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EX-31.1 - EX-31.1 - FERRO CORPfoe-20170930xex31_1.htm

rti8Mag

Mag

 

 

 

 

 





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549









FORM 10-Q













 

(Mark One)

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

For the quarterly period ended September 30, 2017



or





 

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

For the transition period from _________ to __________



Commission File Number 1-584







FERRO CORPORATION

(Exact name of registrant as specified in its charter)













 

 

 

 



Ohio

(State or other jurisdiction of

incorporation or organization)

 

34-0217820

(I.R.S. Employer Identification No.)

 



 

 

 

 



6060 Parkland Boulevard

Suite 250

Mayfield Heights, OH

(Address of principal executive offices)

 

44124

(Zip Code)

 



 

 

 

 



216-875-5600

(Registrant’s telephone number, including area code)

 











Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES NO

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





 

 

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company



 

 

Emerging growth company

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  



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

At October 31, 2017, there were 83,857,289 shares of Ferro Common Stock, par value $1.00, outstanding.





 

 

 

 





 

2


 

PART I — FINANCIAL INFORMATION



Item 1.  Financial Statements (Unaudited)



Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Operations







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,



 

2017

 

2016

 

2017

 

2016



 

(Dollars in thousands, except per share amounts)

Net sales

 

$

350,012 

 

$

288,527 

 

$

1,019,199 

 

$

863,955 

Cost of sales

 

 

246,396 

 

 

199,546 

 

 

708,447 

 

 

592,372 

Gross profit

 

 

103,616 

 

 

88,981 

 

 

310,752 

 

 

271,583 

Selling, general and administrative expenses

 

 

65,485 

 

 

55,588 

 

 

186,957 

 

 

166,105 

Restructuring and impairment charges

 

 

1,471 

 

 

26 

 

 

7,713 

 

 

1,694 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7,248 

 

 

5,304 

 

 

19,921 

 

 

15,579 

Interest earned

 

 

(201)

 

 

(214)

 

 

(556)

 

 

(414)

Foreign currency losses, net

 

 

1,021 

 

 

867 

 

 

5,575 

 

 

2,867 

Loss on extinguishment of debt

 

 

 —

 

 

 —

 

 

3,905 

 

 

 —

Miscellaneous (income) expense, net

 

 

(1,726)

 

 

705 

 

 

(2,264)

 

 

(2,079)

Income before income taxes

 

 

30,318 

 

 

26,705 

 

 

89,501 

 

 

87,831 

Income tax expense

 

 

7,353 

 

 

6,157 

 

 

23,186 

 

 

22,659 

Income from continuing operations

 

 

22,965 

 

 

20,548 

 

 

66,315 

 

 

65,172 

Loss from discontinued operations, net of income taxes

 

 

 —

 

 

(29,222)

 

 

 —

 

 

(64,464)

Net income (loss)

 

 

22,965 

 

 

(8,674)

 

 

66,315 

 

 

708 

Less: Net income attributable to noncontrolling interests

 

 

148 

 

 

210 

 

 

575 

 

 

589 

Net income (loss) attributable to Ferro Corporation common shareholders

 

$

22,817 

 

$

(8,884)

 

$

65,740 

 

$

119 

Earnings (loss) per share attributable to Ferro Corporation common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.27 

 

$

0.24 

 

$

0.79 

 

$

0.78 

Discontinued operations

 

 

 —

 

 

(0.35)

 

 

 —

 

 

(0.77)



 

$

0.27 

 

$

(0.11)

 

$

0.79 

 

$

0.01 

Diluted earnings (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.27 

 

$

0.24 

 

$

0.77 

 

$

0.77 

Discontinued operations

 

 

 —

 

 

(0.35)

 

 

 —

 

 

(0.77)



 

$

0.27 

 

$

(0.11)

 

$

0.77 

 

$

 —











See accompanying notes to condensed consolidated financial statements.



 

3


 

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)











 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,



 

2017

 

2016

 

2017

 

2016



 

(Dollars in thousands)

Net income (loss)

 

$

22,965 

 

$

(8,674)

 

$

66,315 

 

$

708 

Other comprehensive income (loss), net of income tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss) income

 

 

(2,996)

 

 

2,680 

 

 

18,081 

 

 

(2,267)

Cash flow hedging instruments, unrealized gain

 

 

104 

 

 

 —

 

 

104 

 

 

 —

Postretirement benefit liabilities (loss) gain

 

 

(33)

 

 

(2)

 

 

(21)

 

 

293 

Other comprehensive (loss) income, net of income tax

 

 

(2,925)

 

 

2,678 

 

 

18,164 

 

 

(1,974)

Total comprehensive income (loss)

 

 

20,040 

 

 

(5,996)

 

 

84,479 

 

 

(1,266)

Less: Comprehensive income attributable to noncontrolling interests

 

 

294 

 

 

191 

 

 

837 

 

 

450 

Comprehensive income (loss) attributable to Ferro Corporation

 

$

19,746 

 

$

(6,187)

 

$

83,642 

 

$

(1,716)



See accompanying notes to condensed consolidated financial statements.



 

4


 

Ferro Corporation and Subsidiaries

Condensed Consolidated Balance Sheets







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

ASSETS

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,211 

 

$

45,582 

Accounts receivable, net

 

 

337,887 

 

 

259,687 

Inventories

 

 

286,848 

 

 

229,847 

Other receivables

 

 

50,057 

 

 

37,814 

Other current assets

 

 

19,533 

 

 

9,087 

Total current assets

 

 

746,536 

 

 

582,017 

Other assets

 

 

 

 

 

 

Property, plant and equipment, net

 

 

288,774 

 

 

262,026 

Goodwill

 

 

197,819 

 

 

148,296 

Intangible assets, net

 

 

190,985 

 

 

137,850 

Deferred income taxes

 

 

106,081 

 

 

106,454 

Other non-current assets

 

 

45,472 

 

 

47,126 

Total assets

 

$

1,575,667 

 

$

1,283,769 

LIABILITIES AND EQUITY

Current liabilities

 

 

 

 

 

 

Loans payable and current portion of long-term debt

 

$

18,477 

 

$

17,310 

Accounts payable

 

 

155,542 

 

 

127,655 

Accrued payrolls

 

 

40,950 

 

 

35,859 

Accrued expenses and other current liabilities

 

 

85,927 

 

 

65,203 

Total current liabilities

 

 

300,896 

 

 

246,027 

Other liabilities

 

 

 

 

 

 

Long-term debt, less current portion

 

 

673,464 

 

 

557,175 

Postretirement and pension liabilities

 

 

170,199 

 

 

162,941 

Other non-current liabilities

 

 

83,995 

 

 

62,594 

Total liabilities

 

 

1,228,554 

 

 

1,028,737 

Equity

 

 

 

 

 

 

Ferro Corporation shareholders’ equity:

 

 

 

 

 

 

Common stock, par value $1 per share; 300.0 million shares authorized; 93.4 million shares issued; 83.8 million and 83.4 million shares outstanding at September 30, 2017, and December 31, 2016, respectively

 

 

93,436 

 

 

93,436 

Paid-in capital

 

 

303,428 

 

 

306,566 

Retained earnings

 

 

180,430 

 

 

114,690 

Accumulated other comprehensive loss

 

 

(88,741)

 

 

(106,643)

Common shares in treasury, at cost

 

 

(151,900)

 

 

(160,936)

Total Ferro Corporation shareholders’ equity

 

 

336,653 

 

 

247,113 

Noncontrolling interests

 

 

10,460 

 

 

7,919 

Total equity

 

 

347,113 

 

 

255,032 

Total liabilities and equity

 

$

1,575,667 

 

$

1,283,769 



See accompanying notes to condensed consolidated financial statements.



 

5


 

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Equity







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Ferro Corporation Shareholders

 

 

 

 

 

 



 

Common Shares

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 



 

in Treasury

 

 

 

 

 

 

 

 

 

Other

 

Non-

 

 

 



 

 

 

 

 

 

Common

 

Paid-in

 

Retained

 

Comprehensive

 

controlling

 

Total



 

Shares

 

Amount

 

Stock

 

Capital

 

Earnings

 

(Loss)

 

Interests

 

Equity



 

(In thousands)

Balances at December 31, 2015

 

9,431 

 

$

(166,020)

 

$

93,436 

 

$

314,854 

 

$

135,507 

 

$

(61,318)

 

$

7,822 

 

$

324,281 

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

119 

 

 

 —

 

 

589 

 

 

708 

Other comprehensive (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,835)

 

 

(139)

 

 

(1,974)

Purchase of treasury stock

 

1,175 

 

 

(11,429)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(11,429)

Stock-based compensation transactions

 

(556)

 

 

15,095 

 

 

 —

 

 

(10,015)

 

 

 —

 

 

 —

 

 

 —

 

 

5,080 

Distributions to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(502)

 

 

(502)

Balances at September 30, 2016

 

10,050 

 

 

(162,354)

 

 

93,436 

 

 

304,839 

 

 

135,626 

 

 

(63,153)

 

 

7,770 

 

 

316,164 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2016

 

9,996 

 

 

(160,936)

 

 

93,436 

 

 

306,566 

 

 

114,690 

 

 

(106,643)

 

 

7,919 

 

 

255,032 

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

65,740 

 

 

 —

 

 

575 

 

 

66,315 

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

17,902 

 

 

262 

 

 

18,164 

Stock-based compensation transactions

 

(359)

 

 

9,036 

 

 

 —

 

 

(3,138)

 

 

 —

 

 

 —

 

 

 —

 

 

5,898 

Change in ownership interest

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,178 

 

 

2,178 

Distributions to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(474)

 

 

(474)

Balances at September 30, 2017

 

9,637 

 

$

(151,900)

 

$

93,436 

 

$

303,428 

 

$

180,430 

 

$

(88,741)

 

$

10,460 

 

$

347,113 



See accompanying notes to condensed consolidated financial statements.



 

6


 

            Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows







 

 

 

 

 

 



 

 

 

 

 

 



 

Nine Months Ended



 

September 30,



 

2017

 

2016



 

(Dollars in thousands)

Cash flows from operating activities

 

 

 

 

 

 

Net cash provided by operating activities

 

$

34,691 

 

$

6,742 

Cash flows from investing activities

 

 

 

 

 

 

Capital expenditures for property, plant and equipment and other long lived assets

 

 

(30,134)

 

 

(18,217)

Proceeds from sale of assets

 

 

 —

 

 

3,598 

Proceeds from sale of equity method investment

 

 

2,268 

 

 

 —

Business acquisitions, net of cash acquired

 

 

(71,930)

 

 

(11,417)

Other investing

 

 

551 

 

 

 —

Net cash used in investing activities

 

 

(99,245)

 

 

(26,036)

Cash flows from financing activities

 

 

 

 

 

 

Net (repayments) borrowings under loans payable

 

 

(10,803)

 

 

2,606 

Proceeds from revolving credit facility, maturing 2019

 

 

15,628 

 

 

212,906 

Principal payments on revolving credit facility, maturing 2019

 

 

(327,183)

 

 

(149,696)

Proceeds from term loan facility, maturing 2024

 

 

623,827 

 

 

 —

Principal payments on term loan facility, maturing 2024

 

 

(3,232)

 

 

 —

Principal payments on term loan facility, maturing 2021

 

 

(243,250)

 

 

(52,250)

Proceeds from revolving credit facility, maturing 2022

 

 

69,787 

 

 

 —

Principal payments on revolving credit facility, maturing 2022

 

 

(42,400)

 

 

 —

Principal payments on other long-term debt

 

 

(2,978)

 

 

 —

Proceeds from other long-term debt

 

 

2,700 

 

 

 —

Payment of debt issuance costs

 

 

(12,927)

 

 

(661)

Acquisition related contingent consideration payment

 

 

(1,315)

 

 

 —

Purchase of treasury stock

 

 

 —

 

 

(11,429)

Other financing activities

 

 

182 

 

 

416 

Net cash provided by financing activities

 

 

68,036 

 

 

1,892 

Effect of exchange rate changes on cash and cash equivalents

 

 

3,147 

 

 

(422)

Increase (decrease) in cash and cash equivalents

 

 

6,629 

 

 

(17,824)

Cash and cash equivalents at beginning of period

 

 

45,582 

 

 

58,380 

Cash and cash equivalents at end of period

 

$

52,211 

 

$

40,556 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

20,594 

 

$

15,032 

Income taxes

 

$

16,619 

 

$

12,929 



 

See accompanying notes to condensed consolidated financial statements.



 

7


 

Ferro Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements



1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Ferro Corporation (“Ferro,” “we,” “us” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. These statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016.



As discussed in Note 3, in the third quarter of 2016, we completed the disposition of the Europe-based Polymer Additives business and have classified the related operating results, net of income tax, as discontinued operations in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2016.



During the first quarter of 2017, the Company renamed the Pigments, Powders and Oxides segment Color Solutions.



Operating results for the three and nine months ended September 30, 2017, are not necessarily indicative of the results expected in subsequent quarters or for the full year ending December 31, 2017.  





2.    Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation: (Topic 718): Improvements to Employee Share-Based Payment Accounting.  ASU 2016-09 is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This new guidance requires all income tax effects of awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled. Cash flow related to excess tax benefits will no longer be classified as a financing activity on the statement of cash flows but will be presented with all other income tax cash flows as an operating activity. The new guidance also provides an accounting policy election to account for award forfeitures as they occur.  Finally, the updated standard also allows the Company to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and clarifies that all cash tax payments made on an employee’s behalf for withheld shares should be presented as financing activities on the statement of cash flows.



The Company adopted ASU 2016-09, in the first quarter of 2017.  As a result of the adoption, tax benefits of $0.3 million were recorded in income tax expense. The Company has elected to account for award forfeitures as they occur.  In addition, the Company elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively.  The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on the statements of cash flows since the Company has historically presented such payments as financing activities. 



New Accounting Standards

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  ASU 2017-12 provides guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This pronouncement is effective for fiscal years beginning after December 15, 2018, including interim

8


 

periods within those fiscal years. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation: (Topic 718): Scope of Modification Accounting.  ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits: (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs.  ASU 2017-07 requires that an employer report the service cost component in the same line item as other compensation costs arising from services rendered during the period. The other components of net benefit costs are to be presented in the income statement separately from the service costs component and outside a subtotal of income from operations.  Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement.  This pronouncement is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: (Topic 350): Simplifying the Test for Goodwill Impairment.  ASU 2017-04 is intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the current goodwill impairment test. This pronouncement is effective for the annual or any interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations: (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 is intended to clarify the definition of a business with the objective of adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or dispositions) of assets or businesses. This pronouncement is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes: (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.  ASU 2016-16 is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This pronouncement is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company is in the process of assessing the impact that the adoption of this ASU will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow: (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  ASU 2016-15 is intended to address eight specific cash flow issues with the objective of reducing the existing diversity in practice.  This pronouncement is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is in the process of assessing the impact the adoption of this ASU will have on our consolidated financial statements.



In February 2016, the FASB issued ASU 2016-02, Leases: (Topic 842).  ASU 2016-02 requires companies to recognize a lease liability and asset on the balance sheet for operating leases with a term greater than one year.  This pronouncement is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in the process of assessing the impact the adoption of this ASU will have on our consolidated financial statements.



In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: (Topic 606). This ASU replaces nearly all existing U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of which will require significant judgment. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.  We will adopt the new standard effective January 1, 2018, using the modified

9


 

retrospective method.  We are nearing completion of our assessment and review of specific contracts and we do not currently believe ASU 2014-09 will have a material effect on our consolidated financial statements.



No other new accounting pronouncements issued had or are expected to have a material impact of the Company’s consolidated financial statements.



3.    Discontinued Operations

During 2014, we commenced a process to market for sale our Europe-based Polymer Additives business.  We determined that the criteria to classify these assets as held-for-sale under ASC Topic 360, Property, Plant and Equipment, were met at that time. On August 22, 2016, we completed the disposition of the Europe-based Polymer Additives business to Plahoma Two AG, an affiliate of the LIVIA Group.  The Company made a capital contribution of €12 million (approximately $13.6 million) to its subsidiaries that owned the assets prior to the close of the sale.  In August 2016, prior to the sale, an impairment charge of $26.8 million was recorded under ASC Topic 360 Property, Plant and Equipment. The charge was calculated as the difference of the executed transaction price and the carrying value of the assets. The impairment charge included $1.1 million associated with the reclassification of foreign currency translation loss from Accumulated other comprehensive loss (Note 17). We have classified the Europe-based Polymer Additives operating results, net of income tax, as discontinued operations in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2016.  

The table below summarizes results for the Europe-based Polymer Additives assets, for the three and nine months ended September 30, 2016, which are reflected in our condensed consolidated statements of operations as discontinued operations.  Interest expense has been allocated to the discontinued operations based on the ratio of net assets of each business to consolidated net assets excluding debt.













 

 

 

 

 



 

 

 

 

 



Three Months Ended

 

Nine Months Ended



September 30, 2016

 

September 30, 2016



(Dollars in thousands)

Net sales

$

3,831 

 

$

18,481 

Cost of sales

 

5,654 

 

 

28,473 

Gross loss

 

(1,823)

 

 

(9,992)

Selling, general and administrative expenses

 

588 

 

 

3,094 

Restructuring and impairment charges

 

26,843 

 

 

50,902 

Interest expense

 

49 

 

 

325 

Miscellaneous income

 

(4)

 

 

(392)

Loss from discontinued operations before income taxes

 

(29,299)

 

 

(63,921)

Income tax (benefit) expense

 

(77)

 

 

543 

Loss from discontinued operations, net of income taxes

$

(29,222)

 

$

(64,464)



























4.    Acquisitions

Dip Tech Ltd.

On August 2, 2017, the Company acquired 100% of the equity interests of Dip Tech Ltd. (“Dip-Tech”), a leading provider of digital printing solutions for glass coatings, for $77.3 million, excluding customary adjustments. Dip-Tech is headquartered in Kfar Saba, Israel. The fair value of the consideration transferred was cash paid at closing of $60.4 million and contingent consideration of $16.9 million. The Company incurred acquisition costs for the three and nine months ended September 30, 2017, of $2.1 million, which is included in Selling, general and administrative expenses in our condensed consolidated statements of operations. The acquired business contributed net sales of $6.4 million for the three and nine months ended September 30, 2017, and net loss attributable to Ferro Corporation of $1.1 million for the three and nine months ended September 30, 2017.  The net loss attributable to Ferro Corporation was driven by the amortization of inventory step up costs of $0.8 million and acquired intangible asset amortization

10


 

costs of $0.6 million for the three and nine months ended September 30, 2017.  Dip-Tech incurred research and development costs of $1.1 million for the three and nine months ended September 30, 2017.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. As of September 30, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $46.3 million of amortizable intangible assets, $38.2 million of goodwill, $11.5 million of a deferred tax liability,  $3.2 million of personal and real property and $1.1 million of net working capital on the condensed consolidated balance sheet.    

Gardenia Quimica S.A.

On August 3, 2017, the Company acquired the majority interest in Gardenia Quimica S.A. (“Gardenia”) for $3.0 million.  The Company previously owned 46% of Gardenia and recorded it as an equity method investment. In connection with this transaction, the Company now owns 83.5% and fully consolidates Gardenia. Due to a change of control that occurred, the Company recorded a gain on purchase of $2.6 million related to the difference between the Company’s carrying value and fair value of the previously held equity method investment.  

Smalti per Ceramiche, s.r.l

On April 24, 2017, the Company acquired 100% of the equity interests of S.P.C. Group s.r.l., and 100% of the equity interests of Smalti per Ceramiche, s.r.l. (“SPC”), for 17.9 million (approximately $19.4 million), including the assumption of debt of 5.7 million (approximately $6.2 million). SPC is a high-end tile coatings manufacturer based in Italy focused on fast-growing specialty products. SPC’s products, strong technology, design capabilities, and customer-centric business model are complementary to our Performance Coatings segment, and position us for continued growth in the high-end tile markets. The Company incurred acquisition costs for the three and nine months ended September 30, 2017, of $0.1 million and $1.3 million, respectively, which is included in Selling, general and administrative expenses in our condensed consolidated statements of operations.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. As of September 30, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $6.7 million of personal and real property, $5.9 million of amortizable intangible assets, $5.7 million of net working capital, $3.3 million of goodwill and $2.2 million of a deferred tax liability on the condensed consolidated balance sheet.    

Cappelle Pigments NV

On December 9, 2016, the Company acquired 100% of the equity interests of Belgium-based Cappelle Pigments NV (“Cappelle”), a leader in specialty, high-performance inorganic and organic pigments used in coatings, inks and plastics, for €49.8 million (approximately $52.7 million), including the assumption of debt of 9.8 million. The acquired business contributed net sales of $17.8 million and $55.8 million for the three and nine months ended September 30, 2017, respectively, and net income attributable to Ferro Corporation of $1.2 million and $2.3 million for the three and nine months ended September 30, 2017, respectively.

The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. As of September 30, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $28.6 million of net working capital, $24.1 million of personal and real property, $3.5 million of goodwill and $3.5 million of a deferred tax liability on the condensed consolidated balance sheet.

11


 

Electro-Science Laboratories, Inc.

On October 31, 2016, the Company acquired 100% of the equity interests of Electro-Science Laboratories, Inc. (“ESL”), a leader in electronic packaging materials, for $78.5 million.  ESL is headquartered in King of Prussia, Pennsylvania.  The acquisition of ESL enhances the Company’s position in the electronic packaging materials space with complementary products, and provides a platform for growth in our Performance Colors and Glass segment.  ESL produces thick-film pastes and ceramics tape systems that enable important functionality in a wide variety of industrial and consumer applications.  The acquired business contributed net sales of $10.5 million and $31.8 million for the three and nine months ended September 30, 2017, respectively, and net income attributable to Ferro Corporation of $1.2 million and $3.9 million for the three and nine months ended September 30, 2017, respectively. The Company incurred acquisition costs for the nine months ended September 30, 2017, of $0.3 million, which is included in Selling, general and administrative expenses in our condensed consolidated statements of operations.



The information included herein has been prepared based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. As of September 30, 2017, the purchase price allocation is subject to further adjustment until all information is fully evaluated by the Company. The Company preliminarily recorded $39.7 million of intangible assets, $19.0 million of goodwill, $18.9 million of net working capital, $2.9 million of personal and real property and $2.0 million of a deferred tax liability on the condensed consolidated balance sheet.



Delta Performance Products, LLC



On August 1, 2016, the Company acquired certain assets of Delta Performance Products, LLC, for a cash purchase price of $4.4 million. The information included herein has been prepared based on the allocation of the purchase price using the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. The Company recorded $3.2 million of amortizable intangible assets, $0.6 million of net working capital, $0.4 million of goodwill and $0.2 million of a deferred tax asset on the condensed consolidated balance sheet.



Pinturas Benicarló, S.L.

On June 1, 2016, the Company acquired 100% of the equity interests of privately held Pinturas Benicarló, S.L. (“Pinturas”) for €16.5 million in cash (approximately $18.4 million). The information included herein has been prepared based on the allocation of the purchase price using the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. The Company recorded $8.8 million of amortizable intangible assets, $7.7 million of net working capital, $3.9 million of goodwill, $2.7 million of a deferred tax liability, and $0.7 million of personal and real property on the condensed consolidated balance sheet. 



Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S.



On January 5, 2016, the Company completed the purchase of 100% of the equity interests of privately held Istanbul-based Ferer Dis Ticaret Ve Kimyasallar Anonim Sirketi A.S. (“Ferer”) for approximately $9.4 million. The information included herein has been prepared based on the allocation of the purchase price using the fair value and useful lives of the assets acquired and liabilities assumed, which were determined with the assistance of third parties who performed independent valuations using discounted cash flow and comparative market approaches, and estimates made by management. The Company recorded $4.5 million of goodwill, $3.3 million of amortizable intangible assets, $1.7 million of net working capital, $0.7 million of a deferred tax liability and $0.6 million of personal and real property on the condensed consolidated balance sheet. 





12


 



5.    Inventories







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

Raw materials

 

$

92,387 

 

$

72,943 

Work in process

 

 

48,131 

 

 

38,859 

Finished goods

 

 

146,330 

 

 

118,045 

Total inventories

 

$

286,848 

 

$

229,847 



In the production of some of our products, we use precious metals, which we obtain from financial institutions under consignment agreements with terms of one year or less. The financial institutions retain ownership of the precious metals and charge us fees based on the amounts we consign. These fees were $0.3 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively, and were $0.8 million and $0.6 million for the nine months ended September 30, 2017 and 2016, respectively. We had on-hand precious metals owned by participants in our precious metals consignment program of $36.3 million at September 30, 2017, and $28.7  million at December 31, 2016, measured at fair value based on market prices for identical assets and net of credits.



6.    Property, Plant and Equipment

Property, plant and equipment is reported net of accumulated depreciation of $493.6 million at September 30, 2017, and $439.4 million at December 31, 2016. Unpaid capital expenditure liabilities, which are non-cash investing activities, were $3.2 million at September 30, 2017, and $2.4 million at September 30, 2016

We recorded a $3.9 million gain on sale of a closed site in Australia which was recorded in Miscellaneous (income) expense, net in our condensed consolidated statements of operations for the nine months ended September 30, 2016.



As discussed in Note 3, our Europe-based Polymer Additives assets had been classified as held-for-sale under ASC Topic 360, Property, Plant and Equipment from 2014 until the ultimate sale of the business in August 2016. As such, at each historical reporting date, these assets were tested for impairment comparing the fair value of the assets, less costs to sell, to the carrying value.  The fair value was determined using both the market approach and income approach, utilizing Level 3 measurements within the fair value hierarchy, which indicated the fair value, less costs to sell, was less than the carrying value during the first quarter of 2016, resulting in an impairment charge of $24.1 million, representing the remaining carrying value of long-lived assets at that reporting dateDuring the third quarter of 2016, prior to the sale, an impairment charge of $26.8 million, representing net working capital, was recorded under ASC Topic 360 Property, Plant and Equipment. The impairment charges of $26.8 million and $50.9 million are included in Loss from discontinued operations, net of income taxes in our condensed consolidated statements of operations for the three and nine months ended September 30, 2016, respectively.    









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Fair Value Measurements Using

 

Total

Description

 

Level 1

 

Level 2

 

Level 3

 

Total

 

(Losses)



 

(Dollars in thousands)

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

(50,902)













13


 

7.   Goodwill and Other Intangible Assets 

Details and activity in the Company’s goodwill by segment follow:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

Performance

 

 



 

Performance

 

Color

 

Colors and

 

 



 

Coatings

 

Solutions

 

Glass

 

Total



 

(Dollars in thousands)

Goodwill, net at December 31, 2016

 

$

28,090 

 

$

40,421 

 

$

79,785 

 

$

148,296 

Acquisitions

 

 

4,145 

2,4

 

 —

 

 

37,371 

1,3

 

41,516 

Foreign currency adjustments

 

 

3,062 

 

 

1,582 

 

 

3,363 

 

 

8,007 

Goodwill, net at September 30, 2017

 

$

35,297 

 

$

42,003 

 

$

120,519 

 

$

197,819 



(1)

During the first quarter of 2017, the Company recorded a purchase price adjustment within the measurement period for goodwill related to the ESL acquisition.

(2)

During the second quarter of 2017, the Company recorded goodwill related to the SPC acquisition.  Refer to Note 4 for additional details. 

(3)

During the third quarter of 2017, the Company recorded goodwill related to the Dip-Tech acquisition. Refer to Note 4 for additional details.

(4)

During the third quarter of 2017, the Company recorded goodwill related to the Gardenia acquisition. Refer to Note 4 for additional details.







 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

Goodwill, gross

 

$

256,286 

 

$

206,763 

Accumulated impairment losses

 

 

(58,467)

 

 

(58,467)

Goodwill, net

 

$

197,819 

 

$

148,296 



Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value. As of September 30, 2017, the Company is not aware of any events or circumstances that occurred which would require a goodwill impairment test.

14


 

Amortizable intangible assets consisted of the following:





 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

Gross amortizable intangible assets:

 

 

 

 

 

 

Patents

 

$

5,334 

 

$

5,147 

Land rights

 

 

4,876 

 

 

4,746 

Technology/know-how and other

 

 

129,003 

 

 

84,837 

Customer relationships

 

 

92,678 

 

 

80,153 

     Total gross amortizable intangible assets

 

 

231,891 

 

 

174,883 

Accumulated amortization:

 

 

 

 

 

 

Patents

 

 

(5,228)

 

 

(4,981)

Land rights

 

 

(2,825)

 

 

(2,698)

Technology/know-how and other

 

 

(40,723)

 

 

(34,775)

Customer relationships

 

 

(9,204)

 

 

(5,311)

     Total accumulated amortization

 

 

(57,980)

 

 

(47,765)

            Amortizable intangible assets, net

 

$

173,911 

 

$

127,118 



Indefinite-lived intangible assets consisted of the following:





 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

Indefinite-lived intangibles assets:

 

 

 

 

 

 

Trade names and trademarks

 

$

17,074 

 

$

10,732 











































8.    Debt

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





 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)

Loans payable

 

$

10,409 

 

$

11,452 

Current portion of long-term debt

 

 

8,068 

 

 

5,858 

Loans payable and current portion of long-term debt

 

$

18,477 

 

$

17,310 



Long-term debt consisted of the following:





 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2017

 

2016



 

(Dollars in thousands)



 

 

 

 

 

 

Term loan facility, net of unamortized issuance costs, maturing 2021(1)

 

$

 —

 

$

239,530 

Term loan facility, net of unamortized issuance costs, maturing 2024(2)

 

 

641,842 

 

 

 —

Revolving credit facility, maturing 2019

 

 

 —

 

 

311,555 

Revolving credit facility, maturing 2022

 

 

27,387 

 

 

 —

Capital lease obligations

 

 

5,292 

 

 

3,720 

Other notes

 

 

7,011 

 

 

8,228 

Total long-term debt

 

 

681,532 

 

 

563,033 

Current portion of long-term debt

 

 

(8,068)

 

 

(5,858)

Long-term debt, less current portion

 

$

673,464 

 

$

557,175 



15


 

(1) The carrying value of the term loan facility, maturing 2021, was net of unamortized debt issuance costs of $3.7 million.

(2) The carrying value of the term loan facility, maturing 2024, is net of unamortized debt issuance costs of $7.7 million.



2014 Credit Facility

In 2014, the Company entered into a credit facility that was amended on January 25, 2016, and August 29, 2016, resulting in a  $400 million secured revolving line of credit with a term of five years and a $300 million secured term loan facility with a term of seven years from the original issuance date (the “Previous Credit Facility”) with a group of lenders that was replaced on February 14, 2017, by the Credit Facility (as defined below).  For discussion of the Company’s Previous Credit Facility, refer to Note 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

In conjunction with the refinancing of the Previous Credit Facility, we recorded a charge of $3.9 million in connection with the write-off of unamortized issuance costs, which is recorded within Loss on extinguishment of debt in our condensed consolidated statement of operations for the nine months ended September 30, 2017.

2017 Credit Facility

On February 14, 2017, the Company entered into a new credit facility (the “Credit Facility”) with a group of lenders to refinance its then outstanding credit facility debt and to provide liquidity for ongoing working capital requirements and general corporate purposes.

The Credit Facility consists of a $400 million secured revolving line of credit with a term of five years, a $357.5 million secured term loan facility with a term of seven years and a €250 million secured euro term loan facility with a term of seven years. The term loans are payable in equal quarterly installments in an amount equal to 0.25% of the original principal amount of the term loans, with the remaining balance due on the maturity date thereof.  In addition, the Company is required, on an annual basis, to make a prepayment of term loans until they are fully paid and then to the revolving loans in an amount equal to a portion of the Company’s excess cash flow, as calculated pursuant to the Credit Facility.

Subject to the satisfaction of certain conditions, the Company can request additional commitments under the revolving line of credit or term loans in the aggregate principal amount of up to $250 million to the extent that existing or new lenders agree to provide such additional commitments and/or term loans and, certain additional debt subject to satisfaction of certain covenant levels.

Certain of the Company’s U.S. subsidiaries have guaranteed the Company’s obligations under the Credit Facility and such obligations are secured by (a) substantially all of the personal property of the Company and the U.S. subsidiary guarantors and (b) a pledge of 100% of the stock of certain of the Company’s U.S. subsidiaries and 65% of the stock of certain of the Company’s direct foreign subsidiaries.

Interest Rate – Term Loans:  The interest rates applicable to the U.S. term loans will be, at the Company’s option, equal to either a base rate or a LIBOR rate plus, in both cases, an applicable margin.  The interest rates applicable to the Euro term loans will be a Euro Interbank Offered Rate (“EURIBOR”) rate plus an applicable margin.

·

The base rate for U.S. term loans will be the highest of (i) the federal funds rate plus 0.50%, (ii) syndication agent’s prime rate or (iii) the daily LIBOR rate plus 1.00%.  The applicable margin for base rate loans is 1.50%.

·

The LIBOR rate for U.S. term loans shall not be less than 0.75% and the applicable margin for LIBOR rate U.S. term loans is 2.50%.

·

The EURIBOR rate for Euro term loans shall not be less than 0% and the applicable margin for EURIBOR rate loans is 2.75%.

·

For LIBOR rate term loans and EURIBOR rate term loans, the Company may choose to set the duration on individual borrowings for periods of one, two, three or six months, with the interest rate based on the applicable LIBOR rate or EURIBOR rate, as applicable, for the corresponding duration.

At September 30, 2017, the Company had borrowed $355.7 million under the secured term loan facility at an interest rate of 3.73% and €248.8 million under the secured euro term loan facility at an interest rate of 2.75%. At September 30, 2017, there were no additional borrowings available under the term loan facilities. We entered into interest rate swap agreements in the second quarter of 2017.  These

16


 

swaps converted $150 million and €90 million of our term loans from variable interest rates to fixed interest rates. At September 30, 2017, the effective interest rate for the term loan facilities after adjusting for the interest rate swap was 4.27% for the secured term loan facility and 3.00% for the euro term loan facility.

Interest Rate – Revolving Credit Line:  The interest rates applicable to loans under the revolving credit line will be, at the Company’s option, equal to either a base rate or a LIBOR rate plus, in both cases, an applicable variable margin.  The variable margin will be based on the ratio of (a) the Company’s total consolidated net debt outstanding at such time to (b) the Company’s consolidated EBITDA computed for the period of four consecutive fiscal quarters most recently ended.

·

The base rate for revolving loans will be the highest of (i) the federal funds rate plus 0.50%, (ii) syndication agent’s prime rate or (iii) the daily LIBOR rate plus 1.00%.  The applicable margin for base rate loans will vary between 0.75% and 1.75%.

·

The LIBOR rate for revolving loans shall not be less than 0% and the applicable margin for LIBOR rate revolving loans will vary between 1.75% and 2.75%.

·

For LIBOR rate revolving loans, the Company may choose to set the duration on individual borrowings for periods of one, two, three or six months, with the interest rate based on the applicable LIBOR rate for the corresponding duration.

At September 30, 2017, there were $27.4 million borrowings under the revolving credit line at an interest rate of 3.48%. After reductions for outstanding letters of credit secured by these facilities, we had $367.9 million of additional borrowings available under the revolving credit facilities at September 30, 2017.

The Credit Facility contains customary restrictive covenants including, but not limited to, limitations on use of loan proceeds, limitations on the Company’s ability to pay dividends and repurchase stock, limitations on acquisitions and dispositions, and limitations on certain types of investments. The Credit Facility also contains standard provisions relating to conditions of borrowing and customary events of default, including the non-payment of obligations by the Company and the bankruptcy of the Company.

Specific to the revolving credit facility, the Company is subject to a financial covenant regarding the Company’s maximum leverage ratio.  If an event of default occurs, all amounts outstanding under the Credit Facility may be accelerated and become immediately due and payable.  At September 30, 2017, we were in compliance with the covenants of the Credit Facility.



Other Financing Arrangements

We maintain other lines of credit to provide global flexibility for our short-term liquidity requirements. These facilities are uncommitted lines for our international operations and totaled $61.8 million and $7.3 million at September 30, 2017, and December 31, 2016, respectively. The unused portions of these lines provided additional liquidity of $43.5 million at September 30, 2017, and $6.7 million at December 31, 2016.





17


 

9.    Financial Instruments

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







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

September 30, 2017



 

Carrying

 

Fair Value



 

Amount

 

Total

 

Level 1

 

Level 2

 

Level 3



 

(Dollars in thousands)

Cash and cash equivalents

 

$

52,211 

 

$

52,211 

 

$

52,211 

 

$

 —

 

$

 —

Loans payable

 

 

(10,409)

 

 

(10,409)

 

 

 —

 

 

(10,409)

 

 

 —

Term loan facility, maturing 2024(1)

 

 

(641,842)

 

 

(644,916)

 

 

 —

 

 

(644,916)

 

 

 —

Revolving credit facility, maturing 2022

 

 

(27,387)

 

 

(27,835)

 

 

 —

 

 

(27,835)

 

 

 —

Other long-term notes payable

 

 

(7,011)

 

 

(3,781)

 

 

 —

 

 

(3,781)

 

 

 —

Interest rate swaps - asset

 

 

298 

 

 

298 

 

 

 —

 

 

298 

 

 

 —

Interest rate swaps - liability

 

 

(132)

 

 

(132)

 

 

 —

 

 

(132)

 

 

 —

Foreign currency forward contracts, net

 

 

52 

 

 

52 

 

 

 —

 

 

52 

 

 

 —