Through March 31, 2010, the Company has completed substantially all workforce reductions under the 2008 restructuring program totaling 1,429 employees related to this restructuring program.  The remaining exit activities relate to the Harsco Metals Segment and are targeted for completion during the second quarter of 2010.  These restructuring activities were not completed in 2009 due to continued negotiations with labor unions and customers that resulted in changes to estimates of the amount of restructuring costs and the timing of their settlement.

The restructuring accrual at March 31, 2010 and the activity for the three months then ended by segment is as follows:

(In thousands)		Accrual December 31 2009				2010 Restructuring Program Charges				Adjustments to Previously Recorded Restructuring Charges (a)				Cash Expenditures				Remaining Accrual March 31 2010
Harsco Infrastructure Segment
Employee termination benefit costs		$	122			$	5,111			$	—			$	(984	)		$	4,249
Cost to exit activities			—				2,696				—				(1,694	)			1,002
Total Harsco Infrastructure Segment			122				7,807				—				(2,678	)			5,251
Harsco Metals Segment
Employee termination benefit costs			3,317				1,254				(68	)			(3,335	)			1,168
Cost to exit activities			186				—				—				(49	)			137
Total Harsco Metals Segment			3,503				1,254				(68	)			(3,384	)			1,305
Total		$	3,625			$	9,061			$	(68	)		$	(6,062	)		$	6,556

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

The majority of the remaining cash expenditures of $6.6 million related to these actions are expected to be paid by June 30, 2010.

 

 

- 20 -

---

 

M.        Income Taxes

Income tax expense from Continuing Operations increased due to lower earnings from continuing operations and an increase in the effective income tax rate from continuing operations.  The effective income tax rate relating to continuing operations for the first quarter of 2010 was 24.1% versus 6.7% for the first quarter of 2009.  The effective tax rate in 2009 reflected net discrete tax benefits related to a change in the permanent reinvestment of prior-year undistributed earnings.

N.        Other Income

This income statement classification includes impaired asset write-downs, employee termination benefit costs and costs to exit activities, offset by net gains on the disposal of non-core assets.  Net other income for the first quarter of 2010 of $2.5 million includes restructuring costs of $9.3 million, primarily in the Harsco Infrastructure Segment, offset by an $8.3 million purchase accounting adjustment (as more fully explained in Note F, “Acquisitions”) in the Harsco Infrastructure Segment and $3.7 million of gains from the sale of non-core assets.

Other income in the first quarter of 2009 of $2.8 million included gains on the sale of non-core assets of $4.4 million, offset by restructuring costs of $1.6 million.

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 financial statements as well as the Company’s annual Form 10-K for the year ended December 31, 2009, which included additional information about the Company’s critical accounting policies, contractual obligations, practices and the transactions that support the financial results, and provided a more comprehensive summary of the Company’s outlook, trends and strategies for 2010 and beyond.

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 forward-looking statements, expectations and assumptions expressed or implied herein.  Forward-looking statements contained herein could include, among other things, statements about our management confidence and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, cash flows, e arnings 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 results to differ 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 countri es 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 business; (8) our ability to successfully enter into new contracts and complete new acquisitions or joint 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) the ongoing global financial and credit crisis, which could result in our customers curtailing development projects, construction, production and capital expenditures, which, in turn, could reduce the demand for our products and services and, accordingly, our sales, margins and profitability; (12) the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; (13) our ability to successfully i mplement cost-reduction initiatives; and (14) other risk factors listed from time to time in the Company's SEC reports.  A further discussion of these, along with other potential factors, can be found in Part I, Item 1A, “Risk Factors,” of the Company’s Form 10-K for the year ended December 31, 2009.  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.

 

 

- 21 -

---

 

Executive Overview

Revenues for the Company during the first quarter of 2010 were $742.4 million compared to $696.9 million in 2009.  The Company generated higher volumes in the Harsco Metals Segment due to an increase in global steel production and in the Harsco Rail Segment due to shipments under existing contracts.  This was offset by weaker demand for infrastructure services due to distressed market conditions in non-residential construction, particularly in North America and Europe.  Foreign currency translation contributed to the increased revenues by $40.6 million.

Revenues by Segment		Three Months Ended March 31												Percentage Change From 2009 to 2010
(Dollars in millions)		2010				2009				Change				Price/ Volume				Currency				Total
Harsco Infrastructure		$	250.6			$	283.7			$	(33.1	)			(16.6	)%			4.9	%			(11.7	)%
Harsco Metals			297.5				238.4				59.1				14.8				10.0				24.8
Harsco Rail			95.4				59.8				35.6				57.3				2.2				59.5
All Other Category			98.8				114.9				(16.1	)			(15.3	)			1.3				(14.0	)
Corporate			0.1				0.1				—				—				—				—
Total		$	742.4			$	696.9			$	45.5				0.7	%			5.8	%			6.5	%

The following major challenges, emanating from the global recession which began in 2008, impacted results throughout 2009 and continued to negatively impact the Company during the first quarter of 2010:

·	A lack of commercial and multi-family construction activity in the United States and across Europe due to the depressed demand, coupled with poor weather conditions;

·	Pricing pressures as customers continued to seek lower cost solutions and increased competition for remaining projects; and

·	Accelerated cost reduction initiatives implemented in the first quarter to combat the above challenges.

The effects of the above challenges were partially offset by the following items which contributed positively to the Company’s results in the first quarter of 2010:

·	Increased global steel production by our customers served;

·	Continued strong performance of Harsco Rail resulting from increased shipments and leaner operations

·	Increased metals pricing benefitting Harsco Minerals

·	An overall weaker U.S. dollar during the first quarter of 2010 compared with 2009;

·	Reductions in capital spending, contributing to discretionary cash flows;

·	Further implementation of internal countermeasures to improve efficiency and avoid unnecessary costs; and

·	The Company’s global continuous improvement initiative.

The Company continues to execute on its geographic expansion strategy, as revenues from targeted growth markets were approximately 24% of total revenues in the first quarter of 2010, compared with 20% for the first quarter of 2009 and 23% for calendar year 2009.

Revenues by Region		Three Months Ended March 31												Percentage Change From 2009 to 2010
(Dollars in millions)		2010				2009				Change				Price/ Volume				Currency				Total
Western Europe		$	293.9			$	289.5			$	4.4				(5.1	)%			6.6	%			1.5	%
North America			271.3				269.6				1.7				(0.2	)			0.8				0.6
Latin America (a)			63.9				39.1				24.8				43.9				19.6				63.5
Middle East and Africa			53.6				55.0				(1.4	)			(8.1	)			5.5				(2.6	)
Asia-Pacific			36.1				20.9				15.2				47.2				25.6				72.8
Eastern Europe			23.6				22.8				0.8				(10.6	)			13.9				3.3
Total		$	742.4			$	696.9			$	45.5				0.7	%			5.8	%			6.5	%

(a)

Includes Mexico.

Operating income from continuing operations was $28.2 million compared with $37.2 million in 2009, a decrease of 24%.  The decrease in operating income was driven by the depressed non-residential construction market, pricing pressures and poor weather conditions during the first quarter of 2010.  This was partially offset by increased steel production at customer sites and increased shipments in the Harsco Rail Segment coupled with benefits from restructuring actions and countermeasures implemented over the past 18 months throughout the Company.  Diluted earnings per share from continuing operations were $0.10 compared with $0.25 for the first quarter of 2009.

 

- 22 -

---

 

The Company continues to have significant available liquidity and remains well-positioned from a financial flexibility perspective.  Net cash from operating activities for the first quarter 2009 of $39.6 million decreased to $30.1 million in 2010 primarily due to lower income.  Capital expenditures for the first quarter of 2010 were lower than 2009 as the Company continued to utilize the mobility of its asset base.  Balance sheet debt increased slightly from December 31, 2009 and the Company’s debt to capital ratio increased from 39.5% at December 31, 2009 (the lowest year-end ratio since 1998) to 40.1% at March 31, 2010, but was lower than the 41.9% at March 31, 2009.  Further information in regards to the Company’s cash flows are discussed in the “Liquidity and Capital Resources& #8221; section.

Segment Financial Highlights (a)

Revenues		Three Months Ended March 31																Change
(Dollars in millions)		2010								2009								Amount				Percent
Harsco Infrastructure		$	250.6				33.8	%		$	283.7				40.7	%		$	(33.1	)			(11.7	)%
Harsco Metals			297.5				40.1				238.4				34.2				59.1				24.8
Harsco Rail			95.4				12.8				59.8				8.6				35.6				59.5
All Other Category			98.8				13.3				114.9				16.5				(16.1	)			(14.0	)
Corporate			0.1				—				0.1				—				—				—
Total Revenues		$	742.4				100.0	%		$	696.9				100.0	%		$	45.5				6.5	%

Operating Income		Three Months Ended March 31																Change
(Dollars in millions)		2010								2009								Amount				Percent
Harsco Infrastructure		$	(19.3	)			(68.4	)%		$	18.8				50.4	%		$	(38.1	)			(202.7	)%
Harsco Metals			11.4				40.4				(2.8	)			(7.5	)			14.2				507.1
Harsco Rail			20.4				72.3				7.2				19.4				13.2				183.3
All Other Category			16.3				57.8				16.2				43.6				0.1				0.6
Corporate			(0.6	)			(2.1	)			(2.2	)			(5.9	)			1.6				72.7
Total Operating Income		$	28.2				100.0	%		$	37.2				100.0	%		$	(9.0	)			(24.2	)%

Operating Margins		Three Months Ended March 31
		2010				2009
Harsco Infrastructure			(7.7	)%			6.6	%
Harsco Metals			3.8				(1.2	)
Harsco Rail			21.4				12.1
All Other Category			16.5				14.1
Consolidated Operating Margin			3.8	%			5.3	%

(a)

Segment information for prior periods has been reclassified to conform with the current presentation.  The Harsco Rail operating segment, which was previously a component of the All Other Category, is now reported separately.

2010 Quarterly Highlights

The following significant items affected the Company during the first quarter of 2010 in comparison with the first quarter of 2009:

Harsco Infrastructure Segment:

The Harsco Infrastructure Segment generated lower revenue and operating income in the first quarter of 2010 compared with 2009, due principally to lower end-market demand driven by greatly reduced commercial and multi-family construction activity in the United States and across Europe, coupled with significant pricing pressures and poor weather conditions.  The lack of available credit to certain customers has resulted in delayed non-residential construction projects.  This was partially offset by the revenues generated by recent acquisitions and the weaker U.S. dollar.

 

- 23 -

---

 

Significant Effects on Revenues (In millions)		Three Months Ended March 31
Revenues – 2009		$	283.7
Net decreased volume			(65.5	)
Acquisitions			18.4
Impact of foreign currency translation			14.0
Revenues – 2010		$	250.6

Significant Effects on Operating Income:

·	In the first quarter of 2010, the Segment’s operating results decreased due to reduced or deferred non-residential, commercial and infrastructure construction spending, particularly in the United Kingdom, North America and several other key markets within Europe and the Middle East.

·	In response to further deterioration of global infrastructure markets during the first quarter of 2010, this Segment continued to implement additional countermeasures targeting expense reduction, asset optimization and facility rationalization.

·

Restructuring costs primarily relating to severance and exit-related costs during the first quarter of 2010 were $7.8 million.  These were offset by a combination of property gains of $2.6 million and purchase accounting adjustments of $8.3 million.  See Note F, "Acquisitions," in Part I, Item 1, Financial Statements for additional information on the purchase accounting adjustment.

·	Foreign currency translation in the first quarter of 2010 increased operating income for this Segment by $0.4 million compared with the first quarter of 2009.

Harsco Metals Segment:

The Harsco Metals Segment generated higher revenues, operating income and margins in the first quarter of 2010 compared with 2009 due principally to the increased global steel production of its customers and the weaker U.S. dollar.

Significant Impacts on Revenues (In millions)		Three Months Ended March 31
Revenues – 2009		$	238.4
Net increased volume			35.3
Impact of foreign currency translation			23.8
Revenues – 2010		$	297.5

Significant Effects on Operating Income:

·	Customers’ production increased approximately 37% compared with the first quarter of 2009.

·	Further net restructuring actions of $1.4 million were taken during the first quarter of 2010 when compared with the first quarter of 2009.

·

During the first quarter of 2010, this Segment’s operating income benefited from cost reduction initiatives from the continued implementation of restructuring actions and from additional countermeasures implemented throughout 2009 and 2010, which have targeted expense reduction, revenue enhancement and asset optimization.

·	Foreign currency translation in the first quarter of 2010 increased operating income for this Segment by $1.3 million compared with the first quarter of 2009.

 

Harsco Rail Segment:

The Harsco Rail Segment generated higher revenues, operating income and margins in the first quarter of 2010 compared with 2009 due principally to shipments of orders to China and other parts of the world, coupled with cost reduction benefits as a result of continuous improvement initiatives.

 

- 24 -

---

 

Significant Impacts on Revenues (In millions)		Three Months Ended March 31
Revenues – 2009		$	59.8
Net increased volume			34.2
Impact of foreign currency translation			1.4
Revenues – 2010		$	95.4

Significant Effects on Operating Income:

·	This Segment’s operating income increased for the first quarter of 2010 due in part to shipments of equipment to China under existing contracts and to other parts of the world, partially offset by lower grinding services and spare parts sales.

·	During the first quarter of 2010, this Segment’s operating income and margins also benefited from the implementation of continuous improvement initiatives implemented during 2009.  These initiatives are on-going.

·	Foreign currency translation in 2010 increased operating income for this Segment by $0.3 million compared with the first quarter of 2009.

All Other Category – Harsco Minerals & Harsco Industrial:

The All Other Category (“Harsco Minerals & Harsco Industrial”) generated lower revenues, but increased operating margins and comparable operating income in the first quarter of 2010 compared with 2009.  The decline in revenues was primarily due to reduced market demand for certain industrial products.  However, higher metals selling prices for Harsco Minerals partially offset the impact of these market conditions within the operating income results.

Significant Impacts on Revenues (In millions)		Three Months Ended March 31
Revenues – 2009		$	114.9
Air-cooled heat exchangers			(24.1	)
Industrial grating products			(5.6	)
Minerals and recycling technologies			11.3
Impact of foreign currency translation			1.5
Other changes not individually discussed			0.8
Revenues – 2010		$	98.8

Significant Effects on Operating Income:

·

The air-cooled heat exchangers business experienced a decrease in operating income in the first quarter of 2010 due to reduced customer demand within the natural gas industry caused by reduced natural gas prices and unfavorable economic conditions in comparison to the record performance in the first quarter of 2009.  These conditions are currently showing signs of modest improvement.

·	The industrial grating products business operating income decreased due to the economic downturn as compared with the first quarter of 2009, partially offset by lower raw material costs.

·	Operating income for the minerals business increased in the first quarter of 2010 due to significantly higher metal prices and higher customer demand.

·	Countermeasures targeting expense reduction, revenue enhancement and asset optimization continue to be implemented in these businesses and partially offset the declines in operating income.

·	Foreign currency translation in the first quarter of 2010 increased operating income for the All Other Category by $0.1 million compared with the first quarter of 2009.

 

 

- 25 -

---

 

Outlook, Trends and Strategies

Expectations are that many of the challenges stemming from the global recession will continue through 2010, particularly in the first half of the year.  In particular, the lack of activity in many of the non-residential and commercial construction markets served by the Company poses near-term challenges that include further pressures on pricing and equipment utilization.  However, an increase in steel production during the first quarter of 2010 in comparison with the first quarter of 2009 and consistent with the current trend, is a positive sign for the Company.

Although uncertainty remains in global economic conditions, the Company believes it is well-positioned to capitalize on opportunities based on its strong balance sheet, available liquidity and ability to generate strong operating cash flows, as well as its demonstrated ability to execute appropriate countermeasures.  Those countermeasures include on-going cost-reduction initiatives; a globally integrated enterprise initiative; and the Company’s continuous improvement program.  These countermeasures have significantly reduced, and will continue to reduce, the Company’s cost structure and further enhance its financial strength without sacrificing quality of output.  The Company’s expansion of its global footprint in targeted growth markets; its diversity of services and products in industries that are fundamental to global growth; its long-term mill services and minerals supply contracts; the portability and mobility of its infrastructure services equipment; and its large infrastructure services customer base help mitigate the Company’s overall exposure to changes in any single economy.  However, any further deterioration of global economies could still have an adverse impact on the Company’s operating results.

Additionally, the following significant items, risks, trends and strategies are expected to affect the Company for the remainder of 2010 and beyond:

·

The near-term outlook for the Harsco Infrastructure Segment is impacted by a continued lack of activity in non-residential, commercial construction markets, particularly in Europe and the United States. This lack of activity is expected to continue to present challenging business conditions for this Segment.  The Company expects the Harsco Infrastructure Segment to experience a smaller operating loss in the second quarter of 2010 than in the first quarter of 2010, with further improvement in the second half of 2010 due principally to cost reduction benefits, contribution from targeted growth markets expansion, seasonal factors and some expected sequential improvement in overall non-residential construction activity as the year progresses.

·

Steel industry expectations are that steel production will continue to increase in 2010 compared with 2009, but not to levels prior to the beginning of the global recession.  Consistent with the industry overall, the Harsco Metals Segment’s customers increased their production during the first quarter of 2010, and those production levels are expected to increase modestly throughout 2010.

·

The Company anticipates that tightening environmental regulations will compel customers to address their production waste streams as an opportunity to maximize environmental compliance.  This should provide additional revenue opportunities for the Harsco Metals Segment and for the Harsco Minerals businesses in the All Other Category.  The Company will continue to pursue growth opportunities in environmental services as awareness of environmental issues creates additional outsourced functions in slag management.

·	The Harsco Rail Segment has a strong backlog for 2010 due principally to ongoing production of rail grinding machines for existing orders.  The contract will generate revenues through 2011.

·

International demand for railway track maintenance services, solutions and equipment is expected to be strong in both the near-term and the long-term.  The Harsco Rail Segment expects to develop a larger presence in certain developing countries as track construction and maintenance needs grow.  Global bidding activity has been strong.

·	In the Harsco Minerals businesses in the All Other Category, improved customer production levels should have an overall positive effect on certain reclamation and recycling services in the near-term.

·

Also in the All Other Category, the air-cooled heat exchangers business continues to explore international opportunities in addition to further grow in its customary North American markets.  Increased industrial use due to improving economic conditions will influence the price and demand for natural gas and, consequently, the demand for heat exchanger equipment.  Colder weather tends to increase demand for heat exchanger equipment while warmer weather tends to result in reduced demand.

·

The Company announced in January 2010 that it has embarked upon a business transformation initiative designed to create significant operating and cost efficiencies by improving the Company’s internal supply chain planning, logistics, scheduling and integration throughout its worldwide operations.  This project is expected to contribute to the Company’s EVA growth but could result in near-term cost increases and capital expenditures.

·

The Company will continue to place a strong focus on corporate-wide expansion into targeted growth markets to grow and better balance its geographic footprint.  More specifically, the Company’s global growth strategies include steady, targeted expansion, particularly in the Gulf Region of the Middle East and Africa, Asia-Pacific and Latin America to further complement the Company’s already-strong presence throughout Europe and North America.  Growth is 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 acquisitions in strategic countries and market sectors.  Additionally, new higher-margin service and sales opportunities in the Harsco Minerals and Harsco Rail businesses will be pursued globally.& #160; This strategy is expected to develop a significant increase to the Company’s presence in these markets to achieve approximately 30% of total Company revenues from targeted growth markets over the near-term and closer to 40% in the longer-term.  Over time, the improved geographic footprint will also benefit the Company through further diversification of its customer base.

 

 

- 26 -

---

 

·

The Company expects continued strong cash flows from operating activities.  The Company also expects to maintain discipline to limit capital expenditures through its ability to redeploy equipment to new projects, without jeopardizing growth opportunities.  The Company believes that in the current economic environment, the mobile nature of its capital investment pool will facilitate strategic growth initiatives in the near-term, lessening the need for growth capital expenditures for 2010, particularly for the Harsco Infrastructure business.

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

·

Governments around the world have enacted stimulus packages to promote infrastructure projects.  Any substantial near-term benefit from stimulus packages is uncertain, particularly in the United States and the United Kingdom.  When stimulus package funding becomes available for infrastructure projects, which has been limited thus far, the Harsco Infrastructure and the Harsco Rail Segments are well positioned with their engineering expertise and the Company’s capital investment base to take advantage of any expected opportunities.  The Harsco Minerals businesses should also benefit from increased demand for its abrasive products as required by refurbishment stimulus projects.

·

Fluctuations in the U.S. dollar can have significant impacts in the Harsco Infrastructure and Harsco Metals Segments, as approximately 80% to 85% of the revenues generated in these businesses are outside the United States.  If the U.S. dollar would strengthen, as it did overall from the fourth quarter of 2009 to the first quarter of 2010, sales and operating income would generally be reduced.  If the U.S. dollar were to weaken, as it did in comparing the first quarter of 2010 with the first quarter of 2009, sales and operating income would generally improve.

·

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 Segment and several businesses in the All Other Category as customers may outsource more services to reduce overall costs.  Volatility may also provide opportunities in the Harsco Infrastructure Segment for additional industrial plant maintenance and capital improvement projects.

·

The Company has maintained a capital structure with a balance sheet debt to capital ratio approximating 40% for the last several years.  In October 2010, the Company’s 200 million British pound sterling-denominated notes (approximately $301 million at March 31, 2010) will mature.  The Company expects to refinance these notes during 2010 through new public debt, commercial paper borrowings or its revolving credit facilities.

·

Currently, 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.  U.S. income tax and foreign withholding taxes have not been provided on undistributed earnings for certain non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries.  Several U.S. legislation proposals have been announced that would have the effect of substantially reducing the Company’s ability to defer U.S. taxes on profit permanently reinvested outside the United States.  Proposals to date could have a negative impact on the Company’s financial position and operating results.  Additionally, they could have a negative impact on the Company’s ability to compete in the global marketplace.  The probability of any of these proposals being enacted cannot be predicted with any certainty.  Indications are that reform in 2010 is still likely, but such reform may be structured with more of the business community’s concerns in mind.  Nonetheless, the Company is working with legislators with the goal of achieving a balanced and fair approach to tax reform.  The Company continues to monitor legislation to be in position to structure operations in a manner that will reduce the impact of enacted changes.

·

The Company has initiated strategies to reposition the Harsco Infrastructure business and is focusing increasingly on projects in the global industrial maintenance and infrastructure construction sectors; developing this business in economies outside the U.S. and Europe that have greater prospects for both near-term and long-term growth; and reducing the branch structure which will result in costs savings in the second half of 2010 and beyond.

·

In 2010, the Company will fully integrate its recent acquisitions: ESCO, a regional leader in infrastructure services in seven countries in Central and South America, and Bell Scaffolding Group, with operations across the eastern seaboard of Australia.  ESCO is expected to provide an opportunity for the Company to scale its operations across the Latin American region, while Bell Scaffolding provides opportunities for further growth throughout Australia and other neighboring regions.

·

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act became law during the quarter.  These new laws will have an impact on the Company’s future costs for providing health care benefits for its employees when the laws begin to impact the company’s health care costs in 2013 and beyond.  The Company determined that the impact of the new laws on postretirement medical plans will be immaterial to its financial position, results of operations and cash flows.  The Company is in the process of assessing the extent to which the new laws will affect its future health care and related employee benefit plan costs for active employees.

·

The Harsco Minerals business 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 such as roofing materials or 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 follow closely the EPA’s proposal and file public comments as appropriate.

 

- 27 -

---

 

Results of Operations

		Three Months Ended March 31
										Change
(Dollars are in millions, except per share and percentages)		2010				2009				Amount				%
Revenues from continuing operations		$	742.4			$	696.9			$	45.5				6.5
Cost of services and products sold			579.4				536.9				42.5				7.9
Selling, general and administrative expenses			136.3				125.0				11.3				9.1
Research and development expenses			0.9				0.6				0.3				42.3
Other income			(2.5	)			(2.8	)			(0.3	)			(10.6	)
Operating income from continuing operations			28.2				37.2				(8.9	)			(24.0	)
Interest expense			16.1				15.3				0.8				5.3
Income tax expense from continuing operations			3.0				1.5				1.5				100.7
Income from continuing operations			9.7				21.0				(11.3	)			(53.9	)
Income (loss) from discontinued operations			0.3				(1.2	)			1.5				120.6
Net income attributable to Harsco Corporation			8.0				18.6				(10.6	)			(56.8	)
Diluted earnings per common share from continuing operations			0.10				0.25				(0.15	)			(60.0	)
Diluted earnings per common share			0.10				0.23				(0.13	)			(56.5	)
Effective income tax rate for continuing operations			24.1	%			6.7	%

 

- 28 -

---

 

Comparative Analysis of Consolidated Results

Revenues

The increase in revenues for the first quarter of 2010 from the first quarter of 2009 was attributable to the following significant items:

 

Changes in Revenues – 2010 vs. 2009		First Quarter
(In millions)
Effect of foreign currency translation.		$	40.6
Net increased volumes in the Harsco Metals Segment due principally to increased steel production.			35.3
Net increased revenues in the Harsco Rail Segment due to a higher level of rail equipment shipments to China in 2010.			34.2
Effect of business acquisitions in the Harsco Infrastructure Segment.			18.4
Net increased revenues in the reclamation and recycling services business due to higher commodity pricing and increased volume.			11.3
Increased volume in the roofing granules and abrasives business.			1.4
Decreased revenues of industrial grating products coupled with lower pricing levels.			(5.6	)
Reduced demand for air-cooled heat exchangers due to a weaker natural gas market.			(24.1	)
Net decreased revenues in the Harsco Infrastructure Segment due to lower rentals and sales, principally due to lower non-residential construction activity globally as a result of economic decline.			(65.5	)
Other (minor changes across the various units not already mentioned).			(0.5	)
Total Change in Revenues – 2010 vs. 2009		$	45.5

Cost of Services and Products Sold

The increase in cost of services and products sold for the first quarter of 2010 from the first quarter of 2009 was attributable to the following significant items:

Changes in Cost of Services and Products Sold – 2010 vs. 2009		First Quarter
(In millions)
Effect of foreign currency translation.		$	30.5
Business acquisitions.			15.9
Other, net (due to product mix, stringent cost controls and enterprise business optimization initiatives).			(3.9	)
Total Change in Cost of Services and Products Sold – 2010 vs. 2009		$	42.5

 

- 29 -

---

 

Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses for the first quarter of 2010 from the first quarter of 2009 was attributable to the following significant items:

Changes in Selling, General and Administrative Expenses – 2010 vs. 2009		First Quarter
(In millions)
Effect of foreign currency translation.		$	6.9
Effect of business acquisitions.			3.2
Higher professional fees due to globally integrated enterprise initiatives.			1.6
Decreased compensation expense due to lower employment levels.			(2.3	)
Other, net.			1.9
Total Change in Selling, General and Administrative Expenses – 2010 vs. 2009		$	11.3

Other Income

This income statement classification includes impaired asset write-downs, employee termination benefit costs and costs to exit activities, offset by net gains on the disposal of non-core assets.  Net other income for the first quarter of 2010 of $2.5 million includes restructuring costs of $9.3 million, primarily in the Harsco Infrastructure Segment, offset by an $8.3 million purchase accounting adjustment in the Harsco Infrastructure Segment and $3.7 million of gains from the sale of non-core assets.  Other income in the first quarter of 2009 of $2.8 million included gains on the sale of non-core assets of $4.4 million, offset by restructuring costs of $1.6 million.

Interest Expense

This increase of $0.8 million in the first quarter of 2010 compared with 2009 was due to foreign currency translation as well as higher overall debt levels due to recent acquisitions.

Income Tax Expense from Continuing Operations

This increase was due to lower earnings from continuing operations and an increase in the effective income tax rate from continuing operations.  The effective income tax rate relating to continuing operations for the first quarter of 2010 was 24.1% versus 6.7% for the first quarter of 2009.  The effective tax rate in 2009 reflected net discrete tax benefits related to a change in the permanent reinvestment of prior-year undistributed earnings.

Income from Continuing Operations

This decrease resulted from lower rentals and sales in the Harsco Infrastructure Segment due to decreased global construction activity; partially offset by increased volume in the Harsco Metals Segment resulting from increased steel production, and increased revenues in the Harsco Rail Segment due principally to higher equipment sales to China.

Liquidity and Capital Resources

Overview

Global financial markets which have been under stress since 2008 due to poor financial institution lending and investment practices and sharp declines in real estate values, have started to show signs of improvement for certain highly rated credit issuers.  However, during 2009, tightened credit conditions for the funding of non-residential construction projects, particularly commercial construction, restrained growth in that sector.  That tight credit market continues today.  In response to these changes in global economic conditions, the Company has undertaken several initiatives to conserve capital and enhance liquidity, including: prudently reducing capital spending to only critical projects where the highest returns can be achieved while redeploying existing capital investments; optimizing worldwide cash positions; reducing or eliminating discretionary spending; and additional scrutiny of customer and business-partner credit risk.

Despite the global financial market environment, the Company continues to have sufficient available liquidity and has been able to obtain any necessary financing.  The Company currently expects operational and business needs to be covered by cash from operations in 2010 and beyond.  During the first quarter of 2010, the Company generated $30.1 million in operating cash, a decrease from the $39.6 million generated in the first quarter of 2009.  Both 2010 and 2009 results reflect the lower net income the Company has experienced resulting from the ongoing global economic situation.

 

- 30 -

---

 

In the first quarter of 2010, the Company invested $29.9 million in capital expenditures (46.7% of which were for revenue-growth projects), comparable to the $36.0 million invested in the first quarter of 2009 and paid $16.5 million in stockholder dividends compared with $15.6 million paid in the first quarter of 2009.

The Company’s net cash borrowings increased $32.7 million in the first quarter of 2010 due to an acquisition.  Balance sheet debt, which is affected by foreign currency translation, increased $9.8 million from December 31, 2009.  The debt to total capital ratio increased from 39.5% at December 31, 2009 (the lowest year-end ratio since 1998) to 40.1% at March 31, 2010 due principally to decreased equity and higher debt.  The March 31, 2010 ratio was lower than the 41.9% ratio at March 31, 2009.

Despite the ongoing global economic conditions, the Company expects to generate strong operating cash flows for 2010.  The Company plans to sustain its balanced portfolio through its strategy of redeploying discretionary cash for disciplined growth and international or market-segment diversification; for organic growth and strategic acquisitions in the Harsco Rail Segment; for growth in long-term, high-return and high-renewal-rate services contracts for the Harsco Metals Segment, principally in targeted growth markets or for customer diversification; for growth and international diversification in the All Other Category (Harsco Minerals & Harsco Industrial).  The Company also foresees continuing its long and consistent history of paying dividends to stockholders.

The Company continues its focus on improving working capital management.  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 and Harsco Rail Segments.

Sources and Uses of Cash

The Company’s principal sources of liquidity are cash from operations 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 sales and income.  The Company’s long-term Harsco Metals contracts, in addition to the backlog of certain equipment and the long-term nature of certain service contracts within the Harsco Rail Segment, provide predictable cash flows for several years into the future.  (See the “Certainty of Cash Flows” section for additional information on estimated future revenues of Harsco Metals and Harsco Rail contracts and order backlogs for the Company’s manufacturing businesses.)  Cash returns on capit al investments made in prior years, for which no 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 industrial services business; payroll costs and related benefits; dividend payments; pension funding payments; inventory purchases for the manufacturing businesses; income tax payments; debt principal and interest payments; insurance premiums and payments of self-insured casualty losses; and machinery, equipment, automobile and facility rental payments.  Cash is also used for targeted, strategic acquisitions as the appropriate opportunities arise.

Resources available for cash requirements – The Company meets its ongoing cash requirements for operations and growth initiatives 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.  Various bank credit facilities are available throughout the world.  The Company’s 200 million British pound sterling-denominated notes mature in October 2010.  The Company expects to utilize both the public debt markets and bank facilities 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, 2010:

 

- 31 -

---

 

Summary of Credit Facilities and Commercial Paper Programs		March 31, 2010
(In millions)		Facility Limit				Outstanding Balance				Available Credit
U.S. commercial paper program		$	550.0			$	49.9			$	500.1
Euro commercial paper program			268.3				33.5				234.8
Multi-year revolving credit facility (a)			570.0				—				570.0
Bilateral credit facility (b)			30.0				—				30.0
Totals at March 31, 2010		$	1,418.3			$	83.4			$	1,334.9	(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 $600 million (the aggregate amount of the back-up facilities).

For more information on the Company’s credit facilities and long-term notes, see Note 6, “Debt and Credit Agreements,” to the Company’s Form 10-K for the year ended December 31, 2009.

Credit Ratings and Outlook – The following table summarizes the Company's debt credit ratings at March 31, 2010:

	Long-term Notes	U.S.-Based Commercial Paper	Outlook
Standard & Poor’s (S&P)	A-	A-2	Stable
Moody’s	Baa1	P-2	Stable
Fitch	A-	F2	Stable

The Company’s euro-based commercial paper program has not been rated since the euro market does not require it.  In February 2010, Standard & Poor’s reaffirmed the Company’s ratings.  Moody’s and Fitch ratings were reaffirmed in January 2010 and August 2009, respectively.  A downgrade 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, a downgrade in the Company’s credit ratings may result in reduced access to credit markets.

 

 

 

 

 

 

- 32 -

---

 

Working Capital Position – Changes in the Company’s working capital are reflected in the following table:

(Dollars are in millions)		March 31 2010				December 31 2009				Increase (Decrease)
Current Assets
Cash and cash equivalents		$	85.4			$	94.2			$	(8.8	)
Trade accounts receivable, net			639.5				598.3				41.2
Other receivables, net			27.9				30.9				(3.0	)
Inventories			279.7				291.2				(11.5	)
Other current assets			147.3				154.7				(7.4	)
Total current assets			1,179.8				1,169.3				10.5
Current Liabilities
Notes payable and current maturities			144.2				83.2				61.0
Accounts payable			220.5				215.5				5.0
Accrued compensation			75.0				67.7				7.3
Income taxes payable			14.3				5.9				8.4
Other current liabilities			354.7				378.8				(24.1	)
Total current liabilities			808.7				751.1				57.6
Working Capital		$	371.1			$	418.2			$	(47.1	)
Current Ratio		1.5:1				1.6:1

Working capital decreased 11.3% in the first quarter of 2010 due principally to the following factors:

·	Net trade accounts receivable increased $41.2 million primarily due to higher sales levels, particularly in the month of March 2010, partially offset by foreign currency translation effects.

·	Inventories decreased $11.5 million due to the shipments in the Harsco Rail Segment to satisfy current international contracts and foreign currency translation effects.

·	Notes payable and current maturities increased $61.0 million due to higher commercial paper borrowings related to recent acquisitions and the reclassification of a portion of the Company’s £200 million notes as current maturities.

·	Income taxes payable increased $8.4 million due to the overall timing of income tax accruals and payments.

·	Other current liabilities decreased $24.1 million due principally to a decrease in advance payments in the Harsco Rail Segment as equipment was shipped to the customers.

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 the strong discretionary cash flows (operating cash flows in excess of the amounts necessary for capital expenditures to maintain current revenue levels) generated by the Company.  Historically, the Company has utilized these discretionary cash flows for growth-related capital expenditures, strategic acquisitions and for debt pay-down.  As the Company has demonstrated since the end of 2008, it has the ability to substantially reduce its capital expenditures without negatively impacting the business .  The Company has continued to grow in countries with increased demand through prudent redeployment of its existing equipment.

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, each of the Company’s businesses, in its balanced portfolio, is among the top three companies (relative to sales) in the industries 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 Consolidated Statements of Cash Flows, are summarized in the following table:

 

- 33 -

---

 

Summarized Cash Flow Information

		Three Months Ended March 31
(In millions)		2010				2009
Net cash provided by (used in):
Operating activities		$	30.1			$	39.6
Investing activities			(52.9	)			(31.4	)
Financing activities			14.7				(26.5	)
Effect of exchange rate changes on cash			(0.6	)			(3.8	)
Net change in cash and cash equivalents		$	(8.8	) (a)		$	(22.2	) (a)

(a) Does not total due to rounding

Cash From Operating Activities – Net cash provided by operating activities in the first quarter of 2010 was $30.1 million, a decrease of $9.5 million from the first quarter of 2009.  The decrease resulted primarily from the following:

·	Increase in net trade receivables due to higher sales levels,

·	Reduction in advances in contracts due to shipments of equipment for the Harsco Rail Segment in 2010, and

·	Lower net income in 2010 as compared with 2009.

These decreases were partially offset by the following:

·	The timing of payments and increased business activity year over year that resulted in higher accounts payable levels in 2010,

·	Lower incentive compensation payments in 2010 compared with 2009 due to lower earned incentive compensation, and

·	Lower inventory due to increased shipments of equipment for the Harsco Rail Segment.

Cash Used in Investing Activities – In the first quarter of 2010, cash used in investing activities was $52.9 million consisting primarily of capital investments of $29.8 million and $27.6 million used for strategic acquisitions.  Capital investments declined $6.2 million compared to the first quarter of 2009. Both years reflect management’s ongoing initiatives to conserve capital and enhance liquidity through prudent reduction of capital investments.  Growth capital constituted 46.7% of investments made in the first quarter of 2010, with investments made predominantly in the Metals’ business.  Throughout the remainder of 2010, the Company plans to continue to manage its balanced portfolio and consider opportunities to invest in value c reation projects. Additionally, the Company intends to increase growth investments in the Harsco Rail Segment and the All Other Category (Harsco Minerals & Harsco Industrial) in 2010 and beyond, as these businesses continue to expand globally.

Cash Used in Financing Activities – The following table summarizes the Company’s debt and capital positions at March 31, 2010 and December 31, 2009.

(Dollars are in millions)		March 31 2010				December 31 2009
Notes Payable and Current Maturities		$	144.2			$	83.2
Long-term Debt			850.5				901.7
Total Debt			994.7				984.9
Total Equity			1,487.4				1,509.8
Total Capital		$	2,482.1			$	2,494.7
Total Debt to Total Capital			40.1	%			39.5	%

The Company's debt as a percent of total capital at March 31, 2010 increased from December 31, 2009.  The increase results principally from a decline in overall equity due to negative foreign currency translation effects from the strengthening of the U.S. dollar from December 31, 2009; and higher debt due to an acquisition. The increase in debt was partially offset by foreign currency translation resulting from the strengthening of the U.S. dollar in comparison with the British Pound Sterling.

 

- 34 -

---

 

Debt Covenants

The Company’s credit facilities and certain notes payable agreements contain a covenant stipulating a maximum debt to capital ratio of 60%.  Certain notes payable agreements also contain a covenant requiring a minimum net worth of $475 million.  In addition, one credit facility limits the proportion of subsidiary consolidated indebtedness to 10% of consolidated tangible assets.  At March 31, 2010, the Company was in compliance with these covenants with a debt to capital ratio of 40.1% and total net worth of $1.5 billion.  Based on balances at March 31, 2010, the Company could increase borrowings by approximately $1.2 billion and still be within its debt covenants.  Alternatively, keeping all other factors constant, the Company’s equity could decrease by approximately $0.8 billi on and the Company would still be within its debt covenants.  Additionally, the Company’s 7.25% British pound sterling-denominated notes and its 5.75% notes include covenants that permit the note holders to redeem their notes, at par and 101% of par, respectively, in the event of a change of control of the Company or disposition of a significant portion of the Company’s assets in combination with the Company’s credit rating downgraded to non-investment grade.  The Company expects to continue to be compliant with these debt covenants one year from now.

Cash and Value-Based Management

The Company plans to continue with its strategy of targeted, prudent investing for strategic purposes for the foreseeable future, continuing 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 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 cost of capital.  In the first quarter of 2010, EVA was lower compared with the first quarter of 2009 due to lower operating profits.

The Company currently expects to continue paying dividends to stockholders.  The Company has increased the dividend rate for 16 consecutive years, and in February 2010, the Company paid its 239th consecutive quarterly cash dividend.  In February 2010, the Company declared its 240th consecutive quarterly cash dividend.

The Company's financial position and debt capacity should enable it to meet current and future requirements.  As additional resources are needed, the Company should be able to obtain funds readily and at competitive costs.  The Company is well-positioned financially and intends to continue investing in high-return projects and prudent, strategic acquisitions; to reduce debt and pay cash dividends as a means of enhancing stockholder value.

Recently Adopted and Recently Issued Accounting Standards

Information on recently adopted and recently issued accounting standards is included in Note J, "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 Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures as of March 31, 2010.  Based on that evaluation, the 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 2010.

 

 

- 35 -

---

 

PART II – OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

Information on legal proceedings is included in Note G, "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 customer concentration in the Harsco Metals and Harsco Rail Segments and certain businesses of the “All Other” Category; collectibility of receivables; volatility of the financial markets and their effect on pension plans; and global economic and political conditions.

For a full disclosure of risk factors that affect the Company, see the Company’s 2009 Annual Report on Form 10-K (Part I, Item 1A).

 

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, 2010 – January 31, 2010	—	—	—	2,000,000
February 1, 2010 – February 28, 2010	—	—	—	2,000,000
March 1, 2010 – March 31, 2010	—	—	—	2,000,000
Total	—	—	—

The Company’s share repurchase program was extended by the Board of Directors in September 2009.  At that time, the Board authorized an increase of 463,353 shares to the 1,536,647 remaining from the Board’s previous stock repurchase authorization.  The repurchase program expires January 31, 2011.  As of March 31, 2010, there are 2,000,000 authorized shares remaining in the program.  When and if appropriate, repurchases are made in open market transactions, depending on market conditions.  Repurchases may not be made and may be discontinued at any time.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.      (REMOVED AND RESERVED)

ITEM 5.      OTHER INFORMATION

 

DIVIDEND INFORMATION

On February 23, 2010, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share, payable May 17, 2010, to stockholders of record as of April 15, 2010.

 

- 36 -

---

 

ELECTION OF CHAIRMAN OF THE BOARD

Following the Annual Meeting of Stockholders on April 27, 2010, the Company’s Board of Directors re-elected Salvatore D. Fazzolari as Chairman and CEO of the Company.

ITEM 6.      EXHIBITS

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

Exhibit Number	Description
31(a)	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(b)	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)

 

 

 

 

 

 

 

 

- 37 -

---

 

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 6, 2010		/S/ Stephen J. Schnoor
			Stephen J. Schnoor
			Senior Vice President and Chief Financial Officer
DATE	May 6, 2010		/S/ Richard M. Wagner
			Richard M. Wagner
			Vice President and Controller

 

 

 

 

 

 

 

 

 

- 38 -

---

 

EXHIBIT 31(a)

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, Salvatore D. Fazzolari, 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 6, 2010

/s/ Salvatore D. Fazzolari

Salvatore D. Fazzolari

Chief Executive Officer

EXHIBIT 31(b)

 

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 6, 2010

/s/ Stephen J. Schnoor

Stephen J. Schnoor

Chief Financial Officer

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, 2010 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 6, 2010

/s/ Salvatore D. Fazzolari

Salvatore D. Fazzolari

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.