10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2012

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to          

Commission File Number  001-03970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	23-1483991
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification number)
350 Poplar Church Road, Camp Hill, Pennsylvania	17011
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code  717-763-7064

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES x  NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES x  NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x	Accelerated filer  o
Non-accelerated filer  o (Do not check if a smaller reporting company)	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o  NO x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 13, 2012
Common stock, par value $1.25 per share	80,546,643

HARSCO CORPORATION

FORM 10-Q

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Income (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Condensed Consolidated Statements of Equity (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8 – 22
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23 – 35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosure (Not Applicable)	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
SIGNATURES		38

2

PART I — FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

HARSCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)	March 31 2012			December 31 2011
ASSETS
Current assets:
Cash and cash equivalents	$	136,604		$	121,184
Trade accounts receivable, net	631,645			618,475
Other receivables	34,955			44,431
Inventories	261,959			241,934
Other current assets	123,031			133,407
Total current assets	1,188,194			1,159,431
Property, plant and equipment, net	1,279,121			1,274,484
Goodwill	692,826			680,901
Intangible assets, net	90,449			93,501
Other assets	128,875			130,560
Total assets	$	3,379,465		$	3,338,877
LIABILITIES
Current liabilities:
Short-term borrowings	$	32,407		$	51,414
Current maturities of long-term debt	2,741			3,558
Accounts payable	245,927			252,329
Accrued compensation	82,711			92,603
Income taxes payable	9,952			8,409
Dividends payable	16,512			16,498
Insurance liabilities	21,863			25,075
Advances on contracts	111,071			111,429
Other current liabilities	231,325			220,953
Total current liabilities	754,509			782,268
Long-term debt	932,799			853,800
Deferred income taxes	27,337			27,430
Insurance liabilities	62,897			60,864
Retirement plan liabilities	334,376			343,842
Other liabilities	53,521			50,755
Total liabilities	2,165,439			2,118,959
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock	—			—
Common stock	140,025			139,914
Additional paid-in capital	150,261			149,066
Accumulated other comprehensive loss	(333,307		)	(364,191		)
Retained earnings	1,950,340			1,996,234
Treasury stock	(745,071		)	(744,644		)
Total Harsco Corporation stockholders’ equity	1,162,248			1,176,379
Noncontrolling interests	51,778			43,539
Total equity	1,214,026			1,219,918
Total liabilities and equity	$	3,379,465		$	3,338,877

See accompanying notes to unaudited condensed consolidated financial statements.

3

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended March 31
(In thousands, except per share amounts)	2012			2011
Revenues from continuing operations:
Service revenues	$	598,700		$	653,527
Product revenues	153,635			125,528
Total revenues	752,335			779,055
Costs and expenses from continuing operations:
Cost of services sold	483,425			525,978
Cost of products sold	110,242			84,441
Selling, general and administrative expenses	129,203			137,789
Research and development expenses	2,060			1,340
Other expenses	40,092			471
Total costs and expenses	765,022			750,019
Operating income (loss) from continuing operations	(12,687		)	29,036
Interest income	674			720
Interest expense	(12,824		)	(11,935		)
Income (loss) from continuing operations before income taxes and equity income	(24,837		)	17,821
Income tax expense	(4,498		)	(4,400		)
Equity in income of unconsolidated entities, net	169			211
Income (loss) from continuing operations	(29,166		)	13,632
Discontinued operations:
Loss on disposal of discontinued business	(650		)	(1,328		)
Income tax benefit related to discontinued business	244			503
Loss from discontinued operations	(406		)	(825		)
Net income (loss)	(29,572		)	12,807
Less: Net (income) loss attributable to noncontrolling interests	203			(1,376		)
Net income (loss) attributable to Harsco Corporation	$	(29,369	)	$	11,431
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	(28,963	)	$	12,256
Loss from discontinued operations, net of tax	(406		)	(825		)
Net income (loss) attributable to Harsco Corporation common stockholders	$	(29,369	)	$	11,431
Weighted-average shares of common stock outstanding	80,579			80,695
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.36	)	$	0.15
Discontinued operations	(0.01		)	(0.01		)
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders	$	(0.36	)(a)	$	0.14
Diluted weighted-average shares of common stock outstanding	80,579			80,944
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations	$	(0.36	)	$	0.15
Discontinued operations	(0.01		)	(0.01		)
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders	$	(0.36	)(a)	$	0.14
Cash dividends declared per common share	$	0.205		$	0.205

(a)Does not total due to rounding

See accompanying notes to unaudited condensed consolidated financial statements.

4

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended March 31
(In thousands)	2012			2011
Net income (loss)	$	(29,572	)	$	12,807
Other comprehensive income:
Foreign currency translation adjustments, net of deferred income taxes	36,040			34,812
Net gains on cash flow hedging instruments, net of deferred income taxes of $(215) and $(1,517) in 2012 and 2011, respectively	762			5,777
Pension liability adjustments, net of deferred income taxes of $793 and $2,105 in 2012 and 2011, respectively	(5,418		)	(4,971		)
Unrealized gain on marketable securities, net of deferred income taxes of $(4) in 2012	7			—
Total other comprehensive income	31,391			35,618
Total comprehensive income	1,819			48,425
Less: Comprehensive income attributable to noncontrolling interests	(304		)	(1,620		)
Comprehensive income attributable to Harsco Corporation	$	1,515		$	46,805

See accompanying notes to unaudited condensed consolidated financial statements.

5

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended March 31
(In thousands)	2012			2011
Cash flows from operating activities:
Net income (loss)	$	(29,572	)	$	12,807
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation	65,454			67,929
Amortization	6,488			8,593
Equity in income of unconsolidated entities, net	(169		)	(211		)
Dividends or distributions from unconsolidated entities	—			88
Harsco 2011/2012 Restructuring Program non-cash adjustment	12,246			—
Other, net	(9,830		)	(4,372		)
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	212			(38,681		)
Inventories	(17,269		)	(14,313		)
Accounts payable	(9,522		)	10,547
Accrued interest payable	5,552			6,199
Accrued compensation	(11,760		)	(9,704		)
Harsco Infrastructure Segment 2010 Restructuring Program accrual	(1,317		)	(9,116		)
Harsco 2011/2012 Restructuring Program accrual	(599		)	—
Other assets and liabilities	(11,340		)	(16,626		)
Net cash provided (used) by operating activities	(1,426		)	13,140
Cash flows from investing activities:
Purchases of property, plant and equipment	(52,789		)	(67,257		)
Proceeds from sales of assets	22,488			6,617
Other investing activities, net	(2,020		)	4,733
Net cash used by investing activities	(32,321		)	(55,907		)
Cash flows from financing activities:
Short-term borrowings, net	(19,527		)	29,431
Current maturities and long-term debt:
Additions	139,066			70,482
Reductions	(61,196		)	(66,566		)
Cash dividends paid on common stock	(16,499		)	(16,507		)
Dividends paid to noncontrolling interests	—			(600		)
Contributions from noncontrolling interests	7,935			333
Common stock issued-options	542			1,239
Other financing activities, net	(2,708		)	—
Net cash provided by financing activities	47,613			17,812
Effect of exchange rate changes on cash	1,554			2,029
Net increase (decrease) in cash and cash equivalents	15,420			(22,926		)
Cash and cash equivalents at beginning of period	121,184			124,238
Cash and cash equivalents at end of period	$	136,604		$	101,312

See accompanying notes to unaudited condensed consolidated financial statements.

6

HARSCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

	Harsco Corporation Stockholders’ Equity
												Accumulated Other
(In thousands, except share and per	Common Stock					Additional			Retained			Comprehensive			Noncontrolling
share amounts)	Issued		Treasury			Paid-in Capital			Earnings			Loss			Interests			Total
Balances, January 1, 2011	$	139,514	$	(737,106	)	$	141,298		$	2,073,920		$	(185,932	)	$	36,451		$	1,468,145
Net income									11,431						1,376			12,807
Cash dividends declared:
Common @ $0.205 per share									(16,548		)							(16,548		)
Noncontrolling interests															(600		)	(600		)
Translation adjustments, net of deferred income taxes of $(6,508)												34,568			244			34,812
Cash flow hedging instrument adjustments, net of deferred income taxes of $(1,517)												5,777						5,777
Contributions from noncontrolling interests															333			333
Pension liability adjustments, net of deferred income taxes of $2,105												(4,971		)				(4,971		)
Stock options exercised, 80,442 shares	100					1,139												1,239
Vesting of restricted stock units, net 31,552 shares	118		(1,008		)	(118		)										(1,008		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						944												944
Balances, March 31, 2011	$	139,732	$	(738,114	)	$	143,263		$	2,068,803		$	(150,558	)	$	37,804		$	1,500,930

	Harsco Corporation Stockholders’ Equity
											Accumulated Other
(In thousands, except share and per	Common Stock					Additional		Retained			Comprehensive			Noncontrolling
share amounts)	Issued		Treasury			Paid-in Capital		Earnings			Loss			Interests			Total
Balances, January 1, 2012	$	139,914	$	(744,644	)	$	149,066	$	1,996,234		$	(364,191	)	$	43,539		$	1,219,918
Net income (loss)								(29,369		)				(203		)	(29,572		)
Cash dividends declared:
Common @ $0.205 per share								(16,525		)							(16,525		)
Translation adjustments, net of deferred income taxes of $(4,644)											35,533			507			36,040
Cash flow hedging instrument adjustments, net of deferred income taxes of $(215)											762						762
Contributions from noncontrolling interests														7,935			7,935
Pension liability adjustments, net of deferred income taxes of $793											(5,418		)				(5,418		)
Marketable securities unrealized gains, net of deferred income taxes of $(4)											7						7
Stock options exercised, 30,900 shares	39					503											542
Vesting of restricted stock units and other, net 38,573 shares	72		(427		)	215											(140		)
Amortization of unearned portion of stock-based compensation, net of forfeitures						477											477
Balances, March 31, 2012	$	140,025	$	(745,071	)	$	150,261	$	1,950,340		$	(333,307	)	$	51,778		$	1,214,026

See accompanying notes to unaudited condensed consolidated financial statements.

7

HARSCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.     Basis of Presentation

Harsco Corporation (the “Company”) has prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission rules that permit reduced disclosure for interim periods.  In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation are reflected in the unaudited condensed consolidated financial statements.  The December 31, 2011 Condensed Consolidated Balance Sheet information contained in this Form 10-Q was derived from the 2011 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for an annual report.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The Company’s management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company’s unaudited condensed consolidated financial statements and notes as required by U.S. GAAP.

Operating results and cash flows for the three months ended March 31, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012.

2.     Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in 2012:

On January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) issued changes related to fair value measurement and disclosure.  The changes are the result of convergence with International Financial Reporting Standards and clarify certain fair value measurement concepts and expand on existing disclosure requirements on Level 3 fair value measurements.  The adoption of these changes did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted FASB issued changes related to the presentation of comprehensive income.  The changes remove certain presentation options and require entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements.  There were no changes to the items that are reported in other comprehensive income.  In December 2011, the FASB indefinitely deferred a requirement dealing with the presentation of reclassification adjustments out of accumulated other comprehensive income.  Other than the sequencing of financial statements, the adoption of these changes did not have an impact on the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted FASB issued changes related to testing for goodwill impairment.  The changes allow for an assessment of qualitative factors to determine whether it is necessary to perform the two-step impairment test.  The adoption of these changes will not have an impact on the Company’s consolidated financial statements, but it may impact the manner in which the Company performs testing for goodwill impairment.

The following accounting standard has been issued and becomes effective for the Company at a future date:

In December 2011, the FASB issued changes related to offsetting assets and liabilities.  The changes require additional disclosure information regarding offsetting assets and liabilities to enable users of financial statements to understand the effect on financial position.  Management is currently evaluating these changes and believes that it may require additional disclosure, but will not have a material impact on the Company’s consolidated financial statements.  These changes become effective for the Company on January 1, 2013 with retrospective application required.

8

3.     Acquisitions and Dispositions

Acquisitions

Certain of the Company’s acquisitions in prior years included contingent consideration features for which defined goals needed to be met by the acquired business in order for payment of the consideration.  Each quarter until settlement of these contingencies, the Company assessed the likelihood that an acquired business would achieve the goals and the resulting fair value of the contingency.  In accordance with accounting standards for business combinations, these adjustments were recognized in operating income in the Condensed Consolidated Statements of Income as a component of the Other expenses line item.  The Company’s assessment of these performance goals resulted in the following reductions to previously recognized contingent consideration liabilities:

	Three Months Ended March 31
(In thousands)	2012		2011
Reduction of contingent consideration liabilities	$	—	$	3,966

All contingent consideration liabilities have been settled and there was no recorded contingent consideration liability as of March 31, 2012 or December 31, 2011.

Dispositions - Assets Held-for-Sale

Throughout the past several years and in conjunction with the 2011/2012 Restructuring Program and the Fourth Quarter 2010 Harsco Infrastructure Program, management approved the sale of certain long-lived assets throughout the Company’s operations.  At March 31, 2012 and December 31, 2011, assets held-for-sale of $3.3 million and $7.2 million, respectively were recorded as Other current assets on the Condensed Consolidated Balance Sheets.

4.   Accounts Receivable and Inventories

Accounts receivable consist of the following:

(In thousands)	March 31 2012			December 31 2011
Trade accounts receivable	$	650,340		$	636,304
Less: Allowance for doubtful accounts	(18,695		)	(17,829		)
Trade accounts receivable, net	$	631,645		$	618,475
Other receivables (a)	$	34,955		$	44,431

(a)Other receivables include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable, net.

The provision for doubtful accounts related to trade accounts receivable was as follows:

	Three Months Ended March 31
(In thousands)	2012		2011
Provision for doubtful accounts related to trade accounts receivable	$	2,927	$	2,166

Inventories consist of the following:

(In thousands)	March 31 2012		December 31 2011
Finished goods	$	84,087	$	78,445
Work-in-process	44,832		34,041
Raw materials and purchased parts	93,364		92,995
Stores and supplies	39,676		36,453
Total inventories	$	261,959	$	241,934

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5.     Property, Plant and Equipment

Property, plant and equipment consists of the following:

(In thousands)	March 31 2012			December 31 2011
Land	$	27,273		$	26,729
Land improvements	18,684			17,960
Buildings and improvements	192,788			186,799
Machinery and equipment	3,003,796			2,977,521
Uncompleted construction	65,721			66,719
Gross property, plant and equipment	3,308,262			3,275,728
Less accumulated depreciation	(2,029,141		)	(2,001,244		)
Property, plant and equipment, net	$	1,279,121		$	1,274,484

6.     Goodwill and Other Intangible Assets

The following table reflects the changes in carrying amounts of goodwill by segment (there is no goodwill associated with the Harsco Industrial Segment) for the three months ended March 31, 2012:

(In thousands)	Harsco Metals & Minerals Segment		Harsco Infrastructure Segment			Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2011	$	411,876	$	259,715		$	9,310	$	680,901
Changes to goodwill	—		(807		)	—		(807		)
Foreign currency translation	6,855		5,877			—		12,732
Balance at March 31, 2012	$	418,731	$	264,785		$	9,310	$	692,826

The Company’s 2011 annual goodwill impairment testing did not result in any impairment of the Company’s goodwill.  The fair values of the Harsco Metals business and the Harsco Infrastructure Segment exceeded carrying value by approximately 7.4% and 9.1%, respectively.  The Company tests for goodwill impairment annually, and whenever events or circumstances make it more likely than not that impairment may have occurred.  The Company performs its annual goodwill impairment test as of October 1 and monitors for interim triggering events on an ongoing basis.  The Company determined that as of March 31, 2012, no interim goodwill impairment testing was necessary.  There can be no assurance that the Company’s annual goodwill impairment testing will not result in a charge to earnings.  Should the Company’s analysis indicate a further degradation in the overall markets served by the Harsco Metals business or Harsco Infrastructure Segment, impairment losses for associated assets could be required.  Any impairment could result in the write-down of the carrying value of goodwill to its implied fair value.

Intangible assets by class consist of the following:

	March 31, 2012				December 31, 2011
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	186,093	$	124,415	$	183,576	$	119,708
Non-compete agreements	1,374		1,325		1,353		1,301
Patents	6,950		5,270		6,884		5,145
Technology related	29,738		15,466		29,497		14,614
Trade names	18,700		9,276		18,538		8,379
Other	11,461		8,115		10,749		7,949
Total	$	254,316	$	163,867	$	250,597	$	157,096

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Amortization expense for intangible assets was as follows:

	Three Months Ended March 31
(In thousands)	2012		2011
Amortization expense for intangible assets	$	5,308	$	7,849

The estimated amortization expense for the next five fiscal years based on current intangible assets and excluding the potential effect of future foreign currency exchange rate fluctuations is as follows:

(In thousands)	2012		2013		2014		2015		2016
Estimated amortization expense	$	17,500	$	15,750	$	13,500	$	8,750	$	7,500

7.     Debt and Credit Agreements

In March 2012, the Company entered into an Amended and Restated Five-Year Credit Agreement (“Credit Agreement”) in the amount of $525 million through a syndicate of 14 banks.   The Credit Agreement matures in March 2017.  The Company has the option to increase the amount of the Credit Agreement to $550 million.  The Credit Agreement amends and restates the Company’s multi-year revolving credit facility which was set to mature in December 2012.  There were no borrowings outstanding under the multi-year revolving credit facility upon execution of the Credit Agreement,

The Credit Agreement contains covenants stipulating a maximum debt to capital ratio of 60%; a maximum subsidiary consolidated indebtedness to consolidated tangible assets ratio of 10%; and a minimum total consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest charges ratio of 3.0:1.  At March 31, 2012 the Company was in compliance with these covenants. Borrowings under the Credit Agreement are available in most major currencies with active markets and at interest rates based upon LIBOR, plus a margin.

During the three months ended March 31, 2012, the Company expensed $0.5 million of previously deferred financing costs associated with the multi-year revolving credit facility for banks which did not participate in the Credit Agreement or banks with decreased obligations under the Credit Agreement.

8.  Employee Benefit Plans

	Three Months Ended March 31
Defined Benefit Net Periodic Pension Cost	U. S. Plans						International Plans
(In thousands)	2012			2011			2012			2011
Defined benefit plans:
Service cost	$	472		$	392		$	1,064		$	1,094
Interest cost	3,209			3,389			11,378			11,983
Expected return on plan assets	(3,907		)	(4,147		)	(11,044		)	(12,533		)
Recognized prior service costs	47			62			99			104
Recognized losses	1,158			750			3,731			2,778
Amortization of transition liability	—			—			9			14
Settlement/curtailment loss (gain)	—			—			(1,696		)	30
Defined benefit plans net periodic pension cost	$	979		$	446		$	3,541		$	3,470

Company Contributions	Three Months Ended March 31
(In thousands)	2012		2011
Defined benefit pension plans:
United States	$	589	$	448
International	18,612		16,854
Multiemployer pension plans	3,295		3,819
Defined contribution pension plans	4,949		4,708

The Company currently anticipates contributing an additional $8.7 million and $11.6 million for the U.S. and international defined benefit pension plans, respectively, during the remainder of 2012.

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9.     Income Taxes

Income tax expense from continuing operations increased primarily due to certain losses from continuing operations being generated in jurisdictions where no tax benefit can be recognized for the three months ended March 31, 2012 compared with the three months ended March 31, 2011. The effective income tax rate related to continuing operations for the three months ended March 31, 2012 was 18.1% compared with 24.7% for the three months ended March 31, 2011.  The effective income tax rate changed primarily due to certain losses in jurisdictions where no tax benefit can be recognized.  This resulted in income tax expense despite an overall loss from continuing operations.

An income tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.  The unrecognized income tax benefit at March 31, 2012 was $44.2 million including interest and penalties.  Within the next twelve months, it is reasonably possible that up to $5.2 million of such amount will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

10.  Commitments and Contingencies

Environmental

The Company is involved in a number of environmental remediation investigations and cleanups and, along with other companies, has been identified as a “potentially responsible party” for certain waste disposal sites.  While each of these matters is subject to various uncertainties, it is probable that the Company will agree to make payments toward funding certain of these activities and it is possible that some of these matters will be decided unfavorably to the Company.  The Company has evaluated its potential liability, and its financial exposure is dependent upon such factors as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the allocation of cost among potentially responsible parties, the years of remedial activity required and the remediation methods selected.  The Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011 include accruals in Other current liabilities of $2.4 million and $2.5 million, respectively, for environmental matters.  The amounts charged against pre-tax income related to environmental matters totaled $0.2 million for the three months ended March 31, 2012 and 2011.

The Company evaluates its liability for future environmental remediation costs on a quarterly basis.  Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures.  The Company does not expect that any sum it may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse effect on its financial position, results of operations or cash flows.

Brazilian Tax Disputes

The Company is involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil.  These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest charges that increase at statutorily determined amounts per month and are assessed on the aggregate amount of the principal and penalties.  In addition, the losing party at the collection action or court appeals phase could be subject to a charge to cover statutorily mandated legal fees, which are generally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest.  A large number of the claims relate to value-added (“ICMS”), services and social security tax disputes.  The largest proportion of the assessed amounts relate to ICMS claims filed by the State Revenue Authorities from the State of São Paulo, Brazil (the “SPRA”), encompassing the period from January 2002 to May 2005.

In October 2009, the Company received notification of the SPRA’s final administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to a customer in the State between January 2004 and May 2005.  As of March 31, 2012, the principal amount of the tax assessment from the SPRA with regard to this case is approximately $3 million, with penalty, interest and fees assessed to date increasing such amount by an additional $31 million.  Any increase in the aggregate amount since the Company’s last Annual Report on Form 10-K is due to an increase in assessed interest and statutorily mandated legal fees for the quarter.  All such amounts include the effect of foreign currency translation.

Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003, and is still pending at the administrative phase, where the aggregate amount assessed by the tax authorities in August 2005 was $14 million (the amounts with regard to this claim are valued as of the date of the assessment since it has not yet reached the collection phase), composed of a principal amount of approximately $3 million, with penalty and interest assessed

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through that date increasing such amount by an additional $11 million.  All such amounts include the effect of foreign currency translation.

The Company continues to believe that it is not probable it will incur a loss for these assessments by the SPRA and continues to believe that sufficient coverage for these claims exists as a result of the Company’s customer’s indemnification obligations and such customer’s pledge of assets in connection with the October 2009 notice, as required by Brazilian procedure.

The Company intends to continue its practice of vigorously defending itself against these tax claims under various alternatives, including judicial appeal.  The Company will continue to evaluate its potential liability with regard to these claims on a quarterly basis; however, it is not possible to predict the ultimate outcome of these tax-related disputes in Brazil.

Customer Disputes

The Company, through its Harsco Metals & Minerals Segment, provides services to various subsidiaries and affiliates of ArcelorMittal (“ArcelorMittal”) on a number of sites worldwide through long-term service contracts.  Currently, ArcelorMittal and the Company are involved in several commercial disputes, a few of which have resulted in legal action.  Both the Company and ArcelorMittal are working to resolve these matters.  Although results of operations and cash flows for a given period could be adversely affected by a negative outcome in these or other lawsuits, claims and proceedings, management believes that the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Other

In the United States, the Company has been named as one of many defendants (approximately 90 or more in most cases) in legal actions alleging personal injury from exposure to airborne asbestos over the past several decades.  In their suits, the plaintiffs have named as defendants, among others, many manufacturers, distributors and installers of numerous types of equipment or products that allegedly contained asbestos.

The Company believes that the claims against it are without merit.  The Company has never been a producer, manufacturer or processor of asbestos fibers.  Any component within a Company product that may have contained asbestos would have been purchased from a supplier.  Based on scientific and medical evidence, the Company believes that any asbestos exposure arising from normal use of any Company product never presented any harmful levels of airborne asbestos exposure, and, moreover, the type of asbestos contained in any component that was used in those products was protectively encapsulated in other materials and is not associated with the types of injuries alleged in the pending suits.  Finally, in most of the depositions taken of plaintiffs to date in the litigation against the Company, plaintiffs have failed to specifically identify any Company products as the source of their asbestos exposure.

The majority of the asbestos complaints pending against the Company have been filed in New York.  Almost all of the New York complaints contain a standard claim for damages of $20 million or $25 million against the approximately 90 defendants, regardless of the individual plaintiff’s alleged medical condition, and without specifically identifying any Company product as the source of plaintiff’s asbestos exposure.

As of March 31, 2012, there are 18,730 pending asbestos personal injury claims filed against the Company.  Of these cases, 18,241 are pending in the New York Supreme Court for New York County in New York State.  The other claims, totaling 489, are filed in various counties in a number of state courts, and in certain Federal District Courts (including New York), and those complaints generally assert lesser amounts of damages than the New York State court cases or do not state any amount claimed.

As of March 31, 2012, the Company has obtained dismissal by stipulation, or summary judgment prior to trial, in 25,966 cases.

In view of the persistence of asbestos litigation nationwide, the Company expects to continue to receive additional claims.  However, there have been developments during the past several years, both by certain state legislatures and by certain state courts, which could favorably affect the Company’s ability to defend these asbestos claims in those jurisdictions.  These developments include procedural changes, docketing changes, proof of damage requirements and other changes that require plaintiffs to follow specific procedures in bringing their claims and to show proof of damages before they can proceed with their claim.  An example is the action taken by the New York Supreme Court (a trial court), which is responsible for managing all asbestos cases pending within New York County in the State of New York.  This Court issued an order in December 2002 that created a Deferred or Inactive Docket for all pending and future asbestos claims filed by plaintiffs who cannot demonstrate that they have a malignant condition or discernible physical impairment, and an Active or In Extremis Docket for plaintiffs who are able to show such medical condition.  As a result of this order, the

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majority of the asbestos cases filed against the Company in New York County have been moved to the Inactive Docket until such time as the plaintiffs can show that they have incurred a physical impairment.  At March 31, 2012, the Company has been listed as a defendant in 808 Active or In Extremis asbestos cases in New York County.  The Court’s Order has been challenged by some plaintiffs.

Except with regard to the legal costs in a few limited, exceptional cases, the Company’s insurance carrier has paid all legal and settlement costs and expenses to date related to the Company’s U.S. asbestos cases.  The Company has liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, to substantially cover any liability that might ultimately be incurred on these claims.

The Company intends to continue its practice of vigorously defending these claims and cases.  It is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation.  Despite this uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate outcome of these cases will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company is subject to various other claims and legal proceedings covering a wide range of matters that arose in the ordinary course of business.  In the opinion of management, all such matters are adequately covered by insurance or by established reserves, and, if not so covered, are without merit or are of such kind, or involve such amounts, as would not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the event can be reasonably estimated.  Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported.  Inherent in these estimates are assumptions that are based on the Company’s history of claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends.  If actual claims differ from those projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in the period the change was determined.  When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability.  Insurance claim receivables are included in Other receivables on the Company’s Condensed Consolidated Balance Sheets.  See Note 1, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 for additional information on Accrued Insurance and Loss Reserves.

11.  Reconciliation of Basic and Diluted Shares

	Three Months Ended
	March 31
(In thousands, except per share amounts)	2012			2011
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	(28,963	)	$	12,256
Weighted-average shares outstanding - basic	80,579			80,695
Dilutive effect of stock-based compensation	—			249
Weighted-average shares outstanding - diluted	80,579			80,944
Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	(0.36	)	$	0.15
Diluted	$	(0.36	)	$	0.15

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At March 31, 2012, the following average outstanding stock-based compensation units were not included in the three month computation of diluted earnings per share because the effect was antidilutive:

·Restricted stock units – 63,972

·Stock options – 460,000

·Stock appreciation rights – 55,992

·Other – 158,569

At March 31, 2011, all outstanding stock-based compensation units were included in the computation of diluted earnings per share.

12.  Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency forward exchange contracts, commodity contracts and cross-currency interest rate swaps, to manage certain foreign currency, commodity price and interest rate exposures.  Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes.

All derivative instruments are recorded on the balance sheet at fair value.  Changes in the fair value of derivatives used to hedge foreign-currency-denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged.  Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate and if the criteria for hedge accounting are met.  Gains and losses on derivatives designated as cash flow hedges are deferred as a separate component of equity and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.  Generally, at March 31, 2012, these deferred gains and losses will be reclassified to earnings over 10 to 15 years from the balance sheet date.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

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The fair value of outstanding derivative contracts recorded as assets and liabilities on the Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011 were as follows:

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
March 31, 2012
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	28	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	38,289		Noncurrent liabilities	5,353
Total derivatives designated as hedging instruments		$	38,317		$	5,353
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	518	Other current liabilities	$	1,488

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
December 31, 2011
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	274	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	44,636		Noncurrent liabilities	1,792
Total derivatives designated as hedging instruments		$	44,910		$	1,792
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	2,912	Other current liabilities	$	1,207

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The effect of derivative instruments on the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011 was as follows:

Derivatives Designated as Hedging Instruments

(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended March 31, 2012:
Foreign currency forward exchange contracts	$	(362	)	Cost of services and products sold	$	34		$	—
Cross-currency interest rate swaps	1,339				—		Cost of services and products sold	(11,247		) (a)
	$	977			$	34		$	(11,247	)
For the three months ended March 31, 2011:
Foreign currency forward exchange contracts	$	(527	)		$	—		$	—
Cross-currency interest rate swaps	7,821				—		Cost of services and products sold	(18,781		) (a)
	$	7,294			$	—		$	(18,781	)

(a)   These gains (losses) offset foreign currency fluctuation effects on the debt principal.

Derivatives Not Designated as Hedging Instruments

	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended March 31 (a)
(In thousands)		2012			2011
Foreign currency forward exchange contracts	Cost of services and products sold	$	(4,694	)	$	(5,121	)

(a) These gains (losses) offset amounts recognized in cost of service and products sold principally as a result of intercompany or third party foreign currency exposures.

Foreign Currency Forward Exchange Contracts

The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements.  The financial position and results of operations of substantially all of the Company’s foreign subsidiaries are measured using the local currency as the functional currency.  Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods.  The aggregate effects of translating the balance sheets of these subsidiaries are deferred and recorded in Accumulated other comprehensive loss, which is a separate component of equity.

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations.  At March 31, 2012 and December 31, 2011, the Company had $311.1 million and $324.5 million of contracted amounts, respectively, of foreign currency forward exchange contracts outstanding.  These contracts are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and its various subsidiaries, vendors or customers.  The unsecured

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contracts outstanding at March 31, 2012 mature at various times within three months and are with major financial institutions.  The Company may be exposed to credit loss in the event of non-performance by the contract counterparties.  The Company evaluates the creditworthiness of the counterparties and does not expect default by them.  Foreign currency forward exchange contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.

The following tables summarize, by major currency, the contractual amounts of the Company’s foreign currency forward exchange contracts in U.S. dollars at March 31, 2012 and December 31, 2011.  The “Buy” amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the “Sell” amounts represent the U.S. dollar equivalent of commitments to sell foreign currencies.  The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

March 31, 2012

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	2,776	April 2012	$	(4	)
British pounds sterling	Buy	2,405		April 2012	3
Euros	Sell	185,694		April 2012 through June 2012	(1,144		)
Euros	Buy	106,894		April 2012 through June 2012	88
Other currencies	Sell	4,384		April 2012 through June 2012	(10		)
Other currencies	Buy	8,947		April 2012	125
Total		$	311,100		$	(942	)

December 31, 2011

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	18,350	January 2012	$	(20	)
British pounds sterling	Buy	4,364		January 2012	(12		)
Euros	Sell	178,889		January 2012 through October 2012	2,345
Euros	Buy	105,247		January 2012 through April 2012	(878		)
Other currencies	Sell	2,957		January 2012 through March 2012	62
Other currencies	Buy	14,656		January 2012	235
Total		$	324,463		$	1,732

In addition to foreign currency forward exchange contracts, the Company designates certain loans as hedges of net investments in foreign subsidiaries.  The Company recorded pre-tax net losses of $4.3 million and $6.9 million during the three months ended March 31, 2012 and 2011, respectively into Accumulated other comprehensive loss, which is a separate component of stockholders’ equity.

Cross-Currency Interest Rate Swaps

The Company uses cross-currency interest rate swaps in conjunction with certain debt issuances in order to secure a fixed local currency interest rate.  Under these cross-currency interest rate swaps, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively.  The cross-currency interest rate swaps are recorded on the Condensed  Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread recorded in Accumulated other comprehensive loss, which is a separate component of equity.  Changes in value attributed to the effect of foreign currency fluctuations are recorded in the income statement and offset currency fluctuation effects on the debt principal.

Cross-Currency Interest Rate Swaps

			Interest Rates
(In millions)	Contractual Amount		Receive	Pay
Maturing 2018	$	250.0	Fixed U.S. dollar rate	Fixed euro rate
Maturing 2020	220.0		Fixed U.S. dollar rate	Fixed British pound sterling rate
Maturing 2013	1.8		Floating U.S. dollar rate	Fixed rupee rate

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Fair Value of Derivative Assets and Liabilities and Other Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).  The Company utilizes market data or assumptions that the Company believes market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  The three levels of the fair value hierarchy are described below:

·Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

·Level 3—Inputs that are both significant to the fair value measurement and unobservable.

In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

At March 31, 2012 and December 31, 2011, all derivative assets and liabilities were valued at Level 2 of the fair value hierarchy.  The following table indicates the different financial instruments of the Company at March 31, 2012 and December 31, 2011:

Level 2 Fair Value Measurements

(In thousands)	March 31 2012		December 31 2011
Assets
Foreign currency forward exchange contracts	$	546	$	3,186
Cross-currency interest rate swaps	38,289		44,636
Liabilities
Foreign currency forward exchange contracts	1,488		1,207
Cross-currency interest rate swaps	5,353		1,792

The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3) for the three months ended March 31:

	Three Months Ended March 31
(In thousands)	2012		2011
Balance at beginning of period	$	—	$	3,872
Acquisitions during the period	—		—
Fair value adjustments included in earnings	—		(3,966		)
Effect of exchange rate changes	—		94
Balance at end of period	$	—	$	—

The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information.  Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and minimize the use of unobservable inputs.  The Company is able to classify fair value balances based on the ability to observe those

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inputs.  Commodity derivatives, foreign currency forward exchange contracts and cross-currency interest rate swaps are classified as Level 2 fair value based upon pricing models using market-based inputs.  Model inputs can be verified, and valuation techniques do not involve significant management judgment.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities.  At March 31, 2012 and December 31, 2011, the total fair value of long-term debt, including current maturities, was $1.0 billion and $935.1 million, respectively, compared to carrying value of $935.5 million and $857.4 million, respectively.  Fair values for debt are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

13. Review of Operations by Segment

	Three Months Ended March 31
(In thousands)	2012			2011
Revenues From Continuing Operations
Harsco Metals & Minerals	$	359,951		$	391,737
Harsco Infrastructure	237,972			261,567
Harsco Rail	68,048			62,602
Harsco Industrial	86,364			63,149
Total revenues from continuing operations	$	752,335		$	779,055
Operating Income (Loss) From Continuing Operations
Harsco Metals & Minerals	$	22,311		$	28,605
Harsco Infrastructure	(53,542		)	(17,491		)
Harsco Rail	9,331			8,123
Harsco Industrial	13,998			10,674
Corporate	(4,785		)	(875		)
Total operating income (loss) from continuing operations	$	(12,687	)	$	29,036

Reconciliation of Segment Operating Income (Loss) to Income (Loss) From Continuing Operations Before Income Taxes and Equity Income

	Three Months Ended March 31
(In thousands)	2012			2011
Segment operating income (loss)	$	(7,902	)	$	29,911
General corporate	(4,785		)	(875		)
Operating income (loss) from continuing operations	(12,687		)	29,036
Interest income	674			720
Interest expense	(12,824		)	(11,935		)
Income (loss) from continuing operations before income taxes and equity income	$	(24,837	)	$	17,821

14.  Other Expenses

This income statement classification includes restructuring costs for employee termination benefits, product rationalization and costs to exit activities; former CEO separation costs; net gains on the disposal of non-core assets; and business combination accounting adjustments for contingent consideration related to acquisitions by the Company.

	Three Months Ended March 31
(In thousands)	2012			2011
Restructuring costs (see Note 15)	$	35,449		$	4,836
Former CEO separation costs	4,125			—
Net gains from sale of non-core assets	(401		)	(1,056		)
Contingent consideration adjustments	—			(3,966		)
Other	919			657
Other expenses	$	40,092		$	471

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15.  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 reduced fixed investment and generate annual operating expense savings.  The programs have been instituted in response to the continuing impact of global financial and economic uncertainty on the Company’s end markets, particularly in the Company’s Harsco Infrastructure Segment.

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.

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, in the Harsco Infrastructure and Harsco Metals & Minerals Segments.  As previously disclosed in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2011, the Company incurred approximately $101 million in pre-tax charges under this program in 2011. Additional charges of approximately $97 million are expected to be incurred in 2012.  Benefits under this program, in the form of reduced costs, are expected to be over $36 million in 2012 and more than $65 million when fully annualized in 2013.

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

(In thousands)	Accrual December 31 2011		Additional Expenses Incurred (a)			Non-Cash Charges / Adjustments			NetCash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Employee termination benefit costs	$	14,500	$	4,243		$	(299	)	$	(9,302	)	$	527		$	9,669
Cost to exit activities	2,833		23,204			253			(15,326		)	51			11,015
Total Harsco Infrastructure Segment (b)	17,333		27,447			(46		)	(24,628		)	578			20,684
Harsco Metals & Minerals Segment
Employee termination benefit costs	12,737		(205		)	—			(2,925		)	(2		)	9,605
Harsco Rail Segment
Employee termination benefit costs	50		—			—			(50		)	—			—
Harsco Corporate
Employee termination benefit costs	351		74			—			(266		)	—			159
Total	$	30,471	$	27,316		$	(46	)	$	(27,869	)	$	576		$	30,448

(a)Includes principally the recognition of additional expenses due to timing considerations under U.S. GAAP, as well as adjustments to previously recorded restructuring charges resulting from changes in facts and circumstances in the implementation of these activities.

(b)The table does not include $8.1 million of non-cash product rationalization expense or $7.3 million of proceeds from asset sales under the 2011/2012 Restructuring Program for this Segment as these items did not impact the restructuring accrual during the quarter.

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

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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 March 31, 2012 and the activity for the three months then ended are as follows:

(In thousands)	Accrual December 31 2011		Adjustments to Previously Recorded Restructuring Charges (a)			Cash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Cost to exit activities	$	11,929	$	(234	)	$	(870	)	$	107		$	10,932
Employee termination benefit costs	211		(147		)	(61		)	(3		)	—
Other	7		(5		)	—			(2		)	—
Total	$	12,147	$	(386	)	$	(931	)	$	102		$	10,932

(a)Adjustments to previously recorded restructuring charges resulted from changes in facts and circumstances in the implementation of these activities.

Approximately one-third of the remaining accrual at March 31, 2012 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.

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 March 31, 2012 and the activity for the year then ended are as follows:

(In thousands)	Accrual December 31 2011		Cash Expenditures			Foreign Currency Translation		Remaining Accrual March 31 2012
Harsco Metals & Minerals Segment
Employee termination benefit costs	$	1,280	$	—		$	26	$	1,306
Cost to exit activities	727		(34		)	1		694
Total	$	2,007	$	(34	)	$	27	$	2,000

The majority of the remaining cash expenditures of $2.0 million related to these actions are expected to be paid throughout 2012 and 2013.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements as well as the Company’s audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which includes additional information about the Company’s critical accounting policies, contractual obligations, practices and the transactions that support the financial results, and provides a more comprehensive summary of the Company’s outlook, trends and strategies for 2012 and beyond.

Certain amounts included in Item 2 of this Quarterly Report on Form 10-Q are rounded in millions and all percentages are calculated based on actual amounts.  As a result, minor differences may exist due to rounding.

Forward-Looking Statements

The nature of the Company’s business and the many countries in which it operates subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties.  In accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein.  Forward-looking statements contained herein could include, among other things, statements about the Company’s management’s confidence and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, earnings and Economic Value Added (“EVA®”).  These statements can be identified by the use of such terms as “may,” “could,” “expect,” “anticipate,” “intend,” “believe” or other comparable terms.

Factors that could cause actual results to differ, perhaps materially, from those implied by the forward-looking statements include, but are not limited to:  (1) changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchange rates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of stock and bond markets that could affect, among other things, the valuation of the assets in the Company’s pension plans and the accounting for pension assets, liabilities and expenses; (4) changes in governmental laws and regulations, including environmental, tax and import tariff standards; (5) market and competitive changes, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) unforeseen business disruptions in one or more of the many countries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (7) the seasonal nature of the Company’s business; (8) the Company’s ability to successfully enter into new contracts and complete new acquisitions or strategic ventures in the timeframe contemplated, or at all; (9) the integration of the Company’s strategic acquisitions; (10) the amount and timing of repurchases of the Company’s common stock, if any; (11) ongoing global financial and credit crises and economic conditions generally, which could result in the Company’s customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for the Company’s products and services and, accordingly, the Company’s revenues, margins and profitability; (12) the outcome of any disputes with customers; (13) the financial condition of the Company’s customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability;  (14) the Company’s ability to successfully implement and receive the expected benefits of cost-reduction and restructuring initiatives, including the achievement of expected cost savings in the expected time frame; (15) risk and uncertainty associated with intangible assets; and (16) other risk factors listed from time to time in the Company’s SEC reports.  A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The Company cautions that these factors may not be exhaustive and that many of these factors are beyond the Company’s ability to control or predict.  Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.  The Company undertakes no duty to update forward-looking statements except as may be required by law.

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Executive Overview

Revenues by Segment	Three Months Ended March 31
(In millions)	2012		2011		Change			%
Harsco Metals & Minerals	$	360.0	$	391.7	$	(31.8	)	(8.1	)%
Harsco Infrastructure	238.0		261.6		(23.6		)	(9.0	)
Harsco Rail	68.0		62.6		5.4			8.7
Harsco Industrial	86.4		63.1		23.2			36.8
Total revenues	$	752.3	$	779.1	$	(26.7	)	(3.4	)%

Revenues by Region	Three Months Ended March 31
(In millions)	2012		2011		Change			%
Western Europe	$	278.6	$	308.1	$	(29.5	)	(9.6	)%
North America	273.1		264.3		8.8			3.3
Latin America (a)	87.1		81.5		5.5			6.8
Middle East and Africa	37.4		50.9		(13.5		)	(26.5	)
Asia-Pacific	49.2		45.3		3.9			8.7
Eastern Europe	26.9		28.9		(2.0		)	(6.9	)
Total revenues	$	752.3	$	779.1	$	(26.7	)	(3.4	)%

(a)Includes Mexico.

Revenues for the Company during the first quarter of 2012 were $752.3 million compared with $779.1 million in the first quarter of 2011.  Foreign currency translation decreased revenues by $14.2 million for the first quarter of 2012 in comparison with the first quarter of 2011.  The Company generated lower revenues in the first quarter 2012 in the Harsco Metals & Minerals Segment due to decreased production resulting principally from contracts that have been exited or not renewed due to the Company’s minimum return requirements, as well decreased steel production by customers.  In the Harsco Infrastructure Segment, reduced revenues were due to decreased volumes of equipment rentals and erection and dismantling services, principally in North America and Europe.  These reductions were partially offset by higher revenues in the Harsco Rail Segment due to increased contract services revenues and equipment sales, and the Harsco Industrial Segment due to increased demand in energy-related markets.

Revenues from emerging markets (those outside North America and Western Europe) were approximately 27% of total revenues in the first quarter of 2012 compared with 26% for the first quarter of 2011.

Operating Income (Loss) by Segment	Three Months Ended March 31
(In millions)	2012			2011			Change			%
Harsco Metals & Minerals	$	22.3		$	28.6		$	(6.3	)	(22.0	)%
Harsco Infrastructure	(53.5		)	(17.5		)	(36.1		)	(206.1	)
Harsco Rail	9.3			8.1			1.2			14.9
Harsco Industrial	14.0			10.7			3.3			31.1
Corporate	(4.8		)	(0.9		)	(3.9		)	(446.9	)
Total operating income (loss)	$	(12.7	)	$	29.0		$	(41.7	)	(143.7	)%

	Three Months Ended March 31
Operating Margins	2012		2011
Harsco Metals & Minerals	6.2	%	7.3	%
Harsco Infrastructure	(22.5	)	(6.7	)
Harsco Rail	13.7		13.0
Harsco Industrial	16.2		16.9
Consolidated operating margin	(1.7	)%	3.7	%

The operating loss from continuing operations for the first quarter of 2012 was $12.7 million compared with operating income from continuing operations of $29.0 million in the first quarter of 2011.  This decrease was principally driven by $35.4 million of pre-tax restructuring charges associated with the 2011/2012 Restructuring Program.  Decreased customer steel production, due partially to contracts that expired and were not renewed, in the Harsco Metals & Minerals Segment also reduced operating income, as did former CEO separation costs at Corporate.  This was partially offset by increased operating income in the Harsco Industrial Segment due to overall strength in the energy-related markets served by these

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businesses.  Diluted loss per share from continuing operations for the first quarter of 2012 was $0.36 compared with diluted earnings per share from continuing operations of $0.15 for the first quarter of 2011.

Savings realized under the 2011/2012 Restructuring Program had a positive pre-tax effect on operating income of approximately $7 million in the first quarter of 2012.  Under the 2011/2012 Restructuring Program, the Company expects to realize savings of approximately $36 million in 2012 and $65 million on an annualized basis in 2013.  These estimates have not changed from prior reported estimates.  Savings under the Company’s Fourth Quarter 2010 Harsco Infrastructure Program have previously been estimated at $60 million per year and the Company expects to realize that amount in 2012 from the 2010 actions.

The Company continues to have sufficient available liquidity and has been able to obtain all necessary financing.  The Company currently expects operational and business needs to be met with cash from operations for 2012, although short-term borrowings may be made from time to time due to historical patterns of seasonal cash flow and for the funding of various projects.  See Liquidity and Capital Resources under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on cash flows.

Harsco Metals & Minerals Segment:

Significant Impacts on Revenues (In millions)	Three Months Ended March 31
Revenues — 2011	$	391.7
Net decreased price/volume	(23.1		)
Impact of foreign currency translation	(8.6		)
Revenues — 2012	$	360.0

Significant Impacts on Operating Income:

·Lower global steel production and demand.  Overall, steel production by customers under services contracts was down 13% year-over-year, reflecting primarily the impact of non-renewal of contracts as the Company exited lower-margin contracts.

·Negative impact due to higher fuel costs.

·These impacts were partially offset by improved results from this Segment’s roofing granules and abrasives business and overall cost reductions from the 2011/2012 Restructuring Program.

Harsco Infrastructure Segment:

Significant Impacts on Revenues (In millions)	Three Months Ended March 31
Revenues — 2011	$	261.6
Net decreased volume	(13.4		)
Impact of foreign currency translation	(5.2		)
Impact of the sale of two lines of business	(5.0		)
Revenues — 2012	$	238.0

Significant Impacts on Operating Income:

·During the first quarter of 2012, a pre-tax restructuring charge of $35.6 million was incurred as part of the 2011/2012 Restructuring Program.

·Decreased volumes of equipment rentals and erection and dismantling services, primarily in North America and Europe.

·These impacts were partially offset by the realization of expected cost savings resulting from restructuring initiatives implemented in 2010 and 2011.

Harsco Rail Segment:

Significant Effects on Revenues (In millions)	Three Months Ended March 31
Revenues — 2011	$	62.6
Net increased volume	5.4
Revenues — 2012	$	68.0

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Significant Effects on Operating Income:

·Stronger than anticipated performance in the first quarter of 2012 was the result of higher contract services revenues and equipment sales compared with the first quarter of 2011.

·Certain parts and equipment sales previously expected to occur in the second quarter of 2012 were realized in the first quarter of 2012.

Harsco Industrial Segment:

Significant Effects on Revenues (In millions)	Three Months Ended March 31
Revenues — 2011	$	63.1
Net increased price/volume	23.7
Impact of foreign currency translation	(0.4		)
Revenues — 2012	$	86.4

Significant Effects on Operating Income:

·Increased market demand with gains in market share and overall economic improvement in the principally energy-related markets served by these businesses.

·Operating income was negatively impacted by higher year-over-year material costs.

Outlook, Trends and Strategies

In addition to items noted in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, the following significant items, risks, trends and strategies are expected to affect the Company for the remainder of 2012 and beyond:

·The Company will continue to place a strong focus on expansion into targeted emerging markets to improve the balance of its geographic footprint.  More specifically, the Company’s global growth strategies include steady, targeted expansion, particularly in Asia-Pacific, the Gulf Region of the Middle East and Africa and Latin America to further complement the Company’s already strong presence throughout Europe and North America.  Although the Harsco Metals & Minerals Segment will continue to feel the impact of non-renewed contracts that did not meet minimum return requirements, underlying growth for the Company overall is also expected to be achieved through the provision of additional services to existing customers; new contracts in both developed and targeted growth markets; and targeted strategic ventures and partnerships in strategic countries and market sectors.  This strategy is targeted to result in approximately 35% of revenue from emerging markets by 2015.  This growth will come both organically and through investments such as the previously announced China’s Taiyuan Iron & Steel (Group) Co, Ltd. (“TISCO”) strategic venture.  Over time, a balanced geographic footprint should also benefit the Company through further diversification of its customer base.

·The Company’s intention with regard to the use of operating cash flow is to take a balanced approach.  The first use of cash flows will be to continue to pay the Company’s cash dividend, which has been paid every year since 1939.  Second, the Company plans to allocate capital expenditures to projects that have the appropriate long-term return characteristics.

·Management will continue to be very selective and disciplined in allocating capital, choosing projects with the highest Economic Value Added (“EVA®”) potential and return on capital employed.

·The Company has maintained a capital structure with a balance sheet debt to capital ratio approximating 40% for the last several years.  That ratio has increased to 44.4% at March 31, 2012 primarily due to decreased equity resulting from restructuring charges incurred in 2011 and 2012; foreign currency translation adjustments and pension liability adjustments in 2011, including a deferred tax valuation allowance recorded related to U.K. pension liabilities; and higher outstanding commercial paper balances.  The effective income tax rate for 2012 is currently expected to be approximately 27%.

·A majority of the Company’s revenue is generated from customers located outside the United States, and a substantial portion of the Company’s assets and employees are located outside the United States.  United States income tax and international withholding taxes have not been provided on undistributed earnings for certain non-U.S. subsidiaries as the Company considers such earnings as indefinitely reinvested in the operations of those subsidiaries.  Any tax reform that reduces the Company’s ability to defer U.S. taxes on profit indefinitely reinvested outside the United States could have a negative impact on the Company’s ability to compete in the global marketplace.  The Company does not believe that substantive U.S. legislative corporate tax reform is realistic for 2012, given the current U.S. political environment.  However, the Company will monitor events in the U.S. Legislature closely for any favorable or unfavorable legislation.

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·Fluctuations in the U.S. dollar can have significant impacts in the Harsco Metals & Minerals and Harsco Infrastructure Segments, as approximately 80% of the revenues generated in these Segments are from outside the United States.

·Volatility in energy and commodity costs (e.g., diesel fuel, natural gas, steel, etc.) and worldwide demand for these commodities could impact the Company’s operations, both in cost increases or decreases to the extent that such increases or decreases are not passed on to customers.  However, volatility in energy and commodity costs may provide additional service opportunities for the Harsco Metals & Minerals Segment as customers may outsource more services to reduce overall costs.  Volatility may also affect opportunities in the Harsco Infrastructure Segment for additional plant maintenance and capital improvement projects.  Similarly, natural gas price volatility may affect opportunities in the Harsco Industrial Segment.

·Defined benefit net periodic pension costs for 2012 are expected to be approximately $9 million higher than 2011.  Contributing to this increased expense are lower discount rates at December 31, 2011 and a lower than expected return on plan assets in 2011.  These two factors are primary drivers of the Company’s defined benefit net periodic pension costs as, substantially all of the Company’s significant defined benefit plans have been frozen to eliminate future service benefits.

·The Company may be required to record impairment charges in the future to the extent it cannot generate future cash flows at a level sufficient to recover the net book value of a reporting unit.  As part of the Company’s annual goodwill impairment testing, estimates of fair value are based on assumptions regarding future operating cash flows and growth rates of each reporting unit, the weighted-average cost of capital (“WACC”) applied to these cash flows and current market estimates of value.  Based on the uncertainty of future growth rates and other assumptions used to estimate goodwill recoverability, future reductions in a reporting unit’s cash flows could cause a material non-cash impairment charge to goodwill, which could have a material adverse effect on the Company’s results of operations and financial condition.  See Application of Critical Accounting Policies under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Harsco Metals & Minerals Segment:

·The Harsco Metals & Minerals Segment is expected to show improved operating margins and overall returns in the second half of 2012.  End market activity is expected to continue to be down year-over-year in the second quarter of 2012, due principally to the impact of non-renewed contracts that did not meet minimum return requirements and European and Middle East market conditions. Improvement is expected in the second half of the year.  The second half of 2012 should also benefit from continued new contract signings and restructuring actions.

·The 25-year environmental solutions contract for on-site metal recovery in China that was awarded in July 2011 to the Company’s previously announced venture with Taiyuan Iron & Steel (Group) Co., Ltd. (“TISCO”) will effectively address the environmentally beneficial processing and metal recovery of TISCO’s stainless and carbon steel slag production by-products across a range of potential commercial applications.  The Company anticipates that the venture has the potential to generate new revenues of an estimated $30 million per year initially, beginning after the start-up of operations in the fourth quarter of 2012, and ramping up to a projected run rate of approximately $50 million to $60 million per year when fully operational.  The Company and TISCO will respectively share a 60%-40% relationship in the partnership and the Company consolidates the financial statements of the venture.

·The industrial abrasives and roofing granules business within the Harsco Metals & Minerals Segment generates value by collecting and processing boiler slag, a coal combustion by-product (“CCP”), into commercially useful products that put this material to beneficial use in products such as roofing materials and blasting abrasives.  In May 2010, the Environmental Protection Agency (“EPA”) released a proposed rule that set out two different options with regard to the regulation of CCPs produced by coal-fired utility boilers.  One option would regulate CCPs as hazardous waste when the CCPs are destined for disposal in landfills and surface impoundments.  The second option would regulate the disposal of CCPs as solid waste by issuing minimum national criteria for proper management of these nonhazardous, solid wastes.  Neither proposal changes the EPA’s prior determination that beneficially used CCPs, including the Company’s products, are exempt from the hazardous waste regulations.  The adoption, terms and timing of any new regulation controlling disposal of CCPs remain uncertain, however, and there can be no assurance that any CCP regulation will continue to provide for an exemption for beneficial use of CCPs.  The Company will continue to closely monitor the EPA’s proposal.

Harsco Infrastructure Segment:

·The Company expects this Segment to realize an operating loss for 2012 due to the substantial restructuring expenses that will be incurred under the 2011/2012 Restructuring Program.

·As expected, this Segment is realizing the anticipated cost benefits resulting from the successful implementation of the Fourth Quarter 2010 Harsco Infrastructure Restructuring Program and the 2011/2012 Restructuring Program.  The Company currently expects to see the full benefit of Fourth Quarter 2010 Harsco Infrastructure Restructuring Program

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in 2012 and the full benefits of the 2011/2012 Restructuring Program in 2013. However, other factors including higher pension costs are expected to partially offset these benefits.

·The Company has initiated strategies to reposition the Harsco Infrastructure Segment and is focusing increasingly on projects in the global industrial maintenance and civil infrastructure construction sectors; as well as developing this business in economies outside the United States and Western Europe that have greater prospects for both near-term and long-term growth.  The Segment has been shifting from small, essentially independent branches that serve smaller projects to an integrated business with resources able to focus on larger projects that will have a longer duration and which require highly engineered solutions.  Local focus on the customer will continue, and customer service should improve through coordinated asset management, sales effectiveness and operational excellence.

Harsco Rail Segment:

·The Harsco Rail Segment entered 2012 with a strong order book and encouraging bidding activity and is again expected to show strong full-year results.  It should be noted that the second quarter of 2011 included an $8.0 million pre-tax one-time benefit.  As previously noted, this benefit related to the completion of the first phase of this Segment’s large equipment order to the Ministry of Railways of China.  This benefit will not repeat in 2012.

·The outlook for this Segment continues to be favorable.  The global demand for railway maintenance-of-way equipment, parts, and services continues to be strong and the Class I railroads in the United States continue to report strong freight shipments, a positive indication of further opportunities for this Segment in 2012.

·International demand for Harsco Rail’s track maintenance services, equipment and parts has been strong as reflected in global bidding activity.  This is expected to continue into the long-term.  The Harsco Rail Segment expects to develop a larger presence in certain developing countries as track construction and maintenance needs grow.  Additionally, sales opportunities along with strategic acquisitions and/or joint ventures in the Harsco Rail Segment will be considered if the appropriate strategic opportunities arise.

Harsco Industrial Segment:

·The outlook for the Harsco Industrial Segment for the remainder of 2012 is somewhat restrained.  This Segment expects to see continued growth in both revenues and income in 2012 and beyond, principally due to its focus on the energy sector, its globalization of the business and a renewed emphasis on product development and differentiation.  However, recent low natural gas prices could have a negative impact on this Segment’s future order activity.

·Worldwide supply and demand for steel and other commodities impact raw material costs for the Harsco Industrial Segment.  The Company has implemented strategies to help mitigate, but not eliminate, the potential impact that changes in steel and other commodity prices could have on operating income.  If steel or other commodity costs associated with the Company’s manufactured products increase and the costs cannot be passed on to the Company’s customers, operating income would be adversely affected.  Conversely, reduced steel and other commodity costs would improve operating income to the extent such savings are not transferred to customers.

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Results of Operations

	Three Months Ended March 31
(Dollars in millions, except per share amounts)	2012			2011
Revenues from continuing operations	$	752.3		$	779.1
Cost of services and products sold	593.7			610.4
Selling, general and administrative expenses	129.2			137.8
Other expenses	40.1			0.5
Operating income (loss) from continuing operations	(12.7		)	29.0
Interest expense	12.8			11.9
Income tax expense	4.5			4.4
Income (loss) from continuing operations	(29.2		)	13.6
Diluted earnings (loss) per common share from continuing operations attributable to Harsco Corporation common stockholders	(0.36		)	0.15
Effective income tax rate for continuing operations	18.1		%	24.7		%

Comparative Analysis of Consolidated Results

Revenues

Revenues for the first quarter of 2012 decreased $26.7 million or 3% from the first quarter of 2011.  This decrease was attributable to the following significant items:

Change in Revenues — 2012 vs. 2011	Three Months
(In millions)	Ended March 31
Net decreased revenues in the Harsco Metals & Minerals Segment due principally to contracts that have been exited or not renewed due to the Company’s minimum return requirements, as well decreased steel production by customers.	$	(23.1	)
Effect of foreign currency translation.	(14.2		)
Net decreased revenues in the Harsco Infrastructure Segment due principally to decreased volumes in equipment rentals and erection and dismantling services, principally in North America and the U.K.	(13.4		)
Impact of the sale of two lines of business in the Harsco Infrastructure Segment.	(5.0		)
Increased market demand with gains in market share and overall economic improvement in the principally energy-related markets served by these businesses in the Harsco Industrial Segment.	23.7
Net increased revenues in the Harsco Rail Segment due principally to increased contract services revenues and equipment sales.	5.4
Total change in revenues — 2012 vs. 2011	$	(26.7	)

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Cost of Services and Products Sold

Costs of services and products sold for the first quarter of 2012 decreased $16.8 million or 3% from the first quarter of 2011.  This decrease was attributable to the following significant items:

Change in Cost of Services and Products Sold — 2012 vs. 2011	Three Months
(In millions)	Ended March 31
Decreased costs due to changes in revenues (exclusive of the effect of foreign currency translation, and including the impact of increased energy and fluctuations in commodity costs included in selling prices).	$	(12.1	)
Effect of foreign currency translation.	(11.2		)
Principally product mix and higher costs, including commodities,	6.5
Total change in cost of services and products sold — 2012 vs. 2011	$	(16.8	)

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first quarter of 2012 decreased $8.6 million or 6% from the first quarter of 2011.  Selling, general and administrative expenses as a percentage of revenues decreased to 17% from 18% for the first quarter of 2012 compared with the first quarter of 2011.  The change in selling, general and administrative expenses was attributable to the following significant items:

Change in Selling, General and Administrative Expenses — 2012 vs. 2011	Three Months
(In millions)	Ended March 31
Decreased compensation expense due to the realization of cost savings benefits from restructuring activities.	$	(4.8	)
Effect of foreign currency translation.	(2.5		)
Decreased professional fees.	(1.4		)
Other, net.	0.1
Total change in selling, general and administrative expenses — 2012 vs. 2011	$	(8.6	)

Other Expenses

This income statement classification includes restructuring costs for employee termination benefits, product rationalization and costs to exit activities; former CEO separation costs; net gains on the disposal of non-core assets; and business combination accounting adjustments for contingent consideration related to acquisitions by the Company.

	Three Months Ended March 31
(In thousands)	2012			2011
Restructuring costs (see Note 15)	$	35,449		$	4,836
Former CEO separation costs	4,125			—
Net gains from sale of non-core assets	(401		)	(1,056		)
Contingent consideration adjustments	—			(3,966		)
Other	919			657
Other expenses	$	40,092		$	471

In the first quarter of 2012, restructuring costs were incurred principally in the Harsco Infrastructure Segment.

Interest Expense

Interest expense for the first quarter of 2012 increased $0.9 million or 7% from the first quarter of 2011.  The increase was primarily due to expensing previously deferred financing costs and higher outstanding commercial paper balances

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Income Tax Expense

Increased income tax expense was due primarily to losses being generated in jurisdictions where no tax benefit can be recognized. The effective income tax rate relating to continuing operations for the first quarter of 2012 was 18.1% versus 24.7% for the first quarter of 2011.  This resulted in income tax expense despite an overall loss from continuing operations.

Income (loss) from Continuing Operations

The $29.2 million loss from continuing operations in the first quarter of 2012 was $42.8 million lower than income from continuing operations for the same period of 2011 of $13.6 million.  The decrease principally resulted from the Company’s $35.4 million pre-tax restructuring charges related to the 2011/2012 Restructuring Program, principally in the Harsco Infrastructure Segment.

Liquidity and Capital Resources

Overview

The Company continues to have sufficient available liquidity and has been able to obtain all necessary financing.  The Company currently expects operational and business needs to be met with cash from operations supplemented with borrowings from time to time due to historical patterns of seasonal cash flow and for the funding of various projects.

The Company continues to implement and perform on capital efficiency initiatives to enhance liquidity.  These initiatives have included prudent allocation of capital spending to projects where the highest returns can be achieved while redeploying existing capital investments; optimization of worldwide cash positions; reductions in discretionary spending; and frequent evaluation of customer and business-partner credit risk.  These initiatives have been successful in helping counteract strained global financial markets.  While global financial markets have improved for certain highly rated credit issuers, the stresses the markets have been under since 2008 are still reflected in tightened credit conditions for the funding of non-residential construction projects, particularly commercial construction.  These tightened credit conditions, along with the sovereign debt crisis in Europe and economic austerity measures implemented in the United Kingdom and other European economies, have restrained growth in the Harsco Infrastructure Segment.  These unfavorable conditions in the credit markets also continue to impact some of the Company’s current and potential customers.

During the first quarter of 2012, the Company’s operations used $1.4 million in operating cash flow, a decrease from the $13.1 million generated in first quarter of 2011.  Approximately $28.8 million of operating cash was disbursed in the first quarter of 2012 for restructuring costs associated with the Fourth Quarter 2010 Harsco Infrastructure Program and the 2011/2012 Restructuring Program.  In the first quarter of 2012, the Company invested $52.8 million in capital expenditures, mostly for the Metals & Minerals Segment, compared with $67.3 million invested in the first quarter of 2011.  The Company paid $16.5 million in stockholder dividends in the first quarters of 2012 and 2011.

The Company’s net cash borrowings increased by $58.3 million in the first quarter of 2012, primarily to fund capital expenditures, principally in the Harsco Metals & Minerals Segment.  The Company’s debt to total capital ratio increased to 44.4% at March 31, 2012 from 42.7% at December 31, 2011.  The increase at March 31, 2012 is primarily due to increased commercial paper borrowings.  Similarly, the Company’s net debt to net capital ratio, which incorporates the Company’s cash and cash equivalents, increased to 40.6% at March 31, 2012 from 39.2% at December 31, 2011.

In March 2012, the Company executed an Amended and Restated Five-Year Credit Agreement (“Credit Agreement”) in the amount of $525 million through a syndicate of 14 banks.  The Credit Agreement matures in March 2017.  The Company has the option to increase the amount of the Credit Agreement to $550 million.  The Credit Agreement amends and restates the Company’s multi-year revolving credit facility which was set to mature in December 2012.  There were no borrowings outstanding under the multi-year revolving credit facility at the time of the Credit Agreement.

The Company plans to sustain its balanced portfolio through its strategy of redeploying discretionary cash for disciplined organic growth and international or market-segment diversification; for potential strategic ventures, alliances and partnerships; for growth in long-term, high-return and high-renewal-rate services contracts for the Harsco Metals & Minerals Segment, principally in targeted growth markets or for customer diversification; and for strategic investments or possible acquisitions in the Harsco Rail Segment.  The Company also foresees continuing its long and consistent history of paying dividends to stockholders.

The Company continues its focus on improving working capital efficiency.  The Company’s globally integrated enterprise initiatives are being used to continue to further improve the effective and efficient use of working capital, particularly accounts receivable and inventories in the Harsco Infrastructure, Harsco Metals & Minerals and Harsco Rail Segments.

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The Company also generated approximately $22.5 million in cash from asset sales in the first quarter of 2012, which included $7.3 million from disposal of equipment under the 2011/2012 Restructuring Program .

Sources and Uses of Cash

The Company’s principal sources of liquidity are cash from operations, issuance of commercial paper and borrowings under its various credit agreements, augmented periodically by cash proceeds from non-core asset sales.  The primary drivers of the Company’s cash flow from operations are the Company’s revenues and income.  The Company’s long-term Harsco Metals & Minerals Segment contracts, in addition to the backlog of certain equipment orders and the long-term nature of certain service contracts within the Harsco Rail Segment, provide predictable cash flows for the near-term years.  Cash returns on capital investments made in prior years, for which limited cash is currently required, are a significant source of cash from operations.  Depreciation expense related to these investments is a non-cash charge.  The Company also continues to maintain working capital at a manageable level based upon the requirements and seasonality of the businesses.

Major uses of operating cash flows and borrowed funds include: capital investments, principally in the Harsco Metals & Minerals Segment; payroll costs and related benefits; dividend payments; pension funding payments; inventory purchases for the Harsco Rail and Harsco Industrial Segments; income tax payments; debt principal and interest payments; insurance premiums and payments of self-insured casualty losses; machinery, equipment, automobile and facility lease payments; and in 2012, significant payments under the 2011/2012 Restructuring Plan.  Cash is also used for targeted, strategic acquisitions as appropriate opportunities arise.

Resources available for cash requirements

The Company meets its ongoing cash requirements for operations and growth initiatives by utilizing cash from operations; by accessing the public debt markets; and by borrowing from banks.  Public markets in the United States and Europe are accessed through the Company’s commercial paper programs and through discrete-term note issuance to investors.  The Company has various bank credit facilities that are available throughout the world.  The Company expects to utilize public debt markets, bank credit facilities and cash from operations to meet its cash requirements in the future.

The following table illustrates the amounts outstanding under credit facilities and commercial paper programs and available credit at March 31, 2012:

	At March 31, 2012
(In millions)	Facility Limit		Outstanding Balance		Available Credit
U.S. commercial paper program	$	550.0	$	91.7	$	458.3
Euro commercial paper program	266.0		—		266.0
Multi-year revolving credit facility (a)	525.0		—		525.0
Bilateral credit facility (b)	25.0		—		25.0
Totals at March 31, 2012	$	1,366.0	$	91.7	$	1,274.3	(c)

(a)U.S.-based program.

(b)International-based program.

(c)Although the Company has significant available credit, for practical purposes, the Company limits aggregate commercial paper and credit facility borrowings at any one-time to a maximum of $550 million (the aggregate amount of the multi-year and bilateral credit facilities).

For more information on the Company’s bank credit facilities and long-term notes, see Note 7, “Debt and Credit Agreements,” to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and Note 7, “Debt and Credit Agreements,” in Part I, Item 1, Financial Statements.

Credit Ratings and Outlook

The following table summarizes the Company’s current debt ratings:

	Long-term Notes	U.S.-Based Commercial Paper	Watch / Outlook
Standard & Poor’s	BBB	A-3	Negative Outlook
Moody’s	Baa3	P-3	Negative Outlook
Fitch	BBB+	F2	Negative Outlook

The Company’s euro commercial paper program has not been rated since the euro market does not require it.  In January 2012, both Standard &Poor’s and Moody’s placed the Company’s ratings on negative watch.  In February 2012, Fitch affirmed its long-term and short-term debt ratings but changed the Company’s outlook to negative.  In March 2012, Moody’s downgraded the Company’s long-term and short-term credit ratings to Baa3 and P-3, respectively, with a negative outlook.  In March 2012, Standard & Poor’s downgraded the Company’s long-term and short-term credit ratings

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to BBB and A-3, respectively, with a negative outlook.  As a result, the Company’s interest rates for commercial paper borrowing increased approximately forty basis points per annum and interest rates under the multi-year revolving credit facility increased two and one-half basis points.  Future downgrades to the Company’s credit ratings may increase borrowing costs to the Company, while an improvement in the Company’s credit ratings may decrease borrowing costs to the Company.  Additionally, future downgrades in the Company’s credit ratings may result in reduced access to certain short-term credit markets, but will not reduce access to the credit facilities.

Working Capital Position

Changes in the Company’s working capital are reflected in the following table:

(Dollars in millions)	March 31 2012		December 31 2011		Increase (Decrease)
Current Assets
Cash and cash equivalents	$	136.6	$	121.2	$	15.4
Trade accounts receivable, net	631.6		618.5		13.2
Other receivables	35.0		44.4		(9.5		)
Inventories	262.0		241.9		20.0
Other current assets	123.0		133.4		(10.4		)
Total current assets	1,188.2		1,159.4		28.8
Current Liabilities
Notes payable and current maturities	35.1		55.0		(19.8		)
Accounts payable	245.9		252.3		(6.4		)
Accrued compensation	82.7		92.6		(9.9		)
Income taxes payable	10.0		8.4		1.5
Other current liabilities	380.8		374.0		6.8
Total current liabilities	754.5		782.3		(27.8		)
Working Capital	$	433.7	$	377.2	$	56.5
Current Ratio (a)	1.6:1		1.5:1

(a)Calculated as Total current assets/Total current liabilities

Working capital increased $56.5 million in the first quarter of 2012 due principally to the following factors:

·Inventories increased $20.0 million across all segments, primarily at the Harsco Rail Segment due to timing of shipments and Harsco Industrial due increased sales volumes.

·Notes payable and current maturities decreased by $19.8 million primarily due to repayment intentions on certain outstanding debt.

·Trade accounts receivable, net, increased by $13.2 million primarily due to timing of invoicing and increased sales activity in the Harsco Rail Segment and timing of sales in the Harsco Metals & Minerals Segment.

·Accrued compensation decreased by $9.9 million due to payment of incentive compensation.

These working capital increases were offset by the following:

·Other current assets decreased by $10.4 million primarily due to a reduction of assets held for sale and the timing of income tax prepayments.

·Other receivables decreased by $9.5 million due to cash receipts.

Certainty of Cash Flows

The certainty of the Company’s future cash flows is underpinned by the long-term nature of the Company’s metals services contracts, the order backlog for the Company’s railway track maintenance services and equipment, and overall discretionary cash flows (operating cash flows plus cash from asset sales in excess of the amounts necessary for capital expenditures to maintain current revenue levels) generated by the Company.  Historically, the Company has utilized these

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discretionary cash flows for growth-related capital expenditures, strategic acquisitions, debt repayment and dividend payments.

The types of products and services that the Company provides are not subject to rapid technological change, which increases the stability of related cash flows.  Additionally, the Company believes each of its businesses in its balanced portfolio is a leader in the industries and major markets the Company serves.  Due to these factors, the Company is confident in its future ability to generate positive cash flows from operations.

Cash Flow Summary

The Company’s cash flows from operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows, are summarized in the following table:

	Three Months Ended March 31
(In millions)	2012			2011
Net cash provided (used) by:
Operating activities	$	(1.4	)	$	13.1
Investing activities	(32.3		)	(55.9		)
Financing activities	47.6			17.8
Effect of exchange rate changes on cash	1.6			2.0
Net change in cash and cash equivalents	$	15.4		$	(22.9	)

Cash Provided by Operating Activities — Net cash used by operating activities in the first quarter of 2012 was $1.4 million, a decrease of $14.5 million from the first quarter of 2011.  The decrease is due to a net loss in the first quarter of 2012 compared to net income in the first quarter of 2011 and cash outflows of approximately $28.8 million associated with the 2011/2012 Restructuring Program and the Fourth Quarter 2010 Harsco Infrastructure Program, the timing of accounts payable disbursements, partially offset by improved accounts receivable collections.

Cash Used by Investing Activities — Net cash used in investing activities in the first quarter of 2012 was $32.3 million, a decrease of $23.6 million from the first quarter of 2011.  Capital investments totaled $52.8 million and decreased $14.5 million compared with the first quarter of 2011.  The decrease in capital investments was supplemented by proceeds from asset sales of $22.4 million, which included $7.3 million from disposal of equipment under the 2011/2012 Restructuring Program.

Cash Provided by Financing Activities — Net cash provided by financing activities in the first quarter of 2012 was $47.6 million, an increase of $29.8 million from first quarter of 2011.  The change was primarily due to increased commercial paper borrowings and contributions from noncontrolling interests by strategic venture partners.

(Dollars in millions)	March 31 2012			December 31 2011
Notes payable and current maturities	$	35.1		$	55.0
Long-term debt	932.8			853.8
Total debt	967.9			908.8
Total equity	1,214.0			1,220.0
Total capital	$	2,182.0		$	2,128.7
Total debt to total capital (a)	44.4		%	42.7		%

(a)Calculated as Total debt/Total capital.

The Company’s debt as a percent of total capital increased in the first quarter of 2012 due principally to increased commercial paper borrowings.

Debt Covenants

The Company’s credit facilities contain a covenant stipulating a maximum debt to capital ratio of 60%.  One credit facility also contains a covenant requiring a minimum net worth of $475 million, and another, a minimum ratio of total consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest charges of 3.0:1.  The Company’s 5.75% and 2.70% notes include covenants that permit the note holders to redeem their notes at 101% of par in the event of a change of control of the Company or disposition of a significant portion of the Company’s

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assets in combination with a downgrade in the Company’s credit rating to non-investment grade.  At March 31, 2012, the Company was in compliance with these covenants with a debt to capital ratio of 44.4% and total net worth (as defined by the covenants) of $1.2 billion and a ratio of consolidated EBITDA to consolidated interest charges of 7.7.  Based on balances at March 31, 2012, the Company could increase borrowings by approximately $0.9 billion and still be within its debt covenants.  Alternatively, keeping all other factors constant, the Company’s equity could decrease by approximately $0.6 billion and the Company would still be within its debt covenants.  The Company expects to continue to be in compliance with these debt covenants one year from now.

Cash and Value-Based Management

The Company has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiable and legally permissible to do so.  These centralized cash balances are then redeployed to other operations to reduce short-term borrowings and to finance working capital needs or capital expenditures.  Due to the transitory nature of cash balances, they are normally invested in bank deposits that can be withdrawn at will or in very liquid short-term bank time deposits and government obligations.  The Company’s policy is to use banks rated “A” or better located in the various countries in which the Company operates, or if no such banks exist, to use the largest banks within those countries.  The Company monitors the creditworthiness of its banks and when appropriate will adjust its banking operations to reduce or eliminate exposure to less creditworthy banks.

The Company plans to continue its strategy of targeted, prudent investing for strategic purposes for the foreseeable future and to make more efficient use of existing investments.  The long-term goal of this strategy is to create stockholder value by improving the Company’s Economic Value Added (“EVA”).  Under this program, the Company evaluates strategic investments based upon the investment’s economic profit.  EVA equals after-tax operating profits less a charge for the use of the capital employed to create those profits.  Therefore, value is created when a project or initiative produces a return above the risk-adjusted local country cost of capital.  In the first quarter of 2012, EVA was comparable with the first quarter of 2011.

TheCompanycurrentlyexpectstocontinuepayingdividendstostockholders.InFebruary2012,theCompanypaidits247thconsecutive quarterly cash dividend.  In February 2012 and April 2012, the Company declared its 248th and 249th consecutive quarterly cash dividends, payable in May 2012 and August 2012, respectively.

The Company’s financial position and debt capacity should enable it to meet current and future requirements.

Recently Adopted and Recently Issued Accounting Standards

Information on recently adopted and recently issued accounting standards is included in Note 2, “Recently Adopted and Recently Issued Accounting Standards,” in Part I, Item 1, Financial Statements.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Part II, Item 1A, “Risk Factors,” for quantitative and qualitative disclosures about market risk.

ITEM 4.        CONTROLS AND PROCEDURES

The Company’s management, including the Interim Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures as of March 31, 2012.  Based on that evaluation, the Interim Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective.  There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the first quarter of 2012.

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PART II — OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

Information on legal proceedings is included in Note 10, “Commitments and Contingencies,” in Part I, Item 1, Financial Statements.

ITEM 1A.     RISK FACTORS

In the normal course of business, the Company is routinely subjected to a variety of risks.  In addition to the market risk associated with interest rate and currency movements on outstanding debt and non-U.S. dollar-denominated assets and liabilities, other examples of risk include adverse economic conditions and increased competition in the global non-residential construction markets; customer concentration in the Harsco Metals & Minerals Segment and Harsco Rail Segment; collectability of receivables; volatility of the financial markets and their effect on pension plans and the availability of funding of non-residential construction projects; and global economic and political conditions.

For a full disclosure of risk factors that affect the Company, see Part 1, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)   There were no unregistered sales of equity securities during the period covered by the report.

(b)   Not applicable.

(c)   Issuer Purchases of Equity Securities.

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2012 — January 31, 2012	—	—	—	1,713,423
February 1, 2012 — February 29, 2012	—	—	—	1,713,423
March 1, 2012 — March 31, 2012	—	—	—	1,713,423
Total	—	—	—

The Company’s share repurchase program was extended by the Board of Directors in November 2011.  The repurchase program expires January 31, 2013.  At March 31, 2012, there are 1,713,423 authorized shares remaining in the program.  When and if appropriate, repurchases are made in open market transactions, depending on market conditions.  Share repurchases may not occur and may be discontinued at any time.

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.        MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.        OTHER INFORMATION

DIVIDEND INFORMATION

On February 28, 2012, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share, payable May 15, 2012 to stockholders of record as of April 16, 2012.

On April 25, 2012, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share, payable August 15, 2012 to stockholders of record as of July 16, 2012.

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ITEM 6.        EXHIBITS

The following exhibits are filed as a part of this report:

Exhibit Number	Description
10.1	Amended and Restated Five-Year Credit Agreement, dated March 2, 2012, among Harsco Corporation, the lenders named therein, Citibank, N.A., as administrative agent, RBS Securities Inc., as syndication agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd., HSBC Bank USA, National Association, ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A. and Lloyds TSB Bank PLC, as documentation agents (incorporated by reference to the Company’s Current Report on Form 8-K dated March 7, 2012, Commission File No. 001-03970).
10.2	Notification Letter to Henry W. Knueppel, dated March 7, 2012.
10.3	Separation and Release Agreement, dated March 9, 2012, Between Harsco Corporation and Salvatore D. Fazzolari.
10.4	Harsco Corporation 1995 Executive Incentive Compensation Plan, as amended and restated effective March 12, 2012 (incorporated by reference to the Company’s Current Report on Form 8-K dated March 13, 2012, Commission File No. 001-03970).
31.1	Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
31.2	Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer).
101	The following financial statements from Harsco Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on May 2, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii)  the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; (v) the Condensed Consolidated Statements of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

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	May 2, 2012	/s/ Stephen J. Schnoor
		Stephen J. Schnoor
		Senior Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)
DATE	May 2, 2012	/s/ Barry E. Malamud
		Barry E. Malamud
		Vice President and Corporate Controller
		(Principal Accounting Officer)

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EX-10.2

Exhibit 10.2

Harsco Notification Letter to Henry W. Knueppel

March 7, 2012

Henry W. Knueppel

c/o Harsco Corporation

350 Poplar Church Road

Camp Hill, Pennsylvania 17011

Dear Henry:

This notification (“Notification”) is intended to confirm the compensation that will be provided by Harsco Corporation (the “Company”) to you while you are serving as Interim Chairman and Interim Chief Executive Officer of the Company (“Interim CEO”).  For purposes of this Notification, “Term” means the period of time from February 28, 2012 through such date on which you cease to serve at the pleasure of the Company’s Board of Directors as Interim Chairman and Interim CEO.

Salary

During the Term, your gross base salary will be paid at the rate of $75,000 per month, payable in installments in accordance with the Company’s payroll practices generally in effect from time to time.

Incentive Compensation

In lieu of participation in the Company’s standard short-term and long-term incentive Plans, you will receive (1) as soon as reasonably possible upon the execution of this agreement, an award of shares of Harsco Common Stock (the “Common Stock”) equal to the quotient of (a) $145,055 ($400,000 X 33/91) divided by (b) the average of the high and low sale prices of the Common Stock as reported for the Grant Date, on the New York Stock Exchange (the “Common Stock”) and (2) on each first day of each of the Company’s fiscal quarters that begins during the Term (each, a “Grant Date”), a number of whole shares (rounded down to the nearest whole share) of Common Stock (each of these quarterly awards, plus the award on March 7, 2012, a “Share Award”) equal to the quotient of (a) $400,000 divided by (b) the average of the high and low sale prices of the Common Stock as reported for the Grant Date on the New York Stock Exchange (or, if the Common Stock is not then listed on the New York Stock Exchange, on any other national securities exchange on which the Common Stock is listed), or if there are no sales on such date, on the next preceding trading day during which a sale occurred.

Each Share Award will be fully vested as of the Grant Date, will not be subject to any restrictions, performance, holding or deferral periods or requirements, and will not be subject to any risk of forfeiture.  Notwithstanding the provisions of any other Company document, agreement or policy, each Share Award will not be subject to any Company minimum holding or stock ownership requirements that may otherwise apply to you.  The Company will withhold from each Share Award a portion of the Common Stock otherwise to be delivered pursuant to the Share Award with a fair market value equal to the amount of all applicable withholding taxes, with the balance of the Common Stock comprising each Share Award issued to you as soon as practicable, but no more than 10 days, after the applicable Grant Date.

Employee Benefits and Perquisites

During the Term, you have elected not to participate in any of the Company’s health and welfare, retirement or other employee benefit programs or plans and, except as otherwise provided in this paragraph, you will not receive any employee benefits from the Company.  During the Term, you will be entitled to reasonable use of the Company’s aircraft for your commute between the Company’s headquarters and your primary residence in Wisconsin.  The tax liability for use of the plane will be grossed up for tax purposes.  Vacation will be awarded as agreed upon by you and the Board of Directors.

Interim Living

Regarding your temporary living expenses due to the necessary relocation to the Camp Hill area, Harsco will assume all housing and car rental expenses as well as reimbursement for meals.

General

The Company may withhold from any amounts payable to you all federal, state, city or other taxes as the Company is required to withhold.  Notwithstanding any other provision of this Notification, the Company is not obligated to guarantee any particular tax result for you with respect to any payment or benefit provided to you, and you are responsible for any taxes imposed on you with respect to any such payment or benefit.  Nothing in this Notification will be construed as a guarantee of continuing employment for any specified period. Your employment with the Company is at-will and is terminable by you or the Company at any time, with or without cause.

If any reimbursements provided by the Company to you during or after the Term would constitute deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, such reimbursements will be subject to the following rules:  (1) the amounts to be reimbursed will be determined pursuant to the terms of the applicable benefit plan, policy or agreement and shall be limited to your lifetime and the lifetime of your eligible dependents; (2) the amounts eligible for reimbursement during any calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (3) any reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (4) your right to a reimbursement is not subject to liquidation or exchange for cash or another benefit.

Sincerely,

Harsco Corporation

By:	/s/ Kathy Eddy
Name: Kathy Eddy
Title: Lead Director

2

EX-10.3

Exhibit 10.3

Separation and Release Agreement

This Separation and Release Agreement (this “Agreement”) dated as of March 9, 2012 (the “Effective Date”) is entered into by and between Harsco Corporation, a Delaware corporation (the “Company”), and Salvatore D. Fazzolari (the “Executive”) to set forth the terms and conditions of the Executive’s separation from the Company effective February 23, 2012 (the “Separation Date”).

WHEREAS, the Executive has been employed by the Company as its President and Chief Executive Officer;

WHEREAS, the Executive resigned his positions as Chairman of the Board of Directors and President and Chief Executive Officer, as well as an officer or director, in each case, of the Company and of any of the Company’s subsidiaries, effective as of the Separation Date; and

WHEREAS, the Executive wishes to accept the payments described herein, to make the covenants described herein, and to release the Company from any and all claims concerning his prior employment.

NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, the parties agree as follows:

1.     Separation Date. The Executive hereby confirms that his employment with respect to all positions with the Company and its subsidiaries and service as a director of the Company and its subsidiaries has been terminated effective as of the Separation Date.

2.     Amount of Payments and Benefits. In exchange for the promises given by the Executive to the Company as described in this Agreement, the Executive has or will receive, in lieu of any other compensation whatsoever, except as otherwise provided herein, the separation benefits set forth in Subsections 2.a., 2.b., 9.a. and 9.c. hereof.

a.A cash payment, payable as described below, equal to $3,843,000 (totaling an amount equal to two (2) times the Executive’s base salary and target bonus); plus an additional amount of $1,173,583 (in payment of a proportionate share of certain of his long-term incentive awards).  Provided that the Revocation Period shall have expired and this Agreement shall have not been revoked in accordance with Section 14 hereof, the Executive’s aggregate cash payment under this Section 2.a. shall be paid in five (5) equal installments as follows:

i.	$1,003,316.60 payable April 15, 2012
ii.	$1,003,316.60 payable June 15, 2012
iii.	$1,003,316.60 payable August 15, 2012
iv.	$1,003,316.60 payable October 15, 2012; and
v.	$1,003,316.60 payable December 15, 2012

b.The Executive shall be entitled to and agrees to timely elect, for Executive, his spouse and covered dependents, COBRA health insurance continuation coverage with respect to the health plans of the Company.  Company agrees to pay the Executive’s COBRA health insurance premium, for the Executive, his spouse and covered dependents, for the maximum period in which Executive is able to participate in the Company’s health insurance plans pursuant to COBRA up to a maximum of 24 months.  If the COBRA coverage period ends on a date which is less than 24 months following the Effective Date, the Company shall reimburse Executive for Executive’s reasonable, documented monthly health insurance premium costs, for the Executive, his spouse and covered dependents, for the period beginning at the end of the COBRA coverage period and ending on the date which is 24 months following the Effective Date.  The Company agrees to make such payments under this Subsection 2.b., and if applicable, reimburse the Executive for any COBRA health insurance premium paid directly by the Executive prior to the expiration of the Revocation Period, provided the Revocation Period shall have expired and this Agreement shall not have been revoked in accordance with Section 14 hereof.  In the event of the Executive’s death prior to the expiration of 24 months following the Effective Date, the Company agrees to continue to pay the COBRA health insurance premiums for the Executive’s spouse and covered dependents through the end of the COBRA coverage period and provide the Executive’s spouse and covered dependents with health insurance premium cost reimbursement for the coverage period following

the COBRA period as described above, subject however to a maximum period of 24 months from the Effective Date.

c.The Executive may elect to convert any group life insurance coverage to an individual program within 30 days of the Effective Date at the rates provided by the carrier, with conversion information provided in separate correspondence, provided however, that notwithstanding anything to the contrary herein, in the event of such election, the Executive shall be solely responsible for all premiums and costs associated with such coverage.

d.Payment of all amounts earned or accrued as a result of Executive’s employment with the Company through the Separation Date, consisting of five weeks vacation pay, in the amount of $87,980.80.

3.     Withholding of Taxes.  All payments and benefits that the Executive is entitled to receive from the Company hereunder shall be subject to the withholding of such amounts, if any, relating to tax, excise tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. For the avoidance of doubt, the Executive (or any other agent acting for or on behalf of the Executive, as applicable) shall be solely responsible for the payment of any and all taxes imposed as a result of the Executive receiving or being entitled to receive the payments and benefits provided by the Company under this Agreement.

4.     Equity Awards.  All of the Executive’s outstanding equity compensation awards granted to him by the Company shall be terminated effective as of the Separation Date and be forfeited without consideration. Without limiting the generality of the foregoing, (a) the Executive’s outstanding stock options to purchase 165,000 shares of the Company’s common stock pursuant to that U.S. Option Contract between the Company and the Executive dated as of January 25, 2011 shall be terminated, effective as of the Separation Date; and (b) the Time-Based and Performance-Based portions of awards granted to Executive under the Company’s restricted stock unit program, granted under the Company’s 1995 Executive Incentive Compensation Plan, as amended and restated,  with respect to each of the 2010-2012 performance cycle, the 2011-2013 performance cycle, and the 2012-2014 performance cycle shall be terminated, effective as of the Separation Date.

5.     Pension/Deferred Compensation Benefits.  Nothing in this Agreement, including, without limitation, the release contained in Section 10 hereof, shall affect any rights that the Executive may have, to the benefits under Subsections 2.c. and 2.d. hereof or under the Harsco Employees Pension Plan, as amended and restated, the Harsco Corporation Supplemental Retirement Benefit Plan, as amended and restated, the Harsco Retirement Savings and Investment Plan, as amended and restated, and the Harsco Non-Qualified Retirement Savings and Investment Plan, as amended and restated.

6.     No Additional Compensation.  The Executive and the Company agree that, except as to the benefits and/or compensation to which the Executive is otherwise entitled to receive pursuant to existing plans and programs of the Company in effect and the additional benefits and compensation expressly set forth in this Agreement, the Executive shall not be entitled to receive any additional compensation, bonuses, incentive compensation, benefits or other consideration from the Company or any of its subsidiaries in connection with or in any way related to his resignation from, or prior employment by, the Company or any of its subsidiaries.

7.     Certain Covenants.

a.Non-Disparagement.  The Executive shall not defame, disparage, or make negative statements about the Company or any of its affiliates, or any of its or their respective officers, directors, or employees.  In addition, the Company shall not, through its directors or officers, defame, disparage, or make negative statements about the Executive.  This paragraph shall not prohibit the Executive nor the Company or any of its/his representatives from taking action to enforce their rights under this Agreement, making disclosures required by law or the rules and regulations of any securities exchange upon which the securities of the Company are listed or from cooperating with or responding to any governmental, administrative or judicial investigations or proceedings.

b.Confidentiality.  Executive agrees that, during his employment with the Company and its subsidiaries, he had access to confidential information and/or proprietary information about the Company, its subsidiaries and/or its or their customers, including, but not limited to, trade secrets, methods, models, passwords, access to computer files, financial information and records, forecasts, computer software programs, agreements and/or contracts between the Company, its subsidiaries and/or its or their respective customers, customer contracts, prospective contracts, creative policies and ideas, public relations and public affairs campaigns, media materials, budgets, practices, concepts, strategies, methods of operation, technical and scientific information, discoveries, developments, formulas, specifications, know-how, design inventions, marketing and business strategies and financial or business projects, and information about or received from customers  and other companies with which the Company or any of its subsidiaries does business.  The foregoing shall be collectively referred to as “Confidential Information,”

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provided that Confidential Information shall not include such information that is generally available to the public (other than as a result of disclosure by the Executive in breach of this Agreement).  With respect to such Confidential Information which is not readily available to the public, Executive agrees that he will not at any time, disclose to anyone any such Confidential Information, or utilize such Confidential Information for his own benefit, or for the benefit of third parties.  Disclosure of any Confidential Information will not be prohibited if such disclosure is directed pursuant to a valid and existing subpoena or order of a court or other governmental body or agency within the United States; provided, that the Executive will first have given prompt notice to the Company of any such subpoena or order (or proceeding pursuant to any such order).

c.Non-Competition after Separation.  In consideration of the rights and payments contained herein, the Executive agrees that  for a period of 24 months commencing with the Effective Date, the Executive shall not, directly or indirectly:

i.	for or on behalf of any business that competes with the Company or any of its subsidiaries, solicit, contract with, or accept business from any entity or individual which (1) was or has been a customer of the Company or any of its subsidiaries within two years prior to the Separation Date, (2) was or is a prospective customer of the Company or any of its subsidiaries with which the Executive had business-related communications within two years prior to the Separation Date;
ii.	render services to, become employed by, own, or have a financial or other interest in (either as an individual, partner, joint venturer, owner, manager, stockholder, employee, partner, officer, director, independent contractor, or other such role) any business which competes with the business of any the operating unit(s) of the Company or any of its subsidiaries; and
iii.	induce, offer, assist, encourage or suggest (1) that another business or enterprise offer employment to or enter into a business affiliation with any employee, agent or representative of the Company or any of its subsidiaries, or (2) that any employee, agent or representative of the Company or any of its subsidiaries, terminate his or her employment or business affiliation with the Company or any of its subsidiaries;

provided however, that the foregoing shall not prohibit the Executive from being a passive investor and owning up to 5% of any class of publicly traded securities of any corporation.

8.     Enforcement.  The Executive acknowledges and agrees that the provisions of this Agreement, including Section 7, are reasonable and necessary for the successful operation of the Company and its subsidiaries.  The Executive acknowledges and agrees that a breach by the Executive of any of the provisions of this Agreement will cause irreparable harm to the Company and its subsidiaries and that money damages may not be a sufficient remedy for any breach by the Executive of any of the provisions of this Agreement.  Accordingly, the Company shall be entitled to obtain equitable relief, including, without limitation, injunctive relief and specific performance, as a remedy for any such breach or to prevent any potential breach by the Executive.  Such remedies shall not be deemed to be the exclusive remedies for a breach by the Executive of the provisions of this Agreement but shall be in addition to all other remedies available at law or equity to the Company.  The Executive further agrees not to raise as a defense or as an objection to the request or granting of any such relief that any breach by the Executive of provisions of this Agreement is or would be compensable by an award of monetary damages and agrees to waive any requirements for the securing or posting of any bond in connection with such remedy.  If any provision of this Agreement is determined by a court of competent jurisdiction to be not enforceable in the manner set forth herein, the Executive and the Company agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law.

9.     Return of Property and Records.  Upon the Effective Date, Executive shall immediately return to the Company all property of the Company or any of its subsidiaries in his possession, including without limitation, all keys, access cards, credit cards, documents and other materials in any medium including but not limited to electronic, in his possession or under his direct or indirect control which relate in any way to the Company, its business, executives, clients and customers and will not retain copies, in whatever form of any such materials or documents, unless Executive first obtains the Company’s written consent to keep such records. Notwithstanding anything to the contrary set forth herein, the Company hereby acknowledges and agrees that the Executive may retain, as his own property, (a) his Company-provided  automobile,  (b) his copies of his individual personnel records and documents, such as his payroll and tax records, and similar personal records, his rolodex and address book (so long as a copy is left at the Company) and (c) his Company-provided cellular phone and personal computer, after providing the Company with a reasonable time to review and “scrub” such cellular phone and computer for Company information or property; and provided that from and after the Separation Date, the Executive shall be solely responsible for all costs and charges incurred in connection with such automobile,  cellular phone and personal computer.

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10.  Complete Release of Claims by the Executive Against the Company.  In consideration of the payments described in Subsections 2.a., 2.b., 9.a. and 9.c. of this Agreement, and other good and valuable consideration, which are given to the Executive specifically in exchange for this release as a result of negotiations between the Company and the Executive, the Executive, on behalf of himself, his heirs, successors and assigns, hereby releases and discharges the Company, its subsidiaries, its and their employee benefit plans, its and their current or former directors, officers, executives, agents, insurers, attorneys, consultants, and auditors, and any and each of their successors and assigns and predecessors (“Company Released Parties”), from any and all claims, charges, causes of action and damages (including attorneys’ fees and costs actually incurred) (“Claims”), known and unknown, including those Claims related in any way to the Executive’s employment with the Company or any of its subsidiaries, or the termination of his employment relationship or positions as an officer of the Company, arising on or prior to the Effective Date.  The waivers in this Agreement shall not waive the Executive’s rights respecting (i) the Company’s obligations under this Agreement; (ii) the Executive’s right to receive COBRA continuation coverage in accordance with applicable law; and (iii) claims for benefits under any health, disability, retirement, life insurance or other, similar employee benefit plan (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) of the Company.

For the purposes of implementing a full and complete release and discharge of the Company Released Parties, the Executive expressly acknowledges that this Agreement is intended to include in its affect, without limitation, all Claims which he does not know or suspect to exist in his favor at the time he signs this Agreement, and that this Agreement is intended to fully and finally resolve any such Claim or Claims.

The release contained in this Section 10 specifically includes, but is not limited to, rights and claims under the local, state or federal laws prohibiting discrimination in employment, including the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Pennsylvania Human Relations Act, ERISA (except as otherwise stated herein), the Executive protection provisions of the Federal Deposit Insurance Act (12 U.S.C. § 1831j), Title VII of the Civil Rights Act of 1964, the Sarbanes-Oxley Act of 2002, as well as any other state or federal laws or common law theories relating to discrimination in employment, the termination of employment, or personal injury, including without limitation all claims for wrongful discharge, breach of contract, breach of an implied covenant of good faith and fair dealing, intentional infliction of emotional distress, tortious interference with contract or prospective economic advantage, defamation, loss of consortium, infliction of emotional distress; or any claim for any compensation, including, but not limited to additional compensation, back pay, front pay, or benefits (other than as provided for in this Agreement), severance, reinstatement, or any other form of economic loss; and all claims for personal injury, including, but not limited to: mental anguish, emotional distress, pain and suffering, humiliation, and damage to name or reputation; and all claims for liquidated damages and punitive damages and all claims for counsel fees and costs.

11.  Release of Claims by the Company Against the Executive.  In consideration of the Executive’s resignation and other good and valuable consideration, the Company, on behalf of itself and its subsidiaries, hereby releases and discharges the Executive from any and all Claims arising on or prior to the Effective Date that the Company or any of its subsidiaries may have against the Executive to the extent that such Claims are suspected or are known to any of the directors or officers of the Company as of the date of this Agreement (“Company Released Claims”).   The waivers in this Agreement shall not waive the Company’s rights respecting the Executive’s obligations under this Agreement.

With respect to any Company Released Claim, the release contained in this Section 11 specifically includes, but is not limited to, rights and claims under local, state or federal laws or common law theories relating to personal injury, breach of contract, breach of an implied covenant of good faith and fair dealing, tortuous interference with contract or prospective economic advantage, defamation, or any other claim of economic loss; and all claims for liquidated damages and punitive damages and all claims for counsel fees and costs.

12.  Covenant Not to Sue.  The Parties represent to each other that they have not filed any Claim that was released in this Agreement against the other (or other persons released hereunder) with any court or government agency, and that they will not, to the extent allowed by applicable law, do so at any time in the future; provided, however, that the covenants contained in Sections 10 and 11 and this Section 12 will not prevent either Party from filing a claim to enforce the terms of this Agreement or any other Claim not released hereunder.  If any government agency brings any claim or conducts any investigation against the Executive or the Company, nothing in this Agreement shall prevent the other from cooperating in such proceedings.

13.  Future Cooperation.  The Executive agrees to make himself reasonably available to the Company in connection with any claims, disputes, investigations, regulatory examinations or actions, lawsuits or administrative proceedings relating to matters in which he was involved during the period in which he was Chief Executive Officer or an officer of the Company, and to provide information to the Company, and otherwise cooperate with the Company in the Company’s investigation, defense or prosecution of such actions.  Executive further agrees to make himself available to the Chief Executive Officer of the Company, via telephone or electronic mail, to assist with the transition

4

of his role, as reasonably requested by the new Chief Executive Officer of the Company, during the 24 month period following the Effective Date.  The Company agrees to make appropriate Company personnel available to the Executive to assist in Executive’s reasonable requests for assistance in insurance coverage and benefit claims, administrative matters and information technology.  The Company agrees to wire all payments or reimbursements due the Executive to such accounts designated by the Executive to the Company in writing.

14.  Revocation Period. Executive represents that he has read carefully and fully understands the terms of the Release set forth in Section 10 of this Agreement, and that Executive has been advised to consult with an attorney and has had the opportunity to consult with an attorney prior to signing this Agreement. Executive acknowledges that he is executing this Agreement voluntarily and knowingly and that he has not relied on any representations, promises or agreements of any kind made to Executive in connection with Executive’s decision to accept the terms of this Agreement, other than those set forth in this Agreement. Executive acknowledges that Executive has been given at least twenty-one (21) days to consider whether Executive wants to sign this Agreement and that the Age Discrimination in Employment Act gives Executive the right to revoke this Agreement within seven (7) days after it is signed, and Executive understands that he will not receive any payments not otherwise  due him under this Agreement until such seven (7) day revocation period (the “Revocation Period”) has passed and then, only if Executive has not revoked this Agreement. Executive may revoke the Agreement during the Revocation Period by providing written notice of the revocation to Mark Kimmel at the Company’s Corporate office at 350 Poplar Church Road, Camp Hill, PA 17011. Upon such revocation, this Agreement and the provisions entitling him to benefits to which he is not otherwise entitled under the Agreement shall be null and void and of no further force and effect. To the extent Executive has executed this Agreement within less than twenty-one (21) days after its delivery to Executive, Executive hereby acknowledges that his decision to execute this Release prior to the expiration of such twenty-one (21) day period was entirely voluntary.

15.  Voluntary Agreement; Full Understanding; Advice of Counsel.  The Executive understands and acknowledges the significance of this Agreement and acknowledges that this Agreement is voluntary and has not been given as a result of any coercion.  The Executive also acknowledges that he has been given full opportunity to review and negotiate this Agreement, that he has been specifically advised to consult with legal counsel prior to signing it, that he has in fact carefully reviewed it with his attorney before signing it, and that he executes this Agreement only after full reflection and analysis.

16.  Complete Agreement.  This Agreement represents and contains the entire understanding between the parties in connection with the subject matter of this Agreement.  This Agreement shall not be modified or varied except by a written instrument signed by the Executive and the Company.  It is expressly acknowledged and recognized by all parties that all prior written or oral agreements, understandings or representations between the parties are merged into this Agreement.

17.  Governing Law.  This Agreement shall be governed by and enforceable in accordance with the laws of the Commonwealth of Pennsylvania.  Any controversy, claim or dispute arising out of or relating to this Agreement, or any breach or alleged breach hereof, shall be settled by final and binding arbitration, conducted in Cumberland County, Pennsylvania, before, and in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof.  The costs of such arbitration shall be borne equally by the parties thereto and each party shall bear such party’s own attorneys’ fees in connection with such arbitration.  Notwithstanding the foregoing, the Company shall be entitled to bring an action seeking equitable relief, including, without limitation, injunction and specific performance, as a remedy for any breach or to prevent any potential breach of this Agreement by the Executive in any court having jurisdiction.

18.  Section 409A.

a.The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from Section 409A or in compliance therewith, as applicable.

b.All expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s objectively determinable and nondiscretionary policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive.

c.For purposes of Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

19.  Successors and Assigns. This Agreement shall be binding upon Company’s successors and assigns.  The term “Company” as used herein includes such successors and assigns.  The term “successors and assigns” as used

5

herein means any person or entity that acquires all or substantially all of Company’s assets and business (including this Agreement) whether by operation of law or otherwise.  This Agreement, with respect to Executive, is for personal services, and is therefore not assignable.

20.  Severability. To the extent any provision of this Agreement or portion thereof shall be invalid or unenforceable, it shall be considered deleted therefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

21.  Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.

Harsco Corporation
By:	/s/ Mark E. Kimmel
Name: Mark E. Kimmel
Title: Sr. Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary
Salvatore D. Fazzolari
/s/ Salvatore D. Fazzolari

6

EX-31.1

Exhibit 31.1

HARSCO CORPORATION

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Henry W. Knueppel, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Harsco Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 2, 2012

/s/ Henry W. Knueppel

Henry W. Knueppel

Interim Chief Executive Officer

EX-31.2

Exhibit 31.2

HARSCO CORPORATION

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen J. Schnoor, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Harsco Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 2, 2012

/s/ Stephen J. Schnoor

Stephen J. Schnoor

Chief Financial Officer

EX-32

Exhibit 32

HARSCO CORPORATION

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Harsco Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 2, 2012

/s/ Henry W. Knueppel

Henry W. Knueppel

Interim Chief Executive Officer

/s/ Stephen J. Schnoor

Stephen J. Schnoor

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Harsco Corporation and will be retained by Harsco Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Debt and Credit Agreements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 bank
Five-Year Credit Agreement
Credit Facilities
Facility Limit	$ 525
Term of credit agreement (in years)	5 years
Number of lenders providing credit facility (in banks)	14
Available Credit	550
Debt to capital ratio, maximum (as a percent)	60.00%
Subsidiary consolidated indebtedness as a percent of consolidated tangible assets, maximum	10.00%
Total consolidated EBITDA to total consolidated interest charges ratio,Numerator, minimum	3.0
Debt Instrument, Covenant Minimum Consolidated Interest Coverage Ratio, Denominator	1
Five-Year Credit Agreement | LIBOR
Credit Facilities
Variable basis of interest rates	LIBOR
Multi-year revolving credit facility
Credit Facilities
Write-down of deferred financing costs	$ 0.5

XML

Derivative Instruments, Hedging Activities and Fair Value (Details 5) (Fair value measurements recurring, Level 2, USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Fair value measurements recurring | Level 2
Assets
Foreign currency forward exchange contracts	$ 546	$ 3,186
Cross-currency interest rate swaps	38,289	44,636
Liabilities
Foreign currency forward exchange contracts	1,488	1,207
Cross-currency interest rate swaps	$ 5,353	$ 1,792

XML

Derivative Instruments, Hedging Activities and Fair Value (Details 3) (USD $)	3 Months Ended			12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012 Foreign currency forward exchange contracts	Dec. 31, 2011 Foreign currency forward exchange contracts	Mar. 31, 2012 British pounds sterling Commitments to sell foreign currencies	Dec. 31, 2011 British pounds sterling Commitments to sell foreign currencies	Mar. 31, 2012 British pounds sterling Commitments to purchase foreign currencies	Dec. 31, 2011 British pounds sterling Commitments to purchase foreign currencies	Mar. 31, 2012 Euros Commitments to sell foreign currencies	Dec. 31, 2011 Euros Commitments to sell foreign currencies	Mar. 31, 2012 Euros Commitments to purchase foreign currencies	Dec. 31, 2011 Euros Commitments to purchase foreign currencies	Mar. 31, 2012 Other currencies Commitments to sell foreign currencies	Dec. 31, 2011 Other currencies Commitments to sell foreign currencies	Mar. 31, 2012 Other currencies Commitments to purchase foreign currencies	Dec. 31, 2011 Other currencies Commitments to purchase foreign currencies
Foreign Currency Derivatives
Maximum maturity period of unsecured contracts (in months)			3 months
U.S. Dollar Equivalent			$ 311,100,000	$ 324,463,000	$ 2,776,000	$ 18,350,000	$ 2,405,000	$ 4,364,000	$ 185,694,000	$ 178,889,000	$ 106,894,000	$ 105,247,000	$ 4,384,000	$ 2,957,000	$ 8,947,000	$ 14,656,000
Recognized Gain (Loss)			(942,000)	1,732,000	(4,000)	(20,000)	3,000	(12,000)	(1,144,000)	2,345,000	88,000	(878,000)	(10,000)	62,000	125,000	235,000
Pre-tax net losses on certain loans designated as hedges of net investments in foreign subsidiaries	$ (4,300,000)	$ (6,900,000)

XML

Restructuring Programs (Tables)

3 Months Ended

Mar. 31, 2012

2011/2012 Restructuring Program

Restructuring Programs

Schedule of restructuring accrual and related activity

(In thousands)	Accrual December 31 2011		Additional Expenses Incurred (a)			Non-Cash Charges / Adjustments			NetCash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Employee termination benefit costs	$	14,500	$	4,243		$	(299	)	$	(9,302	)	$	527		$	9,669
Cost to exit activities	2,833		23,204			253			(15,326		)	51			11,015
Total Harsco Infrastructure Segment (b)	17,333		27,447			(46		)	(24,628		)	578			20,684
Harsco Metals & Minerals Segment
Employee termination benefit costs	12,737		(205		)	—			(2,925		)	(2		)	9,605
Harsco Rail Segment
Employee termination benefit costs	50		—			—			(50		)	—			—
Harsco Corporate
Employee termination benefit costs	351		74			—			(266		)	—			159
Total	$	30,471	$	27,316		$	(46	)	$	(27,869	)	$	576		$	30,448

(a)Includes principally the recognition of additional expenses due to timing considerations under U.S. GAAP, as well as adjustments to previously recorded restructuring charges resulting from changes in facts and circumstances in the implementation of these activities.

(b)The table does not include $8.1 million of non-cash product rationalization expense or $7.3 million of proceeds from asset sales under the 2011/2012 Restructuring Program for this Segment as these items did not impact the restructuring accrual during the quarter.

Fourth Quarter 2010 Harsco Infrastructure Program

Restructuring Programs

Schedule of restructuring accrual and related activity

(In thousands)	Accrual December 31 2011		Adjustments to Previously Recorded Restructuring Charges (a)			Cash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Cost to exit activities	$	11,929	$	(234	)	$	(870	)	$	107		$	10,932
Employee termination benefit costs	211		(147		)	(61		)	(3		)	—
Other	7		(5		)	—			(2		)	—
Total	$	12,147	$	(386	)	$	(931	)	$	102		$	10,932

(a)Adjustments to previously recorded restructuring charges resulted from changes in facts and circumstances in the implementation of these activities.

Prior Restructuring Programs

Restructuring Programs

Schedule of restructuring accrual and related activity

(In thousands)	Accrual December 31 2011		Cash Expenditures			Foreign Currency Translation		Remaining Accrual March 31 2012
Harsco Metals & Minerals Segment
Employee termination benefit costs	$	1,280	$	—		$	26	$	1,306
Cost to exit activities	727		(34		)	1		694
Total	$	2,007	$	(34	)	$	27	$	2,000

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Accounts Receivable and Inventories (Tables)

3 Months Ended

Mar. 31, 2012

Accounts Receivable and Inventories

Schedule of accounts receivable

(In thousands)	March 31 2012			December 31 2011
Trade accounts receivable	$	650,340		$	636,304
Less: Allowance for doubtful accounts	(18,695		)	(17,829		)
Trade accounts receivable, net	$	631,645		$	618,475
Other receivables (a)	$	34,955		$	44,431

(a)Other receivables include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable, net.

Schedule of provision for doubtful accounts related to trade accounts receivable

	Three Months Ended March 31
(In thousands)	2012		2011
Provision for doubtful accounts related to trade accounts receivable	$	2,927	$	2,166

Schedule of inventories

(In thousands)	March 31 2012		December 31 2011
Finished goods	$	84,087	$	78,445
Work-in-process	44,832		34,041
Raw materials and purchased parts	93,364		92,995
Stores and supplies	39,676		36,453
Total inventories	$	261,959	$	241,934

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Review of Operations by Segment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operations by segment
Revenues From Continuing Operations	$ 752,335	$ 779,055
Operating Income (Loss) From Continuing Operations	(12,687)	29,036
Interest income	674	720
Interest expense	(12,824)	(11,935)
Income (loss) from continuing operations before income taxes and equity income	(24,837)	17,821
Total reportable segments
Operations by segment
Operating Income (Loss) From Continuing Operations	(7,902)	29,911
Harsco Metals & Minerals Segment
Operations by segment
Revenues From Continuing Operations	359,951	391,737
Operating Income (Loss) From Continuing Operations	22,311	28,605
Harsco Infrastructure Segment
Operations by segment
Revenues From Continuing Operations	237,972	261,567
Operating Income (Loss) From Continuing Operations	(53,542)	(17,491)
Harsco Rail Segment
Operations by segment
Revenues From Continuing Operations	68,048	62,602
Operating Income (Loss) From Continuing Operations	9,331	8,123
Harsco Industrial Segment
Operations by segment
Revenues From Continuing Operations	86,364	63,149
Operating Income (Loss) From Continuing Operations	13,998	10,674
Corporate
Operations by segment
Operating Income (Loss) From Continuing Operations	$ (4,785)	$ (875)

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended					3 Months Ended
	Mar. 31, 2012 Environmental	Mar. 31, 2011 Environmental	Dec. 31, 2011 Environmental	Mar. 31, 2012 Brazilian Tax Disputes - Case 1	Aug. 31, 2005 Brazilian Tax Disputes - Case 2	Mar. 31, 2012 Other defendants case claim
Commitments and Contingencies
Accruals for environmental matters	$ 2.4		$ 2.5
Charges related to environmental matters	0.2	0.2
Estimated claims or assessment, before tax				3	3
Estimated claims or assessment, additional amount				31	11
Estimated claims or assessment, aggregate amount					14
Approximate number of defendants that includes the company named in legal actions						90
Minimum amount of damages						20
Maximum amount of damages						$ 25
Number of pending claims						18,730
Number of claims pending in New York Supreme Court						18,241
Number of claims pending in various counties in a number of state courts, and in certain Federal District Courts						489
Number of claims dismissed to date by stipulation or summary judgment prior to trial						25,966
Number of active or in extremis cases in New York County						808

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			3 Months Ended
	Mar. 31, 2012	Mar. 31, 2012 Harsco Metals & Minerals Segment	Oct. 01, 2011 Harsco Metals & Minerals Segment	Mar. 31, 2012 Harsco Infrastructure Segment	Oct. 01, 2011 Harsco Infrastructure Segment	Mar. 31, 2012 Harsco Rail Segment	Dec. 31, 2011 Harsco Rail Segment
Changes in carrying amounts of goodwill
Balance at the beginning of the period	$ 680,901	$ 411,876		$ 259,715		$ 9,310	$ 9,310
Changes to goodwill	(807)			(807)
Foreign currency translation	12,732	6,855		5,877
Balance at the end of the period	$ 692,826	$ 418,731		$ 264,785		$ 9,310	$ 9,310
Approximate percentage of fair value exceeded carrying value			7.40%		9.10%

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Restructuring Programs (Details) (USD $)	3 Months Ended			12 Months Ended			3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012 2011/2012 Restructuring Program	Dec. 31, 2011 2011/2012 Restructuring Program	Mar. 31, 2012 2011/2012 Restructuring Program Minimum	Mar. 31, 2012 Fourth Quarter 2010 Harsco Infrastructure Program	Mar. 31, 2012 Prior Restructuring Programs	Mar. 31, 2012 Harsco Infrastructure Segment 2011/2012 Restructuring Program	Mar. 31, 2012 Harsco Infrastructure Segment 2011/2012 Restructuring Program Employee termination benefit cost	Mar. 31, 2012 Harsco Infrastructure Segment 2011/2012 Restructuring Program Cost to exit activities	Mar. 31, 2012 Harsco Infrastructure Segment Fourth Quarter 2010 Harsco Infrastructure Program	Mar. 31, 2012 Harsco Infrastructure Segment Fourth Quarter 2010 Harsco Infrastructure Program Employee termination benefit cost	Mar. 31, 2012 Harsco Infrastructure Segment Fourth Quarter 2010 Harsco Infrastructure Program Cost to exit activities	Mar. 31, 2012 Harsco Infrastructure Segment Fourth Quarter 2010 Harsco Infrastructure Program Other	Mar. 31, 2012 Harsco Metals & Minerals Segment 2011/2012 Restructuring Program Employee termination benefit cost	Mar. 31, 2012 Harsco Metals & Minerals Segment Prior Restructuring Programs Employee termination benefit cost	Mar. 31, 2012 Harsco Metals & Minerals Segment Prior Restructuring Programs Cost to exit activities	Mar. 31, 2012 Harsco Rail Segment 2011/2012 Restructuring Program Employee termination benefit cost	Mar. 31, 2012 Harsco Corporate 2011/2012 Restructuring Program Employee termination benefit cost
Restructuring Programs
Pre-tax charges	$ 35,449,000	$ 4,836,000		$ 101,000,000
Additional charges expected to be incurred in 2012			97,000,000
Overall cost savings expected in 2012					36,000,000
Overall cost savings expected in 2013					65,000,000
Restructuring accrual related activity
Accrual, balance at the beginning of the period			30,471,000				2,007,000	17,333,000	14,500,000	2,833,000	12,147,000	211,000	11,929,000	7,000	12,737,000	1,280,000	727,000	50,000	351,000
Additional Expenses Incurred			27,316,000					27,447,000	4,243,000	23,204,000	(386,000)	(147,000)	(234,000)	(5,000)	(205,000)				74,000
Non-Cash Charges / Adjustments			(46,000)					(46,000)	(299,000)	253,000
Net Cash Expenditures			(27,869,000)				(34,000)	(24,628,000)	(9,302,000)	(15,326,000)	(931,000)	(61,000)	(870,000)		(2,925,000)		(34,000)	(50,000)	(266,000)
Foreign Currency Translation			576,000				27,000	578,000	527,000	51,000	102,000	(3,000)	107,000	(2,000)	(2,000)	26,000	1,000
Remaining Accrual, balance at the end of the period			30,448,000	30,471,000			2,000,000	20,684,000	9,669,000	11,015,000	10,932,000		10,932,000		9,605,000	1,306,000	694,000		159,000
Non-cash product rationalization expense			8,100,000
Proceeds from asset sales under the 2011/2012 Restructuring Program	22,488,000	6,617,000	7,300,000
Remaining amount of accrual expected to be paid related to multiemployer plan withdrawal liabilities through 2023						6,300,000
Remaining amount of cash expenditures paid throughout 2012 and 2013							$ (2,000,000)

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Derivative Instruments, Hedging Activities and Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012
Cross-Currency Interest Rate Swaps Maturing 2018
Derivatives Designated as Hedging Instruments
Contractual Amount	$ 250,000
Cross-Currency Interest Rate Swaps Maturing 2020
Derivatives Designated as Hedging Instruments
Contractual Amount	220,000
Cross-Currency Interest Rate Swaps Maturing 2013
Derivatives Designated as Hedging Instruments
Contractual Amount	$ 1,800

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Basis of Presentation

3 Months Ended

Mar. 31, 2012

Basis of Presentation

Basis of Presentation

1.     Basis of Presentation

Harsco Corporation (the “Company”) has prepared these unaudited condensed consolidated financial statements based on Securities and Exchange Commission rules that permit reduced disclosure for interim periods.  In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation are reflected in the unaudited condensed consolidated financial statements.  The December 31, 2011 Condensed Consolidated Balance Sheet information contained in this Form 10-Q was derived from the 2011 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for an annual report.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The Company’s management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company’s unaudited condensed consolidated financial statements and notes as required by U.S. GAAP.

Operating results and cash flows for the three months ended March 31, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012.

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Reconciliation of Basic and Diluted Shares (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Reconciliation of Basic and Diluted Shares
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$ (28,963)	$ 12,256
Weighted-average shares outstanding - basic	80,579,000	80,695,000
Dilutive effect of stock-based compensation (in shares)		249,000
Weighted-average shares outstanding - diluted	80,579,000	80,944,000
Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic (in dollars per share)	$ (0.36)	$ 0.15
Diluted (in dollars per share)	$ (0.36)	$ 0.15
Restricted stock units
Antidilutive securities
Number of securities not included in computation of diluted earnings per share (in shares)	63,972
Stock options
Antidilutive securities
Number of securities not included in computation of diluted earnings per share (in shares)	460,000
Stock appreciation rights
Antidilutive securities
Number of securities not included in computation of diluted earnings per share (in shares)	55,992
Other stock-based compensation units
Antidilutive securities
Number of securities not included in computation of diluted earnings per share (in shares)	158,569

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Reconciliation of Basic and Diluted Shares (Tables)

3 Months Ended

Mar. 31, 2012

Reconciliation of Basic and Diluted Shares

Reconciliation of basic and diluted shares

	Three Months Ended
	March 31
(In thousands, except per share amounts)	2012			2011
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	(28,963	)	$	12,256
Weighted-average shares outstanding - basic	80,579			80,695
Dilutive effect of stock-based compensation	—			249
Weighted-average shares outstanding - diluted	80,579			80,944
Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	(0.36	)	$	0.15
Diluted	$	(0.36	)	$	0.15

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Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2012

Employee Benefit Plans

Schedule of defined benefit net periodic pension cost

	Three Months Ended March 31
Defined Benefit Net Periodic Pension Cost	U. S. Plans						International Plans
(In thousands)	2012			2011			2012			2011
Defined benefit plans:
Service cost	$	472		$	392		$	1,064		$	1,094
Interest cost	3,209			3,389			11,378			11,983
Expected return on plan assets	(3,907		)	(4,147		)	(11,044		)	(12,533		)
Recognized prior service costs	47			62			99			104
Recognized losses	1,158			750			3,731			2,778
Amortization of transition liability	—			—			9			14
Settlement/curtailment loss (gain)	—			—			(1,696		)	30
Defined benefit plans net periodic pension cost	$	979		$	446		$	3,541		$	3,470

Schedule of contributions to pension plans

Company Contributions	Three Months Ended March 31
(In thousands)	2012		2011
Defined benefit pension plans:
United States	$	589	$	448
International	18,612		16,854
Multiemployer pension plans	3,295		3,819
Defined contribution pension plans	4,949		4,708

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Derivative Instruments, Hedging Activities and Fair Value (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011
Derivatives Designated as Hedging Instruments
Derivative contracts
Period over which gains and losses are reclassified to earnings, low end of range (in years)	10 years
Period over which gains and losses are reclassified to earnings, high end of range (in years)	15 years
Asset Derivatives	$ 38,317	$ 44,910
Liability Derivatives	5,353	1,792
Derivatives Designated as Hedging Instruments | Foreign currency forward exchange contracts
Derivative contracts
Asset Derivatives	28	274
Derivatives Designated as Hedging Instruments | Cross-currency interest rate swaps
Derivative contracts
Asset Derivatives	38,289	44,636
Liability Derivatives	5,353	1,792
Derivatives Not Designated as Hedging Instruments | Foreign currency forward exchange contracts
Derivative contracts
Asset Derivatives	518	2,912
Liability Derivatives	$ 1,488	$ 1,207

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Derivative Instruments, Hedging Activities and Fair Value (Tables)

3 Months Ended

Mar. 31, 2012

Derivative Instruments, Hedging Activities and Fair Value

Schedule of fair value of outstanding derivative contracts

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
March 31, 2012
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	28	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	38,289		Noncurrent liabilities	5,353
Total derivatives designated as hedging instruments		$	38,317		$	5,353
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	518	Other current liabilities	$	1,488

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
December 31, 2011
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	274	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	44,636		Noncurrent liabilities	1,792
Total derivatives designated as hedging instruments		$	44,910		$	1,792
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	2,912	Other current liabilities	$	1,207

Schedule of effect of derivative instruments

(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended March 31, 2012:
Foreign currency forward exchange contracts	$	(362	)	Cost of services and products sold	$	34		$	—
Cross-currency interest rate swaps	1,339				—		Cost of services and products sold	(11,247		) (a)
	$	977			$	34		$	(11,247	)
For the three months ended March 31, 2011:
Foreign currency forward exchange contracts	$	(527	)		$	—		$	—
Cross-currency interest rate swaps	7,821				—		Cost of services and products sold	(18,781		) (a)
	$	7,294			$	—		$	(18,781	)

(a)   These gains (losses) offset foreign currency fluctuation effects on the debt principal.

	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended March 31 (a)
(In thousands)		2012			2011
Foreign currency forward exchange contracts	Cost of services and products sold	$	(4,694	)	$	(5,121	)

(a) These gains (losses) offset amounts recognized in cost of service and products sold principally as a result of intercompany or third party foreign currency exposures.

Summary of foreign currency forward exchange contracts, by major currency

March 31, 2012

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	2,776	April 2012	$	(4	)
British pounds sterling	Buy	2,405		April 2012	3
Euros	Sell	185,694		April 2012 through June 2012	(1,144		)
Euros	Buy	106,894		April 2012 through June 2012	88
Other currencies	Sell	4,384		April 2012 through June 2012	(10		)
Other currencies	Buy	8,947		April 2012	125
Total		$	311,100		$	(942	)

December 31, 2011

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	18,350	January 2012	$	(20	)
British pounds sterling	Buy	4,364		January 2012	(12		)
Euros	Sell	178,889		January 2012 through October 2012	2,345
Euros	Buy	105,247		January 2012 through April 2012	(878		)
Other currencies	Sell	2,957		January 2012 through March 2012	62
Other currencies	Buy	14,656		January 2012	235
Total		$	324,463		$	1,732

Summary of notional amount of cross-currency interest rate swaps

			Interest Rates
(In millions)	Contractual Amount		Receive	Pay
Maturing 2018	$	250.0	Fixed U.S. dollar rate	Fixed euro rate
Maturing 2020	220.0		Fixed U.S. dollar rate	Fixed British pound sterling rate
Maturing 2013	1.8		Floating U.S. dollar rate	Fixed rupee rate

Schedule of fair value of financial instruments

(In thousands)	March 31 2012		December 31 2011
Assets
Foreign currency forward exchange contracts	$	546	$	3,186
Cross-currency interest rate swaps	38,289		44,636
Liabilities
Foreign currency forward exchange contracts	1,488		1,207
Cross-currency interest rate swaps	5,353		1,792

Reconciliation of liabilities measured on a recurring basis using unobservable inputs (Level 3)

	Three Months Ended March 31
(In thousands)	2012		2011
Balance at beginning of period	$	—	$	3,872
Acquisitions during the period	—		—
Fair value adjustments included in earnings	—		(3,966		)
Effect of exchange rate changes	—		94
Balance at end of period	$	—	$	—

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Review of Operations by Segment (Tables)

3 Months Ended

Mar. 31, 2012

Review of Operations by Segment

Schedule of operations by segment

	Three Months Ended March 31
(In thousands)	2012			2011
Revenues From Continuing Operations
Harsco Metals & Minerals	$	359,951		$	391,737
Harsco Infrastructure	237,972			261,567
Harsco Rail	68,048			62,602
Harsco Industrial	86,364			63,149
Total revenues from continuing operations	$	752,335		$	779,055
Operating Income (Loss) From Continuing Operations
Harsco Metals & Minerals	$	22,311		$	28,605
Harsco Infrastructure	(53,542		)	(17,491		)
Harsco Rail	9,331			8,123
Harsco Industrial	13,998			10,674
Corporate	(4,785		)	(875		)
Total operating income (loss) from continuing operations	$	(12,687	)	$	29,036

Reconciliation of Segment Operating Income to Consolidated Income From Continuing Operations Before Income Taxes and Equity Income

	Three Months Ended March 31
(In thousands)	2012			2011
Segment operating income (loss)	$	(7,902	)	$	29,911
General corporate	(4,785		)	(875		)
Operating income (loss) from continuing operations	(12,687		)	29,036
Interest income	674			720
Interest expense	(12,824		)	(11,935		)
Income (loss) from continuing operations before income taxes and equity income	$	(24,837	)	$	17,821

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Cash dividends declared, Common, per share (in dollars per share)	$ 0.205	$ 0.205
Translation adjustments, deferred income taxes	$ (4,644)	$ (6,508)
Cash flow hedging instrument adjustments, deferred income taxes	(215)	(1,517)
Pension liability adjustments, deferred income taxes	793	2,105
Marketable securities unrealized gains (loss), deferred income taxes	$ (4)
Stock options exercised (in shares)	30,900	80,442
Vesting of restricted stock units and other (in shares)	38,573	31,552

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Other Expenses (Tables)

3 Months Ended

Mar. 31, 2012

Other Expenses

Schedule of other expenses

	Three Months Ended March 31
(In thousands)	2012			2011
Restructuring costs (see Note 15)	$	35,449		$	4,836
Former CEO separation costs	4,125			—
Net gains from sale of non-core assets	(401		)	(1,056		)
Contingent consideration adjustments	—			(3,966		)
Other	919			657
Other expenses	$	40,092		$	471

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Employee Benefit Plans (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Defined benefit plans:
Multiemployer pension plans	$ 3,295,000	$ 3,819,000
Defined contribution pension plans	4,949,000	4,708,000
U. S. Plans
Defined benefit plans:
Service cost	472,000	392,000
Interest cost	3,209,000	3,389,000
Expected return on plan assets	(3,907,000)	(4,147,000)
Recognized prior service costs	47,000	62,000
Recognized losses	1,158,000	750,000
Defined benefit plans net periodic pension cost	979,000	446,000
Contributions by employer to defined benefit pension plan	589,000	448,000
Anticipated contributions to defined benefit pension plans during the remainder of the fiscal year	8,700,000
International Plans
Defined benefit plans:
Service cost	1,064,000	1,094,000
Interest cost	11,378,000	11,983,000
Expected return on plan assets	(11,044,000)	(12,533,000)
Recognized prior service costs	99,000	104,000
Recognized losses	3,731,000	2,778,000
Amortization of transition liability	9,000	14,000
Settlement/curtailment loss (gain)	(1,696,000)	30,000
Defined benefit plans net periodic pension cost	3,541,000	3,470,000
Contributions by employer to defined benefit pension plan	18,612,000	16,854,000
Anticipated contributions to defined benefit pension plans during the remainder of the fiscal year	$ 11,600,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 136,604	$ 121,184
Trade accounts receivable, net	631,645	618,475
Other receivables	34,955	44,431
Inventories	261,959	241,934
Other current assets	123,031	133,407
Total current assets	1,188,194	1,159,431
Property, plant and equipment, net	1,279,121	1,274,484
Goodwill	692,826	680,901
Intangible assets, net	90,449	93,501
Other assets	128,875	130,560
Total assets	3,379,465	3,338,877
Current liabilities:
Short-term borrowings	32,407	51,414
Current maturities of long-term debt	2,741	3,558
Accounts payable	245,927	252,329
Accrued compensation	82,711	92,603
Income taxes payable	9,952	8,409
Dividends payable	16,512	16,498
Insurance liabilities	21,863	25,075
Advances on contracts	111,071	111,429
Other current liabilities	231,325	220,953
Total current liabilities	754,509	782,268
Long-term debt	932,799	853,800
Deferred income taxes	27,337	27,430
Insurance liabilities	62,897	60,864
Retirement plan liabilities	334,376	343,842
Other liabilities	53,521	50,755
Total liabilities	2,165,439	2,118,959
COMMITMENTS AND CONTINGENCIES
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Preferred stock
Common stock	140,025	139,914
Additional paid-in capital	150,261	149,066
Accumulated other comprehensive loss	(333,307)	(364,191)
Retained earnings	1,950,340	1,996,234
Treasury stock	(745,071)	(744,644)
Total Harsco Corporation stockholders' equity	1,162,248	1,176,379
Noncontrolling interests	51,778	43,539
Total equity	1,214,026	1,219,918
Total liabilities and equity	$ 3,379,465	$ 3,338,877

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Derivative Instruments, Hedging Activities and Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Effect of derivative instruments
Amount of Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative - Effective Portion	$ 977	$ 7,294
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	34
Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	(11,247)	(18,781)
Foreign currency forward exchange contracts
Effect of derivative instruments
Amount of Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative - Effective Portion	(362)	(527)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	34
Derivatives Not Designated as Hedging Instruments
Amount of Gain (Loss) Recognized in Income on Derivative, included in Cost of services and products sold	(4,694)	(5,121)
Cross-currency interest rate swaps
Effect of derivative instruments
Amount of Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative - Effective Portion	1,339	7,821
Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	$ (11,247)	$ (18,781)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities:
Net income (loss)	$ (29,572)	$ 12,807
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation	65,454	67,929
Amortization	6,488	8,593
Equity in income of unconsolidated entities, net	(169)	(211)
Dividends or distributions from unconsolidated entities		88
Harsco 2011/2012 Restructuring Program non-cash adjustment	12,246
Other, net	(9,830)	(4,372)
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
Accounts receivable	212	(38,681)
Inventories	(17,269)	(14,313)
Accounts payable	(9,522)	10,547
Accrued interest payable	5,552	6,199
Accrued compensation	(11,760)	(9,704)
Harsco Infrastructure Segment 2010 Restructuring Program accrual	(1,317)	(9,116)
Harsco 2011/2012 Restructuring Program accrual	(599)
Other assets and liabilities	(11,340)	(16,626)
Net cash provided (used) by operating activities	(1,426)	13,140
Cash flows from investing activities:
Purchases of property, plant and equipment	(52,789)	(67,257)
Proceeds from sales of assets	22,488	6,617
Other investing activities, net	(2,020)	4,733
Net cash used by investing activities	(32,321)	(55,907)
Cash flows from financing activities:
Short-term borrowings, net	(19,527)	29,431
Current maturities and long-term debt:
Additions	139,066	70,482
Reductions	(61,196)	(66,566)
Cash dividends paid on common stock	(16,499)	(16,507)
Dividends paid to noncontrolling interests		(600)
Contributions from noncontrolling interests	7,935	333
Common stock issued-options	542	1,239
Other financing activities, net	(2,708)
Net cash provided by financing activities	47,613	17,812
Effect of exchange rate changes on cash	1,554	2,029
Net increase (decrease) in cash and cash equivalents	15,420	(22,926)
Cash and cash equivalents at beginning of period	121,184	124,238
Cash and cash equivalents at end of period	$ 136,604	$ 101,312

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Accounts Receivable and Inventories (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Accounts receivable
Trade accounts receivable	$ 650,340		$ 636,304
Less: Allowance for doubtful accounts	(18,695)		(17,829)
Trade accounts receivable, net	631,645		618,475
Other receivables	34,955		44,431
Provision for doubtful accounts related to trade accounts receivable	2,927	2,166
Inventories
Finished goods	84,087		78,445
Work-in-process	44,832		34,041
Raw materials and purchased parts	93,364		92,995
Stores and supplies	39,676		36,453
Total inventories	$ 261,959		$ 241,934

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Other Expenses

3 Months Ended

Mar. 31, 2012

Other Expenses

Other Expenses

14.  Other Expenses

This income statement classification includes restructuring costs for employee termination benefits, product rationalization and costs to exit activities; former CEO separation costs; net gains on the disposal of non-core assets; and business combination accounting adjustments for contingent consideration related to acquisitions by the Company.

	Three Months Ended March 31
(In thousands)	2012			2011
Restructuring costs (see Note 15)	$	35,449		$	4,836
Former CEO separation costs	4,125			—
Net gains from sale of non-core assets	(401		)	(1,056		)
Contingent consideration adjustments	—			(3,966		)
Other	919			657
Other expenses	$	40,092		$	471

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Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment
Gross property, plant and equipment	$ 3,308,262	$ 3,275,728
Less accumulated depreciation	(2,029,141)	(2,001,244)
Property, plant and equipment, net	1,279,121	1,274,484
Land
Property, Plant and Equipment
Gross property, plant and equipment	27,273	26,729
Land improvements
Property, Plant and Equipment
Gross property, plant and equipment	18,684	17,960
Buildings and improvements
Property, Plant and Equipment
Gross property, plant and equipment	192,788	186,799
Machinery and equipment
Property, Plant and Equipment
Gross property, plant and equipment	3,003,796	2,977,521
Uncompleted construction
Property, Plant and Equipment
Gross property, plant and equipment	$ 65,721	$ 66,719

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Acquisitions and Dispositions (Tables)

3 Months Ended

Mar. 31, 2012

Acquisitions and Dispositions

Schedule of reductions to previously recognized contingent consideration liabilities

	Three Months Ended March 31
(In thousands)	2012		2011
Reduction of contingent consideration liabilities	$	—	$	3,966

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock Issued	Common Stock Treasury	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests
Balances at Dec. 31, 2010	$ 1,468,145	$ 139,514	$ (737,106)	$ 141,298	$ 2,073,920	$ (185,932)	$ 36,451
Increase (Decrease) in Stockholders' Equity
Net income (loss)	12,807				11,431		1,376
Cash dividends declared:
Common @ $0.205 per share	(16,548)				(16,548)
Noncontrolling interests	(600)						(600)
Translation adjustments, net of deferred income taxes of $(4,644) and $(6,508) in 2012 and 2011, respectively	34,812					34,568	244
Cash flow hedging instrument adjustments, net of deferred income taxes of $(215) and $(1,517) in 2012 and 2011, respectively	5,777					5,777
Contributions from noncontrolling interests	333						333
Pension liability adjustments, net of deferred income taxes of $793 and $2,105 in 2012 and 2011, respectively	(4,971)					(4,971)
Stock options exercised, 30,900 shares and 80,442 shares in 2012 and 2011, respectively	1,239	100		1,139
Vesting of restricted stock units and other, net 38,573 shares and 31,552 shares in 2012 and 2011, respectively	(1,008)	118	(1,008)	(118)
Amortization of unearned portion of stock-based compensation, net of forfeitures	944			944
Balances at Mar. 31, 2011	1,500,930	139,732	(738,114)	143,263	2,068,803	(150,558)	37,804
Balances at Dec. 31, 2011	1,219,918	139,914	(744,644)	149,066	1,996,234	(364,191)	43,539
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(29,572)				(29,369)		(203)
Cash dividends declared:
Common @ $0.205 per share	(16,525)				(16,525)
Translation adjustments, net of deferred income taxes of $(4,644) and $(6,508) in 2012 and 2011, respectively	36,040					35,533	507
Cash flow hedging instrument adjustments, net of deferred income taxes of $(215) and $(1,517) in 2012 and 2011, respectively	762					762
Contributions from noncontrolling interests	7,935						7,935
Pension liability adjustments, net of deferred income taxes of $793 and $2,105 in 2012 and 2011, respectively	(5,418)					(5,418)
Marketable securities unrealized gains, net of deferred income taxes of $(4)	7					7
Stock options exercised, 30,900 shares and 80,442 shares in 2012 and 2011, respectively	542	39		503
Vesting of restricted stock units and other, net 38,573 shares and 31,552 shares in 2012 and 2011, respectively	(140)	72	(427)	215
Amortization of unearned portion of stock-based compensation, net of forfeitures	477			477
Balances at Mar. 31, 2012	$ 1,214,026	$ 140,025	$ (745,071)	$ 150,261	$ 1,950,340	$ (333,307)	$ 51,778

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012		Mar. 31, 2011
Revenues from continuing operations:
Service revenues	$ 598,700		$ 653,527
Product revenues	153,635		125,528
Total revenues	752,335		779,055
Costs and expenses from continuing operations:
Cost of services sold	483,425		525,978
Cost of products sold	110,242		84,441
Selling, general and administrative expenses	129,203		137,789
Research and development expenses	2,060		1,340
Other expenses	40,092		471
Total costs and expenses	765,022		750,019
Operating income (loss) from continuing operations	(12,687)		29,036
Interest income	674		720
Interest expense	(12,824)		(11,935)
Income (loss) from continuing operations before income taxes and equity income	(24,837)		17,821
Income tax expense	(4,498)		(4,400)
Equity in income of unconsolidated entities, net	169		211
Income (loss) from continuing operations	(29,166)		13,632
Discontinued operations:
Loss on disposal of discontinued business	(650)		(1,328)
Income tax benefit related to discontinued business	244		503
Loss from discontinued operations	(406)		(825)
Net income (loss)	(29,572)		12,807
Less: Net (income) loss attributable to noncontrolling interests	203		(1,376)
Net income (loss) attributable to Harsco Corporation	(29,369)		11,431
Amounts attributable to Harsco Corporation common stockholders:
Income (loss) from continuing operations, net of tax	(28,963)		12,256
Loss from discontinued operations, net of tax	(406)		(825)
Net income (loss) attributable to Harsco Corporation common stockholders	$ (29,369)		$ 11,431
Weighted-average shares of common stock outstanding (in shares)	80,579		80,695
Basic earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations (in dollars per share)	$ (0.36)		$ 0.15
Discontinued operations (in dollars per share)	$ (0.01)		$ (0.01)
Basic earnings (loss) per share attributable to Harsco Corporation common stockholders (in dollars per share)	$ (0.36)	[1]	$ 0.14
Diluted weighted-average shares of common stock outstanding (in shares)	80,579		80,944
Diluted earnings (loss) per common share attributable to Harsco Corporation common stockholders:
Continuing operations (in dollars per share)	$ (0.36)		$ 0.15
Discontinued operations (in dollars per share)	$ (0.01)		$ (0.01)
Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders (in dollars per share)	$ (0.36)	[1]	$ 0.14
Cash dividends declared per common share (in dollars per share)	$ 0.205		$ 0.205

[1] (a) Does not total due to rounding

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Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

Income Taxes

9.     Income Taxes

Income tax expense from continuing operations increased primarily due to certain losses from continuing operations being generated in jurisdictions where no tax benefit can be recognized for the three months ended March 31, 2012 compared with the three months ended March 31, 2011. The effective income tax rate related to continuing operations for the three months ended March 31, 2012 was 18.1% compared with 24.7% for the three months ended March 31, 2011.  The effective income tax rate changed primarily due to certain losses in jurisdictions where no tax benefit can be recognized.  This resulted in income tax expense despite an overall loss from continuing operations.

An income tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits.  The unrecognized income tax benefit at March 31, 2012 was $44.2 million including interest and penalties.  Within the next twelve months, it is reasonably possible that up to $5.2 million of such amount will be recognized upon settlement of tax examinations and the expiration of various statutes of limitations.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 13, 2012
Document and Entity Information
Entity Registrant Name	HARSCO CORP
Entity Central Index Key	0000045876
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		80,546,643
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

10.  Commitments and Contingencies

Environmental

The Company is involved in a number of environmental remediation investigations and cleanups and, along with other companies, has been identified as a “potentially responsible party” for certain waste disposal sites.  While each of these matters is subject to various uncertainties, it is probable that the Company will agree to make payments toward funding certain of these activities and it is possible that some of these matters will be decided unfavorably to the Company.  The Company has evaluated its potential liability, and its financial exposure is dependent upon such factors as the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the allocation of cost among potentially responsible parties, the years of remedial activity required and the remediation methods selected.  The Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011 include accruals in Other current liabilities of $2.4 million and $2.5 million, respectively, for environmental matters.  The amounts charged against pre-tax income related to environmental matters totaled $0.2 million for the three months ended March 31, 2012 and 2011.

The Company evaluates its liability for future environmental remediation costs on a quarterly basis.  Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures.  The Company does not expect that any sum it may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse effect on its financial position, results of operations or cash flows.

Brazilian Tax Disputes

The Company is involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil.  These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest charges that increase at statutorily determined amounts per month and are assessed on the aggregate amount of the principal and penalties.  In addition, the losing party at the collection action or court appeals phase could be subject to a charge to cover statutorily mandated legal fees, which are generally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest.  A large number of the claims relate to value-added (“ICMS”), services and social security tax disputes.  The largest proportion of the assessed amounts relate to ICMS claims filed by the State Revenue Authorities from the State of São Paulo, Brazil (the “SPRA”), encompassing the period from January 2002 to May 2005.

In October 2009, the Company received notification of the SPRA’s final administrative decision regarding the levying of ICMS in the State of São Paulo in relation to services provided to a customer in the State between January 2004 and May 2005.  As of March 31, 2012, the principal amount of the tax assessment from the SPRA with regard to this case is approximately $3 million, with penalty, interest and fees assessed to date increasing such amount by an additional $31 million.  Any increase in the aggregate amount since the Company’s last Annual Report on Form 10-K is due to an increase in assessed interest and statutorily mandated legal fees for the quarter.  All such amounts include the effect of foreign currency translation.

Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003, and is still pending at the administrative phase, where the aggregate amount assessed by the tax authorities in August 2005 was $14 million (the amounts with regard to this claim are valued as of the date of the assessment since it has not yet reached the collection phase), composed of a principal amount of approximately $3 million, with penalty and interest assessed through that date increasing such amount by an additional $11 million.  All such amounts include the effect of foreign currency translation.

The Company continues to believe that it is not probable it will incur a loss for these assessments by the SPRA and continues to believe that sufficient coverage for these claims exists as a result of the Company’s customer’s indemnification obligations and such customer’s pledge of assets in connection with the October 2009 notice, as required by Brazilian procedure.

The Company intends to continue its practice of vigorously defending itself against these tax claims under various alternatives, including judicial appeal.  The Company will continue to evaluate its potential liability with regard to these claims on a quarterly basis; however, it is not possible to predict the ultimate outcome of these tax-related disputes in Brazil.

Customer Disputes

The Company, through its Harsco Metals & Minerals Segment, provides services to various subsidiaries and affiliates of ArcelorMittal (“ArcelorMittal”) on a number of sites worldwide through long-term service contracts.  Currently, ArcelorMittal and the Company are involved in several commercial disputes, a few of which have resulted in legal action.  Both the Company and ArcelorMittal are working to resolve these matters.  Although results of operations and cash flows for a given period could be adversely affected by a negative outcome in these or other lawsuits, claims and proceedings, management believes that the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Other

In the United States, the Company has been named as one of many defendants (approximately 90 or more in most cases) in legal actions alleging personal injury from exposure to airborne asbestos over the past several decades.  In their suits, the plaintiffs have named as defendants, among others, many manufacturers, distributors and installers of numerous types of equipment or products that allegedly contained asbestos.

The Company believes that the claims against it are without merit.  The Company has never been a producer, manufacturer or processor of asbestos fibers.  Any component within a Company product that may have contained asbestos would have been purchased from a supplier.  Based on scientific and medical evidence, the Company believes that any asbestos exposure arising from normal use of any Company product never presented any harmful levels of airborne asbestos exposure, and, moreover, the type of asbestos contained in any component that was used in those products was protectively encapsulated in other materials and is not associated with the types of injuries alleged in the pending suits.  Finally, in most of the depositions taken of plaintiffs to date in the litigation against the Company, plaintiffs have failed to specifically identify any Company products as the source of their asbestos exposure.

The majority of the asbestos complaints pending against the Company have been filed in New York.  Almost all of the New York complaints contain a standard claim for damages of $20 million or $25 million against the approximately 90 defendants, regardless of the individual plaintiff’s alleged medical condition, and without specifically identifying any Company product as the source of plaintiff’s asbestos exposure.

As of March 31, 2012, there are 18,730 pending asbestos personal injury claims filed against the Company.  Of these cases, 18,241 are pending in the New York Supreme Court for New York County in New York State.  The other claims, totaling 489, are filed in various counties in a number of state courts, and in certain Federal District Courts (including New York), and those complaints generally assert lesser amounts of damages than the New York State court cases or do not state any amount claimed.

As of March 31, 2012, the Company has obtained dismissal by stipulation, or summary judgment prior to trial, in 25,966 cases.

In view of the persistence of asbestos litigation nationwide, the Company expects to continue to receive additional claims.  However, there have been developments during the past several years, both by certain state legislatures and by certain state courts, which could favorably affect the Company’s ability to defend these asbestos claims in those jurisdictions.  These developments include procedural changes, docketing changes, proof of damage requirements and other changes that require plaintiffs to follow specific procedures in bringing their claims and to show proof of damages before they can proceed with their claim.  An example is the action taken by the New York Supreme Court (a trial court), which is responsible for managing all asbestos cases pending within New York County in the State of New York.  This Court issued an order in December 2002 that created a Deferred or Inactive Docket for all pending and future asbestos claims filed by plaintiffs who cannot demonstrate that they have a malignant condition or discernible physical impairment, and an Active or In Extremis Docket for plaintiffs who are able to show such medical condition.  As a result of this order, the majority of the asbestos cases filed against the Company in New York County have been moved to the Inactive Docket until such time as the plaintiffs can show that they have incurred a physical impairment.  At March 31, 2012, the Company has been listed as a defendant in 808 Active or In Extremis asbestos cases in New York County.  The Court’s Order has been challenged by some plaintiffs.

Except with regard to the legal costs in a few limited, exceptional cases, the Company’s insurance carrier has paid all legal and settlement costs and expenses to date related to the Company’s U.S. asbestos cases.  The Company has liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, to substantially cover any liability that might ultimately be incurred on these claims.

The Company intends to continue its practice of vigorously defending these claims and cases.  It is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation.  Despite this uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate outcome of these cases will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company is subject to various other claims and legal proceedings covering a wide range of matters that arose in the ordinary course of business.  In the opinion of management, all such matters are adequately covered by insurance or by established reserves, and, if not so covered, are without merit or are of such kind, or involve such amounts, as would not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the event can be reasonably estimated.  Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported.  Inherent in these estimates are assumptions that are based on the Company’s history of claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends.  If actual claims differ from those projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in the period the change was determined.  When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability.  Insurance claim receivables are included in Other receivables on the Company’s Condensed Consolidated Balance Sheets.  See Note 1, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 for additional information on Accrued Insurance and Loss Reserves.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net income (loss)	$ (29,572)	$ 12,807
Other comprehensive income:
Foreign currency translation adjustments, net of deferred income taxes	36,040	34,812
Net gains on cash flow hedging instruments, net of deferred income taxes of $(215) and $(1,517) in 2012 and 2011, respectively	762	5,777
Pension liability adjustments, net of deferred income taxes of $793 and $2,105 in 2012 and 2011, respectively	(5,418)	(4,971)
Unrealized gain on marketable securities, net of deferred income taxes of $(4) in 2012	7
Total other comprehensive income	31,391	35,618
Total comprehensive income	1,819	48,425
Less: Comprehensive income attributable to noncontrolling interests	(304)	(1,620)
Comprehensive income attributable to Harsco Corporation	$ 1,515	$ 46,805

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Accounts Receivable and Inventories

3 Months Ended

Mar. 31, 2012

Accounts Receivable and Inventories

Accounts Receivable and Inventories

4.   Accounts Receivable and Inventories

Accounts receivable consist of the following:

(In thousands)	March 31 2012			December 31 2011
Trade accounts receivable	$	650,340		$	636,304
Less: Allowance for doubtful accounts	(18,695		)	(17,829		)
Trade accounts receivable, net	$	631,645		$	618,475
Other receivables (a)	$	34,955		$	44,431

(a)Other receivables include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable, net.

The provision for doubtful accounts related to trade accounts receivable was as follows:

	Three Months Ended March 31
(In thousands)	2012		2011
Provision for doubtful accounts related to trade accounts receivable	$	2,927	$	2,166

Inventories consist of the following:

(In thousands)	March 31 2012		December 31 2011
Finished goods	$	84,087	$	78,445
Work-in-process	44,832		34,041
Raw materials and purchased parts	93,364		92,995
Stores and supplies	39,676		36,453
Total inventories	$	261,959	$	241,934

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Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2012

Acquisitions and Dispositions

Acquisitions and Dispositions

3.     Acquisitions and Dispositions

Acquisitions

Certain of the Company’s acquisitions in prior years included contingent consideration features for which defined goals needed to be met by the acquired business in order for payment of the consideration.  Each quarter until settlement of these contingencies, the Company assessed the likelihood that an acquired business would achieve the goals and the resulting fair value of the contingency.  In accordance with accounting standards for business combinations, these adjustments were recognized in operating income in the Condensed Consolidated Statements of Income as a component of the Other expenses line item.  The Company’s assessment of these performance goals resulted in the following reductions to previously recognized contingent consideration liabilities:

	Three Months Ended March 31
(In thousands)	2012		2011
Reduction of contingent consideration liabilities	$	—	$	3,966

All contingent consideration liabilities have been settled and there was no recorded contingent consideration liability as of March 31, 2012 or December 31, 2011.

Dispositions - Assets Held-for-Sale

Throughout the past several years and in conjunction with the 2011/2012 Restructuring Program and the Fourth Quarter 2010 Harsco Infrastructure Program, management approved the sale of certain long-lived assets throughout the Company’s operations.  At March 31, 2012 and December 31, 2011, assets held-for-sale of $3.3 million and $7.2 million, respectively were recorded as Other current assets on the Condensed Consolidated Balance Sheets.

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Restructuring Programs

3 Months Ended

Mar. 31, 2012

Restructuring Programs

Restructuring Programs

15.  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 reduced fixed investment and generate annual operating expense savings.  The programs have been instituted in response to the continuing impact of global financial and economic uncertainty on the Company’s end markets, particularly in the Company’s Harsco Infrastructure Segment.

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.

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, in the Harsco Infrastructure and Harsco Metals & Minerals Segments.  As previously disclosed in the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2011, the Company incurred approximately $101 million in pre-tax charges under this program in 2011. Additional charges of approximately $97 million are expected to be incurred in 2012.  Benefits under this program, in the form of reduced costs, are expected to be over $36 million in 2012 and more than $65 million when fully annualized in 2013.

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

(In thousands)	Accrual December 31 2011		Additional Expenses Incurred (a)			Non-Cash Charges / Adjustments			NetCash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Employee termination benefit costs	$	14,500	$	4,243		$	(299	)	$	(9,302	)	$	527		$	9,669
Cost to exit activities	2,833		23,204			253			(15,326		)	51			11,015
Total Harsco Infrastructure Segment (b)	17,333		27,447			(46		)	(24,628		)	578			20,684
Harsco Metals & Minerals Segment
Employee termination benefit costs	12,737		(205		)	—			(2,925		)	(2		)	9,605
Harsco Rail Segment
Employee termination benefit costs	50		—			—			(50		)	—			—
Harsco Corporate
Employee termination benefit costs	351		74			—			(266		)	—			159
Total	$	30,471	$	27,316		$	(46	)	$	(27,869	)	$	576		$	30,448

(a)Includes principally the recognition of additional expenses due to timing considerations under U.S. GAAP, as well as adjustments to previously recorded restructuring charges resulting from changes in facts and circumstances in the implementation of these activities.

(b)The table does not include $8.1 million of non-cash product rationalization expense or $7.3 million of proceeds from asset sales under the 2011/2012 Restructuring Program for this Segment as these items did not impact the restructuring accrual during the quarter.

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

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 March 31, 2012 and the activity for the three months then ended are as follows:

(In thousands)	Accrual December 31 2011		Adjustments to Previously Recorded Restructuring Charges (a)			Cash Expenditures			Foreign Currency Translation			Remaining Accrual March 31 2012
Harsco Infrastructure Segment
Cost to exit activities	$	11,929	$	(234	)	$	(870	)	$	107		$	10,932
Employee termination benefit costs	211		(147		)	(61		)	(3		)	—
Other	7		(5		)	—			(2		)	—
Total	$	12,147	$	(386	)	$	(931	)	$	102		$	10,932

(a)Adjustments to previously recorded restructuring charges resulted from changes in facts and circumstances in the implementation of these activities.

Approximately one-third of the remaining accrual at March 31, 2012 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.

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 March 31, 2012 and the activity for the year then ended are as follows:

(In thousands)	Accrual December 31 2011		Cash Expenditures			Foreign Currency Translation		Remaining Accrual March 31 2012
Harsco Metals & Minerals Segment
Employee termination benefit costs	$	1,280	$	—		$	26	$	1,306
Cost to exit activities	727		(34		)	1		694
Total	$	2,007	$	(34	)	$	27	$	2,000

The majority of the remaining cash expenditures of $2.0 million related to these actions are expected to be paid throughout 2012 and 2013.

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Reconciliation of Basic and Diluted Shares

3 Months Ended

Mar. 31, 2012

Reconciliation of Basic and Diluted Shares

Reconciliation of Basic and Diluted Shares

11.  Reconciliation of Basic and Diluted Shares

	Three Months Ended
	March 31
(In thousands, except per share amounts)	2012			2011
Income (loss) from continuing operations attributable to Harsco Corporation common stockholders	$	(28,963	)	$	12,256
Weighted-average shares outstanding - basic	80,579			80,695
Dilutive effect of stock-based compensation	—			249
Weighted-average shares outstanding - diluted	80,579			80,944
Earnings (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:
Basic	$	(0.36	)	$	0.15
Diluted	$	(0.36	)	$	0.15

At March 31, 2012, the following average outstanding stock-based compensation units were not included in the three month computation of diluted earnings per share because the effect was antidilutive:

·Restricted stock units – 63,972

·Stock options – 460,000

·Stock appreciation rights – 55,992

·Other – 158,569

At March 31, 2011, all outstanding stock-based compensation units were included in the computation of diluted earnings per share.

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Debt and Credit Agreements

3 Months Ended

Mar. 31, 2012

Debt and Credit Agreements

Debt and Credit Agreements

7.     Debt and Credit Agreements

In March 2012, the Company entered into an Amended and Restated Five-Year Credit Agreement (“Credit Agreement”) in the amount of $525 million through a syndicate of 14 banks.   The Credit Agreement matures in March 2017.  The Company has the option to increase the amount of the Credit Agreement to $550 million.  The Credit Agreement amends and restates the Company’s multi-year revolving credit facility which was set to mature in December 2012.  There were no borrowings outstanding under the multi-year revolving credit facility upon execution of the Credit Agreement,

The Credit Agreement contains covenants stipulating a maximum debt to capital ratio of 60%; a maximum subsidiary consolidated indebtedness to consolidated tangible assets ratio of 10%; and a minimum total consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest charges ratio of 3.0:1.  At March 31, 2012 the Company was in compliance with these covenants. Borrowings under the Credit Agreement are available in most major currencies with active markets and at interest rates based upon LIBOR, plus a margin.

During the three months ended March 31, 2012, the Company expensed $0.5 million of previously deferred financing costs associated with the multi-year revolving credit facility for banks which did not participate in the Credit Agreement or banks with decreased obligations under the Credit Agreement.

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Property, Plant and Equipment

3 Months Ended

Mar. 31, 2012

Property, Plant and Equipment

Property, Plant and Equipment

5.     Property, Plant and Equipment

Property, plant and equipment consists of the following:

(In thousands)	March 31 2012			December 31 2011
Land	$	27,273		$	26,729
Land improvements	18,684			17,960
Buildings and improvements	192,788			186,799
Machinery and equipment	3,003,796			2,977,521
Uncompleted construction	65,721			66,719
Gross property, plant and equipment	3,308,262			3,275,728
Less accumulated depreciation	(2,029,141		)	(2,001,244		)
Property, plant and equipment, net	$	1,279,121		$	1,274,484

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2012

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

6.     Goodwill and Other Intangible Assets

The following table reflects the changes in carrying amounts of goodwill by segment (there is no goodwill associated with the Harsco Industrial Segment) for the three months ended March 31, 2012:

(In thousands)	Harsco Metals & Minerals Segment		Harsco Infrastructure Segment			Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2011	$	411,876	$	259,715		$	9,310	$	680,901
Changes to goodwill	—		(807		)	—		(807		)
Foreign currency translation	6,855		5,877			—		12,732
Balance at March 31, 2012	$	418,731	$	264,785		$	9,310	$	692,826

The Company’s 2011 annual goodwill impairment testing did not result in any impairment of the Company’s goodwill.  The fair values of the Harsco Metals business and the Harsco Infrastructure Segment exceeded carrying value by approximately 7.4% and 9.1%, respectively.  The Company tests for goodwill impairment annually, and whenever events or circumstances make it more likely than not that impairment may have occurred.  The Company performs its annual goodwill impairment test as of October 1 and monitors for interim triggering events on an ongoing basis.  The Company determined that as of March 31, 2012, no interim goodwill impairment testing was necessary.  There can be no assurance that the Company’s annual goodwill impairment testing will not result in a charge to earnings.  Should the Company’s analysis indicate a further degradation in the overall markets served by the Harsco Metals business or Harsco Infrastructure Segment, impairment losses for associated assets could be required.  Any impairment could result in the write-down of the carrying value of goodwill to its implied fair value.

Intangible assets by class consist of the following:

	March 31, 2012				December 31, 2011
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	186,093	$	124,415	$	183,576	$	119,708
Non-compete agreements	1,374		1,325		1,353		1,301
Patents	6,950		5,270		6,884		5,145
Technology related	29,738		15,466		29,497		14,614
Trade names	18,700		9,276		18,538		8,379
Other	11,461		8,115		10,749		7,949
Total	$	254,316	$	163,867	$	250,597	$	157,096

Amortization expense for intangible assets was as follows:

	Three Months Ended March 31
(In thousands)	2012		2011
Amortization expense for intangible assets	$	5,308	$	7,849

The estimated amortization expense for the next five fiscal years based on current intangible assets and excluding the potential effect of future foreign currency exchange rate fluctuations is as follows:

(In thousands)	2012		2013		2014		2015		2016
Estimated amortization expense	$	17,500	$	15,750	$	13,500	$	8,750	$	7,500

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2012

Employee Benefit Plans

Employee Benefit Plans

8.  Employee Benefit Plans

	Three Months Ended March 31
Defined Benefit Net Periodic Pension Cost	U. S. Plans						International Plans
(In thousands)	2012			2011			2012			2011
Defined benefit plans:
Service cost	$	472		$	392		$	1,064		$	1,094
Interest cost	3,209			3,389			11,378			11,983
Expected return on plan assets	(3,907		)	(4,147		)	(11,044		)	(12,533		)
Recognized prior service costs	47			62			99			104
Recognized losses	1,158			750			3,731			2,778
Amortization of transition liability	—			—			9			14
Settlement/curtailment loss (gain)	—			—			(1,696		)	30
Defined benefit plans net periodic pension cost	$	979		$	446		$	3,541		$	3,470

Company Contributions	Three Months Ended March 31
(In thousands)	2012		2011
Defined benefit pension plans:
United States	$	589	$	448
International	18,612		16,854
Multiemployer pension plans	3,295		3,819
Defined contribution pension plans	4,949		4,708

The Company currently anticipates contributing an additional $8.7 million and $11.6 million for the U.S. and international defined benefit pension plans, respectively, during the remainder of 2012.

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Acquisitions and Dispositions (Details) (USD $)	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2012	Dec. 31, 2011
Acquisitions and Dispositions
Reduction of contingent consideration liabilities	$ 3,966,000
Assets held-for-sale, current		$ 3,300,000	$ 7,200,000

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Other Expenses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Other Expenses
Pre-tax charges	$ 35,449	$ 4,836
Severance Costs	4,125
Net gains from sale of non-core assets	(401)	(1,056)
Contingent consideration adjustments		(3,966)
Other	919	657
Other expenses	$ 40,092	$ 471

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Review of Operations by Segment

3 Months Ended

Mar. 31, 2012

Review of Operations by Segment

Review of Operations by Segment

13. Review of Operations by Segment

	Three Months Ended March 31
(In thousands)	2012			2011
Revenues From Continuing Operations
Harsco Metals & Minerals	$	359,951		$	391,737
Harsco Infrastructure	237,972			261,567
Harsco Rail	68,048			62,602
Harsco Industrial	86,364			63,149
Total revenues from continuing operations	$	752,335		$	779,055
Operating Income (Loss) From Continuing Operations
Harsco Metals & Minerals	$	22,311		$	28,605
Harsco Infrastructure	(53,542		)	(17,491		)
Harsco Rail	9,331			8,123
Harsco Industrial	13,998			10,674
Corporate	(4,785		)	(875		)
Total operating income (loss) from continuing operations	$	(12,687	)	$	29,036

Reconciliation of Segment Operating Income (Loss) to Income (Loss) From Continuing Operations Before Income Taxes and Equity Income

	Three Months Ended March 31
(In thousands)	2012			2011
Segment operating income (loss)	$	(7,902	)	$	29,911
General corporate	(4,785		)	(875		)
Operating income (loss) from continuing operations	(12,687		)	29,036
Interest income	674			720
Interest expense	(12,824		)	(11,935		)
Income (loss) from continuing operations before income taxes and equity income	$	(24,837	)	$	17,821

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Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2012

Property, Plant and Equipment

Schedule of property, plant and equipment

(In thousands)	March 31 2012			December 31 2011
Land	$	27,273		$	26,729
Land improvements	18,684			17,960
Buildings and improvements	192,788			186,799
Machinery and equipment	3,003,796			2,977,521
Uncompleted construction	65,721			66,719
Gross property, plant and equipment	3,308,262			3,275,728
Less accumulated depreciation	(2,029,141		)	(2,001,244		)
Property, plant and equipment, net	$	1,279,121		$	1,274,484

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Derivative Instruments, Hedging Activities and Fair Value (Details 6) (USD $)			3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2012 Contingent consideration for acquisition	Mar. 31, 2011 Contingent consideration for acquisition
Reconciliation of the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3)
Balance at beginning of period				$ 3,872,000
Acquisitions during the period			0
Fair value adjustments included in earnings			0	(3,966,000)
Effect of exchange rate changes			0	94,000
Balance at end of period			0
Long-term debt, including current maturities
Fair value of long-term debt	1,000,000,000	935,100,000
Carrying value of long-term debt	$ 935,500,000	$ 857,400,000

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Income Taxes
Effective income tax rate (as a percent)	18.10%	24.70%
Unrecognized tax benefits including interest and penalties	$ 44.2
Portion of UTB, expected to be recognized upon settlement of tax examinations and the expiration of various statutes of limitations within next twelve months	$ 5.2

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net gains on cash flow hedging instruments, deferred income taxes	$ (215)	$ (1,517)
Pension liability adjustments, deferred income taxes	793	2,105
Unrealized gain on marketable securities, deferred income taxes	$ (4)

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Recently Adopted and Recently Issued Accounting Standards

3 Months Ended

Mar. 31, 2012

Recently Adopted and Recently Issued Accounting Standards

Recently Adopted and Recently Issued Accounting Standards

2.     Recently Adopted and Recently Issued Accounting Standards

The following accounting standards have been adopted in 2012:

On January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) issued changes related to fair value measurement and disclosure.  The changes are the result of convergence with International Financial Reporting Standards and clarify certain fair value measurement concepts and expand on existing disclosure requirements on Level 3 fair value measurements.  The adoption of these changes did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted FASB issued changes related to the presentation of comprehensive income.  The changes remove certain presentation options and require entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements.  There were no changes to the items that are reported in other comprehensive income.  In December 2011, the FASB indefinitely deferred a requirement dealing with the presentation of reclassification adjustments out of accumulated other comprehensive income.  Other than the sequencing of financial statements, the adoption of these changes did not have an impact on the Company’s consolidated financial statements.

On January 1, 2012, the Company adopted FASB issued changes related to testing for goodwill impairment.  The changes allow for an assessment of qualitative factors to determine whether it is necessary to perform the two-step impairment test.  The adoption of these changes will not have an impact on the Company’s consolidated financial statements, but it may impact the manner in which the Company performs testing for goodwill impairment.

The following accounting standard has been issued and becomes effective for the Company at a future date:

In December 2011, the FASB issued changes related to offsetting assets and liabilities.  The changes require additional disclosure information regarding offsetting assets and liabilities to enable users of financial statements to understand the effect on financial position.  Management is currently evaluating these changes and believes that it may require additional disclosure, but will not have a material impact on the Company’s consolidated financial statements.  These changes become effective for the Company on January 1, 2013 with retrospective application required.

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2012

Goodwill and Other Intangible Assets

Schedule of changes in carrying amounts of goodwill by segment

(In thousands)	Harsco Metals & Minerals Segment		Harsco Infrastructure Segment			Harsco Rail Segment		Consolidated Totals
Balance at December 31, 2011	$	411,876	$	259,715		$	9,310	$	680,901
Changes to goodwill	—		(807		)	—		(807		)
Foreign currency translation	6,855		5,877			—		12,732
Balance at March 31, 2012	$	418,731	$	264,785		$	9,310	$	692,826

Schedule of intangible assets by class

	March 31, 2012				December 31, 2011
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer related	$	186,093	$	124,415	$	183,576	$	119,708
Non-compete agreements	1,374		1,325		1,353		1,301
Patents	6,950		5,270		6,884		5,145
Technology related	29,738		15,466		29,497		14,614
Trade names	18,700		9,276		18,538		8,379
Other	11,461		8,115		10,749		7,949
Total	$	254,316	$	163,867	$	250,597	$	157,096

Schedule of amortization expense

	Three Months Ended March 31
(In thousands)	2012		2011
Amortization expense for intangible assets	$	5,308	$	7,849

Schedule of estimated amortization expense

(In thousands)	2012		2013		2014		2015		2016
Estimated amortization expense	$	17,500	$	15,750	$	13,500	$	8,750	$	7,500

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Goodwill and Other Intangible Assets (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Intangible Assets, by category
Gross Carrying Amount	$ 254,316		$ 250,597
Accumulated Amortization	163,867		157,096
Amortization expense for intangible assets	5,308	7,849
Estimated amortization expense for next 5 years
2012	17,500
2013	15,750
2014	13,500
2015	8,750
2016	7,500
Customer related
Intangible Assets, by category
Gross Carrying Amount	186,093		183,576
Accumulated Amortization	124,415		119,708
Non-compete agreements
Intangible Assets, by category
Gross Carrying Amount	1,374		1,353
Accumulated Amortization	1,325		1,301
Patents
Intangible Assets, by category
Gross Carrying Amount	6,950		6,884
Accumulated Amortization	5,270		5,145
Technology related
Intangible Assets, by category
Gross Carrying Amount	29,738		29,497
Accumulated Amortization	15,466		14,614
Trade names
Intangible Assets, by category
Gross Carrying Amount	18,700		18,538
Accumulated Amortization	9,276		8,379
Other
Intangible Assets, by category
Gross Carrying Amount	11,461		10,749
Accumulated Amortization	$ 8,115		$ 7,949

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Derivative Instruments, Hedging Activities and Fair Value

3 Months Ended

Mar. 31, 2012

Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments, Hedging Activities and Fair Value

12.  Derivative Instruments, Hedging Activities and Fair Value

Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency forward exchange contracts, commodity contracts and cross-currency interest rate swaps, to manage certain foreign currency, commodity price and interest rate exposures.  Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes.

All derivative instruments are recorded on the balance sheet at fair value.  Changes in the fair value of derivatives used to hedge foreign-currency-denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged.  Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for as cash flow hedges, as deemed appropriate and if the criteria for hedge accounting are met.  Gains and losses on derivatives designated as cash flow hedges are deferred as a separate component of equity and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.  Generally, at March 31, 2012, these deferred gains and losses will be reclassified to earnings over 10 to 15 years from the balance sheet date.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

The fair value of outstanding derivative contracts recorded as assets and liabilities on the Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011 were as follows:

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
March 31, 2012
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	28	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	38,289		Noncurrent liabilities	5,353
Total derivatives designated as hedging instruments		$	38,317		$	5,353
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	518	Other current liabilities	$	1,488

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
December 31, 2011
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	274	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	44,636		Noncurrent liabilities	1,792
Total derivatives designated as hedging instruments		$	44,910		$	1,792
Derivates not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	2,912	Other current liabilities	$	1,207

The effect of derivative instruments on the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011 was as follows:

Derivatives Designated as Hedging Instruments

(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
For the three months ended March 31, 2012:
Foreign currency forward exchange contracts	$	(362	)	Cost of services and products sold	$	34		$	—
Cross-currency interest rate swaps	1,339				—		Cost of services and products sold	(11,247		) (a)
	$	977			$	34		$	(11,247	)
For the three months ended March 31, 2011:
Foreign currency forward exchange contracts	$	(527	)		$	—		$	—
Cross-currency interest rate swaps	7,821				—		Cost of services and products sold	(18,781		) (a)
	$	7,294			$	—		$	(18,781	)

(a)   These gains (losses) offset foreign currency fluctuation effects on the debt principal.

Derivatives Not Designated as Hedging Instruments

	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended March 31 (a)
(In thousands)		2012			2011
Foreign currency forward exchange contracts	Cost of services and products sold	$	(4,694	)	$	(5,121	)

(a) These gains (losses) offset amounts recognized in cost of service and products sold principally as a result of intercompany or third party foreign currency exposures.

Foreign Currency Forward Exchange Contracts

The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements.  The financial position and results of operations of substantially all of the Company’s foreign subsidiaries are measured using the local currency as the functional currency.  Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods.  The aggregate effects of translating the balance sheets of these subsidiaries are deferred and recorded in Accumulated other comprehensive loss, which is a separate component of equity.

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations.  At March 31, 2012 and December 31, 2011, the Company had $311.1 million and $324.5 million of contracted amounts, respectively, of foreign currency forward exchange contracts outstanding.  These contracts are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and its various subsidiaries, vendors or customers.  The unsecured contracts outstanding at March 31, 2012 mature at various times within three months and are with major financial institutions.  The Company may be exposed to credit loss in the event of non-performance by the contract counterparties.  The Company evaluates the creditworthiness of the counterparties and does not expect default by them.  Foreign currency forward exchange contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.

The following tables summarize, by major currency, the contractual amounts of the Company’s foreign currency forward exchange contracts in U.S. dollars at March 31, 2012 and December 31, 2011.  The “Buy” amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the “Sell” amounts represent the U.S. dollar equivalent of commitments to sell foreign currencies.  The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

March 31, 2012

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	2,776	April 2012	$	(4	)
British pounds sterling	Buy	2,405		April 2012	3
Euros	Sell	185,694		April 2012 through June 2012	(1,144		)
Euros	Buy	106,894		April 2012 through June 2012	88
Other currencies	Sell	4,384		April 2012 through June 2012	(10		)
Other currencies	Buy	8,947		April 2012	125
Total		$	311,100		$	(942	)

December 31, 2011

(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	18,350	January 2012	$	(20	)
British pounds sterling	Buy	4,364		January 2012	(12		)
Euros	Sell	178,889		January 2012 through October 2012	2,345
Euros	Buy	105,247		January 2012 through April 2012	(878		)
Other currencies	Sell	2,957		January 2012 through March 2012	62
Other currencies	Buy	14,656		January 2012	235
Total		$	324,463		$	1,732

In addition to foreign currency forward exchange contracts, the Company designates certain loans as hedges of net investments in foreign subsidiaries.  The Company recorded pre-tax net losses of $4.3 million and $6.9 million during the three months ended March 31, 2012 and 2011, respectively into Accumulated other comprehensive loss, which is a separate component of stockholders’ equity.

Cross-Currency Interest Rate Swaps

The Company uses cross-currency interest rate swaps in conjunction with certain debt issuances in order to secure a fixed local currency interest rate.  Under these cross-currency interest rate swaps, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively.  The cross-currency interest rate swaps are recorded on the Condensed  Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread recorded in Accumulated other comprehensive loss, which is a separate component of equity.  Changes in value attributed to the effect of foreign currency fluctuations are recorded in the income statement and offset currency fluctuation effects on the debt principal.

Cross-Currency Interest Rate Swaps

			Interest Rates
(In millions)	Contractual Amount		Receive	Pay
Maturing 2018	$	250.0	Fixed U.S. dollar rate	Fixed euro rate
Maturing 2020	220.0		Fixed U.S. dollar rate	Fixed British pound sterling rate
Maturing 2013	1.8		Floating U.S. dollar rate	Fixed rupee rate

Fair Value of Derivative Assets and Liabilities and Other Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).  The Company utilizes market data or assumptions that the Company believes market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  The three levels of the fair value hierarchy are described below:

·Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

·Level 3—Inputs that are both significant to the fair value measurement and unobservable.

In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

At March 31, 2012 and December 31, 2011, all derivative assets and liabilities were valued at Level 2 of the fair value hierarchy.  The following table indicates the different financial instruments of the Company at March 31, 2012 and December 31, 2011:

Level 2 Fair Value Measurements

(In thousands)	March 31 2012		December 31 2011
Assets
Foreign currency forward exchange contracts	$	546	$	3,186
Cross-currency interest rate swaps	38,289		44,636
Liabilities
Foreign currency forward exchange contracts	1,488		1,207
Cross-currency interest rate swaps	5,353		1,792

The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3) for the three months ended March 31:

	Three Months Ended March 31
(In thousands)	2012		2011
Balance at beginning of period	$	—	$	3,872
Acquisitions during the period	—		—
Fair value adjustments included in earnings	—		(3,966		)
Effect of exchange rate changes	—		94
Balance at end of period	$	—	$	—

The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information.  Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and minimize the use of unobservable inputs.  The Company is able to classify fair value balances based on the ability to observe those inputs.  Commodity derivatives, foreign currency forward exchange contracts and cross-currency interest rate swaps are classified as Level 2 fair value based upon pricing models using market-based inputs.  Model inputs can be verified, and valuation techniques do not involve significant management judgment.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities.  At March 31, 2012 and December 31, 2011, the total fair value of long-term debt, including current maturities, was $1.0 billion and $935.1 million, respectively, compared to carrying value of $935.5 million and $857.4 million, respectively.  Fair values for debt are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.