Equity Method Investments

In November 2013, the Company sold the Company's Harsco Infrastructure Segment into a strategic venture with Clayton, Dubilier & Rice ("CD&R") as part of a transaction that combined the Harsco Infrastructure Segment with Brand Energy & Infrastructure Services, Inc., which CD&R simultaneously acquired (the "Infrastructure Transaction"). As a result of the Infrastructure Transaction, the Company retained an equity interest in Brand Energy & Infrastructure Service, Inc. and Subsidiaries ("Brand" or the "Infrastructure strategic venture") which was accounted for as an equity method investment in accordance with U.S. GAAP.

As part of the Infrastructure Transaction, the Company was required to make a quarterly payment to the Company's partner in the Infrastructure strategic venture, either (at the Company's election) (i) in cash, with total payments to equal approximately $22 million per year on a pre-tax basis (approximately $15 million per year after-tax), or (ii) in kind, through the transfer of approximately 3% of the Company's ownership interest in the Infrastructure strategic venture on an annual basis (the "unit adjustment liability"). The Company recognized the change in fair value to the unit adjustment liability each period until the Company was no longer required to make these payments or chose not to make these payments. The change in fair value to the unit adjustment liability was a non-cash expense.

In March 2016, the Company elected not to make the quarterly cash payments to the Company's partner in the Infrastructure strategic venture for the remainder of 2016. Instead, the Company transferred approximately 3% of its ownership interest in satisfaction of the Company's 2016 obligation related to the unit adjustment liability. As a result of not making the quarterly cash payments for 2016, the Company's ownership interest in the Infrastructure strategic venture decreased by approximately 3% and the value of the unit adjustment liability was updated to reflect this change. Accordingly, the book value of the Company's equity method investment in Brand decreased by $29.4 million and the unit adjustment liability decreased by

$19.1 million. The resulting net loss of $10.3 million was recognized in Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment on the Consolidated Statement of Operations. This net loss was a non-cash expense.

In September 2016, the Company entered into an Omnibus Agreement with CDR Bullseye Holdings, L.P., Bullseye G.P., LLC, Bullseye Partnership, L.P., Bullseye Holdings, L.P. and Brand Energy & Infrastructure Holdings, Inc. (the “Brand Entities”), pursuant to which the Brand Entities repurchased the Company's remaining approximate 26% interest in Brand.

In exchange for the Company's interest, (i) the Company received $145 million in cash, net, and (ii) the requirement for the Company to fund certain obligations to Brand through 2018 were satisfied, the present value of which equaled $20.6 million. In addition, the Company received $1.4 million in accrued but unpaid fees, rent and expenses from the Brand Entities. As a result of the sale, the Company’s obligation to make quarterly payments related to the unit adjustment liability under the terms of a limited partnership agreement that governed the operation of the strategic venture terminated. The Company recognized a loss on the sale of its equity interest in Brand in the amount of $43.5 million which was reflected in Change in fair value to unit adjustment liability and loss on dilution and sale of equity method investment on the Consolidated Statement of Operations.

The Company's equity interest in Brand and book value of the equity investment in Brand at December 31, 2015 were approximately 29% and $250.1 million, respectively. The Company's initial underlying equity in the net assets of Brand, upon consummation of the Infrastructure Transaction, was approximately $225 million. The difference between the initial fair value of the Company's equity method investment in Brand and Company's underlying equity in the net assets of Brand was determined to be equity method goodwill and was not amortized.

The Company's proportionate share of Brand's net income or loss is recorded one quarter in arrears. Brand's summarized balance sheet information at June 30, 2016 and September 30, 2015 and summarized statement of operations information for the period from October 1, 2015 through June 30, 2016, the year ended September 30, 2015 and the period from

November 27, 2013 through September 30, 2014 are summarized as follows:



(In thousands)	June 30 2016		September 30 2015
Summarized Balance Sheet Information of Brand:
Current assets	$	896,933	$	806,510
Property and equipment , net	884,979		894,537
Other noncurrent assets	1,454,951		1,519,722
Total assets	$	3,236,863	$	3,220,769

Short-term borrowings, including current portion of long-term debt	$	14,402	$	68,687
Other current liabilities	341,979		397,759
Long-term debt	1,857,162		1,736,081
Other noncurrent liabilities	351,714		383,638
Total liabilities	2,565,257		2,586,165
Equity	671,606		634,604
Total liabilities and equity	$	3,236,863	$	3,220,769



(In thousands)	Period From October 1, 2015 Through June 30 2016 (a)		Year Ended September 30 2015		Period From November 27 2013 Through September 30 2014 (b)
Summarized Statement of Operations Information of Brand:
Net revenues	$	2,333,561	$	2,976,471	$	2,559,556
Gross profit	499,005		649,596		559,376
Net income (loss) attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries	20,756		605		(4,848		)
Harsco's equity in income (loss) of Brand	5,686		175		(1,595		)


(a)	The Company's equity method investment in Brand was sold in September 2016; accordingly equity income (loss) was recorded for the period from October 1, 2015 through June 30, 2016.


(b)	The Company's equity method investment in Brand began on November 26, 2013; accordingly, there is only approximately ten months of related equity income (loss). The results of the Harsco Infrastructure Segment from January 1, 2013 through the date of closing are reported in the Company's results of operations for 2013.

For the years ended 2016, 2015 and 2014, the Company recognized $4.7 million, $8.5 million and $9.7 million, respectively, of change in fair value to the unit adjustment liability, exclusive of the fair value adjustment resulting from the decision not to make the quarterly payments in 2016 and the loss related to the sale of the Company's interest, in Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment on the Consolidated Statement of Operations. The Consolidated Balance Sheets as of December 31, 2015 included balances related to the unit adjustment liability of $79.9 million in the current and non-current captions, Unit adjustment liability. As a result of the sale of the Company's equity interest in Brand, there were no remaining balances related to the unit adjustment liability at December 31, 2016. A reconciliation of beginning and ending balances related to the unit adjustment liability is included in Note 15, Financial Instruments.

Balances related to transactions between the Company and Brand are as follows:



(In thousands)	December 31 2016		December 31 2015
Balances due from Brand	$	—	$	1,557
Balances due to Brand	—		21,407

The balances between the Company and Brand, at December 31, 2015, related primarily to transition services and the funding of certain transferred defined benefit pension plan obligations through 2018. As part of the Omnibus Agreement, all remaining balances between Brand and the Company were settled through payment.