Harsco Corporation
Annual Report 2013

Plain-text annual report

2013 Summary annual report The Way Financial Summary Dollars in thousands, except per share amounts 2013 2012 2011 2010 2009 Total revenues from continuing operations $2,896,520 $3,046,018 $3,302,740 $3,038,678 $2,990,577 Operating income (loss) from continuing operations (134,799) (174,790) 87,649 78,431 218.656 Income (loss) from continuing operations attributable to Harsco Corporation stockholders (226,449) (253,693) (9,447) 10,885 133,838 Current ratio Return on average equity Return on average assets 1.4:1 (29.1) (4.6) Diluted earnings (loss) per share from continuing operations $««««««««(2.80) Book value per share Cash dividends declared per share Diluted average shares outstanding (in thousands) Number of employees % % * 1.7:1 (21.7) (5.2) $««««««««(3.15) 10.69 0.82 % % **** 7.52 0.82 80,755 12,300 80,632 18,500 1.5:1 (0.6) % 2.6 % 1.5:1 0.7 % 2.3 % 1.6:1 9.1 % 6.3 % * ÷«$÷÷÷÷(0.12) * * * $÷÷÷«÷0.13 * * ** $÷÷÷«÷1.66 15.16 0.82 80,736 19,650 18.23 0.82 80,761 19,300 18.79 0.805 80,586 19,600 Revenues from Continuing Operations Dollars in millions United States International Operating Income (Loss) from Continuing Operations Dollars in millions 13 12 11 10 09 2,897 3,046 3,303 3,039 2,991 Diluted Earnings (Loss) per Share from Continuing Operations In dollars 13 12 11 (0.12) (2.80) (3.15) 10 0 496 0.13 992 1488 1984 2480 2976 3472 3968 09 1.66 13 12 11 10 09 88 78 (135) (175) 219 Cash Dividends Declared per Share In dollars 13 12 11 10 0.82 0.82 0.82 0.82 09 0.805 0.000000 91.599998183.199997274.799995366.399994457.999992 * After loss on disposal of Harsco Infrastructure segment and other special items of $3.63 per share in 2013. ** 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 HarSCo CorporatIon Fellow Shareholders: With the support of our entire organization, we are steadily metals & minerals business and positioned it for double-digit building the foundation necessary to reward our shareholders improvement in operating income in 2014. We grew our base with solid and substantial returns. We have significantly lowered business in rail, and while year-over-year revenue comparisons corporate costs, simplified our business operations, and taken will remain difficult through 2014 due to the prior year’s record important steps to drive Continuous Improvement, human production, we are in a strong position to add to our project capital development and uniform safety practices throughout our pipeline. We are also excited about the growth opportunities in organization. now, under the leadership of David everitt as our our Industrial business, where we serve a growing energy market newly appointed Interim president and Ceo as of February 28th, and have recently added a new, adjacent growth platform to we will continue to execute our strategy to transform harsco complement our air-X-Changers business. into a growing, roIC-focused company. Dave is a truly seasoned business leader who recently completed an outstanding 37-year There is much more work ahead, but harsco is clearly operating career as a senior executive at Deere & Company, where he held from a much stronger position than it was when I wrote to you a number of global positions and responsibilities. he has also two years ago. The board is fully supportive of the strategy that been a valued harsco director and colleague since 2010. he is is in place and the considerable progress that is being made. thoroughly familiar with the company’s strategy and objectives, harsco has talented people, innovative products and abundant and he has embraced this opportunity to help position harsco opportunities to bring our products and services to new customers for a bright future. We are saddened by patrick Decker’s and markets. We know what we need to do and we are fully departure, but we wish him the best in his new position. harsco focused on execution. We thank you for your continued support will be in very capable hands as we continue our transformation as we work to create sustainable shareholder value. and secure a permanent Ceo successor. our 2013 performance reflects the early stages of our transformation. We created immediate and long-term value when we divested harsco Infrastructure into a strategic venture that will improve our operating margins going forward, and create Henry W. Knueppel Non-Executive Chairman significant exit value in the future. We improved roIC in our march 3, 2014 2013 Summary annual reporT 1 HARSCO CORPORATIONletter from tHe InterIm CHIef exeCutIve offICer HarSCo CorporatIon Fellow Shareholders: When I joined harsco Corporation’s board of directors in 2010, drive additional growth. In 2013 we signed several new contracts I saw an opportunity to help this resilient company transform its with some of the largest and most advanced steel producers operations and return to strong, sustainable growth. Since then, the in India, China and other leading regions. These projects will board has engaged with and supported harsco’s management team help improve performance in the years ahead. as it worked to turn around its two largest businesses and unlock the value of its manufacturing growth platforms. I’m genuinely expanding our manufacturing platforms impressed both by the sound business strategy we’re executing on the manufacturing side of our portfolio, we made targeted upon, and by the progress our team made in 2013 to simplify and investments to expand our two strong growth platforms. In 2013 transform the company. now, as harsco’s Interim president and we built on the success of harsco rail’s expanding global base Ceo, I’m excited to step in and have a direct hand in helping harsco and growing core capabilities to win new contracts from several continue to execute its plans and strategies, and deliver greater major railways and metro transit system operators. These include value for customers, employees and shareholders. a new contract in Switzerland valued at more than $100 million to design and deliver utility track maintenance vehicles that will rebalancing our Service portfolio help maintain rail operations in a massive new tunnel now under We took an important step in our transformation in 2013 when construction through the Swiss alps. We’re also building a robust we divested harsco Infrastructure into a strategic venture with aftermarket parts and services business, where we can help Clayton, Dubilier & rice (CD&r). We received approximately global customers maintain and update existing rail maintenance $300 million in cash and an approximate 29 percent equity equipment with such innovative technologies as our patented interest in the strategic venture, which combines harsco Jupiter II Control System and our Compass™ fleet monitoring Infrastructure with Brand energy & Infrastructure Services to and data communications software. form a much larger, $3 billion global business serving the energy and construction sectors. While 2014 will focus principally on our other manufacturing platform, harsco Industrial, continued alignment and integration between the two businesses, we expect its trend of healthy revenue and income performance across three our equity stake to contribute positively to results in the coming diverse businesses. We’ve gained significant market share over the years and ultimately to produce substantial future exit proceeds. past several years serving both the attractive natural gas and energy markets and the improving uS construction market. Disciplined, We also continued our priority work to turn around our industry- targeted research and development is driving organic growth through leading metals & minerals business. Through our Simplification new products like the stainless steel p-K SonIC™ commercial boiler initiative, we are streamlining its operations and introducing rigorous we introduced in 2013. harsco Industrial is also pursuing inorganic analytics into the contract management process. We are also growth, especially within the global heat exchanger market where emphasizing proven, higher-value products and services that will our air-X-Changers business has long been among the market 2 2013 Summary annual reporT HARSCO CORPORATIONHarsco’s Transformation Generating Top Returns for Shareholders 2013 2014 2015 2016+ HarSCo CorporatIon Improve Financial Returns focus on roIC across portfolio Drive cash flow improvement to maximize shareholder returns Turn Around Metals & Minerals major improvement initiatives identified and outlined executing strategy to drive improvement in returns Optimize Portfolio— Grow Rail and Industrial Scale businesses to create growth platforms for Harsco financial flexibility to pursue strategic acquisitions leaders for compression coolers. our early 2014 acquisition of Defining the Harsco Way hammco Corporation gives harsco a solid point of entry into as we move forward, we are also defining the shared values that the adjacent process cooler market. later this year we plan to will anchor our organization. These values find full expression consolidate our four existing compression cooler facilities into in the harsco Way—the foundational approach we take to run a single, larger manufacturing plant to provide added capacity our business and make decisions every day. With a new, leaner and even greater operational efficiency. corporate center that connects and supports our businesses, we executing a Disciplined Strategy can move forward together with a clear understanding of what it takes to succeed at harsco—and what it takes for harsco to We recognize that building sustainable growth platforms is succeed. as we build out the essential elements, global employees a multi-year process, and that we are just in the early innings will enjoy greater autonomy to make decisions at the site level so of harsco’s transformation. as harsco’s Interim Ceo, I’m that harsco can operate as a customer-centric organization. committed to continuing to drive the execution of our well-defined strategic plan to leverage the full capabilities of our portfolio. Seizing new opportunities as we conduct the search for harsco’s next Ceo, we will focus I’m confident that harsco is on the right track, and that the strategy on delivering on our key initiatives to create immediate and we’ve defined will fix what’s broken and grow our top and bottom sustainable value. For harsco metals & minerals, we will lines. We’re seeing strong growth in global energy markets and improve return on Invested Capital (roIC) by rigorously tracking increased demand for our environmental solutions. and we’re performance across global sites and across more than 40 applying customer-focused innovation to win market share across service offerings. We will use a disciplined process for allocating our entire business portfolio. as we pursue these opportunities, we capital to ensure higher returns on future investment decisions. must continue to improve cash flow, execute our metals & minerals For harsco rail, we will support a strong bidding environment transformation strategy and approach performance improvement with for major projects and a renewed focus on aftermarket services. even greater urgency. Together, we’re building a balanced portfolio and we will continue to support new product development and of businesses that can achieve a real, sustainable competitive continued market leadership across harsco Industrial. advantage that positions harsco for attractive long-term growth. on a parallel path, we will also build out the capabilities that a global multi-industry corporation needs to generate long- term growth. We will deploy standardized processes across all businesses that will make us more accountable at the site level, unite our culture around a common language and shared practices, David C. everitt Interim President and Chief Executive Officer and create greater mobility and opportunity for employees. march 3, 2014 2013 Summary annual reporT 3 HARSCO CORPORATIONHarSCo CorporatIon The Way Build a Balanced Portfolio. harsco intends to operate a balanced, diversified business portfolio that mixes market-driven original equipment manufacturing (oem) with traditional service businesses. our two oem businesses, harsco rail and harsco Industrial, are capital-efficient operations that can build global scale from a strong and growing base. our large global services business, harsco metals & minerals, can build on its global leadership position and generate reliable recurring revenues by delivering more of the higher- valued resource recovery and environmental solutions that large steel-producing sites demand. harsco will operate with clear criteria for what makes a strong portfolio company. our goal is that all harsco businesses will generate returns on Invested Capital (roIC) that exceed our cost of capital. They will focus on global industries with attractive long-term prospects. They will have solid potential for multinational expansion, especially in emerging markets. and they will strive for market leadership by delivering products and services that truly stand out. Pursue Growth And Financial Returns. harsco will reward shareholders by making smart decisions about how we deploy capital. We will no longer accept low returns in pursuit of growth. Instead, we will hold each business accountable to meet clear performance criteria for everything from new contracts to investments in customer-focused solutions. We will take a disciplined approach to evaluate strategic opportunities, use rigorous analytics to screen them and make sure that the decisions we make advance our strategy. We also recognize that there are many pathways to profitable growth. Strategic joint ventures with customers, equity partners and third-party service providers will enable harsco to expand our global footprint as well as our opportunities to create value, while appropriately managing risks. 4 2013 Summary annual reporT HarSCo CorporatIon Harsco is uniting under new principles that define our identity, create clear criteria for decision making and empower us to thrive as a disciplined and customer-focused organization. drive Change from the Bottom Up. no one understands customer expectations and operational dynamics better than the local teams who work at harsco sites around the world. That’s why at harsco, the true center of gravity belongs in our operations, where we can take full advantage of the diversity of thought and perspective our employees bring to work each day. local teams are responsible for nurturing customer relationships, for gathering market and customer insights, and for making sure harsco remains competitive. These insights—like the new pelletizing process a metals & minerals team developed to reduce dust emissions and improve environmental compliance—in turn drive the investment decisions that fuel our growth. local teams will benefit from a lean corporate center focused on a few essential functions that will truly help them succeed. It will establish key performance indicators and give operations the current data they need to make informed business and investment decisions. It will drive critical environment, health and Safety programs across the organization. It will help define and focus the Continuous Improvement programs that help us meet performance targets. and it will lead a robust talent development program that will identify next-generation harsco leaders and create individual strategies for cultivating new skills. 2013 Summary annual reporT 5 HarSCo CorporatIon The Way Strive for Continuous Improvement. Continuous Improvement and lean disciplines hold the key to harsco’s future as a company that thrives on efficiency, generates strong cash returns and effectively manages working capital. highly effective best practices exist across all harsco businesses, and there is a lot to be learned from them about how to manage receivables to improve cash flow conversion, how standardized equipment maintenance activities can extend the useful life of our vehicles, and how a well-tuned Concept to Commercialization engine streamlines and accelerates new product development. We will apply these tools more consistently across all harsco sites to boost performance. no processes are more important than the environment, health and Safety practices we’ve designed to protect our people in very demanding environments. Together, we will work proactively to enhance safety and environmental responsibility by focusing on reducing risk, conducting regular safety assessments, ensuring “near miss” reporting and measuring incident response times. as harsco moves closer to our customers, the strong safety culture we are creating will be a critical differentiator that helps customers improve their own performance. Emphasize Competitive differentiation. In today’s highly competitive global marketplace, harsco will win by leading the way in customer-focused innovation, and by helping customers solve their most critical business challenges. For metals & minerals, that means using our deep operational expertise and our Insight onsite™ to develop new environmental services and commercial applications that make the most of existing resources. For rail, it means offering a complete line of products and services critical to rail operators, introducing innovative technologies that enhance railway performance, and applying our expanded global capabilities to execute 6 2013 Summary annual reporT large orders. For our Industrial businesses, powerful brand identities within each business unit provide strong platforms for developing and supporting safe and efficient next-generation products—and for exporting these products to growing energy markets around the world. To emphasize how harsco is different and better, we will upgrade our marketing mechanisms, create more points of customer contact and build a sustainable profile of long-term value creation. Take a Long-term View. harsco has a clear vision of what it means to operate as a balanced, smart, and efficient company that generates sustainable and profitable growth. But we understand that large-scale change is a multi-year journey that requires both urgency and patience. It takes time and genuine commitment to channel the passion and entrepreneurial spirit of all harsco colleagues to build and sustain a culture of execution, roIC focus, safety and continuous improvement. It takes disciplined investment to expand our footprint in emerging markets, to position all our growth platforms for success, and to develop harsco products and services to meet well-defined customer and market needs. and it takes continuous focus on our people—and systematic thinking about business contingencies and requirements—to ensure that we have the deep bench strength and advanced skill sets we need to translate vision into performance. To achieve this vision, we will manage all these variables with urgency and rigor. We will also scan the horizon to anticipate what’s coming, so we can scale our operations to seize these opportunities. By embracing the harsco Way, harsco colleagues can thrive by contributing their skills and perspectives to a dynamic and growing global enterprise that impacts the industries and markets we serve, engineers value for customers and shareholders, and creates attractive career opportunities. HarSCo CorporatIon 2013 Summary annual reporT 7 HarSCo CorporatIon 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 www.harsco-m.com State-of-the-art solutions for railway track maintenance and new track construction www.harscorail.com 8 2013 Summary annual reporT Harsco At a Glance harsco’s global businesses deliver essential products and services to basic industries that are fundamental to worldwide economic progress We operate in more than 35 countries and employ over 12,000 people MAJOR SERVICES & PROdUCTS MARKETS • Global market leader for multiple service and product offerings • mill services • resource recovery • environmental solutions • Broad operational expertise providing tailored customer solutions • Brand-name customer base of leading steel and metals producers • operating at more than 160 customer sites • Strong presence in major emerging markets • Growing industry demand for waste-reducing environmental solutions STRATEGIC dIRECTIOn REVEnUES BY GEOGRAPHY • Intense focus on performance improvement • augmenting portfolio with higher-value-added products and services • Improved efficiency and service effectiveness Total $1,359m north america 26% Western europe 41% rest of the World 33% MAJOR SERVICES & PROdUCTS MARKETS • Wide range of railway track maintenance equipment and services • recurring aftermarket parts and support • Customer-driven new product development and innovative solutions • $24 billion global rail infrastructure maintenance market • 1,000,000+ km of track globally, and growing • primary customers include major railway operators, metro rail systems, short lines and contractors STRATEGIC dIRECTIOn REVEnUES BY GEOGRAPHY • Growing capabilities to compete for large projects worldwide • large installed base with opportunities for additional services and support • Scalable business in a highly fragmented market, where scale is beneficial Total $286m north america 42% Western europe 15% rest of the World 43% (By destination)) 2013 Consolidated Revenues Global Revenue Sources $2,897m metals & minerals 47% Infrastructure 30% rail 10% Industrial 13% $2,897m north america 38% Western europe 37% rest of the World 25% MAJOR SERVICES & PROdUCTS MARKETS • Three businesses with powerful 100+ year brand heritage • heat exchangers • metal grating products • Boilers and water heaters • market-renowned for quality and performance • Broad attractive end markets – energy and construction • market fundamentals continue to be strong • natural gas production/consumption • Industrial capacity expansion • Improvement in uS construction STRATEGIC dIRECTIOn REVEnUES BY GEOGRAPHY • Demonstrated ability to grow rapidly • positioned for organic growth from solid market fundamentals and new product development • Strong opportunity to grow inorganically in core and near-adjacent profitable markets Total $366m north america 91% rest of the World 9% TRAnSACTIOn SUMMARY MARKETS • Divestiture of Infrastructure division into a strategic venture with Clayton, Dubilier & rice completed november 2013 • Creates a market-leading provider of specialized industrial services to the worldwide energy and infrastructure sectors • Combined business is operating as Brand energy & Infrastructure Services • harsco holds an approximate 29 percent equity interest • Brand operates in five key market segments: • upstream/midstream • Downstream • power generation • Industrial • Infrastructure STRATEGIC dIRECTIOn REVEnUES BY GEOGRAPHY HarSCo CorporatIon World-class industrial products for energy and energy-related markets www.harscoaxc.com www.harscoikg.com www.harscopk.com With the divestiture of its Infrastructure business in november 2013, Harsco holds a 29 percent equity interest in a combined company providing specialized industrial services to the worldwide energy and infrastructure sectors; the combined company operates under the name Brand Energy & Infrastructure Services • Transaction strengthens harsco’s financial profile while enhancing financial flexibility to pursue higher-return, higher-growth opportunities • reduces complexity, consistent with harsco’s objectives for internal simplification and greater operational efficiency • Creates the opportunity for additional value creation Total $885m north america 22% Western europe 52% rest of the World 26% www.harsco-i.com www.beis.com (For harsco Infrastructure) 2013 Summary annual reporT 9 HarSCo CorporatIon 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, 2013 based on the framework financial statements for external reporting purposes in accordance with established in Internal Control—Integrated Framework (1992) issued by accounting principles generally accepted in the United States of America. the 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, 2013. 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 27, 2014 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 assets F. Nicholas Grasberger, III that could have a material effect on the Company’s consolidated Senior Vice President and Chief Financial Officer financial statements. February 27, 2014 Report of Independent Registered Public Accounting Firm To The Stockholders of Harsco Corporation: In our opinion, the information set forth in the accompanying We have audited, in accordance with the standards of the Public Company condensed consolidated financial statements is fairly stated, in all material Accounting Oversight Board (United States), the consolidated balance respects, in relation to the consolidated financial statements from sheets of Harsco Corporation and its subsidiaries as of December 31, 2013 which it has been derived. and 2012, 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, 2013 (not presented herein) appearing in Harsco’s annual report on Form 10-K for the year PricewaterhouseCoopers LLP ended December 31, 2013; and in our report dated February 27, 2014, February 27, 2014 we expressed an unqualified opinion on those consolidated financial statements. 10 2013 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 Assets held-for-sale Other current assets Total current assets Investments 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 Liabilities of assets held-for-sale Due to unconsolidated affiliate Unit adjustment liability Other current liabilities Total current liabilities Long-term debt Deferred income taxes Insurance liabilities Retirement plan liabilities Due to unconsolidated affiliate Unit adjustment liability 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 112,198,693 and 112,063,938 shares at December 31, 2013 and 2012, respectively) Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock, at cost (31,519,768 and 31,479,310 shares at December 31, 2013 and 2012, respectively) Total Harsco Corporation stockholders’ equity Noncontrolling interests Total equity Total liabilities and equity The complete financial statements for Harsco Corporation as of December 31, 2013 may be found in the Company’s Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 27, 2014. HarSCo CorporatIon December 31, 2013 December 31, 2012 $«««÷93,605 $«««÷95,250 353,181 46,470 155,689 113,968 75,842 838,755 298,856 711,346 431,265 53,261 108,265 600,264 39,836 236,512 2,399 92,182 1,066,443 3,201 1,266,225 429,198 77,726 133,176 $2,441,748 $2,975,969 «$÷÷««7,489 $÷÷«÷8,560 20,257 181,410 53,113 7,199 16,536 10,523 24,053 109,176 24,954 22,320 129,739 606,769 783,158 8,217 41,879 241,049 27,292 84,023 42,526 1,834,913 – 140,248 159,025 (370,615) 1,381,321 (746,237) 563,742 43,093 606,835 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 2,114,345 – 140,080 152,645 (411,168) 1,675,490 (745,205) 811,842 49,782 861,624 $2,441,748 $2,975,969 2013 Summary annual reporT 11 2013 Summary annual reporT 11 HarSCo CorporatIon 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 Loss on disposal of Harsco Infrastructure Segment and transaction costs Other expenses Total costs and expenses Operating income (loss) from continuing operations Interest income Interest expense Change in fair value to unit adjustment liability Income (loss) from continuing operations before income taxes and equity income Income tax expense Equity in income of unconsolidated entities, net Loss from continuing operations Discontinued operations: Loss on disposal of discontinued business Income tax benefit related to discontinued business Loss from discontinued operations Net loss Less: Net income attributable to noncontrolling interests Net loss attributable to Harsco Corporation Amounts attributable to Harsco Corporation common stockholders: Loss from continuing operations, net of tax Loss from discontinued operations, net of tax Net loss attributable to Harsco Corporation common stockholders Weighted-average shares of common stock outstanding Basic loss per share attributable to Harsco Corporation common stockholders: Continuing operations Discontinued operations 2013 2012 2011 $2,229,966 666,554 2,896,520 $2,340,996 705,022 3,046,018 1,766,730 1,861,732 467,485 481,052 9,570 – 291,372 15,110 3,031,319 (134,799) 2,087 (49,654) (966) (183,332) (34,912) 1,548 (216,696) (2,398) 906 (1,492) (218,188) (9,753) 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) $2,700,664 602,076 3,302,740 2,162,948 407,680 535,679 6,044 – – 102,740 3,215,091 87,649 2,751 (48,735) – 41,665 (49,848) 690 (7,493) (3,306) 1,243 (2,063) (9,556) (1,954) ««÷$««(227,941) «$««(254,612) «$««««(11,510) $÷(226,449) (1,492) $÷(227,941) 80,755 $««««««««(2.80) (0.02) $««(253,693) (919) $««(254,612) 80,632 $««««««(9,447) (2,063) «$««««(11,510) 80,736 $««««««««(3.15) $««««««««(0.12) (0.01) (0.03) Basic loss per share attributable to Harsco Corporation common stockholders ÷÷$÷÷««««(2.82) ÷÷$÷÷««««(3.16) ÷÷$÷÷««««(0.14) (a) Diluted weighted-average shares of common stock outstanding Diluted loss per share attributable to Harsco Corporation common stockholders: Continuing operations Discontinued operations 80,755 80,632 80,736 $««««««««(2.80) (0.02) $««««««««(3.15) $««««««««(0.12) (0.01) (0.03) Diluted loss per share attributable to Harsco Corporation common stockholders ÷÷$÷÷««««(2.82) ÷÷$÷÷««««(3.16) ÷÷$÷÷««««(0.14) (a) (a) Does not total due to rounding. The complete financial statements for Harsco Corporation as of December 31, 2013 may be found in the Company’s Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 27, 2014. 12 2013 Summary annual reporT Condensed Consolidated Statements of Cash Flows (In thousands) Years ended December 31 Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation Amortization Deferred income tax expense (benefit) Equity in income of unconsolidated entities, net Dividends from unconsolidated entities Harsco 2011/2012 Restructuring Program non-cash adjustment Goodwill impairment charge Loss on disposal of Harsco Infrastructure Segment 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 the Infrastructure transaction Proceeds from sales of assets Purchase of businesses, net of cash acquired* Other investing activities, net Net cash provided (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 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 Property, plant and equipment Other noncurrent assets and liabilities, net Net cash used to acquire businesses HarSCo CorporatIon 2013 2012 2011 $(218,188) $(254,101) $«««(9,556) 221,266 15,775 (18,427) (1,548) 37 – – 271,296 2,735 (34,504) 18,510 14,319 (1,836) (9,860) (6,788) (17,705) (46,827) 188,255 (246,147) 303,039 18,984 (2,849) (10,342) 62,685 251,905 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) 198,879 276,021 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 (265,023) (313,101) – 49,779 (740) (3,284) – 42,653 (1,938) 16,564 (219,268) (255,822) (1,901) (43,464) 21,637 316,804 (498,600) (66,211) (3,381) (166) 4,825 371 – (405) (248,664) (3,921) (1,645) 95,250 $÷«93,605 $««««(2,437) (412) $««««(2,849) 285,850 (184,372) (66,068) (2,605) – 8,097 725 – (2,709) (4,546) (999) (25,934) 121,184 $÷«95,250 $««««««««««««– (740) $÷÷÷«(740) 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 $«««(1,394) (544) $«««(1,938) The complete financial statements for Harsco Corporation as of December 31, 2013 may be found in the Company’s Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 27, 2014. 2013 Summary annual reporT 13 HarSCo CorporatIon Condensed Consolidated Statements of Changes in Equity (In thousands, except share and per share amounts) Balances, January 1, 2011 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 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 gains, 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 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $(5,924) Cash flow hedging instrument adjustments, net of deferred income taxes of $(1,410) Contributions from noncontrolling interests Purchase of subsidiary shares from noncontrolling interest Noncontrolling interests transferred in the Infrastructure transaction Pension liability adjustments, net of deferred income taxes of $(11,095) Marketable securities unrealized gains, net of deferred income taxes of $(18) Common Stock Issued Treasury Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss)(a) Noncontrolling Interests Total $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 (227,941) (66,228) (292) 1,003 9,753 (218,188) (4,764) 371 (69) 4,825 107 (16,912) (56,198) 1,116 95,604 31 (66,228) (4,764) (55,827) 1,047 4,825 (185) (15,909) 95,604 31 400 1,185 3,220 $140,248 $(746,237) $159,025 $1,381,321 $(370,615) $43,093 $ 606,835 Stock options exercised, net 20,000 shares 25 375 Vesting of restricted stock units and other stock grants, net 74,297 shares Amortization of unearned portion of stock-based compensation, net of forfeitures Balances, December 31, 2013 143 (1,032) 2,074 3,220 (a) 2013 includes changes due to the Infrastructure transaction consummated November 26, 2013. 14 2013 Summary annual reporT 14 2013 Summary annual reporT Five-Year Statistical Summary (In thousands, except per share, employee information and percentages) 2013(a) 2012 2011 2010 2009(b) HarSCo CorporatIon 1,954 (9,556) Amounts Attributable to Harsco Corporation Common Stockholders Statement of Operations 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 provided (used) by investing activities Cash used by financing activities Ratios Return on average equity(c) Current ratio(d) $2,896,520 $3,046,018 $3,302,740 $3,038,678 $2,990,577 (226,449) (1,492) (227,941) (253,693) (919) (254,612) (9,447) (2,063) (11,510) 10,885 (4,131) 6,754 133,838 (15,061) 118,777 $«««231,986 2,441,748 $÷«428,868 2,975,969 $««377,163 3,338,877 $÷«387,082 3,469,220 $÷«418,237 3,639,240 783,158 810,904 237,041 (246,147) 188,255 62,685 (248,664) (29.1) 1.4:1 957,428 969,266 272,117 (265,023) 198,879 (219,268) (4,546) 853,800 908,772 310,441 (313,101) 298,776 (255,822) (39,554) (21.7) % 1.7:1 (0.6) % 1.5:1 849,724 884,932 315,239 (192,348) 401,427 (202,023) (171,521) 0.7% 1.5:1 901,734 984,927 311,531 (165,320) 434,458 (269,360) (164,083) 9.1% 1.6:1 Per Share Information Attributable to Harsco Corporation Common Stockholders Basic – Income (loss) from continuing operations «$««««««««(2.80) $÷÷÷««(3.15) $÷÷÷««(0.12) $÷÷÷÷«0.14 $÷÷÷÷«1.67 – Loss from discontinued operations – Net income (loss) Diluted – Income (loss) from continuing operations – Loss from discontinued operations – Net income (loss) Other Information Book value per share Cash dividends declared per share Diluted weighted-average number of shares outstanding Number of employees (0.02) «$««««««« (2.82) $««««««««(2.80) (0.02) (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 $÷÷÷÷«1.66 (0.03) (0.05) (0.19) ««$««««««««(2.82) $÷÷÷««(3.16) $÷÷÷««(0.14) (e) $÷÷÷÷«0.08 $÷÷÷÷«1.47 $«««««««««7.52 $÷÷÷«10.69 $÷÷÷«15.16 $÷÷÷«18.23 $÷÷÷«18.79 $÷÷«÷÷0.820 $÷÷«÷÷0.820 $÷÷÷«««0.820 $÷««÷÷«0.820 $÷««««÷«0.805 80,755 12,300 80,632 18,500 80,736 19,650 80,761 19,300 80,586 19,600 Includes impacts of the Infrastructure transaction consummated on November 26, 2013. Includes ESCO Interamerica, Ltd. acquired November 10, 2009. (a) (b) (c) Return on average equity is calculated by dividing income (loss) from continuing operations by average equity throughout the year. (d) Current ratio is calculated by dividing total current assets by total current liabilities. (e) Does not total due to rounding. Common Stock Issued Treasury Additional Paid-in Capital Retained Earnings Comprehensive Income (Loss)(a) Noncontrolling Interests Total $139,514 $(737,106) $141,298 $2,073,920 $(185,932) $36,451 $1,468,145 Accumulated Other 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) (In thousands, except share and per share amounts) Balances, January 1, 2011 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 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 of $(3) Contributions from noncontrolling interests Sale of investment in consolidated subsidiary Pension liability adjustments, net of deferred income taxes of $7,572 Marketable securities unrealized gains, net of deferred income taxes Stock options exercised, 38,900 shares Vesting of restricted stock units and other stock grants, net 68,558 shares (561) Amortization of unearned stock-based compensation, 49 117 net of forfeitures Balances, December 31, 2012 Net income (loss) Cash dividends declared: Common @ $0.82 per share Noncontrolling interests Translation adjustments, net of deferred income taxes of $(5,924) Cash flow hedging instrument adjustments, net of deferred income taxes of $(1,410) Contributions from noncontrolling interests Purchase of subsidiary shares from noncontrolling interest Noncontrolling interests transferred in the Infrastructure transaction Pension liability adjustments, net of deferred income taxes of $(11,095) Marketable securities unrealized gains, net of deferred income taxes of $(18) Vesting of restricted stock units and other stock grants, net 74,297 shares Amortization of unearned portion of stock-based compensation, net of forfeitures Balances, December 31, 2013 661 959 1,959 (292) 1,003 3,220 (11,510) (66,176) (254,612) (66,132) (227,941) (66,228) (4,171) (221) 9,526 (2,605) 439 8,602 (704) (4,764) 371 (69) 4,825 107 (16,912) (60,354) 5,933 (123,827) (11) 10,995 (4,333) (53,645) 6 (56,198) 1,116 95,604 31 (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 (66,228) (4,764) (55,827) 1,047 4,825 (185) (15,909) 95,604 31 400 1,185 3,220 Stock options exercised, net 20,000 shares 25 375 143 (1,032) 2,074 (a) 2013 includes changes due to the Infrastructure transaction consummated November 26, 2013. $140,248 $(746,237) $159,025 $1,381,321 $(370,615) $43,093 $ 606,835 $140,080 $(745,205) $152,645 $1,675,490 $(411,168) $49,782 $ 861,624 9,753 (218,188) 2013 Summary annual reporT 15 2013 Summary annual reporT 15 % HarSCo CorporatIon Board of directors and Corporate Leadership (As of March 3, 2014) Corporate Leadership David C. everitt Interim president and Chief executive officer William H. alexander Vice president, Global real estate & Facilities management anthony a. DeGregorio Vice president and Chief Information officer a. verona Dorch Vice president, General Counsel and Corporate Secretary Scott H. Gerson Vice president and Group president harsco Industrial f. nicholas Grasberger, III Senior Vice president and Chief Financial officer Christopher r. Hernandez Vice president – Global Compliance Janet l. Hogan Vice president and Chief human resources officer a. James Howell Vice president – Internal audit Scott W. Jacoby Vice president and Group president harsco rail michael H. Kolinsky Vice president – Tax and risk management michael p. monberg Interim Group president harsco metals & minerals 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 James f. earl 1, 2 executive Vice president and president – GaTX rail International GaTX Corporation Director since 2012 Kathy G. eddy 1, 3C 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, 3 Chairman Skanska aB Director since 2009 terry D. Growcock 2C 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 3 Chairman Sordoni Construction Services, Inc. Director since 1988 Dr. robert C. Wilburn 2 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 16 2013 Summary annual reporT HarSCo CorporatIon 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 the Director of Investor Relations at Harsco’s corporate office, telephone 717-763-7064 or email ir @harsco.com. Annual Meeting April 29, 2014, 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 P. O. Box 30170 College Station, TX 77842-3170 By Overnight Delivery: Computershare 211 Quality Circle, Suite 210 College Station, TX, 77845 As shown below, during 2013, the Company’s common stock traded in a range of $20.98 to $28.99 and closed at $28.03 at year-end. High and low per share data are as quoted on the NYSE. Four quarterly cash dividends were paid in 2013 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 2013 $ 26.02 22.84 0.205 24.75 20.98 0.205 27.03 23.20 0.205 28.99 23.86 0.205 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 Comparison of Five-Year Cumulative Total Return* among harsco Corporation, the S&p midcap 400 Index, and the Dow Jones uS Diversified Industrials Index $269.04 $241.34 $118.41 By Calling: 800-850-3508 (U.S. and Canada) 312-360-5100 (other countries) 08 09 10 11 12 13 Harsco Corporation S&P Midcap 400 Index Dow Jones US Diversified Industrials Index 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: harsco Corporation S&p midcap 400 12/08 12/09 12/10 12/11 12/12 12/13 100.00 119.71 108.22 80.87 96.03 118.41 100.00 137.38 173.98 170.96 201.53 269.04 Dow Jones uS Diversified Industrials 100.00 113.50 139.44 140.56 169.80 * $100 invested on 12/31/08 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. 241.34 300 250 200 150 800-952-9245 (U.S. and Canada), 781-575-4592 (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 2013, there were 80,678,925 shares outstanding and approximately 12,500 stockholders. Copyright © 2014 S&p, a division of The mcGraw-hill Companies Inc. all rights reserved. Copyright © 2014 Dow Jones & Co. all rights reserved. 100 50 0 HARSCO 300 250 Summary Annual Report This Summary Annual Report is designed to present our 2013 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. 100 150 200 150 200 250 300 50 0 S& P Midcap 400 Forward-Looking Statements The nature of the Company’s business and the many countries in which it operates subject it to changing economic, competitive, regulatory and technological conditions, risks and uncertainties. In accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressed or implied herein. Forward-looking statements contained herein could include, among other things, statements about manage- ment’s confidence in and strategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, revenues, cash flows and earnings. Forward-looking statements can be identified by the use of such terms as “may,” “could,” “expect,” “anticipate,” “intend,” “believe,” “likely,” “estimate,” “plan,” 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. 0 100 50 Dow Jones Harsco Corporation World Headquarters 350 poplar Church road Camp hill, pa 17011 uSa Tel: 717.763.7064 www.harsco.com SKU 002CSN35F7 

Continue reading text version or see original annual report in PDF format above