-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YNyOhDCCE+zMfymEOO1g816ILZzwLYMJCXE0r3YXMWkn82rTBjpicUTEbrYMTkkR 3TUn9NIXfqINW3N8JfZetg== 0000045876-94-000005.txt : 19940415 0000045876-94-000005.hdr.sgml : 19940415 ACCESSION NUMBER: 0000045876-94-000005 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940414 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARSCO CORP CENTRAL INDEX KEY: 0000045876 STANDARD INDUSTRIAL CLASSIFICATION: 3440 IRS NUMBER: 231483991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03970 FILM NUMBER: 94522666 BUSINESS ADDRESS: STREET 1: 350 POPLAR CHURCH RD CITY: CAMP HILL STATE: PA ZIP: 17001-8888 BUSINESS PHONE: 7177637064 MAIL ADDRESS: STREET 1: PO BOX 8888 CITY: CAMP HILL STATE: PA ZIP: 17001-8888 8-K/A 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A AMENDMENT TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Amendment No.#1 Amendment to Current Report on Form 8-K dated January 28, 1994, and filed on February 14, 1994. Harsco Corporation (Exact name of registrant as specified in its charter) Delaware 1-3970 23-1483991 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification Number) Camp Hill, Pennsylvania 17001-8888 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(717) 763-7064 The undersigned registrant hereby amends the following item of its Current Report on Form 8-K dated January 28, 1994, and filed February 14, 1994, as set forth in the pages attached hereto: ITEM 7. Financial Statements and Exhibits (a) Consolidated Financial Statements of FMC's Defense Systems Group (1) Independent Auditors' Report (2) Consolidated Balance Sheets as of December 31, 1993 and 1992 (3) Consolidated Statements of Income for the Years 1993, 1992, 1991 (4) Consolidated Statements of Cash Flows for the Years 1993, 1992, 1991 (5) Notes to Financial Statements (b) Pro Forma Financial Information (unaudited) to reflect Harsco's acquisition of an interest in United Defense, L.P. formed to combine FMC's Defense Systems Group and Harsco's BMY-Combat Systems Division (1) Balance Sheet as of December 31, 1993 (2) Statement of Income for the Year Ended December 31, 1993 (d) Exhibits Number Exhibit 24 Consent of Independent Accountants SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HARSCO CORPORATION (Registrant) Date: April 13, 1994 By: /s/ Leonard A. Campanaro Leonard A. Campanaro Senior Vice President & Chief Financial Officer Independent Auditors' Report The Board of Directors and Stockholders, FMC Corporation We have audited the balance sheets of the Defense Systems Group of FMC Corporation as of December 31, 1993 and 1992 and the related statements of income and cash flows for each of the years in the three-year period ended December 31, 1993. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based upon our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and signficant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Defense Systems Group of FMC Corporation as of December 31, 1993 and 1992, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1993, in conformity with generally accepted accounting principles. As discussed in Note 5 to the financial statements, the company changed its method of accounting for post retirement benefits other than pensions in 1992. KPMG, Peat Marwick Chicago, Illinois January 24, 1994 FMC CORPORATION DEFENSE SYSTEMS GROUP BALANCE SHEETS (Dollars In Thousands) DECEMBER 31 ASSETS 1993 1992 Current assets: Trade receivables, net $ 85,348 $ 72,457 Inventories 39,249 61,555 Deferred income taxes 30,126 30,617 Other current assets 21,381 19,467 _________ _________ Total current assets 176,104 184,096 Investments in affiliated companies 8,721 10,342 Net property, plant & equipment 111,718 135,262 Prepaid pensions and deferred charges 28,573 24,817 Deferred income taxes 5,165 7,956 _________ _________ Total assets $ 330,281 $ 362,473 _________ _________ _________ _________ LIABILITIES AND GROUP EQUITY Current liabilities: Accounts payable, trade and other $ 73,144 $ 93,989 Advance payments received from customers 95,781 85,292 Accrued payroll 21,183 21,638 Accrued workers' compensation insurance 27,147 21,599 Accrued and other liabilities 18,789 25,462 Total current liabilities 236,044 247,980 _________ _________ Accrued post-retirement benefits 69,601 75,162 Commitments and contingencies Group equity: Investment of FMC Corporation 24,636 39,331 _________ _________ Total liabilities and group equity $ 330,281 $ 362,473 _________ _________ _________ _________ See accompanying notes to financial statements

FMC CORPORATION DEFENSE SYSTEMS GROUP STATEMENTS OF INCOME (Dollars In Thousands) YEARS ENDED DECEMBER 31 1993 1992 1991 Revenue $ 950,170 $1,111,809 $1,169,043 _________ _________ _________ Cost of sales 708,362 867,757 897,871 Selling, general and administrative 102,406 106,036 113,813 Research and development 16,669 21,000 21,305 Other (income) and expense, net (15,232) (31,284) (4,458) _________ _________ _________ Total costs and expenses 812,205 963,509 1,028,531 _________ _________ _________ Income before income taxes and cumulative effect of change in accounting principle 137,965 148,300 140,512 Income taxes 52,405 55,670 54,868 _________ _________ _________ Income from continuing operations before cumulative effect of change in accounting principle 85,560 92,630 85,644 Cumulative effect of change in accounting principle, net of taxes - (45,678) - - _________ _________ _________ Net income $ 85,560 $ 46,952 $ 85,644 _________ _________ _________ _________ _________ _________ See accompanying notes to financial statements
FMC CORPORATION DEFENSE SYSTEMS GROUP STATEMENTS OF CASH FLOWS (Dollars In Thousands) YEARS ENDED DECEMBER 31 1993 1992 1991 Cash flows from operating activities: Net income $ 85,560 $ 46,952 $ 85,644 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,960 26,452 28,631 Amortization of accrued pension costs 2,066 8,178 2,966 Deferred income taxes 3,281 (27,480) (79) _________ _________ _________ 114,867 54,102 117,162 _________ _________ _________ (Increase) decrease in assets: Trade receivables, net ( 12,891) 3,878 (1,605) Inventories 22,306 56,982 81,043 Other current assets (1,914) (3,482) (7,168) (Decrease) increase in liabilities: Accounts payable - trade and other (23,681) 16 11,373 Advance payments received from customers 10,489 (80,562) (111,296) Other current liabilities 1,256 (1,672) 2,170 Pension and other post-retirement benefits, net (10,785) 69,792 (5,250) _________ _________ _________ Net cash provided by operating activities 99,647 99,054 86,429 _________ _________ _________ Cash flows provided (required) by investing activities: Expenditures for property, plant and equipment (17,816) (17,963) (23,075) Transfers and other changes in property, plant and equipment 17,400 3,978 2,600 Changes in investments in affiliates and other 1,024 3,165 350 _________ _________ _________ Cash flows provided (required) by investing activities 608 (10,820) (20,125) _________ _________ _________ Net cash flow provided to FMC Corporation $ 100,255 $ 88,234 $ 66,304 _________ _________ _________ _________ _________ _________ See accompanying notes to financial statements
Property, plant and equipment consists of the following: December 31, 1993 1992 Land and land improvements $ 17,761 $ 18,490 Buildings and building equipment 73,087 90,478 Machinery and equipment 320,081 323,350 Construction in progress 5,597 8,055 _________ _________ Total cost 416,526 440,373 Accumulated depreciation 304,808 305,111 Net property, plant and equipment $ 111,718 $ 135,262 The decrease in net property, plant and equipment from 1992 resulted primarily from the transfer to FMC of a technology center in Minneapolis with a net book value of approximately $16 million.
4. INCOME TAXES The provisions for income taxes consist of: December 31, 1993 1992 1991 Current: Federal $ 42,984 $ 47,030 $ 47,903 State and local 6,140 6,916 7,044 _________ _________ _________ Total current 49,124 53,946 54,947 Deferred 3,281 (27,480) (79) _________ _________ _________ Total income taxes $ 52,405 $ 26,466 $ 54,868 _________ _________ _________ _________ _________ _________
The deferred tax benefit in 1992 relates primarily to the one-time adjustment for postretirement benefits as discussed in note 5. The income tax provision differs from that computed by applying the applicable federal statutory rate (35% in 1993 and 34% in the other years) to income before taxes for the following reasons: December 31, 1993 1992 1991 Expected tax provision $ 48,288 $ 24,962 $ 47,774 State income taxes, less federal tax benefit 6,898 3,671 7,026 Tax adjustment on dividends from affiliate (1,781) (1,737) - - Foreign sales corporation income (1,000) (430) 68 _________ _________ _________ Actual tax provision $ 52,405 $ 26,466 $ 54,868 _________ _________ _________ _________ _________ _________
Significant components of the Group's deferred tax assets and liabilities are as follows: December 31, 1993 1992 Inventory basis differences $ 8,678 $ 11,293 Accrued and other liabilities 21,448 19,324 Deferred tax assets - current 30,126 30,617 Post-retirement benefits and other 27,277 29,313 _________ _________ Total deferred tax assets $ 57,403 $ 59,930 Prefunded pension costs $ 9,444 $ 8,212 Property, plant and equipment 9,880 10,786 Other 2,788 2,359 _________ _________ Total deferred tax liabilities $ 22,112 $ 21,357 _________ _________ Net deferred tax assets $ 35,291 $ 38,573 _________ _________ _________ _________
No valuation allowance with respect to the deferred tax assets is considered necessary. 5. EMPLOYEE BENEFIT PLANS RETIREMENT PLANS Salaried employees of DSG are covered by FMC's Salaried Retirement Plan, which provides pension benefits based on years of service and an average of the highest 60 consecutive months of compensation during the last 120 months of consecutive employment. Plans covering hourly employees of DSG generally provide benefits of stated amounts for each year of service. The funding policy is to make contributions based on the projected unit credit actuarial cost method and to limit contributions to amounts that are currently deductible for tax reporting purposes. In 1992, net pension cost includes a pension curtailment charge of $4.6 million relating to the elimination of certain employees in the DSG hourly plans. The following table summarizes the assumptions used and the components of the net pension cost: Year Ended December 31, Assumptions: 1993 1992 1991 Weighted average discount rate 8.0% 8.0% 8.0% Rates of increase in future compensation levels 5.0% 5.0% 5.0% Weighted average expected long-term asset return 9.3% 9.3% 9.8% ________ ________ ________ Components: Service cost-benefits earned $ 7,537 $ 8,350 $ 8,105 Interest cost on projected benefit obligation 13,374 12,604 11,195 Actual return on plan assets (31,751) (14,923) (33,857) Net amortization and deferral: Net transition asset amortization (1,006) (1,006) (1,006) Prior service cost amortization 1,632 6,390 1,990 Net (gain) loss amortization (213) 142 (98) Net asset gain (loss) deferred 12,493 (3,379) 16,637 ________ ________ ________ Net pension cost $ 2,066 $ 8,178 $ 2,966 ________ ________ ________ ________ ________ ________
The funded status of the plans and accrued pension cost recognized in the financial statements were as follows: Year Ended December 31, 1993 1992 Actuarial present value of benefits for service rendered to date: Accumulated benefit obligation based on salaries to date, including vested benefits of $148,171 in 1993 and $141,101 in 1992 $ (154,959) $ (148,921) Additional benefits based on estimated future salary levels (29,702) (30,193) _________ _________ Projected benefit obligation $ (184,661) $ (179,114) Plan assets at fair value 228,395 201,172 _________ _________ Plan assets in excess of projected benefit obligation 43,734 22,158 Unrecognized net transition asset (7,030) (8,035) Unrecognized prior service cost 9,700 8,310 Unrecognized net gain (22,189) (1,376) _________ _________ Prepaid pension cost $ 24,215 $ 21,057 _________ _________ _________ _________ Primarily equities, bonds and participating annuities
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE Substantially all of DSG employees are covered by FMC's postretirement health care and life insurance benefit program. Employees generally become eligible for the retiree benefit plans when they meet minimum retirement age and service requirements. The cost of providing most of these benefits is shared with retirees. FMC has reserved the right to change or eliminate these benefit plans. FMC funds a trust for retiree health and life benefits for DSG. Funding is based on amounts in negotiated government defense contracts, in conformance with Governmental Cost Accounting Standards. Retroactive to January 1, 1992, FMC elected early adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires accrual of the expected cost of providing postretirement benefits other than pensions, during the years of employee service. The adoption of SFAS No. 106 resulted in a one-time pre-tax charge of $74.9 million ($45.7 million, net of tax). Prior to 1992, the Group recognized postretirement health care costs using the cash basis of accounting, while the estimated costs of postretirement life insurance benefits were generally accrued over the employees' active working lives. These costs were $ 3.1 million in 1991. Actuarial assumptions used to determine costs and benefit obligations include a discount rate of 8 percent and a weighted average expected return on long-term assets of 9 percent. The assumed rate of future increases in per capita cost of health care benefits was 13 percent in 1993 and 1992, decreasing gradually to 6 percent by the year 2001. The following table summarizes the components of net periodic postretirement benefit cost for 1993 and 1992: 1993 1992 Service cost of benefits earned $ 1,620 $ 1,925 Interest cost on accumulated postretirement benefit obligation 4,900 6,593 Actual return on plan assets (1,246) (707) Prior service cost amortization and net asset loss deferred (2,172) (454) _________ _________ Net periodic postretirement benefit cost $ 3,102 $ 7,357 _________ _________ _________ _________
Plan amendments adopted in 1993 reduced the accumulated benefit obligation by approximately $ 18.7 million. These amendments will be recognized as a reduction of plan costs over the average remaining service period of active plan participants. The status of the accrued postretirement benefit cost recognized in the balance sheet and the funded status of the plan as of December 31 were as follows: 1993 1992 Accumulated postretirement benefit obligation (APBO): Retirees $ (29,905) $ (27,663) Fully eligible active participants (9,080) (16,637) Other active participants (22,422) (41,084) _________ _________ APBO $ (61,407) $ (85,384) Plan assets at fair value 20,792 14,826 _________ _________ APBO in excess of plan assets (40,615) (70,558) Unamortized plan amendments (21,725) (4,966) Unrecognized (gain) loss (7,261) 362 _________ _________ Accrued postretirement benefit obligation $ (69,601) $ (75,162) _________ _________ _________ _________ Primarily fixed income securities
EMPLOYEES' THRIFT AND STOCK PURCHASE PLAN All salaried and non-union hourly employees are included in FMC Employee Thrift and Stock Purchase Plan. Under the Thrift Plan, participants may elect to have up to 15 percent of their compensation contributed to the plan. An employee's contribution, up to 5 percent of compensation, is matched by the Group's 15 percent to 100 percent (80 percent prior to April 1, 1993) depending on profits and fund elections. A participant's interest in the Group's contribution vests gradually during the first five years of active service and is fully vested thereafter. The employee-elected contributions may be invested in FMC stock, a fixed income fund or an equity fund, as a participant elects. All matching contributions by the Group are invested in FMC stock. Charges for these benefits for the years 1993, 1992 and 1991, were $ 4.9 million, $ 4.4 million and $ 3.9 million, respectively. 6. EQUITY: INVESTMENT BY FMC CORPORATION The changes in equity during the three years ended December 31, 1993 were as follows: Balance December 31, 1990 $ 61,273 Net income for 1991 85,644 Net cash provided to FMC (66,304) _________ Balance December 31, 1991 80,613 Net income for 1992 46,952 Net cash provided to FMC (88,234) _________ Balance December 31, 1992 39,331 Net income for the year 85,560 Net cash provided to FMC (100,255) _________ Balance December 31, 1993 $ 24,636 _________ _________ 7. TRANSACTIONS WITH FMC The following summarizes the assumptions used in accounting for certain transactions between DSG and FMC. See also Notes 2 and 4. WORKING CAPITAL AND FINANCING REQUIREMENTS All capital requirements of DSG are funded through the operation of a centralized cash management system at FMC. Generally, all cash receipts are deposited to and all cash requirements are funded through the system on a daily basis. Cash activity is segregated and controlled through intercompany accounts, which are included in the accompanying financial statements as a component of Group Equity: Investment of FMC Corporation. ADMINISTRATIVE COST ALLOCATION The statements of income presented reflect an administrative cost allocation from FMC for certain expenses incurred at the corporate level for the benefit of the Group, aggregating $24.3 million, $20.4 million and $23.1 million for the years 1993, 1992 and 1991, respectively. The allocations are based on sales, numbers of FMC personnel, payroll dollars, estimates of time spent to provide services, or other rational measures. These allocations include general management, treasury, tax, financial audits, financial reporting, benefits administration, insurance, communication, public affairs, information management and other miscellaneous services. DIRECT CHARGES Other costs incurred at the FMC corporate level and charged directly to DSG on the basis of services used include the Corporate Technology Center, computer processing, employee benefits, pension and thrift plan costs, insurance and miscellaneous other expenses. Charges related to services other than employee benefits aggregated approximately $15.2 million, $17.0 million and $18.1 million in 1993, 1992 and 1991, respectively. Employee benefits are discussed further in Note 5. 8. COMMITMENTS AND CONTINGENT LIABILITIES MINIMUM LEASE PAYMENTS DSG leases manufacturing space and various types of equipment under operating leases. Total rent expense under all leases amounted to $4.4 million, $6.6 million and $5.7 million in the years 1993, 1992 and 1991, respectively. Minimum future rentals under noncancellable leases aggregated approximately $18.2 million as of December 31, 1993, and are estimated to be payable $4.6 million in 1994, $4.4 million in 1995, $3.9 million in 1996, $1.9 million in 1997, $1.9 million in 1998 and $1.5 million in 1999. ENVIRONMENTAL COMPLIANCE AND REMEDIATION In accordance with the environmental accounting policy, reserves of approximately $6.5 million and $6.7 million have been provided at the end of 1993 and 1992, respectively. The liability arising from potential environmental obligations that have not been reserved for at this time--because amounts cannot be reasonably determined due to uncertainties associated with remedial-related activities, relevant clean-up technologies and methods, and amounts to be recovered from third parties--may or may not be material to any one year's results of operations in the future. Management, however, believes the liability arising from these potential environmental obligations is not likely to have a material adverse effect on the Group's liquidity or financial condition and will be satisfied over many years. OFF BALANCE SHEET RISK DSG is contingently liable under outstanding letters of credit in the amount of approximately $32.1 million at December 31, 1993. OTHER CONTINGENT LIABILITIES DSG has certain contingent liabilities resulting from litigation, claims and commitments incident to the ordinary course of business. Management believes that the probable resolution of such contingencies will not materially affect the financial position or results of operations. HARSCO CORPORATION AND SUBSIDIARY COMPANIES PRO FORMA CONDENSED FINANCIAL INFORMATION (Unaudited) On January 28, 1994, FMC Corporation ("FMC") and Harsco Corporation ("Harsco") announced completion of a series of agreements ("Agreements"), first announced in December 1992, to combine certain assets and liabilities of FMC's Defense Systems Group ("DSG") and Harsco's BMY-Combat Systems Division ("BMY-CS"). The effective date of the combination was January 1, 1994. The combined company, United Defense, L.P. ("UDLP"), will operate as a limited partnership, with FMC as the Managing General Partner with a 60 percent equity interest and Harsco Defense Holding, Inc. as the Limited Partner holding a 40 percent equity interest. The following unaudited pro forma condensed financial statements reflect the elimination of BMY-CS and accounting for the 40% ownership interest of Harsco in UDLP on the equity method of accounting. The assumption, for the balance sheet, is that the combination occurred on December 31, 1993, and for the statement of income that the combination date was January 1, 1993. The pro forma operating results are not necessarily indicative of what would have occurred had the combination actually taken place on January 1, 1993, or of what they are expected to be in 1994. Also, no adjustments have been made to operations for the impact of certain anticipated operational and administrative efficiencies which are expected to be realized over the first two years of the combined company's operation. HARSCO CORPORATION AND SUBSIDIARY COMPANIES PRO FORMA CONDENSED BALANCE SHEET (In Thousands of Dollars) (Unaudited) Pro Forma as of December 31, 1993 Pro Forma Pro Forma Adjustments and Harsco with Less Eliminations 40% ASSETS Harsco BMY-CS Debit Credit UDLP Current Assets Cash and cash equivalents $ 58,740 $ - $ 5,200 $ 53,540 Notes and accounts receivable, net 322,894 45,286 $ 38,507 316,115 Inventories 202,426 86,815 115,611 Other current assets 16,045 6,374 5,962 15,633 ________ _______ ________ Total current assets 600,105 138,475 500,899 Property, plant and equipment, net 491,655 50,597 441,058 Goodwill 221,082 221,082 Equity in unconsolidated entities 9,258 29,600 38,858 Other assets 105,512 212 105,300 ________ _______ ________ Total assets $1,427,612 $189,284 $1,307,197 ________ _______ ________ ________ _______ ________ LIABILITIES Current Liabilities Borrowings due within one year $ 63,509 $ - $ $ 63,509 Accounts payable 98,021 18,272 1,265 81,014 Advances on long-term contracts 88,518 78,882 9,636 Income taxes payable 14,905 - 14,905 Other current liabilities 52,396 19,019 3,634 137,011 _________ _______ ________ Total current liabilities 417,349 116,173 306,075 Long-term debt 364,869 - 364,869 Deferred income taxes 33,424 3,544 3,544 33,424 Insurance accruals 49,350 - 49,350 Other liabilities 39,536 9,164 23 30,395 _________ _______ ________ Total liabilities 904,528 128,881 784,113 _________ _______ ________ CAPITAL Capital stock 40,143 40,143 Additional paid-in capital 86,436 86,436 Retained earnings 603,158 603,158 Cumulative adjustments (16,166) (16,166) Treasury stock, at cost (190,487) (190,487) Net Assets 60,403 60,403 - - _________ _______ _______ Total capital 523,084 60,403 523,084 _________ _______ _______ Total liabilities and capital $1,427,612 $189,284 $1,307,197 _________ _______ _______ _________ _______ _______ See accompanying notes to unaudited pro forma condensed financial statements.
HARSCO CORPORATION AND SUBSIDIARY COMPANIES PRO FORMA CONDENSED STATEMENT OF INCOME (In Thousands of Dollars, Except Per Share Amounts) (Unaudited) Pro Forma for the Year Ended December 31 1993 Pro Forma Harsco with Less: Pro Forma 40% Harsco BMY-CS Adjustments UDLP Net sales $1,422,308 $ 347,958 $ - $1,074,350 Operating expenses 1,295,148 283,904 4,416 1,015,660 _________ _______ _______ _________ Profit from operations 127,160 64,054 (4,416) 58,690 Equity in earnings of unconsolidated entities 2,415 84,000 86,415 Other income, net 7,576 12 - 7,564 _________ _______ _______ _________ Income before provision for income taxes and the cumulative effect of accounting change 137,151 64,066 79,584 152,669 Provision for income taxes 56,335 24,653 31,834 63,516 _________ _______ _______ _________ Income before cumulative effect of change in accounting method 80,816 39,413 47,750 89,153 Cumulative effect of change in accounting method 6,802 - - 6,802 ________ _______ _______ ________ Net income $ 87,618 $ 39,413 $ 47,750 $ 95,955 ________ _______ _______ ________ ________ _______ _______ ________ Average shares of common stock outstanding 25,036,893 25,036,893 Earnings per common share: Income before cumulative effect of accounting change $ 3.23 3.56 Cumulative effect of change in method of accounting .27 .27 ________ ________ Net income per common share $ 3.50 $ 3.83 ________ ________ ________ ________ See accompanying notes to unaudited pro forma condensed financial statements. Under the Agreements, Harsco is required to contribute a total net asset value of $29.6 million including $5.2 million of cash. Harsco also will retain financial responsibility for certain items which are not contributed to the joint venture and sufficient accounts receivable balances to meet the total net asset value of $29.6 million. These adjustments are to reflect the contribution of cash, the retention of accounts receivable, and the retention of certain liability accounts as provided for in the Agreements. The assets and liabilities contributed by FMC and Harsco to the joint venture are recorded at their historical net book values and, consequently, no recognition is given to their fair market values at formation. In combining the assets and liabilities under this premise, Harsco's initial equity interest in UDLP has a net book value of $67 million, calculated at 40 percent of the combined net assets contributed by FMC and Harsco of $168 million. Therefore, Harsco's 40 percent equity interest in the joint venture exceeds the book value of the net assets contributed and acquisition costs incurred by approximately $34 million. However, no recognition is given to this amount in the Pro Forma Financial Statements. $4.4 million of general and administrative expense allocated to BMY in 1993 by Harsco has been retained by Harsco in order to approximate the operating results of Harsco assuming the transaction had occurred on January 1, 1993. The Agreements provide for sharing the income before income taxes of the venture generally on the basis of the partners' equity ownership interests, after giving effect to a limited partner preferred distribution. The Equity in Earnings of $84 million includes the limited partner preferred distribution and 40% of the remaining pro forma pre-tax earnings of UDLP. The pro forma earnings of the venture give effect to various income and expense adjustments in order to approximate the results of operations assuming the transaction had been effective on January 1, 1993. The income tax expense results from the taxable pro forma adjustments to income at a combined Federal and State statutory tax rate of approximately 40%.
EXHIBIT 24 CONSENT OF KPMG PEAT MARWICK We consent to the incorporation by reference in the following Registration Statements of Harsco Corporation and subsidiary companies of our report included herein dated January 24, 1994, relating to the balance sheets of the Defense Systems Group of FMC Corporation as of December 31, 1993 and 1992, and the related statements of income and cash flows for each of the years in the three-year period ended December 31, 1993: - - Post Effective Amendment No. 6 to Form S-8 Registration Statement (Registration No. 2-57876), effective May 21, 1982. - - Post Effective Amendment No. 2 to Form S-8 Registration Statement (Registration No. 33-5300), dated March 26, 1987. - - Form S-8 Registration Statement (Registration No. 33-14064), dated May 6, 1987. - - Amendment No. 2 to Form S-8 Registration Statement (Registration No. 33-24854), dated October 31, 1988. Our report contains an explanatory paragraph regarding changes in the Company's method of accounting for postretirement benefits other than pensions. KPMG PEAT MARWICK Chicago, Illinois April 11, 1994 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~