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Letter to Shareholders In the past year, Ferro has taken several bold steps to capitalize on the outstanding opportunities that exist in many of our markets. Through portfolio management, geographic expansion and acquisitions, as well as ongoing programs in innovation and marketing ,the moves we are making today are positioning Ferro for strong growth tomorrow. Therefore, we have chosen to highlight the word "opportunity" throughout this year's Annual Report. Within these pages is the story of how our strategies, combined with superior operational capabilities and engineering expertise, together are forming a foundation that will allow Ferro to be recognized as a company with a solid growth profile. A Year of Challenges and Successes. The year 2000 marked the first year in which we established a target for sales growth of 6 to 8 percent, and maintained our earnings per share growth target of 12 percent long-term, both compounded annually. It is satisfying that despite the difficult environment for specialty chemical companies in general and the challenges we faced, we achieved record sales and earnings per share once again for the year. Sales from ongoing operations increased 8.0 percent compared with 1999. Total net sales reached $1.45 billion, an increase of 6.8 percent, compared with 1999. Diluted earnings per share rose 3.8 percent to a record $1.92. Our revenue growth met our target, and our five-year earnings per share growth of 13 percent through 2000 exceeds our target for 12 percent growth long-term. During that time we delivered 19 consecutive quarters of year-over-year earnings per share growth until the fourth quarter of 2000. To be sure, short-term challenges and market forces have affected sales, margins and earnings throughout our industry in 2000 and had some impact on Ferro's performance. Most notably, the high costs of petroleum-based raw materials, increased energy costs, the decline in value of the euro and slowing end markets in the United States are significant but only temporary. Despite these issues, our businesses recorded strong sales growth for the year and the Coatings segment delivered solid earnings growth led by the Electronic Materials business. Performance Chemicals faced a more difficult earnings challenge as the plastics business faced a headwind of dramatically higher raw material costs. We believe we have seen the end of higher raw material costs for plastics, which should lead to better performance for this business in 2001. Overall, in 2000, Ferro overcame these challenges and delivered continued earnings per share growth. |