & Ceramics
Workers of North America
-- Local #501-Nashville 4/22/97 107 4.6%
Laborers' International
Union of North America
-- Local #498-Orrville 12/10/96 12 0.5%
International Union, United
Automobile, Aerospace &
Agricultural Implement
Workers of America
-- Local #52-Plymouth 12/11/96 19 0.8%
United Steel Workers of
America
-- Local #1170 10/12/95 165 7.2%
Cleveland
-- Local #4084-Pittsburgh 2/28/96 18 0.8%
Allied Industrial Workers
-- Local #243-Bedford 9/6/94 59 2.6%
---- -----
551 23.9%
As indicated by the foregoing table, only 2.6% of Ferro's
domestic work force is affected by union agreements which expire in 1994.
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Foreign Operations
------------------
Financial information about Ferro's domestic and foreign
operations is set forth under the heading "Geographic Operating Data" on page
35 of the Annual Report and is incorporated herein by reference.
Ferro's products are produced and distributed in foreign as
well as domestic markets. Ferro commenced its international operations in
1927.
Wholly-owned subsidiaries operate manufacturing facilities in
Argentina, Australia, Brazil, Canada, England, France, Germany, Holland, Italy,
Mexico, New Zealand, Spain and Taiwan. Partially-owned affiliates manufacture
in Ecuador, Indonesia, Italy, Japan, Portugal, Taiwan, Thailand, Turkey and
Venezuela.
Foreign operations (excluding Canada) accounted for 50% of the
consolidated net sales and 57% of Ferro's consolidated operating income for
the fiscal year 1993; comparable amounts for the fiscal year 1992 were 55% and
74% and for fiscal year 1991 were 55% and 159%. The split of operating
income between foreign and domestic operations in 1991 was skewed heavily
against domestic results due to the one time restructuring charge.
Except for the sales of Ferro Enamel Espanola S.A. (Spain),
Ferro France, S.a R.L. (France), Ferro Chemicals S.A. (France), Ferro
(Holland) B.V., Ferro Mexicana S.A. de C.V. (Mexico), Ferro (Great Britain)
Ltd., Ferro Industrial Products Limited (Taiwan), Ferro Toyo Co., Ltd. (Taiwan)
and Metal Portuguesa S.A. (Portugal), the sales of each of Ferro's subsidiaries
are principally for delivery in the country in which the subsidiary is located.
Ferro's European Community subsidiaries continue to reduce and eliminate, to
the extent practical, duplication of product lines with the intended result
being that only one subsidiary will be the primary provider of each line of
Ferro specialty products to the entire European Community market.
Ferro receives technical service fees and/or royalties from
many of its foreign subsidiaries. Under historical practice, as a matter of
general corporate policy, the foreign subsidiaries were normally expected to
remit a portion of their annual earnings to the parent by way of dividends.
Under current practice, earnings of the Company's European subsidiaries are
being reinvested in European operations. Several of the countries where Ferro
has subsidiaries control the transfer of currency out of the country, but in
recent years Ferro has been able to receive such remittances without material
hindrance from foreign government restrictions. To the extent earnings of
foreign subsidiaries are not remitted to Ferro, such earnings are intended to
be indefinitely invested in those subsidiaries.
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ITEM 2 Properties
- -------------------
Ferro's research and development center is located in leased
space in Cleveland, Ohio. The corporate headquarters office is located at 1000
Lakeside Avenue, Cleveland, Ohio, and such property is owned by the Company.
The business segments in which Ferro's plants are used and the locations of the
principal manufacturing plants it owns in the United States are as follows:
Coatings, Colors and Ceramics -- Cleveland, Ohio, Lake Park, Florida,
Nashville, Tennessee, Pittsburgh, Pennsylvania, Toccoa, Georgia, Orrville,
Ohio, Penn Yan, New York, East Liverpool, Ohio, Crooksville, Ohio, and East
Rochester, New York; Plastics -- Plymouth, Indiana, Evansville, Indiana,
Stryker, Ohio, Edison, New Jersey and South Plainfield, New Jersey; Chemicals
- -- Bedford, Ohio, Hammond, Indiana and Baton Rouge, Louisiana. In addition,
Ferro leases manufacturing facilities in Santa Barbara, California (Coatings);
Schaumburg, Illinois (Plastics) and Lake Park, Florida (Coatings).
Outside the United States, Ferro or its subsidiaries own
manufacturing plants in Argentina, Australia, Brazil, Canada, France, Germany,
Indonesia, Italy, Japan, Mexico, the Netherlands, Portugal, Spain, Taiwan,
Thailand and the United Kingdom. Ferro or its subsidiaries lease manufacturing
plants in Italy, the Netherlands and New Zealand. In many instances, the
manufacturing facilities outside of the United States are used in multiple
business segments of Ferro.
Ferro believes that all of the foregoing facilities are
generally well maintained and adequate for their present use. During the past
year, several of Ferro's plants have been operating near capacity.
ITEM 3 Legal Proceedings
- --------------------------
The information set forth in Note 7 to Ferro's Consolidated
Financial Statements on page 29 of the Annual Report is incorporated herein by
reference.
Information regarding certain legal proceedings with respect
to environmental matters is contained under Part I of this Annual Report on
Form 10-K.
The law firm of Squire, Sanders & Dempsey, of which Paul B. Campbell
is a partner, provided legal services to Ferro in 1993 and Ferro plans to
continue the use of such firm in 1994. Mr. Campbell is the Secretary and a
Director of Ferro.
ITEM 4 Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
No matters were submitted to a vote of Ferro's security
holders during the fourth quarter of the fiscal year covered by this report.
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Executive Officers of the Registrant
------------------------------------
There is set forth below the name, age, positions and offices
held by each of Ferro's executive officers as of March 15, 1994 as well as
their business experience during the past five years. Years indicate the year
the individual was named to the indicated position. There is no family
relationship between any of Ferro's executive officers.
Albert C. Bersticker - 59
President and Chief Executive Officer, 1991
President and Chief Operating Officer, 1988
Werner F. Bush - 54
Executive Vice President and Chief Operating Officer, 1993
Senior Vice President, Coatings, Colors and Ceramics, 1991
Group Vice President, Coatings, Colors and Electronic
Materials, 1988
David G. Campopiano - 45
Vice President, Corporate Development, 1989
Senior Vice President, Prescott, Ball & Turben, Inc., 1987
Frank A. Carragher - 62
Senior Vice President, Chemicals and Polymers, 1991
Group Vice President, Chemicals, 1979
R. Jay Finch - 52
Vice President, Specialty Plastics, 1991
Vice President and General Manager, Plastics & Rubber Division,
Mobay Corporation, 1984
James F. Fisher - 56
Senior Vice President, Coatings, Colors and Ceramics, 1993
Group Vice President, International, 1991
Vice President, International, 1988
D. Thomas George - 46
Treasurer, 1991
Director, Treasury Operations, 1989
Area Controller, Latin America and Far East, 1988
Marino Lopez-Vega - 52
Vice President, Frit, 1992
Managing Director of Ferro Spain, 1984
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Hector R. Ortino - 51
Executive Vice President and Chief Financial-Administrative
Officer, 1993
Senior Vice President and Chief Financial Officer, 1991
Vice President, Finance and Chief Financial Officer, 1987
Richard C. Oudersluys - 55
Vice President, Pigments and Glass/Ceramics Colorants, 1992
General Manager, Color Division, 1987
Robert E. Price - 55
Vice President, International, 1993
Managing Director, Asia-Pacific, 1989
President, Ferro Far East Ltd., 1987
Thomas O. Purcell, Jr. - 50
Vice President, Research and Development, 1991
Associate Director Research, Plastics, 1990
Manager, Technology Assessment Operation, General Electric
Plastics, 1988
Gary H. Ritondaro - 47
Vice President, Finance, 1993
Vice President, Controller, 1991
Controller, 1986
PART II
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ITEM 5 Market for Registrant's Common Equity and Related
Stockholder Matters
- ----------------------------------------------------------
Information regarding the recent price and dividend history of
Ferro's Common Stock, the principal market for its Common Stock and the number
of holders thereof is set forth under the heading "Quarterly Data" on page 38
of the Annual Report. Said information is incorporated herein by reference.
Information concerning dividend restrictions is contained in Note 3 to Ferro's
Consolidated Financial Statements on pages 26 and 27 of the Annual Report and
said information is incorporated herein by reference.
ITEM 6 Selected Financial Data
- --------------------------------
The summary of selected financial data for each of the last
five years set forth under the heading "Selected Financial Data" on
pages 36 and 37 of the Annual Report is incorporated herein by reference.
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ITEM 7 Management's Discussion and Analysis of Financial
Conditions and Results of Operation
- ----------------------------------------------------------
The information contained under the heading "Management's
Discussion and Analysis" on pages 15 through 20 of the Annual Report is
incorporated herein by reference.
ITEM 8 Financial Statements and Supplementary Data
- ----------------------------------------------------
The Consolidated Financial Statements of Ferro and its
subsidiaries contained on pages 21 through 35, inclusive, of the Annual Report,
including the Notes to Consolidated Financial Statements, are incorporated
herein by reference.
ITEM 9 Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
- ------------------------------------------------------------------------
There are no such changes or disagreements.
PART III
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ITEM 10 Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
The information regarding directors of Ferro contained under
the headings "Election of Directors" and "Certain Matters Pertaining to the
Board of Directors" on pages 1 through 9, inclusive, of Ferro's Proxy Statement
dated March 14, 1994 is incorporated herein by reference. Information
regarding executive officers of Ferro is contained under Part I of this Annual
Report on Form 10-K.
ITEM 11 Executive Compensation
- -------------------------------
The information required by this Item 11 is set forth under
the heading "Information Concerning Executive Officers" on pages 15 through 20,
inclusive, of Ferro's Proxy Statement dated March 14, 1994 and is incorporated
herein by reference.
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
The information required by this Item 12 is set forth under
the headings "Election of Directors" and "Security Ownership of Directors,
Officers and Certain Beneficial Owners" on pages 1 through 8 of Ferro's Proxy
Statement dated March 14, 1994 and is incorporated herein by reference.
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ITEM 13 Certain Relationships and Related Transactions
- -------------------------------------------------------
There are no relationships or transactions that are required
to be reported.
PART IV
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ITEM 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K
- ------------------------------------------------------------
1. Documents filed as part of this Annual Report on Form 10-K
(a) The following Consolidated Financial Statements of Ferro
Corporation and its subsidiaries, contained on pages 21 through 35, inclusive,
of the Annual Report are incorporated herein by reference:
Consolidated Statements of Income for the Years ended December 31,
1993, 1992 and 1991
Consolidated Balance Sheets at December 31, 1993 and 1992
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for the Years ended December
31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
(b) Financial Statement Schedules V, VI, VIII, IX and X, together
with the independent Auditor's Report thereon, are contained on pages F-1
through F-7 of this Annual Report on Form 10-K.
(c) Exhibits
(3) Articles of Incorporation and by-laws
(a) Eleventh Amended Articles of Incorporation.
(Reference is made to Exhibit 3 to Ferro
Corporation's Quarterly Report on Form 10-Q
for the three months ended September 30, 1989,
which Exhibit is incorporated herein by
reference.)
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(b) Amended Code of Regulations. (Reference is
made to Exhibit (3)(b) to Ferro Corporation's
Quarterly Report on Form 10-Q for the three
months ended June 30, 1987, which Exhibit is
incorporated herein by reference.)
(4) Instruments defining rights of security holders,
including indentures
(a) Revolving Credit Agreement by and between
Ferro and four commercial banks dated August
22, 1990. (Reference is made to Exhibit 10 to
Ferro Corporation's Quarterly Report on Form
10-Q for the three months ended September 30,
1990, which Exhibit is incorporated herein by
reference.)
(b) Amendment Number 1 dated May 31, 1991, to the
Revolving Credit Agreement by and between
Ferro and four commercial banks. (Reference
is made to Exhibit 4(b)(1) to Ferro
Corporation's Quarterly Report on Form 10-Q
for the three months ended June 30, 1991,
which Exhibit is incorporated herein by
reference.)
(c) Amendment Number 2 dated July 30, 1991, to the
Revolving Credit Agreement by and between
Ferro and four commercial banks. (Reference
is made to Exhibit 4(b)(2) to Ferro
Corporation's Quarterly Report on Form 10-Q
for the three months ended June 30, 1991,
which Exhibit is incorporated herein by
reference.)
(d) Amendment Number 3 dated December 31, 1991, to
the Revolving Credit Agreement by and between
Ferro and four commercial banks. (Reference is
hereby made to Exhibit 4 to Ferro
Corporation's Form 10-K for the year ended
December 31, 1991, which Exhibit is
incorporated herein by reference.)
(e) Amendment Number 4 dated July 21, 1992, to the
Revolving Credit Agreement by and between
Ferro and four commercial banks. (Reference is
hereby made to Exhibit 4 to Ferro
Corporation's Form 10-Q for the three months
ended June 30, 1992, which Exhibit is
incorporated herein by reference.)
(f) Amendment Number 5 dated April 20, 1993, to
the Revolving Credit Agreement by and between
Ferro and four commercial banks. (Reference
is hereby made to Exhibit 4(b)(4) to Ferro
Corporation's Form 10-Q for the three months
ended June 30, 1993, which Exhibit is
incorporated herein by reference.)
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(g) The rights of the holders of Ferro's 11-3/4%
Debentures due October 15, 2000 are described
in the form of Indenture filed as Exhibit 4(b)
to Amendment No. 1 to the Registration
Statement on Form S- 3 filed with the
Commission on October 8, 1985 (Registration
No. 33-529). Said Exhibit is incorporated
herein by reference.
(h) Rights Agreement between Ferro Corporation and
National City Bank, Cleveland, Ohio, as Rights
Agent, dated as of March 21, 1986. (Reference
is made to Exhibit 1.2 to the Registration
Statement on Form 8-A dated March 26, 1986,
which Exhibit is incorporated herein by
reference.)
(i) Amendment No. 1 to Rights Agreement between
Ferro Corporation and National City Bank,
Cleveland, Ohio, as Rights Agent, dated as of
March 31, 1989. (Reference is made to Exhibit
1 to Form 8-K filed with the Commission on
March 31, 1989, which Exhibit is incorporated
herein by reference.)
(j) The rights of the holders of Ferro's Debt
Securities to be issued pursuant to an
Indenture between Ferro and Society National
Bank, as Trustee, are described in the form of
Indenture dated May 1, 1993 filed as Exhibit
4(j) to Ferro Corporation's Form 10-Q for the
three months ended June 30, 1993. Said
Exhibit is incorporated herein by reference.
(10) Material Contracts
(a) Key elements of Ferro's Incentive Compensation
Plan are set forth under the heading "Report
of the Compensation and Organization
Committee" on pages 11 through 13 of the Proxy
Statement dated March 14, 1994. Said
description is incorporated herein by
reference.
(b) Key elements of Ferro's Performance Share Plan
are set forth under the heading "Performance
Share Plan Awards" on pages 15, note 1, 17 and
18 of Ferro Corporation's Proxy Statement
dated March 15, 1993. Said description is
incorporated herein by reference.
(c) Ferro Corporation Savings and Stock Ownership
Plan. (Reference is made to Exhibit 4.3 to
Ferro Corporation's Quarterly Report on Form
10-Q for the three months ended March 31,
1989, which Exhibit is incorporated herein by
reference.)
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(d) Ferro's 1985 Employee Stock Option Plan for
Key Personnel (Amended and Restated).
(Reference is hereby made to Exhibit A to
Ferro Corporation's Proxy Statement dated
March 11, 1991, which Exhibit is hereby
incorporated by reference.)
(e) Form of Indemnification Agreement (adopted
January 25, 1991 for use from and after that
date). (Reference is hereby made to Exhibit
10 to Ferro Corporation's Form 10-K for the
year ended December 31, 1990, which Exhibit is
incorporated herein by reference.)
(f) Form of Executive Employment Agreement
(adopted October 1, 1991 for use from and
after that date). (Reference hereby is made
to Exhibit 10 to Ferro Corporation's Form 10-K
for the year ended December 31, 1991, which
Exhibit is incorporated herein by reference.)
(g) Schedule I listing the officers with whom
Ferro has entered into currently effective
executive employment agreements. A copy of
such Schedule I is attached hereto as Exhibit
10.
(h) Agreement between Ferro Corporation and Frank
A. Carragher dated October 18, 1993 is
attached hereto as Exhibit 10.1.
(11) Statement Regarding Computation of Earnings Per Share.
(12) Ratio of Earnings to Fixed Charges.
(13) Annual Report to Shareholders for the year ended
December 31, 1993.
(21) List of Subsidiaries.
(23) Consent of KPMG Peat Marwick to the incorporation by
reference of their audit report on the Consolidated
Financial Statements contained in the Annual Report
into Ferro's Registration Statements on Form S-8
Registration Nos. 2-61407, 33-28520 and 33-45582 and
Ferro's Registration Statement on Form S-3
Registration No. 33-51284.
2. No reports on Form 8-K were filed for the three months ended
December 31, 1993.
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
FERRO CORPORATION
By /s/Albert C. Bersticker
-----------------------------------
Albert C. Bersticker, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the Registrant and in their indicated capacities and as of
this 28th day of March, 1994.
/s/Albert C. Bersticker President and Chief Executive
- -----------------------------------------------------
Albert C. Bersticker Officer and Director
(Principal Executive Officer)
/s/Hector R. Ortino Executive Vice President and Chief
- -----------------------------------------------------
Hector R. Ortino Financial-Administrative Officer and Director
(Principal Financial Officer)
/s/Gary H. Ritondaro Vice President, Finance
- -----------------------------------------------------
Gary H. Ritondaro (Principal Accounting Officer)
/s/Paul S. Brentlinger Director
- -----------------------------------------------------
Paul S. Brentlinger
/s/Glenn R. Brown Director
- -----------------------------------------------------
Glenn R. Brown
/s/Werner F. Bush Director
- -----------------------------------------------------
Werner F. Bush
/s/William E. Butler Director
- -----------------------------------------------------
William E. Butler
/s/Paul B. Campbell Director
- -----------------------------------------------------
Paul B. Campbell
/s/A. James Freeman Director
- -----------------------------------------------------
A. James Freeman
- 17 -
18
/s/John C. Morley Director
- -----------------------------------------------------
John C. Morley
/s/Kevin O'Donnell Director
- -----------------------------------------------------
Kevin O'Donnell
/s/Adolph Posnick Director
- -----------------------------------------------------
Adolph Posnick
/s/Rex A. Sebastian Director
- -----------------------------------------------------
Rex A. Sebastian
/s/Dennis W. Sullivan Director
- -----------------------------------------------------
Dennis W. Sullivan
- 18 -
19
FERRO CORPORATION AND SUBSIDIARIES
Supporting Schedules to
Consolidated Financial Statements and Schedules
Submitted in Response to Part IV -- Form 10-K
December 31, 1993, 1992 and 1991
20
KPMG PEAT MARWICK
CERTIFIED PUBLIC ACCOUNTANTS
1500 National City Center
1800 East Ninth Street
Cleveland, OH 44114-3495
INDEPENDENT AUDITORS' REPORT
----------------------------
The Shareholders and Board of Directors
Ferro Corporation:
Under date of January 27, 1994, we reported on the consolidated balance
sheets of Ferro Corporation and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the years in the three- year period
ended December 31, 1993, as contained in the 1993 annual report to
shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for
the year 1993. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related
financial statement schedules listed in the accompanying table of contents.
These financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
/s/ KPMG PEAT MARWICK
Cleveland, Ohio
January 27, 1994
F-1
21
FERRO CORPORATION AND SUBSIDIARIES
Table of Contents
-----------------
Financial Statements
--------------------
Audited
Consolidated Balance Sheets -
December 31, 1992 and 1991
Consolidated Statements of Income -
Years ended December 31, 1993, 1992, and 1991
Consolidated Statements of Shareholders' Equity -
Years ended December 31, 1993, 1992, and 1991
Consolidated Statements of Cash Flows -
Years ended December 31, 1993, 1992, and 1991
Notes to Consolidated Financial Statements -
December 31, 1993, 1992, and 1991
Schedules
---------
Plant and Equipment -
Years ended December 31, 1993, 1992, and 1991 Schedule V
Accumulated Depreciation of Plant and Equipment -
Years ended December 31, 1993, 1992, and 1991 Schedule VI
Valuation and Qualifying Accounts and Reserves -
Years ended December 31, 1993, 1992, and 1991 Schedule VIII
Short-Term Borrowings -
Years ended December 31, 1993, 1992, and 1991 Schedule IX
Supplementary Income Statement Information -
Years ended December 31, 1993, 1992, and 1991 Schedule X
All other schedules have been omitted because the material is not
applicable or is not required as permitted by the rules and regulations of
the Securities and Exchange Commission, or the required information is
included in notes to consolidated financial statements.
Financial statements of foreign affiliates in which Company ownership
exceeds 20 percent, accounted for on the equity method, are not included
herein since, in the aggregate, these companies do not constitute a
significant subsidiary. Financial statements are incorporated herein by
reference to the Company's annual report to its shareholders, the required
number of copies of which were furnished to the Commission pursuant to
Rule 14A-3.
F-2
22
Schedule V
----------
FERRO CORPORATION AND SUBSIDIARIES
Plant and Equipment
Years ended December 31, 1993, 1992, and 1991
(thousands of dollars)
Retirements
Balance at Additions - Other and Balance
Beginning Companies Additions Companies Other at End of
Classification of Period Purchased at Cost Divested Changes Period
-------------- ----------- ---------- --------- ----------- ------- --------
Year ended December 31, 1993
Land $ 13,139 1,333 892 - (450)(B) 14,914
Buildings 113,656 6,799 9,105 1,564 (1,015)(B) 126,981
Machinery and equipment 370,766 23,194 33,714 19,501 (13,506)(B) 396,293
1,626 (A)
---------- ------ ------ ------ ---------- --------
$ 497,561 31,326 43,711 21,065 (13,345) 538,188
========== ====== ====== ====== ========== ========
Year ended December 31, 1992
Land $ 11,849 350 2,093 463 (690)(B) 13,139
Buildings 122,645 1,534 7,134 13,241 (4,416)(B) 113,656
Machinery and equipment 377,111 2,118 35,532 27,639 116(A) 370,766
(16,472)(B)
---------- ------ ------ ------ ---------- --------
$ 511,605 4,002 44,759 41,343 (21,462) 497,561
========== ====== ====== ====== ========== ========
Year ended December 31, 1991
Land $ 9,624 - 222 83 2,017 (A) 11,849
69 (B)
Buildings 125,153 - 4,469 4,823 (2,017) 122,645
(137)(B)
Machinery and equipment 384,267 - 34,314 40,726 (744) 377,111
---------- ------ ------ ------ ---------- --------
$ 519,044 - 39,005 45,632 (812) 511,605
========== ====== ====== ====== ========== ========
<FN>
Notes
- -----
(A) Transfers and adjustments.
(B) Exchange adjustments to restate plant and equipment at the applicable year-end exchange rates.
F-3
23
Schedule VI
-----------
FERRO CORPORATION AND SUBSIDIARIES
Accumulated Depreciation of Plant and Equipment
Years ended December 31, 1993, 1992, and 1991
(thousands of dollars)
Additions
Balance at Charged to Retirements and
Beginning of Costs and Companies Other Balance at end
Classification Period Expenses Divested Changes of Period
Year ended December 31, 1993
Buildings $ 46,688 4,674 487 (1,219)(B) 49,656
Machinery and equipment 223,310 29,138 14,468 (7,269)(B) 230,711
------- ------ ------ ------- -------
$ 269,998 33,812 14,955 (8,488) 280,367
======= ====== ====== ======= =======
Year ended December 31, 1992
Buildings $ 49,678 3,811 4,652 (2,149)(B) 46,688
Machinery and equipment 227,207 29,640 23,263 (10,274)(B) 223,310
------- ------ ------ ------ -------
$ 276,885 33,451 27,915 (12,423) 269,998
======= ====== ====== ====== =======
Year ended December 31, 1991
Buildings $ 47,545 3,335 1,138 17(A) 49,678
(81)(B)
Machinery and equipment 215,569 29,351 17,998 (17)(A) 227,207
302 (B)
------- ------ ------ ------ -------
$ 263,114 32,686 19,136 221 276,885
======= ====== ====== ======= =======
<FN>
Notes
- -----
(A) Transfers and adjustments.
(B) Exchange adjustments to restate plant and equipment at the applicable year-end exchange rates.
F-4
24
Schedule VIII
-------------
FERRO CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years ended December 31, 1993, 1992, and 1991
(thousands of dollars)
Additions
---------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
of Period Expenses Accounts Deductions Period
Year ended December 31, 1993
Valuation and qualifying accounts which are
deducted on consolidated balance sheet from
the assets to which they apply
Possible losses in collection of notes
and accounts receivable - trade $ 7,924 811 (517) (B) 1,754 (A) 6,464
======= ====== ====== ===== =======
Year ended December 31, 1992
Valuation and qualifying accounts which are
deducted on consolidated balance sheet from
the assets to which they apply
Possible losses in collection of notes
and accounts receivable - trade $10,418 2,530 (1,063) (B) 3,961 (A) 7,924
====== ====== ===== ===== =======
Year ended December 31, 1991
Valuation and qualifying accounts which are
deducted on consolidated balance sheet from
the assets to which they apply
Possible losses in collection of notes (841) (B)
and accounts receivable - trade $ 9,381 3,346 (241) (C) 1,227 (A) 10,418
======= ===== ====== ===== ======
<FN>
Notes
- -----
(A) Accounts written off, less recoveries.
(B) Adjustment in respect of differences in rates of exchange.
(C) Divestiture of business or subsidiary.
F-5
25
Schedule IX
-----------
FERRO CORPORATION AND SUBSIDIARIES
Short-Term Borrowings
Years ended December 31, 1993, 1992, and 1991
(thousands of dollars)
Maximum Average Weighted
Weighted Amount Amount Average
Balance at Average Outstanding Outstanding Interest Rate
End of Interest During the During the During the
Category Period Rate Period Period (A) Period (B)
-------- ---------- -------- --------- ----------- -------------
Year ended December, 1993
Bank $ 18,376 10.81% $ 20,063 $ 18,084 11.97%
====== ===== ====== ======== =====
Year ended December 31, 1992
Bank $ 16,251 12.10% $ 16,252 $ 10,616 11.65%
====== ===== ====== ======== =====
Year ended December 31, 1991
Bank $ 12,504 19.43% $ 21,089 $ 14,938 19.19%
====== ===== ====== ======== =====
<FN>
Notes
- -----
(A) Average amount outstanding during the period is computed by dividing the total of
month-end short-term borrowings by 12.
(B) Weighted average interest rate during the period is computed by dividing interest expense
applicable to short-term borrowings by the weighted average short-term debt outstanding.
F-6
26
Schedule X
----------
FERRO CORPORATION AND SUBSIDIARIES
Supplementary Income Statement Information
Years ended December 31, 1993, 1992, and 1991
(thousands of dollars)
Charged to Costs and Expenses
-----------------------------
Item 1993 1992 1991
---- ---- ---- ----
Maintenance and repairs $ 43,590 47,269 44,937
====== ====== ======
Note
- ----
Depreciation and amortization of intangible assets, taxes other than payroll,
and income taxes, royalties, and advertising costs have been excluded from the
above table because each of those expenses amounted to less than 1 percent of
total revenues in the years presented or is included in the consolidated
financial statements.
F-7
27
EXHIBIT INDEX
-------------
Exhibit
- -------
(10) Schedule I
(10.1) Agreement Between Ferro Corporation
and Frank A. Carragher
(11) Statement Regarding Computation of
Earnings Per Share
(12) Ratio of Earnings to Fixed Charges
(13) Annual Report to Shareholders
(21) List of Subsidiaries
(23) Consent of KPMG Peat Marwick