Ferro Corp. has a market cap of $1.11 billion; its shares were traded at around $12.94 with a P/E ratio of 25.37 and P/S ratio of 0.67. FOE is in the portfolios of Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Interest expense declined by $7.4 million during the third quarter compared with the 2009 third quarter, largely as a result of lower average borrowing levels. Interest expense was also lower as a result of refinancing actions taken during the 2010 third quarter. During the quarter, we entered into a new credit agreement that provided for a five-year, $350 million revolving credit facility, and we issued $250 million in new Senior Notes due 2018. The proceeds from this financing were used to repay our previous revolving credit borrowing and term loans and to repay a portion of our 6.5% Convertible Notes that we purchased through a tender offer. The combined effects of this refinancing activity, including the write-off of unamortized fees related to the previous credit facility, reduced interest expense beginning in August 2010. Interest expense for the 2010 third quarter included a $0.8 million noncash write-off of unamortized fees related to a repayment of term loans.
During the third quarter of 2010, income tax expense was $0.7 million, or (45.4)% of the pre-tax loss. In the prior-year period we recorded an income tax benefit of $3.7 million, or 399% of pre-tax loss. The change in the effective tax rate primarily was the result of a $0.6 million tax charge to adjust tax expense to reflect actual taxes on 2009 tax returns filed in jurisdictions worldwide and not recognizing a $1.3 million benefit on current losses incurred in jurisdictions with full valuation allowances.
Performance Coatings Segment Results. Sales increased in Performance Coatings primarily as a result of increased sales volume. Higher sales volume contributed approximately $27 million to sales growth in the quarter. This increase was partially offset by a $5 million decline in sales due to changes in product pricing and mix. Changes in foreign currency exchange rates reduced sales growth by an additional $7 million. The sales increase was led by higher sales in Europe-Middle East-Africa and the United States. Operating income declined as a result of a $1 million reduction in gross profit and a $2 million increase in SG&A expense. The decline in gross profit was the result of increased manufacturing costs due to higher repair and maintenance costs and production disruptions due to severe weather conditions in Latin America and changes in foreign currency exchange rates. These cost increases more than offset higher gross profit that resulted from higher sales.
Color and Glass Performance Materials Segment Results. Sales increased in Color and Glass Performance Materials primarily due to increased sales volume, partially offset by reduced precious metal sales resulting from our April 2010 business combination. Higher sales volume accounted for approximately $10 million of sales growth. Changes in product pricing and mix reduced sales growth by $4 million, and sales growth was reduced by an additional $3 million due to changes in foreign currency exchange rates. Sales growth was primarily due to higher sales in the United States, partially offset by modest declines in Asia-Pacific and Latin America. Operating income increased as a result of a $2 million increase in gross profit due to higher sales volume. The increase in gross profit was partially offset by a $1 million increase in SG&A expenses.
Polymer Additives Segment Results. Sales increased in Polymer Additives as a result of improvements in product pricing and mix, with additional contributions from higher sales volume. Changes in pricing and mix contributed approximately $8 million to the increased sales, and higher sales volume contributed an additional $4 million to sales growth. Changes in foreign currency exchange rates reduced sales by approximately $2 million. Sales growth was generated primarily from the United States and Europe-Middle East-Africa, the principal markets for our polymer additives products. Operating income increased primarily as a result of a $3 million increase in gross profit driven by higher sales.
Specialty Plastics Segment Results. Sales increased in Specialty Plastics due to changes in product price and mix as well as increased sales volume. Changes in product pricing and mix increased sales by approximately $3 million, and increased sales volume contributed an additional $2 million to the overall sales growth. Changes in foreign currency exchange rates reduced sales by approximately $1 million. Sales growth was primarily from the United States. Operating income increased as a result of a $0.9 million increase in gross profit and a $0.4 million reduction in SG&A expenses.
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