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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, 2008oro

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-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    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 14Item 4


Submission of Matters to a Vote of Security
    Holders


Page 15PART 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 39Item 8


Financial Statements and Supplementary Data


Page 41Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


Page 94Item 9A


Controls and Procedures


Page 94Item 9B


Other Information


Page 96PART IIIItem 10


Directors, Executive Officers and Corporate
    Governance


Page 97Item 11


Executive Compensation


Page 97Item 12


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


Page 97Item 13


Certain Relationships and Related Transactions,
    and Director Independence


Page 98Item 14


Principal Accountant Fees and Services


Page 98PART IVItem 15


Exhibits and Financial Statement Schedules


Page 99EX-10.16EX-10.17EX-10.18EX-10.20EX-10.21EX-10.22EX-10.23EX-10.24EX-10.31EX-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
    
    Inorganic specialty products  High-quality glazes,
    frits, enamels, pigments, dinnerware decoration colors and other
    performance materials;
    Organic specialty products  Polymer specialty
    materials, engineered plastic compounds, pigment dispersions,
    and high-potency pharmaceutical active ingredients; and
    Electronic materials  High-performance dielectrics,
    conductive pastes, metal powders and polishing materials.    
    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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Inorganic Specialties

Organic Specialties

Electronic Material Systems Tile Coating Systems(1)

 Polymer Additives

 Electronic Materials   Porcelain Enamel(1)

   Specialty Plastics Color and Glass
    Performance Materials

   Pharmaceuticals     (1)
    
    Tile Coating Systems and Porcelain Enamel are combined into one
    reportable business segment, Performance Coatings, for financial
    reporting purposes.    Markets
    and Customers
    
    Appliances
    Transportation
    Building and renovation
    Electronics
    Household furnishings
    Industrial products
    Packaging
    Pharmaceuticals        Backlog
    of Orders and Seasonality
    Competition
   4




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Raw
    Materials and Supplier Relations
    Metal
    Oxides:(1)

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

 Gold Cobalt oxide

 Platinum Lead oxide

 Palladium Aluminum oxide

 Silver Nickel oxide

 Titanium ChromiumPolymers:(2)

 Copper Polypropylene

 Bismuth Unsaturated polyester

 Lithium Polystyrene

 ZincOther Inorganic Materials:

Other Organic Materials: (4) Zircon(1)

 Phthalic anhydride Feldspar(1)

 Toluene Silica(1)

 Butanol Titanium dioxide(2)

 Tallow Fiberglass(2)

 Soybean oil Boron(3)     (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.      Environmental
    Matters
   5




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Research
    and Development
      Patents,
    Trademarks and Licenses
    Employees
     6




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Domestic
    and Foreign Operations
  Form 10-K.
    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   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 the recent macro-economic circumstances and
    uncertainty in credit markets.
    and/or
  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.
   8




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We
    depend on external financial resources, and the current 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.
  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
    have significant deferred tax assets, and our ability to utilize
    these assets will depend on our future
    performance.
  Form 10-K.
  Noncompliance
    with NYSE rules could result in the delisting of our common
    stock from the NYSE.
     9




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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.
    We
    strive to improve operating margins through sales growth, price
    increases, productivity gains, improved purchasing techniques
    and restructuring activities, but we may not achieve the desired
    improvements.
   10




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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 and political
    instability in certain countries.    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.
  U.S.-based
  Regulatory
    authorities in the U.S., European Union and elsewhere are taking
    a much more aggressive approach to regulating hazardous
    materials, 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.
   11




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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.
  Our
    businesses depend on a continuous stream of new products, and
    failure to introduce new products could affect our sales and
    profitability.
  and/or
  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.
   12




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Form 10-K.
  Our
    restructuring initiatives may not provide sufficient cost
    savings to justify their expense.
    We are
    exposed to intangible asset risk.
    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
    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.
   13




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and/or
    Item 1B 
    Unresolved
    Staff Comments    Item 2 
    Properties                    Item 3 
    Legal
    Proceedings   14




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Item 4 
    Submission
    of Matters to a Vote of Security Holders    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(PERFORMANCE GRAPH)
   intra-day
  2008


2007High


Low


Dividends


High


Low


DividendsFirst Quarter

$
20.65


$
13.77


$
0.145


$
22.95


$
19.30


$
0.145Second Quarter


21.10



13.52



0.145



25.48



19.98



0.145Third Quarter


24.13



17.28



0.145



26.03



17.37



0.145Fourth Quarter


20.97



5.54



0.145



23.21



19.28



0.145     Form 10-K.
 17




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Item 6 
    Selected
    Financial Data    2008


2007


2006


2005


2004(Dollars in thousands, except per share data)Net sales

$
2,245,152


$
2,147,904


$
1,987,606


$
1,833,064


$
1,797,707(Loss) income from continuing operations


(53,746
)


(99,566
)


15,422



15,558



26,008Basic (loss) earnings per share from continuing operations


(1.26
)


(2.34
)


0.33



0.33



0.58Diluted (loss) earnings per share from continuing operations


(1.26
)


(2.34
)


0.33



0.33



0.58Cash dividends declared per common share


0.58



0.58



0.58



0.58



0.58Total assets


1,544,500



1,638,260



1,741,602



1,676,598



1,739,885Long-term debt, including current portion, and redeemable
    preferred stock


596,339



538,758



601,765



568,325



521,658   Form 10-K.
  Item 7 
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
        
    Cost control initiatives, including costs associated with our
    restructuring programs,
    Charges for the impairment of goodwill and other assets,
    resulting from reduced expectations for future cash flows from
    several of our businesses, and
    Volatile raw material costs. 18




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1 8
      Outlook
       19




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Results
    of Operations
  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


50,145



57,837



(7,692
)


(13.3
)%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 expense (income), net


1,239



576



663



115.1
%(Loss) income before income taxes


(56,537
)


(117,518
)


60,981



(51.9
)%Income tax (benefit) expense


(2,791
)


(17,952
)


15,161



(84.5
)%(Loss) income from continuing operations


(53,746
)


(99,566
)


45,820



(46.0
)%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) income

$
(39,698
)

$
(94,479
)

$
54,781



(58.0
)%Diluted (loss) earnings per share

$
(0.94
)

$
(2.23
)

$
1.29



(57.8
)%        20




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1 8
         21




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##### Table of Contents



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.
  Color and Glass Performance Materials Segment
    Results.
  Polymer Additives Segment Results.
 22




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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
%    23




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Comparison
    of the years ended December 31, 2007 and 2006
  2007


2006


$ Change


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

$
2,147,904


$
1,987,606


$
160,298



8.1
%Cost of sales


1,745,445



1,585,081



160,364



10.1
%Gross profit


402,459



402,525



(66
)



%Gross margin percentage


18.7
%


20.3
%Selling, general and administrative expenses


314,878



302,442



12,436



4.1
%Impairment charges


128,737







128,737



Restructuring charges


16,852



23,146



(6,294
)


(27.2
)%Other expense (income):






Interest expense


57,837



62,714



(4,877
)


(7.8
)%Interest earned


(1,505
)


(4,466
)


2,961



(66.3
)%Foreign currency losses, net


1,254



1,040



214



20.6
%Loss (gain) on sale of businesses


1,348



(67
)


1,415



(2,111.9
)%Miscellaneous expense (income), net


576



(87
)


663



(762.1
)%(Loss) income before income taxes


(117,518
)


17,803



(135,321
)


(760.1
)%Income tax (benefit) expense


(17,952
)


2,381



(20,333
)


(854.0
)%(Loss) income from continuing operations


(99,566
)


15,422



(114,988
)


(745.6
)%Income from discontinued operations, net of income taxes


5,312



5,670



(358
)


(6.3
)%Gain (loss) on disposal of discontinued operations, net of
    income taxes


(225
)


(472
)


247



(52.3
)%Net (loss) income

$
(94,479
)

$
20,620


$
(115,099
)


(558.2
)%Diluted (loss) earnings per share

$
(2.23
)

$
0.46


$
(2.69
)


(584.8
)%        24




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U.S.-based
           25




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2007


2006


$ Change


% Change(Dollars in thousands)Segment SalesPerformance Coatings

$
609,285


$
538,385


$
70,900



13.2
%Electronic Materials


469,885



444,463



25,422



5.7
%Color & Glass Performance Materials


445,709



387,540



58,169



15.0
%Polymer Additives


334,492



313,500



20,992



6.7
%Specialty Plastics


261,956



271,307



(9,351
)


(3.4
)%Pharmaceuticals


26,577



32,411



(5,834
)


(18.0
)%Total segment sales

$
2,147,904


$
1,987,606


$
160,298



8.1
%Segment Operating IncomePerformance Coatings

$
37,965


$
42,718


$
(4,753
)


(11.1
)%Electronic Materials


32,785



35,136



(2,351
)


(6.7
)%Color & Glass Performance Materials


48,222



43,512



4,710



10.8
%Polymer Additives


10,755



10,947



(192
)


(1.8
)%Specialty Plastics


15,116



14,629



487



3.3
%Pharmaceuticals


1,947



(1,219
)


3,166



(259.7
)%Total segment operating income

$
146,790


$
145,723


$
1,067



0.7
%   Performance Coatings Segment Results.
  Electronic Materials Segment Results.
  Color and Glass Performance Materials Segment
    Results.
  Polymer Additives Segment Results.
 26




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on-site
  Specialty Plastics Segment Results.
  Pharmaceuticals Segment Results.
  2007


2006


$ Change


% Change(Dollars in thousands)Geographic RevenuesUnited States

$
900,146


$
908,497


$
(8,351
)


(0.9
)%International


1,247,758



1,079,109



168,649



15.6
%Total geographic revenues

$
2,147,904


$
1,987,606


$
160,298



8.1
%     Summary
    of Cash Flows for the years ended December 31, 2008, 2007
    and 2006
  2008


2007


2006(Dollars in thousands)Net cash (used for) provided by operating activities

$
(9,096
)

$
144,579


$
70,944Net cash used for investing activities


(17,050
)


(62,033
)


(68,718
)Net cash provided by (used for) financing activities


23,854



(88,717
)


(3,035
)Effect of exchange rate changes on cash


458



1,211



381Decrease in cash and cash equivalents

$
(1,834
)

$
(4,960
)

$
(428
)   Operating activities.
 27




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Investing activities.
  Financing activities. 1 8 1 8
  Capital
    Resources and Liquidity
  6.50% Convertible
    Senior Notes
  1 8
  91/8% Senior
    Notes
  1 8 1 8 1 8 1 8
  Revolving
    Credit and Term Loan Facility
   28




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Form 10-K.
    
    Increase the interest rates and commitment fees payable
    thereunder pursuant to a grid structure based on our leverage
    ratio,
    Increase the maximum permitted leverage ratio and decrease the
    minimum permitted fixed charge coverage ratio,
    Add a minimum quarterly EBITDA requirement for fiscal year 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 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 effectively
    prohibits us from paying dividends on our common stock. 29




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Domestic
    Receivable Sales Program
      Off
    Balance Sheet Arrangements
  International Receivables Sales Programs.
  Consignment and Customer Arrangements for Precious
    Metals.
     30




---



##### Table of Contents



Bank Guarantees and Standby Letters of
    Credit.
  Other
    Financing Arrangement
    Liquidity
    Requirement
      2009


2010


2011


2012


2013


Thereafter


Totals(Dollars in thousands)Loans payable to banks

$
4,754


$



$



$



$



$



$
4,754Convertible notes


















172,500







172,500Revolving credit facility










111,803















111,803Term loan facility


3,050



3,050



73,315



213,083











292,498Other long-term notes


268



255



209



188



104



519



1,543Obligations under capital leases


1,392



1,360



958



958



909



4,701



10,278Obligations under operating leases


13,105



8,817



6,167



4,518



4,166



12,623



49,396Purchase commitments


34,431



4,043



783



153



38







39,448$
57,000


$
17,525


$
193,235


$
218,900


$
177,717


$
17,843


$
682,220         Accounting for
    Uncertainty in Income Taxes non-U.S. tax
 31




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##### Table of Contents



Critical
    Accounting Policies
    Inventories
  first-in,
  Environmental
    Liabilities
      Income
    Taxes
     32




---



##### Table of Contents



non-U.S. tax non-U.S. jurisdictions,
    Pension
    and Other Postretirement Benefits
      non-U.S. plans
   33




---



##### 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

$
922


$
502U.S. retiree medical plan


(59
)


Non-U.S.
    pension plans


760



328Total

$
1,623


$
830     2008


2007


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


6.49
%


6.05
%


0.44
%U.S. retiree medical plan


6.10
%


5.90
%


0.20
%Non-U.S.
    pension plans


5.56
%


4.69
%


0.87
%Discount rate used to measure benefit obligations: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
%Expected return on plan assets:U.S. pension plans


8.50
%


8.50
%



%Non-U.S.
    pension plans


5.25
%


4.95
%


0.30
%        34




---



##### Table of Contents



Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R) non-U.S. plans
  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.   35




---



##### Table of Contents



Valuation
    of Goodwill and Other
    Non-amortizing
    Intangibles
      Assessment
    of Long-Lived Assets
      Derivative
    Financial Instruments
     36




---



##### Table of Contents



Impact
    of Newly Issued Accounting Pronouncements
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
 37




---



##### Table of Contents



No. FAS 142-3, Determination of the Useful Life of Intangible Assets No. FAS 142-3). Goodwill and Other Intangible
    Assets No. FAS 142-3;
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1
  No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is
    Indexed to an Entitys Own Stock No. 07-5), No. 01-6, The Meaning of Indexed to a Companys Own
    Stock. Accounting for
    Derivative Instruments and Hedging Activities No. 07-5 No. 07-5;
  No. 08-6, Equity Method Investment Accounting Considerations No. 08-6). No. 08-6;
  No. 08-7, Accounting for Defensive Intangible Assets No. 08-7). No. 08-7;
  Employers Disclosures About
    Postretirement Benefit Plan Assets
 38




---



##### Table of Contents



Item 7A  Quantitative
    and Qualitative Disclosures about Market Risk         39




---



##### Table of Contents



2008


2007(Dollars in thousands)Variable-rate debt and utilization of asset securitization
    program:Change in annual interest expense from 1% change in interest
    rates

$
2,742


$
2,636Fixed-rate debt:Carrying amount

$
174,043


$
200,404Fair value

$
85,700


$
205,705Change in fair value from 1% increase in interest rate

$
(2,877
)

$
(1,929
)Change in fair value from 1% decrease in interest rate

$
3,003


$
1,957Interest rate swaps:Notional amount

$
150,000


$
150,000Carrying amount and fair value

$
(12,724
)

$
(8,109
)Change in fair value from 1% increase in interest rate

$
3,322


$
5,000Change in fair value from 1% decrease in interest rate

$
(3,401
)

$
(5,181
)Foreign currency forward contracts:Notional amount

$
156,840


$
142,638Carrying amount and fair value

$
(96
)

$
(268
)Change in fair value from 10% appreciation of U.S. dollar

$
2,523


$
(1,402
)Change in fair value from 10% depreciation of U.S. dollar

$
(3,084
)

$
1,714Raw material commodity swaps:Notional amount (in metric tons of base metals)


330



1,171Carrying amount and fair value

$
(576
)

$
(1,499
)Change in fair value from 10% change in forward prices

$
71


$
507Precious metals forward contracts:Notional amount (in troy ounces)


129



159,648Carrying amount and fair value

$
8


$
755Change in fair value from 10% change in forward prices

$
11


$
612  40




---



##### Table of Contents



Item 8 
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Accounting for Uncertainty in
    Income Taxes, Share-Based Payment Employers Accounting for Defined Pension and Other
    Postretirement Plans
  Internal Control  Integrated Framework
  
    41




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2008


2007


2006(In thousands, except per share amounts)Net sales

$
2,245,152


$
2,147,904


$
1,987,606Cost of sales


1,841,485



1,745,445



1,585,081Gross profit


403,667



402,459



402,525Selling, general and administrative expenses


297,119



314,878



302,442Impairment charges


80,205



128,737



Restructuring charges


25,937



16,852



23,146Other expense (income):Interest expense


50,145



57,837



62,714Interest earned


(714
)


(1,505
)


(4,466
)Loss on extinguishment of debt


5,531







Foreign currency losses, net


742



1,254



1,040Loss (gain) on sale of businesses






1,348



(67
)Miscellaneous expense (income), net


1,239



576



(87
)(Loss) income before income taxes


(56,537
)


(117,518
)


17,803Income tax (benefit) expense


(2,791
)


(17,952
)


2,381(Loss) income from continuing operations


(53,746
)


(99,566
)


15,422Income from discontinued operations, net of income taxes


5,014



5,312



5,670Gain (loss) on disposal of discontinued operations, net of
    income taxes


9,034



(225
)


(472
)Net (loss) income


(39,698
)


(94,479
)


20,620Dividends on preferred stock


(877
)


(1,035
)


(1,252
)Net (loss) income available to common shareholders

$
(40,575
)

$
(95,514
)

$
19,368Weighted-average common shares outstanding


43,261



42,926



42,394Incremental common shares attributable to convertible preferred
    stock, performance shares, deferred stock units, and stock
    options










28Weighted-average diluted shares outstanding


43,261



42,926



42,422Per common share dataBasic (loss) earnings:From continuing operations

$
(1.26
)

$
(2.34
)

$
0.33From discontinued operations


0.32



0.11



0.13$
(0.94
)

$
(2.23
)

$
0.46Diluted (loss) earnings:From continuing operations

$
(1.26
)

$
(2.34
)

$
0.33From discontinued operations


0.32



0.11



0.13$
(0.94
)

$
(2.23
)

$
0.46    42




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(Dollars in thousands)ASSETSCurrent assetsCash and cash equivalents

$
10,191


$
12,025Accounts and trade notes receivable, net


296,423



242,039Note receivable from Ferro Finance Corporation






29,577Inventories


256,411



256,019Deferred income taxes


19,167



14,773Other receivables


58,391



33,338Other current assets


8,306



8,218Current assets of discontinued operations






11,203Total current assets


648,889



607,192Other assetsProperty, plant and equipment, net


456,549



495,599Goodwill


229,665



290,698Amortizable intangible assets, net


11,753



9,071Deferred income taxes


134,139



100,935Other non-current assets


63,505



110,033Other assets of discontinued operations






24,732Total assets

$
1,544,500


$
1,638,260LIABILITIES and SHAREHOLDERS EQUITYCurrent liabilitiesLoans payable and current portion of long-term debt

$
8,883


$
5,444Accounts payable


232,113



265,323Income taxes


14,361



Accrued payrolls


18,695



26,105Accrued expenses and other current liabilities


82,995



108,004Current liabilities of discontinued operations






5,456Total current liabilities


357,047



410,332Other liabilitiesLong-term debt, less current portion


580,662



520,645Postretirement and pension liabilities


221,110



140,988Deferred income taxes


6,039



8,857Other non-current liabilities


34,047



56,644Other liabilities of discontinued operations






991Total liabilities


1,198,905



1,138,457Minority interests


9,755



9,896Series A convertible preferred stock (approximates
    redemption value)


11,548



13,623Shareholders equityCommon stock


52,323



52,323Paid-in capital


166,011



166,391Retained earnings


401,918



468,190Accumulated other comprehensive loss


(98,436
)


(7,765
)Common shares in treasury, at cost


(197,524
)


(202,855
)Total shareholders equity


324,292



476,284Total liabilities and shareholders equity

$
1,544,500


$
1,638,260    43




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND
 COMPREHENSIVE
    INCOME (LOSS)
  Accumulated





TotalCommon Shares











Other





Share-In Treasury


Common


Paid-in


Retained


Comprehensive


Unearned


holdersShares


Amount


Stock


Capital


Earnings


Income (Loss)(a)


Compensation


Equity(In thousands, except per share data)Balances at December 31, 2005


9,970


$
(221,095
)

$
52,323


$
163,074


$
605,874


$
(115,990
)

$
(6,123
)

$
478,063Net income


















20,620











20,620Other comprehensive income (loss), net of tax:Foreign currency translation adjustment






















33,468







33,468Mimimum pension liability adjustment






















15,858







15,858Other adjustments






















502







502Total comprehensive income






























70,448Cash dividends(b):Common


















(24,649
)










(24,649
)Preferred


















(1,252
)










(1,252
)Income tax benefits


















45











45Stock-based compensation transactions


(512
)


9,819







1,553















11,372Reclassification to initially apply FAS No. 123R as of
    January 1, 2006














(6,123
)










6,123Adjustment to apply FAS No. 158 as of
    December 31, 2006, net of tax






















1,024







1,024Balances at December 31, 2006


9,458



(211,276
)


52,323



158,504



600,638



(65,138
)






535,051Net loss


















(94,479
)










(94,479
)Other comprehensive income (loss), net of tax:Foreign currency translation adjustment






















39,167







39,167Postretirement benefit liability adjustments






















25,589







25,589Raw material commodity swap adjustments






















(2,161
)






(2,161
)Interest rate swap adjustments






















(5,222
)






(5,222
)Total comprehensive loss






























(37,106
)Cash dividends(b):Common


















(25,051
)










(25,051
)Preferred


















(1,035
)










(1,035
)Income tax benefits


















50











50Stock-based compensation transactions


(705
)


8,421







7,887















16,308Adjustment to initially apply FIN No. 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
)






476,284Net loss


















(39,698
)










(39,698
)Other comprehensive income (loss), net of tax:Foreign currency translation adjustment






















(23,490
)






(23,490
)Postretirement benefit liability adjustments






















(65,235
)






(65,235
)Raw material commodity swap adjustments






















713







713Interest rate swap adjustments






















(2,973
)






(2,973
)Other






















(52
)






(52
)Total comprehensive loss






























(130,735
)Cash dividends(b):Common


















(25,192
)










(25,192
)Preferred


















(877
)










(877
)Income tax benefits














43















43Stock-based compensation transactions


(321
)


5,331







(423
)














4,908Adjustment 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


$
166,011


$
401,918


$
(98,436
)

$



$
324,292     (a)
    
    Accumulated translation adjustments
    were $12,020, $35,510, and $(3,657), accumulated postretirement
    benefit liability adjustments were $(101,738), $(36,869), and
    $(62,458), accumulated raw material commodity swap adjustments
    were $(471), $(1,184), and $977, and accumulated interest rate
    swap adjustments were $(8,195), $(5,222), and $-0- at
    December 31, 2008, 2007 and 2006, respectively, all net of
    tax.(b)
    
    Dividends were $0.58 per share of
    common stock and $3.25 per share of convertible preferred stock
    for 2008, 2007, and 2006.   44




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2008


2007


2006(Dollars in thousands)Cash flows from operating activitiesNet (loss) income

$
(39,698
)

$
(94,479
)

$
20,620Adjustments to reconcile net income to net cash (used for)
    provided by operating activities:(Gain) loss from discontinued operations, net of tax


(14,048
)


(5,087
)


(5,198
)Loss (gain) on sale of assets and businesses


2,598



1,175



(1,626
)Depreciation and amortization


73,450



84,048



76,484Impairment charges


80,205



128,737



Noncash restructuring charges


351



3,259



15,795Provision for allowance for doubtful accounts


5,843



603



1,444Retirement benefits


(15,254
)


(16,533
)


(13,826
)Deferred income taxes


(13,692
)


(30,468
)


(13,391
)Changes in current assets and liabilities, net of effects of
    acquisitions:Accounts and trade notes receivable


30,455



(5,396
)


(24,793
)Note receivable from Ferro Finance Corporation


(46,344
)


(13,494
)


95,842Inventories


(6,462
)


22,687



(30,716
)Deposits for precious metals






70,073



(51,073
)Other receivables and other current assets


(23,137
)


(13,423
)


250Accounts payable


(27,185
)


9,636



(13,222
)Accrued expenses and other current liabilities


(23,898
)


(2,131
)


10,557Other operating activities


4,435



(2,582
)


(481
)Net cash (used for) provided by continuing operations


(12,381
)


136,625



66,666Net cash provided by (used for) discontinued operations


3,285



7,954



4,278Net cash (used for) provided by operating activities


(9,096
)


144,579



70,944Cash flows from investing activitiesCapital expenditures for plant and equipment of continuing
    operations


(70,751
)


(62,782
)


(46,011
)Capital expenditures for plant and equipment of discontinued
    operations


(2,317
)


(4,852
)


(4,604
)Expenditures for other assets


(3,400
)






Cash adjustments to purchase price of prior acquisition










1,790Net proceeds from sale of discontinued operations


56,484







Proceeds from sale of assets and businesses


2,360



4,850



5,130Investment in Ferro Finance Corporation










(25,000
)Other investing activities


574



751



(23
)Net cash used for investing activities


(17,050
)


(62,033
)


(68,718
)Cash flows from financing activitiesNet borrowings (repayments) under short-term loans payable to
    banks


3,687



(6,857
)


1,334Proceeds from convertible notes


172,500







Proceeds from revolving credit facility


1,024,174



779,630



697,929Proceeds from term loan facility






55,000



250,000Proceeds from former revolving credit facility










461,900Principal payments on revolving credit facility


(926,228
)


(893,726
)


(569,976
)Principal payments on term loan facility


(9,452
)


(3,050
)


Principal payments on former revolving credit facility










(648,000
)Extinguishment of debt


(205,269
)






(155,000
)Debt issue costs


(5,570
)


(1,783
)


(16,234
)Cash dividends


(26,069
)


(26,086
)


(25,901
)Proceeds from exercise of stock options


58



9,843



4,168Other financing activities


(3,977
)


(1,688
)


(3,255
)Net cash provided by (used for) financing activities


23,854



(88,717
)


(3,035
)Effect of exchange rate changes on cash and cash equivalents


458



1,211



381Decrease in cash and cash equivalents


(1,834
)


(4,960
)


(428
)Cash and cash equivalents at beginning of period


12,025



16,985



17,413Cash and cash equivalents at end of period

$
10,191


$
12,025


$
16,985Cash paid during the period for:Interest

$
52,670


$
56,911


$
62,980Income taxes

$
10,308


$
15,721


$
10,687    45




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Years ended December 31, 2008, 2007 and 2006
  1.
    Our
    Business and Summary of Significant Accounting
    Policies  Our
    Business
    Inorganic Specialties

Organic Specialties

Electronic Material Systems   Tile Coating Systems

   Polymer Additives

   Electronic Materials   Porcelain Enamel

   Specialty Plastics   Color and Glass

   PharmaceuticalsPerformance Materials         Principles
    of Consolidation
     46




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Use of
    Estimates and Assumptions in the Preparation of Financial
    Statements
    Foreign
    Currency Translation
      Cash
    Equivalents
    Accounts
    Receivable and the Allowance for Doubtful Accounts
    2008


2007


2006(Dollars in thousands)Allowance for doubtful accounts

$
11,668


$
6,396


$
7,524Bad debt (credit) expense


4,472



(345
)


836  47




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Note
    Receivable from Ferro Finance Corporation
    2008


2007


2006(Dollars in thousands)Valuation allowance

$



$
3,015


$
2,702Bad debt expense


1,371



948



608   Inventories
  first-in,
      Property,
    Plant and Equipment
    Buildings

20 to 40 yearsMachinery and equipment

5 to 15 years    48




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Accounting for the
    Impairment of Long-Lived Assets and for Long-Lived Assets to Be
    Disposed Of
      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; or
    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.     49




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  cost-of-capital,
  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.     50




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Contingencies
      Restructuring
    and Cost Reduction Programs
      Postretirement
    and Other Employee Benefits
    Derivative
    Financial Instruments
   51




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (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
     52




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    Selling,
    General and Administrative Expenses
      Comprehensive
    Income (Loss)
    Recently
    Adopted Accounting Pronouncements
  Share-Based
    Payment
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
  Accounting for Uncertainty in Income Taxes
  Accounting for Servicing
    of Financial Assets  an amendment of FASB Statement
    No. 140
 53




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    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 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset is not Active No. FAS 157-3). No. FAS 157-1 No. FAS 157-2 No. FAS 157-3
  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). No. 06-11
  No. FAS 140-4 Disclosures by Public Entities
    (Enterprises) about Transfers of Financial Assets and Interests
    in Variable Interest Entities
 54




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Newly
    Issued Accounting Pronouncements
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  No. FAS 142-3, Determination of the Useful Life of Intangible Assets No. FAS 142-3). Goodwill and Other Intangible
    Assets No. FAS 142-3;
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1
  No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is
    Indexed to an Entitys Own Stock No. 07-5), No. 01-6, The Meaning of Indexed to a Companys Own
    Stock. Accounting for
    Derivative Instruments and Hedging Activities No. 07-5
 55




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  No. 07-5;
  No. 08-6, Equity Method Investment Accounting Considerations No. 08-6). No. 08-6;
  No. 08-7, Accounting for Defensive Intangible Assets No. 08-7). No. 08-7;
  Employers Disclosures About
    Postretirement Benefit Plan Assets
  2.
    Inventories    2008


2007(Dollars in thousands)Raw materials

$
82,837


$
72,140Work in process


43,224



41,599Finished goods


130,350



142,280Total

$
256,411


$
256,019    56




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  3.
    Property,
    Plant and Equipment  December 31,2008


2007(Dollars in thousands)Land

$
33,687


$
40,455Buildings


230,450



244,046Machinery and equipment


720,044



808,368Construction in progress


35,216



48,518Property, plant and equipment under capital leases


16,957



17,011Total property, plant and equipment


1,036,354



1,158,398Total accumulated depreciation


(579,805
)


(662,799
)Net property, plant and equipment

$
456,549


$
495,599       U.S.-based
   57




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  4.
    Goodwill
    and Other Intangible Assets    (Dollars inthousands)Balance at December 31, 2006

$
395,835Impairments


(105,653
)Currency translation adjustments


516Balance at December 31, 2007


290,698Impairments


(58,361
)Currency translation adjustments


(2,672
)Balance at December 31, 2008

$
229,665     Estimated


December 31,Economic Life


2008


2007(Dollars in thousands)Patents


9-15 years


$
5,775


$
6,515Other


1-20 years



14,451



10,483Total gross amortizable intangible assets






20,226



16,998Accumulated amortization






(8,473
)


(7,927
)Amortizable intangible assets, net





$
11,753


$
9,071   Goodwill and Other
    Intangible Assets
     58




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    U.S.-based
      2008


2007


2006(Dollars in thousands)Intangibles

$
938


$
1,236


$
965Deferred charges and other non-current assets


7,173



7,460



9,054Total amortization expense

$
8,111


$
8,696


$
10,019     5.
    Financing
    and Short-term and Long-term Debt    2008


2007(Dollars in thousands)Loans payable to banks

$
4,754


$
954Current portion of long-term debt


4,129



4,490Total loans payable and current portion of long-term debt

$
8,883


$
5,444    59




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007(Dollars in thousands)$172.5 million 6.50% Convertible Senior Notes

$
172,500


$
$200 million
    91/8% Senior
    Notes, net of unamortized discounts






199,636Revolving credit facility


111,803



13,857Term loan facility


292,498



301,950Capitalized lease obligations (see Note 14)


6,447



8,924Other notes


1,543



768584,791



525,135Current portion


(4,129
)


(4,490
)Total long-term debt, less current portion

$
580,662


$
520,645     (Dollars inthousands)2009

$
4,1292010


4,3612011


185,9692012


213,9232013


173,231Thereafter


3,178Total maturities of long-term debt

$
584,791   6.50% Convertible
    Senior Notes
  1 8
   60




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  91/8% Senior
    Notes
  1 8 1 8 1 8 1 8
  Revolving
    Credit and Term Loan Facilities
    dollar-for-dollar
    
    Increase the interest rates and commitment fees payable
    thereunder pursuant to a grid structure based on our leverage
    ratio,
    Increase the maximum permitted leverage ratio and decrease the
    minimum permitted fixed charge coverage ratio,
    Add a minimum quarterly EBITDA requirement for fiscal year 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, 61




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (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 effectively
    prohibits us from paying dividends on our common stock.        Receivables
    Sales Programs
     62




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
        2008


2007


2006(Dollars in thousands)Sales of trade accounts receivable to FFC

$
1,031,164


$
985,922


$
994,436Purchases of previously sold trade accounts receivable


6,483



2,302



Net cash proceeds from FFC


994,771



969,265



1,090,485Trade accounts receivable collected and remitted to FFC and the
    conduits


1,049,393



975,243



1,005,885Servicing fees from FFC


563



308



310      63




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007


2006(Dollars in thousands)Trade accounts receivable sold to financial institutions

$
232,065


$
182,075


$
104,869Cash proceeds from financial institutions


221,509



178,429



104,676Trade accounts receivable collected and remitted to financial
    institutions


73,301



84,273



53,090   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
    2008


2007Carrying


Fair


Carrying


FairAmount


Value


Amount


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

$
172,500


$
84,725


$



$
$200 million
    91/8% Senior
    Notes










199,636



205,000Revolving credit facility


111,803



88,757



13,857



13,857Term loan facility


292,498



225,731



301,950



301,950Other notes


1,543



975



768



705   1 8
   64




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Derivative
    Instruments
            2008Level 1


Level 2


Level 3


Total


2007(Dollars in thousands)AssetsForeign currency forward contracts

$



$
480


$



$
480


$
16Precious metals forward contracts






8







8



755Total fair value

$



$
488


$



$
488


$
771LiabilitiesInterest rate swaps

$



$
(12,724
)

$



$
(12,724
)

$
(8,109
)Foreign currency forward contracts






(576
)






(576
)


(284
)Raw material commodity swaps






(576
)






(576
)


(1,499
)Total fair value

$



$
(13,876
)

$



$
(13,876
)

$
(9,892
)   Interest rate swaps.
  Foreign currency forward contracts.
  Raw material commodity swaps.
  Precious metals forward contracts.
 65




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    7.
    Income
    Taxes    2008


2007


2006(Dollars in thousands)U.S.

$
(11,026
)


(143,828
)

$
(32,070
)Foreign


(45,511
)


26,310



49,873Total

$
(56,537
)


(117,518
)

$
17,803       2008


2007


2006(Dollars in thousands)Current:U.S. federal

$
(2,262
)

$
(2,584
)

$
(2,768
)Foreign


21,713



14,688



18,349State and local


580



606



(189
)Total current


20,031



12,710



15,392Deferred:U.S. federal


(7,722
)


(30,320
)


(1,333
)Foreign


(15,167
)


(3,824
)


(12,054
)State and local


67



3,482



376Total deferred


(22,822
)


(30,662
)


(13,011
)Total income tax (benefit) expense

$
(2,791
)

$
(17,952
)

$
2,381  66




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007


2006(Dollars in thousands)Foreign currency translation adjustments

$
1,952


$
2,134


$
Postretirement benefit liability adjustments


(32,783
)


16,348



1,085Raw material commodity swap adjustments


394



(1,386
)


586Interest rate swap adjustments


(1,643
)


(2,887
)


Dividends on performance shares


(43
)


(50
)


(45
)Stock options exercised


(3
)


175



(208
)Other


(35
)






(214
)Total income tax expense (benefit) allocated to
    shareholders equity

$
(32,161
)

$
14,334


$
1,204     2008


2007


2006U.S. federal statutory income tax rate


(35.0
)%


(35.0
)%


35.0
%Goodwill impairment


27.3



10.4



Adjustment of valuation allowances


17.3



4.0



(42.0
)Foreign tax rate difference


12.5



0.3



(17.3
)U.S. tax cost of foreign dividends


(10.8
)


6.0



41.7Uncertain tax positions


(10.1
)






Net adjustment of prior year accrual


(4.0
)


(1.0
)


9.9ESOP dividend tax benefit


(0.8
)


(0.4
)


(3.3
)Effect of equity earnings


(0.5
)


(0.3
)


(4.7
)Extraterritorial income exclusion










(5.9
)Miscellaneous


(0.8
)


0.7



Effective tax rate


(4.9
)%


(15.3
)%


13.4
%  67




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007(Dollars in thousands)Deferred tax assets:Pension and other benefit programs

$
72,442


$
49,256Foreign net operating loss carryforwards


29,932



24,547Foreign tax credit carryforwards


28,503



35,756Capitalized research costs


20,481



17,809Accrued liabilities


14,537



15,380Other credit carryforwards


12,024



8,319State net operating loss carryforwards


5,972



5,691Allowance for doubtful accounts


3,619



1,981Inventories


1,626



835Deferred gains






5,426Other


9,917



5,824Total deferred tax assets


199,053



170,824Deferred tax liabilities:Property, equipment and intangibles  depreciation and
    amortization


25,535



43,665Unremitted earnings of foreign subsidiaries


1,942



12,541Other


2,858



2,897Total deferred tax liabilities


30,335



59,103Net deferred tax asset before valuation allowance


168,718



111,721Valuation allowance


(21,451
)


(8,906
)Net deferred tax assets

$
147,267


$
102,815           2008


2007(Dollars in thousands)Current assets

$
19,167


$
14,773Non-current assets


134,139



100,935Current liabilities






(4,036
)Non-current liabilities


(6,039
)


(8,857
)Net deferred tax assets

$
147,267


$
102,815  68




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007(Dollars in thousands)Balance at beginning of year

$
52,173


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


1,770



1,783Additions for tax positions of prior years


2,774



2,661Reductions for tax positions of prior years


(5,256
)


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


(11,420
)


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


(1,472
)


3,692Settlements with taxing authorities


(3,805
)


(125
)Balance at end of year

$
34,764


$
52,173     non-U.S. tax
  non-U.S. income
    8.
    Contingent
    Liabilities   69




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
        9.
    Retirement
    Benefits  Defined
    Benefit Pension Plans
  U.S. Plans


Non-U.S. Plans2008


2007


2006


2008


2007


2006(Dollars in thousands)Net periodic benefit cost:Service cost

$
201


$
1,232


$
6,568


$
5,405


$
6,434


$
6,131Interest cost


20,705



20,105



20,395



11,503



9,606



7,949Expected return on plan assets


(22,652
)


(20,543
)


(19,232
)


(8,353
)


(7,578
)


(5,899
)Amortization of prior service cost


100



157



136



118



125



121Net amortization and deferral


2,495



5,845



6,157



189



570



1,058Curtailment and settlement effects


259



532



2,565



(747
)


(374
)


(24
)Special termination benefits














121



2,156



Total net periodic benefit cost

$
1,108


$
7,328


$
16,589


$
8,236


$
10,939


$
9,336Weighted-average assumptions:Discount rate


6.49
%


6.05
%


5.90
%


5.56
%


4.69
%


4.34
%Rate of compensation increase


N/A



3.25
%


3.43
%


3.49
%


3.05
%


3.09
%Expected return on plan assets


8.50
%


8.50
%


8.50
%


5.25
%


4.95
%


4.63
%      70




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    U.S. Plans


Non-U.S. Plans2008


2007


2008


2007(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
330,925


$
340,727


$
211,241


$
197,582Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008


763











Service cost


201



1,232



5,405



6,434Interest cost


20,705



20,105



11,503



9,606Amendments










(4,716
)


100Curtailments






(1,214
)


(2,614
)


137Settlements


(630
)






(4,493
)


(746
)Special termination benefits










121



2,156Plan participants contributions






12



755



721Benefits paid


(20,456
)


(18,536
)


(9,345
)


(9,240
)Actuarial (gain) loss


(10,969
)


(11,401
)


(7,827
)


(12,562
)Exchange rate effect










(14,966
)


17,053Benefit obligation at end of year

$
320,539


$
330,925


$
185,064


$
211,241Accumulated benefit obligation at end of year

$
320,539


$
330,925


$
175,636


$
197,399Change in plan assets:Fair value of plan assets at beginning of year

$
294,810


$
258,737


$
156,806


$
143,438Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008


(4,627
)










Actual return on plan assets


(78,444
)


32,027



(11,301
)


1,550Employer contributions


10,055



22,570



11,387



8,749Plan participants contributions






12



755



721Benefits paid


(20,456
)


(18,536
)


(9,345
)


(9,240
)Effect of settlements


(630
)






(4,493
)


(746
)Exchange rate effect










(12,414
)


12,334Fair value of plan assets at end of year

$
200,708


$
294,810


$
131,395


$
156,806Reconciliation of accrued costs:Funded status

$
(119,831
)

$
(36,115
)

$
(53,669
)

$
(54,435
)Contributions between measurement date and end of year






135







Net amount recognized

$
(119,831
)

$
(35,980
)

$
(53,669
)

$
(54,435
) 71




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  U.S. Plans


Non-U.S. Plans2008


2007


2008


2007(Dollars in thousands)Amounts recognized in the balance sheet:Other non-current assets

$



$



$
1,798


$
1,861Accrued expenses and other current liabilities


(431
)


(508
)


(2,190
)


(2,224
)Postretirement and pension liabilities


(119,400
)


(35,472
)


(53,277
)


(54,072
)Net amount recognized

$
(119,831
)

$
(35,980
)

$
(53,669
)

$
(54,435
)Weighted-average assumptions as of the measurement date:Discount rate


6.74
%


6.49
%


5.85
%


5.56
%Rate of compensation increase


N/A



N/A



3.45
%


3.49
%Pension plans with benefit obligations in excess of plan
    assets:Benefit obligations

$
320,539


$
330,925


$
148,422


$
190,652Plan assets


200,708



294,810



92,955



134,356Pension plans with accumulated benefit obligations in excess
    of plan assets:Projected benefit obligations

$
320,539


$
330,925


$
146,159


$
187,876Accumulated benefit obligations


320,539



330,925



139,704



176,768Plan assets


200,708



294,810



90,796



131,827  72




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    U.S. Plans


Non-U.S. Plans2008


2007


2008


2007(Dollars in thousands)Balance at beginning of year

$
(54,868
)

$
(85,500
)

$
(16,740
)

$
(22,331
)Net (loss) gain arising during the year


(95,788
)


24,099



(9,213
)


5,949Prior service cost arising during the year










4,716



(100
)Amounts recognized as net periodic benefit costs


2,854



6,533



(440
)


769Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008


649











Exchange rate effects










2,729



(1,027
)Balance at end of year

$
(147,153
)

$
(54,868
)

$
(18,948
)

$
(16,740
)Amounts recognized in accumulated othercomprehensive income (loss):Net loss

$
(146,784
)

$
(54,374
)

$
(21,879
)

$
(14,807
)Prior service (cost) credit


(369
)


(494
)


2,931



(1,933
)$
(147,153
)

$
(54,868
)

$
(18,948
)

$
(16,740
)Estimated amounts to be amortized in 2009:Net loss

$
(15,380
)





$
(1,035
)Prior service (cost) credit


(98
)






333$
(15,478
)





$
(702
)       U.S. Plans


Non-U.S. PlansTarget








TargetAllocation


2008


2007


Allocation


2008


2007Debt Securities


30
%


40
%


31
%


63
%


65
%


61
%Equity Securities


70



60



69



30



25



29Other














7



10



10Total


100
%


100
%


100
%


100
%


100
%


100
%     non-U.S. pension
 73




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    U.S. Plans


Non-U.S. Plans(Dollars in thousands)2009

$
20,167


$
9,0252010


20,422



9,2982011


20,896



10,2782012


21,489



10,4412013


21,923



10,6482014-2018


116,956



62,574   Postretirement
    Health Care and Life Insurance Benefit Plans
  2008


2007


2006(Dollars in thousands)Net periodic benefit cost:Service cost

$
64


$
512


$
690Interest cost


2,923



3,387



3,287Amortization of prior service cost


(1,643
)


(1,349
)


(835
)Net amortization and deferral










Curtailment and settlement effects






(3,197
)


(2,453
)Total net periodic benefit cost

$
1,344


$
(647
)

$
689Weighted-average assumptions:Discount rate


6.10
%


5.90
%


5.90
%Current trend rate for health care costs


9.40
%


10.10
%


9.30
%Ultimate trend rate for health care costs


5.20
%


5.20
%


5.20
%Year that ultimate trend rate is reached


2017



2017



2013       1-Percentage


1-PercentagePoint Increase


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

$
218


$
(198
)Effect on postretirement benefit obligation


2,753



(2,519
)   74




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  2008


2007(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
52,923


$
60,475Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008


(2,714
)


Service cost


64



512Interest cost


2,923



3,387Effect of curtailment


(1,540
)


(2,794
)Benefits paid


(4,159
)


(3,548
)Actuarial (gain) loss


(333
)


(5,109
)Benefit obligation at end of year

$
47,164


$
52,923Change 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


4,978



3,548Benefits paid


(4,159
)


(3,548
)Fair value of plan assets at end of year

$



$
Reconciliation of accrued costs:Funded status

$
(47,164
)

$
(52,923
)Contributions between measurement date and end of year






819Curtailment gain between measurement date and end of year






2,383Net amount recognized

$
(47,164
)

$
(49,721
)Amounts recognized in the balance sheet:Accrued expenses and other current liabilities

$
(4,956
)

$
(4,554
)Postretirement and pension liabilities


(42,208
)


(45,167
)Net amount recognized

$
(47,164
)

$
(49,721
)Weighted-average assumptions as of December 31:Discount rate


6.45
%


6.10
%Current trend rate for health care costs


8.70
%


9.40
%Ultimate trend rate for health care costs


5.20
%


5.20
%Year that ultimate trend rate is reached


2018



2017  75




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007(Dollars in thousands)Balance at beginning of year

$
9,463


$
3,723Net loss (gain) arising during the year


333



5,109Prior service cost arising during the year


1,540



1,980Amounts recognized as net periodic benefit costs


(1,643
)


(1,349
)Adjustment to apply measurement provisions of
    FAS No. 158 as of January 1, 2008


(80
)


Balance at end of year

$
9,613


$
9,463Amounts recognized in accumulated other comprehensive income
    (loss):Net (loss) gain

$
4,609


$
3,945Prior service cost


5,004



5,518$
9,613


$
9,463Estimated amounts to be amortized in 2009:Net (loss) gain

$
Prior service cost


(1,748
)$
(1,748
)     Before


AfterMedicare Subsidy


Medicare Subsidy(Dollars in thousands)2009

$
5,461


$
4,9562010


5,381



4,8662011


5,258



4,7382012


5,037



4,5102013


4,835



4,3122014-2018


21,201



18,816   Other
    Retirement Plans
   76




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  10.
    Serial
    Convertible Preferred Stock        11.
    Common
    Stock    12.
    Stock-based
    Compensation       77




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Stock
    Options
  General
    Information
    Stock
    Option Valuation Model and Method Information
      Assumption

Estimation Method

RangeExpected life, in years

Historical stock option exercise experience

6.25 to 8.20Risk-free interest rate

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

2.67% to 5.94%Expected volatility

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

28.07% to 37.30%Expected dividend yield

Historical dividend rate at the date of grant

2.18% to 6.99%  78




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Stock
    Option Activity Information
    Per Share


Weighted-Weighted-


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Term


Value(In years)


(Dollars inthousands)Outstanding at December 31, 2007


4,239,408


$
22.36Granted


515,600



17.41Exercised


(2,750
)


21.06Forfeited or expired


(566,898
)


22.74Outstanding at December 31, 2008


4,185,360



21.70



5.0


$
Exercisable at December 31, 2008


3,151,356



22.44



3.9



Vested or expected to vest at December 31, 2008


4,058,670



21.71



5.0



     in-the-money in-the-money
    2008


2007


2006(Dollars in thousands)Proceeds from the exercise of stock options

$
58


$
9,843


$
4,169Intrinsic value of stock options exercised


7



947



577Income tax benefit related to stock options exercised


3



333



202     Per ShareWeighted-AverageGrant-dateShares


Fair ValueNonvested at December 31, 2007


1,000,007


$
6.01Granted


515,600



4.25Vested


(366,215
)


5.99Forfeited


(115,388
)


5.36Nonvested at December 31, 2008


1,034,004



5.21  79




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Stock-Based
    Compensation Expense Information
    2008


2007


2006(Dollars in thousands)Compensation expense recorded in selling, general and
    administrative expenses

$
2,274


$
2,363


$
3,035Deferred income tax benefits related to compensation expense


796



827



1,062Total fair value of stock options vested


2,195



2,698



3,230Unrecognized compensation cost related to stock options


3,656



4,057



5,035Expected weighted-average recognition period for unrecognized
    compensation, in years


2.3



2.4



2.4   Performance
    Shares
  General
    Information
      Performance
    Share Award Information
    Per SharePotential Number


Weighted-Average


Potential FuturePotential Number


of Shares at


Common


Stock-Basedof Shares at


December 31,


Stock Price at


CompensationPlan

Grant Date


2008


Grant Date


Expense(In thousands)2006  2008


271,200



225,600


$
18.03


$
2007  2009


131,600



118,400



21.99



1122008  2010


77,825



77,825



17.26



    80




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
      AchievementPlan

Percentage2006  2008


53.1
%2007  2009


22.5
%2008  2010


00.0
%   Stock-Based
    Compensation Expense Information
    2008


2007


2006(Dollars in thousands)Compensation (credit) expense recorded in selling, general and
    administrative expenses

$
(710
)

$
1,018


$
1,224Estimated future compensation cost


112



1,836



2,603     Deferred
    Stock Units
  General
    Information
    Deferred
    Stock Unit Activity Information
  Per ShareWeighted-AverageAward-dateShares


PriceOutstanding at December 31, 2007


32,900


$
22.07Awarded


34,200



17.26Exercised


(32,900
)


22.07Forfeited






Outstanding at December 31, 2008


34,200



17.26    81




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    Directors
    Deferred Compensation
  No. 97-14, Accounting for Deferred Compensation Arrangements Where
    Amounts Earned are Held in A Rabbi Trust and Invested.
  Restricted
    Share Awards
  General
    Information:
    Restricted
    Share Awards Activity Information:
  Per ShareWeighted-AverageAward-date FairShares


ValueNonvested at December 31, 2007





$
Awarded


99,600



17.51Vested






Forfeited


(7,200
)


17.22Nonvested at December 31, 2008


92,400



17.53    82




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  Stock-based
    Compensation Transactions in Shareholders
    Equity
    Common Sharesin Treasury


Paid-inShares


Amount


Capital(In thousands)2006:Stock options


(232
)

$
4,080


$
3,299Performance shares, net


(95
)


2,016



(1,952
)Preferred stock conversions


(185
)


3,723



206(512
)

$
9,819


$
1,5532007:Stock options


(497
)

$
8,399


$
3,360Performance shares, net


(25
)


(215
)


978Deferred stock units










632Directors deferred compensation






(3,127
)


3,127Preferred stock conversions


(183
)


3,364



(210
)(705
)

$
8,421


$
7,8872008:Stock options


(3
)

$
50


$
2,293Performance shares, net






25



(83
)Deferred stock units


(33
)


596



(48
)Directors deferred compensation






(664
)


664Preferred stock conversions


(185
)


3,519



(1,872
)Restricted shares


(100
)


1,805



(1,377
)(321
)

$
5,331


$
(423
)   13.
    Restructuring
    and Cost Reduction Programs    Inorganic Specialties.
   83




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
        Organic Specialties.
    Electronic Material Systems.
   84




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    EmployeeTermination


Other


AssetBenefits


Costs


Impairment


Total(Dollars in thousands)Balance, December 31, 2005

$
2,232


$
66


$



$
2,298Restructuring charges


7,351







15,795



23,146Cash payments


(2,853
)


(27
)






(2,880
)Non-cash items










(15,795
)


(15,795
)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


$



$
6,308       14.
    Leases      2008


2007(Dollars in thousands)Gross amounts capitalized:Buildings

$
3,100


$
3,100Equipment


13,857



13,91116,957



17,011Accumulated amortization:Buildings


(1,666
)


(1,589
)Equipment


(10,821
)


(8,954
)(12,487
)


(10,543
)Net assets under capitalized leases

$
4,470


$
6,468  85




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    Capital Leases


Operating Leases(Dollars in thousands)2009

$
1,392


$
13,1052010


1,360



8,8172011


958



6,1672012


958



4,5182013


909



4,166Thereafter


4,701



12,623Total minimum lease payments


10,278


$
49,396Less amount representing executory costs


116Net minimum lease payments


10,162Less amount representing imputed interest


3,715Present value of net minimum lease payments


6,447Less current portion


810Long-term obligations at December 31, 2008

$
5,637   15.
    Discontinued
    Operations      2008


2007


2006(Dollars in thousands)Gain (loss) on disposal of discontinued operations before income
    tax expense (benefit)

$
16,614


$
(369
)

$
(738
)Income tax expense (benefit)


7,580



(144
)


(266
)Gain (loss) on disposal of discontinued operations, net of
    income tax expense (benefit)

$
9,034


$
(225
)

$
(472
)  86




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007


2006(Dollars in thousands)Net sales

$
60,980


$
56,881


$
53,919Cost of sales


47,464



42,677



40,799Gross profit


13,516



14,204



13,120Selling, general and administrative expenses


4,303



4,187



2,769Other expense (income):Interest expense


1,526



1,853



1,713Foreign currency losses, net


19







Miscellaneous expense (income), net


76



(36
)


Income from discontinued operations before income taxes


7,592



8,200



8,638Income tax expense


2,578



2,888



2,968Income from discontinued operations, net of income taxes

$
5,014


$
5,312


$
5,670     (Dollars inthousands)Accounts receivable, net

$
3,330Inventories


6,780Deferred income taxes


991Other receivables


81Other current assets


21Current assets of discontinued operations

$
11,203Property, plant and equipment, net

$
24,360Goodwill


372Other assets of discontinued operations

$
24,732Accounts payable

$
4,268Accrued payrolls


310Accrued expenses and other current liabilities


878Current liabilities of discontinued operations

$
5,456Deferred income taxes

$
991Other liabilities of discontinued operations

$
991   and/or
 87




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    16.
    (Loss)
    earnings per Share from Continuing Operations    2008


2007


2006(In thousands,except per share amounts)Basic (loss) earnings per share computation:Net (loss) income available to common shareholders

$
(40,575
)

$
(95,514
)

$
19,368Less: Income from discontinued operations


(14,048
)


(5,087
)


(5,198
)$
(54,623
)

$
(100,601
)

$
14,170Weighted-average common shares outstanding


43,261



42,926



42,394Basic (loss) earnings per share from continuing operations

$
(1.26
)

$
(2.34
)

$
0.33Diluted (loss) earnings per share computation:Net (loss) income available to common shareholders

$
(40,575
)

$
(95,514
)

$
19,368Less: Income from discontinued operations


(14,048
)


(5,087
)


(5,198
)Plus: Convertible preferred stock










$
(54,623
)

$
(100,601
)

$
14,170Weighted-average common shares outstanding


43,261



42,926



42,394Assumed exercise of stock options










Assumed satisfaction of performance share conditions










28Assumed satisfaction of deferred stock unit conditions










Assumed conversion of convertible notes










Assumed conversion of convertible preferred stock










Weighted-average diluted shares outstanding


43,261



42,926



42,422Diluted (loss) earnings per share from continuing operations

$
(1.26
)

$
(2.34
)

$
0.33    88




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  17.
    Reporting
    for Segments          2008


2007


2006(Dollars in thousands)Performance Coatings

$
627,918


$
609,285


$
538,385Electronic Materials


558,313



469,885



444,463Color and Glass Performance Materials


456,644



445,709



387,540Polymer Additives


349,902



334,492



313,500Specialty Plastics


225,856



261,956



271,307Pharmaceuticals


26,519



26,577



32,411Total net sales

$
2,245,152


$
2,147,904


$
1,987,606     2008


2007


2006(Dollars in thousands)Performance Coatings

$
36,935


$
37,965


$
42,718Electronic Materials


52,868



32,785



35,136Color and Glass Performance Materials


39,112



48,222



43,512Polymer Additives


6,086



10,755



10,947Specialty Plastics


5,385



15,116



14,629Pharmaceuticals


3,524



1,947



(1,219
)Total segment income


143,910



146,790



145,723Unallocated corporate expenses


37,362



59,209



45,640Impairment charges


80,205



128,737



Restructuring charges


25,937



16,852



23,146Other expense, net


56,943



59,510



59,134(Loss) income before income taxes from continuing operations

$
(56,537
)

$
(117,518
)

$
17,803  89




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007


2006(Dollars in thousands)Performance Coatings

$
17,806


$
13,469


$
914Electronic Materials


602



(929
)


16,488Color and Glass Performance Materials


3,877



4,105



4,127Polymer Additives


1,617







Specialty Plastics


2,035



207



1,617Pharmaceuticals










Total restructuring charges

$
25,937


$
16,852


$
23,146     2008


2007


2006(Dollars in thousands)Performance Coatings

$
17,736


$
17,854


$
14,543Electronic Materials


17,294



18,444



18,565Color and Glass Performance Materials


8,101



11,228



9,581Polymer Additives


10,753



11,033



10,765Specialty Plastics


3,314



3,705



3,841Pharmaceuticals


1,693



2,684



2,569Total segment depreciation and amortization


58,891



64,948



59,864Unallocated depreciation and amortization


14,559



19,100



16,620Total depreciation and amortization

$
73,450


$
84,048


$
76,484     2008


2007(Dollars in thousands)Performance Coatings

$
379,054


$
444,226Electronic Materials


330,013



361,637Color and Glass Performance Materials


260,927



288,951Polymer Additives


139,572



154,154Specialty Plastics


62,952



94,826Pharmaceuticals


41,243



36,063Total segment assets


1,213,761



1,379,857Assets of discontinued operations






35,935Unallocated assets


330,739



222,468Total assets

$
1,544,500


$
1,638,260  90




---



##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
    2008


2007(Dollars in thousands)Performance Coatings

$
590


$
45,269Electronic Materials


151,901



152,081Color and Glass Performance Materials


68,949



68,078Polymer Additives






Specialty Plastics






17,045Pharmaceuticals


8,225



8,225Total goodwill

$
229,665


$
290,698     2008


2007


2006(Dollars in thousands)Performance Coatings

$
29,294


$
17,900


$
17,646Electronic Materials


18,892



13,866



7,256Color and Glass Performance Materials


7,715



10,591



6,378Polymer Additives


8,379



7,925



7,084Specialty Plastics


1,989



1,300



2,271Pharmaceuticals


3,645



4,173



3,486Total segment expenditures for long-lived assets


69,914



55,755



44,121Expenditures for long-lived assets of discontinued operations


2,317



4,852



4,604Unallocated corporate expenditures for long-lived assets


4,237



7,027



1,890Total expenditures for long-lived assets

$
76,468


$
67,634


$
50,615     2008


2007


2006(Dollars in thousands)United States

$
973,717


$
900,146


$
908,497Spain


362,370



339,516



198,470Other international


909,065



908,242



880,639Total sales

$
2,245,152


$
2,147,904


$
1,987,606     2008


2007


2006(Dollars in thousands)United States

$
402,192


$
425,824


$
558,577International


295,775



369,544



350,863Total long-lived assets

$
697,967


$
795,368


$
909,440  91




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  18.
    Related
    Party Transactions    2008


2007


2006(Dollars in thousands)Sales

$
10,157


$
9,727


$
7,659Purchases


5,495



5,573



5,229Dividends and interest received


159



702



1,590Commissions and royalties received


194



132



136Commissions and royalties paid


230



227



130     19.
    Summarized
    Financial Information of Unconsolidated Affiliates Accounted For
    Under the Equity Method          2008


2007


2006(Dollars in thousands)Net sales

$
73,048


$
67,894


$
72,976Gross profit


20,337



18,475



18,808Income from continuing operations


4,065



8,284



7,841Net income


2,755



5,667



5,479   92




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##### Table of Contents



FERRO
    CORPORATION AND CONSOLIDATED SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Years
    ended December 31, 2008, 2007 and
    2006  (Continued)
  2008


2007(Dollars in thousands)Current assets

$
42,466


$
50,677Non-current assets


24,914



25,371Current liabilities


23,552



28,046Non-current liabilities


4,450



4,348   20.
    Subsequent
    Events      21.
    Quarterly
    Data (Unaudited)  Per Common ShareNet


Basic


DilutedQuarter

Net Sales


Gross Profit


Income (Loss)


Earnings (Loss)


Earnings (Loss)(Dollars in thousands, except per share data)20071

$
515,057


$
102,349


$
6,079


$
0.14


$
0.142


538,478



102,936



4,540



0.10



0.103


537,244



97,564



5,585



0.12



0.124


557,125



99,610



(110,683
)


(2.58
)


(2.58
)Total

$
2,147,904


$
402,459


$
(94,479
)

$
(2.23
)

$
(2.23
)20081

$
590,838


$
109,265


$
9,140


$
0.21


$
0.212


631,976



118,974



9,365



0.21



0.213


590,150



110,343



4,831



0.11



0.114


432,188



65,085



(63,034
)


(1.46
)


(1.46
)Total

$
2,245,152


$
403,667


$
(39,698
)

$
(0.94
)

$
(0.94
)        93




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##### 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
   94




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
      Internal Control  Integrated Framework
        Internal
    Control  Integrated Framework
 95




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##### Table of Contents



Changes
    in Internal Control over Financial Reporting and Other
    Remediation
    Item 9B 
    Other
    Information   96




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##### 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      Number of Shares to





Number of SharesBe Issued on


Weighted-Average


Remaining AvailableExercise of


Exercise Price of


for Future IssuanceOutstanding Options,


Outstanding Options,


Under EquityEquity Compensation Plan

and Other Awards


and Other Awards


Compensation Plans(1)Approved by Ferro Shareholders(2)


4,108,360 shares


$
21.64



1,702,175 shares
(4)Not Approved by Ferro
    Shareholders(3)


104,553 shares


$
24.96



0 sharesTotal


4,212,913 shares


$
21.70



1,702,175 shares     (1)
    
    Excludes shares listed in the second column.(2)
    
    Includes options issued under the Companys Stock Option
    Plan and 2003 Long-Term Incentive Compensation Plan.(3)
    
    Includes options granted in excess of 100,000 shares to the
    Chief Executive Officer and phantom units issued under the
    Companys Executive Employee Deferred Compensation Plan and
    Supplemental Executive Defined Contribution Plan. 97




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##### Table of Contents



(4)
    
    Shares are only available under the 2006 Long-Term Incentive
    Plan and may be issued as stock options, stock appreciation
    rights, restricted shares, performance shares, and other common
    stock-based awards.    
    Stock Options.  On February 11, 2002 and
    February 9, 2001, respectively, the Board granted
    Mr. Ortino, then our Chief Executive Officer, 155,000 and
    122,000 options to purchase shares. Of this amount, options for
    100,000 shares each year were granted under the 1985
    Employee Stock Option Plan approved by shareholders and the
    remaining options were approved and granted by the Board from
    available treasury shares. The options granted in 2002 have an
    exercise price of $25.50 and the options granted in 2001 have an
    exercise price of $23.60. Both grants have a maximum term of ten
    years and vested evenly over four years from the grant date.
    Executive Employee Deferred Compensation
    Plan.  The Ferro Corporation Deferred Compensation
    Plan for Executive Employees allows participants to defer up to
    75% of annual base salary and up to 100% of incentive cash bonus
    awards and cash performance share payouts. Participants may
    elect to have all or a portion of their deferred compensation
    accounts deemed to be invested in shares of Ferro Common Stock,
    and credited with hypothetical appreciation, depreciation, and
    dividends. When distributions are made from this Plan in respect
    of such shares, the distributions are made in actual shares of
    Ferro Common Stock.
    Supplemental Executive Defined Contribution
    Plan.  The Ferro Corporation Supplemental Defined
    Contribution Plan for Executive Employees allows participants to
    be credited annually with matching and basic pension
    contributions that they would have received under the
    Companys 401(k) plan except for the applicable IRS
    limitations on compensation and contributions. Contributions
    vest at 20% for each year of service, are deemed invested in
    Ferro Common Stock and earn dividends. Distributions are made in
    Ferro Common Stock or in cash.  Item 13 
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14 
    Principal
    Accountant Fees and Services   98




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##### 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, 2008, 2007 and 2006;
    Consolidated Balance Sheets at December 31, 2008 and 2007;
    Consolidated Statements of Shareholders Equity and
    Comprehensive Income (Loss) for the years ended
    December 31, 2008, 2007 and 2006;
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2008, 2007 and 2006; and
    Notes to Consolidated Financial Statements  (b)
    Schedule II  Valuation and Qualifying Accounts
    and Reserves for the years ended December 31, 2008, 2007,
    and 2006, contained on page 101 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
    102 of this Annual Report on
    Form 10-K. 99




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##### 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/  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/  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  100




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##### Table of Contents



FERRO
    CORPORATION AND SUBSIDIARIES
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
    Years Ended December 31, 2008, 2007, and 2006
  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, 2008

$
6,396



4,472



3,544
(1)


(2,436
)


(308
)

$
11,668Year ended December 31, 2007

$
7,524



(345
)






(1,430
)


647


$
6,396Year ended December 31, 2006

$
7,507



836







(1,468
)


649


$
7,524Allowance for Possible Losses on Collection of Note
    Receivable from Ferro Finance Corporation:Year ended December 31, 2008

$
3,015



1,371



(3,544
)(1)


(842
)





$
Year ended December 31, 2007

$
2,702



948







(635
)





$
3,015Year ended December 31, 2006

$
3,158



608







(1,064
)





$
2,702Valuation Allowance on Net Deferred Tax AssetsYear ended December 31, 2008

$
8,906



20,598







(8,053
)





$
21,451Year ended December 31, 2007

$
4,023



4,644



545



(469
)


163


$
8,906Year ended December 31, 2006

$
9,651



(5,800
)










172


$
4,023     (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. 101




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##### 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

Fourth Amendment to Amended and Restated Credit Agreement, dated
    March 11, 2009, among Ferro Corporation; Credit Suisse,
    Cayman Islands Branch, as term loan administrative agent;
    National City Bank, as revolving loan administrative agent.
    (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed March 11, 2009, which Exhibit is incorporated here by
    reference.)10
.2

Third Amendment to Amended and Restated Credit Agreement, dated
    June 12, 2008, among Ferro Corporation; Credit Suisse,
    Cayman Islands Branch, as term loan administrative agent;
    National City Bank, as revolving loan administrative agent.
    (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed June 18, 2008, which Exhibit is incorporated here by
    reference.)10
.3

Second Amendment to Amended and Restated Credit Agreement, dated
    January 4, 2008, 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 10.1
    to Ferro Corporations Current Report on
    Form 8-K,
    filed January 10, 2008, which Exhibit is incorporated here
    by reference.)10
.4

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.) 102




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##### Table of Contents



10
.5

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.)10
.6

Pledge and Security Agreement, dated as of June 6, 2006,
    made by Ferro Corporation and each U.S. Subsidiary, as Grantors,
    in favor of National City Bank, as Collateral Agent. (Reference
    is made to Exhibit 10.2 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed June 12, 2006, which Exhibit is incorporated here by
    reference.)10
.7

Purchase Agreement, dated as of April 1, 2008, among Ferro
    Color & Glass Corporation, Ferro Pfanstiehl
    Laboratories, Inc. and Ferro Corporation. (Reference is made to
    Exhibit 10.1 to Ferro Corporations Current Report on
    Form 8-K,
    filed April 7, 2008, which Exhibit is incorporated here by
    reference.)10
.8

Amendment No. 1 to Amended and Restated Purchase and
    Contribution Agreement dated October 31, 2008 by and among
    Ferro Finance Corporation, Ferro Corporation and Citicorp North
    America, Inc. (Reference is made to Exhibit 10.3 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed December 16, 2008, which Exhibit is incorporated here
    by reference.)10
.9

Amended and Restated Purchase and Contribution Agreement, dated
    as of April 1, 2008, 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 April 7, 2008, which Exhibit is incorporated here by
    reference.)10
.10

Amendment No. 4 to Second Amended and Restated Receivables
    Purchase Agreement, dated December 15, 2008, among Ferro
    Corporation, Ferro Color & Glass Corporation, Ferro
    Pfanstiehl Laboratories, Inc., Ferro Finance Corporation, CAFCO,
    LLC, Citicorp North America, Inc., and Citibank, N.A. (Reference
    is made to Exhibit 10.1 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed December 16, 2008, which Exhibit is incorporated here
    by reference.)10
.11

Amendment No. 3 to Second Amended and restated Receivables
    Purchase Agreement, dated October 31, 2008, by and among
    Ferro Corporation, Ferro Finance Corporation, CAFCO, LLC, and
    Citicorp North America, Inc. (Reference is made to
    Exhibit 10.2 to Ferro Corporations Current Report on
    Form 8-K,
    filed December 16, 2008, which Exhibit is incorporated here
    by reference.)10
.12

Amendment No. 2 to Second Amended and Restated Receivables
    Purchase Agreement, dated as of June 10, 2008, among Ferro
    Finance Corporation, as Seller; CAFCO, LLC, as the Investor;
    Citibank, N.A., as a Bank; Citicorp North America, Inc., as the
    Agent; Ferro Color & Glass Corporation and Ferro
    Pfanstiehl Laboratories, Inc., each as an Originator; and Ferro
    Corporation, as Originator and Collection Agent. (Reference is
    made to Exhibit 10.2 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed June 16, 2008, which Exhibit is incorporated here by
    reference.)10
.13

Amendment No. 1 to Second Amended and Restated Receivables
    Purchase Agreement, dated as of June 3, 2008, among Ferro
    Finance Corporation, as Seller; CAFCO, LLC, as the Investor;
    Citibank, N.A., as a Bank; Citicorp North America, Inc., as the
    Agent; Ferro Color & Glass Corporation and Ferro
    Pfanstiehl Laboratories, Inc., each as an Originator; and Ferro
    Corporation, as Originator and Collection Agent. (Reference is
    made to Exhibit 10.1 to Ferro Corporations Current
    Report on
    Form 8-K,
    filed June 16, 2008, which Exhibit is incorporated here by
    reference.)10
.14

Second Amended and Restated Receivables Purchase Agreement,
    dated as of April 1, 2008, among Ferro Finance Corporation,
    as Seller, and CAFCO, LLC, as the Investor, and Citibank, N.A.,
    as a Bank, Citicorp North America, Inc., as the Agent, Ferro
    Color & Glass Corporation and Ferro Pfanstiehl
    Laboratories, Inc., each as an Originator, and Ferro
    Corporation, as Originator and Collection Agent and Originator.
    (Reference is made to Exhibit 10.3 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed April 7, 2008, which Exhibit is incorporated here by
    reference.)10
.15

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
.16

Ferro Corporation 2003 Long-Term Incentive Compensation Plan.*10
.17

Form of Terms of Incentive Stock Option Award Grants under the
    Ferro Corporation 2003 Long-Term Incentive Compensation Plan.* 103




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##### Table of Contents



10
.18

Form of Terms of Performance Share Awards under the Ferro
    Corporation 2003 Long-Term Incentive Compensation Plan.*10
.19

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
.20

Form of Terms of Incentive Stock Option Award Grants under the
    Ferro Corporation 2006 Long-Term Incentive Compensation Plan.*10
.21

Form of Terms of Nonstatutory Stock Option Grants under the
    Ferro Corporation 2006 Long-Term Incentive Compensation Plan.*10
.22

Form of Terms of Performance Share Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.*10
.23

Form of Terms of Restricted Share Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.*10
.24

Form of Terms of Deferred Stock Unit Awards under the Ferro
    Corporation 2006 Long-Term Incentive Compensation Plan.*10
.25

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
.26

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
.27

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
.28

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.)*10
.29

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
.30

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
.31

Form of Indemnification Agreement. (James F. Kirsch is the only
    officer that is party to an indemnification agreement with Ferro
    Corporation.)*10
.32

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
.33

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, Barry D. Russell 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
.34

Employment Transition Agreement between Ferro Corporation and
    Thomas M. Gannon. (Reference is made to Exhibit 10.1 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed October 26, 2006, which Exhibit is incorporated here
    by reference.)*10
.35

First Amendment to Asset Purchase Agreement, dated
    October 31, 2008, between Ferro Corporation and Novolyte
    Technologies LP. (Reference is made to Exhibit 10.1 to
    Ferro Corporations Current Report on
    Form 8-K,
    filed November 4, 2008, which Exhibit is incorporated here
    by reference.)10
.36

Asset Purchase Agreement, dated as of September 29, 2008,
    between Ferro Corporation and Novolyte Technologies LP.
    (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed October 3, 2008, which Exhibit is incorporated here
    by reference.) 104




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##### Table of Contents



10
.37

Suzhou Equity Transfer Agreement, dated October 31, 2008,
    among Novolyte Technologies Limited, Novolyte Technologies LP
    and Ferro Corporation. (Reference is made to Exhibit 10.3
    to Ferro Corporations Current Report on
    Form 8-K,
    filed November 4, 2008, which Exhibit is incorporated here
    by reference.)10
.38

Purchase Agreement, dated March 21, 2008, between Ferro
    (Holland) B.V. and Brix Houwelingen Projecten XVIII B.V.
    (Reference is made to Exhibit 10.1 to Ferro
    Corporations Current Report on
    Form 8-K,
    filed March 26, 2008, 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. 105