Restructuring Programs

12 Months Ended

Dec. 31, 2011

Restructuring Programs

Restructuring Programs

18. Restructuring Programs

        The Company instituted restructuring programs in 2010 and 2011 as detailed below. The overall objective of the programs is to balance short-term profitability goals with long-term strategies to establish platforms upon which the affected businesses can grow with limited fixed investment and generate annual operating expense savings. The programs have been instituted in response to the continuing impact of uncertainty in global financial and economic markets on the Company's end markets, particularly in the Company's Harsco Infrastructure Segment. These end market conditions have included such factors as the following:

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  a continued lack of meaningful commercial and multi-family construction activity in various regions of the world served by the Harsco Infrastructure Segment, particularly in Europe;

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  pricing pressures as customers worldwide continued to seek lower cost solutions;

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  postponements, deferrals and cancellation of jobs and projects; and

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  concern over possible sovereign debt crises arising in certain countries.
  
  
  

          Within the Harsco Infrastructure Segment, these restructuring programs are part of an ongoing transformation strategy to improve organizational efficiency and enhance profitability and stockholder value. The strategy includes optimizing the Segment as a more streamlined, efficient, cost-effective, disciplined and market-focused global platform.

        Restructuring costs incurred in these programs were recorded in the Other expenses line of the Consolidated Statements of Income.

2011/2012 Restructuring Program

        Under the 2011/2012 Restructuring Program, the Company is optimizing rental assets and sale inventories by removing redundant and/or non-core assets under an expanded product rationalization and branch structure reduction program undertaken in its Harsco Infrastructure Segment; optimizing office structures in the Harsco Infrastructure and Harsco Metals & Minerals Segments; and reducing the global workforce principally in the Harsco Infrastructure and Harsco Metals & Minerals Segments. Overall cost savings under this program are expected to be over $36 million in 2012 and more than $65 million when fully annualized in 2013.

        In the fourth quarter of 2011, the Company recorded pre-tax restructuring charges totaling $100.8 million, including non-cash product rationalization charges of $66.1 million for disposal of rental assets and sales inventories; severance of $28.6 million related to headcount reductions; and exit costs of $6.1 million related to branch structure reduction and office rationalization costs. Additional pre-tax charges totaling approximately $97 million are expected to be incurred in 2012, with approximately $85 million in the Harsco Infrastructure Segment and approximately $12 million in the Harsco Metals & Minerals Segment. Approximately $42 million of the expected charges in the Harsco Infrastructure Segment in 2012 are estimated to be non-cash.

        The restructuring accrual for the 2011/2012 Restructuring Program at December 31, 2011 and the activity for the year then ended are as follows:

(In thousands)	Expense Incurred in 2011		Non-Cash Charges			Cash Expenditures			Remaining Accrual December 31 2011
Harsco Infrastructure Segment
Employee termination benefit costs	$	15,410	$	—		$	(910	)	$	14,500
Cost to exit activities		6,131		(1,257	)		(2,041	)		2,833
Product rationalization		66,063		(66,063	)		—			—
Total Harsco Infrastructure Segment		87,604		(67,320	)		(2,951	)		17,333
Harsco Metals & Minerals Segment
Employee termination benefit costs		12,775		—			(38	)		12,737
Harsco Rail Segment
Employee termination benefit costs		50		—			—			50
Harsco Corporate
Employee termination benefit costs		351		—			—			351
Total	$	100,780	$	(67,320	)	$	(2,989	)	$	30,471

        Cash expenditures related to the remaining accrual at December 31, 2011 are expected to be paid principally throughout 2012 with certain exit activity costs for lease terminations expected to be paid over the remaining life of the leases.

        At December 31, 2011 the Company had completed workforce reductions of 43 employees of a total expected reduction of 1,100 employees affected under the 2011/2012 Restructuring Program. The remaining workforce reductions are targeted for completion during 2012.

Fourth Quarter 2010 Harsco Infrastructure Program

        Under the Fourth Quarter 2010 Harsco Infrastructure Program, the Harsco Infrastructure Segment reduced its branch structure; consolidated and/or closed administrative office locations; reduced its global workforce; and rationalized its product lines.

        The restructuring accrual for the Fourth Quarter 2010 Harsco Infrastructure Program at December 31, 2011 and the activity for the year then ended are as follows:

(In thousands)	Accrual December 31 2010		Adjustments to Previously Recorded Restructuring Charges(a)			Cash Expenditures			Foreign Currency Translation			Remaining Accrual December 31 2011
Harsco Infrastructure Segment
Employee termination benefit costs	$	9,254	$	(1,040	)	$	(8,346	)	$	343		$	211
Cost to exit activities		21,449		1,779			(11,218	)		(81	)		11,929
Other		97		—			(90	)		—			7
Total	$	30,800	$	739		$	(19,654	)	$	262		$	12,147

(a)

Adjustments to previously recorded restructuring charges resulted from changes in facts and circumstances in the implementation of these activities as well as the timing of additional expenses recognized under U.S. GAAP.

        Approximately one-half of the remaining accrual at December 31, 2011 related to this program is expected to be paid throughout 2012. Approximately $6.3 million related to payment of multiemployer pension plan withdrawal liabilities is expected to be paid through 2023 under contractual payment terms with the related plan administrators. Certain exit activity costs for lease terminations are expected to be paid over the remaining life of the leases.

        At December 31, 2011, the Company had completed substantially all workforce reductions related to 494 employees affected under this program.

Prior Restructuring Programs

        Other restructuring actions were undertaken in 2010, in addition to the Fourth Quarter 2010 Harsco Infrastructure Program described above, to reduce the Company's cost structure.

        The restructuring accrual for those prior restructuring programs at December 31, 2011 and the activity for the year then ended are as follows:

(In thousands)	Accrual December 31 2010		Adjustments to Previously Recorded Restructuring Charges(a)			Cash Expenditures			Foreign Currency Translation			Remaining Accrual December 31 2011
Harsco Infrastructure Segment
Employee termination benefit costs	$	905	$	(361	)	$	(571	)	$	27		$	—
Cost to exit activities		413		(61	)		(367	)		15			—
Total Harsco Infrastructure Segment		1,318		(422	)		(938	)		42			—
Harsco Metals & Minerals Segment
Employee termination benefit costs		2,109		(88	)		(623	)		(118	)		1,280
Cost to exit activities		864		—			(162	)		25			727
Total Harsco Metals & Minerals Segment		2,973		(88	)		(785	)		(93	)		2,007
Total	$	4,291	$	(510	)	$	(1,723	)	$	(51	)	$	2,007

(a)

Adjustments to previously recorded restructuring charges resulted from changes in facts and circumstances in the implementation of these activities as well as the timing of additional expenses recognized under U.S. GAAP.

        The majority of the remaining cash expenditures of $2.0 million related to these actions are expected to be paid throughout 2012.

        At December 31, 2011, the Company had completed all workforce reductions related to 249 employees for the Harsco Infrastructure Segment; and reductions of 188 employees of a total expected workforce reduction of 242 employees for the Harsco Metals & Minerals Segment. Remaining workforce reductions and costs to exit activities are targeted for substantial completion in 2012.