2012 summary annual report Focus. Align. ExEcutE. Financial summary Dollars in thousands, except per share amounts 2012 2011 2010 2009 2008 Total revenues from continuing operations $3,046,018 $3,302,740 $3,038,678 $2,990,577 $3,967,822 Operating income (loss) from continuing operations (174,790) 87,649 78,431 218,656 411,988 Income (loss) from continuing operations attributable to Harsco Corporation stockholders (253,693) (9,447) 10,885 133,838 245,623 Current ratio Return on average capital Return on average equity Return on average assets Debt to total capitalization 1.7:1 (9.3) (21.7) (5.2) % % % 52.9 % 1.5:1 (0.7) (0.6) % % 2.6 % 42.7 % 1.5:1 2.4 % 0.7 % 2.3 % 37.6 % 1.6:1 7.6 % 9.1 % 6.3 % 39.5 % 1.4:1 10.6 % 14.6 % 10.3 % 41.1 % Diluted earnings (loss) per share from continuing operations $««««««««(3.15) * $««««««««(0.12) ** ÷«$«««««÷««0.13 *** $÷÷÷«÷1.66 $÷÷÷«÷2.92 Book value per share Cash dividends declared per share Diluted average shares outstanding (in thousands) Number of employees 10.69 0.82 80,632 18,500 15.16 0.82 80,736 19,650 18.23 0.82 80,761 19,300 18.79 0.805 80,586 19,600 18.09 0.78 84,029 21,500 Revenues from Continuing Operations Dollars in millions United States International Operating Income (Loss) from Continuing Operations Dollars in millions United States International 12 11 10 09 08 3,046 3,303 3,039 2,991 3,968 Diluted Earnings (Loss) per Share from Continuing Operations In dollars 12 11 10 (0.12)** 0.13*** (3.15)* 0 09 496 992 1488 1984 2480 2976 3472 3968 1.66 88 78 (175) 219 12 11 10 09 08 Cash Dividends Declared per Share In dollars 12 11 10 09 412 0.82 0.82 0.82 0.805 08 2.92 08 0.000000 91.599998183.199997274.799995366.399994457.999992 0.78 * After restructuring and non-cash goodwill impairment charges of $4.35 per share in 2012. ** After fourth quarter restructuring charges of $1.50 per share in 2011. ***After fourth quarter restructuring charges of $0.77 per share in 2010. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.0 0.2 0.4 0.6 0.8 1.0 Fellow shareholders: PATRICK K. DECKER president and Chief executive officer I’m excited to lead a company of Harsco’s caliber. We serve important end markets that are essential to economic growth, and we’re well-positioned to expand our reach into additional geographies and adjacent new markets. We offer customers compelling value propositions based on delivering Insight Onsite™. Our high-quality workforce approaches each day with pride and commitment—and is eager to excel as part of a winning team. There’s also tremendous opportunity ahead to take full advantage of Harsco’s recent capital investments and unlock additional value throughout the company. It’s equally clear that the last four years have brought many especially for organizations that have never undertaken changes to Harsco. our people have worked hard and made large-scale transformation. big sacrifices to support a series of restructuring initiatives. they’ve also been asked to embrace a number of ambitious It’s time to simplify our approach. We will tap into what is enterprise-wide programs. previous experience has taught great about Harsco and elevate its performance by doing me that change of this magnitude can be agonizing— three things: Focus, align, and execute. Harsco Corporation 2012 summary annual report 1 First Impressions: A Solid Foundation The Path Forward: Focus, Align, Execute six months into my tenure, I’ve formed positive impressions our people clearly understand and embrace our need to about how we can build on our company’s solid foundation return to basics and improve our financial returns. yet our to achieve its full potential. I began with a period of active vision extends well beyond short-term measures. together, listening, where I visited numerous sites around the we can build Harsco into a recognized industry leader with a world and met with Harsco colleagues, customers and balanced, diversified portfolio of vital services and equipment partners. I’m especially encouraged by the energy and that ties directly to the world’s major economic trends. By commitment of our worldwide colleagues. Despite several investing in our people, we’ll open new channels for sharing years of difficult challenges, people on our front lines have ideas and technologies. our thought leadership will make cultivated intimate, long-term customer relationships. these us increasingly valuable to both current and potential relationships underpin Harsco’s competitive advantage—and customers. this is especially relevant to our expansion in the present a significant barrier to entry for prospective rivals. world’s most rapidly developing markets, where our expertise can accelerate vital industrial progress. as one example, under Interim Chairman and Ceo Henry Knueppel, Harsco’s we’re applying our breakthrough resource recovery solutions management team established key strategic focus areas at two of China’s largest steelmakers to address critical that are essential to our future: customer centricity, customer needs and pressing environmental challenges. continuous improvement, innovation, employee engagement and value creation. they also made measurable progress We will concentrate our resources on a handful of high-impact toward building a world-class safety architecture and initiatives that create value for customers and make Harsco instilling greater operational discipline. these timeless a stronger and better company. We will align our organization principles are fundamental to a winning culture. around more focused strategies and build efficient, integrated processes to support them. and together, we will drive We also have a solid and resilient financial profile to build execution by establishing basic goals and objectives, attacking upon, and both the determination and discipline to invest them with urgency and driving accountability. capital wisely in order to significantly improve our financial returns. under tough economic conditions throughout this Customer Focus. as our first priority, we will recommit past year, our aggressive actions to streamline Harsco’s ourselves to Harsco’s greatest strength—our ability to deliver cost structure and instill more capital discipline helped us Insight onsite, which is our expression for turning our generate $60 million in free cash flow, more than double our unmatched insight, expertise and talent into focused onsite 2011 result. this improvement also enabled us to sustain solutions. We want customers around the world to view us our dividend—a proud Harsco tradition that spans nearly as a respected source of new ideas, technologies and best 75 years. While these are certainly encouraging signs, we practices. We will embrace a culture of continuous learning recognize that we have a lot of work to do to build a lasting that encourages and rewards excellence through lean and six culture of excellence. sigma principles. We will invite customers at every level to tell us exactly what they need from us to help them do what they do better, faster and safer. and we will be industry leaders in bringing new products, services and solutions to the market. 2 Harsco Corporation 2012 summary annual report Capital Management. It’s clear to me that Harsco cannot customers to new markets and continuing to lead with continue to restructure its way to profitability. that being pacesetting innovation. I encourage you to learn more about said, we continue to reduce the capital intensity of our two our performance and prospects by visiting our online annual largest businesses. and we must simplify our structure report at www.annualreport.harsco.com. and processes to increase our speed of service and lower our operating costs. as we do, we will strike the right I’m confident that Harsco will emerge from the rough patch balance between permanent cost reduction and preserving we’ve endured to offer our global customers superior value vital investment in innovation; new product and service propositions and our shareholders an attractive financial development; and sales and marketing. By increasing our return. I saw the power of Harsco’s capabilities at work focus on working capital and cash management, we will be during a recent visit to Vale’s massive iron ore mining able to channel more of our capital toward the ideas that will operations in Brazil. I was impressed by the seamless shape our future and improve returns to our shareholders. teamwork between our track maintenance crew and Vale’s railway operations. these tracks move the world’s largest Safety and Environmental Protection. our people regularly freight trains across more than 500 miles of inland terrain work in demanding environments, and safeguarding them to shipping ports on the northeastern coast. our track has always been a core Harsco value. But when it comes grinding equipment and onsite support have virtually to safety and environmental responsibility, there is always eliminated rail breaks caused by deterioration of rail profiles, room to improve. to create an enduring safety culture, we with consequent improvement in traffic flow. need to look beyond incident rates and recordable injuries. our focus on reducing risk, conducting regular safety Harsco’s future will depend on a culture that enables both assessments, ensuring “near miss” reporting and measuring small improvements and major breakthroughs. Guided incident response times will demonstrate to everyone that by a focused set of values that will become the Harsco safety is serious business within Harsco. Going forward, Way, we will simplify what we’re doing, return to basics we will expand our current programs to further conserve and concentrate on improving our financial returns. In the resources and protect the environment. process, Harsco will reward investors for their confidence, Outlook for 2013 and Beyond real difference to our customers and to the environment. give employees genuine opportunities to grow and make a I’m encouraged by the early progress we’ve made to strengthen Harsco’s core competencies, and we will build on this success in 2013. that means growing the multi- business presence we’ve established in rapidly developing markets such as China, India, Brazil and the middle east. PATRICK K. DECKER It means re-establishing the positive momentum of our president and Chief executive officer Infrastructure business and moving metals & minerals toward higher-margin resource recovery services. It means march 8, 2013 advancing rail’s customer-focused innovation and global expansion. and it means following our Industrial group’s Harsco Corporation 2012 summary annual report 3 2012 Consolidated Revenues Global Revenue Sources 2012 Consolidated Revenues Global Revenue Sources Harsco at a Glance 2012 Consolidated Revenues Global Revenue Sources $3,046M metals & minerals 46% Infrastructure 31% rail 11.5% Industrial 11.5% $3,046M north america 39% Western europe 35% rest of the World 26% We operate in nearly 50 countries and employ approximately 18,500 people. www.harsco-m.com www.harsco-i.com DESCRIPTION DESCRIPTION the world’s largest and most complete provider of outsourced, onsite services to steel mills and other metal-producing operations, and a leading provider of innovative resource recovery solutions for industrial byproducts one of the world’s most complete global organizations for the rental and sale of engineered scaffolding, shoring, concrete forming and other access-related solutions for major construction projects as well as industrial plant maintenance programs MAJOR SERVICES & PRODUCTS MAJOR SERVICES & PRODUCTS • Onsite material handling and resource recovery services • Complete rental equipment and installation services for scaffolding, • Engineered solutions for minimizing the waste streams of metals powered access, shoring, forming and site safety production • Total access equipment solutions and services for industrial facility • Processing of mineral byproducts for environmentally beneficial uses, including abrasives, roofing granules and agricultural soil conditioners maintenance • Expertise and application knowledge of more than 300 in-house engineers MARKETS MARKETS • Global and regional producers of carbon steel, stainless steel, aluminum, zinc and copper • Commercial and industrial users of mineral products, including industrial abrasives contractors, asphalt roofing shingle manufacturers, agricultural operators and turf care specialists • Principal markets include nonresidential and heavy civil works construction projects and industrial plant maintenance programs in the energy, petrochemical and manufacturing sectors 2012 HIGHLIGHTS 2012 HIGHLIGHTS • Signed 20-year environmental services contract at the flagship site of China’s largest steelmaker, Hebei Iron & steel • Major restructuring of 2011 and 2012 is complete; strong focus on improving operational efficiencies • Commenced operations at TISCO under the largest contract in Harsco • Year-over-year improvement despite soft end markets history • Grew presence in key emerging markets, with new orders in India, the middle east and others Metals & Minerals Infrastructure • Bidding activity is starting to show modest pick-up after multi-year downturn Infrastructure Metals & Minerals • Delivered healthy free cash flow despite near-term market contraction REVENUES BY GEOGRAPHY REVENUES BY GEOGRAPHY total $1,404M north america 28% Western europe 39% rest of the World 33% total $937M north america 18% Western europe 55% rest of the World 27% 4 Harsco Corporation 2012 summary annual report Rail Industrial Rail Industrial We operate in nearly 50 countries and employ approximately 18,500 people. Harsco’s four businesses deliver essential services, products and resource recovery solutions to major industries that are fundamental to global economic progress and infrastructure development. METAlS & MInERAlS InFRASTRuCTuRE RAIl InDuSTRIAl north america 40% www.harscorail.com www.harscoaxc.com www.harscoikg.com www.harscopk.com DESCRIPTION DESCRIPTION state-of-the-art solutions for railway track maintenance and new track construction World-class industrial products for energy and energy-related markets MAJOR SERVICES & PRODUCTS MAJOR SERVICES & PRODUCTS • One of the industry’s broadest lines of equipment, parts and contract solutions for virtually all major aspects of track maintenance, repair and construction, including rail grinding, track surfacing and track stabilization • Air-cooled heat exchangers for natural gas compression and pipeline distribution • Steel grating for industrial and commercial flooring and safety walkways • Energy-efficient boilers and hot water systems for large commercial and institutional buildings MARKETS MARKETS • Major domestic and international railways, short lines and urban • Increasing focus on energy-generating and energy-efficiency markets metro transit systems • Expanding global footprint includes a significant emphasis on emerging markets, including China, Brazil and others Metals & Minerals Infrastructure • major customers include natural gas producers and packagers, power plant and industrial facility operators, and commercial building managers and contractors Infrastructure Metals & Minerals 2012 HIGHLIGHTS 2012 HIGHLIGHTS • Strong production year in 2012 as major China order nears completion • Increased market demand from strong energy sector, particularly in • Continued market expansion; new orders in India, Brazil and Europe • Robust new product development program • Increasing value to railway customers as total track solutions provider the first half of the year • Expanding R&D focus on new products • Driving information technology and Continuous Improvement initiatives to accelerate competitive advantage REVENUES BY GEOGRAPHY REVENUES BY GEOGRAPHY total $352M north america 40% Western europe 11% rest of the World 49% (By destination) total $353M north america 90% rest of the World 10% Rail Industrial Rail Industrial Harsco Corporation 2012 summary annual report 5 management’s report on Internal Control over Financial reporting Management of Harsco Corporation, together with its consolidated Because of its inherent limitations, internal control over financial subsidiaries (the “Company”), is responsible for establishing and reporting may not prevent or detect misstatements. Also, projections of maintaining adequate internal control over financial reporting, as defined any evaluation of effectiveness to future periods are subject to the risk in Securities Exchange Act Rule 13a-15(f) or 15d-15(e). The Company’s that controls may become inadequate because of changes in conditions, internal control over financial reporting is a process designed under the or that the degree of compliance with the policies and procedures supervision of the Company’s principal executive and principal financial may deteriorate. officers to provide reasonable assurance regarding the reliability of Management has assessed the effectiveness of its internal control financial reporting and the preparation of the Company’s consolidated over financial reporting at December 31, 2012 based on the framework financial statements for external reporting purposes in accordance with established in Internal Control—Integrated Framework issued by the accounting principles generally accepted in the United States of America. Committee of Sponsoring Organizations of the Treadway Commission The Company’s internal control over financial reporting includes (COSO). Based on this assessment, management has determined that policies and procedures that: the Company’s internal control over financial reporting was effective • Pertain to the maintenance of records that, in reasonable detail, at December 31, 2012. accurately and fairly reflect transactions and dispositions of assets of the Company; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements Patrick K. Decker in accordance with accounting principles generally accepted in the President, Chief Executive Officer and Director United States of America, and that receipts and expenditures of the February 26, 2013 Company are being made only in accordance with authorizations of management and the directors of the Company; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s Barry E. Malamud assets that could have a material effect on the Company’s Vice President, Corporate Controller and Interim Chief Financial Officer consolidated financial statements. February 26, 2013 report of Independent registered public accounting Firm To The Stockholders of Harsco Corporation: In our opinion, the information set forth in the accompanying condensed We have audited, in accordance with the standards of the Public Company consolidated financial statements is fairly stated, in all material respects, Accounting Oversight Board (United States), the consolidated balance sheets in relation to the consolidated financial statements from which it has of Harsco Corporation and its subsidiaries as of December 31, 2012 and been derived. 2011 and the related consolidated statements of operations, changes in equity, cash flows and comprehensive income (loss) for each of the three years in the period ended December 31, 2012 (not presented herein) appearing in Harsco’s annual report on Form 10-K for the year ended December 31, 2012; and in our report dated February 26, 2013, we expressed an unquali- PricewaterhouseCoopers LLP fied opinion on those consolidated financial statements. February 26, 2013 6 Harsco Corporation 2012 summary annual report Condensed Consolidated Balance sheets (In thousands, except share amounts) ASSETS Current assets: Cash and cash equivalents Trade accounts receivable, net Other receivables Inventories Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets, net Other assets Total assets LIABILITIES Current liabilities: Short-term borrowings Current maturities of long-term debt Accounts payable Accrued compensation Income taxes payable Dividends payable Insurance liabilities Advances on contracts Other current liabilities Total current liabilities Long-term debt Deferred income taxes Insurance liabilities Retirement plan liabilities Other liabilities Total liabilities COMMITMENTS AND CONTINGENCIES HARSCO CORPORATION STOCKHOLDERS’ EQUITY Preferred stock, Series A junior participating cumulative preferred stock Common stock, par value $1.25 (issued 112,063,938 and 111,931,267 shares at December 31, 2012 and 2011, respectively) Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock, at cost (31,479,310 and 31,454,097 shares at December 31, 2012 and 2011, respectively) Total Harsco Corporation stockholders’ equity Noncontrolling interests Total equity Total liabilities and equity December 31, 2012 December 31, 2011 $«««÷95,250 $«««121,184 600,264 39,836 236,512 94,581 1,066,443 1,266,225 429,198 77,726 136,377 618,475 44,431 241,934 133,407 1,159,431 1,274,484 680,901 93,501 130,560 $2,975,969 «$3,338,877 $÷÷«÷8,560 $«««««51,414 3,278 221,479 94,398 10,109 16,520 19,434 47,696 216,101 637,575 957,428 18,880 63,248 385,062 52,152 3,558 252,329 92,603 8,409 16,498 25,075 111,429 220,953 782,268 853,800 27,430 60,864 343,842 50,755 2,114,345 2,118,959 – 140,080 152,645 (411,168) 1,675,490 (745,205) 811,842 49,782 861,624 $2,975,969 – 139,914 149,066 (364,191) 1,996,234 (744,644) 1,176,379 43,539 1,219,918 $3,338,877 The complete financial statements for Harsco Corporation as of December 31, 2012 may be found in the Company’s Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 26, 2013. Harsco Corporation 2012 summary annual report 7 Condensed Consolidated statements of operations (In thousands, except per share amounts) Years ended December 31 Revenues from continuing operations: Service revenues Product revenues Total revenues Costs and expenses from continuing operations: Cost of services sold Cost of products sold Selling, general and administrative expenses Research and development expenses Goodwill impairment charge Other expenses Total costs and expenses Operating income (loss) from continuing operations Interest income Interest expense Income (loss) from continuing operations before income taxes and equity income Income tax expense Equity in income of unconsolidated entities, net Income (loss) from continuing operations Discontinued operations: Loss on disposal of discontinued business Income tax benefit related to discontinued business Loss from discontinued operations Net income (loss) Less: Net income attributable to noncontrolling interests Net income (loss) attributable to Harsco Corporation Amounts attributable to Harsco Corporation common stockholders: Income (loss) from continuing operations, net of tax Loss from discontinued operations, net of tax Net income (loss) attributable to Harsco Corporation common stockholders Weighted-average shares of common stock outstanding Basic earnings (loss) per share attributable to Harsco Corporation common stockholders: Continuing operations Discontinued operations 2012 2011 2010 $2,340,996 705,022 3,046,018 $2,700,664 602,076 3,302,740 $2,511,505 527,173 3,038,678 1,861,732 2,162,948 1,994,637 487,784 503,339 9,139 265,038 93,776 3,220,808 (174,790) 3,676 (47,381) (218,495) (35,251) 564 (253,182) (1,843) 924 (919) (254,101) (511) 407,680 535,679 6,044 – 102,740 3,215,091 87,649 2,751 (48,735) 41,665 (49,848) 690 (7,493) (3,306) 1,243 (2,063) (9,556) (1,954) 342,242 532,624 4,271 – 86,473 2,960,247 78,431 2,668 (60,623) 20,476 (4,276) 390 16,590 (7,249) 3,118 (4,131) 12,459 (5,705) «$««(254,612) «$««««(11,510) $÷«««««6,754 $««(253,693) (919) $««(254,612) 80,632 $««««««««(3.15) (0.01) $««««««(9,447) (2,063) «$««««(11,510) 80,736 $÷«««10,885 (4,131) $÷«««««6,754 80,569 $««««««««(0.12) $÷÷÷÷«0.14 (0.03) (0.05) Basic earnings (loss) per share attributable to Harsco Corporation common stockholders ÷÷$÷÷««««(3.16) ÷÷$÷÷««««(0.14) (a) $÷÷÷÷«0.08(a) Diluted weighted-average shares of common stock outstanding Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders: Continuing operations Discontinued operations 80,632 80,736 80,761 $««««««««(3.15) (0.01) $««««««««(0.12) $÷÷÷÷«0.13 (0.03) (0.05) Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders ÷÷$÷÷««««(3.16) ÷÷$÷÷««««(0.14) (a) $÷÷÷÷«0.08 (a) Does not total due to rounding. The complete financial statements for Harsco Corporation as of December 31, 2012 may be found in the Company’s Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 26, 2013. 8 Harsco Corporation 2012 summary annual report Condensed Consolidated statements of Cash Flows (In thousands) Years ended December 31 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation Amortization Deferred income tax expense (benefit) Equity in income of unconsolidated entities, net Dividends or distributions from unconsolidated entities Harsco Infrastructure Segment 2010 Restructuring Program non-cash adjustment Harsco 2011/2012 Restructuring Program non-cash adjustment Goodwill impairment charge Other, net Changes in assets and liabilities, net of acquisitions and dispositions of businesses: Accounts receivable Inventories Accounts payable Accrued interest payable Accrued compensation Harsco Infrastructure Segment 2010 Restructuring Program accrual Harsco 2011/2012 Restructuring Program accrual Other assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from sales of assets Purchase of businesses, net of cash acquired* Other investing activities, net Net cash used by investing activities Cash flows from financing activities: Short-term borrowings, net Current maturities and long-term debt: Additions Reductions Cash dividends paid on common stock Dividends paid to noncontrolling interests Purchase of noncontrolling interests Contributions from noncontrolling interests Common stock issued — options Common stock acquired for treasury Other financing activities, net Net cash used by financing activities Effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period *Purchase of businesses, net of cash acquired Working capital, other than cash Property, plant and equipment Other noncurrent assets and liabilities, net Net cash used to acquire businesses 2012 2011 2010 $(254,101) $«««(9,556) $««12,459 251,905 20,212 (10,708) (564) 308 – 31,443 265,038 (27,098) 22,016 2,365 (37,649) (319) 517 (5,211) (7,883) (51,392) 198,879 (265,023) 49,779 (740) (3,284) (219,268) 276,021 34,420 20,826 (690) 226 – 67,320 – (7,432) (58,011) 7,976 (2,713) (375) 12,554 (19,629) 30,471 (52,632) 298,776 (313,101) 42,653 (1,938) 16,564 (255,822) 279,234 36,005 (26,617) (390) 176 43,158 – – (20,629) 4,395 12,599 36,529 (2,615) 16,305 29,817 – (18,999) 401,427 (192,348) 22,663 (27,643) (4,695) (202,023) (43,464) 21,637 (25,706) 285,850 (184,372) (66,068) (2,605) – 8,097 725 – (2,709) (4,546) (999) (25,934) 121,184 $÷«95,250 301,515 (297,854) (66,146) (4,171) – 8,851 2,403 (5,788) (1) (39,554) (6,454) (3,054) 124,238 $121,184 $««««««««««««– $«««««««««««– – (740) (1,394) (544) $÷÷÷«(740) $«««(1,938) 747,213 (821,038) (65,976) (5,850) (1,159) 698 997 – (700) (171,521) 2,171 30,054 94,184 $124,238 $÷«(1,918) (15,600) (10,125) «$«(27,643) The complete financial statements for Harsco Corporation as of December 31, 2012 may be found in the Company’s Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 26, 2013. Harsco Corporation 2012 summary annual report 9 Condensed Consolidated statements of Changes in equity (In thousands, except share and per share amounts) Balances, January 1, 2010 Net income Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $7,612 Cash flow hedging instrument adjustments, net of deferred income taxes of $347 Purchase of subsidiary shares from noncontrolling interests Contributions from noncontrolling interests Pension liability adjustments, net of deferred income taxes of $(9,727) Marketable securities unrealized loss, net of deferred income taxes of $(7) Stock options exercised, net 91,485 shares Vesting of restricted stock units, net 69,515 shares Amortization of unearned compensation on restricted stock units, net of forfeitures Balances, December 31, 2010 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $2,504 Cash flow hedging instrument adjustments, net of deferred income taxes of $(2,101) Contributions from noncontrolling interests Pension liability adjustments, net of deferred income taxes of $19,143 Marketable securities unrealized gains, net of deferred income taxes of $7 Stock options exercised, net 157,058 shares Vesting of restricted stock units, net 92,630 shares Treasury shares repurchased, 286,577 shares Amortization of unearned stock-based compensation, net of forfeitures Balances, December 31, 2011 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $(5,436) Cash flow hedging instrument adjustments, net of deferred income taxes of $567 Contributions from noncontrolling interests Sale of investment in consolidated subsidiary Pension liability adjustments, net of deferred income taxes of $7,572 Marketable securities unrealized gain, net of deferred income taxes of $(3) Stock options exercised, 38,900 shares Vesting of restricted stock units and other stock grants, net 68,558 shares Amortization of unearned stock-based compensation, net of forfeitures Balances, December 31, 2012 Common Stock Issued Treasury Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Total $139,234 $(735,016) $137,746 $2,133,297 $(201,684) $36,257 $1,509,834 6,754 (66,131) 5,705 12,459 (5,850) (203) (156) 698 (6,430) (700) 22,872 10 (66,131) (5,850) (6,633) (700) (1,159) 698 22,872 10 754 (1,306) 3,297 (1,003) 1,446 (188) 3,297 144 136 (836) (1,254) $139,514 $(737,106) $141,298 $2,073,920 $(185,932) $36,451 $1,468,145 (11,510) (66,176) 1,954 (9,556) (4,171) (221) 9,526 (60,354) 5,933 (123,827) (11) (66,176) (4,171) (60,575) 5,933 9,526 (123,827) (11) 2,319 226 (5,788) 3,873 249 151 (840) (910) (5,788) 2,910 985 3,873 $139,914 $(744,644) $149,066 $1,996,234 $(364,191) $43,539 $1,219,918 (254,612) (66,132) 511 (254,101) (2,605) 439 8,602 (704) 10,995 (4,333) (53,645) 6 (66,132) (2,605) 11,434 (4,333) 8,602 (704) (53,645) 6 710 515 1,959 49 117 (561) 661 959 1,959 $140,080 $(745,205) $152,645 $1,675,490 $(411,168) $49,782 $ 861,624 The complete financial statements for Harsco Corporation as of December 31, 2012 may be found in the Company’s Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 26, 2013. 10 Harsco Corporation 2012 summary annual report Five-year statistical summary (In thousands, except per share, employee information and percentages) 2012 2011 2010 2009 (a) 2008 $139,234 $(735,016) $137,746 $2,133,297 $(201,684) $36,257 $1,509,834 Amounts Attributable to Harsco Corporation Common Stockholders Income Statement Information Revenues from continuing operations Income (loss) from continuing operations Loss from discontinued operations Net income (loss) Financial Position and Cash Flow Information Working capital Total assets Long-term debt Total debt Depreciation and amortization Capital expenditures Cash provided by operating activities Cash used by investing activities Cash used by financing activities Ratios Return on average equity(b)(c) Current ratio Total debt to total capital(c)(d) $3,046,018 $3,302,740 $3,038,678 $2,990,577 $3,967,822 (253,693) (919) (254,612) (9,447) (2,063) (11,510) 10,885 (4,131) 6,754 133,838 (15,061) 118,777 $÷«428,868 2,975,969 $««377,163 3,338,877 $÷«387,082 3,469,220 $÷«418,237 3,639,240 957,428 969,266 272,117 (265,023) 198,879 (219,268) (4,546) (21.7) 1.7:1 52.9 % 853,800 908,772 310,441 (313,101) 298,776 (255,822) (39,554) (0.6) % 1.5:1 42.7 % 849,724 884,932 315,239 (192,348) 401,427 (202,023) (171,521) 0.7% 1.5:1 37.6% 901,734 984,927 311,531 (165,320) 434,458 (269,360) (164,083) 9.1% 1.6:1 39.5% 245,623 (4,678) 240,945 $÷«317,062 3,562,970 891,817 1,012,883 337,949 (457,617) 574,276 (443,418) (155,539) 14.6% 1.4:1 41.1% Per Share Information attributable to Harsco Corporation Common Stockholders Basic – Income (loss) from continuing operations $÷÷÷««(3.15) $÷÷÷««(0.12) $÷÷÷÷«0.14 $÷÷÷÷«1.67 $÷÷÷÷«2.94 – Loss from discontinued operations – Net income (loss) Diluted – Income (loss) from continuing operations – Loss from discontinued operations – Net income (loss) Other Information Book value per share Cash dividends declared per share Diluted weighted-average number of shares outstanding Number of employees (0.01) $÷÷÷««(3.16) $÷÷÷««(3.15) (0.01) (0.03) (0.05) (0.19) $÷÷÷««(0.14) (e) $÷÷÷÷«0.08 (e) $÷÷÷÷«1.48 $÷÷÷««(0.12) $÷÷÷÷«0.13 $÷÷÷÷«1.66 (0.03) (0.05) (0.19) (0.06) $÷÷÷÷«2.88 $÷÷÷÷«2.92 (0.06) $÷÷÷««(3.16) $÷÷÷««(0.14) (e) $÷÷÷÷«0.08 $÷÷÷÷«1.47 $÷÷÷÷«2.87(e) $÷÷÷«10.69 $÷÷÷«15.16 $÷÷÷«18.23 $÷÷÷«18.79 $÷÷÷«18.09 $÷÷«÷÷0.820 $÷÷÷«««0.820 $÷««÷÷«0.820 $÷««««÷«0.805 $÷««÷÷«0.780 80,632 18,500 80,736 19,650 80,761 19,300 80,586 19,600 84,029 21,500 Includes ESCO Interamerica, Ltd. acquired November 10, 2009 (Harsco Infrastructure Segment). (a) (b) Return on average equity is calculated by dividing income (loss) from continuing operations by average equity throughout the year. (c) 2008 reflects noncontrolling interests, previously referred to as minority interests, as a component of equity in accordance with the changes to consolidation accounting and reporting issued by the Financial Accounting Standards Board January 1, 2009. (d) “Total debt to total capital” is calculated by dividing total debt (short-term borrowings and long-term debt including current maturities) by the sum of equity and total debt. (e) Does not total due to rounding. (In thousands, except share and per share amounts) Balances, January 1, 2010 Net income Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $7,612 Cash flow hedging instrument adjustments, net of deferred income taxes of $347 Purchase of subsidiary shares from noncontrolling interests Contributions from noncontrolling interests Pension liability adjustments, net of deferred income taxes of $(9,727) Marketable securities unrealized loss, net of deferred income taxes of $(7) Stock options exercised, net 91,485 shares Vesting of restricted stock units, net 69,515 shares Amortization of unearned compensation on restricted stock units, net of forfeitures Balances, December 31, 2010 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $2,504 Cash flow hedging instrument adjustments, net of deferred income taxes of $(2,101) Contributions from noncontrolling interests Pension liability adjustments, net of deferred income taxes of $19,143 Marketable securities unrealized gains, net of deferred income taxes of $7 Stock options exercised, net 157,058 shares Vesting of restricted stock units, net 92,630 shares Treasury shares repurchased, 286,577 shares Amortization of unearned stock-based compensation, net of forfeitures Balances, December 31, 2011 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Common Stock Issued Treasury Additional Paid-in Capital Retained Earnings Comprehensive Income (Loss) Noncontrolling Interests Total Accumulated Other 5,705 12,459 (1,003) 1,446 (188) 3,297 144 136 (836) (1,254) $139,514 $(737,106) $141,298 $2,073,920 $(185,932) $36,451 $1,468,145 1,954 (9,556) 6,754 (66,131) (11,510) (66,176) (254,612) (66,132) (6,430) (700) 22,872 10 (60,354) 5,933 (123,827) (11) 10,995 (4,333) (53,645) 6 (5,850) (203) (156) 698 (4,171) (221) 9,526 (2,605) 439 8,602 (704) (66,131) (5,850) (6,633) (700) (1,159) 698 22,872 10 754 (1,306) 3,297 (66,176) (4,171) (60,575) 5,933 9,526 (123,827) (11) 2,319 226 (5,788) 3,873 (66,132) (2,605) 11,434 (4,333) 8,602 (704) (53,645) 6 710 515 1,959 249 151 (840) (910) (5,788) 2,910 985 3,873 $139,914 $(744,644) $149,066 $1,996,234 $(364,191) $43,539 $1,219,918 511 (254,101) $140,080 $(745,205) $152,645 $1,675,490 $(411,168) $49,782 $ 861,624 Translation adjustments, net of deferred income taxes of $(5,436) Cash flow hedging instrument adjustments, net of deferred income taxes of $567 Contributions from noncontrolling interests Sale of investment in consolidated subsidiary Pension liability adjustments, net of deferred income taxes of $7,572 Marketable securities unrealized gain, net of deferred income taxes of $(3) Stock options exercised, 38,900 shares Amortization of unearned stock-based compensation, net of forfeitures Balances, December 31, 2012 Vesting of restricted stock units and other stock grants, net 68,558 shares (561) 49 117 661 959 1,959 Harsco Corporation 2012 summary annual report 11 % Board of Directors and Corporate officers (As of March 8, 2013) Corporate Officers Patrick K. Decker president and Chief executive officer Barry E. Malamud Vice president, Corporate Controller and Interim Chief Financial officer Galdino J. Claro executive Vice president and Group Ceo Harsco metals & minerals Mark E. Kimmel senior Vice president and Group president Harsco Infrastructure Scott W. Jacoby Vice president and Group president Harsco rail Scott H. Gerson Vice president and Group president Harsco Industrial A. Verona Dorch Vice president, General Counsel and Corporate secretary Douglas Eubanks Vice president and Chief Information officer Janet l. Hogan Vice president and Chief Human resources officer A. James Howell Vice president – Internal audit Michael H. Kolinsky Vice president – taxes Richard A. Sullivan Vice president – Business transformation and Chief Global supply Chain officer Robert G. Yocum Vice president and treasurer Jeremy Zahn Vice president – Global environmental, Health and safety Board of Directors Henry W. Knueppel Retired Chairman and Chief executive officer regal Beloit Corporation Director since 2008 Serves as Non-Executive Chairman Patrick K. Decker president and Chief executive officer Harsco Corporation Director since 2012 James F. Earl 1 executive Vice president and president – GatX rail International GatX Corporation Director since 2012 Kathy G. Eddy 1 Cpa and Founding partner mcDonough, eddy, parsons & Baylous, aC Director since 2004 David C. Everitt 1, 2 retired Co-leader, agriculture and turf Division Deere & Company Director since 2010 Stuart E. Graham 1, 3C Chairman skanska aB Director since 2009 Terry D. Growcock 2C, 3 retired Chairman the manitowoc Company Director since 2008 James M. loree 1C, 3 executive Vice president and Chief operating officer stanley Black & Decker Director since 2010 Andrew J. Sordoni, III 2, 3 Chairman sordoni Construction services, Inc. Director since 1988 Dr. Robert C. Wilburn 2, 3 Distinguished service professor and Director, Heinz College; principal of the Wilburn Group Director since 1986 Board Committees 1 audit Committee 2 management Development and Compensation Committee 3 nominating and Corporate Governance Committee C Indicates Committee Chair 12 Harsco Corporation 2012 summary annual report shareholder Information Company News Company information, archived news releases and SEC filings are available free of charge 24 hours a day, seven days a week via Harsco’s website at www.harsco.com. Harsco’s quarterly earnings conference calls and other significant investor events are posted when they occur. Securities analysts, portfolio managers, other representatives of institutional investors and other interested parties seeking information about Harsco should contact: James K. Jacobson Director – Investor Relations Phone: 717.612.5628 Email: jjacobson@harsco.com Annual Meeting April 23, 2013, 8:00 am Radisson Hotel Harrisburg Camp Hill, PA 17011 Transfer Agent and Registrar Shareholder communications regarding transfer of shares, book-entry shares, lost certificates, lost dividend checks or changes of address should be directed to: By Mail: Computershare Investor Services P. O. Box 43078 Providence, RI 02940-3078 By Overnight Delivery: By Calling: Computershare Investor Services 250 Royall Street Canton, MA 02021 800-850-3508 (U.S. and Canada) 312-360-5100 (other countries) Shareholders can also view real-time account information and request transfer agent services online at the Computershare Investor Services website: www.computershare.com/investor. Computershare Investor Services can be accessed through telecommunications devices for the hearing impaired by calling: 800-850-3508 (U.S. and Canada), 312-588-4110 (other countries) Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP Philadelphia, PA 19103 Quarterly Share Price and Dividend Information Harsco Corporation common stock is listed on the New York Stock Exchange (NYSE) under ticker symbol HSC. At year-end 2012, there were 80,584,628 shares outstanding and approximately 14,000 stockholders. As shown below, during 2012, the Company’s common stock traded in a range of $18.40 to $24.48 and closed at $23.50 at year-end. High and low per share data are as quoted on the NYSE. Four quarterly cash dividends were paid in 2012 for an annual rate of $0.82. There are no significant restrictions on the payment of dividends. First Quarter High Low Dividends Declared Second Quarter High Low Dividends Declared Third Quarter High Low Dividends Declared Fourth Quarter High Low Dividends Declared 2012 $ 24.48 19.80 0.205 23.86 18.57 0.205 22.45 19.35 0.205 23.54 18.40 0.205 2011 $ 36.63 28.45 0.205 36.78 29.46 0.205 34.07 18.85 0.205 24.96 17.77 0.205 Comparison of Five-Year Cumulative Total Return* among Harsco Corporation, the s&p midcap 400 Index and the Dow Jones us Diversified Industrials Index $128.51 $86.51 $42.27 07 08 09 10 11 12 Harsco Corporation S&P Midcap 400 Index Dow Jones US Diversified Industrials Index Harsco Corporation s&p midcap 400 12/07 12/08 12/09 12/10 12/11 12/12 $100.00 44.02 52.69 47.63 35.60 150 42.47 100.00 63.77 87.61 110.94 109.02 120 128.51 Dow Jones us Diversified Industrials 100.00 50.95 57.83 71.04 71.61 * $100 invested on 12/31/07 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. 86.51 HARSCO 90 60 30 0 150 Summary Annual Report This Summary Annual Report is designed to present our 2012 results in a simple, easy-to-read and cost-efficient format. The more detailed financial information and analysis included in previous annual reports are contained in our Form 10-K filing with the Securities and Exchange Commission, which was distributed to shareholders along with this summary report. A copy of our Form 10-K filing may also be obtained from Harsco Investor Relations at the address on the back cover, or it can be viewed and downloaded from our Harsco website at www.harsco.com. 120 120 150 30 60 90 0 S& P Midcap 400 90 60 30 0 Dow Jones 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, 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. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Please refer to our Annual Report filed on Form 10-K for further discussion. Harsco Corporation World Headquarters 350 poplar Church road Camp Hill, pa 17011 usa tel: 717.763.7064 www.harsco.com 002CSN8405