Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Summary of assets acquired and liabilities assumed

The fair value recorded for the assets acquired and liabilities assumed for Altek is as follows:

	Final Valuation
(In millions)	June 30 2018			Measurement Period Adjustments (f)		March 31  2019
Cash and cash equivalents	$	1.7		$	—	$	1.7
Net working capital	(1.5		)	0.2		(1.3		)
Property, plant and equipment	3.3			—		3.3
Intangible assets	52.5			0.2		52.7
Goodwill	20.9			1.6		22.5
Net deferred tax liabilities	(8.5		)	—		(8.5		)
Other liabilities	(0.3		)	—		(0.3		)
Total identifiable net assets of Altek	$	68.1		$	2.0	$	70.1

(f) The measurement period adjustments did not have a material impact on the Company's previously reported operating results.

The fair value recorded for the assets acquired and liabilities assumed for Clean Earth is as follows:

	Preliminary Valuation
(In millions)	June 28, 2019			Measurement Period Adjustments (a)			September 30,  2019
Cash and cash equivalents (b)	$	42.8		$	(39.2	)	$	3.6
Trade accounts receivable, net	63.7			(0.5		)	63.2
Other receivables	0.8			1.3			2.1
Other current assets	8.7			(1.4		)	7.3
Property, plant and equipment	75.6			2.2			77.8
Right-of-use assets	14.4			6.9			21.3
Goodwill	313.8			14.4			328.2
Intangible assets	261.1			(18.9		)	242.2
Other assets	4.0			(3.0		)	1.0
Accounts payable	(23.0		)	—			(23.0		)
Acquisition consideration payable (b)	(39.2		)	39.2			—
Other current liabilities	(18.0		)	(1.5		)	(19.5		)
Net deferred taxes liabilities	(51.2		)	4.5			(46.7		)
Operating lease liabilities	(11.1		)	(4.0		)	(15.1		)
Other liabilities (c)	(6.5		)	(0.3		)	(6.8		)
Total identifiable net assets of Clean Earth	$	635.9		$	(0.3	)	$	635.6

(a) The measurement period adjustments did not have a material impact on the Company's previously reported operating results.

(b) Acquisition consideration payable represents a portion of the cash consideration not paid out until July 2019.

(c)

Includes $2.8 million of fair value related to a contingent consideration liability resulting from a prior Clean Earth acquisition.

Preliminary valuation of identifiable intangible assets and amortization periods

The following table details the preliminary valuation of identifiable intangible assets and amortization periods for Clean Earth:

		Preliminary Valuation
(Dollars in millions)	Weighted-Average Amortization Period	Preliminary  Valuation June 28, 2019		Measurement Period Adjustments (d)			September 30,  2019
Permits	18 years	$	176.1	$	(6.0	)	$	170.1
Customer relationships	8 years	33.4		(12.9		)	20.5
Air rights	Usage based	25.6		—			25.6
Trade names	11.5 years	26.0		—			26.0
Total identifiable intangible assets of Clean Earth		$	261.1	$	(18.9	)	$	242.2

(d) The measurement period adjustments did not have a material impact on the Company's previously reported operating results.

Pro forma information

The pro forma information below gives effect to the Clean Earth acquisition as if it had been completed on January 1, 2018 (the “pro forma period”). The pro forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on the above date, nor is it necessarily indicative of future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition and does not reflect the additional revenue opportunities following the acquisition. The pro forma information below includes adjustments to reflect additional depreciation and amortization expense based on the estimated fair value and useful lives of intangible assets and fixed assets acquired; includes additional interest expense of approximately $18.2 million for the nine months ended September 30, 2019 and $9.1 million and $27.0 million for the three and nine months ended September 30, 2018, respectively, on the acquisition related borrowings used to finance the Clean Earth acquisition; and excludes certain directly attributable transaction costs and historic Clean Earth interest expense. These pro forma adjustments are subject to change as additional analysis is performed. The values assigned to the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as the Company obtains additional information during the measurement period.

	Three Months Ended		Nine Months Ended
	September 30		September 30
(In millions)	2018		2019		2018
Pro forma revenues	$	422.7	$	1,236.2	$	1,215.5
Pro forma net income (including discontinued operations) (e)	32.0		477.5		77.0

(e) Pro forma net income for the three and nine months ended September 30, 2019 includes a $417.5 million after-tax gain on the sale of AXC.

Summary of changes in fair value of contingent consideration

The following table reflects the changes in the fair value of contingent consideration:

(In thousands)	Contingent Consideration
Balance at December 31, 2018	$	8,420
Fair value adjustment (g)	(4,417		)
Foreign currency translation	(213		)
Balance at September 30, 2019	$	3,790

(g) The fair value adjustment resulted from the decreased probability of Altek achieving cumulative financial and non-financial performance goals within the required time frame. This amount is recorded in Other expenses, net on the Company's Condensed Consolidated Statements of Operations.

Balance sheet positions and financial information included in net income from discontinued operations and statements of cash flows

The former Harsco Industrial Segment's balance sheet positions as of September 30, 2019 and December 31, 2018 are presented as Assets held-for-sale and Liabilities of assets held-for-sale in the Company’s Condensed Consolidated Balance Sheets and are summarized as follows:

(in thousands)	September 30, 2019(h)		December 31 2018
Trade accounts receivable, net	$	18,508	$	44,786
Other receivables	101		412
Inventories	21,994		16,926
Current portion of contract assets	—		12,124
Other current assets	1,225		984
Property, plant and equipment, net	22,093		37,107
Right-of-use assets, net	6,389		—
Goodwill	—		6,839
Intangible assets, net	—		10,618
Deferred income tax assets	—		563
Other assets	178		204
Total assets	$	70,488	$	130,563

(in thousands)	September 30, 2019(h)		December 31 2018
Accounts payable	$	8,401	$	24,426
Accrued compensation	2,073		7,385
Current portion of advances on contracts	718		1,910
Current portion of operating lease liabilities	1,513		—
Other current liabilities	2,499		5,689
Operating lease liabilities	4,959		—
Other liabilities	315		555
Total liabilities	$	20,478	$	39,965

(h) The decrease from December 31, 2018 is primarily related to the sale of AXC.

Certain key selected financial information included in net income from discontinued operations for the former Harsco Industrial Segment is as follows:

	Three Months Ended				Nine Months Ended
	September 30				September 30
(In millions)	2019		2018		2019		2018
Amounts directly attributable to the former Harsco Industrial Segment:
Total revenues	$	39,855	$	93,912	$	274,037	$	269,575
Cost of products sold	28,174		69,750		201,188		197,115
Gain on sale from discontinued business	527,980		—		527,980		—
Income from discontinued business	803		11,291		24,877		32,366
Additional amounts allocated to the former Harsco Industrial Segment:
Selling, general and administrative expenses (i)	$	1,994	$	—	$	5,521	$	—
Interest expense (j)	—		4,084		11,237		12,341
Loss on early extinguishment of debt (k)	5,314		—		5,314		—

(i) The Company has allocated directly attributable transaction costs to discontinued operations.

(j) The Company has allocated interest expense, including a portion of the amount reclassified into income for the Company's interest rate swaps, amortization of deferred financing costs, and $2.7 million related to interest rate swap terminations which occurred during the nine months ended September 30, 2019, all of which were directly attributed with the mandatory repayment of the Company's Term Loan Facility, resulting from the AXC disposal, as part of discontinued operations.

(k) The Company has allocated the $5.3 millionwrite-off of deferred financing costs to discontinued operations as it is directly attributed to the mandatory repayment of the Term Loan Facility that resulted from the AXC disposal.

The following is selected financial information included on the Company's Condensed Consolidated Statements of Cash Flows attributable to the former Harsco Industrial Segment:

	Nine Months Ended
	September 30
(In millions)	2019		2018
Non-cash operating items
Depreciation and amortization	$	3,301	$	5,708
Cash flows from investing activities
Purchases of property, plant and equipment	6,151		5,894