The troubles of 2005 just won't end for Ferro Corp.
On Dec. 19, the Cleveland-based specialty chemicals and plastics firm announced that it had received a three-month extension to file its 2004 annual report from the New York Stock Exchange - but that Ferro faced being delisted from the exchange if it failed to meet that deadline.
That announcement came only four days after former Ferro employee Brian Haylor was sentenced to four months in jail and an additional eight months of house arrest for falsifying $1.2 million in earnings and debt filings with the Securities and Exchange Commission. Haylor - who was controller of Ferro's polymer additives division from 2000-04 - had pleaded guilty to securities fraud earlier this year. Haylor made the false reports between March 2003 and June 2004. Haylor - a 38-year-old resident of Avon, Ohio - was sentenced in U.S. District Court in Cleveland.
Ferro, one of North America's largest polypropylene compounders, first disclosed the improper reporting in July 2004. In January 2005, the firm restated earnings for 2003 and the first quarter of 2004. The restatements lowered profit by almost $10 million and sales by more than $3 million for the affected period.
The reporting troubles also are affecting Ferro's reporting of results for 2005. The firm has released unaudited results for the first two quarters of 2005 and has released only an estimate of third-quarter results. In a Dec. 19 news release, Ferro Chief Financial Officer Tom Gannon said the firm won't release third-quarter 2005 results until the complete 2004 annual report is filed.
According to unofficial releases, Ferro posted sales of about $480 million in the second quarter of 2005 and expected to post sales of about $450 million in the third quarter.
As if those challenges weren't enough, Ferro also is coping with the unexpected death of chairman and CEO Hector Ortino, who passed away in late November at age 63. Ortino, who had been with Ferro since 1971 and had held his recent titles since 1999, has been replaced by James Kirsch.
Kirsch, a chemicals industry veteran, had served as president and chief operating officer since joining Ferro in late 2004.
Ferro's per-share stock price also has been battered on Wall Street. It was around $24 when the disclosures were made in July 2004, but stood at just under $19 in late trading Dec. 21.
In addition to PP compounds, Ferro makes color compounds and concentrates and thermoplastic elastomers. Plastics account for about 15 percent of Ferro's annual sales, which were listed at $1.8 billion in its original 2004 annual report.