FERRO CORP (Form: 10-Q, Received: 04/25/2012 16:40:01)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

( Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-584

FERRO CORPORATION

(Exact name of registrant as specified in its charter)


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

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

216-875-5600

(Registrant’s telephone number, including area code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x

At March 31, 2012, there were 86,567,912 shares of Ferro Common Stock, par value $1.00, outstanding.

TABLE OF CONTENTS


	Page
PART I

Item 1. Financial Statements (Unaudited)		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures about Market Risk		23

Item 4. Controls and Procedures		24

PART II

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25

Item 3. Defaults Upon Senior Securities		25

Item 4. Mine Safety Disclosures		25

Item 5. Other Information		26

Item 6. Exhibits		26

Exhibit 10.1

Exhibit 10.2

Exhibit 10.3

Exhibit 10.4

Exhibit 10.5

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

EX-101 Instance Document

EX-101 Schema Document

EX-101 Calculation Linkbase Document

EX-101 Labels Linkbase Document

EX-101 Presentation Linkbase Document

EX-101 Definition Linkbase Document

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Net Income


	Three months ended March 31,
	2012			2011
	(Dollars in thousands, except per share amounts)
Net sales	$	466,390		$	573,009
Cost of sales		378,067			452,683

Gross profit		88,323			120,326
Selling, general and administrative expenses		77,685			76,818
Restructuring and impairment charges		311			1,630
Other expense (income):
Interest expense		6,740			6,826
Interest earned		(84	)		(74	)
Foreign currency losses, net		144			1,310
Miscellaneous expense, net		394			518

Income before income taxes		3,133			33,298
Income tax expense		1,719			10,107

Net income		1,414			23,191
Less: Net income attributable to noncontrolling interests		124			301

Net income attributable to Ferro Corporation		1,290			22,890
Dividends on preferred stock		—			(165	)

Net income attributable to Ferro Corporation common shareholders	$	1,290		$	22,725

Earnings per share attributable to Ferro Corporation common shareholders:
Basic earnings per share	$	0.01		$	0.26
Diluted earnings per share		0.01			0.26

See accompanying notes to condensed consolidated financial statements.

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income


	Three months ended March 31,
	2012		2011
	(Dollars in thousands)
Net income	$	1,414	$	23,191
Other comprehensive income (loss), net of tax:
Foreign currency translation		24		5,579
Postretirement benefit liabilities		1,892		(491	)

Total comprehensive income		3,330		28,279
Less: Comprehensive income attributable to noncontrolling interests		122		348

Comprehensive income attributable to Ferro Corporation	$	3,208	$	27,931

See accompanying notes to condensed consolidated financial statements.

Ferro Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	March 31, 2012			December 31, 2011
	(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	23,271		$	22,991
Accounts receivable, net		343,668			306,775
Inventories		243,151			228,813
Deferred income taxes		17,291			17,395
Other receivables		33,915			37,839
Other current assets		10,076			17,086

Total current assets		671,372			630,899
Other assets
Property, plant and equipment, net		378,988			379,336
Goodwill		215,830			215,601
Amortizable intangible assets, net		11,184			11,056
Deferred income taxes		118,978			117,658
Other non-current assets		89,096			86,101

Total assets	$	1,485,448		$	1,440,651

LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt	$	43,194		$	11,241
Accounts payable		217,457			214,460
Accrued payrolls		30,773			31,055
Accrued expenses and other current liabilities		71,789			67,878

Total current liabilities		363,213			324,634
Other liabilities
Long-term debt, less current portion		300,530			298,082
Postretirement and pension liabilities		213,253			215,732
Other non-current liabilities		20,954			19,709

Total liabilities		897,950			858,157
Equity
Ferro Corporation shareholders’ equity:
Common stock, par value $1 per share; 300.0 million shares authorized; 93.4 million shares issued; 86.6 million shares outstanding in 2012 and 2011		93,436			93,436
Paid-in capital		321,963			320,882
Retained earnings		394,926			393,636
Accumulated other comprehensive loss		(80,157	)		(82,075	)
Common shares in treasury, at cost		(152,980	)		(153,617	)

Total Ferro Corporation shareholders’ equity		577,188			572,262
Noncontrolling interests		10,310			10,232

Total equity		587,498			582,494

Total liabilities and equity	$	1,485,448		$	1,440,651

See accompanying notes to condensed consolidated financial statements.

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Equity


	Ferro Corporation Shareholders
	Common Shares in Treasury						Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interests			Total Equity
	Shares			Amount			Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interests			Total Equity
	(In thousands)
Balances at December 31, 2010		7,242		$	(164,257	)	$	93,436	$	323,015		$	362,164		$	(50,949	)	$	10,771		$	574,180
Net income													22,890						301			23,191
Other comprehensive income																5,041			47			5,088
Cash dividends on preferred stock													(165	)								(165	)
Stock-based compensation transactions		(362	)		10,256					(7,514	)											2,742

Balances at March 31, 2011		6,880		$	(154,001	)	$	93,436	$	315,501		$	384,889		$	(45,908	)	$	11,119		$	605,036

Balances at December 31, 2011		6,865		$	(153,617	)	$	93,436	$	320,882		$	393,636		$	(82,075	)	$	10,232		$	582,494
Net income													1,290						124			1,414
Other comprehensive income																1,918			(2	)		1,916
Stock-based compensation transactions		3			637					1,081												1,718
Distributions to noncontrolling interests																			(44	)		(44	)

Balances at March 31, 2012		6,868		$	(152,980	)	$	93,436	$	321,963		$	394,926		$	(80,157	)	$	10,310		$	587,498

See accompanying notes to condensed consolidated financial statements.

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows


	Three months ended March 31,
	2012			2011
	(Dollars in thousands)
Cash flows from operating activities
Net cash used for operating activities	$	(10,975	)	$	(28,580	)
Cash flows from investing activities
Capital expenditures for property, plant and equipment		(22,579	)		(16,037	)
Proceeds from sale of assets		368			1,132

Net cash used for investing activities		(22,211	)		(14,905	)
Cash flows from financing activities
Net borrowings under loans payable		31,684			52,944
Proceeds from long-term debt		97,918			209,677
Principal payments on long-term debt		(95,673	)		(209,677	)
Redemption of convertible preferred stock		—			(9,427	)
Cash dividends paid		—			(165	)
Other financing activities		(440	)		331

Net cash provided by financing activities		33,489			43,683
Effect of exchange rate changes on cash and cash equivalents		(23	)		360

Increase in cash and cash equivalents		280			558
Cash and cash equivalents at beginning of period		22,991			29,035

Cash and cash equivalents at end of period	$	23,271		$	29,593

Cash paid during the period for:
Interest	$	12,059		$	11,540
Income taxes		1,229			6,930

See accompanying notes to condensed consolidated financial statements.

Ferro Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

1.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Ferro Corporation (“Ferro,” “we,” “us” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. These statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2011.

Operating results for the three months ended March 31, 2012, are not necessarily indicative of the results expected in subsequent quarters or for the full year ending December 31, 2012.

2.	Recent Accounting Pronouncements

Accounting Standards Adopted in the Three Months Ended March 31, 2012

On January 1, 2012, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs , (“ASU 2011-04”), which is codified in ASC Topic 820, Fair Value Measurement. This pronouncement changes certain fair value measurement guidance and expands certain disclosure requirements. Adoption of this pronouncement did not have a material effect on our consolidated financial statements.

On January 1, 2012, we adopted ASU 2011-05, Presentation of Comprehensive Income , (“ASU 2011-05”) and ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 , (“ASU 2011-12”), which are codified in ASC Topic 220, Comprehensive Income. ASU 2011-05 requires companies to present items of net income, items of other comprehensive income and total comprehensive income in one continuous statement or two separate but consecutive statements. ASU 2011-12 indefinitely defers certain provision of ASU 2011-05 that required companies to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. Adoption of these pronouncements did not have a material effect on our consolidated financial statements.

On January 1, 2012, we adopted ASU 2011-08, Testing Goodwill for Impairment , (“ASU 2011-08”), which is codified in ASC Topic 350, Intangibles—Goodwill and Other. This pronouncement permits companies testing goodwill for impairment to first assess qualitative factors to determine whether the two-step impairment test is required. Adoption of this pronouncement did not have a material effect on our consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities , (“ASU 2011-11”), which is codified in ASC Topic 210, Balance Sheet. This pronouncement contains new disclosure requirements about a company’s right of setoff and related arrangements associated with its financial and derivative instruments. ASU 2011-11 will be effective for our fiscal year that begins January 1, 2013, and is to be applied retrospectively. We do not expect that adoption of this pronouncement will have a material effect on our consolidated financial statements.

3.	Inventories


	March 31, 2012		December 31, 2011
	(Dollars in thousands)
Raw materials	$	84,872	$	78,199
Work in process		43,360		42,111
Finished goods		114,919		108,503

Total inventories	$	243,151	$	228,813

In the production of some of our products, we use precious metals, some of which we obtain from financial institutions under consignment agreements with terms of one year or less. The financial institutions retain ownership of the precious metals and charge us fees based on the amounts we consign. These fees were $1.9 million and $2.0 million for the three months ended March 31, 2012 and 2011, respectively. We had on hand precious metals owned by participants in our precious metals consignment program of $202.7 million at March 31, 2012, and $195.0 million at December 31, 2011, measured at fair value based on market prices for identical assets.

4.	Property, Plant and Equipment

Property, plant and equipment is reported net of accumulated depreciation of $615.6 million at March 31, 2012, and $599.1 million at December 31, 2011. Unpaid capital expenditure liabilities, which are noncash investing activities, were $7.8 million at March 31, 2012, and $5.9 million at March 31, 2011.

Debt

Loans payable and current portion of long-term debt consisted of the following:


	March 31, 2012		December 31, 2011
	(Dollars in thousands)
Loans payable to banks	$	6,386	$	404
Domestic accounts receivable asset securitization program		30,000		—
International accounts receivable sales programs		4,385		8,150
Current portion of long-term debt		2,423		2,687

Loans payable and current portion of long-term debt	$	43,194	$	11,241

Long-term debt consisted of the following:


	March 31, 2012			December 31, 2011
	(Dollars in thousands)
7.875% Senior Notes	$	250,000		$	250,000
6.50% Convertible Senior Notes, net of unamortized discounts		33,713			33,537
Revolving credit facility		9,951			7,706
Capital lease obligations		4,142			4,459
Other notes		5,147			5,067

Total long-term debt		302,953			300,769
Current portion of long-term debt		(2,423	)		(2,687	)

Long-term debt, less current portion	$	300,530		$	298,082

Receivable Sales Programs

We have an asset securitization program for Ferro’s U.S. trade accounts receivable. We sell interests in our domestic receivables to various purchasers, and we may obtain up to $50.0 million in the form of cash or letters of credit. Advances received under this program are accounted for as borrowings secured by the receivables and included in net cash provided by financing activities. In 2011, we made certain modifications to and extended the maturity of this credit facility through May 2012. At March 31, 2012, advances received of $30.0 million were secured by $109.2 million of accounts receivable, and based on available and qualifying receivables, $20.0 million of additional borrowings were available under the program. The interest rate under this program is the sum of (A) either (1) commercial paper rates, (2) LIBOR rates, or (3) the federal funds rate plus 0.5% or the prime rate and (B) a fixed margin. At March 31, 2012, the interest rate was 0.6%.

We also have several international programs to sell with recourse trade accounts receivable to financial institutions. Advances received under these programs are accounted for as borrowings secured by the receivables and included in net cash provided by financing activities. At March 31, 2012, the commitments supporting these programs totaled $18.7 million, the advances received of $4.4 million were secured by $9.9 million of accounts receivable, and based on available and qualifying receivables, $3.3 million of additional borrowings were available under the programs. The interest rates under these programs are based on EURIBOR rates plus 1.75%. At March 31, 2012, the weighted-average interest rate was 2.3%.

7.875% Senior Notes

The 7.875% Senior Notes (the “Senior Notes”) were issued in 2010 at par, bear interest at a rate of 7.875% per year, payable semi-annually in arrears on February 15th and August 15th, and mature on August 15, 2018. Through August 15, 2013, we may redeem up to 35% of the Senior Notes at a price equal to 107.875% of the principal amount using proceeds of certain equity offerings. We may also redeem some or all of the Senior Notes prior to August 15, 2014, at a price equal to the principal amount plus a defined applicable premium. The applicable premium on any redemption date is the greater of 1% of the principal amount of the note or the excess of (1) the present value at such redemption date of the redemption price of the note at August 15, 2014, plus all required interest payments due on the note through August 15, 2014, computed using a discount rate equal to the Treasury Rate as of the redemption date plus 50 basis points; over (2) the principal amount of the note. In addition, we may redeem some or all of the Senior Notes beginning August 15, 2014, at prices ranging from 100% to 103.938% of the principal amount.

The Senior Notes are unsecured obligations and rank equally in right of payment with any other unsecured, unsubordinated obligations. The Senior Notes contain certain affirmative and negative covenants customary for high-yield debt securities, including, but not limited to, restrictions on our ability to incur additional debt, create liens, pay dividends or make other distributions or repurchase our common stock and sell assets outside the ordinary course of business. At March 31, 2012, we were in compliance with the covenants under the Senior Notes’ indenture.

6.50% Convertible Senior Notes

The 6.50% Convertible Senior Notes (the “Convertible Notes”) were issued in 2008, bear interest at a rate of 6.5% per year, payable semi-annually in arrears on February 15th and August 15th, and mature on August 15, 2013. We separately account for the liability and equity components of the Convertible Notes in a manner that, when interest cost is recognized in subsequent periods, will reflect our nonconvertible debt borrowing rate at the time the Convertible Notes were issued. The effective interest rate on the liability component is 9.5%. Under certain circumstances, holders of the Convertible Notes may convert their notes prior to maturity. The Convertible Notes are unsecured obligations and rank equally in right of payment with any other unsecured, unsubordinated obligations. The principal amount outstanding was $35.1 million at March 31, 2012, and $35.1 million at December 31, 2011. At March 31, 2012, we were in compliance with the covenants under the Convertible Notes’ indenture.

2010 Credit Facility

In 2010, we entered into the Third Amended and Restated Credit Agreement with a group of lenders for a five-year, $350 million multi-currency senior revolving credit facility (the “2010 Credit Facility”). The 2010 Credit Facility matures on August 24, 2015, and is secured by substantially all of Ferro’s assets. After reductions for outstanding letters of credit, we had $335.9 million of additional borrowings available at March 31, 2012. The interest rate under the 2010 Credit Facility is the sum of (A) either (1) LIBOR or (2) the higher of the Federal Funds Rate plus 0.5%, the Prime Rate, or LIBOR plus 1.0% and (B) a variable margin based on the Company’s leverage. At March 31, 2012, the interest rate was 3.0%.

Under the 2010 Credit Facility, we are subject to a number of financial covenants, including limitations on the payment of common stock dividends, which are discussed in Note 6 within Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. At March 31, 2012, we were in compliance with the covenants of the 2010 Credit Facility.

6.	Financial Instruments

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

Level

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

Level

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

Level

3: Unobservable inputs that are not corroborated by market data.

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


	March 31, 2012													December 31, 2011
	Carrying Amount			Fair Value										Carrying Amount			Fair Value
	Carrying Amount			Total			Level 1		Level 2			Level 3		Carrying Amount			Fair Value
	(Dollars in thousands)
Cash and cash equivalents	$	23,271		$	23,271		$	23,271	$	—		$	—	$	22,991		$	22,991
Other receivables		33,915			33,915			—		33,915			—		37,839			37,839
Short-term loans payable		(40,771	)		(40,771	)		—		(40,771	)		—		(8,554	)		(8,554	)
7.875% Senior Notes		(250,000	)		(256,250	)		—		(256,250	)		—		(250,000	)		(253,750	)
6.50% Convertible Senior Notes, net of unamortized discounts		(33,713	)		(35,022	)		—		(35,022	)		—		(33,537	)		(34,589	)
Revolving credit facility		(9,951	)		(10,027	)		—		(10,027	)		—		(7,706	)		(7,973	)
Other long-term notes payable		(5,147	)		(4,250	)		—		(4,250	)		—		(5,067	)		(4,184	)
Foreign currency forward contracts, net		(5,541	)		(5,541	)		—		(5,541	)		—		6,225			6,225

The fair values of cash and cash equivalents are based on the fair values of identical assets. The fair value of other receivables and short-term loans payable are based on the present value of expected future cash flows and approximate their carrying amounts due to the short periods to maturity. The fair values of the Senior Notes and the Convertible Notes are based on third-party estimated bid prices. The fair values of the revolving credit facility and the other long-term notes are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company that market participants would use in pricing the debt.

Foreign currency forward contracts. We manage foreign currency risks principally by entering into forward contracts to mitigate the impact of currency fluctuations on transactions. These forward contracts are not designated as hedging instruments. The fair value of these contracts is based on market prices for comparable contracts. We had foreign currency forward contracts with notional amounts of $270.8 million at March 31, 2012, and $249.3 million at December 31, 2011.

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


	March 31, 2012			December 31, 2011			Balance Sheet Location
	(Dollars in thousands)
Asset derivatives:
Foreign currency forward contracts	$	—		$	6,491		Other current assets
Foreign currency forward contracts		129			—		Accrued expenses and other current liabilities

Total	$	129		$	6,491

Liability derivatives:
Foreign currency forward contracts	$	—		$	(266	)	Other current assets
Foreign currency forward contracts		(5,670	)		—		Accrued expenses and other current liabilities

Total	$	(5,670	)	$	(266	)

The following table presents the effect on our consolidated statements of net income for the March 31st of foreign currency forward contracts:


	Amount of Gain (Loss) Recognized in Earnings
	2012			2011			Location of Gain (Loss) in Earnings
	(Dollars in thousands)
Foreign currency forward contracts	$	(5,653	)	$	(7,560	)	Foreign currency losses, net

7.	Income Taxes

Income tax expense for the three months ended March 31, 2012, was $1.7 million, or 54.9% of pre-tax income. In the first three months of 2011, we recorded income tax expense of $10.1 million, or 30.4% of pre-tax income. The increase in the effective tax rate was primarily a result of a greater proportion of pre-tax losses in jurisdictions with full valuation allowances for which no tax benefit is recognized.

8.	Contingent Liabilities

We have recorded environmental liabilities of $11.7 million at March 31, 2012, and $11.6 million at December 31, 2011, for costs associated with the remediation of certain of our properties that have been contaminated, primarily a non-operating facility in Brazil. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities. The ultimate liability could be affected by numerous uncertainties, including the extent of contamination found, the required period of monitoring and the ultimate cost of required remediation.

On January 4, 2011, the Company received an administrative subpoena from the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). OFAC requested that the Company provide documents and information related to the possibility of direct or indirect transactions with or to a prohibited country. The Company subsequently responded to the administrative subpoena. On January 17, 2012, OFAC provided the Company with a “no action letter” advising that it had completed its review of the matter and had closed its file without taking further action.

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

9.	Retirement Benefits

Information concerning net periodic benefit costs of our U.S. pension plans (including our unfunded nonqualified plans), non-U.S. pension plans, and postretirement health care and life insurance benefit plans for the three months ended March 31st follows:


	U.S. Pension Plans						Non-U.S. Pension Plans						Other Benefit Plans
	2012			2011			2012			2011			2012			2011
	(Dollars in thousands)
Service cost	$	4		$	—		$	577		$	539		$	—		$	—
Interest cost		4,869			5,114			1,375			1,432			396			482
Expected return on plan assets		(5,096	)		(5,136	)		(753	)		(810	)		—			—
Amortization of prior service cost (credit)		12			18			(33	)		(33	)		(33	)		(100	)
Amortization of net loss (gain)		4,014			3,235			195			161			(230	)		(160	)

Net periodic benefit cost	$	3,803		$	3,231		$	1,361		$	1,289		$	133		$	222

Net periodic benefit cost for our U.S. and non-U.S. pension plans increased from the effects of lower discount rates, lower expected returns on plan assets, and worse than expected asset performance in 2011.

10.

Stock-Based Compensation

Our Board of Directors granted 0.6 million stock options, 0.5 million performance share units and 0.3 million deferred stock units during the first quarter of 2012 under our 2010 Long Term Incentive Plan. The following table details the weighted-average grant-date fair values and the assumptions used for estimating the fair values of stock options and performance share units for grants made during the three months ended March 31, 2012:


	Stock Options			Performance Share Units
Weighted-average grant-date fair value	$	4.74		$	9.63
Expected life, in years		6.0			3.0
Risk-free interest rate		1.4	%		0.4	%
Expected volatility		81.1	%		63.0	%

We measure the fair value of deferred stock units based on the closing market price of our common stock on the date of the grant. The weighted-average fair value per unit for grants made during the three months ended March 31, 2012, was $6.84.

We recognized stock-based compensation expense of $2.0 million for the three months ended March 31, 2012, and $2.1 million for the three months ended March 31, 2011. At March 31, 2012, unearned compensation cost related to the unvested portion of all stock-based awards was approximately $15.1 million and is expected to be recognized over the remaining vesting period of the respective grants, through the first quarter of 2015.

11.

Restructuring and Cost Reduction Programs

The activities and accruals related to our restructuring and cost reduction programs are summarized below:


	Employee Severance			Other Costs			Asset Impairment		Total
	(Dollars in thousands)
Balance at December 31, 2011	$	218		$	3,419		$	—	$	3,637
Restructuring charges		311			—			—		311
Cash payments		(314	)		(156	)		—		(470	)
Non-cash items		2			103			—		105

Balance at March 31, 2012	$	217		$	3,366		$	—	$	3,583

We expect to make cash payments to settle the remaining liability for employee termination benefits and other costs over the next twelve months, except where legal or contractual restrictions prevent us from doing so.

12.

Earnings Per Share

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


	Three months ended March 31,
	2012		2011
	(In thousands, except per share amounts)
Basic earnings per share computation:
Net income attributable to Ferro Corporation common shareholders	$	1,290	$	22,725
Weighted-average common shares outstanding		86,233		85,975
Basic earnings per share attributable to Ferro Corporation common shareholders	$	0.01	$	0.26
Diluted earnings per share computation:
Net income attributable to Ferro Corporation common shareholders	$	1,290	$	22,725
Plus: Convertible preferred stock dividends, net of tax		—		103

Total	$	1,290	$	22,828

Weighted-average common shares outstanding		86,233		85,975
Assumed exercise of stock options		191		351
Assumed satisfaction of stock unit award conditions		23		64
Assumed satisfaction of restricted share conditions		248		361
Assumed conversion of convertible notes		—		—
Assumed conversion of convertible preferred stock		—		528

Weighted-average diluted shares outstanding		86,695		87,279

Diluted earnings per share attributable to Ferro Corporation common shareholders	$	0.01	$	0.26

The number of anti-dilutive or unearned shares, including shares related to contingently convertible debt, was 6.9 million for the three months ended March 31, 2012, and 5.3 million for the three months ended March 31, 2011, respectively.

13.

Reporting for Segments

The Company has six reportable segments: Performance Coatings, Electronic Materials, Color and Glass Performance Materials, Polymer Additives, Specialty Plastics, and Pharmaceuticals. We have aggregated our Tile Coating Systems and Porcelain Enamel operating segments into one reportable segment, Performance Coatings, and aggregated our Glass Systems and Performance Pigments and Colors operating segments into one reportable segment, Color and Glass Performance Materials, based on their similar economic and operating characteristics.

We measure segment income for internal reporting purposes by excluding unallocated corporate expenses, restructuring and impairment charges, other expenses (income) and income taxes. During the first quarter of 2012, we refined the allocation of certain corporate expenses to the Company’s reportable segments, which aligns segment reporting to the current manner in which performance is evaluated, strategic decisions are made and resources are allocated. Unallocated corporate expenses consist primarily of executive employment costs, legacy pension and other benefit costs, certain professional fees, and costs associated with our global headquarters facility.

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


	Three months ended March 31,
	2012		2011
	(Dollars in thousands)
Electronic Materials	$	71,696	$	202,347
Performance Coatings		152,514		136,700
Color and Glass Performance Materials		101,435		99,805
Polymer Additives		87,724		85,862
Specialty Plastics		47,056		42,629
Pharmaceuticals		5,965		5,666

Total net sales	$	466,390	$	573,009

Each segment’s income (loss) and reconciliations to income before income taxes follow. As a result of applying the refined allocations to prior periods, each segment’s income for the three months ended March 31, 2011, has been impacted as presented below.


	Three months ended March 31,
				2011
	2012			Adjusted		As reported
	(Dollars in thousands)
Electronic Materials	$	(4,690	)	$	30,748	$	32,589
Performance Coatings		8,059			6,347		7,405
Color and Glass Performance Materials		8,457			9,098		9,830
Polymer Additives		6,627			6,580		6,451
Specialty Plastics		4,648			1,872		1,909
Pharmaceuticals		1,187			1,326		1,156

Total segment income		24,288			55,971		59,340
Unallocated corporate expenses		13,650			12,463		15,832
Restructuring and impairment charges		311			1,630		1,630
Other expense, net		7,194			8,580		8,580

Income before income taxes	$	3,133		$	33,298	$	33,298

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

Overview

Market conditions and customer demand were mixed in our key markets during the first quarter of 2012. The market for conductive pastes used in solar cell applications continued to be affected by reduced customer demand. As a result, demand for our conductive pastes declined from prior-year levels. Lower sales of our conductive pastes reduced overall sales levels in our Electronic Materials business and resulted in lower segment income. Demand for a number of other products increased compared with the first quarter of 2011, including products used for coating ceramic tiles and glass enamels used in automotive applications.

Net sales declined by 19% compared with the first quarter of 2011, driven by a decline in sales of Electronic Materials products. Sales increased in each of our other reporting segments: Performance Coatings, Specialty Plastics, Polymer Additives, Color and Glass Performance Materials, and Pharmaceuticals. Sales declined in Electronic Materials primarily as a result of a reduction in demand for conductive pastes and precious metal powders. In aggregate, changes in product pricing and mix reduced Ferro’s overall sales by approximately 11 percentage points, while lower sales volume reduced sales by an additional 7 percentage points. Changes in foreign currency exchange rates reduced sales by approximately one percentage point. The lower product sales in Electronic Materials drove both the price/mix and volume declines in the quarter. Both sales volume and price/mix contributed to the total sales growth in our business segments other than Electronic Materials. A significant portion of the overall decline in sales compared with the prior-year quarter was due to lower sales volume and lower prices for precious metals.

Gross profit declined in the first quarter of 2012 compared with the first three months of 2011, primarily driven by the decline in sales of high-margin conductive pastes and powders. Raw material costs increased compared with the prior-year period but these changes had little net impact on gross profit as the added costs were offset by product price increases, in aggregate, across the Company. The pricing environment was the most difficult in the Electronic Materials and Polymer Additives segments, and most favorable in the Specialty Plastics segment.

Selling, general and administrative (“SG&A”) expenses during the 2012 first quarter were approximately the same as during the prior-year quarter. SG&A expenses during the 2012 first quarter included higher pension expense, salary adjustments, and costs related to an initiative to standardize and streamline our business processes and improve management information systems tools. Largely offsetting these SG&A increases were reductions in other SG&A expense categories including depreciation, business travel expenses and professional fees.

Restructuring and impairment charges declined during the 2012 first quarter, reflecting the continued winding down of our manufacturing rationalization activities. The restructuring charges recorded in the first quarter of 2012 were primarily related to residual costs at manufacturing sites where production activities have been concluded.

Interest expense declined slightly during the 2012 first quarter compared with the prior-year quarter. The decline in interest expense during the quarter was primarily due to lower average borrowings.

Net income declined in the first three months of 2012 compared with the prior-year quarter primarily as a result of lower net sales and the resulting decline in gross profit.

Outlook

Our ability to forecast future financial performance is limited because of uncertainty surrounding customer demand and economic conditions in a number of key markets and regions around the world. Customer demand for our conductive solar pastes is difficult to forecast because of uncertainty in end-market demand and uncertainty in the customer adoption rate of our new products. Order levels for our solar products continue to be significantly lower than prior-year levels and our visibility to future customer orders is limited. We expect demand for these products to improve during the course of 2012, but the timing and strength of the recovery in customer demand is not known at this time. In addition, future economic conditions in Europe are expected to be generally weaker in the coming quarters due to sovereign debt issues and other macroeconomic drivers. This weakness may affect demand for our products in the region, although the magnitude of these effects is difficult to estimate.

Factors that could adversely affect our future financial performance are described under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011.

Results of Operations

Comparison of the three months ended March 31, 2012 and 2011


	Three months ended March 31,
	2012			2011			$ Change			% Change
	(Dollars in thousands, except per share amounts)
Net sales	$	466,390		$	573,009		$	(106,619	)		(18.6	)%
Cost of sales		378,067			452,683			(74,616	)		(16.5	)%

Gross profit		88,323			120,326			(32,003	)		(26.6	)%
Gross profit percentage		18.9	%		21.0	%
Selling, general and administrative expenses		77,685			76,818			867			1.1	%
Restructuring and impairment charges		311			1,630			(1,319	)
Other expense (income):
Interest expense		6,740			6,826			(86	)
Interest earned		(84	)		(74	)		(10	)
Foreign currency losses, net		144			1,310			(1,166	)
Miscellaneous expense, net		394			518			(124	)

Income before income taxes		3,133			33,298			(30,165	)
Income tax expense		1,719			10,107			(8,388	)

Net income	$	1,414		$	23,191		$	(21,777	)

Diluted earnings per share	$	0.01		$	0.26		$	(0.25	)

Net sales declined by 18.6% for the three months ended March 31, 2012, compared with the first quarter of 2011. The decline was the result of reduced customer demand for our Electronic Materials products, including our metal pastes and powders. Sales in all other segments increased compared with the prior-year quarter. Lower sales of precious metals accounted for approximately 82 percent of the overall sales decline, driven by reduced sales volume and lower prices for silver. In aggregate, changes in product pricing and mix reduced overall net sales by 11 percentage points. Lower sales volume contributed an additional 7 percentage points to the overall sales decline. Changes in foreign currency exchange rates reduced sales by one percentage point during the quarter.

Gross profit declined during the first three months of 2012 as a result of lower net sales. Gross profit percentage declined to 18.9% of net sales from 21.0% in the prior-year period. In aggregate, raw material costs increased by approximately $11 million compared with the first quarter of 2011 and these increased costs were offset by increased product prices. Charges related to residual costs at closed manufacturing sites involved in earlier restructuring initiatives reduced gross profit by $0.7 million during the first three months of 2012. Gross profit was reduced by charges of $1.6 million in the 2011 first quarter, primarily due to residual costs at closed manufacturing sites.

Selling, general and administrative (“SG&A”) expenses were slightly higher during the 2012 first quarter compared with the first quarter of 2011. Due to reduced sales, SG&A expenses increased to 16.7% of net sales from 13.4% of net sales in the prior-year period. Increased pension expenses, salary adjustments and higher expenses related to an initiative to streamline and standardize business processes and improve management information systems tools contributed to higher SG&A expenses for the quarter. Largely offsetting these increases were declines in other SG&A expenses including depreciation expense, business travel costs and professional fees. SG&A expenses in the 2012 first quarter included charges of $1.8 million that were primarily related to residual expenses at sites that were closed during earlier restructuring initiatives and severance costs from expense reduction actions. SG&A expenses in the first three months of 2011 included charges of $1.1 million, primarily related to expenses at closed sites impacted by earlier restructuring initiatives.

Restructuring and impairment charges declined to $0.3 million in the first quarter of 2012 from $1.6 million in the prior-year period. The lower charges reflect the continued winding down of our multi-year manufacturing rationalization activities.

Interest expense declined slightly during the 2012 first quarter, compared with the first quarter of 2011. Compared with the prior year quarter, average borrowings were lower in the first three months of 2012, which reduced interest expense.

We are exposed to the impact of exchange rate fluctuations on foreign currency positions arising from our international sales and operations. We manage these currency risks principally by entering into forward contracts. The carrying value of the open contracts at each quarter-end are adjusted to fair value and the resulting gains or losses are charged to income or expense during the period, partially offsetting the effect of changes in foreign currency exchange rates on the underlying positions.

During the first quarter of 2012, income tax expense was $1.7 million, or 54.9% of income before income taxes. In the first three months of 2011, we recorded income tax expense of $10.1 million, or 30.4% of pre-tax income. The increase in the effective tax rate was primarily a result of a greater proportion of pre-tax losses in jurisdictions with full valuation allowances for which no tax benefit is recognized.

Net income declined to $1.4 million in the 2012 first quarter from $23.2 million in the prior-year quarter, primarily driven by lower sales and the resulting decline in gross profit.


	Three months ended March 31,
	2012			2011		$ Change			% Change
	(Dollars in thousands)
Segment Sales
Electronic Materials	$	71,696		$	202,347	$	(130,651	)		(64.6	)%
Performance Coatings		152,514			136,700		15,814			11.6	%
Color and Glass Performance Materials		101,435			99,805		1,630			1.6	%
Polymer Additives		87,724			85,862		1,862			2.2	%
Specialty Plastics		47,056			42,629		4,427			10.4	%
Pharmaceuticals		5,965			5,666		299			5.3	%

Total segment sales	$	466,390		$	573,009	$	(106,619	)		(18.6	)%

Segment Income (Loss)
Electronic Materials	$	(4,690	)	$	30,748	$	(35,438	)		NM
Performance Coatings		8,059			6,347		1,712			27.0	%
Color and Glass Performance Materials		8,457			9,098		(641	)		(7.0	)%
Polymer Additives		6,627			6,580		47			0.7	%
Specialty Plastics		4,648			1,872		2,776			148.3	%
Pharmaceuticals		1,187			1,326		(139	)		(10.5	)%

Total segment income	$	24,288		$	55,971	$	(31,683	)		(56.6	)%

NM — Not meaningful

Electronic Materials Segment Results. Sales declined in Electronic Materials primarily as a result of reduced demand for our conductive pastes used in solar cell manufacturing and metal powders used in other electronics applications. Changes in product pricing and mix accounted for $77 million of the sales decline during the quarter. Reduced volume lowered sales by an additional $54 million. Sales of precious metals declined by $88 million due to lower sales volume of solar pastes and precious metal powders, and as a result of lower precious metal prices. The costs of precious metals are passed through to our customers as an element of our product prices. Sales of products produced in the United States, Asia-Pacific and Europe declined compared with the prior-year quarter. Segment income declined due to a $36 million reduction in gross profit driven primarily by lower sales volume. SG&A expense declined by $1 million compared with the first quarter of 2011.

Performance Coatings Segment Results. Sales increased in Performance Coatings primarily due to higher sales volume. Increased sales volume accounted for $18 million of the sales growth in the quarter. Changes in product pricing and mix contributed an additional $2 million to sales growth, while changes in foreign currency exchange rates reduced sales by approximately $4 million. Sales increased in all regions with the greatest growth occurring in Europe-Middle East-Africa, driven by increased production at our tile coatings plant in Egypt. Segment income increased as a result of a $2.3 million increase in gross profit, which was partially offset by a $0.6 million increase in SG&A expense.

Color and Glass Performance Materials Segment Results. Sales increased in Color and Glass Performance Materials as a result of changes in product pricing and mix, partially offset by lower sales volume and changes in foreign currency exchange rates. Changes in product pricing and mix contributed $9 million to increased sales during the quarter. Lower volume reduced sales by $5 million and changes in foreign currency exchange rates reduced sales by an additional $2 million. The sales growth was primarily driven by increased sales of glass coatings in the United States. Sales in Europe-Middle East-Africa declined primarily as a result of reduced demand for our pigments products. Segment income declined by $1.6 million as a result of lower gross profit that was partially offset by a $1.0 million reduction in SG&A expense.

Polymer Additives Segment Results. Sales increased in Polymer Additives primarily as a result of higher sales volume. Higher volume contributed $3 million to the sales increase compared with the prior-year quarter and changes in foreign currency exchange rates reduced sales by approximately $1 million. Sales increased in the United States and declined in Europe-Middle East-Africa. The decline in Europe-Middle East-Africa reflected reduced market demand resulting from a weak macroeconomic environment in the region. Segment income was nearly unchanged from the prior-year quarter. First quarter gross profit and SG&A expense were nearly unchanged from the first quarter of 2011.

Specialty Plastics Segment Results. Sales increased in Specialty Plastics primarily as a result of higher product prices. Changes in product pricing and mix contributed approximately $3 million to the sales growth in the quarter. Increased sales volume accounted for an additional $2 million of the sales growth, while changes in foreign currency exchange rates reduced sales by approximately $1 million. Sales growth was primarily driven by increased sales in the United States. The growth was partially offset by a decline in sales in Europe-Middle East-Africa that reflected a weak macroeconomic environment in the region. Segment income increased as a result of a $2.5 million increase in gross profit and a $0.3 million decline in SG&A expenses, compared with the prior-year quarter.

Pharmaceuticals Segment Results. Sales increased in Pharmaceuticals primarily due to favorable changes in product pricing and mix. Segment income declined due primarily to a reduction in gross profit. SG&A expense declined slightly, offsetting a portion of the reduction in gross profit.


	Three months ended March 31,
	2012		2011		$ Change			% Change
	(Dollars in thousands)
Geographic Revenues
United States	$	209,736	$	288,509	$	(78,773	)		(27.3	)%
International		256,654		284,500		(27,846	)		(9.8	)%

Total	$	466,390	$	573,009	$	(106,619	)		(18.6	)%

Net sales declined in both the United States and international regions compared with the prior-year quarter. In the 2012 first quarter, sales originating in the United States were 45% of total sales, compared with 50% in the first quarter of 2011. The decline reflected the reduction in sales of our Electronic Materials products produced in the United States. Sales originating in the Asia-Pacific region declined, also primarily as a result of lower Electronic Materials sales. Sales growth was mixed in Europe-Middle East-Africa, but declined in total, primarily driven by a decline in European pigment sales. Sales increased in Latin America compared with the prior-year quarter.

Summary of Cash Flows for the three months ended March 31, 2012 and 2011


	Three months ended March 31,
	2012			2011			$ Change
	(Dollars in thousands)
Net cash used for operating activities	$	(10,975	)	$	(28,580	)	$	17,605
Net cash used for investing activities		(22,211	)		(14,905	)		(7,306	)
Net cash provided by financing activities		33,489			43,683			(10,194	)
Effect of exchange rate changes on cash and cash equivalents		(23	)		360			(383	)

Increase in cash and cash equivalents	$	280		$	558		$	(278	)

Details of net cash provided by (used for) operating activities were as follows:


	Three months ended March 31,
	2012			2011			$ Change
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	1,414		$	23,191		$	(21,777	)
Depreciation and amortization		13,879			16,229			(2,350	)
Precious metals deposits		—			28,086			(28,086	)
Accounts receivable		(33,733	)		(50,070	)		16,337
Inventories		(11,929	)		(41,891	)		29,962
Accounts payable		11,554			33,768			(22,214	)
Other changes in current assets and liabilities, net		14,404			(14,084	)		28,488
Other adjustments, net		(6,564	)		(23,809	)		17,245

Net cash used for operating activities	$	(10,975	)	$	(28,580	)	$	17,605

Cash flows from operating activities increased by $17.6 million in the first three months of 2012 compared with the prior-year period. Year-over-year cash flows from operating activities increased $30.0 million due to changes in inventories, $28.5 million due to other changes in current assets and liabilities, $17.2 million due to changes in other adjustments to reconcile net income to net cash used for operating activities, and $16.3 million due to changes in accounts receivable. Partially offsetting these effects, year-over-year cash flows from operating activities decreased $28.1 million due to changes in precious metals deposits, $22.2 million due to changes in accounts payable and $21.8 million due to changes in net income. Accounts receivable, inventories and accounts payable increased in the first quarters of 2012 and 2011 in response to improved customer demand over the fourth quarters of the respective prior years. Other changes in current assets and liabilities provided $14.4 million of cash in the first quarter of 2012, primarily from changes in the value of foreign currency forward contracts. Other changes in current assets and liabilities used $14.1 million of cash in the first quarter of 2011, primarily from the payment of 2010 year-end incentive compensation. Other adjustments to reconcile net income to net cash used for operating activities include noncash foreign currency gains and losses, restructuring charges, retirement benefits, and deferred taxes, as well as changes to other non-current assets and liabilities. In the first three months of 2012, other adjustments used $6.6 million of cash, primarily for noncash foreign currency gains. In the first three months of 2011, other adjustments used $23.8 million of cash, primarily related to noncash foreign currency gains and payments toward retirement benefits and restructuring activities greater than the expenses recognized. The return of precious metal deposits provided $28.1 million of cash in the first three months of 2011 due to additional credit lines not requiring collateral. Net income declined in the first three months of 2012 compared with the prior-year quarter primarily as a result of lower net sales and the resulting decline in gross profit.

Cash flows from investing activities decreased $7.3 million in the first three months of 2012 compared with the prior-year period. Capital expenditures increased to $22.6 million in the first quarter of 2012 from $16.0 million in the first quarter of 2011.

Cash flows from financing activities decreased $10.2 million in the first three months of 2012 compared with the prior-year period. In the first three months of 2012, we borrowed $30.0 million through our domestic accounts receivable asset securitization program. In the same period of 2011, we borrowed $50.0 million through our domestic accounts receivable asset securitization program, and we redeemed in cash all outstanding 7% Series A ESOP Convertible Preferred Stock for $9.4 million plus earned but unpaid dividends.

Capital Resources and Liquidity

7.875% Senior Notes

The 7.875% Senior Notes (the “Senior Notes”) were issued in 2010 at par, bear interest at a rate of 7.875% per year, payable semi-annually in arrears on February 15 and August 15, and mature on August 15, 2018. The principal amount outstanding was $250.0 million at March 31, 2012, and December 31, 2011. Through August 15, 2013, we may redeem up to 35% of the Senior Notes at a price equal to 107.875% of the principal amount using proceeds of certain equity offerings. We may also redeem some or all of the Senior Notes prior to August 15, 2014, at a price equal to the principal amount plus a defined applicable premium. The applicable premium on any redemption date is the greater of 1% of the principal amount of the note or the excess of (1) the present value at such redemption date of the redemption price of the note at August 15, 2014, plus all required interest payments due on the note through August 15, 2014, computed using a discount rate equal to the Treasury Rate as of the redemption date plus 50 basis points; over (2) the principal amount of the note. In addition, we may redeem some or all of the Senior Notes beginning August 15, 2014, at prices ranging from 100% to 103.938% of the principal amount.

6.50% Convertible Senior Notes

The 6.50% Convertible Notes (the “Convertible Notes”) were issued in 2008, bear interest at a rate of 6.5% per year, payable semi-annually in arrears on February 15th and August 15th, and mature on August 15, 2013. We separately account for the liability and equity components of the Convertible Notes in a manner that, when interest cost is recognized in subsequent periods, will reflect our nonconvertible debt borrowing rate at the time the Convertible Notes were issued. The effective interest rate on the liability component is 9.5%. Under certain circumstances, holders of the Convertible Notes may convert their notes prior to maturity. The Convertible Notes are unsecured obligations and rank equally in right of payment with any other unsecured, unsubordinated obligations. The principal amount outstanding was $35.1 million at March 31, 2012, and December 31, 2011. At March 31, 2012, we were in compliance with the covenants under the Convertible Notes’ indenture.

2010 Credit Facility

In 2010, we entered into the Third Amended and Restated Credit Agreement with a group of lenders for a five-year, $350 million multi-currency senior revolving credit facility (the “2010 Credit Facility”). The 2010 Credit Facility matures on August 24, 2015, and is secured by substantially all of Ferro’s assets. We had borrowed $10.0 million at March 31, 2012, and $7.7 million at December 31, 2011, under this facility. After reductions for outstanding letters of credit, we had $335.9 million of additional borrowings available at March 31, 2012. The interest rate under the 2010 Credit Facility is the sum of (A) either (1) LIBOR or (2) the higher of the Federal Funds Rate plus 0.5%, the Prime Rate, or LIBOR plus 1.0% and (B) a variable margin based on the Company’s leverage. At March 31, 2012, the interest rate was 3.0%.

We are subject to a number of financial covenants under our 2010 Credit Facility, which are discussed in Note 6 within Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. At March 31, 2012, we were in compliance with the covenants of the 2010 Credit Facility.

Domestic Receivable Sales Programs

International Receivable Sales Programs

We have several international programs to sell with recourse trade accounts receivable to financial institutions. Advances received under these programs are accounted for as borrowings secured by the receivables and included in net cash provided by financing activities. At March 31, 2012, commitments supporting these programs totaled $18.7 million, advances received of $4.4 million were secured by $9.9 million of accounts receivable, and based on available and qualifying receivables, $3.3 million of additional borrowings were available under the programs. The interest rates under these programs are based on EURIBOR rates plus 1.75%. At March 31, 2012, the weighted-average interest rate was 2.3%.

Off Balance Sheet Arrangements

Consignment Arrangements for Precious Metals. In the production of some of our products, we use precious metals, some of which we obtain from financial institutions under consignment agreements with terms of one year or less. The financial institutions retain ownership of the precious metals and charge us fees based on the amounts we consign. We had on hand precious metals owned by participants in our precious metals program of $202.7 million at March 31, 2012, and $195.0 million at December 31, 2011, measured at fair value based on market prices for identical assets. On occasion, we have delivered cash collateral as a result of the market value of the precious metals under consignment exceeding the lines provided by some of the financial institutions. While no deposits were outstanding at March 31, 2012, or December 31, 2011, we may be required to furnish additional cash collateral in the future based on the quantity and market value of the precious metals under consignment.

Liquidity Requirements

Our liquidity requirements primarily include debt service, purchase commitments, labor costs, working capital requirements, capital investments, and postretirement obligations. We expect to meet these requirements in the long term through cash provided by operating activities and availability under existing credit facilities or other financing arrangements. Cash flows from operating activities are primarily driven by earnings before noncash charges and changes in working capital needs. In the first quarter of 2012, cash flows from financing activities were used to fund our operating and investing activities. We had additional borrowing capacity of $370.2 million at March 31, 2012, and $397.5 million at December 31, 2011, available under various credit facilities, primarily our revolving credit facility. We have taken a variety of actions to enhance liquidity, including restructuring activities and suspension of dividend payments on our common stock.

Our level of debt, debt service requirements, and ability to access credit markets could have important consequences to our business operations and uses of cash flows. The Company has recently accessed credit markets for the following transactions. In 2010, we issued 7.875% Senior Notes, which mature in 2018, and entered into the 2010 Credit Facility, which matures in 2015. In 2011, we entered into several international accounts receivable sales programs and extended our domestic asset securitization facility.

We may from time to time seek to retire or repurchase our outstanding debt through open market purchases, privately negotiated transactions, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

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

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

Critical Accounting Policies and Their Application

There were no material changes to our critical accounting policies described in “Critical Accounting Policies” within Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Impact of newly Issued Accounting Pronouncements

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

Risk Factors

Certain statements contained here and in future filings with the SEC reflect the Company’s expectations with respect to future performance and constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to a variety of uncertainties, unknown risks and other factors concerning the Company’s operations and business environment, which are difficult to predict and are beyond the control of the Company. Factors that could adversely affect our future financial performance are described under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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

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

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


	March 31, 2012			December 31, 2011
	(Dollars in thousands)
Variable-rate debt and utilization of accounts receivable sales programs:
Change in annual interest expense from 1% change in interest rates	$	507		$	163
Fixed-rate debt:
Carrying amount		288,860			288,604
Fair value		295,522			292,523
Change in fair value from 1% increase in interest rates		(12,797	)		(13,071	)
Change in fair value from 1% decrease in interest rates		13,586			13,902
Foreign currency forward contracts:
Notional amount		270,800			249,337
Carrying amount and fair value		(5,541	)		6,225
Change in fair value from 10% appreciation of U.S. dollar		13,981			12,216
Change in fair value from 10% depreciation of U.S. dollar		(17,088	)		(14,930	)

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Ferro is committed to maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) of the Exchange Act, Ferro has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. The evaluation examined those disclosure controls and procedures as of March 31, 2012, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2012.

Changes in Internal Control over Financial Reporting

During the first quarter of 2012, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

On September 30, 2011, the United States Environmental Protection Agency (“USEPA”) issued a complaint and notice of opportunity for a hearing and proposed a civil administrative penalty assessment to the Company for alleged violations regarding the laws and regulations of the Clean Air Act at our Bridgeport, New Jersey, facility. We have contested the allegations of the complaint and the amount of the proposed penalty assessment. We are currently involved in settlement negotiations and do not expect the ultimate outcome of this penalty assessment and any associated expenses to have a material effect on the financial position, results of operations, or cash flows of the Company.

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

Item 1A. Risk Factors

There were no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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

Our ability to pay common stock dividends is limited by certain covenants in our 2010 Credit Facility and the bond indenture governing the Senior Notes. The covenant in our 2010 Credit Facility is the more limiting of the two covenants and is described in Note 6 within Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The following table summarizes purchases of our common stock by the Company and affiliated purchasers during the three months ended March 31, 2012:


	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
	(In thousands, except for per share amounts)
January 1, 2012 to January 31, 2012		—	$	—		—		—
February 1, 2012 to February 29, 2012		37		6.90		—		—
March 1, 2012 to March 31, 2012		—		—		—		—

Total		37				—

(1)	Consists of shares of common stock surrendered by employees to meet minimum tax withholding obligations under current and previous long-term incentive plans.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						FERRO CORPORATION (Registrant)

Date: April 25, 2012

						/s/ James F. Kirsch
						James F. Kirsch
						Chairman, President and Chief Executive Officer (Principal Executive Officer)

Date: April 25, 2012

						/s/ Jeffrey L. Rutherford
						Jeffrey L. Rutherford
						Vice President and Chief Financial Officer (Principal Financial Officer)

EXHIBIT INDEX

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

Exhibit:



3		Articles of incorporation and by-laws:

3.1		Eleventh Amended Articles of Incorporation of Ferro Corporation (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Registration Statement on Form S-3, filed March 5, 2008).

3.2		Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed December 29, 1994 (incorporated by reference to Exhibit 4.2 to Ferro Corporation’s Registration Statement on Form S-3, filed March 5, 2008).

3.3		Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed on June 23, 1998 (incorporated by reference to Exhibit 4.3 to Ferro Corporation’s Registration Statement on Form S-3, filed March 5, 2008).

3.4		Certificate of Amendment to the Eleventh Amended Articles of Incorporation of Ferro Corporation filed on October 14, 2011 (incorporated by reference to Exhibit 3.1 to Ferro Corporation’s Current Report on Form 8-K, filed October 17, 2011).

3.5		Ferro Corporation Amended and Restated Code of Regulations (incorporated by reference to Exhibit 3.1 to Ferro Corporation’s Current Report on Form 8-K, filed December 14, 2011).

4		Instruments defining rights of security holders, including indentures:

4.1		Senior Indenture, dated as of March 5, 2008, by and between Ferro Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.5 to Ferro Corporation’s Registration Statement on Form S-3, filed March 5, 2008).

4.2		First Supplemental Indenture, dated August 19, 2008, by and between Ferro Corporation and U.S. Bank National Association (with Form of 6.50% Convertible Senior Note due 2013) (incorporated by reference to Exhibit 4.2 to Ferro Corporation’s Current Report on Form 8-K, filed August 19, 2008).

4.3		Form of Indenture, by and between Ferro Corporation and Wilmington Trust FSB (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Registration Statement on Form S-3ASR, filed July 27, 2010).

4.4		First Supplemental Indenture, dated August 24, 2010, by and between Ferro Corporation and Wilmington Trust FSB (with Form of 7.875% Senior Notes due 2018) (incorporated by reference to Exhibit 4.1 to Ferro Corporation’s Current Report on Form 8-K, filed August 24, 2010).

		The Company agrees, upon request, to furnish to the U.S. Securities and Exchange Commission a copy of any instrument authorizing long-term debt that does not authorize debt in excess of 10% of the total assets of the Company and its subsidiaries on a consolidated basis.

10		Material contracts:

10.1		Terms of Nonstatutory Stock Option Grants under the Ferro Corporation 2010 Long-Term Incentive Plan.*

10.2		Terms of Performance Share Unit Awards under the Ferro Corporation 2010 Long-Term Incentive Plan.*

10.3		Terms of Restricted Share Unit Awards under the Ferro Corporation 2010 Long-Term Incentive Plan.*

10.4		Terms of Cash Incentive Award for Mr. James F. Kirsch.*

10.5		Terms of Forfeited Bonus Reimbursement for Mr. Jeffrey L. Rutherford.*

31		Certifications:

31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).

31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350.

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350.

Exhibit:



101		XBRL Documents:

101.INS		XBRL Instance Document**

101.SCH		XBRL Schema Document**

101.CAL		XBRL Calculation Linkbase Document**

101.LAB		XBRL Labels Linkbase Document**

101.PRE		XBRL Presentation Linkbase Document**

101.DEF		XBRL Definition Linkbase Document**

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

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

Exhibit 10.1

TERMS OF NONSTATUTORY STOCK OPTION GRANTS

Generally. This document sets forth the terms and conditions under which nonstatutory stock options (the “NSO Options”) are granted under Section 4(a) of the 2010 Long-Term Incentive Plan (the “Plan”), which was approved by Ferro Corporation shareholders on April 30, 2010. (The recipient of an NSO Option grant is called the “NSO Optionee” below. The term “Ferro” below includes Ferro Corporation and its subsidiary and affiliated companies.)

Precedence of the Plan. The terms of this document are in all events subject to the terms and conditions of the Plan. If there is any inconsistency between this document and the Plan, then the Plan, and not this document, will govern. The Compensation Committee of the Board of Directors (or such other committee as the Board may from time to time designate) (the “Committee”) administers awards under the Plan and has the authority to determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted under this Plan. In this capacity, the Committee also has the authority to construe and interpret the provisions of the Plan and all awards under the Plan and to establish, amend, and rescind rules and regulations for the administration of the Plan, all of which will be binding on the NSO Optionee.

Basic Option Terms. The name of the NSO Optionee, the date of the NSO Option grant, the aggregate number of shares of Ferro Common Stock that may be purchased under the NSO Option, the option exercise price, and the expiration date of the NSO Option ( i.e. , last date on which such NSO Option may be exercised) are set forth separately in a grant letter from Ferro to the NSO Optionee which refers expressly to this document.

Normal Exercise. Except as otherwise provided below, NSO Options will become exercisable only if and after the NSO Optionee has remained employed by Ferro for one year from the date of the NSO Option grant, whereupon such rights shall become exercisable to the extent of one third of the aggregate number of shares granted, which portion shall increase to two-thirds after two years, and will be fully vested after three years of employment. Fractional shares will be rounded to the nearest whole share.

Retirement. If an NSO Optionee is deemed by the Company to be terminating his or her employment as a direct result of his or her retirement from the Company at a time when he or she is age 55 or older and has 10 or more years of service before an NSO Option has been exercised or expired, then the NSO Option will become 100% exercisable when the NSO Optionee retires and the NSO Optionee will then be entitled to exercise the NSO Option at any time on or before such NSO Option expires.

Disability. If an NSO Optionee’s employment terminates due to the NSO Optionee’s total and permanent disability before an NSO Option has been exercised or expired, then the NSO Option will become 100% exercisable when the NSO Optionee’s employment terminates and the NSO Optionee will then be entitled to exercise the NSO Option at any time on or before such NSO Option expires.

Death. If an NSO Optionee dies before an NSO Option has been exercised or expired, then the person who is entitled by will or the applicable laws of descent and distribution may exercise the option rights (a) in full in the case of an NSO Optionee who was employed by Ferro at the time of his or her death or (b) in the case of an NSO Optionee not so employed, to the extent that the NSO Optionee was entitled to exercise the same immediately before his or her death.

Change of Control. If a “Change of Control” occurs before an NSO Option has been exercised or expired, then the NSO Option will become 100% exercisable immediately upon the “Change of Control” provided that the NSO Optionee is then employed by Ferro. (For purposes of this document, the term “Change of Control” has the meaning given to that term in Section 9 of the Plan.)

Other Termination of Employment. If the NSO Optionee’s employment with Ferro terminates before an NSO Option has been exercised or expired for any reason other than those stated in paragraphs 5-8 above, the NSO Optionee may exercise the option rights at any time within the three-month period after his or her termination of employment (but before the expiration of the NSO Option) to the extent he or she was entitled to exercise the same immediately before the termination of employment.

10.

Liquidation, Dissolution and Merger. If at any time before an NSO Option is exercised or expires Ferro is liquidated or dissolved, or becomes a party to a plan of merger or consolidation with respect to which Ferro is not the surviving corporation, then the following will apply:

Ferro will give the NSO Optionee at least 30 days’ prior written notice that such event will occur.

If the NSO Optionee is then employed by Ferro, then the NSO Option will immediately become 100% exercisable provided that the NSO Optionee exercises the NSO Option before it expires and within 30 days after the notice.

If the NSO Optionee is not then employed by Ferro, then the NSO Option will be exercisable to the extent it was exercisable of the date of such notice provided that the NSO Optionee exercises the NSO Option before it expires and within 30 days after the notice.

If an NSO Option has not been exercised on or before the effective date of any such liquidation, dissolution, merger or consolidation, then notwithstanding the provisions of paragraphs 5-8 above, the NSO Option will terminate on such date, unless another corporation assumes the NSO Option.

11.

Exercise. An NSO Option may be exercised by delivering to Ferro at the office of its Treasurer a written notice signed by the person entitled to exercise the option, of the election to exercise the option and stating the number of shares to be purchased, together will full payment of the option exercise price of the shares then to be purchased. Payment of the option exercise price may be made, at the election of the NSO Optionee, (a) in cash, (b) in Ferro Common Stock, or (c) in any combination of cash and Ferro Common Stock. Shares of Ferro Common Stock used in payment of the purchase price will be valued at their closing price on the New York Stock Exchange on the trading day immediately preceding the date of exercise. Upon the proper exercise of an NSO Option, Ferro will issue the appropriate number of shares of Ferro Common Stock in the name of the person exercising the NSO Option and deliver to him or her a certificate or certificates for the shares purchased. The NSO Optionee will either pay in cash, within the time period specified by Ferro, the amount (if any) required to be withheld for Federal, state or local tax purposes on account of the exercise of an NSO Option or to make arrangements to satisfy such withholding requirements in a manner satisfactory to Ferro.

12.

Legal Restrictions on Exercise. No NSO Option will be exercisable if and to the extent such exercise would violate:

Any applicable state securities law;

Any applicable registration or other requirements under the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended, or the listing requirements of any stock exchange; or

Any applicable legal requirement of any other government authority.

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Ferro will make reasonable efforts to comply with the foregoing laws and requirements so as to permit the exercise of NSO Options. Furthermore, if a Registration Statement with respect to the shares to be issued upon the exercise of an NSO Option is not in effect or if counsel for Ferro deems it necessary or desirable in order to avoid possible violation of the 1933 Act, Ferro may require, as a condition to its issuance and delivery of certificates for the shares, the delivery to Ferro of a commitment in writing by the person exercising the option that at the time of such exercise it is his or her intention to acquire such shares for his or her own account for investment only and not with a view to, or for resale in connection with, the distribution thereof; that such person understands the shares may be “restricted securities” as defined in Rule 144 of the Securities and Exchange Commission; and that any resale, transfer or other disposition of said shares will be accomplished only in compliance with Rule 144, the 1933 Act, or the other Rules and Regulations there under. Ferro may place on the certificates evidencing such shares an appropriate legend reflecting the aforesaid commitment and the Company may refuse to permit transfer of such certificates until it has been furnished evidence satisfactory to it that no violation of the 1933 Act or the Rules and Regulations there under would be involved in such transfer.

13.

Forfeiture. The NSO Optionee will forfeit the NSO Option if, from the date the NSO Option is granted until the date the NSO Option has been fully exercised or expired, he or she —

Directly or indirectly, engages in, or assists or has a material ownership interest in, or acts as agent, advisor or consultant of, for, or to any person, firm, partnership, corporation or other entity that is engaged in the manufacture or sale of any products manufactured or sold by Ferro or any products that are logical extensions, on a manufacturing or technological basis, of such products;

Discloses to any person any proprietary or confidential business information concerning Ferro, its subsidiaries, or affiliates or any of the officers, Directors, employees, agents, or representatives of Ferro, its subsidiaries or affiliates, which the Participant obtained or which came to his or her attention during the course of his or her employment with Ferro;

Takes any action likely to disparage or have an adverse effect on Ferro, its subsidiaries, or affiliates or any of Ferro’s officers, Directors, employees, agents, or representatives;

Induces or attempts to induce any Ferro employee to leave the employ of Ferro or otherwise interferes with the relationship between Ferro and any of Ferro’s employees, or hires or assists in the hiring of any person who was a Ferro employee, or solicits, diverts or otherwise attempts to take away any customers, suppliers, or co-venturers of Ferro, either on the NSO Optionee’s own behalf or on behalf of any other person or entity; or

Otherwise performs any act or engages in any activity which in the opinion of the Committee is inimical to the best interests of Ferro.

14.

Withholding. All amounts paid to or on behalf of the NSO Optionee in respect of an NSO Option will be subject to withholding as required by law.

15.

Transferability. Subject only to the exceptions stated in Section 8 of the Plan, an NSO Option is not transferable by the NSO Optionee other than by will or by the laws of descent and distribution. An NSO Option will be exercisable during the lifetime of the NSO Optionee only by the NSO Optionee and/or his or her guardian or legal representative.

16.

Adjustments on Changes in Capitalization. If at any time before an NSO Option is exercised or expires, the shares of Ferro Common Stock are changed or Ferro makes an “extraordinary distribution” or effects a “prorata repurchase” of Common Stock as described in Section 7 of the Plan or takes any other action described in that section, then the shares of Common Stock issuable pursuant to such NSO Option will be appropriately adjusted as provided in such section.

17.

No Rights as a Shareholder. The NSO Optionee acknowledges that as holder of an NSO Option the NSO Optionee has no rights as a shareholder or otherwise in respect of any of the shares as to which the NSO Option has not been effectively exercised.

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18.

Employment at Will. Nothing in this NSO Option grant affects in any way the NSO Optionee’s status as an employee at will of Ferro.

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Exhibit 10.2

TERMS OF PERFORMANCE SHARE UNIT AWARDS

Generally. This document sets forth the terms and conditions under which an award (an “Award”) of phantom Performance Share units representing Ferro Common Stock (“Performance Share Units”) is made under paragraph 4(d) of the 2010 Long-Term Incentive Plan (the “Plan”), which was approved by Ferro Corporation shareholders on April 30, 2010. (The recipient of an Award is called the “Performance Share Unit Recipient” below. The term “Ferro” below includes Ferro Corporation and its subsidiaries and affiliated companies.)

Precedence of the Plan. The terms of this document are subject to the terms and conditions of the Plan. If there is any inconsistency between this document and the Plan, then the Plan, and not this document, will govern. The Compensation Committee of the Board of Directors or such other committee as the Board may from time to time designate (the “Committee”); administers awards under the Plan and has the authority to determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted under this Plan. In this capacity, the Committee also has the authority to construe and interpret the provisions of the Plan and all awards under the Plan and to establish, amend, and rescind rules and regulations for the administration of the Plan, all of which will be binding on the Performance Share Unit Recipient.

Basic Award Terms. The name of the Performance Share Unit Recipient, the date of the Award, the number of Performance Share Units being awarded, the period over which the Performance Share Units will mature (the “Performance Period”), and the targets which must be achieved in order to earn the Performance Share Units (the “Performance Targets”) are set forth separately in an award letter from Ferro to the Performance Share Unit Recipient which refers expressly to this document.

Performance Share Units . The Performance Share Units are phantom shares of Ferro Common Stock that will be converted into shares of Ferro Common Stock at the end of the Performance Period if Performance Targets have been met (as further explained below). The Performance Share Units are subject to forfeiture if the Performance Targets have not been achieved at the end of the Performance Period. During the Performance Period the Performance Share Unit Recipient will not be entitled to any rights as a shareholder, including voting rights or dividends, with respect to the Performance Share Units.

Performance Targets. The Committee establishes the Performance Targets that apply to a given Award. When determining whether Performance Targets have been attained, the Committee will have the discretion to make adjustments to take into account extraordinary or nonrecurring items or events, or unusual nonrecurring gains or losses identified in Ferro’s financial statements, provided such adjustments are (to the extent applicable) made in a manner consistent with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Awards of Performance Shares made to Participants subject to Section 162(m) of the Code are intended to qualify under Section 162(m) and the Committee will interpret the terms of such Awards in a manner consistent with that intent to the extent appropriate.

Conversion. As soon as practicable after (a) Ferro’s independent auditors have issued their report on Ferro’s financial results for the Performance Period, and (b) the Committee has certified the achievement levels, Ferro will calculate and deliver to the Performance Share Recipient the value of the Award. The value of the Award will be determined by multiplying (x) the number of Performance Share Units covered by the Award times (y) a Conversion Rate set forth in the award letter times (z) the average closing price for Ferro Common Stock during the first ten calendar days of the last month of the Performance Period. Any Performance Share Units not converted will be forfeited.

7.	Payment. Ferro will pay one-half of the value of the Award in nonforfeitable shares of Ferro Common Stock and the remaining one-half in cash. Any fractional share will be rounded down to the nearest whole number.

Retirement. If a Performance Share Unit Recipient is deemed by the Company to be terminating his or her employment as a direct result of his or her retirement from the Company at a time when he or she is age 55 or older and has 10 or more years of service during the Performance Period, then the Performance Share Unit Recipient will remain eligible to receive a prorated payment in respect of the Award at the end of the Performance Period. The prorated payment will be measured by a fraction the numerator of which is the number of full calendar months in the Performance Period prior to the Performance Share Unit Recipient’s retirement and the denominator of which is the number of full calendar months in the Performance Period.

Disability. If a Performance Share Unit Recipient’s employment terminates due to the Performance Share Unit Recipient’s total and permanent disability during the Performance Period, then the Performance Share Unit Recipient will remain eligible to receive a prorated payment in respect of the Award at the end of the Performance Period. The prorated payment will be measured by a fraction the numerator of which is the number of full calendar months in the Performance Period prior to Performance Share Unit Recipient’s termination of employment and the denominator of which is the number of full calendar months in the Performance Period.

10.

Death. If a Performance Share Unit Recipient dies while employed by the Company during a Performance Period, then the person who is entitled by will or the applicable laws of descent and distribution will be eligible to receive a prorated payment in respect of the Award at the end of the Performance Period. The prorated payment will be measured by a fraction the numerator of which is the number of full calendar months in the Performance Period prior to Performance Share Unit Recipient’s death and the denominator of which is the number of full calendar months in the Performance Period. In the case of a Performance Share Unit Recipient who is not employed by the Company at the time of death, the person who is entitled by will or the applicable laws of descent and distribution will be eligible to receive a payment in respect of the Award at the end of the Performance Period to the extent that the Performance Share Unit Recipient would have been entitled to the same immediately before his or her death.

11.

Other Termination of Employment. If the Performance Share Unit Recipient’s employment with the Company terminates before the end of the Performance Period for any reason other than those stated in clauses 8-10 above, then all of the Performance Share Units will be forfeited and the Performance Share Unit Recipient will not be eligible to receive any payment in respect of the Award at the end of the Performance Period.

12.

Change of Control. In the event of a “Change of Control” (as defined in an applicable Change in Control agreement or, if the Performance Share Unit Recipient is not a party to a Change in Control agreement, the Plan), the Performance Share Units will be governed by the Change in Control agreement entered into by and between the Performance Share Unit Recipient, including the definition of Change in Control, if applicable. If the Performance Share Unit Recipient is not party to a Change in Control agreement, the Performance Share Units will be governed by paragraph 9(c) of the Plan. Notwithstanding the foregoing, to comply with Section 409A, for purposes of this document, the term “Change of Control” means the occurrence of any one or more of the following events:

(i) any Person (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company immediately prior to the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common stock of the Company) becomes the Beneficial Owner (except that a Person shall be deemed to be the Beneficial Owner of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the 60 day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company, representing 50% or more of the combined voting power of the Company’s or such Subsidiary’s then outstanding securities;

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(ii) during any twelve-month period, a majority of the members of the Board is replaced by individuals who were not members of the Board at the Effective Date and whose election by the Board or nomination for election by the Company’s shareholders was not approved by a vote of at least a majority of the directors then still in office who either were directors at the Effective Date or whose election or nomination for election was previously so approved;

(iii) the consummation of a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) 50% or more of the combined voting power of the surviving or resulting entity outstanding immediately after such merger or consolidation; or

(iv) the consummation of a sale or disposition of all or substantially all of the assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of the common stock of the Company immediately prior to such sale or disposition).

13.

Legal Restrictions on Issuance of Shares. No shares of Ferro Common Stock will be issued in respect of an Award if and to the extent such issuance would violate:

Any applicable state securities law;

Any applicable registration or other requirements under the Securities Act of 1933 (the “1933 Act”), as amended, the Securities Exchange Act of 1934, as amended, or the listing requirements of any stock exchange; or

Any applicable legal requirement of any other government authority.

Ferro will make reasonable efforts to comply with the foregoing laws and requirements so as to permit the issuance of shares of Ferro Common Stock in respect of Awards. Furthermore, if a Registration Statement with respect to the shares to be issued in respect of an Award is not in effect or if counsel for Ferro deems it necessary or desirable in order to avoid possible violation of the 1933 Act, then Ferro may require, as a condition to its issuance and delivery of certificates for the shares, the delivery to Ferro of a commitment in writing by the person to whom the shares are being issued that at the time of such exercise it is his or her intention to acquire such shares for his or her own account for investment only and not with a view to, or for resale in connection with, the distribution thereof; that such person understands the shares may be “restricted securities” as defined in Rule 144 of the Securities and Exchange Commission; and that any resale, transfer or other disposition of said shares will be accomplished only in compliance with Rule 144, the 1933 Act, or the other Rules and Regulations there under. Ferro may place on the certificates evidencing such shares an appropriate legend reflecting the aforesaid commitment and the Company may refuse to permit transfer of such certificates until it has been furnished evidence satisfactory to it that no violation of the 1933 Act or the Rules and Regulations there under would be involved in such transfer.

14.

Forfeiture. The Performance Share Unit Recipient will forfeit his or her Performance Share Units if, during the Performance Period, he or she —

Discloses to any person any proprietary or confidential business information concerning Ferro or any Ferro officers, Directors, employees, agents, or representatives which the Performance Share Participant obtained or which came to his or her attention during the course of his or her employment with Ferro;

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Takes any action likely to disparage or have an adverse effect on Ferro, its subsidiaries, or affiliates or any of Ferro’s officers, Directors, employees, agents, or representatives;

Induces or attempts to induce any Ferro employee to leave the employ of Ferro or otherwise interferes with the relationship between Ferro and any of Ferro’s employees, or hires or assists in the hiring of any person who was a Ferro employee, or solicits, diverts or otherwise attempts to take away any customers, suppliers, or co-venturers of Ferro, either on the Performance Share Recipient’s own behalf or on behalf of any other person or entity; or

Otherwise performs any act or engages in any activity which in the opinion of the Committee is inimical to the best interests of Ferro.

15.

Withholding. All amounts paid to or on behalf of the Performance Share Unit Recipient in respect of settlement of Performance Share Units will be subject to withholding as required by law.

16.

Transferability. No Performance Share Units are transferable by the Performance Share Unit Recipient other than by will or by the laws of descent and distribution, and is exercisable during the lifetime of the Performance Share Unit Recipient.

17.

Adjustments on Changes in Capitalization. If at any time before the end of the Performance Period, the shares of Ferro Common Stock are changed or Ferro makes an “extraordinary distribution” or effects a “pro rata repurchase” of Common Stock as described in paragraph 7 of the Plan or takes any other action described in that paragraph, then the shares of Common Stock issuable in respect of an Award will be appropriately adjusted as provided in such paragraph.

18.

Employment at Will. Nothing in this grant of Performance Share Units affects in any way the Performance Share Unit Recipient’s status as an employee at will of Ferro.

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Exhibit 10.3

TERMS OF RESTRICTED SHARE UNIT AWARDS

[Vested by Lapse of Time]

Generally. This document sets forth the terms and conditions under which an award (an “Award”) of Restricted Share Units (“Restricted Share Units”) are made under Section 4(e) of the 2010 Long-Term Incentive Plan (the “Plan”), which was approved by Ferro Corporation shareholders on April 30, 2010. (The recipient of an Award is called the “Restricted Share Unit Recipient” below. The term “Ferro” below includes Ferro Corporation and its subsidiaries and affiliated companies.)

Precedence of the Plan. The terms of this document are subject to the terms and conditions of the Plan. If there is any inconsistency between this document and the Plan, then the Plan, and not this document, will govern, unless this document expressly states otherwise. The Compensation Committee of the Board of Directors, or such other committee as the Board may from time to time designate (the “Committee”), administers awards under the Plan and has the authority to determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted under this Plan. In this capacity, the Committee also has the authority to construe and interpret the provisions of the Plan and all awards under the Plan and to establish, amend, and rescind rules and regulations for the administration of the Plan, all of which will be binding on the Restricted Share Unit Recipient.

3.	Basic Award Terms. The name of the Restricted Share Unit Recipient, the date of the Award, and the number of Restricted Share Units being awarded are set forth separately in an award letter from Ferro to the Restricted Share Unit Recipient that refers expressly to this document.

Restricted Share Units . The Restricted Share Units are phantom shares of Ferro Common Stock with each Restricted Share Unit representing one share of Ferro Common Stock. The Restricted Share Units will vest at the end of the three-year period following the date of grant (the “Vesting Period”). Once vested, the Restricted Share Units are subject to the Holding Period described in paragraph 14 of this document. Upon conclusion of the Holding Period (or earlier under certain circumstances), the Restricted Share Units will be converted to shares of Ferro Common Stock. The Restricted Share Unit Recipient will not be entitled to any rights as a shareholder, including voting rights or dividends, with respect to the Restricted Share Units during the Vesting Period.

Disability. If a Restricted Share Unit Recipient’s employment terminates due to the Restricted Share Unit Recipient’s total and permanent disability (as defined under Section 409A of the Internal Revenue Code and the Treasury regulations promulgated thereunder) during the Vesting Period, then Ferro will deliver the shares of Ferro Common Stock represented by the Restricted Share Units to the Restricted Share Recipient at or soon as practicable after the Restricted Share Recipient’s employment terminates and such shares will not be subject to the Holding Period.

Death. If a Restricted Share Unit Recipient dies during a Vesting Period, then Ferro will deliver the shares of Ferro Common Stock represented by the Restricted Share Units to the person(s) or entity that is entitled by will or the applicable laws of descent and distribution to such shares of Ferro Common Stock as soon as practicable after the Restricted Share Recipient’s death and such shares will not be subject to the Holding Period.

Change of Control. If a “Change of Control” occurs before the end of the Vesting Period, then Ferro will deliver the shares of Ferro Common Stock represented by the Restricted Share Units to the Restricted Share Unit Recipient at or soon as practicable after the “Change of Control;” provided that the Restricted Share Unit Recipient is then employed by Ferro. (To comply with Section 409A, for purposes of this document, the term “Change of Control” means the occurrence of any one or more of the following events:

Other Termination of Employment. If the Restricted Share Unit Recipient’s employment with Ferro terminates before the end of the Vesting Period for any reason other than those stated in paragraphs 5, 6 and 7 above, then all of the Restricted Share Units will be forfeited and the Restricted Share Unit Recipient will not be eligible to receive the delivery of any shares of Ferro Common Stock under this Award.

9.	Legal Restrictions on Issuance of Shares. No shares of Ferro Common Stock will be issued in respect of an Award if and to the extent such issuance would violate:

Any applicable state securities law;

Any applicable legal requirement of any other government authority.

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10.

Forfeiture. The Restricted Share Unit Recipient will forfeit his or her Restricted Share Units if, during the Vesting Period, he or she:

Takes any action likely to disparage or have an adverse effect on Ferro, its subsidiaries, or affiliates or any of Ferro’s officers, Directors, employees, agents, or representatives;

Induces or attempts to induce any Ferro employee to leave the employ of Ferro or otherwise interferes with the relationship between Ferro and any of Ferro’s employees, or hires or assists in the hiring of any person who was a Ferro employee, or solicits, diverts or otherwise attempts to take away any customers, suppliers, or co-venturers of Ferro, either on the Restricted Share Recipient’s own behalf or on behalf of any other person or entity; or

Otherwise performs any act or engages in any activity which in the opinion of the Committee is inimical to the best interests of Ferro.

11.

Taxes and Withholding. All amounts paid to or on behalf of the Restricted Share Unit Recipient in respect of Restricted Share Units will be subject to withholding as required by law. The Restricted Share Unit Recipient will be responsible for making appropriate arrangements satisfactory to Ferro to pay any withholding, transfer, or other taxes due as a result of the issuance of the shares of Ferro Common Stock pursuant to this document. The Restricted Share Unit Recipient may, however, elect to pay Ferro all or a portion of such taxes by delivering to Ferro cash or previously-owned shares of Ferro Common Stock, by having shares of Ferro Common Stock that would otherwise be delivered under these terms withheld by Ferro, or by using any combination of such alternatives.

12.

Holding Period. The Restricted Share Units will vest at the end of the Vesting Period; however, shares of Ferro Common Stock will not be issued to the Restricted Share Unit Recipient until after a two-year deferral period (the “Holding Period”) regardless of the Restricted Share Unit Recipient’s employment status with Ferro; provided, however , that if the Restricted Share Unit Recipient dies during the Holding Period, such shares of Ferro Common Stock will pass to the person(s) or entity that is entitled by will or the applicable laws of descent and distribution to such shares of Ferro Common Stock; and provided further that if there is a Change in Control during the Holding Period, shares of Ferro Common Stock will be issued immediately with no restrictions on sale, transfer, assignment or other disposition.

13.

Transferability. No Restricted Share Units are transferable by the Restricted Share Unit Recipient other than by will or by the laws of descent and distribution.

14.

Adjustments on Changes in Capitalization. If at any time before the end of the Vesting Period or Holding Period, the shares of Ferro Common Stock are changed or Ferro makes an “extraordinary distribution” or effects a “prorata repurchase” of Common Stock as described in Section 7 of the Plan or takes any other action described in that section, then the shares of Common Stock issuable in respect of an Award will be appropriately adjusted as provided in such section.

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15.

Employment at Will. Nothing in this grant of Restricted Share Units affects in any way the Restricted Share Unit Recipient’s status as an employee at will of Ferro.

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Exhibit 10.4

March 5, 2012

Mr. James F. Kirsch

1 Windrush Lane

Beachwood, OH 44122

Re:

Cash Incentive Award

Dear Jim:

This letter agreement sets forth the terms of a cash incentive award granted to you by the Compensation Committee of the Board of Directors of Ferro Corporation (the “Company” ) on February 23, 2012.

Cash Incentive Opportunity. You are eligible to earn a cash incentive award in the amount of $450,000 (the “Award”). The payout of the Award will be based on the Company performance metric established for the Performance Share Units granted on February 23, 2012 for the period beginning January 1, 2012 and ending December 31, 2014 (the “Performance Period”). If Company performance meets or exceeds the level at which 100% of the Performance Share Units are earned (the “Target Level”), you will be paid the Award in full. If Company performance is below the Target Level, you will forfeit the Award in its entirety. The Award, if earned, will be paid on March 13, 2015 (the “Payment Date”).

Termination of Employment. The following provisions apply in the event of termination of your employment with the Company:

Retirement or Disability. If your employment from the Company is terminated by reason of retirement (as deemed by the Company at a time you are 55 or older and have 10 or more years of a service) or total and permanent disability during the Performance Period, then you will be entitled to a pro rata share of the Award, assuming the Target Level is achieved with respect to the Performance Share Units. The pro rata share of the Award will be measured by a fraction the numerator of which is the number of full calendar months in the Performance Period during which you were employed by the Company and the denominator of which is thirty-six (36) months. The pro rata portion of the Award will be paid on the Payment Date.

Death. If your employment from the Company is terminated during the Performance Period by reason of your death, the person who is entitled by will or the applicable laws of descent and distribution will be entitled to receive a pro rata share of the Award, assuming the Target Level is achieved with respect to the Performance Share Units. The pro rata share of the Award will be measured by a fraction the numerator of which is the number of full calendar months in the Performance Period during which you were employed by the Company and the denominator of which is thirty-six (36) months. The pro rata portion of the Award will be paid on the Payment Date.

Other Events of Termination. If your employment from the Company is terminated by reason other than retirement, death or disability before the end of the Performance Period then the Award will be forfeited and you will not be eligible to receive any payment in respect of the Award at the end of the Performance Period.

Change in Control. In the event of a Change in Control, as defined herein, you will be entitled to receive the Award in full. To comply with Section 409A, for purposes of this document, the term “Change of Control” means the occurrence of any one or more of the following events:

Section 409A. The Award is intended to comply with the requirements of Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”), and the terms and provisions of the Award will be interpreted in a manner that satisfies the requirements of Section 409A. If any term or provision of the Award would otherwise frustrate or conflict with this intent, such term or condition will be interpreted and deemed amended so as to avoid this conflict.

Compensation Committee Authority. The Compensation Committee has the authority to administer and interpret the terms of the Award. All decisions of the Compensation Committee shall be final, conclusive and binding.

Sincerely,

Richard J. Hipple

Director

Page 2 of 2

Exhibit 10.5

FERRO

James F. Kirsch

Chairman, President and

Chief Executive Officer

February 24, 2012

PERSONAL & CONFIDENTIAL

Addendum to February 16. 2012 Offer Letter

Jeffrey L. Rutherford

14784 River Glen Drive

Novelty, Ohio 44072

Dear Jeff:

The following provision is hereby added to the offer letter dated February 16, 2012:

Should your resignation from Park-Ohio Holdings result in the forfeiture of your earned bonus, Ferro will reimburse you for the documented amount of the forfeited bonus up to a maximum of $150,000, within the first 120 days of employment with Ferro.

If you have any questions, please give Ann Killian or me a call.

Sincerely,

James F. Kirsch

Chairman, President and Chief Executive Officer

Ferro Corporation | 6060 Parkland Boulevard | Mayfield Heights, Ohio 44124 | USA

p 216.875.5750 f 216.875.5631 www.ferro.com

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(a)/15D-14(a)

I, James F. Kirsch, certify that:

1.	I have reviewed this report on Form 10-Q of Ferro Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James F. Kirsch

James F. Kirsch

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

Date: April 25, 2012

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(a)/15D-14(a)

I, Jeffrey L. Rutherford, certify that:

1.	I have reviewed this report on Form 10-Q of Ferro Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jeffrey L. Rutherford

Jeffrey L. Rutherford

Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: April 25, 2012

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. 1350

In connection with the Form 10-Q (the “Report”) of Ferro Corporation (the “Company”) for the period ending March 31, 2012, I, James F. Kirsch, Chairman, President and Chief Executive Officer of the Company, certify that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James F. Kirsch

James F. Kirsch

Chairman, President and Chief Executive Officer

Date: April 25, 2012

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. 1350

In connection with the Form 10-Q (the “Report”) of Ferro Corporation (the “Company”) for the period ending March 31, 2012, I, Jeffrey L. Rutherford, Vice President and Chief Financial Officer of the Company, certify that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey L. Rutherford

Jeffrey L. Rutherford

Vice President and Chief Financial Officer

Date: April 25, 2012

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