##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2009oro

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

(IRS Employer Identification
    No.)1000 Lakeside Avenue
    Cleveland, OH(Address of principal
    executive offices)

44114(Zip Code)   Registrants telephone number, including area code:
    216-641-8580
 Securities Registered Pursuant to section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $1.00

New York Stock Exchange   Securities Registered Pursuant to Section 12(g) of the
    Act:
    6.50% Convertible Senior Notes due August 15, 2013
    Series A ESOP Convertible Preferred Stock, without Par
    Value
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1


Business


Page 3Item 1A


Risk Factors


Page 8Item 1B


Unresolved Staff Comments


Page 14Item 2


Properties


Page 14Item 3


Legal Proceedings


Page 15Item 4


(Reserved)PART IIItem 5


Market for Registrants Common Equity,
    Related Stockholder Matters, and Issuer Purchases of Equity
    Securities


Page 17Item 6


Selected Financial Data


Page 18Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


Page 18Item 7A


Quantitative and Qualitative Disclosures about
    Market Risk


Page 40Item 8


Financial Statements and Supplementary Data


Page 42Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


Page 101Item 9A


Controls and Procedures


Page 101Item 9B


Other Information


Page 103PART IIIItem 10


Directors, Executive Officers and Corporate
    Governance


Page 104Item 11


Executive Compensation


Page 104Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


Page 104Item 13


Certain Relationships and Related Transactions,
    and Director Independence


Page 104Item 14


Principal Accountant Fees and Services


Page 104PART IVItem 15


Exhibits and Financial Statement Schedules


Page 105EX-10.18EX-10.23EX-12EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



PART I  Item 1 
    Business  History,
    Organization and Products
    
    Electronics, Color and Glass Materials  Conductive
    metal pastes and powders, dielectrics, polishing materials,
    high-quality glazes, enamels, pigments, dinnerware decoration
    colors, and other performance materials; and
    Polymer and Ceramic Engineered Materials  Polymer
    specialty materials, engineered plastic compounds, pigment
    dispersions, ,glazes, frits, porcelain enamel, pigments, and
    high-potency pharmaceutical active ingredients.    
    Particle Engineering  Our ability to design and
    produce very small particles made of a broad variety of
    materials, with precisely controlled characteristics of shape,
    size and size distribution. We understand how to disperse these
    particles within liquid, paste and gel formulations.
    Color and Glass Science  Our understanding of the
    chemistry required to develop and produce pigments that provide
    color characteristics ideally suited to customers
    applications. We have a demonstrated ability to provide
    glass-based coatings with properties that precisely meet
    customers needs in a broad variety of applications.
    Surface Chemistry and Surface Application Technology 
    Our understanding of chemicals and materials used to develop
    products and processes that involve the interface between layers
    and the surface properties of materials.
    Product Formulation  Our ability to develop and
    manufacture combinations of materials that deliver specific
    performance characteristics designed to work within
    customers particular manufacturing processes.   3




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Polymer and Ceramic Engineered Materials

Electronics, Color and Glass Materials Polymer Additives

 Electronic Materials Specialty Plastics

 Color and Glass Performance Materials Pharmaceuticals Tile Coating Systems(1) Porcelain Enamel(1)     (1)
    
    Tile Coating Systems and Porcelain Enamel are combined into one
    reportable business segment, Performance Coatings, for financial
    reporting purposes.  Form 10-K.
    Markets
    and Customers
     Appliances

 Household furnishings Automobiles

 Industrial products Building and renovation

 Packaging Electronics

 Pharmaceuticals         Backlog
    of Orders and Seasonality
   4




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Competition
      Raw
    Materials and Supplier Relations
    Metal
    Oxides:(1)

Precious and Non-precious
    Metals:(3) Aluminum oxide(3)

 Aluminum Cobalt oxide

 Bismuth Nickel oxide

 Chromium Zinc oxide

 Copper GoldPolymers:(2)

 Lithium Polypropylene

 Palladium Polystyrene

 Platinum Unsaturated polyester

 Silver TitaniumOther Inorganic Materials:

 Zinc Boron(3) Feldspar(1)

Other Organic Materials:(4) Fiberglass(2)

 Butanol Silica(1)

 Phthalic anhydride Titanium dioxide(1)(2)

 Soybean oil Zircon(1)

 Tallow Toluene     (1)
    
    Primarily used by Color and Glass Performance Materials, Tile
    Coating Systems and Porcelain Enamel.(2)
    
    Primarily used by Specialty Plastics.(3)
    
    Primarily used by Electronic Materials and Color and Glass
    Performance Materials.(4)
    
    Primarily used by Polymer Additives.   5




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Environmental
    Matters
        Research
    and Development
      Patents,
    Trademarks and Licenses
   6




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Employees
        Domestic
    and Foreign Operations
    Consolidated Subsidiaries:   Argentina

   France

   Mexico

   Thailand   Australia

   Germany

   Netherlands

   United Kingdom   Belgium

   Indonesia

   Portugal

   Venezuela   Brazil

   Italy

   Spain   China

   Japan

   TaiwanUnconsolidated Affiliates:   Italy

   Spain

   South Korea

   Thailand   Form 10-K.
  and/or
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K, 44114-1147.
  Forward-looking
    Statements
   7




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Item 1A.
    Risk
    Factors    We
    sell our products into industries where demand has been
    unpredictable, cyclical or heavily influenced by consumer
    spending, and such demand and our results of operations may be
    further impacted by macro-economic circumstances and uncertainty
    in credit markets.
    and/or
  We
    strive to improve operating margins through sales growth, price
    increases, productivity gains, and improved purchasing
    techniques, but we may not achieve the desired
    improvements.
    We
    have initiated and intend to initiate several restructuring
    programs to improve our operating performance and achieve cost
    savings, but we may not be able to implement and/or administer
    these programs in the manner contemplated and these
    restructuring programs may not produce the desired
    results.
  and/or
 8




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and/or
  We
    depend on external financial resources, and the economic
    environment and credit market uncertainty could interrupt our
    access to capital markets, borrowings, or financial transactions
    to hedge certain risks, which could adversely affect our
    financial condition.
  Form 10-K.
  Interest
    rates on some of our borrowings are variable, and our borrowing
    costs could be affected adversely by interest rate
    increases.
  Form 10-K.
  We
    depend on reliable sources of energy and raw materials,
    including petroleum-based materials and other supplies, at a
    reasonable cost, but the availability of these materials and
    supplies could be interrupted and/or their prices could escalate
    and adversely affect our sales and profitability.
    The
    markets for our products are highly competitive and subject to
    intense price competition, and that could adversely affect our
    sales and earnings performance.
   9




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The
    global scope of our operations exposes us to risks related to
    currency conversion rates and changing economic, social and
    political conditions around the world.
    
    New and different legal and regulatory requirements and
    enforcement mechanisms in local jurisdictions;
    U.S. export licenses may be difficult to obtain and we may
    be subject to export duties or import quotas or other trade
    barriers;
    Increased costs of, and decreased availability of,
    transportation or shipping;
    Credit risk and financial conditions of local customers and
    distributors;
    Risk of nationalization of private enterprises by foreign
    governments or restrictions on investments;
    Potentially adverse tax consequences, including imposition or
    increase of withholding and other taxes on remittances and other
    payments by subsidiaries; and
    Local political, economic and social conditions, including the
    possibility of hyperinflationary conditions, deflation, and
    political instability in certain countries.    We
    have significant deferred tax assets, and if we are unable to
    utilize these assets our results of operations may be adversely
    affected.
  Form 10-K.
  Many
    of our assets are encumbered by liens that have been granted to
    lenders, and those liens affect our flexibility to dispose of
    property and businesses.
  and/or Form 10-K.
  We are
    subject to a number of restrictive covenants under our credit
    facilities, which could affect our flexibility to fund ongoing
    operations and strategic initiatives, and, if we are unable to
    maintain compliance with such covenants, could lead to
    significant challenges in meeting our liquidity
    requirements.
  Form 10-K.
 10




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Form 10-K.
    Regulatory
    authorities in the U.S., European Union and elsewhere are taking
    a much more aggressive approach to regulating hazardous
    materials and other substances, and those regulations could
    affect sales of our products.
  and/or
  Our
    operations are subject to operating hazards and, as a result, to
    stringent environmental, health and safety regulations, and
    compliance with those regulations could require us to make
    significant investments.
      Our
    businesses depend on a continuous stream of new products, and
    failure to introduce new products could affect our sales,
    profitability and liquidity.
  and/or
 11




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We are
    subject to stringent labor and employment laws in certain
    jurisdictions in which we operate, we are party to various
    collective bargaining arrangements, and our relationship with
    our employees could deteriorate, which could adversely impact
    our operations.
  and/or
  and/or
  Employee
    benefit costs, especially postretirement costs, constitute a
    significant element of our annual expenses, and funding these
    costs could adversely affect our financial
    condition.
  Form 10-K.
  We are
    exposed to intangible asset risk, and a write down of our
    intangible assets could have an adverse impact to our operating
    results and financial position.
    Our
    ability to use our operating loss carryforwards and other tax
    attributes may be subject to limitation due to significant
    changes in the ownership of our common stock.
   12




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We
    have a growing presence in the Asia-Pacific region where it can
    be difficult for a
    U.S.-based
    company, such as Ferro, to compete lawfully with local
    competitors, which may cause us to lose business
    opportunities.
  U.S.-based
  We
    have in the past identified material weaknesses in our internal
    controls, and the identification of any material weaknesses in
    the future could affect our ability to ensure timely and
    reliable financial reports.
        We are
    a defendant in several lawsuits that could have an adverse
    effect on our financial condition and/or financial performance,
    unless they are successfully resolved.
  Form 10-K.
  We may
    not pay dividends on our common stock at any time in the
    foreseeable future.
   13




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We are
    exposed to risks associated with acts of God, terrorists and
    others, as well as fires, explosions, wars, riots, accidents,
    embargoes, natural disasters, strikes and other work stoppages,
    quarantines and other governmental actions, and other events or
    circumstances that are beyond our control.
  and/or
    Item 1B 
    Unresolved
    Staff Comments    Item 2 
    Properties                    Item 3 
    Legal
    Proceedings   14




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No. CGC-040431278); No. 2:05-CV-04157-LDD, No. 2:08-CV-03702-LDD No. 2:08-CV-04161-LDD No. 2:08-CV-04162-LDD No. 2:08-CV-03701-LDD
        Executive
    Officers of the Registrant
                15




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16




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PART II  Item 5 
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity Securities      COMPARISON
    OF FIVE-YEAR
    CUMULATIVE TOTAL RETURNS
  
   intra-day
  2009

2008High

Low

Dividends

High

Low

DividendsFirst Quarter

$
7.77


$
0.81


$
0.01


$
20.65


$
13.77


$
0.145Second Quarter


6.00



1.33



0.00



21.10



13.52



0.145Third Quarter


10.46



1.95



0.00



24.13



17.28



0.145Fourth Quarter


8.98



5.40



0.00



20.97



5.54



0.145     Form 10-K.
  Form S-3 No. 333-161136)
 17




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##### Table of Contents



Item 6 
    Selected
    Financial Data    2009

2008

2007

2006

2005(Dollars in thousands, except per share data)Net sales

$
1,657,569


$
2,245,152


$
2,147,904


$
1,987,606


$
1,833,064(Loss) income from continuing operations


(40,040
)


(52,882
)


(97,502
)


17,181



17,462Basic (loss) earnings per share from continuing operations
    attributable to Ferro Corporation common shareholders


(0.85
)


(1.28
)


(2.34
)


0.33



0.33Diluted (loss) earnings per share from continuing operations
    attributable to Ferro Corporation common shareholders


(0.85
)


(1.28
)


(2.34
)


0.33



0.33Cash dividends declared per common share


0.01



0.58



0.58



0.58



0.58Total assets


1,526,355



1,544,117



1,638,260



1,741,602



1,676,598Long-term debt, including current portion, and redeemable
    preferred stock


409,231



577,290



538,758



601,765



568,325   Form 10-K.
  Item 7 
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
     18




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
    Cost and expense reduction initiatives. These initiatives
    included restructuring actions that consolidated manufacturing
    facilities and reduced employee positions. The actions resulted
    in restructuring and other charges, and also contributed to
    lower operating costs and expenses.
    Reduced impairment of goodwill and other assets.
    Increased interest expense. Interest expense increased due to
    higher interest rates and increased borrowing levels, including
    borrowing to satisfy requirements for cash collateral related to
    precious metal consignment agreements. Borrowing levels were
    reduced in November as a result of using a portion of the
    proceeds from an equity offering to reduce debt.                  Outlook
   19




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Results
    of Operations
  Comparison
    of the years ended December 31, 2009 and 2008
  2009


2008


$ Change


% Change(Dollars in thousands, except per share data)Net sales

$
1,657,569


$
2,245,152


$
(587,583
)


(26.2
)%Cost of sales


1,343,297



1,841,485



(498,188
)


(27.1
)%Gross profit


314,272



403,667



(89,395
)


(22.1
)%Gross margin percentage


19.0
%


18.0
%Selling, general and administrative expenses


272,259



297,119



(24,860
)


(8.4
)%Impairment charges


8,225



80,205



(71,980
)


(89.7
)%Restructuring charges


11,112



25,937



(14,825
)


(57.2
)%Other expense (income):Interest expense


63,918



51,290



12,628



24.6
%Interest earned


(896
)


(714
)


(182
)


25.5
%Loss on extinguishment of debt






5,531



(5,531
)


(100.0
)%Foreign currency losses, net


3,827



742



3,085



415.8
%Miscellaneous income, net


(618
)


(357
)


(261
)


73.1
%Loss before income taxes


(43,555
)


(56,086
)


12,531



(22.3
)%Income tax benefit


(3,515
)


(3,204
)


(311
)


9.7
%Loss from continuing operations


(40,040
)


(52,882
)


12,842



(24.3
)%Income from discontinued operations, net of income taxes






5,014



(5,014
)


(100.0
)%(Loss) gain on disposal of discontinued operations, net of
    income taxes


(325
)


9,034



(9,359
)


(103.6
)%Net loss

$
(40,365
)

$
(38,834
)

$
(1,531
)


3.9
%Diluted loss per share attributable to Ferro Corporation
    common shareholders

$
(0.86
)

$
(0.95
)

$
0.09



(9.5
)%      20




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##### Table of Contents



1 8
        
    A $4.2 million (9.7%) decrease resulting from rate
    differences between
    non-U.S. and
    U.S. jurisdictions.
    A $2.9 million (6.6%) decrease resulting from goodwill
    impairment not recognized for tax purposes.
    A $2.9 million (6.6%) decrease resulting from a decrease in
    the reserves for uncertain tax positions.
    A $4.4 million (10.1%) increase resulting from
    U.S. credits for increasing research activities. 21




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
    A $15.4 million (27.5%) decrease resulting from goodwill
    impairment with only a partial tax benefit.
    A $9.8 million (17.4%) decrease resulting from an increase
    to valuation allowances due to a determination that it is more
    likely than not that certain deferred tax assets will not be
    realized.
    A $6.5 million (11.6%) decrease resulting from rate
    differences between
    non-U.S. and
    U.S. jurisdictions.
    A $6.1 million (10.9%) increase resulting from a favorable
    tax impact on foreign dividends.
    A $5.7 million (10.2%) increase resulting from a decrease
    in the reserves for uncertain tax positions.    2009


2008


$ Change


% Change(Dollars in thousands)Segment SalesPerformance Coatings

$
487,891


$
627,918


$
(140,027
)


(22.3
)%Electronic Materials


426,896



558,313



(131,417
)


(23.5
)%Color & Glass Performance Materials


321,750



456,644



(134,894
)


(29.5
)%Polymer Additives


249,510



349,902



(100,392
)


(28.7
)%Specialty Plastics


149,524



225,856



(76,332
)


(33.8
)%Pharmaceuticals


21,998



26,519



(4,521
)


(17.0
)%Total segment sales

$
1,657,569


$
2,245,152


$
(587,583
)


(26.2
)%Segment Operating IncomePerformance Coatings

$
29,551


$
36,935


$
(7,384
)


(20.0
)%Electronic Materials


45,344



52,868



(7,524
)


(14.2
)%Color & Glass Performance Materials


13,123



39,112



(25,989
)


(66.4
)%Polymer Additives


6,708



6,086



622



10.2
%Specialty Plastics


10,164



5,385



4,779



88.7
%Pharmaceuticals


438



3,524



(3,086
)


(87.6
)%Total segment operating income

$
105,328


$
143,910


$
(38,582
)


(26.8
)%   Performance Coatings Segment Results.
  Electronic Materials Segment Results.
 22




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##### Table of Contents



Color and Glass Performance Materials Segment
    Results.
  Polymer Additives Segment Results.
  Specialty Plastics Segment Results.
  Pharmaceuticals Segment Results.
  2009


2008


$ Change


% Change(Dollars in thousands)Geographic RevenuesUnited States

$
758,048


$
973,717


$
(215,669
)


(22.1
)%International


899,521



1,271,435



(371,914
)


(29.3
)%Total geographic revenues

$
1,657,569


$
2,245,152


$
(587,583
)


(26.2
)%    23




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Comparison
    of the years ended December 31, 2008 and 2007
  2008


2007


$ Change


% Change(Dollars in thousands, except per share data)Net sales

$
2,245,152


$
2,147,904


$
97,248



4.5
%Cost of sales


1,841,485



1,745,445



96,040



5.5
%Gross profit


403,667



402,459



1,208



0.3
%Gross margin percentage


18.0
%


18.7
%Selling, general and administrative expenses


297,119



314,878



(17,759
)


(5.6
)%Impairment charges


80,205



128,737



(48,532
)


(37.7
)%Restructuring charges


25,937



16,852



9,085



53.9
%Other expense (income):Interest expense


51,290



57,837



(6,547
)


(11.3
)%Interest earned


(714
)


(1,505
)


791



(52.6
)%Loss on extinguishment of debt


5,531







5,531



Foreign currency losses, net


742



1,254



(512
)


(40.8
)%Loss (gain) on sale of businesses






1,348



(1,348
)


(100.0
)%Miscellaneous income, net


(357
)


(1,488
)


1,131



(76.0
)%Loss before income taxes


(56,086
)


(115,454
)


59,368



(51.4
)%Income tax benefit


(3,204
)


(17,952
)


14,748



(82.2
)%Loss from continuing operations


(52,882
)


(97,502
)


44,620



(45.8
)%Income from discontinued operations, net of income taxes


5,014



5,312



(298
)


(5.6
)%Gain (loss) on disposal of discontinued operations, net of
    income taxes


9,034



(225
)


9,259



(4,115.1
)%Net loss

$
(38,834
)

$
(92,415
)

$
53,581



(58.0
)%Diluted loss per share attributable to Ferro Corporation
    common shareholders

$
(0.95
)

$
(2.23
)

$
1.28



(57.4
)%        24




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1 8
          
    A $15.4 million (27.5%) decrease resulting from goodwill
    impairment with only a partial tax benefit.
    A $9.8 million (17.4%) decrease resulting from an increase
    to valuation allowances due to a determination that it is more
    likely than not that certain deferred tax assets will not be
    realized. 25




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
    A $6.5 million (11.6%) decrease resulting from rate
    differences between
    non-U.S. and
    U.S. jurisdictions.
    A $6.1 million (10.9%) increase resulting from a favorable tax
    impact on foreign dividends.
    A $5.7 million (10.2%) increase resulting from a decrease
    in the reserves for uncertain tax positions.    
    A $12.3 million (10.6%) decrease resulting from goodwill
    impairment not recognized for tax purposes.
    A $7.0 million (6.1%) decrease resulting from an
    unfavorable tax impact on foreign dividends.
    A $4.6 million (4.0%) decrease resulting from an increase
    to valuation allowances due to a determination that it is more
    likely than not that certain deferred tax assets will not be
    realized.      2008


2007


$ Change


% Change(Dollars in thousands)Segment SalesPerformance Coatings

$
627,918


$
609,285


$
18,633



3.1
%Electronic Materials


558,313



469,885



88,428



18.8
%Color & Glass Performance Materials


456,644



445,709



10,935



2.5
%Polymer Additives


349,902



334,492



15,410



4.6
%Specialty Plastics


225,856



261,956



(36,100
)


(13.8
)%Pharmaceuticals


26,519



26,577



(58
)


(0.2
)%Total segment sales

$
2,245,152


$
2,147,904


$
97,248



4.5
%Segment Operating IncomePerformance Coatings

$
36,935


$
37,965


$
(1,030
)


(2.7
)%Electronic Materials


52,868



32,785



20,083



61.3
%Color & Glass Performance Materials


39,112



48,222



(9,110
)


(18.9
)%Polymer Additives


6,086



10,755



(4,669
)


(43.4
)%Specialty Plastics


5,385



15,116



(9,731
)


(64.4
)%Pharmaceuticals


3,524



1,947



1,577



81.0
%Total segment operating income

$
143,910


$
146,790


$
(2,880
)


(2.0
)%   Performance Coatings Segment Results.
  Electronic Materials Segment Results.
 26




---



##### Table of Contents



Color and Glass Performance Materials Segment
    Results.
  Polymer Additives Segment Results.
  Specialty Plastics Segment Results.
  Pharmaceuticals Segment Results.
  2008


2007


$ Change


% Change(Dollars in thousands)Geographic RevenuesUnited States

$
973,717


$
900,146


$
73,571



8.2
%International


1,271,435



1,247,758



23,677



1.9
%Total geographic revenues

$
2,245,152


$
2,147,904


$
97,248



4.5
%    27




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##### Table of Contents



Summary
    of Cash Flows for the years ended December 31, 2009, 2008
    and 2007
  2009


2008


2007(Dollars in thousands)Net cash provided by (used for) operating activities

$
2,151


$
(9,096
)

$
144,579Net cash used for investing activities


(42,654
)


(17,050
)


(62,033
)Net cash provided by (used for) financing activities


46,625



23,854



(88,717
)Effect of exchange rate changes on cash


2,194



458



1,211Increase (decrease) in cash and cash equivalents

$
8,316


$
(1,834
)

$
(4,960
)   Operating activities.
    Investing activities.
  Financing activities. 1 8
   28




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##### Table of Contents



1 8
    Capital
    Resources and Liquidity
  Common
    Stock
    6.50% Convertible
    Senior Notes
  1 8
  Revolving
    Credit and Term Loan Facility
      
    Increase the interest rates and commitment fees payable
    thereunder pursuant to a grid structure based on our leverage
    ratio,
    Increase the maximum permitted quarterly leverage ratio and
    decrease the minimum permitted quarterly fixed charge coverage
    ratio,
    Add a minimum cumulative EBITDA requirement for each quarter in
    2009,
    Restrict the Companys ability to engage in acquisitions
    and make investments,
    Limit the amount of cash and cash equivalent collateral the
    Company is permitted to deliver to participants in our precious
    metals program to secure our obligations arising under the
    precious metals consignment agreements,
    Require additional financial reporting by the Company to the
    lenders,
    Increase the amount of the annual excess cash flow required to
    be used to repay term loans,
    Require application of the net proceeds of certain dispositions,
    but excluding the first $20 million of such net proceeds,
    to be applied to repay debt outstanding under the revolving
    credit facility and term loans and to 29




---



##### Table of Contents



permanently reduce availability under the revolving loan
    facility on a dollar for dollar basis, provided that we are not
    required to reduce the commitments under the revolving credit
    facility to below $150 million,  
    Eliminate our ability to request an increase of $50 million
    in the revolving credit facility,
    Add provisions governing the obligations of the Company and the
    lenders if one or more lenders under the revolving credit
    facility fails to satisfy its funding obligations or otherwise
    becomes a defaulting lender, and
    Restrict our ability to make payments with respect to our
    capital securities. The 2009 Amended Credit Facility prohibits
    us from paying dividends on our common stock.    
    Extend the maturity of the revolving commitments through
    June 6, 2012,
    Allow conversion of $100 million of revolving loans into
    new term loans that also mature on June 6, 2012,
    Require application of the proceeds in excess of
    $50 million from the equity offering, net of equity
    issuance and facility amendment fees and costs, to repay
    outstanding term loans (as a result, we repaid
    $79.0 million of existing term loans and $79.0 million
    of new term loans),
    Modify the maximum permitted leverage ratio,
    Modify the minimum permitted fixed charge coverage ratio,
    Delete the minimum EBITDA covenant, which was added in the 2009
    Amended Credit Facility,
    Delete the additional financial reporting by the Company to the
    lenders, which was added in the 2009 Amended Credit Facility,
    Modify our obligations to apply the net proceeds of dispositions
    to repay outstanding revolving and term loans,
    Step down the portion of the annual excess cash flow required to
    be used to repay outstanding loans depending on the leverage
    ratio,
    Increase the amount of indebtedness our foreign subsidiaries may
    incur based on the leverage ratio,
    Allow payment of dividends to holders of Series A preferred
    shares,
    Eliminate the cap on the amount of cash we may deliver to secure
    our obligations arising under our precious metals
    program, and
    Limit the amount of cash or cash equivalents we may hold.    dollar-for-dollar
 30




---



##### Table of Contents



Form 10-K.
  Form 8-K
  Domestic
    Receivable Sales Program
        Off
    Balance Sheet Arrangements
  International Receivable Sales Programs.
  Consignment and Customer Arrangements for Precious
    Metals.
 31




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##### Table of Contents



Bank Guarantees and Standby Letters of
    Credit.
  Other
    Financing Arrangement
    Liquidity
    Requirement
       32




---



##### Table of Contents



2010


2011


2012


2013


2014


Thereafter


Totals(Dollars in thousands)Loans payable to banks

$
5,891


$



$



$



$



$



$
5,891Asset securitization program


17,762























17,762Convertible notes














172,500











172,500Revolving credit facility










1,700















1,700Term loan facility










231,385















231,385Other long-term notes


209



453



513



433



440



2,106



4,154Obligations under capital leases


1,375



974



974



923



790



3,910



8,946Obligations under operating leases


13,395



9,211



6,575



5,180



4,512



8,383



47,256Purchase commitments


33,705



1,000



153



102











34,960$
72,337


$
11,638


$
241,300


$
179,138


$
5,742


$
14,399


$
524,554       FASB Accounting Standards
    Codificationtm non-U.S. tax
   33




---



##### Table of Contents



Critical
    Accounting Policies
    Inventories
  first-in,
  Environmental
    Liabilities
      Income
    Taxes
     34




---



##### Table of Contents



non-U.S. tax non-U.S. jurisdictions,
    Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
    Pension
    and Other Postretirement Benefits
      non-U.S. plans
 35




---



##### Table of Contents



non-U.S. plans. non-U.S. plans.
      25-Basis-Point Decrease25-Basis-Point Decrease


in Asset Returnin Discount Rate


Assumption(Dollars in thousands)U.S. pension plans

$
1,167


$
571U.S. retiree medical plan


4



Non-U.S.
    pension plans


438



367Total

$
1,609


$
938     2009

2008

ChangeDiscount rate used to measure benefit cost:U.S. pension plans


6.74
%


6.49
%


0.25
%U.S. retiree medical plan


6.45
%


6.10
%


0.35
%Non-U.S.
    pension plans


5.85
%


5.56
%


0.29
%Discount rate used to measure benefit obligations:U.S. pension plans


6.20
%


6.74
%


(0.54
)%U.S. retiree medical plan


5.85
%


6.45
%


(0.60
)%Non-U.S.
    pension plans


5.88
%


5.85
%


0.03
%Expected return on plan assets:U.S. pension plans


8.50
%


8.50
%



%Non-U.S.
    pension plans


5.24
%


5.25
%


(0.01
)%      36




---



##### Table of Contents



Restructuring
    and Cost Reduction Programs
      Revenue
    Recognition
    
    Persuasive evidence of an arrangement exists;
    The selling price is fixed and determinable;
    Collection is reasonably assured; and
    Title and risk of loss has passed to our customers.   37




---



##### Table of Contents



Valuation
    of Goodwill and Other
    Non-amortizing
    Intangibles
      Significant Assumptions

2009

2008Weighted-average cost of capital

13.5% - 14.0%

11.0% - 16.0%Residual growth rate

3.0% - 5.0%

3.0% - 5.0%       Assessment
    of Long-Lived Assets
     38




---



##### Table of Contents



Derivative
    Financial Instruments
    Fair Value
    Measurements,
         39




---



##### Table of Contents



Impact
    of Newly Issued Accounting Pronouncements
  2009-13, Multiple Deliverable Revenue Arrangements 2009-13), 2009-13 2009-13 2009-13
  2009-16, Accounting for Transfers of Financial Assets 2009-16), 2009-16 2009-16 2009-16
  2009-17, Improvements to Financial Reporting by Enterprises Involved
    with Variable Interest Entities 2009-17), 2009-17 2009-17
  2010-06, Improving Disclosures About Fair Value Measurements 2010-06), 2010-06
  Item 7A 
    Quantitative
    and Qualitative Disclosures about Market Risk         40




---



##### Table of Contents



2009


2008(Dollars in thousands)Variable-rate debt and utilization of asset securitization
    program:Change in annual interest expense from 1% change in interest
    rates

$
1,170


$
2,742Fixed-rate debt:Carrying amount

$
161,050


$
154,995Fair value

$
160,275


$
85,700Change in fair value from 1% increase in interest rate

$
(4,814
)

$
(2,877
)Change in fair value from 1% decrease in interest rate

$
5,000


$
3,003Interest rate swaps:Notional amount

$
150,000


$
150,000Carrying amount and fair value

$
(9,516
)

$
(12,724
)Change in fair value from 1% increase in interest rate

$
2,226


$
3,322Change in fair value from 1% decrease in interest rate

$
(2,263
)

$
(3,401
)Foreign currency forward contracts:Notional amount

$
178,922


$
156,840Carrying amount and fair value

$
723


$
(96
)Change in fair value from 10% appreciation of U.S. dollar

$
5,571


$
2,523Change in fair value from 10% depreciation of U.S. dollar

$
(6,809
)

$
(3,084
)Raw material commodity swaps:Notional amount (in metric tons of base metals)






330Carrying amount and fair value

$



$
(576
)Change in fair value from 10% change in forward prices

$



$
71Precious metals forward contracts:Notional amount (in troy ounces)






129Carrying amount and fair value

$



$
8Change in fair value from 10% change in forward prices

$



$
11  41




---



##### Table of Contents



Item 8 
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              Internal Control  Integrated
    Framework
  
    42




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2009


2008


2007(In thousands, except per share amounts)Net sales

$
1,657,569


$
2,245,152


$
2,147,904Cost of sales


1,343,297



1,841,485



1,745,445Gross profit


314,272



403,667



402,459Selling, general and administrative expenses


272,259



297,119



314,878Impairment charges


8,225



80,205



128,737Restructuring charges


11,112



25,937



16,852Other expense (income):Interest expense


63,918



51,290



57,837Interest earned


(896
)


(714
)


(1,505
)Loss on extinguishment of debt






5,531



Foreign currency losses, net


3,827



742



1,254Loss on sale of businesses










1,348Miscellaneous income, net


(618
)


(357
)


(1,488
)Loss before income taxes


(43,555
)


(56,086
)


(115,454
)Income tax benefit


(3,515
)


(3,204
)


(17,952
)Loss from continuing operations


(40,040
)


(52,882
)


(97,502
)Income from discontinued operations, net of income taxes






5,014



5,312(Loss) gain on disposal of discontinued operations,
    net of income taxes


(325
)


9,034



(225
)Net loss


(40,365
)


(38,834
)


(92,415
)Less: Net income attributable to noncontrolling interests


2,551



1,596



2,064Net loss attributable to Ferro Corporation


(42,916
)


(40,430
)


(94,479
)Dividends on preferred stock


(705
)


(877
)


(1,035
)Net loss attributable to Ferro Corporation common
    shareholders

$
(43,621
)

$
(41,307
)

$
(95,514
)Amounts attributable to Ferro Corporation:Loss from continuing operations, net of tax

$
(42,591
)

$
(54,478
)

$
(99,566
)(Loss) income from discontinued operations, net of tax


(325
)


14,048



5,087Net loss attributable to Ferro Corporation

$
(42,916
)

$
(40,430
)

$
(94,479
)Weighted-average common shares outstanding


50,935



43,261



42,926Incremental common shares attributable to convertible preferred
    stock,
    performance shares, deferred stock units, and stock options










Weighted-average diluted shares outstanding


50,935



43,261



42,926Per common share dataBasic (loss) earnings attributable to Ferro Corporation common
    shareholders:From continuing operations

$
(0.85
)

$
(1.28
)

$
(2.34
)From discontinued operations


(0.01
)


0.33



0.11$
(0.86
)

$
(0.95
)

$
(2.23
)Diluted (loss) earnings attributable to Ferro Corporation common
    shareholders:From continuing operations

$
(0.85
)

$
(1.28
)

$
(2.34
)From discontinued operations


(0.01
)


0.33



0.11$
(0.86
)

$
(0.95
)

$
(2.23
)    43




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2009


2008(Dollars in thousands)ASSETSCurrent assetsCash and cash equivalents

$
18,507


$
10,191Accounts and trade notes receivable, net


285,638



296,423Inventories


180,700



256,411Deposits for precious metals


112,434



Deferred income taxes


19,618



19,167Other receivables


27,795



58,391Other current assets


7,180



8,306Total current assets


651,872



648,889Other assetsProperty, plant and equipment, net


432,405



456,549Goodwill


221,044



229,665Amortizable intangible assets, net


10,610



11,753Deferred income taxes


133,705



134,361Other non-current assets


76,719



62,900Total assets

$
1,526,355


$
1,544,117LIABILITIES and SHAREHOLDERS EQUITYCurrent liabilitiesLoans payable and current portion of long-term debt

$
24,737


$
8,883Accounts payable


196,038



232,113Income taxes


7,241



14,361Accrued payrolls


20,894



18,695Accrued expenses and other current liabilities


72,039



83,012Total current liabilities


320,949



357,064Other liabilitiesLong-term debt, less current portion


398,720



561,613Postretirement and pension liabilities


203,743



221,110Deferred income taxes


1,124



13,011Other non-current liabilities


31,897



34,047Total liabilities


956,433



1,186,845Series A convertible preferred stock (approximates
    redemption value)


9,427



11,548Shareholders equityFerro Corporation shareholders equity:Common stock


93,436



52,323Paid-in capital


331,376



178,420Retained earnings


357,128



401,186Accumulated other comprehensive loss


(60,147
)


(98,436
)Common shares in treasury, at cost


(171,567
)


(197,524
)Total Ferro Corporation shareholders equity


550,226



335,969Noncontrolling interests


10,269



9,755Total equity


560,495



345,724Total liabilities and shareholders equity

$
1,526,355


$
1,544,117    44




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND
 COMPREHENSIVE
    INCOME (LOSS)
  Ferro Corporation ShareholdersAccumulatedCommon Shares











Other


Non-In Treasury


Common


Paid-in


Retained


Comprehensive


controlling


TotalShares


Amount


Stock


Capital


Earnings


Income (Loss)(a)


Interests


Equity(In thousands, except per share data)Balances at December 31, 2006


9,458


$
(211,276
)

$
52,323


$
158,504


$
600,638


$
(65,138
)

$
8,850


$
543,901Net loss


















(94,479
)






2,064



(92,415
)Other comprehensive income (loss), net of tax:Foreign currency translation






















39,167



295



39,462Postretirement benefit liabilities






















25,589



(1
)


25,588Raw material commodity swaps






















(2,161
)






(2,161
)Interest rate swaps






















(5,222
)






(5,222
)Total comprehensive loss






























(34,748
)Cash dividends(b):Common


















(25,051
)










(25,051
)Preferred


















(1,035
)










(1,035
)Income tax benefits


















50











50Stock-based compensationtransactions


(705
)


8,421







7,887















16,308Distributions to noncontrolling interests


























(1,312
)


(1,312
)Adjustment to initially apply FINNo. 48 as of January 1, 2007


















(11,933
)










(11,933
)Balances at December 31, 2007


8,753



(202,855
)


52,323



166,391



468,190



(7,765
)


9,896



486,180Net loss


















(40,430
)






1,596



(38,834
)Other comprehensive income (loss), net of tax:Foreign currency translation






















(23,490
)


300



(23,190
)Postretirement benefit liabilities






















(65,235
)


20



(65,215
)Raw material commodity swaps






















713







713Interest rate swaps






















(2,973
)






(2,973
)Other






















(52
)






(52
)Total comprehensive loss






























(129,551
)Cash dividends(b):Common


















(25,192
)










(25,192
)Preferred


















(877
)










(877
)Income tax benefits














43















43Issuance of Convertible Notes














12,409















12,409Stock-based compensationtransactions


(321
)


5,331







(423
)














4,908Distributions to noncontrolling interests


























(2,057
)


(2,057
)Adjustment to apply FAS No. 158 as of January 1,
    2008, net of tax


















(505
)


366







(139
)Balances at December 31, 2008


8,432



(197,524
)


52,323



178,420



401,186



(98,436
)


9,755



345,724Net loss


















(42,916
)






2,551



(40,365
)Other comprehensive income (loss), net of tax:Foreign currency translation






















14,250



(2
)


14,248Postretirement benefit liabilities






















21,387







21,387Raw material commodity swaps






















579







579Interest rate swaps






















2,073







2,073Total comprehensive loss






























(2,078
)Issuance of common stock










41,113



174,542















215,655Cash dividends(b):Common


















(437
)










(438
)Preferred


















(705
)










(704
)Stock-based compensationtransactions


(1,057
)


25,957







(21,586
)














4,371Distributions to noncontrolling interests


























(2,035
)


(2,035
)Balances at December 31, 2009


7,375


$
(171,567
)

$
93,436


$
331,376


$
357,128


$
(60,147
)

$
10,269


$
560,495     (a)
    
    Accumulated translation
    adjustments were $26,270, $12,020, and $35,510, accumulated
    postretirement benefit liability adjustments were $(80,351),
    $(101,738), and $(36,869), accumulated raw material commodity
    swap adjustments were $108, $(471), and $(1,184), and
    accumulated interest rate swap adjustments were $(6,122),
    $(8,195), and $(5,222), at December 31, 2009, 2008 and
    2007, respectively, all net of tax.(b)
    
    Dividends per share of common stock
    were $0.01 in 2009, $0.58 in 2008 and $0.58 in 2007. Dividends
    per share of convertible preferred stock were $3.25 for 2009,
    2008 and 2007.   45




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2009


2008


2007(Dollars in thousands)Cash flows from operating activitiesNet loss

$
(40,365
)

$
(38,834
)

$
(92,415
)Adjustments to reconcile net loss to net cash provided by (used
    for) operating activities:Loss (gain) from discontinued operations, net of tax


325



(14,048
)


(5,087
)Loss on sale of assets and businesses


28



2,598



1,175Depreciation and amortization


88,138



74,595



84,048Impairment charges


8,225



80,205



128,737Restructuring charges


(1,739
)


351



3,259Provision for allowance for doubtful accounts


2,676



5,843



603Retirement benefits


8,890



(15,254
)


(16,533
)Deferred income taxes


(12,747
)


(14,105
)


(30,468
)Changes in current assets and liabilities, net of effects of
    acquisitions:Accounts and trade notes receivable


12,351



30,455



(5,396
)Note receivable from Ferro Finance Corporation






(46,344
)


(13,494
)Inventories


76,254



(6,462
)


22,687Deposits for precious metals


(112,434
)






70,073Other receivables and other current assets


31,566



(23,137
)


(13,423
)Accounts payable


(29,230
)


(27,185
)


9,636Accrued expenses and other current liabilities


(17,367
)


(23,898
)


(2,131
)Other operating activities


(12,091
)


2,839



(4,646
)Net cash provided by (used for) continuing operations


2,480



(12,381
)


136,625Net cash (used for) provided by discontinued operations


(329
)


3,285



7,954Net cash provided by (used for) operating activities


2,151



(9,096
)


144,579Cash flows from investing activitiesCapital expenditures for plant and equipment of continuing
    operations


(43,260
)


(70,751
)


(62,782
)Capital expenditures for plant and equipment of discontinued
    operations






(2,317
)


(4,852
)Expenditures for other assets






(3,400
)


Net proceeds from sale of discontinued operations






56,484



Proceeds from sale of assets and businesses


483



2,360



4,850Other investing activities


123



574



751Net cash used for investing activities


(42,654
)


(17,050
)


(62,033
)Cash flows from financing activitiesNet borrowings (repayments) under short-term loans payable to
    banks


15,462



3,687



(6,857
)Proceeds from convertible notes






172,500



Proceeds from revolving credit facility


803,886



1,024,174



779,630Proceeds from term loan facility


100,000







55,000Net proceeds from sale of common stock


215,655







Principal payments on revolving credit facility


(913,989
)


(926,228
)


(893,726
)Principal payments on term loan facility


(161,113
)


(9,452
)


(3,050
)Extinguishment of debt






(205,269
)


Debt issue costs


(16,863
)


(5,570
)


(1,783
)Cash dividends


(1,142
)


(26,069
)


(26,086
)Proceeds from exercise of stock options






58



9,843Other financing activities


4,729



(3,977
)


(1,688
)Net cash provided by (used for) financing activities


46,625



23,854



(88,717
)Effect of exchange rate changes on cash and cash equivalents


2,194



458



1,211Increase (decrease) in cash and cash equivalents


8,316



(1,834
)


(4,960
)Cash and cash equivalents at beginning of period


10,191



12,025



16,985Cash and cash equivalents at end of period

$
18,507


$
10,191


$
12,025Cash paid during the period for:Interest

$
51,505


$
52,670


$
56,911Income taxes

$
10,145


$
10,308


$
15,721    46




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and 2007
  1.
    Our
    Business and Summary of Significant Accounting
    Policies  Our
    Business
    Polymer and Ceramic Engineered Materials

Electronics, Color and Glass Materials   Polymer Additives

   Electronic Materials   Specialty Plastics

   Color and Glass Performance Materials   Pharmaceuticals   Tile Coating Systems   Porcelain Enamel       Principles
    of Consolidation
      Use of
    Estimates and Assumptions in the Preparation of Financial
    Statements
   47




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Foreign
    Currency Translation
      Cash
    Equivalents
    Accounts
    Receivable and the Allowance for Doubtful Accounts
    2009


2008


2007(Dollars in thousands)Allowance for doubtful accounts

$
10,685


$
11,668


$
6,396Bad debt expense (credit)


2,676



4,472



(345
)   Note
    Receivable from Ferro Finance Corporation
    2008


2007(Dollars in thousands)Valuation allowance

$



$
3,015Bad debt expense


1,371



948  48




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Inventories
  first-in,
      Property,
    Plant and Equipment
    Buildings

20 to 40 yearsMachinery and equipment

5 to 15 years        49




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
      Asset
    Impairment
    
    An adverse change in the business climate or market price of a
    long-lived asset or asset group;
    An adverse change in the extent or manner in which a long-lived
    asset or asset group is used or in its physical condition;
    Current operating losses for a long-lived asset or asset group
    combined with a history of such losses or projected or
    forecasted losses that demonstrate that the losses will be
    continuing; or
    A current expectation that, more likely than not, a long-lived
    asset or asset or asset group will be sold or otherwise disposed
    of significantly before the end of its previously estimated
    useful life.    cost-of-capital,
 50




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Income
    Taxes
          Environmental
    Liabilities
      
    Remediation requirements at the contaminated site;
    The nature of the remedy;
    Existing technology;
    The outcome of discussions with regulatory agencies;
    Other potentially responsible parties at multi-party
    sites; and
    The number and financial viability of other potentially
    responsible parties.     51




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Contingencies
    Restructuring
    Programs
      Postretirement
    and Other Employee Benefits
    Derivative
    Financial Instruments
     52




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Revenue
    Recognition
    
    Persuasive evidence of an arrangement exists;
    The selling price is fixed and determinable;
    Collection is reasonably assured; and
    Title and risk of loss has passed to our customers.        Cost
    of Sales
     53




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Selling,
    General and Administrative Expenses
      Comprehensive
    Income (Loss)
    Recently
    Adopted Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes FASB Accounting Standards
    Codificationtm
  Fair Value Measurements No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement Under Statement 13 No. FAS 157-1), No. FAS 157-2, Effective Date of FASB Statement No. 157 No. FAS 157-2). No. FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is not Active No. FAS 157-3). No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly No. FAS 157-4). No. FAS 157-2. No. FAS 157-1 No. FAS 157-2
 54




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  No. FAS 157-3 No. FAS 157-4 No. FAS 157-4
  Employers Accounting
    for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R)
  The Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  No. 06-11, Accounting for Income Tax Benefits of Dividends on
    Share-Based Payment Awards No. 06-11), 718-740, No. 06-11
  No. FAS 140-4 Disclosures by Public Entities
    (Enterprises) about Transfers of Financial Assets and Interests
    in Variable Interest Entities
  Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51
 55




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1), 470-20, 14-1
  Business Combinations Accounting for Assets Acquired
    and Liabilities Assumed in a Business Combination That Arise
    From Contingencies
  No. 08-7, Accounting for Defensive Intangible Assets No. 08-7), 350-30, No. 08-7
  No. FAS 142-3, Determination of the Useful Life of Intangible Assets No. FAS 142-3), 350-30, No. FAS 142-3
 56




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is
    Indexed to an Entitys Own Stock No. 07-5), 815-40, No. 07-5 No. 07-5 14-1,
  No. 08-6, Equity Method Investment Accounting Considerations No. 08-6), No. 08-6
  Employers Disclosures About
    Postretirement Benefit Plan Assets 715-20,
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities
  No. FAS 107-1 28-1, Interim Disclosures about Fair Value of Financial
    Instruments
  No. FAS 115-2 FAS 124-2, Recognition and Presentation of
    Other-Than-Temporary
    Impairments other-than-temporary
 57




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Subsequent Events, Subsequent Events
  2009-01, Topic 105  Generally Accepted Accounting
    Principles 2009-01). 2009-01
  2009-05, Fair Value Measurements and Disclosures  Measuring
    Liabilities at Fair Value 2009-05), 2009-05 2009-05
  Newly
    Issued Accounting Pronouncements
  2009-13, Multiple Deliverable Revenue Arrangements 2009-13), 2009-13 2009-13 2009-13
  2009-16, Accounting for Transfers of Financial Assets 2009-16), 2009-16 2009-16 2009-16
  2009-17, Improvements to Financial Reporting by Enterprises Involved
    with Variable Interest Entities 2009-17), 2009-17 2009-17
  2010-06, Improving Disclosures About Fair Value Measurements 2010-06), 2010-06
 58




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   2.
    Inventories    2009


2008(Dollars in thousands)Raw materials

$
54,481


$
82,837Work in process


37,449



43,224Finished goods


88,770



130,350Total

$
180,700


$
256,411     3.
    Property,
    Plant and Equipment  December 31,2009


2008(Dollars in thousands)Land

$
41,809


$
33,687Buildings


262,267



230,450Machinery and equipment


738,688



720,044Construction in progress


19,205



35,216Property, plant and equipment under capital leases


14,325



16,957Total property, plant and equipment


1,076,294



1,036,354Total accumulated depreciation


(643,889
)


(579,805
)Net property, plant and equipment

$
432,405


$
456,549        59




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    U.S.-based
    4.
    Goodwill
    and Other Intangible Assets    (Dollars inthousands)Balance at December 31, 2007

$
290,698Impairments


(58,361
)Currency translation adjustments


(2,672
)Balance at December 31, 2008


229,665Impairments


(8,225
)Other adjustments


(1,325
)Currency translation adjustments


929Balance at December 31, 2009

$
221,044      60




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Significant Assumptions

2009

2008Weighted-average cost of capital

13.5%-14.0%

11.0% - 16.0%Residual growth rate

3.0% - 5.0%

3.0% - 5.0%           Estimated

December 31,Economic Life

2009


2008(Dollars in thousands)Gross amortizable intangible assets:Patents

5 - 16 years

$
5,810


$
5,775Other

5 - 40 years


14,187



14,451Total gross amortizable intangible assets




19,997



20,226Accumulated amortization:Patents




(4,014
)


(3,382
)Other




(5,373
)


(5,091
)Total accumulated amortization




(9,387
)


(8,473
)Amortizable intangible assets, net



$
10,610


$
11,753    61




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   5.
    Financing
    and Short-term and Long-term Debt    2009


2008(Dollars in thousands)Loans payable to banks

$
5,891


$
4,754Accounts receivable asset securitization program


17,762



Current portion of long-term debt


1,084



4,129Total loans payable and current portion of long-term debt

$
24,737


$
8,883       2009


2008(Dollars in thousands)$172.5 million 6.50% Convertible Senior Notes, net of
    unamortized discounts

$
156,896


$
153,451Revolving credit facility


1,700



111,803Term loan facility


231,385



292,498Capitalized lease obligations (see Note 14)


5,669



6,447Other notes


4,154



1,543399,804



565,742Current portion


(1,084
)


(4,129
)Total long-term debt, less current portion

$
398,720


$
561,613     (Dollars inthousands)2010

$
1,0842011


9912012


234,1882013


173,5422014


976Thereafter


4,627Total maturities of long-term debt


415,408Unamortized discounts on Convertible Notes


(15,604
)Total long-term debt

$
399,804   6.50% Convertible
    Senior Notes
  1 8
 62




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
        Revolving
    Credit and Term Loan Facilities
      
    Increase the interest rates and commitment fees payable
    thereunder pursuant to a grid structure based on our leverage
    ratio,
    Increase the maximum permitted quarterly leverage ratio and
    decrease the minimum permitted quarterly fixed charge coverage
    ratio,
    Add a minimum cumulative EBITDA requirement for each quarter in
    2009,
    Restrict the Companys ability to engage in acquisitions
    and make investments,
    Limit the amount of cash and cash equivalent collateral the
    Company is permitted to deliver to participants in our precious
    metals program to secure our obligations arising under the
    precious metals consignment agreements,
    Require additional financial reporting by the Company to the
    lenders,
    Increase the amount of the annual excess cash flow required to
    be used to repay term loans, 63




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   
    Require application of the net proceeds of certain dispositions,
    but excluding the first $20 million of such net proceeds,
    to be applied to repay debt outstanding under the revolving
    credit facility and term loans and to permanently reduce
    availability under the revolving loan facility on a dollar for
    dollar basis, provided that we are not required to reduce the
    commitments under the revolving credit facility to below
    $150 million,
    Eliminate our ability to request an increase of $50 million
    in the revolving credit facility,
    Add provisions governing the obligations of the Company and the
    lenders if one or more lenders under the revolving credit
    facility fails to satisfy its funding obligations or otherwise
    becomes a defaulting lender, and
    Restrict our ability to make payments with respect to our
    capital securities. The 2009 Amended Credit Facility prohibits
    us from paying dividends on our common stock.    
    Extend the maturity of the revolving commitments through
    June 6, 2012,
    Allow conversion of $100 million of revolving loans into
    new term loans that also mature on June 6, 2012,
    Require application of the proceeds in excess of
    $50 million from the equity offering, net of equity
    issuance and facility amendment fees and costs, to repay
    outstanding term loans (as a result, we repaid
    $79.0 million of existing term loans and $79.0 million
    of new term loans),
    Modify the maximum permitted leverage ratio,
    Modify the minimum permitted fixed charge coverage ratio,
    Delete the minimum EBITDA covenant, which was added in the 2009
    Amended Credit Facility,
    Delete the additional financial reporting by the Company to the
    lenders, which was added in the 2009 Amended Credit Facility,
    Modify our obligations to apply the net proceeds of dispositions
    to repay outstanding revolving and term loans,
    Step down the portion of the annual excess cash flow required to
    be used to repay outstanding loans depending on the leverage
    ratio,
    Increase the amount of indebtedness our foreign subsidiaries may
    incur based on the leverage ratio,
    Allow payment of dividends to holders of Series A preferred
    shares,
    Eliminate the cap on the amount of cash we may deliver to secure
    our obligations arising under our precious metals
    program, and
    Limit the amount of cash or cash equivalents we may hold.   64




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  dollar-for-dollar
        Form 8-K
  Receivables
    Sales Programs
   65




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
          2008


2007(Dollars in thousands)Sales of trade accounts receivable to FFC

$
1,031,164


$
985,922Purchases of previously sold trade accounts receivable


6,483



2,302Net cash proceeds from FFC


994,771



969,265Trade accounts receivable collected and remitted to FFC and the
    purchasers


1,049,393



975,243Servicing fees from FFC


563



308      66




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009

2008

2007(Dollars in thousands)Trade accounts receivable sold to financial institutions

$
112,745


$
232,065


$
182,075Cash proceeds from financial institutions


121,350



221,509



178,429Trade accounts receivable collected and remitted to financial
    institutions


34,101



73,301



84,273   Other
    Financing Arrangements
    6.
    Financial
    Instruments    
    Cash and cash equivalents;
    Notes receivable;
    Deposits;
    Miscellaneous receivables; and
    Short-term loans payable to banks.  Long-term
    Debt
    2009

2008Carrying

Fair

Carrying

FairAmount

Value

Amount

Value(Dollars in thousands)$172.5 million 6.50% Convertible Senior Notes

$
156,896


$
157,191


$
153,451


$
84,725Revolving credit facility


1,700



1,747



111,803



88,757Term loan facility


231,385



237,047



292,498



225,731Other notes


4,154



3,084



1,543



975     Derivative
    Instruments
  Interest rate swaps.
 67




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Foreign currency forward contracts.
  Raw material commodity swaps.
  Precious metals forward contracts.
 68




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008


Balance Sheet Location(Dollars in thousands)Derivatives designated as hedging instruments:Liability derivatives:Interest rate swaps

$
(9,516
)

$
(12,724
)

Other non-current liabilitiesRaw material commodity swaps






(576
)

Accrued expenses and other current liabilitiesTotal fair value

$
(9,516
)

$
(13,300
)Derivatives not designated as hedging instruments:Asset derivatives:Foreign currency forward contracts

$
899


$
1,621


Other receivablesForeign currency forward contracts






230


Accrued expenses and other current liabilitiesPrecious metals forward contracts






8


Other receivablesTotal fair value

$
899


$
1,859Liability derivatives:Foreign currency forward contracts

$
(176
)

$
(1,140
)

Other receivablesForeign currency forward contracts






(807
)

Accrued expenses and other current liabilitiesTotal fair value

$
(176
)

$
(1,947
)          69




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009Level 1


Level 2


Level 3


Total


2008(Dollars in thousands)AssetsForeign currency forward contracts

$



$
723


$



$
723


$
480Precious metals forward contracts


















8Total fair value

$



$
723


$



$
723


$
488LiabilitiesInterest rate swaps

$



$
(9,516
)

$



$
(9,516
)

$
(12,724
)Foreign currency forward contracts


















(576
)Raw material commodity swaps


















(576
)Total fair value

$



$
(9,516
)

$



$
(9,516
)

$
(13,876
)     (Dollars inthousands)Balance at December 31, 2008

$
Total losses included in other comprehensive income


(1,802
)Settlements


3,544Transfers in and/or out of Level 3


(1,742
)Balance at December 31, 2009

$
     Amount of Gain (Loss)


Location ofAmount of Gain (Loss)


Reclassified from AOCI


Gain (Loss)Recognized in OCI


into Income


Reclassified from2009


2008


2009


2008


AOCI into Income(Dollars in thousands)Derivatives in Cash Flow Hedging Relationships:Interest rate swaps

$
(3,893
)

$
(7,717
)

$
(7,101
)

$
(3,102
)

Interest expenseRaw material commodity swaps


76



(2,339
)


(1,075
)


(3,384
)

Cost of salesTotal

$
(3,817
)

$
(10,056
)

$
(8,176
)

$
(6,486
)   70




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FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Amount of Gain (Loss)Recognized in Income


Location of Gain (Loss)2009


2008


in Income(Dollars in thousands)Derivatives Not Designated as Hedging Instruments:Foreign currency forward contracts

$
(11,833
)

$
8,253


Foreign currency gains (losses), netPrecious metals forward contracts


16



1,681


Cost of sales creditsPrecious metals forward contracts


(8
)


(735
)

Miscellaneous income (expense), netTotal

$
(11,825
)

$
9,199   7.
    Income
    Taxes    2009


2008


2007(Dollars in thousands)U.S.

$
(18,755
)

$
(12,171
)

$
(143,828
)Foreign


(24,800
)


(43,915
)


28,374Total

$
(43,555
)

$
(56,086
)

$
(115,454
)     2009


2008


2007(Dollars in thousands)Current:U.S. federal

$
982


$
(2,262
)

$
(2,584
)Foreign


8,403



21,713



14,688State and local


(153
)


580



606Total current


9,232



20,031



12,710Deferred:U.S. federal


(8,490
)


(8,117
)


(30,320
)Foreign


(4,592
)


(15,167
)


(3,824
)State and local


335



49



3,482Total deferred


(12,747
)


(23,235
)


(30,662
)Total income tax benefit

$
(3,515
)

$
(3,204
)

$
(17,952
)  71




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008


2007(Dollars in thousands)Foreign currency translation adjustments

$
583


$
1,952


$
2,134Postretirement benefit liability adjustments


6,453



(32,783
)


16,348Raw material commodity swap adjustments


285



394



(1,386
)Interest rate swap adjustments


1,134



(1,643
)


(2,887
)Issuance of convertible debt






7,164



Dividends on performance shares






(43
)


(50
)Stock options exercised






(3
)


175Other






(35
)


Total income tax expense (benefit) allocated to Ferro
    Corporation shareholders equity

$
8,455


$
(24,997
)

$
14,334     2009


2008


2007U.S. federal statutory income tax rate


(35.0
)%


(35.0
)%


(35.0
)%Foreign tax rate difference


9.7



11.6



(0.3
)Goodwill impairment


6.6



27.5



10.6Uncertain tax positions


6.6



(10.2
)


U.S. tax cost of foreign dividends


4.7



(10.9
)


6.1Net adjustment of prior year accrual


4.3



(4.0
)


(1.0
)Adjustment of valuation allowances


2.9



17.4



4.0Stock options


1.4



0.7



0.6Research and development credit


(10.1
)


(0.4
)


(0.5
)ESOP dividends


(0.6
)


(0.8
)


(0.4
)Miscellaneous


1.4



(1.6
)


0.4Effective tax rate


(8.1
)%


(5.7
)%


(15.5
)%  72




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008(Dollars in thousands)Deferred tax assets:Pension and other benefit programs

$
64,516


$
72,442Foreign operating loss carryforwards


44,595



29,932Foreign tax credit carryforwards


42,023



28,503Other credit carryforwards


14,202



12,024Capitalized research costs


12,347



20,481Accrued liabilities


9,984



14,537State operating loss carryforwards


5,011



5,972Allowance for doubtful accounts


4,654



3,619Inventories


3,625



1,626Other


16,125



10,139Total deferred tax assets


217,082



199,275Deferred tax liabilities:Property, equipment and intangibles  depreciation and
    amortization


31,264



25,535Convertible debt instruments


5,725



6,972Unremitted earnings of foreign subsidiaries


3,037



1,942Other


12,368



2,858Total deferred tax liabilities


52,394



37,307Net deferred tax asset before valuation allowance


164,688



161,968Valuation allowance


(17,969
)


(21,451
)Net deferred tax assets

$
146,719


$
140,517      73




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Operating Loss


Tax CreditCarryforwards


Carryforwards(Dollars in thousands)Expiring in:2010

$
977


$
762011-2015


5,476



39,9622016-2020


9,953



25,2292021-2025


6,535



5,0732026-2030


678



4,0402031-Indefinitely


26,812



2,527Total

$
50,431


$
76,907           2009


2008(Dollars in thousands)Current assets

$
19,618


$
19,167Non-current assets


133,705



134,361Current liabilities


(5,480
)


Non-current liabilities


(1,124
)


(13,011
)Net deferred tax assets

$
146,719


$
140,517  74




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008


2007(Dollars in thousands)Balance at beginning of year

$
34,764


$
52,173


$
47,380Additions based on tax positions related to the current year


4,094



1,770



1,783Additions for tax positions of prior years


2,064



2,774



2,661Reductions for tax positions of prior years


(656
)


(5,256
)


(1,401
)Reductions as a result of expiring statutes of limitations


(4,199
)


(11,420
)


(1,817
)Foreign currency translation of
    non-U.S.
    dollar denominated reserves


1,282



(1,472
)


3,692Settlements with taxing authorities


(950
)


(3,805
)


(125
)Balance at end of year

$
36,399


$
34,764


$
52,173     non-U.S. tax
  non-U.S. income
    8.
    Contingent
    Liabilities       75




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    9.
    Retirement
    Benefits  Defined
    Benefit Pension Plans
  U.S. Plans


Non-U.S. Plans2009


2008


2007


2009


2008


2007(Dollars in thousands)Net periodic benefit cost:Service cost

$
24


$
201


$
1,232


$
4,279


$
5,405


$
6,434Interest cost


21,083



20,705



20,105



10,664



11,503



9,606Expected return on plan assets


(15,437
)


(22,652
)


(20,543
)


(7,145
)


(8,353
)


(7,578
)Amortization of prior service cost (credit)


98



100



157



(401
)


118



125Net amortization and deferral


15,794



2,495



5,845



1,047



189



570Curtailment and settlement effects






259



532



(606
)


(747
)


(374
)Special termination benefits














46



121



2,156Total net periodic benefit cost

$
21,562


$
1,108


$
7,328


$
7,884


$
8,236


$
10,939Weighted-average assumptions:Discount rate


6.74
%


6.49
%


6.05
%


5.85
%


5.56
%


4.69
%Rate of compensation increase


N/A



N/A



3.25
%


3.45
%


3.49
%


3.05
%Expected return on plan assets


8.50
%


8.50
%


8.50
%


5.24
%


5.25
%


4.95
%         76




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  U.S. Plans


Non-U.S. Plans2009


2008


2009


2008(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
320,539


$
330,925


$
185,064


$
211,241Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008






763







Service cost


24



201



4,279



5,405Interest cost


21,083



20,705



10,664



11,503Amendments










(1,523
)


(4,716
)Curtailments










(688
)


(2,614
)Settlements






(630
)


(1,372
)


(4,493
)Special termination benefits










46



121Plan participants contributions










528



755Benefits paid


(20,624
)


(20,456
)


(8,655
)


(9,345
)Actuarial (gain) loss


22,129



(10,969
)


1,511



(7,827
)Exchange rate effect










7,232



(14,966
)Benefit obligation at end of year

$
343,151


$
320,539


$
197,086


$
185,064Accumulated benefit obligation at end of year

$
343,151


$
320,539


$
188,804


$
175,636Change in plan assets:Fair value of plan assets at beginning of year

$
200,708


$
294,810


$
131,395


$
156,806Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008






(4,627
)






Actual return on plan assets


42,232



(78,444
)


13,957



(11,301
)Employer contributions


8,473



10,055



8,155



11,387Plan participants contributions










528



755Benefits paid


(20,624
)


(20,456
)


(8,655
)


(9,345
)Effect of settlements






(630
)


(1,372
)


(4,493
)Exchange rate effect










5,913



(12,414
)Fair value of plan assets at end of year

$
230,789


$
200,708


$
149,921


$
131,395Amounts recognized in the balance sheet:Other non-current assets

$



$



$
1,994


$
1,798Accrued expenses and other current liabilities


(396
)


(431
)


(1,992
)


(2,190
)Postretirement and pension liabilities


(111,966
)


(119,400
)


(47,167
)


(53,277
)Funded status

$
(112,362
)

$
(119,831
)

$
(47,165
)

$
(53,669
)Weighted-average assumptions as of the measurement date:Discount rate


6.20
%


6.74
%


5.88
%


5.85
%Rate of compensation increase


N/A



N/A



3.42
%


3.45
%   77




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  U.S. Plans


Non-U.S. Plans2009


2008


2009


2008(Dollars in thousands)Pension plans with benefit obligations in excess of plan
    assets:Benefit obligations

$
343,151


$
320,539


$
178,573


$
148,422Plan assets


230,789



200,708



129,414



92,955Pension plans with accumulated benefit obligations in excess
    of plan assets:Projected benefit obligations

$
343,151


$
320,539


$
176,048


$
146,159Accumulated benefit obligations


343,151



320,539



169,768



139,704Plan assets


230,789



200,708



126,995



90,796     U.S. Plans


Non-U.S. Plans2009


2008


2009


2008(Dollars in thousands)Balance at beginning of year

$
(147,153
)

$
(54,868
)

$
(18,948
)

$
(16,740
)Net gain (loss) arising during the year


4,665



(95,788
)


5,302



(9,213
)Prior service cost arising during the year










1,523



4,716Amounts recognized as net periodic benefit costs


15,892



2,854



728



(440
)Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008






649







Exchange rate effects










(785
)


2,729Balance at end of year

$
(126,596
)

$
(147,153
)

$
(12,180
)

$
(18,948
)Amounts recognized in accumulated other comprehensive income
    (loss):Net loss

$
(126,325
)

$
(146,784
)

$
(16,458
)

$
(21,879
)Prior service (cost) credit


(271
)


(369
)


4,278



2,931$
(126,596
)

$
(147,153
)

$
(12,180
)

$
(18,948
)Estimated amounts to be amortized in 2010:Net loss

$
(13,823
)





$
(493
)Prior service (cost) credit


(95
)






532$
(13,918
)





$
39   non-U.S. plans,
 78




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
        Level 1


Level 2


Level 3


Total(Dollars in thousands)U.S. PlansFixed income:Cash and cash equivalents

$
12,237


$



$



$
12,237Guaranteed deposits






2,835







2,835Mutual funds


57,604



1,238



547



59,389Equities:Common stocks


121,443











121,443Index mutual funds






34,885







34,885Total

$
191,284


$
38,958


$
547


$
230,789Non-U.S.
    PlansFixed income:Cash and cash equivalents

$
3,642


$



$



$
3,642Guaranteed deposits






25,335







25,335Mutual funds






73,736







73,736Other


2,776











2,776Equities:Common stocks


83











83Index mutual funds






38,398







38,398Real estate










5,586



5,586Other assets










365



365Total

$
6,501


$
137,469


$
5,951


$
149,921       non-U.S. pension
 79




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    U.S. Plans

Non-U.S. Plans(Dollars in thousands)2010

$
20,636


$
12,5382011


21,057



10,1552012


21,618



10,4992013


22,066



11,0872014


22,688



11,1842015-2019


119,703



65,564   Postretirement
    Health Care and Life Insurance Benefit Plans
  2009


2008


2007(Dollars in thousands)Net periodic benefit cost:Service cost

$
14


$
64


$
512Interest cost


2,877



2,923



3,387Amortization of prior service cost


(1,748
)


(1,643
)


(1,349
)Net amortization and deferral










Curtailment and settlement effects


(626
)






(3,197
)Total net periodic benefit cost

$
517


$
1,344


$
(647
)Weighted-average assumptions:Discount rate


6.45
%


6.10
%


5.90
%Current trend rate for health care costs


8.70
%


9.40
%


10.10
%Ultimate trend rate for health care costs


5.20
%


5.20
%


5.20
%Year that ultimate trend rate is reached


2018



2017



2017       1-Percentage-

1-Percentage-Point Increase

Point Increase(Dollars in thousands)Effect on total of service and interest cost components

$
180


$
(165
)Effect on postretirement benefit obligation


2,668



(2,346
)   80




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  2009


2008(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
47,164


$
52,923Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008






(2,714
)Service cost


14



64Interest cost


2,877



2,923Effect of curtailment


(626
)


(1,540
)Benefits paid


(3,425
)


(4,159
)Actuarial (gain) loss


(2,177
)


(333
)Benefit obligation at end of year

$
43,827


$
47,164Change in plan assets:Fair value of plan assets at beginning of year

$



$
Adjustment to apply measurement provisions
    of FAS No. 158 as of January 1, 2008






(819
)Employer contributions


3,425



4,978Benefits paid


(3,425
)


(4,159
)Fair value of plan assets at end of year

$



$
Amounts recognized in the balance sheet:Accrued expenses and other current liabilities

$
(4,616
)

$
(4,956
)Postretirement and pension liabilities


(39,211
)


(42,208
)Funded status

$
(43,827
)

$
(47,164
)Weighted-average assumptions as of December 31:Discount rate


5.85
%


6.45
%Current trend rate for health care costs


8.00
%


8.70
%Ultimate trend rate for health care costs


4.50
%


5.20
%Year that ultimate trend rate is reached


2028



2018  81




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008(Dollars in thousands)Balance at beginning of year

$
9,613


$
9,463Net gain arising during the year


2,177



333Prior service cost arising during the year






1,540Amounts recognized as net periodic benefit costs


(1,748
)


(1,643
)Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008






(80
)Balance at end of year

$
10,042


$
9,613Amounts recognized in accumulated other comprehensive income
    (loss):Net gain

$
6,786


$
4,609Prior service credit


3,256



5,004$
10,042


$
9,613Estimated amounts to be amortized in 2010:Net gain

$
172Prior service credit


1,595$
1,767     Before


AfterMedicare Subsidy


Medicare Subsidy(Dollars in thousands)2010

$
5,143


$
4,6162011


4,999



4,4682012


4,786



4,2502013


4,601



4,0712014


4,469



3,9532015-2019


19,284



16,998   Other
    Retirement Plans
   82




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   10.
    Serial
    Convertible Preferred Stock        11.
    Common
    Stock    12.
    Stock-based
    Compensation     83




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Stock
    Options
  General
    Information
    Stock
    Option Valuation Model and Method Information
    Assumption

Estimation MethodExpected life, in years

Historical stock option exercise experienceRisk-free interest rate

Yield of U.S. Treasury Bonds with remaining life equal to
    expected life of the stock optionExpected volatility

Historical daily price observations of the Companys common
    stock over a period equal to the expected life of the stock
    optionExpected dividend yield

Historical dividend rate at the date of grant     2009

2008

2007Weighted-average grant-date fair value per option

$0.49

$4.25

$6.24Expected life, in years

6.8

6.8

6.25Risk-free interest rate

2.07% - 2.42%

2.67% - 3.44%

4.53%-4.83%Expected volatility

39.7% - 45.0%

30.5% - 36.1%

29.3%Expected dividend yield

2.92% - 8.09%

2.73% - 6.99%

2.44% - 2.79%  84




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Stock
    Option Activity Information
    Weighted-Weighted-


AverageAverage


RemainingNumber of


Exercise Price


Contractual


AggregateOptions


Per Option


Term


Intrinsic Value(In years)


(Dollars inthousands)Outstanding at December 31, 2008


4,185,360


$
21.70Granted


676,700



1.41Exercised






Forfeited or expired


(640,730
)


20.08Outstanding at December 31, 2009


4,221,330



18.70



5.1


$
4,221Exercisable at December 31, 2009


3,007,290



22.13



3.8



10Vested or expected to vest at December 31, 2009


4,105,100



18.62



5.1



4,221   in-the-money in-the-money
    2009


2008


2007(Dollars in thousands)Proceeds from the exercise of stock options

$



$
58


$
9,843Intrinsic value of stock options exercised






7



947Income tax benefit related to stock options exercised






3



333     Weighted-Average Grant-Date FairValue PerOptions


OptionNonvested at December 31, 2008


1,034,004


$
5.21Granted


676,700



0.49Vested


(370,913
)


5.39Forfeited


(125,751
)


2.91Nonvested at December 31, 2009


1,214,040



2.77  85




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Stock-Based
    Compensation Expense Information
    2009


2008


2007(Dollars in thousands)Compensation expense recorded in selling, general and
    administrative expenses

$
1,794


$
2,274


$
2,363Deferred income tax benefits related to compensation expense


628



796



827Total fair value of stock options vested


1,998



2,195



2,698Unrecognized compensation cost


2,009



3,656



4,057Expected weighted-average recognition period for
    unrecognized compensation, in years


1.9



2.3



2.4   Deferred
    Stock Units
  General
    Information
    DSU
    Valuation Model and Method Information
   86




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  DSU
    Activity Information
    Weighted-


Weighted-Average


AverageAward-Date


RemainingFair Value Per


Contractual


AggregateDSUs


DSU


Term


Intrinsic Value(In years)


(Dollars inthousands)Outstanding at December 31, 2008


34,200


$
16.69Awarded


34,200



1.33Converted to common stock


(34,200
)


16.69Forfeited






Outstanding at December 31, 2009


34,200



1.33



0.15


$
282Nonvested and expected to vest at December 31, 2009


34,200



1.33



0.15



282     2009

2008

2007(Dollars in thousands)Intrinsic value of DSUs converted

$
39


$
561


$
Income tax benefit related to DSUs converted


14



196



   Stock-Based
    Compensation Expense Information
    2009


2008


2007(Dollars in thousands)Compensation expense recorded in selling, general and
    administrative expenses

$
129


$
556


$
632Deferred income tax benefits related to compensation expense


45



195



221Total fair value of DSUs converted


571



708



Unrecognized compensation cost


7



90



74Expected weighted-average recognition period for unrecognized
    compensation, in years


0.15



0.16



0.11   Restricted
    Share Awards
  General
    Information:
   87




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  RSA
    Valuation Model and Method Information
    RSA
    Activity Information:
    Weighted-


Weighted-Average


AverageAward-Date


RemainingFair Value


Contractual


Aggregate IntrinsicRSAs


Per RSA


Term


Value(In years)


(Dollars inthousands)Outstanding at December 31, 2008


92,400


$
17.53Awarded


142,100



1.37Vested






Forfeited or expired


(19,700
)


7.16Outstanding at December 31, 2009


214,800



7.79



1.78


$
1,770Vested or expected to vest at December 31, 2009


191,244



7.58



1.79



1,576   Stock-Based
    Compensation Expense Information
    2009


2008(Dollars in thousands)Compensation expense recorded in selling, general and
    administrative expenses

$
482


$
427Deferred income tax benefits related to compensation expense


169



149Total fair value of RSAs vested






Unrecognized compensation cost


706



1,193Expected weighted-average recognition period for unrecognized
    compensation, in years


1.4



2.8   Performance
    Shares
  General
    Information
   88




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Performance
    Share Award Information
    Weighted-AverageRemainingNumber of


Contractual


AggregateShares


Term


Intrinsic Value(In years)


(Dollars inthousands)Outstanding at December 31, 2008


421,825Awarded


Vested from the
    2006-2008
    plan


(59,544
)Forfeited


(179,556
)Outstanding at December 31, 2009


182,725



0.52


$
1,506Expected to vest at December 31, 2009










   2007-2009 2008-2010
  Stock-Based
    Compensation Expense Information
    2009


2008


2007(Dollars in thousands)Compensation (credit) expense recorded in selling, general and
    administrative expenses

$
(155
)

$
(710
)

$
1,018Deferred income tax (expense) benefits related to compensation
    (credit) expense


(54
)


(249
)


356Expected future compensation cost






112



1,836Expected weighted-average recognition period for unrecognized
    compensation, in years


1.0



2.0



2.0    89




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Directors
    Deferred Compensation
    Stock-based
    Compensation Transactions in Shareholders
    Equity
    Common Sharesin Treasury


Paid-inShares


Amount


Capital(In thousands)2007:Stock options


(497
)

$
8,399


$
3,360Deferred stock units










632Performance shares, net


(25
)


(215
)


978Directors deferred compensation






(3,127
)


3,127Preferred stock conversions


(183
)


3,364



(210
)(705
)

$
8,421


$
7,8872008:Stock options


(3
)

$
50


$
2,293Deferred stock units


(33
)


596



(48
)Restricted shares


(100
)


1,805



(1,377
)Performance shares, net






25



(83
)Directors deferred compensation






(664
)


664Preferred stock conversions


(185
)


3,519



(1,872
)(321
)

$
5,331


$
(423
)2009:Stock options





$



$
1,794Deferred stock units


(34
)


835



(706
)Restricted shares


(115
)


2,732



(2,251
)Performance shares, net


181



(594
)


439Directors deferred compensation






(843
)


843Preferred stock conversions


(1,089
)


23,827



(21,705
)(1,057
)

$
25,957


$
(21,586
)  90




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   13.
    Restructuring
    and Cost Reduction Programs        Restructuring
    Program in Rotterdam, Netherlands
    Restructuring
    Program in Limoges, France
       91




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
  Restructuring
    Program in Nules, Spain
    Restructuring
    Program in Australia
    Other
    Restructuring Programs
      EmployeeTermination


Other


AssetBenefits


Costs


Impairment


Total(Dollars in thousands)Balance, December 31, 2006

$
6,730


$
39


$



$
6,769Restructuring charges


11,013



2,580



3,259



16,852Cash payments


(11,225
)


(1,439
)






(12,664
)Currency translation adjustment


166



17







183Non-cash items


1,697



363



(3,259
)


(1,199
)Balance, December 31, 2007


8,381



1,560







9,941Restructuring charges


18,189



6,839



909



25,937Cash payments


(24,852
)


(2,466
)






(27,318
)Currency translation adjustment


(289
)


(582
)






(871
)Non-cash items


(223
)


(249
)


(909
)


(1,381
)Balance, December 31, 2008


1,206



5,102







6,308Restructuring charges


11,406



(294
)






11,112Cash payments


(9,389
)


(3,485
)






(12,874
)Currency translation adjustment


(164
)


195







31Non-cash items


22











22Balance, December 31, 2009

$
3,081


$
1,518


$



$
4,599  92




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
      14.
    Leases      2009


2008(Dollars in thousands)Gross amounts capitalized:Buildings

$
3,100


$
3,100Equipment


11,225



13,85714,325



16,957Accumulated amortization:Buildings


(1,744
)


(1,666
)Equipment


(8,790
)


(10,821
)(10,534
)


(12,487
)Net assets under capitalized leases

$
3,791


$
4,470     Capital Leases


Operating Leases(Dollars in thousands)2010

$
1,375


$
13,3952011


974



9,2112012


974



6,5752013


923



5,1802014


790



4,512Thereafter


3,910



8,383Total minimum lease payments


8,946


$
47,256Less amount representing executory costs


79Net minimum lease payments


8,867Less amount representing imputed interest


3,198Present value of net minimum lease payments


5,669Less current portion


877Long-term obligations at December 31, 2009

$
4,792  93




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   15.
    Discontinued
    Operations      2009


2008


2007(Dollars in thousands)(Loss) gain on disposal of discontinued operations before income
    tax (benefit) expense

$
(523
)

$
16,614


$
(369
)Income tax (benefit) expense


(198
)


7,580



(144
)(Loss) gain on disposal of discontinued operations, net of
    income tax (benefit) expense

$
(325
)

$
9,034


$
(225
)     2008


2007(Dollars in thousands)Net sales

$
60,980


$
56,881Cost of sales


47,464



42,677Gross profit


13,516



14,204Selling, general and administrative expenses


4,303



4,187Other expense (income):Interest expense


1,526



1,853Foreign currency losses, net


19



Miscellaneous expense (income), net


76



(36
)Income from discontinued operations before income taxes


7,592



8,200Income tax expense


2,578



2,888Income from discontinued operations, net of income taxes

$
5,014


$
5,312   and/or
 94




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   16.
    (Loss)
    Earnings per Share from Continuing Operations    2009


2008


2007(In thousands,except per share amounts)Basic loss per share computation:Net loss attributable to Ferro Corporation common shareholders

$
(43,621
)

$
(41,307
)

$
(95,514
)Adjustment for loss (income) from discontinued operations


325



(14,048
)


(5,087
)$
(43,296
)

$
(55,355
)

$
(100,601
)Weighted-average common shares outstanding


50,935



43,261



42,926Basic loss per share from continuing operations
    attributable to Ferro Corporation common shareholders

$
(0.85
)

$
(1.28
)

$
(2.34
)Diluted loss per share computation:Net loss attributable to Ferro Corporation
    common shareholders

$
(43,621
)

$
(41,307
)

$
(95,514
)Adjustment for loss (income) from discontinued operations


325



(14,048
)


(5,087
)Plus: Convertible preferred stock










$
(43,296
)

$
(55,355
)

$
(100,601
)Weighted-average common shares outstanding


50,935



43,261



42,926Assumed exercise of stock options










Assumed satisfaction of deferred stock unit conditions










Assumed satisfaction of restricted share conditions










Assumed conversion of convertible notes










Assumed conversion of convertible preferred stock










Weighted-average diluted shares outstanding


50,935



43,261



42,926Diluted loss per share from continuing operations
    attributable to Ferro Corporation common shareholders

$
(0.85
)

$
(1.28
)

$
(2.34
)    95




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   17.
    Reporting
    for Segments          2009


2008


2007(Dollars in thousands)Performance Coatings

$
487,891


$
627,918


$
609,285Electronic Materials


426,896



558,313



469,885Color and Glass Performance Materials


321,750



456,644



445,709Polymer Additives


249,510



349,902



334,492Specialty Plastics


149,524



225,856



261,956Pharmaceuticals


21,998



26,519



26,577Total net sales

$
1,657,569


$
2,245,152


$
2,147,904     2009


2008


2007(Dollars in thousands)Performance Coatings

$
29,551


$
36,935


$
37,965Electronic Materials


45,344



52,868



32,785Color and Glass Performance Materials


13,123



39,112



48,222Polymer Additives


6,708



6,086



10,755Specialty Plastics


10,164



5,385



15,116Pharmaceuticals


438



3,524



1,947Total segment income


105,328



143,910



146,790Unallocated corporate expenses


63,315



37,362



59,209Impairment charges


8,225



80,205



128,737Restructuring charges


11,112



25,937



16,852Other expense, net


66,231



56,492



57,446Loss before income taxes from continuing operations

$
(43,555
)

$
(56,086
)

$
(115,454
)  96




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008


2007(Dollars in thousands)Performance Coatings

$
928


$
17,806


$
13,469Electronic Materials


401



602



(929
)Color and Glass Performance Materials


9,734



3,877



4,105Polymer Additives


22



1,617



Specialty Plastics


27



2,035



207Pharmaceuticals










Total restructuring charges

$
11,112


$
25,937


$
16,852     2009


2008


2007(Dollars in thousands)Performance Coatings

$
17,726


$
17,736


$
17,854Electronic Materials


13,382



17,294



18,444Color and Glass Performance Materials


6,520



8,101



11,228Polymer Additives


10,492



10,753



11,033Specialty Plastics


2,610



3,314



3,705Pharmaceuticals


1,950



1,693



2,684Total segment depreciation and amortization


52,680



58,891



64,948Unallocated depreciation and amortization


35,458



15,704



19,100Total depreciation and amortization

$
88,138


$
74,595


$
84,048     2009


2008(Dollars in thousands)Performance Coatings

$
349,812


$
379,054Electronic Materials


302,537



330,013Color and Glass Performance Materials


254,683



260,927Polymer Additives


118,222



139,572Specialty Plastics


47,480



62,952Pharmaceuticals


29,871



41,243Total segment assets


1,102,605



1,213,761Unallocated assets


423,750



330,356Total assets

$
1,526,355


$
1,544,117  97




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    Color and GlassPerformance


Electronic


Performance


Polymer


SpecialtyCoatings


Materials


Materials


Additives


Plastics


Pharmaceuticals


TotalBalance at December 31, 2007:Gross goodwill

$
45,269


$
152,081


$
68,078


$
73,447


$
17,045


$
40,431


$
396,351Accumulated impairment losses














(73,447
)






(32,206
)


(105,653
)45,269



152,081



68,078







17,045



8,225



290,698Impairment loss


(41,388
)














(16,973
)






(58,361
)Foreign currency adjustment


(3,291
)


(180
)


871







(72
)






(2,672
)Balance at December 31, 2008:Gross goodwill


41,978



151,901



68,949



73,447



16,973



40,431



393,679Accumulated impairment losses


(41,388
)










(73,447
)


(16,973
)


(32,206
)


(164,014
)590



151,901



68,949











8,225



229,665Impairment loss






















(8,225
)


(8,225
)Other adjustments






(67
)


(1,258
)














(1,325
)Foreign currency adjustment


6



141



782















929Balance at December 31, 2009:Gross goodwill


41,984



151,975



68,473



73,447



16,973



40,431



393,283Accumulated impairment losses


(41,388
)










(73,447
)


(16,973
)


(40,431
)


(172,239
)$
596


$
151,975


$
68,473


$



$



$



$
221,044     2009


2008


2007(Dollars in thousands)Performance Coatings

$
11,803


$
29,294


$
17,900Electronic Materials


4,249



18,892



13,866Color and Glass Performance Materials


10,665



7,715



10,591Polymer Additives


5,224



8,379



7,925Specialty Plastics


685



1,989



1,300Pharmaceuticals


1,830



3,645



4,173Total segment expenditures for long-lived assets


34,456



69,914



55,755Expenditures for long-lived assets of discontinued operations






2,317



4,852Unallocated corporate expenditures for long-lived assets


8,804



4,237



7,027Total expenditures for long-lived assets

$
43,260


$
76,468


$
67,634  98




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
    2009


2008


2007(Dollars in thousands)United States

$
758,048


$
973,717


$
900,146Spain


258,485



362,370



339,516Other international


641,036



909,065



908,242Total sales

$
1,657,569


$
2,245,152


$
2,147,904     2009


2008


2007(Dollars in thousands)United States

$
393,571


$
402,192


$
425,824International


270,488



295,775



369,544Total long-lived assets

$
664,059


$
697,967


$
795,368   18.
    Related
    Party Transactions      2009


2008


2007(Dollars in thousands)Sales

$
6,887


$
10,157


$
9,727Purchases


3,883



5,495



5,573Dividends and interest received


530



159



702Commissions and royalties received


956



194



132Commissions and royalties paid


86



230



227    99




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2009, 2008 and
    2007  (Continued)
   19.
    Quarterly
    Data (Unaudited)  Earnings (Loss)Net Income


Attributable to(Loss)


Ferro CorporationAttributable


Common ShareholdersNet Income


to Ferro


Per Common ShareQuarter

Net Sales


Gross Profit


(Loss)


Corporation


Basic


Diluted(Dollars in thousands, except per share data)20081

$
590,838


$
109,265


$
9,550


$
9,140


$
0.21


$
0.212


631,976



118,974



9,893



9,365



0.21



0.213


590,150



110,343



5,058



4,610



0.10



0.104


432,188



65,085



(63,335
)


(63,545
)


(1.47
)


(1.47
)Total

$
2,245,152


$
403,667


$
(38,834
)

$
(40,430
)

$
(0.95
)

$
(0.95
)20091

$
357,809


$
55,246


$
(19,971
)

$
(20,335
)

$
(0.46
)

$
(0.46
)2


399,277



65,229



(11,188
)


(11,808
)


(0.27
)


(0.27
)3


442,089



93,169



2,845



2,117



0.04



0.044


458,394



100,628



(12,051
)


(12,890
)


(0.19
)


(0.19
)Total

$
1,657,569


$
314,272


$
(40,365
)

$
(42,916
)

$
(0.86
)

$
(0.86
)     14-1, 470-20,
   100




---



##### Table of Contents



Item 9 
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A 
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Rule 13a-15(e),
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f).
      Internal Control  Integrated
    Framework
    101




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
      Internal Control  Integrated Framework
        Internal Control  Integrated Framework
 102




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting and Other
    Remediation
    Item 9B 
    Other
    Information   103




---



##### Table of Contents



PART III  Item 10 
    Directors,
    Executive Officers and Corporate Governance  Form 10-K.
  44114-1147, www.ferro.com
  Item 11 
    Executive
    Compensation    Item 12 
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13 
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14 
    Principal
    Accountant Fees and Services   104




---



##### Table of Contents



PART IV  Item 15 
    Exhibits
    and Financial Statement Schedules  Form 10-K:
  (a)
    The consolidated financial statements of Ferro Corporation and
    its subsidiaries contained in Part II, Item 8 of this
    Annual Report on
    Form 10-K:  
    Consolidated Statements of Operations for the years ended
    December 31, 2009, 2008 and 2007;
    Consolidated Balance Sheets at December 31, 2009 and 2008;
    Consolidated Statements of Shareholders Equity and
    Comprehensive Income (Loss) for the years ended
    December 31, 2009, 2008 and 2007;
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2009, 2008 and 2007; and
    Notes to Consolidated Financial Statements  (b)
    Schedule II  Valuation and Qualifying Accounts
    and Reserves for the years ended December 31, 2009, 2008,
    and 2007, contained on page 107 of this Annual Report on
    Form 10-K.
    All other schedules have been omitted because the material is
    not applicable or is not required as permitted by the rules and
    regulations of the U.S. Securities and Exchange Commission,
    or the required information is included in the consolidated
    financial statements.  (c)
    The exhibits listed in the Exhibit Index beginning on
    page 108 of this Annual Report on
    Form 10-K. 105




---



##### Table of Contents



SIGNATURES
  Form 10-K
    By
    /s/  James
    F. Kirsch       Form 10-K
  /s/  James
    F. KirschJames
    F. Kirsch

Chairman, President and Chief Executive Officer
    (Principal Executive Officer)/s/  Sallie
    B. BaileySallie
    B. Bailey

Vice President and Chief Financial Officer 
    (Principal Financial Officer)/s/  Nicholas
    KatzakisNicholas
    Katzakis

Chief Accounting Officer 
    (Principal Accounting Officer)/s/  Richard
    C. BrownRichard
    C. Brown

Director/s/  Michael
    H. BulkinMichael
    H. Bulkin

Director/s/  Sandra
    Austin CraytonSandra
    Austin Crayton

Director/s/  Richard
    J. HippleRichard
    J. Hipple

Director/s/  Jennie
    S. HwangJennie
    S. Hwang

Director/s/  Gregory
    E. HylandGregory
    E. Hyland

Director/s/  William
    B. LawrenceWilliam
    B. Lawrence

Director/s/  Michael
    F. MeeMichael
    F. Mee

Director/s/  Perry
    W. PremdasPerry
    W. Premdas

Director/s/  William
    J. SharpWilliam
    J. Sharp

Director/s/  Dennis
    W. SullivanDennis
    W. Sullivan

Director/s/  Ronald
    P. VargoRonald
    P. Vargo

Director  106




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##### Table of Contents



FERRO
    CORPORATION AND SUBSIDIARIES
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 Years
    Ended December 31, 2009, 2008, and 2007
  Additions Charged(ReductionsBalance at


Credited) to





Adjustment for


BalanceBeginning


Costs and


Other





Differences in


at End ofof Period


Expenses


Accounts


Deductions


Exchange Rates


Period(Dollars in thousands)Allowance for Possible Losses on Collection of Accounts and
    Trade Notes Receivable:Year ended December 31, 2009

$
11,668



2,676







(3,835
)


176


$
10,685Year ended December 31, 2008

$
6,396



4,472



3,544
(1)


(2,436
)


(308
)

$
11,668Year ended December 31, 2007

$
7,524



(345
)






(1,430
)


647


$
6,396Allowance for Possible Losses on Collection of Note
    Receivable from Ferro Finance Corporation:Year ended December 31, 2009

$



















$
Year ended December 31, 2008

$
3,015



1,371



(3,544
)(1)


(842
)





$
Year ended December 31, 2007

$
2,702



948







(635
)





$
3,015Valuation Allowance on Net Deferred Tax AssetsYear ended December 31, 2009

$
21,451



(3,683
)










201


$
17,969Year ended December 31, 2008

$
8,906



20,598







(8,053
)





$
21,451Year ended December 31, 2007

$
4,023



4,644



545



(469
)


163


$
8,906     (1)
    
    When Ferro Finance Corporation (FFC) was
    consolidated in December 2008, the valuation allowance on
    Ferros note receivable from FFC was combined with the
    valuation allowance on accounts and trade notes receivable. 107




---



##### Table of Contents



EXHIBIT INDEX
  Rule 12b-32
  Exhibit:
  3


Articles of Incorporation and by-laws3
.1

Eleventh Amended Articles of Incorporation of Ferro Corporation.
    (Reference is made to Exhibit 4.1 to Ferro
    Corporations Registration Statement on
    Form S-3,
    filed March 5, 2008, which Exhibit is incorporated here by
    reference.)3
.2

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

Certificate of Amendment to the Eleventh Amended Articles of
    Incorporation of Ferro Corporation filed June 23, 1998.
    (Reference is made to Exhibit 4.3 to Ferro
    Corporations Registration Statement on
    Form S-3,
    filed March 5, 2008, which Exhibit is incorporated here by
    reference.)3
.4

Ferro Corporation Code of Regulations. (Reference is made to
    Exhibit 4.4 to Ferro Corporations Registration
    Statement on
    Form S-3,
    filed March 5, 2008, which Exhibit is incorporated here by
    reference.)4


Instruments defining rights of security holders, including
    indentures4
.1

Senior Indenture, dated as of March 5, 2008, by and between
    Ferro Corporation and U.S. Bank National Association. (Reference
    is made to Exhibit 4.5 to Ferro Corporations
    Registration Statement on
    Form S-3,
    filed March 5, 2008, which Exhibit is incorporated here by
    reference.)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).
    (Reference is made to Exhibit 4.2 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed August 19, 2008, which Exhibit is incorporated here
    by reference.)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 Contracts10
.1

Second Amended and Restated Credit Agreement, dated
    October 26, 2009, among Ferro Corporation and certain of
    its subsidiaries; various financial institutions; Credit Suisse,
    Cayman Islands Branch; PNC Bank, National Association; National
    City Bank; KeyBank National Association; and Citigroup Global
    Markets, Inc. (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed October 27, 2009, which Exhibit is incorporated here
    by reference.)10
.2

Amendment and Restatement and Resignation and Appointment
    Agreement, dated October 26, 2009, among Ferro Corporation;
    the several banks and other financial institutions or entities
    listed on the signature pages thereto; Credit Suisse, Cayman
    Islands Branch,; National City Bank; and PNC Bank, National
    Association. (Reference is made to Exhibit 10.2 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed October 27, 2009, which Exhibit is incorporated here
    by reference.)10
.3

First Amendment to Amended and Restated Credit Agreement and
    First Amendment to Pledge and Security Agreement, dated
    December 17, 2007, among Ferro Corporation; certain of
    Ferros subsidiaries; Credit Suisse, Cayman Islands Branch,
    as Term Loan Administrative Agent; and National City Bank, as
    revolving loan administrative agent; and various financial
    institutions as lenders. (Reference is made to Exhibit 10.2
    to Ferro Corporations Current Report on
    Form 8-K,
    filed January 10, 2008, which Exhibit is incorporated here
    by reference.)10
.4

Amended and Restated Credit Agreement, dated June 8, 2007,
    among Ferro; certain of Ferros subsidiaries; Credit
    Suisse, as term loan administrative agent; National City Bank,
    as revolving loan administrative agent and collateral agent;
    KeyBank National Association, as documentation agent; Citigroup
    Global Markets, Inc., as syndication agent; and various
    financial institutions as lenders. (Reference is made to
    Exhibit 10.3 to Ferro Corporations Current Report on
    Form 8-K,
    filed June 11, 2007, which Exhibit is incorporated here by
    reference.) 108




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10
.5

Purchase Agreement, dated as of June 2, 2009, among Ferro
    Corporation, Ferro Color & Glass Corporation, and
    Ferro Pfanstiehl Laboratories, Inc. (Reference is made to
    Exhibit 10.1 to Ferro Corporations Current Report on
    Form 8-K,
    filed June 3, 2009, which Exhibit is incorporated here by
    reference.)10
.6

Purchase and Contribution Agreement, dated as of June 2,
    2009, between Ferro Corporation and Ferro Finance Corporation.
    (Reference is made to Exhibit 10.2 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed June 3, 2009, which Exhibit is incorporated here by
    reference.)10
.7

Receivables Purchase Agreement, dated as of June 2, 2009,
    among Ferro Finance Corporation, Ferro Corporation, certain
    purchasers from time to time party thereto and Wachovia Bank,
    National Association. (Reference is made to Exhibit 10.3 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed June 3, 2009, which Exhibit is incorporated here by
    reference.)10
.8

Ferro Corporation Employee Stock Option Plan. (Reference is made
    to Exhibit 10.1 to Ferro Corporations Annual Report
    on
    Form 10-K
    for the year ended December 31, 2006, which Exhibit is
    incorporated here by reference.)*10
.9

Ferro Corporation 2003 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.16 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.10

Form of Terms of Incentive Stock Option Award Grants under the
    Ferro Corporation 2003 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.17 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.11

Form of Terms of Performance Share Awards under the Ferro
    Corporation 2003 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.18 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.12

Ferro Corporation 2006 Long-Term Incentive Plan (Reference is
    made to Exhibit 10.01 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed November 8, 2006, which Exhibit is incorporated here
    by reference.)*10
.13

Form of Terms of Incentive Stock Option Award Grants under the
    Ferro Corporation 2006 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.20 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.14

Form of Terms of Nonstatutory Stock Option Grants under the
    Ferro Corporation 2006 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.21 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.15

Form of Terms of Performance Share Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.22 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.16

Form of Terms of Restricted Share Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.23 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.17

Form of Terms of Deferred Stock Unit Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.
    (Reference is made to Exhibit 10.24 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.18

Amendment to the Ferro Corporation Deferred Compensation Plan
    for Executive Employees.*10
.19

Ferro Corporation Deferred Compensation Plan for Executive
    Employees. (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed September 24, 2007, which Exhibit is incorporated
    here by reference.)*10
.20

Ferro Corporation Deferred Compensation Plan for Non-Employee
    Directors. (Reference is made to Exhibit 10.2 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed September 24, 2007, which Exhibit is incorporated
    here by reference.)*10
.21

Ferro Corporation Deferred Compensation Plan for Non-Employee
    Directors Trust Agreement. (Reference is made to
    Exhibit 10.11.1 to Ferro Corporations Annual Report
    on
    Form 10-K
    for the year ended December 31, 2006, which Exhibit is
    incorporated here by reference.)*10
.22

Ferro Corporation Supplemental Defined Benefit Plan for
    Executive Employees. (Reference is made to Exhibit 10.3 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed September 24, 2007, which Exhibit is incorporated
    here by reference.)* 109




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10
.23

Amendment to the Ferro Corporation Supplemental Defined
    Contribution Plan for Executive Employees.*10
.24

Ferro Corporation Supplemental Defined Contribution Plan for
    Executive Employees. (Reference is made to Exhibit 10.4 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed September 24, 2007, which Exhibit is incorporated
    here by reference.)*10
.25

Amended and Restated Employment Agreement, dated as of
    December 31, 2008, between Mr. Kirsch and Ferro
    Corporation. (Reference is made to Exhibit 10.3 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed January 7, 2009, which Exhibit is incorporated here
    by reference.)*10
.26

Form of Indemnification Agreement. (James F. Kirsch is the only
    officer that is party to an indemnification agreement with Ferro
    Corporation.) (Reference is made to Exhibit 10.31 to Ferro
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2008, which Exhibit is
    incorporated here by reference.)*10
.27

Change in Control Agreement, dated as of January 1, 2009,
    between Mr. Kirsch and Ferro Corporation. (Reference is
    made to Exhibit 10.1 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed January 7, 2009, which Exhibit is incorporated here
    by reference.)*10
.28

Form of Change in Control Agreement, dated as of January 1,
    2009. (Sallie B. Bailey, Mark H. Duesenberg, Ann E. Killian,
    James F. Kirsch, Michael J. Murry and Peter T. Thomas have
    entered into this form of change in control agreement.)
    (Reference is made to Exhibit 10.2 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed January 7, 2009, which Exhibit is incorporated here
    by reference.)*10
.29

Separation Agreement and Release between Ferro Corporation and
    Barry D. Russell. (Reference is made to Exhibit 10.1 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed September 29, 2009, which Exhibit is incorporated
    here by reference.)*12


Ratio of Earnings to Fixed Charges and Ratio of Earnings to
    Combined Fixed Charges and Preferred Stock Dividends.21


List of Subsidiaries.23
.1

Consent of Independent Registered Public Accounting Firm.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.     *
    
    Indicates management contract or compensatory plan, contract or
    arrangement in which one or more Directors and/or executives of
    Ferro Corporation may be participants. 110