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Restructuring Programs

3 Months Ended

Mar. 31, 2012

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			Net Cash 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.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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