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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(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, 1996
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
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FERRO CORPORATION
(Exact name of registrant as specified in its charter)
An Ohio Corporation 1000 LAKESIDE AVENUE I.R.S. No. 34-0217820
CLEVELAND, OH 44114
(Address of principal executive offices)
Registrant's telephone number, including area code: 216-641-8580
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Class Name of Exchange on which registered
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Common Stock, par value $1.00 New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
7 5/8% Debentures due May 1, 2013
7 3/8% Debentures due November 1, 2015
8% Debentures due June 15, 2025
Series A ESOP Convertible Preferred Stock, without Par Value
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
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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, January 31, 1997 there were 25,537,533 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
$759,741,607.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Annual Report to Shareholders for the year ended December 31, 1996
(Incorporated into Parts I, II and IV of this Form 10-K).
Portions of Ferro Corporation's Proxy Statement dated March 13, 1997
(Incorporated into Parts II and III of this Form 10-K).
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TABLE OF CONTENTS
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PART I
Item 1. Business..................................................................................Page 3
Item 2. Properties................................................................................Page 6
Item 3. Legal Proceedings.........................................................................Page 6
Item 4. Submission of Matters to a Vote of Security Holders.......................................Page 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.....................Page 8
Item 6. Selected Financial Data...................................................................Page 8
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.....Page 8
Item 8. Financial Statements and Supplementary Data...............................................Page 8
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure..... Page 9
PART III
Item 10. Directors and Executive Officers of the Registrant........................................Page 9
Item 11. Executive Compensation....................................................................Page 9
Item 12. Security Ownership of Certain Beneficial Owners and Management............................Page 9
Item 13. Certain Relationships and Related Transactions............................................Page 9
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................Page 9
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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 for industry by organic
and inorganic chemistry. It operates (either directly or through subsidiaries
and affiliates) in 21 countries worldwide. Ferro produces a variety of specialty
coatings, colors, ceramics, plastics, chemicals, 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 both in the manufacturing processes
and in the end products of Ferro customers. These specialty materials are not
sold in the high volume normally associated with commodity businesses.
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 6 through 13
of its 1996 Annual Report to Shareholders, which is attached hereto as Exhibit
13 (the "Annual Report"). The information contained under the aforementioned
headings on pages 6 through 13 of the Annual Report (excluding pages 8, 11 and
12 on which only pictures appear and the text describing such pictures on pages
9, 10 and 13) is incorporated herein by reference. Information concerning
Ferro's business during 1996, 1995 and 1994 and certain transactions consummated
during those years is included under the heading "Management's Discussion and
Analysis" on pages 14 through 18 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 27 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 30 and 31 of
the Annual Report and is incorporated herein by reference.
Certain Statements contained herein and in future filings with the
Securities and Exchange Commission reflect the Company's current expectations
with respect to the future performance of the Company and may constitute
"Forward-Looking Statements." Because they are based on current expectations,
actual results may differ materially. Please refer to the "Cautionary Note on
Forward-Looking Statements" section of "Management's Discussion and Analysis"
contained on page 17 of the Annual Report for additional information, which
information 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 1996 and does not
anticipate such shortages in 1997.
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
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group of patents would have a materially adverse effect on its business. Ferro
patents expire at various dates through the year 2017.
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 Coatings, Colors and
Ceramics or its Plastics businesses are dependent on any single customer or
group of customers. In the Chemicals segment however, the loss of two or three
of the largest customers could have a materially adverse effect on this segment.
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 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. The exception to this is frit,
where 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 world, 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 61 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 $23,779,000, $23,150,000 and $22,919,000 in
1996, 1995 and 1994 respectively. Expenditures for individual customer requests
for 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
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subject and that, to the extent Ferro may not be in compliance with such
regulations, such non-compliance has not had a materially 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 $4.2 million in capital
expenditures for environmental control in 1996 and the Company's best estimate
of what it expects capital expenditures for environmental control to be in 1997
and 1998 are $3.0 million and $3.5 million, respectively. The Company does not
consider these capital expenditures to be material.
During 1995 the Company reached an agreement in principle to settle a suit
filed in August 1993 by the United States Environmental Protection Agency
alleging violation of the Clean Water Act and the Rivers and Harbors Act by Keil
Chemical, a production facility owned and operated by Ferro in Hammond, Indiana.
The Company had 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 1996 the Company signed a Consent Decree whereby
the Company agreed to pay a civil penalty of $0.4 million and to pay $1.4
million (the "Settlement Amount") into a fund to be established to help clean up
sediment in the West Branch of the Grand Calumet River following entry of the
Consent Decree by the Court. The Consent Decree is expected to be entered by the
Court in the first quarter of 1997. The Company is obligated to pay the
Settlement Amount 30 days after entry of the Consent Decree by the Court.
EMPLOYEES
At December 31, 1996, Ferro employed approximately 6,912 full-time
employees, including 4,040 employees in its foreign subsidiaries and affiliates
and 2,872 in the United States.
Approximately 27% of the domestic workforce is covered by labor agreements,
and approximately 7% is affected by union agreements which expire in 1997.
FOREIGN OPERATIONS
Financial information about Ferro's domestic and foreign operations is set
forth on pages 30 and 31 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,
Portugal, Spain and Taiwan. Partially-owned subsidiaries manufacture in Ecuador,
Indonesia, Japan, Taiwan, Thailand, Turkey and Venezuela.
Foreign operations (excluding Canada) accounted for 46% of the consolidated
net sales and 46% of Ferro's consolidated operating income for the fiscal year
1996; comparable amounts for the fiscal year 1995 were 50% and 53% and for
fiscal year 1994 were 50% and 60%.
Except for the sales of Ferro Enamel Argentina, S.A.I.C.y.M.(Argentina),
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.,
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Ltd. (Taiwan), Ruhr-Pulverlack G.m.b.H.(Germany) and Ferro Industrias Quimicas
(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. Historically, as a matter of general corporate policy, the
foreign subsidiaries have been expected to remit a portion of their annual
earnings to the parent as dividends. 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.
ITEM 2 - PROPERTIES
Ferro's corporate headquarters office is located at 1000 Lakeside Avenue,
Cleveland, Ohio; and the Research and Development Center is located in
Independence, Ohio; both properties are 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; Nashville, Tennessee;
Pittsburgh, Pennsylvania; Toccoa, Georgia; Orrville, Ohio; Shreve, 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 Cleveland, Ohio
(Chemicals); Fort Worth, Texas (Chemicals); Santa Barbara, California (Coatings)
and San Marcos, California (Coatings).
Outside the United States, Ferro or its subsidiaries own manufacturing
plants in Argentina, Australia, Brazil, Canada, Ecuador, France, Germany,
Indonesia, Italy, Japan, Mexico, the Netherlands, Spain, Taiwan, Thailand and
the United Kingdom. Ferro or its subsidiaries lease manufacturing plants in
Italy, Portugal, Germany and the Netherlands. 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
Information set forth in Note 7 to Ferro's Consolidated Financial
Statements on page 28 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 Mark A. Cusick is a
partner, provided legal services
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to Ferro in 1996 and Ferro plans to continue the use of such firm in 1997. Mr.
Cusick is the Secretary 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.
EXECUTIVE OFFICERS OF THE REGISTRANT
There is set forth below the name, age, positions and offices held by each
individual serving as executive officer as of March 15, 1997 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 - 62
Chairman of the Board and Chief Executive Officer, 1996
President and Chief Executive Officer, 1991
David G. Campopiano - 47
Vice President, Corporate Development, 1989
R. Jay Finch - 55
Vice President, Specialty Plastics, 1991
James F. Fisher - 59
Vice President, Ceramics and Colorants 1996
Senior Vice President, Powder Coatings, Specialty Ceramics and
Electronic Materials, 1994
Senior Vice President, Coatings, Colors and Ceramics, 1993
Group Vice President, International, 1991
James B. Friederichsen - 54
Vice President, Specialty Chemicals, 1994
President, MTM Americas, 1990
D. Thomas George - 49
Treasurer, 1991
J. Larry Jameson - 59
Vice President, Powder Coatings, 1996
Self Employed, Coatings Consultant, 1993
Chief Executive Officer, Pirelli Cable Corporation, 1993
President, Coatings and Colorants Division, BASF Corporation, 1986
Charles M. Less - 47
Vice President, Marketing, 1995
Group Market Manager, Rohm and Haas, 1992
Business Manager Coatings, Europe, Rohm and Haas, 1987
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Hector R. Ortino - 54
President and Chief Operating Officer, 1996
President, 1996
Executive Vice President and Chief Financial-Administrative Officer,
1993
Senior Vice President and Chief Financial Officer, 1991
Thomas O. Purcell, Jr. - 52
Vice President and Chief Technical Officer, 1996
Vice President, Research and Development, 1991
Gary H. Ritondaro - 50
Vice President and Chief Financial Officer, 1996
Vice President, Finance, 1993
Vice President, Controller, 1991
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 (unaudited)" on
page 34 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 25 and 26 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 32 and 33 of the
Annual Report is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The information contained under the heading "Management's Discussion and
Analysis" on pages 14 through 18 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 19 through 31, inclusive, including the Notes to Consolidated
Financial Statements, and the quarterly data (unaudited) on page 34 of the
Annual Report, are incorporated herein by reference.
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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 13, 1997 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 14 through 27, inclusive,
of Ferro's Proxy Statement dated March 13, 1997, 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, inclusive, of Ferro's Proxy
Statement dated March 13, 1997 and is incorporated herein by reference.
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 19 THROUGH 31, INCLUSIVE, OF
THE ANNUAL REPORT ARE INCORPORATED HEREIN BY REFERENCE:
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Consolidated Statements of Income for the years ended December 31,
1996, 1995 and 1994
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
(B) THE FOLLOWING ADDITIONAL INFORMATION FOR THE YEARS 1996, 1995 AND
1994, IS SUBMITTED HEREWITH:
Independent Auditors' Report on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts and Reserves
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 because, in the aggregate, these companies do not
constitute a significant subsidiary.
Financial Statement Schedule II, together with the independent
Auditors' Report thereon, are contained on pages F-1 and F-2 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.)
(b) Certificate of Amendment to the Eleventh Amended Articles of
Incorporation of Ferro Corporation filed December 28, 1994.
(Reference is made to Exhibit (3)(b) to Ferro Corporation's
Annual Report on Form 10-K for the year ended December 31,
1994, which Exhibit is incorporated herein by reference.)
(c) 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
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(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 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 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 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 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 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.)
(g) Amendment Number 6 dated June 22, 1995, to the Revolving
Credit Agreement by and between Ferro and four commercial
banks. (Reference is made to Exhibit 4(b)(4) to Ferro
Corporation's Form 10-Q for the three months ended June 30,
1995, which Exhibit is incorporated herein by reference.)
(h) Amendment Number 7 dated October 25, 1995 to the Revolving
Credit Agreement by and between Ferro Corporation and four
commercial banks. (Reference is made to Exhibit 4(b)(4) to
Ferro Corporation's Form 10-Q for the three months ended
September 30, 1995, which Exhibit is incorporated herein by
reference.)
(i) Shareholder Rights Agreement between Ferro Corporation and
National City Bank, Cleveland, Ohio, as Rights Agent, dated
as of March 22, 1996. (Reference is made to the Exhibit to
the Registration Statement on Form 8-A dated May 15, 1996
which Exhibit is incorporated herein by reference.)
(j) The rights of the holders of Ferro's Debt Securities issued
and 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
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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 14 through 17 of the Proxy
Statement dated March 13, 1997. Said description is
incorporated herein by reference.
(b) Ferro's 1997 Performance Share Plan, subject to shareholder
approval at the 1997 annual meeting. Reference is made to
Exhibit A of Ferro Corporation's Proxy Statement dated March
13, 1997, which exhibit 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.)
(d) Ferro's 1985 Employee Stock Option Plan for Key Personnel
(Amended and Restated). (Reference is made to Exhibit A to
Ferro Corporation's Proxy Statement dated March 11, 1991,
which Exhibit is incorporated by reference.) Reference is
also made to pages 13 and 14 of Ferro Corporation's Proxy
Statement dated March 20, 1995, for an amendment to the
plan. Reference is also made to pages 10 through 13 of Ferro
Corporation's Proxy Statement dated March 12, 1996, for an
amendment to the plan. Attached hereto as Exhibit 10.3 is
an amendment to the plan effective with respect to options
granted beginning in January 1997.
(e) Form of Indemnification Agreement (adopted January 25, 1991
for use from and after that date). (Reference is 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) Amended and Restated Executive Employment Agreement dated
July 28, 1995. (Reference is made to Exhibit 10(b) of Ferro
Corporation's Form 10-Q for the three months ended September
30, 1995, 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) Various agreements relating to an Asset Defeasance Financing
including a Participation Agreement dated as of October 31,
1995 among Ferro Corporation, State Street Bank and Trust
Company (not in its individual capacity but solely as
Trustee), the financial institutions named as Purchasers,
and Citibank N.A, as Agent, and a Lease dated October 31,
1995 between State Street Bank and Trust Company (not in its
individual capacity but solely as Trustee) as Lessor and
Ferro Corporation as Lessee. The additional agreements are
available upon request. (Reference is made to Exhibit 10(a)
of Ferro Corporation's Form 10-Q for the three months ended
September 30, 1995, which Exhibit is incorporated herein by
reference.)
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(i) Ferro's Supplemental Executive Defined Contribution Plan is
attached hereto as Exhibit 10.1.
(j) Separation Agreement between Ferro Corporation and Werner F.
Bush dated September 30, 1996 is attached hereto as Exhibit
10.2.
(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, 1996.
(21) List of Subsidiaries.
(23) Consent of KPMG Peat Marwick LLP 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 and
Registration No. 33-63855.
2. REPORTS ON FORM 8-K:
No reports on Form 8-K were filed for the three months ended December 31,
1996
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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,
Chairman 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 21st
day of March, 1997
/s/ Albert C. Bersticker Chairman and Chief Executive Officer
Albert C. Bersticker and Director
(Principal Executive Officer)
/s/ Gary H. Ritondaro Vice President and Chief Financial
Gary H. Ritondaro Officer
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Sandra Harden Austin Director
Sandra Harden Austin
/s/ Paul S. Brentlinger Director
Paul S. Brentlinger
/s/ Glenn R. Brown Director
Glenn R. Brown
Director
William E. Butler
/s/ A. James Freeman Director
A. James Freeman
Director
John C. Morley
/s/ Hector R. Ortino Director
Hector R. Ortino
/s/ Rex A. Sebastian Director
Rex A. Sebastian
/s/ Dennis W. Sullivan Director
Dennis W. Sullivan
-14-
15
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
The Shareholders and Board of Directors Ferro Corporation
Under date of January 23, 1997, we reported on the consolidated balance sheets
of Ferro Corporation and subsidiaries as of December 31, 1996 and 1995, 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, 1996, as
contained in the 1996 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 1996. In connection with our audits of
the aforementioned consolidated financial statements, we also audited the
related financial statement Schedule II, Valuation and Qualifying Accounts and
Reserves. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Cleveland, Ohio
January, 23, 1997
F-1
16
FERRO CORPORATION AND SUBSIDIARIES
Schedule II - Valuation and Qualifying Accounts and Reserves
Years ended December 31, 1996, 1995 and 1994
(thousands of dollars)
Additions
----------------------
Balance at Charged to Charged Balance
Beginning Costs and to Other at End of
of Period Expenses Accounts Deductions Period
---------- ---------- -------- ---------- ---------
Year ended December 31, 1996
Valuation and qualifying accounts which
are deducted on consolidated balance
sheet from the assets to which they apply 254 (C)
Possible losses in collection of notes 225 (B)
and accounts receivable - trade $ 9,877 3,006 2,907 (A) 9,497
========== ========== ======== ========== =========
Year ended December 31, 1995
Valuation and qualifying accounts which
are deducted on consolidated balance
sheet from the assets to which they apply
Possible losses in collection of notes 12 (C)
and accounts receivable - trade $ 7,129 4,750 174 (B) 2,188 (A) 9,877
========== ========== ======== ========== =========
Year ended December 31, 1994
Valuation and qualifying accounts which
are deducted on consolidated balance
sheet from the assets to which they apply
Possible losses in collection of notes 68 (C)
and accounts receivable - trade $ 6,464 2,113 264 (B) 1,780 (A) 7,129
========== ========== ======== ========== =========
<FN>
(A) Accounts written off, less recoveries
(B) Adjustment in respect of differences in rates of exchange
(C) Acquisitions and divestitures, net
F-2
17
EXHIBIT INDEX
Exhibit (10) Schedule I
Exhibit (10.1) Supplemental Executive Defined Contribution Plan
Exhibit (10.2) Separation Agreement Between Ferro Corporation and
Werner F. Bush
Exhibit (10.3) Ammendment to Ferro Corporation 1985 Employee Stock Option
Plan for Key Personnel Effective with Respect to Options
Granted Beginning in January 1997.
Exhibit (11) Statement Regarding Computation of Earnings per Share
Exhibit (12) Ratio of Earnings to Fixed Charges
Exhibit (13) Annual Report to Shareholders
Exhibit (21) List of Subsidiaries
Exhibit (23) Consent of KPMG Peat Marwick LLP
Exhibit (27) Financial Data Schedule (Electronic Filing Only)