Harsco Corporation
Annual Report 2015

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-KýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 001-03970HARSCO CORPORATION(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction of incorporation or organization)23-1483991(I.R.S. employer identification number)350 Poplar Church Road, Camp Hill, Pennsylvania(Address of principal executive offices)17011(Zip Code)Registrant's telephone number, including area code 717-763-7064Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon stock, par value $1.25 per sharePreferred stock purchase rights New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NONEIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ý No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to thebest of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "largeaccelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.Large accelerated filer ý Accelerated filer o Non-accelerated filer o (Do not check if asmaller reporting company) Smaller reporting company oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ýThe aggregate market value of the Company's voting stock held by non-affiliates of the Company as of June 30, 2015 was $1,321,550,000.Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:Class Outstanding at January 29, 2016Common stock, par value $1.25 per share 80,094,365DOCUMENTS INCORPORATED BY REFERENCESelected portions of the 2016 Proxy Statement are incorporated by reference into Part III of this Report.Table of ContentsHARSCO CORPORATIONFORM 10-KINDEX PagePART I Item 1.Business. 1Item 1A.Risk Factors. 6Item 1B.Unresolved Staff Comments. 14Item 2.Properties. 15Item 3.Legal Proceedings. 15Item 4.Mine Safety Disclosures.15SupplementaryItem.Executive Officers of the Registrant (Pursuant to Instruction 3 to Item 401(b) of Regulation S-K). 16PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities. 17Item 6.Selected Financial Data. 18Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations. 19Item 7A.Quantitative and Qualitative Disclosures About Market Risk. 40Item 8.Financial Statements and Supplementary Data. 41Item 9.Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. 95Item 9A.Controls and Procedures. 95Item 9B.Other Information. 95PART III Item 10.Directors, Executive Officers and Corporate Governance. 96Item 11.Executive Compensation. 96Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 96Item 13.Certain Relationships and Related Transactions, and Director Independence. 96Item 14.Principal Accounting Fees and Services. 96PART IV Item 15.Exhibits, Financial Statement Schedules. 97SIGNATURES103Table of ContentsPART IItem 1. Business.(a)General Development of BusinessHarsco Corporation (the "Company") is a diversified, multinational provider of industrial services and engineered products serving global industries that arefundamental to worldwide economic growth and infrastructure development. The Company's operations fall into three reportable segments: Harsco Metals &Minerals, Harsco Industrial and Harsco Rail. The Company has locations in approximately 30 countries, including the U.S. The Company was incorporatedin 1956.The Company's operations previously included the Harsco Infrastructure Segment. In November 2013, the Company consummated the sale of the Company'sHarsco Infrastructure Segment into a strategic venture with Clayton, Dubilier & Rice ("CD&R") as part of a transaction that combined the HarscoInfrastructure Segment with Brand Energy & Infrastructure Services, Inc., which CD&R simultaneously acquired (the "Infrastructure Transaction"). TheCompany contributed substantially all of the Company’s equity interests in, and the net assets of, the Harsco Infrastructure Segment to the strategic venturein exchange for approximately $300 million in cash, subject to working capital and other adjustments, and an approximate 29% equity interest in theInfrastructure strategic venture. The Company’s approximate 29% equity interest in the Infrastructure strategic venture is accounted for under the equitymethod of accounting as prescribed by generally accepted accounting principles in the U.S. See Note 3, Acquisitions and Dispositions, to the ConsolidatedFinancial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional information on the Infrastructure Transaction.The Company's executive offices are located at 350 Poplar Church Road, Camp Hill, Pennsylvania 17011 and the Company's main telephone number is(717) 763-7064. The public may read and copy any material the Company files with the Securities and Exchange Commission ("SEC") at their PublicReference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by callingthe SEC at 1-800-SEC-0330. The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and anyamendments to such reports filed with or furnished to the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, areavailable free of charge on the SEC's Internet website at www.sec.gov and on the Company's Internet website at www.harsco.com as soon as reasonablypracticable after such reports are electronically filed with the SEC. The information posted on the Company's website is not incorporated into the Company'sSEC filings.The Company's principal lines of business and related principal business drivers are as follows:Principal Lines of Business Principal Business DriverslGlobal expertise in providing on-site services of material logistics,product quality improvement and resource recovery for iron, steel andmetals manufacturing; as well as value added environmental solutionsfor industrial co-products lGlobal metals production and capacity utilization lOutsourcing of services by metals producers lDemand for high-value specialty steel and ferro alloys lDemand for environmental solutions for metals and minerals wastestreams lDemand for industrial and infrastructure surface preparation andrestoration lDemand for residential roofing shingles lDemand for road making materialslAir-cooled heat exchangers lDemand in the natural gas, natural gas processing and petrochemicalmarketslIndustrial grating products lIndustrial plant and warehouse construction and expansion lOff-shore drilling and new rig constructionlHeat transfer products lDemand for commercial and institutional boilers and water heaterslRailway track maintenance services and equipment lGlobal railway track maintenance-of-way capital spending lOutsourcing of track maintenance and new track construction byrailroadsThe Company reports segment information using the "management approach," based on the way management organizes and reports the segments within theenterprise for making operating decisions and assessing performance. The Company's reportable segments are identified based upon differences in products,services and markets served. These segments and the types of products and services offered are more fully described in section (c) below.1Table of ContentsIn 2015, 2014 and 2013, sales in the U.S. contributed total revenues of $0.8 billion, $0.9 billion and $1.0 billion, equal to approximately 44%, 43% and 35%of total revenues, respectively. The Company's sales in euro-currency countries contributed total revenues of $0.3 billion, $0.4 billion and $0.7 billion, in2015, 2014 and 2013, equal to approximately 16%, 17% and 25% of total revenues, respectively. Sales in the U.K. contributed total revenues of $0.2 billion,$0.3 billion and $0.4 billion in 2015, 2014 and 2013, equal to approximately 13%, 12% and 12% of total revenues, respectively. There were no significantinter-segment revenues.(b)Financial Information about SegmentsFinancial information concerning segments is included in Note 16, Information by Segment and Geographic Area, to the Consolidated Financial Statementsunder Part II, Item 8, "Financial Statements and Supplementary Data," which information is incorporated herein by reference.(c)Narrative Description of Business(1) A narrative description of the businesses by reportable segment is as follows:Harsco Metals & Minerals Segment—64% of consolidated revenues for 2015The Harsco Metals & Minerals Segment is one of the world's largest providers of on-site services of material logistics, product quality improvement andresource recovery for iron, steel and metals manufacturing. There are no significant metals services contracts for which the estimated costs to complete thecontract currently exceed the estimated revenue to be realized included in the below estimated future revenues though certain contracts may have lower near-term operating margins due to continued reduced steel production and weaker commodity prices. The Metals business's multi-year contracts had estimatedfuture revenues of $3.2 billion at expected production levels at December 31, 2015. This provides the Company with a substantial base of long-termrevenues. Approximately 22% of these revenues are expected to be recognized by December 31, 2016; approximately 43% of these revenues are expected tobe recognized between January 1, 2017 and December 31, 2019; approximately 15% of these revenues are expected to be recognized between January 1,2020 and December 31, 2022; and the remaining revenues are expected to be recognized thereafter.The Minerals business extracts high-value metallic content from stainless steel by-products and also specializes in the development of minerals technologiesfor commercial applications, including agriculture fertilizers. The Minerals business also produces industrial abrasives and roofing granules from power-plantutility coal slag at a number of locations throughout the U.S. Harsco Minerals' BLACK BEAUTY® abrasives are used for industrial surface preparation, suchas rust removal and cleaning of bridges, ship hulls and various structures. Roofing granules are sold to residential roofing shingle manufacturers in the U.S.,primarily for the replacement roofing market. This business is one of the largest U.S. producers of slag abrasives and residential roofing granules.As part of the Harsco Metals & Minerals Segment's initiatives to develop new products and services, in particular environmental solutions, the Segment isinvolved with several initiatives and technology alliances focused on developing greater environmental sustainability through the recovery of resourcesfrom production by-products and waste streams.The Harsco Metals & Minerals Segment operates in approximately 30 countries. In 2015 and 2014, this Segment's revenues were generated in the followingregions: Percentage of RevenuesRegion 2015 2014Western Europe 41% 40%North America 24% 24%Latin America (a) 14% 16%Asia-Pacific 12% 10%Middle East and Africa 5% 5%Eastern Europe 4% 5%(a)Including Mexico.For 2015, 2014 and 2013, the Harsco Metals & Minerals Segment's percentage of the Company's consolidated revenues were 64%, 67% and 47%,respectively.The Company has announced its intention to pursue strategic options for the separation of the Harsco Metals & Minerals Segment from the rest of theCompany. There is no specific timetable related to this initiative and there can be no assurance that a sale, spin-off or any other transaction will take place.2Table of ContentsHarsco Industrial Segment—21% of consolidated revenues for 2015The Harsco Industrial Segment includes the Harsco Industrial Air-X-Changers, Harsco Industrial IKG and Harsco Industrial Patterson-Kelley businesses.Approximately 93% of this Segment's revenues originate in North America.Harsco Industrial Air-X-Changers is a leading supplier of custom-engineered and manufactured air-cooled heat exchangers for the natural gas, natural gasprocessing and petrochemical industries in the U.S. Harsco Industrial Air-X-Changers' heat exchangers are the primary apparatus used to condition natural gasduring recovery, compression and transportation from underground reserves through the major pipeline distribution channels. In January 2014, the Companyacquired Hammco Corporation ("Hammco"), a U.S. manufacturer of high specification air-cooled heat exchangers for the natural gas and petrochemicalprocessing markets.Harsco Industrial IKG manufactures a varied line of industrial grating products at several plants in the U.S. and international plants located in Mexico andChina. These products include a full range of metal bar grating configurations, which are used mainly in industrial flooring, as well as safety and securityapplications in the energy, paper, chemical, refining and processing industries. Harsco Industrial IKG recently introduced GrateGuardTM, a fencing solutionfor first-line physical security.Harsco Industrial Patterson-Kelley is a leading manufacturer of energy-efficient heat transfer products such as boilers and water heaters for commercial andinstitutional applications.For 2015, 2014 and 2013, this Segment's percentage of the Company's consolidated revenues were 21%, 20% and 13%, respectively.Harsco Rail Segment—15% of consolidated revenues for 2015The Harsco Rail Segment is a global provider of equipment, after-market parts and services for the maintenance, repair and construction of railway track. TheSegment's equipment and services support private and government-owned railroads and urban transit systems worldwide. In March 2015, the Companyacquired Protran Technology ("Protran"), a U.S. designer and producer of safety systems for transportation and industrial applications; and in April 2015, theCompany acquired JK Rail Products, LLC ("JK Rail"), a provider of after-market parts for railroad track maintenance.The Harsco Rail Segment's products are produced in three countries and products and services are provided worldwide. In 2015, 2014 and 2013, exportproduct sales from the U.S. for the Harsco Rail Segment were $67.1 million, $104.9 million and $109.3 million, respectively.For 2015, 2014 and 2013, the Harsco Rail Segment's percentage of the Company's consolidated revenues were 15%, 13% and 10%, respectively.(1)(i) The products and services of the Company are generated through a number of product groups. These product groups are more fully discussed inNote 16, Information by Segment and Geographic Area, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements andSupplementary Data." The product groups that contributed 10% or more as a percentage of consolidated revenues in any of the last three fiscal years are setforth in the following table: Percentage of Consolidated RevenuesProduct Group 2015 2014 2013Outsourced, on-site services of material logistics, product quality improvement andresource recovery for iron, steel and metals manufacturing; as well as value addedenvironmental solutions for industrial co-products 64% 67% 47%Engineered scaffolding, concrete forming and shoring, and other access-related services,rentals and sales (a) —% —% 30%Air-cooled heat exchangers 11% 11% 6%Railway track maintenance services and equipment 15% 13% 10%(a) The Engineered scaffolding, concrete forming and shoring, and other access-related services, rentals and sales product group is associated with the Harsco Infrastructure Segment,which was disposed of as part of the Infrastructure Transaction. See Note 3, Acquisitions and Dispositions, to the Consolidated Financial Statements under Part II, Item 8, "FinancialStatements and Supplementary Data," for additional information on the Infrastructure Transaction.(1)(ii) New products and services are added from time to time; however, in 2015, 2014 and 2013 none required the investment of a material amount of theCompany's assets.(1)(iii) The manufacturing requirements of the Company's operations are such that no unusual sources of supply for raw materials are required. The rawmaterials used by the Company for its product manufacturing principally include steel and, to a lesser extent, aluminum, which are usually readily available.The profitability of the Company's manufactured products is affected by changing purchase prices of steel and other materials and commodities.3Table of Contents(1)(iv) While the Company has a number of trademarks, patents and patent applications, it does not consider that any material part of its business isdependent upon them.(1)(v) The Company's Harsco Metals & Minerals Segment provides services which are usually subject to volume reductions at certain points of the year andthe Company furnishes products within the Harsco Industrial Segment that are seasonal in nature. As a result, the Company's revenues and results ofoperations for the first quarter ending March 31 and the fourth quarter ending December 31 may be lower than the second and third quarters. Additionally,the Company has historically generated the majority of its cash flows in the second half of the year. This is a result of normally higher income during thelatter part of the year. The Company's historical revenue patterns and cash provided by operating activities are as follows:Historical Pattern of Revenue from Continuing Operations(In millions) 2015 2014 2013 2012 2011 First quarter $451.6 $512.5 $715.4 $752.3 $778.2 Second quarter 455.7 535.3 759.6 770.6 874.6 Third quarter 428.3 526.4 739.9 756.8 855.5 Fourth quarter 387.4 492.1 681.1 766.3 796.9 Totals $1,723.1(a)$2,066.3 $2,896.0 $3,046.0 $3,305.2 (a)Does not total due to rounding.Historical Pattern of Cash Provided (Used) by Operations(In millions) 2015 2014 2013 2012 2011 First quarter $10.5 $27.5 $3.0 $(1.4) $13.1 Second quarter 34.7 47.8 53.0 37.1 53.7 Third quarter 43.9 110.0 107.7 75.5 123.2 Fourth quarter 32.4 41.4 23.9 87.4 108.7 Totals $121.5 $226.7 $187.7(a)$198.6 $298.8(a)(a)Does not total due to rounding.(1)(vi) The practices of the Company relating to working capital are similar to those of other industrial service providers or manufacturers servicing bothdomestic and international industrial customers and commercial markets. These practices include the following:•Standard accounts receivable payment terms of 30 to 60 days, with progress or advance payments required for certain long-lead-time or large orders.Payment terms are slightly longer in certain international markets.•Standard accounts payable payment terms of 30 to 90 days.•Inventories are maintained in sufficient quantities to meet forecasted demand. Due to the time required to manufacture certain railway trackmaintenance equipment to customer specifications, inventory levels of this business tend to increase for an extended period of time during theproduction phase and decline when the equipment is sold.(1)(vii) In 2015, 2014 and 2013, the Harsco Metals & Minerals Segment had two customers that each provided in excess of 10% of this Segment's revenuesunder multiple long-term contracts at several mill sites. The loss of any one of the contracts would not have a material adverse effect upon the Company'sfinancial position or cash flows; however, it could have a significant effect on quarterly or annual results of operations. Additionally, a decline in economicconditions may further impact the ability of the Company's customers to meet their obligations to the Company on a timely basis and could result inbankruptcy or receivership filings by any of such customers. If customers are unable to meet their obligations on a timely basis, or if the Company is unableto collect amounts due from customers for any reason, it could adversely impact the realizability of receivables, the valuation of inventories and thevaluation of long-lived assets across the Company's businesses. As part of its credit risk management practices, the Company closely monitors the creditstanding and accounts receivable position of its customer base.As previously disclosed, during the fourth quarter of 2013, the Company recorded a bad debt reserve of $2.6 million on receivables with a large steel millcustomer who filed for protection under the Italian receivership procedures (the "Marzano Law"). During the second quarter of 2014, the customer terminatedits contract with the Company under the provisions of the Marzano Law. As a result, during the second quarter of 2014, the Company recorded an additionalbad debt reserve of $3.9 million on the remaining pre-receivership receivables with this customer.Additionally, the Company recorded a bad debt reserve of $2.6 million during 2014 for one of its Canadian steel mill customers that filed for receivershipprotection during the course of the year, as the Company has previously disclosed. The amount of the bad debt reserve for this customer represents the fullpre-receivership balance.4Table of ContentsOne of the Company's steel mill customers in Europe ceased operations and began the formal process of liquidation in late 2015. The Company previouslyrecorded bad debt reserves of approximately $3 million related to this customer and as a result of these events, recorded an additional bad debt reserve relatedto the remaining receivables balance of $9.9 million during 2015.The Harsco Industrial Segment had two customers in 2015, and one customer in 2014 and 2013, that provided in excess of 10% of the Segment's revenues.The loss of any of these customers would not have a material adverse impact on the Company's financial positions or cash flows; however, it could have amaterial effect on quarterly or annual results of operations.The Harsco Rail Segment had two customers in 2015, one customer in 2014, and two customers in 2013 that provided in excess of 10% of the Segment'srevenues. The loss of any of these customers would not have a material adverse impact on the Company's financial positions or cash flows; however, it couldhave a material effect on quarterly or annual results of operations.(1)(viii) At December 31, 2015, the Company's metals services contracts had estimated future revenues of $3.2 billion at expected production levels,compared with $4.5 billion at December 31, 2014. This decrease is primarily due to exited contracts associated with strategic actions from the Harsco Metals& Minerals Improvement Plan ("Project Orion") related to the focus on underperforming contracts and the impact of foreign currency translation. AtDecember 31, 2015, the Company had an estimated order backlog of $72.9 million in its Harsco Industrial Segment, compared with $146.9 million atDecember 31, 2014. This decrease is primarily due to low oil prices impacting capital expenditures and overall spending by customers in the natural gas,natural gas processing and petrochemical industries. In addition, at December 31, 2015, the Harsco Rail Segment had an estimated order backlog of $292.1million, compared with $348.8 million at December 31, 2014. This decrease is primarily due to shipments which were not replaced due to decreased demand,primarily in the U.S., during 2015.At December 31, 2015, $223.4 million or 61% of the Company's manufactured products order backlog is not expected to be filled in 2016. The remainder ofthis backlog is expected to be filled in 2017 and 2018. This is exclusive of long-term metals industry services contracts, roofing granules and industrialabrasives products, and minerals and metal recovery technologies services.(1)(ix) At December 31, 2015, the Company had no material contracts that were subject to renegotiation of profits or termination at the election of the U.S.Government.(1)(x) The Company's competitive environment is complex because of the wide diversity of services and products provided and the global breadth and depthof markets served. No single service provider or manufacturer competes with the Company with respect to all services provided or products manufactured andsold. In general, on a global basis, the Company's segments are among the market leaders in their respective sectors and compete with a range of global,regional and local businesses of varying size and scope.Harsco Metals & Minerals Segment—This Segment provides outsourced on-site services to the global metals industries in approximately 30 countries, withthe largest operations focused in the U.S., the U.K., France and Brazil. This Segment is one of the world's largest providers of these services. This Segment'skey competitive factors are innovative resource recovery solutions, significant industry experience, technology, safety performance, service and value. ThisSegment competes principally with a number of privately-held businesses for services outsourced by customers. Additionally, due to the nature of thisSegment's services, it encounters a certain degree of "competition" from customers' desire to perform similar services themselves instead of using anoutsourced solution.Harsco Industrial Segment—This Segment includes manufacturing businesses located principally in the U.S. with an increasing focus on internationalgrowth. Key competitive factors include quality, value, technology and energy-efficiency. Primary competitors are U.S.-based manufacturers of similarproducts. In January 2014, the Company acquired Hammco, a provider of process coolers for the natural gas, natural gas processing and petrochemicalindustries.Harsco Rail Segment—This Segment manufactures and sells highly-engineered railway track maintenance equipment produced primarily in the U.S. forcustomers throughout the world. Additionally, this Segment provides railway track maintenance services principally in the U.S. and the U.K. This Segment'skey competitive factors are quality, technology, customer service and value. Primary competitors for both products and services are privately-held globalbusinesses as well as certain regional competitors. In March 2015, the Company acquired Protran, a U.S. designer and producer of safety systems fortransportation and industrial applications; and in April 2015, the Company acquired JK Rail, a provider of after-market parts for railroad track maintenance.5Table of Contents(1)(xi) The Company's expense for research and development activities was $4.5 million, $5.5 million and $10.2 million in 2015, 2014 and 2013,respectively. This excludes technology development and engineering costs classified in cost of services and products sold or selling, general andadministrative expense. For additional information regarding research and development activities, see the Research and Development section included underPart II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."(1)(xii) The Company has become subject to, as have others, stringent air and water quality control legislation. In general, the Company has not experiencedsubstantial difficulty complying with these environmental regulations, and does not anticipate making any material capital expenditures for environmentalcontrol facilities. While the Company expects that environmental regulations may expand, and that its expenditures for air and water quality control willcontinue, it cannot predict the effect on its business of such expanded regulations. For additional information regarding environmental matters see Note 12,Commitments and Contingencies, to the Consolidated Financial Statements included under Part II, Item 8, "Financial Statements and Supplementary Data."(1)(xiii) At December 31, 2015, the Company had approximately 10,800 employees.(d)Financial Information about Geographic AreasFinancial information concerning international and domestic operations is included in Note 16, Information by Segment and Geographic Area, to theConsolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," which information is incorporated herein byreference. Export sales from the U.S. totaled $80.8 million, $134.0 million and $143.7 million in 2015, 2014 and 2013, respectively. The decrease in exportsales from the U.S. is primarily attributable to decreased volumes in the Harsco Rail Segment and the air-cooled heat exchangers business.(e)Available InformationInformation is provided in Part I, Item 1 (a), "General Development of Business."Item 1A. Risk Factors.Set forth below are risks and uncertainties that could materially and adversely affect the Company's results of operations, financial condition, liquidity andcash flows. The risks set forth below are not the only risks faced by the Company. The Company's business operations could also be affected by other factorsnot presently known to the Company or factors that the Company currently does not consider to be material.Negative economic conditions may adversely impact demand for the Company's products and services, as well as the ability of the Company's customers tomeet their obligations to the Company on a timely basis.Negative economic conditions, including the tightening of credit in financial markets, can lead businesses to postpone spending, which may impact theCompany's customers, causing them to cancel, decrease or delay their existing and future orders with the Company. In addition, economic conditions mayfurther impact the ability of the Company's customers by either causing them to close locations serviced by the Harsco Metals & Minerals Segment, or causetheir financial condition to deteriorate to a point where they are unable to meet their obligations to the Company on a timely basis. One or more of theseevents could adversely impact the Company's operating results and realizability of receivables.Cyclical industry and economic conditions may adversely affect the Company's businesses.The Company's businesses are subject to general economic slowdowns and cyclical conditions in each of the industries served. In particular:•The Harsco Metals & Minerals Segment may be adversely impacted by continued slowdowns in steel mill production, excess production capacity,and bankruptcy or receivership of steel producers, as well as a reversal or slowing of current outsourcing trends in the steel industry;•The resource recovery technologies business of the Harsco Metals & Minerals Segment can also be adversely impacted by continued slowdowns incustomer production or a reduction in the selling prices of its materials, which are market-based and vary based upon the current fair value of thecomponents being sold. Therefore, the revenue generated from the sale of such recycled materials varies based upon the fair value of the commoditycomponents being sold;•The industrial abrasives and roofing granules business of the Harsco Metals & Minerals Segment may be adversely impacted by reduced homeresales or economic conditions that slow the rate of residential roof replacement, or by slowdowns in the industrial and infrastructure refurbishmentindustries;6Table of Contents•The air-cooled heat exchangers business of the Harsco Industrial Segment is affected by cyclical conditions in the natural gas, natural gas processingand petrochemical industries. The continued depression of oil prices, or a further decline in such prices, may result in a continued slowdown innatural gas and petrochemical drilling or production, which could adversely affect this business;•Decreasing oil prices may adversely impact purchasing by energy sector customers in the Harsco Industrial Segment;•The industrial grating products business of the Harsco Industrial Segment may be adversely impacted by slowdowns in non-residential constructionand industrial production;•The Harsco Rail Segment may be adversely impacted by developments in the railroad industry that lead to lower capital spending or reduced trackmaintenance spending; and•Capital constraints and increased borrowing costs may also adversely impact the financial position and operations of the Company's customersacross all business segments.Furthermore, realization of deferred tax assets is ultimately dependent on generating sufficient income in future periods to ensure recovery of those assets.The cyclicality of the Company's end markets and adverse economic conditions may negatively impact the future income levels that are necessary for theutilization of deferred tax assets.The seasonality of the Company's business may cause its quarterly results to fluctuate.The Company has historically generated the majority of its cash flows provided by operations in the second half of the year. This is a result of normallyhigher income during the second half of the year, as the Company's business tends to follow seasonal patterns. If the Company is unable to successfullymanage the cash flow and other effects of seasonality on the business, its results of operations may suffer.Increased customer concentration and related credit and commercial risks may adversely impact the Company's results of operations, financial conditionand cash flows.For the year ended December 31, 2015, the Company’s top five customers in the Harsco Metals & Minerals Segment accounted for approximately 38% of theCompany’s revenues in that segment and 24% of the Company’s total revenues.Certain of the several large customers in the Harsco Metals & Minerals Segment have significant accounts receivable balances. If a large customer were toexperience financial difficulty, or file for bankruptcy or receivership protection it could adversely impact the Company's results of operations, cash flows andasset valuations.Disputes with our largest customers, or customers with long term contracts, could adversely affect the Company’s financial condition.The Company routinely enters into multiple contracts with its customers, many of which can be long term contracts. For example, the Company is currentlyparty to multiple contracts in numerous countries with its largest customer, ArcelorMittal, which accounted for almost 10% of its total revenues for the yearended December 31, 2015. These contracts cover a variety of services and vary in contract length. From time to time, the Company may be negotiating theterms of current and potential future services to be rendered due to the scope and complexity of this relationship. Disagreements between the parties can ariseas a result of the scope and nature of the relationship and these ongoing negotiations.In addition, under long term contracts, the Company may incur capital expenditures or other costs at the beginning of the contract that it expects to recoupthrough the life of the contract. Some of these contracts provide for advance payments to assist the Company in covering these costs and expenses. A disputewith a customer during the life of a long term contract could impact the ability of the Company to receive these advance payments or otherwise recoupincurred costs and expenses.The Company's global presence subjects it to a variety of risks arising from doing business internationally.The Company operates in approximately 30 countries, generating 56% of its revenues outside of the U.S. (based on location of the facility generating therevenue) for the year ended December 31, 2015. In addition, as of December 31, 2015, approximately 75% of the Company’s property, plant and equipmentare located outside of the U.S. The Company's global footprint exposes it to a variety of risks that may adversely affect the Company's results of operations,financial condition, liquidity and cash flows. These include, but may not be limited to, the following:•periodic economic downturns in the countries in which the Company does business;•imposition of or increases in currency exchange controls and hard currency shortages;•customs matters and changes in trade policy or tariff regulations;•changes in regulatory requirements in the countries in which the Company does business;•changes in tax regulations, higher tax rates in certain jurisdictions and potentially adverse tax consequences including restrictions on repatriatingearnings, adverse tax withholding requirements and "double taxation";•longer payment cycles and difficulty in collecting accounts receivable;•complexities in complying with a variety of U.S. and foreign government laws, controls and regulations;7Table of Contents•political, economic and social instability, civil and political unrest, terrorist actions and armed hostilities in the regions or countries in which theCompany does business;•inflation rates in the countries in which the Company does business;•complying with complex labor laws in foreign jurisdictions;•laws in various international jurisdictions that limit the right and ability of subsidiaries to pay dividends and remit earnings to affiliated companiesunless specified conditions are met;•sovereign risk related to international governments that include, but may not be limited to, governments stopping interest payments or repudiatingtheir debt, nationalizing private businesses or altering foreign exchange regulations; and•uncertainties arising from local business practices, cultural considerations and international political and trade tensions.The Company has operations in several countries in the Middle East, including Bahrain, Egypt, Israel, Saudi Arabia and Oman, as well as India, some ofwhich have recently experienced armed hostilities and civil unrest. Additionally, these countries are geographically close to other countries that may have acontinued high risk of armed hostilities or civil unrest.If the Company is unable to successfully manage the risks associated with its global business, the Company's results of operations, financial condition,liquidity and cash flows may be negatively impacted.The Board of Directors has determined to explore strategic options for the separation of the Company’s Metals & Minerals Segment; there can be noassurance that the Company will be successful in entering into or consummating a transaction or that any such transaction will yield additional value forstockholders.On November 9, 2015, the Company announced that the Board of Directors had authorized a process to explore a range of strategic options for the separationof the Company’s Harsco Metals & Minerals Segment from the Harsco Industrial and Rail Segments and Brand joint venture. There can be no assurances thatany such process will result in a sale, spin-off or any other transaction being entered into or consummated. The process may be time-consuming, distracting tomanagement and disruptive to the Company's business operations, and if the Company is unable to effectively manage the process, the business, financialcondition, and results of operations could be adversely affected. In addition, identifying and evaluating potential strategic options may result in theincurrence of additional expenses. Any strategic decision will involve risks and uncertainties, and the Company cannot guarantee that any potential transaction or other strategic option, ifidentified, evaluated and consummated, will provide greater value to the Company's stockholders than that reflected in the current stock price. Any potentialtransaction would be dependent upon a number of factors that may be beyond the Company's control, including, among other factors, market conditions,industry trends and the interest of third parties in the Harsco Metals & Minerals Segment. The Company has not set a specific timetable for completion of this process and does not intend to discuss or disclose developments with respect to theprocess unless and until such time as the Board of Directors has approved a definitive course of action or otherwise deems disclosure to be required orappropriate. As a consequence, perceived uncertainties related to the future of the Company’s Harsco Metals & Minerals Segment may result in the loss ofpotential business opportunities and may make it more difficult for the Company to attract and retain qualified personnel and business partners. Due to the international nature of the Company's business, the Company could be adversely affected by violations of certain laws.The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediariesfrom making improper payments to officials for the purpose of obtaining or retaining business. The FCPA also imposes accounting standards andrequirements on publicly traded U.S. corporations and their foreign affiliates, which, among other things, are intended to prevent the diversion of corporatefunds to the payment of bribes and other improper payments, and to prevent the establishment of “off the books” slush funds from which improper paymentscan be made. The Company may not always prevent reckless or criminal acts by its employees or agents and may be exposed to liability due to pre-acquisition conduct of employees or agents of businesses or operations the Company may acquire. Violations of these laws, or allegations of such violations,could disrupt the Company’s operations, involve significant management distraction and have a material adverse effect on the Company’s results ofoperations, financial condition and cash flows. If the Company is found to be liable for violations of these laws (either due to its own acts, out of inadvertenceor due to the acts or inadvertence of others), the Company could also be subject to severe criminal or civil penalties or other sanctions, disgorgement, furtherchanges or enhancements to its procedures, policies and controls, personnel changes and other remedial actions.8Table of ContentsFurthermore, the Company is subject to the export controls and economic embargo rules and regulations of the U.S., including the Export AdministrationRegulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Asset Control within the Department ofTreasury (“OFAC”), as well as other laws and regulations administered by the Department of Commerce. These regulations limit the Company’s ability tomarket, sell, distribute or otherwise transfer its products to prohibited countries or persons. Failure to comply with these rules and regulations may result insubstantial civil and criminal penalties, including fines and disgorgement of profits, the imposition of a court-appointed monitor, the denial of exportprivileges and debarment from participation in U.S. government contracts.The Company is subject to potential disruption of its access to credit.Disruptions in the credit markets have severely restricted access to capital for companies. When credit markets deteriorate, the Company's ability to incuradditional indebtedness to fund operations or refinance maturing obligations as they become due may be constrained. This risk could be exacerbated byfuture deterioration in the Company's credit ratings. The Company is unable to predict any duration or severity of disruptions in the credit and financialmarkets and adverse global economic conditions.Exchange rate fluctuations may adversely impact the Company's business.Fluctuations in foreign exchange rates between the U.S. dollar and the approximately 25 other currencies in which the Company currently conducts businessmay adversely impact the Company's results of operations in any given fiscal period. The Company’s principal foreign currency exposures are in theEuropean Economic and Monetary Union, the U.K. and Brazil. Given the structure of the Company's operations, an increase in the value of the U.S. dollarrelative to the foreign currencies in which the Company earns its revenues generally has a negative impact on the translated amounts of the assets andliabilities, results of operations, and cash flows. The Company's foreign currency exposures increase the risk of volatility in its financial position, results ofoperations and cash flows. If currencies in the below regions change materially in relation to the U.S. dollar, the Company's financial position, results ofoperations, or cash flows may be materially affected.Compared with the corresponding full-year period in 2014, the average value of major currencies changed as follows in relation to the U.S. dollar during thefull-year 2015, impacting the Company's revenues and income:•British pound sterling weakened by 7%•euro weakened by 16%•Brazilian real weakened by 30%Compared with exchange rates at December 31, 2014, the value of major currencies at December 31, 2015 changed as follows:•British pound sterling weakened by 5%•euro weakened by 10%•Brazilian real weakened by 33%To illustrate the effect of foreign exchange rate changes in certain key markets of the Company, in 2015 revenues would have been approximately 10% or$170 million higher and operating income would have been approximately 2% or $2 million greater if the average exchange rates for 2014 were utilized. In asimilar comparison for 2014, revenues would have been approximately 1% or $20 million higher and operating income would have been approximately 3%or $2 million greater if the average exchange rates for 2013 were utilized.Currency changes also result in assets and liabilities denominated in local currencies being translated into U.S. dollars at different amounts than at the priorperiod end. Generally, if the U.S. dollar weakens in relation to currencies in countries in which the Company does business, the translated amounts of therelated assets, liabilities, and therefore stockholders' equity, would increase. Conversely, if the U.S. dollar strengthens in relation to currencies in countries inwhich the Company does business, the translated amounts of the related assets, liabilities, and therefore stockholders' equity, would decrease.Although the Company engages in foreign currency exchange forward contracts and other hedging strategies to mitigate foreign exchange transactionalrisks, hedging strategies may not be successful or may fail to completely offset these risks. In addition, competitive conditions in the Company'smanufacturing businesses may limit the Company's ability to increase product prices in the face of adverse currency movement. Sales of productsmanufactured in the U.S. for the domestic and export markets may be affected by the value of the U.S. dollar relative to other currencies. Any long-termstrengthening of the U.S. dollar could depress demand for these products and reduce sales. Conversely, any long-term weakening of the U.S. dollar couldimprove demand for these products and increase sales.9Table of ContentsThe Company may lose customers or be required to reduce prices as a result of competition.The industries in which the Company operates are highly competitive:•The Harsco Metals & Minerals Segment is sustained mainly through contract renewals and new contract signings. The Company may be unable torenew contracts at historical price levels or to obtain additional contracts at historical rates as a result of competition. If the Company is unable torenew its contracts at the historical rates or renewals are made at reduced prices, or if its customers terminate their contracts, revenue and results ofoperations may decline.•The Harsco Industrial and Harsco Rail Segments compete with companies that manufacture similar products both internationally and domestically.Certain international competitors export their products into the U.S. and sell them at lower prices, which can be the result of lower labor costs andgovernment subsidies for exports. Such practices may limit the prices the Company can charge for its products and services. Additionally,unfavorable foreign exchange rates can adversely impact the Company's ability to match the prices charged by international competitors. If theCompany is unable to match the prices charged by international competitors, it may lose customers.Restrictions imposed by the Company's credit facility and other financing arrangements may limit the Company's operating and financial flexibility.The agreements governing the Company's outstanding financing arrangements impose a number of restrictions. For example, the Company's Senior SecuredCredit Facility and the indentures governing the 5.75% Senior Notes due 2018 contain certain restrictions and covenants which restrict the Company'sability to incur liens and/or debt or provide guarantees in respect of obligations of any subsidiary. Under the Company's Senior Secured Credit Facility, theCompany must comply with certain financial covenants on a quarterly basis. The covenants also place limitations on dividends, acquisitions, investments injoint ventures, unrestricted subsidiaries, indebtedness and the imposition of liens on the Company's assets. In the event of a default, the Company's lendersand the counterparties to the Company's other financing arrangements could terminate their commitments to the Company and declare all amounts borrowed,together with accrued interests and fees, immediately due and payable. If this were to occur, the Company might not be able to pay these amounts, or theCompany might be forced to seek an amendment to the Company's financing arrangements which could make the terms of these arrangements more onerousfor the Company. In addition, this could also trigger an event of default under the cross-default provisions of the Company's other obligations. As a result, adefault under one or more of the existing or future financing arrangements could have significant consequences for the Company.The Company is exposed to counterparty risk in its derivative financial arrangements.The Company uses derivative financial instruments, such as cross-currency interest rate swaps ("CCIRs") and foreign currency exchange forward contracts, fora variety of purposes. The Company uses CCIRs in conjunction with certain debt issuances in order to secure either a fixed or floating local currency interestrate. The Company uses foreign currency exchange forward contracts as part of a worldwide program to minimize foreign currency operating income andbalance sheet exposure. In particular, the Company uses foreign currency exchange forward contracts to hedge commitments, such as foreign currency debt,firm purchase commitments and foreign currency cash flows for certain export sales transactions. The unsecured contracts for CCIRs and foreign currencyexchange forward contracts outstanding at December 31, 2015 mature at various times through 2020 and are with major financial institutions. The Companymay also enter into derivative contracts to hedge commodity exposures.The failure of one or more counterparties to the Company's derivative financial instruments to fulfill their obligations could adversely affect the Company'sresults of operations, financial condition, liquidity and cash flows.The Company’s variable rate indebtedness subjects it to interest rate risk, which could cause the Company's debt service obligations to increasesignificantly.The Company's total debt at December 31, 2015 was $911.1 million. Of this amount, approximately 50% had variable rates of interest, and approximately50% had fixed rates of interest. The weighted average interest rate of total debt was approximately 4.6%. At debt levels as of December 31, 2015, a onepercentage point increase/decrease in variable interest rates would increase/decrease interest expense by $4.6 million per year. If the Company is unable tosuccessfully manage its exposure to variable interest rates, its debt service obligations may increase even though the amount borrowed remains the same, andin turn, its results of operations and financial condition may be negatively impacted.Additionally, whenever the Company refinances fixed rate debt, the new interest rates may negatively impact the Company's results of operations. Theinterest rates associated with new fixed rate debt are impacted by several factors including, but not limited to, market conditions, term of the borrowings andthe financial results and currency.10Table of ContentsThe Company is subject to taxes in numerous jurisdictions. Legislative, regulatory and legal developments involving income taxes could materiallyadversely affect the Company’s results of operations and cash flows and impact the Company’s ability to compete abroad.The Company is subject to U.S. federal, U.S. state and international income, payroll, property, sales and use, value-added, fuel and other types of taxes innumerous jurisdictions. Significant judgment is required in determining the Company's worldwide provisions for income taxes. Changes in tax rates,enactments of new tax laws, revisions of tax regulations, and claims or litigation with taxing authorities could result in substantially higher taxes, andtherefore, could have a significant adverse effect on the Company's results of operations, financial condition and liquidity.Currently, a majority of the Company's revenue is generated from customers located outside the U.S., and a substantial portion of the Company's assets andemployees are located internationally. U.S. income tax and withholding taxes have not been provided on undistributed earnings for certain non-U.S.subsidiaries as such earnings are indefinitely reinvested in the operations of those subsidiaries. Any U.S. tax reform that reduces the Company's ability todefer U.S. taxes on earnings indefinitely reinvested outside of the U.S. could have a negative impact on the Company's ability to compete in the globalmarketplace.The Company's defined benefit net periodic pension cost is directly affected by the equity and bond markets. A downward trend in those markets couldadversely impact the Company's results of operations, financial condition and cash flows.In addition to the economic issues that directly affect the Company's businesses, changes in the performance of equity and bond markets, particularly in theU.K. and the U.S., impact actuarial assumptions used in determining annual net periodic pension cost ("NPPC"), pension liabilities and the valuation of theassets in the Company's defined benefit pension plans. Financial market deterioration would most likely have a negative impact on the Company's NPPC andthe pension assets and liabilities. This could result in a decrease to stockholders' equity and an increase in the Company's statutory funding requirements.In addition to the Company's defined benefit pension plans, the Company also participates in several multiemployer pension plans ("MEPPs") throughout theworld. Within the U.S., the Pension Protection Act of 2006 may require additional funding for MEPPs that could cause the Company to be subject to highercash contributions in the future. Additionally, market conditions and the number of participating employers remaining in each plan may affect the fundedstatus of MEPPs and consequently any Company withdrawal liability, if applicable.A negative outcome on personal injury claims against the Company may adversely impact results of operations and financial condition.The Company has been named as one of many defendants (approximately 90 or more in most cases) in legal actions alleging personal injury from exposure toairborne asbestos over the past several decades. In their suits, the plaintiffs have named as defendants, among others, many manufacturers, distributors andinstallers of numerous types of equipment or products that allegedly contained asbestos. The majority of the asbestos complaints pending against theCompany have been filed in New York. Almost all of the New York complaints contain a standard claim for damages of $20 million or $25 million againstthe approximately 90 defendants, regardless of the individual plaintiff's alleged medical condition, and without specifically identifying any of theCompany’s products as the source of plaintiff's asbestos exposure. If the Company is found to be liable in any of these actions and the liability exceeds theCompany's insurance coverage, results of operations, cash flows and financial condition could be adversely affected.The nature of the Company’s products creates the possibility of significant product liability and warranty claims, which could harm its business.The Company’s customers use some of its products in potentially hazardous applications that can cause injury or loss of life and damage to property,equipment or the environment. In addition, the Company’s products are integral to the production process for some end-users and any failure of theCompany’s products could result in a suspension of operations. Accidents may occur at a location where the Company’s equipment and services have been orare being used. Investigations into such accidents, even if the Company and its products are ultimately found not to be the cause of such accidents, requirethe Company to expend significant time, effort and resources. The Company cannot be certain that its products will be completely free from defects. TheCompany may be named as a defendant in product liability or other lawsuits asserting potentially large claims. In addition, the Company cannot guaranteethat insurance will be available or adequate to cover any or all liabilities incurred. The Company also may not be able to maintain insurance in the future atlevels it believes are necessary and at rates it considers reasonable.11Table of ContentsHigher than expected claims under insurance policies, under which the Company retains a portion of the risk, could adversely impact results of operationsand cash flows.The Company retains a significant portion of the risk for property, workers' compensation, U.K. employers' liability, automobile and general and productliability losses. Reserves have been recorded that reflect the undiscounted estimated liabilities for ultimate losses, including claims incurred but not reported.Inherent in these estimates are assumptions that are based on the Company's history of claims and losses, a detailed analysis of existing claims with respect topotential value, and current legal and legislative trends. If actual claims are higher than those projected by management, an increase to the Company'sinsurance reserves may be required and would be recorded as a charge to income in the period the need for the change was determined.Increases or decreases in purchase prices (or selling prices) or availability of steel or other materials and commodities may affect the Company'sprofitability.The profitability of the Company's manufactured products is affected by changing purchase prices of raw material, including steel and other materials andcommodities. If raw material costs associated with the Company's manufactured products increase and the costs cannot be transferred to the Company'scustomers, results of operations would be adversely affected. Additionally, decreased availability of steel or other materials could affect the Company'sability to produce manufactured products in a timely manner. If the Company cannot obtain the necessary raw materials for its manufactured products, thenrevenues, results of operations and cash flows could be adversely affected.Certain services performed by the Harsco Metals & Minerals Segment result in the recovery, processing and sale of recovered metals and minerals and otherhigh-value metal by-products to its customers. The selling price of the by-products material is market-based and varies based upon the current fair value of itscomponents. Therefore, the revenue amounts generated from the sale of such by-products material vary based upon the fair value of the commoditycomponents being sold.The success of the Company's strategic ventures depends on the satisfactory performance by strategic venture partners of their strategic ventureobligations.The Company enters into various strategic ventures as part of its strategic growth initiatives as well as to comply with local laws. Differences in opinions orviews between strategic venture partners can result in delayed decision-making or failure to agree on material issues which could adversely affect thebusiness and operations of the venture. From time to time in order to establish or preserve a relationship, or to better ensure venture success, the Companymay accept risks or responsibilities for the strategic venture that are not necessarily proportionate with the reward it expects to receive. The success of theseand other strategic ventures also depends, in large part, on the satisfactory performance by the Company's strategic venture partners of their strategic ventureobligations, including their obligation to commit working capital, equity or credit support as required by the strategic venture and to support theirindemnification and other contractual obligations.If the Company's strategic venture partners fail to satisfactorily perform their strategic venture obligations as a result of financial or other difficulties, thestrategic venture may be unable to adequately perform or deliver its contracted services. Under these circumstances, the Company may be required to makeadditional investments and provide additional services to ensure the adequate performance and delivery of the contracted services. These additionalobligations could result in reduced profits or, in some cases, increased liabilities or significant losses for the Company with respect to the strategic venture. Inaddition, although the Company generally performs due diligence with regard to potential strategic partners or ventures, a failure by a strategic venturepartner to comply with applicable laws, rules or regulations could negatively impact its business and, in the case of government contracts, could result infines, penalties, suspension or even debarment. Unexpected strategic venture developments could have a material adverse effect on results of operations,financial condition and cash flows.The Company is subject to various environmental laws, and the success of existing or future environmental claims against it could adversely impact theCompany's results of operations and cash flows.The Company's operations are subject to various federal, state, local and international laws, regulations and ordinances relating to the protection of health,safety and the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous wastes, theremediation of contaminated sites and the maintenance of a safe workplace. These laws impose penalties, fines and other sanctions for non-compliance andliability for response costs, property damages and personal injury resulting from past and current spills, disposals or other releases of, or exposure to,hazardous materials. The Company could incur substantial costs as a result of non-compliance with or liability for remediation or other costs or damagesunder these laws. The Company may be subject to more stringent environmental laws in the future, and compliance with more stringent environmentalrequirements may require the Company to make material expenditures or subject it to liabilities that the Company currently does not anticipate.12Table of ContentsThe Company is currently involved in a number of environmental remediation investigations and cleanups and, along with other companies, has beenidentified as a "potentially responsible party" for certain waste disposal sites under the federal "Superfund" law. At several sites, the Company is currentlyconducting environmental remediation, and it is probable that the Company will agree to make payments toward funding certain other of these remediationactivities. It also is possible that some of these matters will be decided unfavorably to the Company and that other sites requiring remediation will beidentified. Each of these matters is subject to various uncertainties, and financial exposure is dependent upon such factors as:•the continuing evolution of environmental laws and regulatory requirements;•the availability and application of technology;•the allocation of cost among potentially responsible parties;•the years of remedial activity required; and•the remediation methods selected.The Company’s ongoing operations are subject to extensive laws, regulations, rules and ordinances relating to safety, health and environmental mattersthat impose significant costs and liabilities on the Company, and future laws and governmental standards could increase these costs and liabilities.The Company is subject to a variety of international, federal, state and local laws and governmental regulations, rules and ordinances regulating the use ofcertain materials contained in its products and/or used in its manufacturing processes. Many of these laws and governmental standards provide for extensiveobligations that require the Company to incur significant compliance costs, and impose substantial monetary fines and/or criminal sanctions for violations.Furthermore, such laws and standards are subject to change and may become more stringent. For example, the U.S. Occupational Safety and HealthAdministration is reviewing its worker safety standards related to exposure to beryllium, which is a trace component of BLACK BEAUTY® abrasives sold byHarsco Metals & Minerals Segment. Although it is not possible to predict changes in laws or other governmental standards, the development, proposal oradoption of more stringent laws or governmental standards may require the Company to change its manufacturing processes, for example by reducing oreliminating use of the regulated component or material in its manufacturing process. The Company may not be able to develop a new manufacturing processto comply with such legal and regulatory changes without investing significant time and resources, if at all. In addition, such legal and regulatory changesmay also affect buying decisions by the users of the Company’s products that contain regulated materials or that involve the use of such materials in themanufacturing process. If applicable laws and governmental standards become more stringent, the Company’s results of operations, liquidity and financialcondition could be materially adversely affected.The Company maintains a workforce based upon current and anticipated workload. If the Company does not receive future contract awards or if theseawards are delayed, significant cost may result that could have a material adverse effect on results of operations, financial condition, liquidity and cashflows.The Company's estimates of future performance depend on, among other matters, whether and when the Company will receive certain new contract awards,including the extent to which the Company utilizes its workforce. The rate at which the Company utilizes its workforce is impacted by a variety of factors,including:•the ability to manage attrition;•the ability to forecast the need for services, which allows the Company to maintain an appropriately sized workforce;•the ability to transition employees from completed projects to new projects or between segments; and•the need to devote resources to non-revenue generating activities such as training or business development.While the Company's estimates are based upon its good faith judgment, these estimates can be unreliable and may frequently change based on newlyavailable information. In the case of large-scale domestic and international projects where timing is often uncertain, it is particularly difficult to predictwhether and when the Company will receive a contract award. The uncertainty of contract award timing can present difficulties in matching the Company'sworkforce size with contract needs. If an expected contract award is delayed or not received, the Company could incur cost resulting from reductions in staffor redundancy of facilities or equipment that could have a material adverse effect on results of operations, financial condition, liquidity and cash flows.Increased information technology security threats and more sophisticated computer crime pose a risk to the Company's systems, networks, products andservices.The Company relies upon information technology systems and networks in connection with a variety of business activities, some of which are managed bythird parties. Additionally, the Company collects and stores data that is of a sensitive nature. The secure operation of these information technology systemsand networks, and the processing and maintenance of this data is critical to the Company's business operations and strategy. Information technology securitythreats - from user error to attacks designed to gain unauthorized access to the Company's systems, networks and data - are increasing in frequency andsophistication. Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer13Table of Contentscrime and advanced persistent threats. These threats pose a risk to the security of the Company's systems and networks and the confidentiality, availabilityand integrity of the Company's data. Should an attack on the Company's information technology systems and networks succeed, it could expose theCompany and the Company's employees, customers, dealers and suppliers to misuse of information or systems, the compromising of confidential information,manipulation and destruction of data, production downtimes and operations disruptions. The occurrence of any of these events could adversely affect theCompany's reputation, competitive position, business, results of operations and cash flows. In addition, such breaches in security could result in litigation,regulatory action, potential liability and the costs and operational consequences of implementing further data protection measures.The Company's intellectual property portfolio may not prevent competitors from independently developing similar or duplicative products and services.The Company's patents and other intellectual property may not prevent competitors from independently developing or selling similar or duplicative productsand services, and there can be no assurance that the resources invested by the Company to protect the Company's intellectual property will be sufficient orthat the Company's intellectual property portfolio will adequately deter misappropriation or improper use of the Company's technology. The Company couldalso face competition in some countries where the Company has not invested in an intellectual property portfolio. The Company may also face attempts togain unauthorized access to the Company's information technology systems or products for the purpose of improperly acquiring trade secrets or confidentialbusiness information. The theft or unauthorized use or publication of the Company's trade secrets and other confidential business information as a result ofsuch an incident could adversely affect the Company's competitive position and the value of the Company's investment in research and development. TheCompany may be unable to secure or retain ownership or rights to use data in certain software analytics or services offerings. In addition, the Company maybe the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims,responding to infringement claims can be expensive and time-consuming. If the Company is found to infringe any third-party rights, the Company could berequired to pay substantial damages or could be enjoined from offering some of the Company's products and services. Also, there can be no assurances thatthe Company will be able to obtain or renew from third parties the licenses needed in the future, and there is no assurance that such licenses can be obtainedon reasonable terms.Union disputes or other labor matters could adversely affect the Company's operations and financial results.A significant portion of the Company's employees are represented by labor unions in a number of countries under various collective bargaining agreementswith varying durations and expiration dates. There can be no assurance that any current or future issues with the Company's employees will be resolved orthat the Company will not encounter future strikes, work stoppages or other types of conflicts with labor unions or the Company's employees. The Companymay not be able to satisfactorily renegotiate collective bargaining agreements in the U.S. and other countries when they expire. If the Company fails torenegotiate existing collective bargaining agreements, the Company could encounter strikes or work stoppages or other types of conflicts with labor unions.In addition, existing collective bargaining agreements may not prevent a strike or work stoppage at the Company's facilities in the future. The Company mayalso be subject to general country strikes or work stoppages unrelated to the Company's business or collective bargaining agreements. A work stoppage orother limitations on production at the Company's facilities for any reason could have an adverse effect on the Company's business, results of operations,financial condition and cash flows. In addition, many of the Company's customers and suppliers have unionized work forces. Strikes or work stoppagesexperienced by the Company's customers or suppliers could have an adverse effect on the Company's business, results of operations and financial condition.If the Company cannot generate future cash flows at a level sufficient to recover the net book value of any reporting units, the Company may be required torecord an impairment charge to earnings.As a result of the Company's goodwill impairment testing, the Company may be required to record future impairment charges to the extent it cannot generatefuture cash flows at a level sufficient to recover the net book value of any of the Company's reporting units. The Company's estimates of fair value are basedon assumptions about the future operating cash flows and growth rates of each reporting unit and discount rates applied to these cash flows. Based on theuncertainty of future growth rates, restructuring savings and other assumptions used to estimate goodwill recoverability, future reductions in the Company'sexpected cash flows could cause a material non-cash goodwill impairment charge, which could have a material adverse effect on the Company's results ofoperations and financial condition.Item 1B. Unresolved Staff Comments.None.14Table of ContentsItem 2. Properties.Operations of Harsco Corporation and its subsidiaries are conducted at both owned and leased properties in domestic and international locations. TheCompany's executive offices are located at 350 Poplar Church Road, Camp Hill, Pennsylvania 17011 and are owned. The following table describes thelocation and principal use of the Company's more significant properties.Location Principal Products InterestHarsco Metals & Minerals Segment Coronel Fabriciano, Brazil Minerals and Resource Recovery Technologies OwnedEast Chicago, Indiana, U.S. Minerals and Resource Recovery Technologies OwnedSarver, Pennsylvania, U.S. Minerals and Resource Recovery Technologies OwnedSorel—Tracy, Canada Minerals and Resource Recovery Technologies LeasedTaiyuan City, China Minerals and Resource Recovery Technologies Owned and LeasedWarren, Ohio, U.S. Minerals and Resource Recovery Technologies OwnedDrakesboro, Kentucky, U.S. Roofing Granules/Abrasives OwnedGary, Indiana, U.S. Roofing Granules/Abrasives OwnedFairless Hills, Pennsylvania, U.S. Roofing Granules/Abrasives Owned Moundsville, West Virginia, U.S. Roofing Granules/Abrasives LeasedHarsco Rail Segment Brendale, Australia Rail Maintenance Equipment OwnedLudington, Michigan, U.S. Rail Maintenance Equipment OwnedWest Columbia, South Carolina, U.S. Rail Maintenance Equipment OwnedHarsco Industrial Segment Broken Arrow, Oklahoma, U.S. Heat Exchangers LeasedEast Stroudsburg, Pennsylvania, U.S. Heat Transfer Products OwnedChannelview, Texas, U.S. Industrial Grating Products OwnedGarrett, Indiana, U.S. Industrial Grating Products LeasedLeeds, Alabama, U.S. Industrial Grating Products OwnedQueretaro, Mexico Industrial Grating Products OwnedThe Harsco Metals business, which is part of the Harsco Metals & Minerals Segment, principally operates on customer-owned sites and has administrativeoffices in Camp Hill, Pennsylvania, and Leatherhead, U.K.The above table includes the principal properties owned or leased by the Company. The Company also operates from a number of other smaller plants,warehouses and offices in addition to the above. The Company considers all of its properties at which operations are currently performed to be in satisfactorycondition and suitable for their intended use.Item 3. Legal Proceedings.Information regarding legal proceedings is included in Note 12, Commitments and Contingencies, to the Consolidated Financial Statements under Part II,Item 8, "Financial Statements and Supplementary Data."Item 4. Mine Safety Disclosures.Not applicable.15Table of ContentsSupplementary Item. Executive Officers of the RegistrantSet forth below, at February 26, 2016, are the executive officers of the Company and certain information with respect to each of them. There are no familyrelationships among any of the executive officers.Name Age Position with the CompanyExecutive Officers: F. Nicholas Grasberger, III 52 President and Chief Executive OfficerPeter F. Minan 54 Senior Vice President and Chief Financial OfficerRussell C. Hochman 51 Senior Vice President and General Counsel, Chief Compliance Officer & Corporate SecretaryScott H. Gerson 45 Senior Vice President and Group President–Harsco IndustrialScott W. Jacoby 49 Senior Vice President and Group President–Harsco RailTracey L. McKenzie 48 Senior Vice President and Chief Human Resources OfficerF. Nicholas Grasberger, IIIPresident and Chief Executive Officer since August 1, 2014, and became a member of the Board of Directors on April 29, 2014. Served as Senior VicePresident and Chief Financial Officer from April 22, 2013 to November 11, 2014, and President and Chief Operating Officer from April 8, 2014 to August 1,2014. Prior to joining the Company, Mr. Grasberger was Managing Director of Fenner Plc’s Precision Polymer division from March 2011 to April 2013. FromApril 1, 2009 to November 9, 2009 he served as Executive Vice President and Chief Executive Officer of Armstrong Building Products. From January 2005 toMarch 31, 2009 he served as Senior Vice President and Chief Financial Officer of Armstrong World Industries, Inc. Prior to his employment with Armstrong,Mr. Grasberger served as Vice President and Chief Financial Officer of Kennametal Inc. from 2000 to 2004.Peter F. MinanSenior Vice President and Chief Financial Officer since November 11, 2014. Mr. Minan has an extensive background in global financial managementacquired through a nearly 30-year career with KPMG from 1983 to 2012. He became a partner at KPMG in 1993 and served as global lead partner for severalmulti-national Fortune 500 industrial and consumer audits. His roles included National Managing Partner, U.S. Audit practice, and Partner in Charge,Washington/Baltimore Audit practice. His most recent role was with Computer Sciences Corporation, where he served as Vice President of Enterprise RiskManagement and Internal Audit from 2012 to 2013.Russell C. HochmanSenior Vice President and General Counsel, Chief Compliance Officer and Corporate Secretary. Prior to joining the Company in 2013 he served in seniorlegal roles with Pitney Bowes Inc. and leading law firms based in New York. He holds a J.D. from Albany Law School of Union University and a B.A. fromCornell University.Scott H. GersonSenior Vice President and Group President–Harsco Industrial since January 25, 2011. Served as Vice President and Group President– Harsco Industrial andChief Information Officer from July 6, 2010 to January 24, 2011. Served as Chief Information Officer from April 4, 2005 to July 6, 2010. Prior to joining theCompany on April 4, 2005, Mr. Gerson was with Kulicke & Soffa Industries, Inc., where he served as IT director of their worldwide application services. Hehas also served in IT management capacities with Compaq Computers and TRW Inc.Scott W. JacobySenior Vice President and Group President–Harsco Rail since July 6, 2010. Served as President of Harsco Rail from April 2009 to July 2010. Served as VicePresident and General Manager of Harsco Track Technologies from August 2007 to April 2009. Served as Vice President and General Manager of Air- X-Changers from April 2005 to August 2007. Prior to that, Mr. Jacoby held senior management positions in the Harsco Industrial business group. Prior tojoining the Company in 1995, Mr. Jacoby began his career with Mack Trucks.Tracey L. McKenzieSenior Vice President and Chief Human Resources Officer since September 2014. Prior to joining Harsco in September 2014, Ms. McKenzie served as GlobalHR Vice President for JLG Industries, a leader in the manufacturing sector for advanced aerial lift systems. Ms. McKenzie previously held executive levelHR positions in her native Australia, and at Pacific Scientific Aerospace (a division of Danaher). 16Table of ContentsPART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Harsco Corporation common stock is listed on the New York Stock Exchange. At December 31, 2015, there were 80,094,365 shares outstanding. In 2015, theCompany's common stock traded in a range of $7.69 to $19.12 and closed at $7.88 at year-end. At December 31, 2015, there were approximately 18,500stockholders. The Company's Senior Secured Credit Facilities contain limitations on the payment of dividends. For additional information regarding HarscoCorporation's common stock market price and dividends declared, see Dividend Action under Part II, Item 7, "Management's Discussion and Analysis ofFinancial Condition and Results of Operations," and the Common Stock Price and Dividend Information under Part II, Item 8, "Financial Statements andSupplementary Data." For additional information on the Company's equity compensation plans see Part III, Item 11, "Executive Compensation." Foradditional information on the Company's limitations on the payment of dividends, see Liquidity and Capital Resources under Part II, Item 7, "Management'sDiscussion and analysis of Financial Condition and Results of Operations" and Note 8, Debt and Credit Agreements, to the Consolidated FinancialStatements under Part II, Item 8, "Financial Statements and Supplementary Data."Stock Performance Graph 12/1012/1112/1212/1312/1412/15Harsco Corporation100.0074.7388.74109.4276.3833.78S&P Midcap 400100.0098.27115.84154.64169.75166.05Dow Jones US Diversified Industrials100.00100.80121.77173.08174.90197.3617Table of ContentsItem 6. Selected Financial Data.Five-Year Statistical Summary(In thousands, except per share,employee information and percentages) 2015 2014 2013 (a) 2012 2011 Statement of operations information Revenues from continuingoperations $1,723,092 $2,066,288 $2,895,970 $3,046,018 $3,305,235 Amounts attributable to Harsco Corporation common stockholders Income (loss) from continuingoperations $7,168 $(22,281) $(231,356) $(258,889) $(8,379) Income (loss) from discontinuedoperations (980) 110 (1,492) (919) (2,063) Net income (loss) 6,188 (22,171) (232,848) (259,808) (10,442) Financial position and cash flow information Working capital $158,399 $117,919 $229,599 $431,594 $376,874 Total assets 2,071,327 2,269,227 2,446,517 2,979,538 3,337,213 Long-term debt 855,751 829,709 783,158 957,428 853,800 Total debt 911,064 871,645 810,904 969,266 908,772 Depreciation and amortization 156,475 176,326 237,041 272,117 310,441 Capital expenditures (123,552) (208,859) (245,551) (264,738) (313,101) Cash provided by operatingactivities 121,507 226,727 187,659 198,594 298,776 Cash provided (used) by investingactivities (130,373) (229,561) 63,281 (218,983) (255,822) Cash provided (used) by financingactivities 22,454 (21,794) (248,664) (4,546) (39,554) Ratios Return on average equity (b) 2.3% (4.0)% (30.0)% (22.2)% (0.6)% Current ratio (c) 1.3:1 1.2:1 1.4:1 1.7:1 1.5:1 Per share information attributable to Harsco Corporation common stockholders Basic—Income (loss) fromcontinuing operations $0.09 $(0.28) $(2.86) $(3.21) $(0.10) Loss from discontinuedoperations (0.01) — (0.02) (0.01) (0.03) Net income (loss) $0.08 $(0.27)(d)$(2.88) $(3.22) $(0.13) Diluted—Income (loss) fromcontinuing operations $0.09 $(0.28) $(2.86) $(3.21) $(0.10) Loss from discontinuedoperations (0.01) — (0.02) (0.01) (0.03) Net income (loss) $0.08 $(0.27)(d)$(2.88) $(3.22) $(0.13) Other information Book value per share (e) $3.88 $4.36 $7.41 $10.64 $15.17 Cash dividends declared per share 0.666 0.820 0.820 0.820 0.820 Diluted weighted-average numberof shares outstanding 80,365 80,884 80,755 80,632 80,736 Number of employees 10,800 12,200 12,300 18,500 19,650 (a)Includes impacts of the Infrastructure Transaction consummated on November 26, 2013.(b)Return on average equity is calculated by dividing income (loss) from continuing operations by average Harsco Corporation stockholders' equity throughout the year.(c)Current ratio is calculated by dividing total current assets by total current liabilities.(d)Does not total due to rounding.(e)Book value per share is calculated by dividing total equity by shares outstanding.18Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.The following discussion should be read in conjunction with the Consolidated Financial Statements of Harsco Corporation (the "Company") provided underPart II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.Amounts included in this Item 7 of this Annual Report on Form 10-K are rounded in millions and all percentages are calculated based on actual amounts. Asa result, minor differences may exist due to rounding.Forward-Looking StatementsThe nature of the Company's business and the many countries in which it operates subject it to changing economic, competitive, regulatory andtechnological conditions, risks and uncertainties. In accordance with the "safe harbor" provisions of Section 27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934, the Company provides the following cautionary remarks regarding important factors that, among others, couldcause future results to differ materially from the results contemplated by forward-looking statements, including the expectations and assumptions expressedor implied herein. Forward-looking statements contained herein could include, among other things, statements about management's confidence in andstrategies for performance; expectations for new and existing products, technologies and opportunities; and expectations regarding growth, sales, 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.Factors that could cause actual results to differ, perhaps materially, from those implied by forward-looking statements include, but are not limited to: (1)changes in the worldwide business environment in which the Company operates, including general economic conditions; (2) changes in currency exchangerates, interest rates, commodity and fuel costs and capital costs; (3) changes in the performance of equity and bond markets that could affect, among otherthings, the valuation of the assets in the Company's pension plans and the accounting for pension assets, liabilities and expenses; (4) changes ingovernmental laws and regulations, including environmental, occupational health and safety, tax and import tariff standards; (5) market and competitivechanges, including pricing pressures, market demand and acceptance for new products, services and technologies; (6) the Company's inability or failure toprotect its intellectual property rights from infringement in one or more of the many countries in which the Company operates; (7) failure to effectivelyprevent, detect or recover from breaches in the Company's cybersecurity infrastructure; (8) unforeseen business disruptions in one or more of the manycountries in which the Company operates due to political instability, civil disobedience, armed hostilities, public health issues or other calamities; (9)disruptions associated with labor disputes and increased operating costs associated with union organization; (10) the seasonal nature of the Company'sbusiness; (11) the Company's ability to successfully enter into new contracts and complete new acquisitions or strategic ventures in the time-framecontemplated, or at all; (12) the integration of the Company's strategic acquisitions; (13) the amount and timing of repurchases of the Company's commonstock, if any; (14) the prolonged recovery in global financial and credit markets and economic conditions generally, which could result in the Company'scustomers curtailing development projects, construction, production and capital expenditures which, in turn, could reduce the demand for the Company'sproducts and services and, accordingly, the Company's revenues, margins and profitability; (15) the outcome of any disputes with customers, contractors andsubcontractors; (16) the financial condition of the Company's customers, including the ability of customers (especially those that may be highly leveragedand those with inadequate liquidity) to maintain their credit availability; (17) the Company's ability to successfully implement and receive the expectedbenefits of cost-reduction and restructuring initiatives, including the achievement of expected cost savings in the expected time frame; (18) the ability tosuccessfully implement the Company's strategic initiatives and portfolio optimization and the impact of such initiatives, such as the Harsco Metals &Minerals Segment's Improvement Plan ("Project Orion"); (19) the amount ultimately realized from the Company's exit from the strategic venture between theCompany and Clayton, Dubilier & Rice and the timing of such exit; (20) implementation of environmental remediation matters; (21) risk and uncertaintyassociated with intangible assets; (22) the impact of a transaction, if any, resulting from the Company's determination to explore strategic options for theseparation of the Harsco Metals & Minerals Segment; and (23) other risk factors listed from time to time in the Company's SEC reports. A further discussion ofthese, along with other potential risk factors, can be found in Part I, Item 1A, "Risk Factors," of this Annual Report on Form 10-K. The Company cautions thatthese factors may not be exhaustive and that many of these factors are beyond the Company's ability to control or predict. Accordingly, forward-lookingstatements should not be relied upon as a prediction of actual results. The Company undertakes no duty to update forward-looking statements except as maybe required by law.19Table of ContentsExecutive OverviewThe Harsco Metals & Minerals Segment has been negatively impacted by lower customer steel production, weaker commodity prices and demand, site exitsand the impact of foreign currency translation. These impacts have been partially offset by the savings and benefits achieved as part of the initial phases ofProject Orion which has helped to transform the Harsco Metals & Minerals Segment into a leaner and more disciplined business. The Company remainsfocused on achieving additional cost reductions and operational improvements to enhance returns for the Harsco Metals & Minerals Segment.The Company began executing Project Orion in the Harsco Metals & Minerals Segment during 2014, after conducting an analysis of the business to identifyopportunities to improve its core processes and simplify its organizational structure. The goals of Project Orion are to improve financial returns and providehigher and more consistent levels of value added services to customers. Project Orion's primary elements include improving the bid and contract managementprocess, improving underperforming contracts, implementing standardized operating practices and simplifying operational structures. As a result of actionsundertaken during the initial phases of Project Orion, the Company achieved annualized savings of approximately $36 million. During the fourth quarter of2015, Project Orion was expanded with additional targeted workforce and operational savings of $20 million to $25 million; the majority of these benefitsare expected to be realized in 2016. The Company incurred $5.1 million in severance and related charges associated with the expansion of Project Orionduring the fourth quarter of 2015. Please see Note 19, Restructuring Programs, to the Consolidated Financial Statements under Part II, Item 8, "FinancialStatements and Supplementary Data" for additional information.The Company has announced its intention to pursue strategic options for the separation of the Harsco Metals & Minerals Segment from the rest of theCompany. A separation of the Harsco Metals & Minerals Segment would allow each of the Company's businesses to benefit from dedicated capital structures,execute tailored and flexible strategic priorities and optimize capital return policies consistent with each business's unique priorities. There is no specifictimetable related to this initiative and there can be no assurance that a sale, spin-off or any other transaction will take place. The Company incurred $9.9million of expenses during 2015 related to the separation which are included as part of the Corporate caption in the Company's segment results.As the Company has previously disclosed, one of the Company's steel mill customers in Europe ceased operations and began the formal process ofliquidation in late 2015. The Company previously recorded bad debt reserves of approximately $3 million related to this customer and as a result of theseevents recorded an additional bad debt reserve related to the remaining receivables balance of $9.9 million during 2015. Also during 2015, the Companyrecorded an additional charge of $3.9 million related principally to severance costs and non-cash long-lived asset impairments. This action reduced thecarrying value of assets used at the customer's site to fair value based upon the expected future realizable cash flows, including anticipated selling expenses.As the Company has previously disclosed, over the past several years the Company has been in discussions with officials at the Supreme Council forEnvironment in Bahrain ("Bahrain Council") with regard to a processing by-product ("salt cakes") located at Hafeera. During 2015, the Company completedthe assessment of options available for processing or removing the salt cakes. As a result, the Company has entered into a service agreement with a third partyfor processing the salt cakes and recorded a charge of $7.0 million, payable over five to seven years, related to the estimated cost of processing and disposal.The Company's Bahrain operations are operated under a strategic venture for which its strategic venture partner has a 35% minority interest. Accordingly, thenet impact of the charge to the Company's Net income (loss) attributable to Harsco Corporation was $4.6 million. The Company is awaiting final approvalfrom the Bahrain Council regarding the proposed processing and disposal method. If the Bahrain Council does not approve the proposed method or mandatesalternative solutions, the estimated liability could change, and such change could be material in any one period.As the Company has previously disclosed, a subcontractor at the site of a large customer in the Harsco Metals & Minerals Segment had filed arbitrationagainst the Company, claiming that it was owed monetary damages from the Company in connection with its processing certain materials. Additionally,related to this matter, the Company has brought suit against its customer which the Company believed had responsibility for any damages. During 2015, allparties involved reached a binding settlement agreement. The Company recorded a charge of $4.2 million related to its obligations under the settlementagreement.The Harsco Industrial Segment has been impacted by low oil prices and the related impacts on capital spending by customers in the oil and natural gasindustries. During 2015, the Company's air-cooled heat exchangers business completed the consolidation of five operating facilities into a single site whichimproves operational efficiency, increases capacity and accelerates the production cycle. Additionally, the new site allows for future growth into adjacentmarkets.20Table of ContentsThe Harsco Rail Segment completed the acquisitions of Protran Technology ("Protran") and JK Rail Products, LLC ("JK Rail") during 2015. Revenuesdecreased from prior year due to lower volumes of equipment sales and contract services. Operating income increased from prior year due to a foreigncurrency gain of $10.9 million, primarily related to converting Swiss franc bank deposits to euros after the Swiss National Bank ended its policy ofmaintaining a stable Swiss franc exchange rate with the euro and a favorable mix of equipment sales, partially offset by an unfavorable mix of after-marketparts sales and lower contract services volume. Revenues by Segment(Dollars in millions) 2015 2014 Change %Harsco Metals & Minerals $1,106.2 $1,378.1 $(272.0) (19.7)%Harsco Industrial 357.3 412.5 (55.3) (13.4)Harsco Rail 259.7 275.6 (15.9) (5.8)Total Revenues $1,723.1 $2,066.3 $(343.2) (16.6)%Revenues by Region(Dollars in millions) 2015 2014 Change %Western Europe $488.7 $588.2 $(99.5) (16.9)%North America 807.7 940.9 (133.2) (14.2)Latin America (a) 181.6 248.4 (66.8) (26.9)Asia-Pacific 153.7 157.5 (3.8) (2.4)Middle East and Africa 52.3 66.5 (14.2) (21.4)Eastern Europe 39.1 64.7 (25.6) (39.6)Total Revenues $1,723.1 $2,066.3 $(343.2) (16.6)%(a) Includes Mexico.Revenues for the Company totaled $1.7 billion and $2.1 billion for 2015 and 2014, respectively. The change is primarily related to the impact of foreigncurrency translation, exited contracts in the Harsco Metals & Minerals Segment, and the impact of price and volume changes in all segments, primarily theHarsco Metals & Minerals and Harsco Industrial Segments. Foreign currency translation decreased revenues by $170.1 million for 2015 in comparison withthe prior year.Operating Income and Operating Margins by Segment(Dollars in millions) 2015 2014 Change %Harsco Metals & Minerals $26.3 $13.8 $12.5 90.9 %Harsco Industrial 57.0 64.1 (7.1) (11.1)Harsco Rail 50.9 37.1 13.8 37.0Corporate (b) (45.7) (45.7) 0.1 0.1Total Operating Income $88.5 $69.3 $19.2 27.8 % 2015 2014Harsco Metals & Minerals 2.4% 1.0%Harsco Industrial 16.0 15.5Harsco Rail 19.6 13.5Consolidated Operating Margin 5.1% 3.4%(b) For the twelve months ended December 31, 2015, Corporate includes $9.9 million of expenses related to the potential Harsco Metals & Minerals Segment separation, $4.0 millionof net period pension cost for defined benefit pension plans retained as part of the Infrastructure Transaction and a $1.0 million loss on disposal of the Harsco InfrastructureSegment. For the twelve months ended December 31, 2014, Corporate includes a $5.1 million loss on disposal of the Harsco Infrastructure Segment and transaction costs and $5.7million of net periodic pension cost for defined benefit pension plans retained by the Company as part of the Infrastructure Transaction.Operating income from continuing operations for 2015 was $88.5 million compared with operating income from continuing operations of $69.3 million in2014. Refer to the segment discussions below for information pertaining to factors positively affecting and negatively impacting operating income.The increase in operating income from continuing operations was the primary driver of the diluted earnings per share from continuing operations for 2015 of$0.09 compared with a diluted loss per share of $0.28 for 2014.21Table of ContentsHarsco Metals & Minerals Segment:Significant Effects on Revenues (In millions) Revenues—2014 $1,378.1Impact of foreign currency translation. (161.6)Net impact of new contracts and lost contracts (including exited underperforming contracts). (72.2)Net impacts of price/volume changes, primarily attributable to volume changes. (38.1)Revenues—2015 $1,106.2Factors Positively Affecting Operating Income:•Costs incurred by the Harsco Metals & Minerals Segment during 2014 related to restructuring charges for Project Orion, site exits and non-cashlong-lived asset impairment charges which declined during 2015, increased operating income by $47.5 million.•Project Orion restructuring benefits, related to compensation savings, of approximately $15 million during 2015.Factors Negatively Impacting Operating Income:•Costs incurred by the Harsco Metals & Minerals Segment related to a steel mill customer liquidation, salt cake disposal costs, charges associatedwith a subcontractor settlement and additional site exit costs decreased operating income by $30.8 million during 2015.•Costs incurred by the Harsco Metals & Minerals Segment related to the expansion of Project Orion, focusing on selling, general and administrativesavings, decreased operating income by $5.1 million during 2015.•Decreased global steel production and scrap metal prices. Overall, steel production by customers under services contracts, including the impact ofexited contracts, decreased by 8% during 2015 compared with the prior year.•Decreased income attributable to the impact of exited contracts and reduced nickel prices and demand. Nickel prices decreased 29% during 2015compared with the prior year.•Foreign currency translation in 2015 negatively impacted operating income for this segment compared with the prior year.Harsco Industrial Segment:Significant Effects on Revenues (In millions) Revenues—2014 $412.5Net impacts of price/volume changes, primarily attributable to volume changes. (50.8)Impact of foreign currency translation. (4.4)Revenues—2015 $357.3Factors Positively Affecting Operating Income:•Operating income was aided by lower selling, general and administrative costs in 2015 compared with the prior year coupled with higher gains fromthe sale of assets in 2015 of $1.5 million, compared with the prior year.Factors Negatively Impacting Operating Income:•Lower volumes resulting in decreased income during 2015, primarily attributable to continued energy price declines which impacts capitalspending by customers in the oil and natural gas industries served by the Company.•Costs associated with consolidating operating facilities for this segment's air cooled heat exchangers business.•Foreign currency translation decreased operating income for this segment during 2015 compared with the prior year.Harsco Rail Segment:Significant Impacts on Revenues (In millions) Revenues—2014 $275.6Net impact of price/volume changes, primarily attributable to volume changes. (16.7)Effect of Protran and JK Rail acquisitions. 4.9Impact of foreign currency translation. (4.1)Revenues—2015 $259.722Table of ContentsFactors Positively Affecting Operating Income:•Foreign currency gain of $10.9 million during the first quarter of 2015, primarily related to converting Swiss franc bank deposits to euros after theSwiss National Bank ended its policy of maintaining a stable Swiss franc exchange rate with the euro.•Equipment sales increased operating income, despite lower volumes, in 2015 compared with the prior year.•Operating income was aided by lower selling and administrative costs in 2015 compared with the prior year.•The acquisitions of Protran and JK Rail, both of which occurred during 2015, increased operating income by $2.2 million.•Foreign currency translation increased operating income for this segment during 2015 compared with the prior year.Factors Negatively Impacting Operating Income:•An unfavorable mix of after-market part sales decreased operating income in 2015. Additionally, lower contract service volumes impacted operatingincome for 2015 compared with the prior year.Outlook, Trends and StrategiesDespite uncertainties in the global economy, along with the challenges of global steel production and related pricing, as well as low oil prices, the Companybelieves it is positioned to execute actions through a disciplined focus on return based capital allocations and business portfolio strategies that will enable itto generate returns above its cost of capital with a balanced business portfolio without endangering its financial profile with unreasonable leverage.These business portfolio strategies will continue to focus on improving the performance of the Harsco Metals & Minerals Segment through executing ProjectOrion, which is aimed at driving operational efficiencies through simplifying its business model and standardizing operating practices; establishingnecessary protocols to facilitate better contract outcomes; addressing underperforming sites; and improving the mix of its products and services. For theHarsco Rail and Industrial Segments, the Company will focus on disciplined growth organically and through acquisitions that improve these businesses'competitive positions in core markets or adjacent market spaces. The Company will continue to pursue cost-reduction and efficiency initiatives, includingContinuous Improvement, which have significantly reduced, and are expected to continue to reduce, the Company's cost structure and further enhance itsfinancial strength without diminishing its services and products capabilities. As part of these initiatives, the Company will continue to focus on developingan active, lean corporate center that optimizes corporate costs while continuing to develop value added activities to support the Company in itstransformation.The Company's expansion into targeted growth markets; its diversity of services and products in industries that are fundamental to global growth; its long-term mill services and minerals supply contracts; its differentiated technologies and innovations; its return based capital allocations and business portfoliostrategies; its focus on executing cost reduction and efficiency initiatives; and the 29% equity interest in Brand, help mitigate the Company's overall long-term exposure to changes in the economic outlook in any single economy or industry. However, deterioration of global economies and industries could stillhave an adverse impact on the Company's results of operations, financial condition and cash flows.The following significant items, risks, trends and strategies are expected to affect the Company in 2016 and beyond:•The Company will focus on the goal of providing returns above its cost of capital for its stockholders by balancing its portfolio of businesses, andby executing its strategic and operational practices with reasonable amounts of financial leverage.•The Company will continue to build and develop strong core capabilities and develop an active and lean corporate center that balances costs withvalue added services.•The Company will continue to assess capital needs in the context of operational trends and strategic initiatives. Management will continue to beselective and disciplined in allocating capital by rigorously analyzing projects and utilizing a return-based capital allocation process.•Management will target acquisitive growth that provides synergistic benefits to the Company, either through cost synergies from combinedplatforms or revenue synergies from expanded offerings and scalability.•The Company expects its operational effective income tax rate to approximate 49% to 51% in 2016, excluding the tax impact on equity income(loss) related to the Brand Energy & Infrastructure Services Inc. and Subsidiaries.23Table of ContentsHarsco Metals & Minerals Segment:•The Company anticipates reduced steel production, weaker commodity prices and demand, the impact of site exits, customer productioncurtailments and the impact of foreign currency translation to negatively impact revenue and operating income in the near term in the Harsco Metals& Minerals Segment. These impacts will be partially offset by savings and benefits achieved as part of Project Orion and other operational savings. •The goals of Project Orion are to improve financial returns and provide higher and more consistent levels of value added services to customers.Project Orion's primary elements include improving the bid and contract management process, improving underperforming contracts,implementation of standardized operating practices and simplifying operational structures. As a result of actions undertaken during the initialphases of Project Orion, the Company achieved annualized savings of approximately $36 million. As a result of the success of the initial phases ofProject Orion, further improvements are targeted to further strengthen the business. During the fourth quarter of 2015, Project Orion was expandedwith additional targeted workforce and operational savings of $20 million to $25 million; the majority of these benefits are expected to be realizedin 2016.•The Company will continue its focus on ensuring that forecasted profits and other requirements for contracts meet certain established standards anddeliver returns above its cost of capital. Project Orion's focus is intended to enable the Company to address underperforming contracts more rapidlywith targeted actions to improve the efficiencies of the business. These actions include central protocols to monitor activities, structures and systemsthat aid in decision making, and processes designed to identify the best operational and commercial actions available to address underperformingcontracts and its overall contract portfolio. In connection with this focus, the possibility exists that the Company may take strategic actions thatresult in exit costs and non-cash asset impairment charges that may have an adverse effect on the Company's results of operations and liquidity.•During 2015, the Company has successfully negotiated and secured several contract renewals and add-on service expansions. Additionally, inFebruary 2016, the Company announced a new 15-year contract with China's largest steel maker with revenues totaling $125 million over the life ofthe contract.•During 2014, the Company accrued approximately $5 million of costs related to disposing certain slag material accumulated as part of a customeroperation in Latin America because it had not received the necessary permits from the local government to sell the slag. The Company hasreengaged the local government to obtain the necessary permits, and if these permits are obtained, the accrued disposal costs may be either partiallyor fully recognized in income that period.Harsco Industrial Segment:•The Company expects low oil prices to continue to impact capital expenditures and overall spending by customers in the natural gas, natural gasprocessing and petrochemical industries. Accordingly, these factors will negatively impact revenue and operating income in the near-term in theHarsco Industrial Segment.•The Company will continue to focus on product innovation and development to drive strategic growth in its businesses. The Company recentlyintroduced GrateGuardTM, a new fencing solution for first-line physical security in the Industrial grating business.•The Company will focus on growing the Harsco Industrial Segment through disciplined organic expansion and acquisitions that improvecompetitive positioning in core markets or adjacent markets.Harsco Rail Segment:•The global demand for railway maintenance-of-way equipment, parts and services continues to be generally positive, though North Americanmarkets may experience some short-term weakness, and the Company continues to pursue further growth opportunities. In total, the Companyanticipates modest organic growth in its after-market parts business and its expected deliveries of existing equipment orders.•During 2013 and 2014, the Company secured two contract awards with initial contract values worth approximately $200 million from the federalrailway system of Switzerland ("SBB"). The Company's capabilities to compete and deliver on large projects provide increased opportunities tobuild out its pipeline further, and enables the Company to continue to pursue other large projects. The majority of deliveries under these contractsare anticipated to occur during 2017 through 2019.•The Company will focus on growing the Harsco Rail Segment through disciplined organic expansion and acquisitions that improve competitivepositioning in core markets or adjacent markets.24Table of ContentsResults of Operations for 2015, 2014 and 2013(In millions, except per share information and percentages) 2015 2014 2013Revenues from continuing operations $1,723.1 $2,066.3 $2,896.0Cost of services and products sold 1,356.4 1,643.9 2,238.9Selling, general and administrative expenses 242.1 284.7 482.1Research and development expenses 4.5 5.5 10.2Loss on disposal of the Harsco Infrastructure Segment and transaction costs 1.0 5.1 292.3Other expenses 30.6 57.8 15.1Operating income (loss) from continuing operations 88.5 69.3 (142.6)Interest income 1.6 1.7 2.1Interest expense (46.8) (47.1) (49.7)Change in fair value to the unit adjustment liability (8.5) (9.7) (1.0)Income tax expense from continuing operations (27.7) (30.4) (32.0)Equity in income (loss) of unconsolidated entities, net 0.2 (1.6) 1.5Income (loss) from continuing operations 7.3 (17.8) (221.6)Diluted income (loss) per common share from continuing operations attributable toHarsco Corporation common stockholders 0.09 (0.28) (2.86)Effective income tax rate for continuing operations 79.5% 214.8% (16.7)%Comparative Analysis of Consolidated ResultsRevenuesRevenues for 2015 decreased $343.2 million or 17% from 2014. This decrease was attributable to the following significant items:Changes in Revenues - 2015 vs. 2014 (In millions)Impact of foreign currency translation. $(170.1)Net impact of new contracts and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (72.2)Net impacts of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. (38.1)Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes. (50.8)Net impacts of price/volume changes, primarily attributable to volume changes in the Harsco Rail Segment, including the effect of theProtran and JK Rail acquisitions. (11.8)Other. (0.2)Total change in revenues - 2015 vs. 2014 $(343.2)Revenues for 2014 decreased $829.7 million or 29% from 2013. This decrease was attributable to the following significant items:Changes in Revenues - 2014 vs. 2013 (In millions)Revenue decrease following the Infrastructure Transaction. $(885.4)Net impact of new contracts and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (40.1)Impact of foreign currency translation. (20.0)Net change in revenues in the Harsco Rail Segment, primarily attributable to the completion of the large China contract with CRC. (12.4)Net effects of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. 79.6Net increased revenues in the Harsco Industrial Segment, primarily attributable to the effects of its business acquisition. 48.6Total change in revenues - 2014 vs. 2013 $(829.7)25Table of ContentsCost of Services and Products SoldCost of services and products sold for 2015 decreased $287.5 million or 17% from 2014. This decrease was attributable to the following significant items:Change in Cost of Services and Products Sold - 2015 vs. 2014 (In millions)Impact of foreign currency translation. $(151.5)Decreased costs due to changes in revenues (exclusive of the effects of foreign currency translation and fluctuations in commoditycosts included in selling prices). (124.4)Other. (11.6)Total Change in Cost of Services and Products Sold 2015 vs. 2014 $(287.5)Cost of services and products sold for 2014 decreased $595.0 million or 27% from 2013. This decrease was attributable to the following significant items:Change in Cost of Services and Products Sold - 2014 vs. 2013 (In millions)Impact of timing of Infrastructure Transaction. $(636.6)Impact of foreign currency translation. (21.9)Increased costs due to changes in revenues (exclusive of the effect of foreign currency translation, the effects of the timing of theInfrastructure Transaction, and the impact of fluctuations in commodity costs included in selling prices). 52.3Other. 11.2Total Change in Cost of Services and Products Sold 2014 vs. 2013 $(595.0)Selling, General and Administrative ExpensesSelling, general and administrative expenses for 2015 decreased $42.6 million or 15% from 2014. This decrease was primarily related to the impact of lowercompensation costs associated with Project Orion in the Harsco Metals & Minerals Segment, foreign currency translation, lower professional fees, anddecreased agent and broker commissions in the Harsco Rail and Industrial Segments, partially offset by increased bad debt expense due principally to theHarsco Metals & Minerals Segment's steel mill customer liquidation.Selling, general and administrative expenses for 2014 decreased $197.4 million or 41% from 2013. This decrease was primarily related to the impact andtiming of the Infrastructure Transaction; partially offset by increased compensation expense due to inflation, incentive and retained pension costs from theInfrastructure Transaction; increased bad debt expense; increased commission expense; and increased professional fees.Loss on Disposal of the Harsco Infrastructure Segment and Transaction CostsThe Company recorded a loss on disposal of the Harsco Infrastructure Segment and related transaction costs of $1.0 million, $5.1 million and $292.3 millionduring 2015, 2014 and 2013, respectively. Please see Note 3, Acquisitions and Dispositions, to the Consolidated Financial Statements under Part II, Item 8,"Financial Statements and Supplementary Data" for additional information on the Infrastructure Transaction.Other ExpensesThis income statement classification includes: certain foreign currency gains, net gains on disposal of non-core assets, employee termination benefit costsand costs to exit activities. The most significant change in Other expenses during 2015 related to costs incurred in the Harsco Metals & Minerals Segmentrelated to a steel mill customer liquidation; salt cake disposal costs; charges associated with a subcontractor settlement during 2015; and additional site exitcosts. Additionally, Other expenses includes the foreign currency gain of $10.9 million primarily related to converting Swiss franc bank deposits to eurosassociated with advances received for the Harsco Rail Segment's two contracts with SBB and costs incurred at Corporate related to the potential HarscoMetals & Minerals Segment separation transaction. The most significant change in Other expenses during 2014 related to restructuring program costsassociated with Project Orion and non-cash impaired asset write-downs. Additional information on Other expenses is included in Note 17, Other Expenses, tothe Consolidated Financial Statements under Part II, Item 8, “Financial Statements and Supplementary Data."26Table of ContentsDuring 2015, 2014 and 2013, the Company recorded pre-tax Other expenses of $30.6 million, $57.8 million and $15.1 million, respectively. The majorcomponents of this income statement caption are as follows: Other (Income) Expenses(In thousands) 2015 2014 2013Net gains $(10,613) $(6,718) $(4,657)Employee termination benefits costs 14,914 19,120 3,928Other costs to exit activities 13,451 4,908 5,382Impaired asset write-downs 8,170 39,455 9,688Foreign currency gains related to Harsco Rail Segment advances on contracts (10,940) — —Harsco Metals & Minerals Segment Separation Costs 9,922 — —Subcontractor settlement 4,220 — —Other expense 1,449 1,059 769Total $30,573 $57,824 $15,110Interest Expense2015 vs. 2014Interest expense in 2015 was $46.8 million, a decrease of $0.3 million or 1% compared with 2014. There were no individually significant items related to thechange in this Statement of Operations caption.2014 vs. 2013Interest expense in 2014 was $47.1 million, a decrease of $2.5 million or 5% compared with 2013. The decrease primarily reflects higher average borrowingsprior to the Infrastructure Transaction in 2013.Income Tax Expense from Continuing Operations2015 vs. 2014Income tax expense from continuing operations in 2015 was $27.7 million, a decrease of $2.7 million compared with 2014 and the effective income tax raterelating to continued operations for 2015 was 79.5% versus 214.8% for 2014. The decrease in income tax expense and the change in the effective income taxrate related to continuing operations was primarily due to a reduction in restructuring and asset impairment charges in the Harsco Metals & Minerals Segmentfor which no tax benefit was recorded.2014 vs. 2013Income tax expense from continuing operations in 2014 was $30.4 million, a decrease of $1.6 million compared with 2013. This decrease was principally dueto the tax effects of the Infrastructure Transaction, which had included valuation allowances recorded against deferred tax assets within certain foreignjurisdictions in which Infrastructure operated and additional tax costs of cash repatriation from the Infrastructure Transaction in 2013 that was not repeated in2014. This decrease was partially offset by restructuring and asset impairment charges from Harsco Metals and Minerals for which no tax benefit wasrecorded. The effective income tax rate relating to continued operations for 2014 was 214.8% versus (16.7) % for 2013. The effective income tax ratechanged between 2013 and 2014 primarily due to the tax effects of the Infrastructure Transaction, which had included valuation allowances recorded againstdeferred tax assets within certain foreign jurisdictions in which Infrastructure operated and additional tax costs of cash repatriation from the InfrastructureTransaction in 2013 that was not repeated in 2014. This was partially offset by restructuring and asset impairment charges from Harsco Metals and Mineralsfor which no tax benefit was recorded.For additional detail, see Note 11, Income Taxes, to the Consolidated Financial Statements under Part II, Item 8, “Financial Statements and SupplementaryData."27Table of ContentsLiquidity and Capital ResourcesOverviewOn October 15, 2015, the Company repaid the 2.7% notes due October 15, 2015 by utilizing borrowings under its Amended and Restated Five Year CreditAgreement (the "Initial Credit Agreement"). There was no change to the Company's overall debt position as a result of the repayment.On December 2, 2015, the Company, entered into (i) an amendment and restatement agreement (the “Amendment Agreement”) and (ii) a second amended andrestated credit agreement (the “Credit Agreement” and, together with the Amendment Agreement, the “Financing Agreements”). The Financing Agreementsincreased the Company's overall borrowing capacity from $500 million to $600 million by (i) amending and restating the Company’s existing creditagreement, (ii) establishing a term loan facility in an initial aggregate principal amount of $250 million, by converting a portion of the outstanding balanceunder the Initial Credit Agreement on a dollar-for-dollar basis (such facility, the “Term Loan Facility”) and (iii) reducing the revolving credit facility limit to$350 million (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”).In November 2015, the Company reduced the quarterly dividend to $0.05 per share for the first quarter 2016 dividend payment in February 2016. Thedecision was made in light of present industry macroeconomic factors with a goal to preserve capital for operations and strategic initiatives, and maintain astrong capital structure, while at the same time enabling the Company to continue the longstanding practice of returning capital to shareholders. TheCompany intends to redirect these funds to reduce debt and enhance financial flexibility. The Company continues to have adequate financial liquidity and borrowing capacity. The Company currently expects operational and business needs to bemet by cash provided by operations supplemented with borrowings from time to time due to historical patterns of seasonal cash flow and for the funding ofvarious projects. The Company continues to assess its capital needs in the context of operational trends and strategic initiatives.The Company continues to implement and perform capital efficiency initiatives to enhance liquidity. These initiatives have included: prudent allocation ofcapital spending to those projects where the highest results can be achieved; optimization of worldwide cash positions; reductions in discretionary spending;and frequent evaluation of customer and business-partner credit risk. The Company continues to focus on improving working capital efficiency. The Company's Continuous Improvement initiatives include improving theeffective and efficient use of working capital, particularly in accounts receivable and inventories.During 2015, the Company generated $121.5 million in operating cash flow, a decrease from the $226.7 million generated in 2014. In 2015, the Companyinvested $123.6 million in capital expenditures, mostly for the Harsco Metals & Minerals Segment, compared with $208.9 million invested in 2014. In 2015,the Company received proceeds from the termination of a cross-currency interest rate swap ("CCIR") of $75.1 million. The Company paid approximately $66million in dividends to stockholders in both 2015 and 2014. The Company generated $26.0 million in cash flow from asset sales in 2015 compared with$15.0 million in 2014. Asset sales have been a normal part of the Company's business model, primarily for the Harsco Metals & Minerals Segment.The Company's net cash borrowings increased by $47.3 million in 2015 principally due to increased credit facility borrowings related to capitalexpenditures, mostly for the Harsco Metals & Minerals Segment; dividend payments; treasury share purchases under the Company's share purchase programthen in effect; and for the Protran and JK Rail acquisitions; partially offset by the receipt of cash proceeds from the termination of a cross-currency swap andcash flow provided by operations. The Company’s consolidated net debt to consolidated EBITDA ratio was 2.8 to 1.0 at December 31, 2015.28Table of ContentsCash RequirementsThe following summarizes the Company's expected future payments related to contractual obligations and commercial commitments at December 31, 2015:Contractual Obligations and Commercial Commitments at December 31, 2015 (a) Payments Due by Period(In millions) Total Less than1 year 1-3years 3-5years After 5yearsShort-term borrowings $30.2 $30.2 $— $— $—Long-term debt (including current maturitiesand capital leases) 880.8 25.1 524.3 331.4 —Projected interest payments on long-term debt(b) 104.0 40.0 59.7 4.3 —Pension obligations (c) 46.7 31.3 15.4 — —Operating leases (non-cancellable) 59.7 12.9 16.0 10.2 20.6Purchase obligations (d) 105.7 94.7 11.0 — —Cross-currency interest rate swaps (e) — — — — —Foreign currency exchange forward contracts(f) — — — — —Unit adjustment liability (g) 99.0 22.3 44.6 32.1 —Total contractual obligations (h) $1,326.1 $256.5 $671.0 $378.0 $20.6(a)See Note 5, Equity Method Investments; Note 8, Debt and Credit Agreements; Note 9, Operating Leases; Note 10, Employee Benefit Plans; Note 11, Income Taxes; and Note 15,Financial Instruments, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional disclosures on the unitadjustment liability; short-term borrowings and long-term debt (including capital leases); operating leases; pensions; income taxes; CCIRs and foreign currency exchange forwardcontracts, respectively.(b)The total projected interest payments on long-term debt are based upon borrowings, interest rates and foreign currency exchange rates at December 31, 2015. The interest rates onvariable-rate debt and the foreign currency exchange rates are subject to changes beyond the Company's control and may result in actual interest expense and payments differingfrom the amounts projected above.(c)Amounts represent expected employer contributions to the defined benefit pension plans for the next year and the underfunded pension liability associated with the InfrastructureTransaction. The Company expects to make a minimum of $23.7 million in cash contributions to its defined benefit pension plans during 2016.(d)Purchase obligations represent legally binding obligations to purchase property, plant and equipment, inventory and other commitments made in the normal course of business tomeet operations requirements. The decrease in the Company's purchase obligations is related to decreases in commitments to purchase raw materials in its Rail Segment anddecreases in capital commitments in its Metals & Minerals and Industrial Segments.(e)Due to the nature of these CCIRs, based on December 31, 2015 fair values there would be net cash received of approximately $19 million comprised of cash payments ofapproximately $262 million and cash receipts of approximately $281 million. Accordingly, no amounts are included in the above table. The CCIRs are recorded on theConsolidated Balance Sheets at fair value.(f)Amounts represent the notional value of the foreign currency exchange contracts outstanding at December 31, 2015. Due to the nature of these contracts, based on fair values atDecember 31, 2016 there will be net cash received of $4.1 million comprised of cash payments of $592.4 million and cash receipts of $596.5 million. Accordingly, no amountsare included in the above table. The difference is recognized as a gain or loss in the Consolidated Statements of Operations.(g)Amounts represent expected payments, at the Company's discretion, related to the unit adjustment liability that resulted from the Infrastructure Transaction. See Note 5, EquityMethod Investments, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional information on the unitadjustment liability.(h)At December 31, 2015, in addition to the above contractual obligations, the Company had $8.0 million of potential long-term tax liabilities, including interest and penalties,related to uncertain tax positions. Because of the high degree of uncertainty regarding the future cash flows associated with these potential long-term tax liabilities, the Company isunable to estimate the years in which settlement will occur with the respective taxing authorities.29Table of ContentsOff-Balance Sheet ArrangementsThe following table summarizes the Company's contingent commercial commitments at December 31, 2015. These amounts are not included on theConsolidated Balance Sheets since there are no current circumstances known to management indicating that the Company will be required to make paymentson these contingent commercial commitments.Commercial Commitments at December 31, 2015 Amount of Commercial Commitment Expiration Per Period(In millions) Total Less than1 Year 1-3Years 3-5Years Over 5Years IndefiniteExpirationStandby letters of credit $83.7 $76.9 $5.7 $1.1 $— $—Guarantees 53.5 9.3 — 2.9 0.2 41.1Performance bonds 101.3 99.7 — — — 1.6Other commercialcommitments 11.1 — — — — 11.1Total commercialcommitments $249.6 $185.9 $5.7 $4.0 $0.2 $53.8Certain commercial commitments that are of a continuous nature do not have an expiration date and are therefore considered to be indefinite in nature. Pleaserefer to Note 15, Financial Instruments, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," foradditional disclosures related to off-balance sheet agreements.Sources and Uses of CashThe Company’s principal sources of liquidity are cash provided by operations and borrowings under its Credit Agreement, augmented by cash proceeds fromasset sales. The primary drivers of the Company’s cash flow from operations are the Company’s revenues and income. Cash returns on capital investmentsmade in the prior years, for which limited cash is currently required, are a significant source of cash provided by operations. Depreciation expense related tothese investments is a non-cash charge. In August 2015, the Company terminated its fixed euro CCIR. Proceeds from the transaction were $75.1 million and used to reduce debt. Euro denominatedforeign currency exchange forward contracts were entered into later in 2015 that provide similar protection from changes in foreign exchange rates to theterminated CCIR contract. Please see Note 15, Financial Instruments, in Part II, Item 8, "Financial Statements and Supplementary Data" for additionalinformation.Major uses of operating cash flows and borrowed funds include: capital investments, principally in the Harsco Metals & Minerals Segment; payroll costs andrelated benefits; dividend payments; pension funding payments; inventory purchases for the Harsco Rail and Harsco Industrial Segments; income taxpayments; debt principal and interest payments; insurance premiums and payments of self-insured casualty losses; payment of the unit adjustment liability;and machinery, equipment, automobile and facility lease payments.The Company plans to redeploy discretionary cash for debt reduction, disciplined organic growth and international or market segment diversification; forgrowth in long-term, higher-return service contracts for the Harsco Metals & Minerals Segment, principally in targeted growth markets or for customerdiversification; and for strategic investments or possible acquisitions in the Harsco Rail and Harsco Industrial Segments.Resources Available for Cash Requirements for Operational and Growth InitiativesIn addition to utilizing cash provided by operations and cash proceeds from asset sales, the Company has bank credit facilities available throughout theworld. The Company also utilizes capital leases to finance the acquisition of certain equipment when appropriate, which allows the Company to minimizecapital expenditures. The Company expects to continue to utilize all these sources to meet future cash requirements for operations and growth initiatives.In March 2012, the Company entered into the Initial Credit Agreement providing for $525 million of borrowing capacity through a syndicate of 14 banks.On September 12, 2013, the Company entered into Amendment No.1 ("Amendment No. 1") to the Initial Credit Agreement. In addition to certainadministrative and conforming modifications, Amendment No. 1 replaced the total consolidated debt to total consolidated capital ratio debt covenant. OnDecember 20, 2013, the Company entered into Amendment No. 2 ("Amendment No. 2") to the Credit Agreement. Amendment No. 2 modified certain definedterms to reflect the impact of the Infrastructure Transaction. 30Table of ContentsOn March 27, 2015, the Company entered into Amendment No. 3 ("Amendment No. 3") to the Initial Credit Agreement. Amendment No. 3 provided for (i)decreased borrowing capacity; (ii) contingency extension of the termination date; (iii) modified certain debt covenants; and (iv) modified certain definedterms. During the three months ended March 31, 2015, the Company expensed $0.6 million fees associated with Amendment No. 3.On December 2, 2015, the Company, entered into (i) an Amendment Agreement and (ii) a Credit Agreement. The Financing Agreements increased theCompany's overall borrowing capacity from $500 million to $600 million by (i) amending and restating the Company’s Initial Credit Agreement, (ii)establishing the Term Loan Facility in an initial aggregate principal amount of $250 million by converting a portion of the outstanding balance under theInitial Credit Agreement on a dollar-for-dollar basis and (iii) reducing the Revolving Credit Facility to $350 million.Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum ranging from 87.5 to 200 basis points over the Base Rate or 187.5 to300 basis points over the Adjusted LIBOR Rate (for borrowings in US dollars or Sterling) or the Adjusted EURIBOR Rate (for borrowing in Euro), each asdefined in the Credit Agreement.The Senior Secured Credit Facilities impose certain restrictions including, but not limited to, restrictions as to types and amounts of debt or liens that may beincurred by the Company; limitations on increases in dividend payments and limitations on certain acquisitions by the Company.The Senior Secured Credit Facilities mature on June 2, 2019, provided that if the notes issued by the Company on May 15, 2008 have not been tendered,repurchased, redeemed, discharged or refinanced in full prior to February 13, 2018, the Senior Secured Credit Facilities become due on such date.The Term Loan Facility requires scheduled quarterly payments, each equal to (i) with respect to quarterly payments made in 2016, 1.25% of the originalprincipal amount of the loans under the Term Loan Facility made at closing and (ii) with respect to quarterly payments made in any year thereafter, 2.50% ofthe original principal amount of the loans under the Term Loan Facility made at closing. These payments are reduced by the application of any prepayments,and any remaining balance is due at maturity. The Credit Agreement requires certain mandatory prepayments of outstanding loans under the Term LoanFacility, subject to certain exceptions, based on the net cash proceeds of certain asset sales and casualty and condemnation events, in some cases subject toreinvestment rights and certain other exceptions, and the net cash proceeds of any issuance of debt, excluding permitted debt issuances.With respect to the Senior Secured Credit Facilities, the obligations of the Company are guaranteed by substantially all of the Company’s current and futurewholly-owned domestic subsidiaries (the “Guarantors”). All obligations under the Senior Secured Credit Facilities, and the guarantees of those obligations,are secured, subject to certain exceptions, by substantially all of the parent company’s assets and the assets of the Guarantors.The following table illustrates available credit at December 31, 2015:(In millions) Facility Limit OutstandingBalance Outstanding Letters ofCredit AvailableCreditMulti-year revolving credit facility $350.0 $165.0 $44.4 $140.6At December 31, 2015, the Company had $415.0 million of borrowings under the Senior Secured Credit Facilities consisting of $250.0 million under theTerm Loan Facility and $165.0 million under the Revolving Credit Facility. At December 31, 2015, of this balance, $380.5 million was classified as long-term debt, $22.0 million was classified as short-term borrowings and $12.5 million was classified as current maturities of long-term debt in the ConsolidatedBalance Sheets. At December 31, 2014, the Company had $98.5 million of borrowings under the Initial Credit Agreement and all such balances wereclassified as long-term debt in the Consolidated Balance Sheets. Classification of such balances is based on the Company's ability and intent to repay suchamounts over the subsequent twelve months, as well as reflects the Company's ability and intent to borrow for a period longer than a year. To the extent theCompany expects to repay any amounts within the subsequent twelve months, the amounts are classified as short-term borrowings or current maturities oflong-term debt.On October 15, 2015, the Company repaid the 2.7% notes due October 15, 2015 by utilizing borrowings under the Initial Credit Agreement. There was nochange to the Company's overall debt position as a result of the repayment.See Note 8, Debt and Credit Agreements, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," formore information on the Company's Credit Agreement.31Table of ContentsWorking Capital PositionChanges in the Company's working capital are reflected in the following table:(Dollars in millions) December 31 2015 December 31 2014 Increase(Decrease)Current Assets Cash and cash equivalents $79.8 $62.8 $16.9Trade accounts receivable, net 254.9 325.1 (70.2)Other receivables, net 30.4 28.1 2.3Inventories 217.0 178.9 38.0Other current assets 82.5 88.5 (5.9)Total current assets 664.5 683.5 (19.0)Current Liabilities Short-term borrowings and current maturities 55.3 41.9 13.4Accounts payable 136.0 146.5 (10.5)Accrued compensation 38.9 53.8 (14.9)Income taxes payable 4.4 2.0 2.4Advances on contracts 107.3 117.4 (10.1)Due to unconsolidated affiliate 7.7 8.1 (0.4)Unit adjustment liability 22.3 22.3 —Other current liabilities 134.2 173.5 (39.3)Total current liabilities 506.1 565.6 (59.4)Working Capital $158.4 $117.9 $40.5Current Ratio (a) 1.3:1 1.2:1 (a)Calculated as Current assets / Current liabilitiesWorking capital increased $40.5 million or 34.3% in 2015 due primarily to the following factors:•Working capital was positively affected by a decrease in Other current liabilities of $39.3 million primarily due to a decrease in dividends payablerelated to the reduction in the dividend rate, foreign currency translation and timing of other accruals;•Working capital was positively affected by an increase in Inventories of $38.0 million primarily due to inventory purchases related to the SBBproject;•Working capital was positively affected by a decrease in Accrued compensation of $14.9 million primarily due to decreases in accrued bonus acrossall the Company's segments; and•Working capital was positively affected by a decrease in Accounts payable of $10.5 million and Advances on contracts of $10.1 million, bothprimarily due to foreign currency translation.These working capital increases were partially offset by the following:•Working capital was negatively impacted by a decrease in Trade accounts receivable, net of $70.2 million primarily due to decreased sales andincreased provision for doubtful accounts, primarily in the Harsco Metals & Minerals Segment; and timing of invoicing and collections and foreigncurrency translation; and•Working capital was negatively impacted by an increase in Short-term borrowings and current maturities of $13.4 million primarily due to thetiming of expected debt repayments.Certainty of Cash FlowsThe certainty of the Company's future cash flows is underpinned by the long-term nature of the Company's metals services contracts, the order backlog for theCompany's railway track maintenance services and equipment, and overall discretionary cash flows (operating cash flows plus cash from asset sales in excessof the amounts necessary for capital expenditures to maintain current revenue levels) generated by the Company. Historically, the Company has utilizedthese discretionary cash flows for growth-related capital expenditures, strategic acquisitions, debt repayment and dividend payments.At December 31, 2015, the Company's metals services contracts had estimated future revenues of $3.2 billion at expected production levels, compared with$4.5 billion at December 31, 2014. This decrease is primarily due to exit activities associated with strategic actions from Project Orion's focus onunderperforming contracts of various customers and impact of foreign currency translation during 2015. There are no significant metals services contracts forwhich the costs to complete the contract are currently estimated to exceed the revenue to be realized included in the above estimated future revenues.32Table of ContentsAt December 31, 2015, the Company's railway track maintenance services and equipment business had estimated future revenues of $292.1 million comparedwith $348.8 million at December 31, 2014. This decrease is primarily due to shipments which were not replaced. The railway track maintenance services andequipment business includes items with long lead times necessary to build certain equipment.In addition, at December 31, 2015, the Company had an order backlog of $72.9 million in the Harsco Industrial Segment. This compares with $146.9 millionat December 31, 2014. This decrease is primarily due to low oil prices impacting capital expenditures and overall spending by customers in the natural gas,natural gas processing and petrochemical industries.Order backlogs for roofing granules and slag abrasives, and for the reclamation and recycling services of high-value content from steelmaking slag, areexcluded from the above amounts. These amounts are generally not quantifiable due to the short order lead times for certain services and the nature andtiming of the products and services provided.The types of products and services that the Company provides are not subject to rapid technological change, which increases the stability of related cashflows. Additionally, the Company believes each business in its portfolio is a leader in the industries and major markets the Company serves. Due to thesefactors, the Company is confident in the Company's future ability to generate positive cash flows from operations.Cash Flow SummaryThe Company's cash flows from operating, investing and financing activities, as reflected on the Consolidated Statements of Cash Flows, are summarized inthe following table:(In millions) 2015 2014 2013Net cash provided (used) by: Operating activities $121.5 $226.7 $187.7Investing activities (130.4) (229.6) 63.3Financing activities 22.5 (21.8) (248.7)Impact of exchange rate changes on cash 3.3 (6.1) (3.9)Net change in cash and cash equivalents $16.9 $(30.8) $(1.6)Cash provided by operating activities — Net cash provided by operating activities in 2015 was $121.5 million, a decrease of $105.2 million from 2014. Thedecrease is primarily attributable to lower customer advances, and an increase in inventory primarily related to the SBB contracts in the Harsco Rail Segment,partially offset by the timing of accounts receivable invoicing and collections. Net cash provided by operating activities in 2014 was $226.7 million, anincrease of $39.1 million from 2013. The increase is primarily attributable to increased customer advances and decreased incentive bonus payments, partiallyoffset by the timing of accounts receivable invoicing and collections, the timing of accounts payable disbursements, and an increase of inventories.Included in the Cash flows from operating activities section of the Consolidated Statement of Cash Flows is the caption, Other, net. In 2015, this captionconsisted principally of the Harsco Rail Segment foreign exchange gain which is reflected in the Effect of exchange rate changes on cash caption, partiallyoffset by the impact of non-cash impaired asset write-downs related to the Harsco Metals & Minerals Segment. In 2014, this caption consisted of principallythe impact of non-cash impaired asset write-downs related to the Harsco Metals & Minerals Segment. In 2013, there were no individually significantcomponents of this caption.Also included in the Cash flows from operating activities section of the Consolidated Statements of Cash Flows is the caption, Other assets and liabilities. Forthe years ended December 31, 2015, 2014 and 2013 the decreases in this caption were $30.6 million, $44.9 million and $18.5 million, respectively. Asummary of the major components of this caption for the periods presented is as follows:(In millions) 2015 2014 2013Net cash provided by (used in): Change in net defined benefit pension liabilities $(24.6) $(27.8) $(16.1) Change in prepaid expenses — (15.8) (2.7) Other (6.0) (1.3) 0.3 Total $(30.6) $(44.9) $(18.5)33Table of ContentsCash provided (used) by investing activities — Net cash used by investing activities in 2015 was $130.4 million, a decrease of $99.2 million from 2014. Thenet decrease was primarily due to a lower level of capital expenditures, primarily in the Harsco Metals & Minerals Segment; a net decrease in purchases ofbusinesses which consisted of Protran and JK Rail in the Harsco Rail Segment in 2015 and Hammco in the Harsco Industrial Segment in 2014; and anincrease in proceeds from sales of assets, partially offset by the final working capital adjustment related to the Infrastructure transaction which was received in2014. Capital investments decreased $85.3 million compared with 2014. In 2014, net cash used by investing activities was $229.6 million, an increase of$292.8 million from 2013. The net increase was primarily due to net proceeds from the Infrastructure Transaction of $303.0 million received in 2013 and theacquisition of Hammco and payment of the unit adjustment liability in 2014. Partially offsetting this increase were a lower level of capital expenditures,primarily related to no longer having capital expenditures for the Infrastructure Segment. Capital investments decreased $36.7 million compared with 2013.Cash provided (used) by financing activities — Net cash provided by financing activities in 2015 was $22.5 million, an increase of $44.2 million from 2014. The change was primarily due to proceeds of $75.1 million from the termination of a CCIR, partially offset by an increase in the treasury shares purchasedunder the Company's share repurchase program then in effect and a decrease in year-over-year net cash borrowings. In 2014, net cash used in financingactivities was $21.8 million, a decrease of $226.9 million from 2013. The change was primarily due to use of cash proceeds from the InfrastructureTransaction to repay outstanding borrowings in 2013 and to increased credit facility borrowings related to the Hammco acquisition and payment of the unitadjustment liability in 2014.Debt CovenantsThe Credit Agreement contains a consolidated net debt to consolidated EBITDA ratio covenant, which is not to exceed 4.0 to 1.0, and a minimumconsolidated EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0 to 1.0. The consolidated net debt to consolidatedEBITDA ratio covenant is reduced to 3.75 to 1.0 after December 31, 2016 and to 3.5 to 1.0 after June 30, 2017. The Company’s 5.75% notes includecovenants that require the Company to offer to repurchase the notes at 101% of par in the event of a change of control of the Company or disposition ofsubstantially all of the Company’s assets in combination with a downgrade in the Company’s credit rating to non-investment grade. At December 31, 2015,the Company was in compliance with these covenants as the consolidated net debt to consolidated EBITDA ratio was 2.8 to 1.0 and total consolidatedEBITDA to consolidated interest charges was 6.4 to 1.0. Based on balances and covenants in effect at December 31, 2015, the Company could increase netdebt by $360.5 million and still be in compliance with these debt covenants. Alternatively, keeping all other factors constant, the Company's EBITDA coulddecrease by $90.2 million and the Company would still be within these debt covenants. The Company expects to continue to be in compliance with thesedebt covenants for at least the next twelve months.Additionally, upon the completion of the potential separation of the Harsco Metals & Minerals Segment, the Company would be required to repay the TermLoan Facility and the consolidated net debt to consolidated EBITDA ratio would be reduced to 3.0 to 1.0 for the Credit Agreement.Cash ManagementThe Company has various cash management systems throughout the world that centralize cash in various bank accounts where it is economically justifiableand legally permissible to do so. These centralized cash balances are then redeployed to other operations to reduce short-term borrowings and to financeworking capital needs or capital expenditures. Due to the transitory nature of cash balances, they are normally invested in bank deposits that can bewithdrawn at will or in very liquid short-term bank time deposits and government obligations. The Company's policy is to use the largest banks in the variouscountries in which the Company operates. The Company monitors the creditworthiness of banks and when appropriate will adjust banking operations toreduce or eliminate exposure to less credit worthy banks. The Company plans to continue the strategy of targeted, prudent investing for strategic purposes forthe foreseeable future and to make more efficient use of existing investments.At December 31, 2015, the Company's consolidated cash and cash equivalents included $78.3 million held by non-U.S. subsidiaries. At December 31, 2015,less than 10% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with and amongsubsidiaries. The cash and cash equivalents held by non-U.S. subsidiaries also included $26.2 million held in consolidated strategic ventures. The strategicventure agreements may require strategic venture partner approval to transfer funds with and among subsidiaries. While the Company's remaining non-U.S.cash and cash equivalents can be transferred with and among subsidiaries, the majority of these non-U.S. cash balances will be used to support the on-goingworking capital needs and continued growth of the Company's non-U.S. operations.In February 2016, the Company paid a quarterly cash dividend.The Company's financial position and debt capacity should enable it to meet current and future requirements. The Company continues to assess its capitalneeds in the context of operational trends and strategic initiatives.34Table of ContentsApplication of Critical Accounting PoliciesThe Company's discussion and analysis of its financial condition and results of operations are based upon the consolidated financial statements, which havebeen prepared in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). The preparation of these consolidated financialstatements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and relateddisclosure of contingent liabilities. On an ongoing basis, the Company evaluates the estimates, including those related to defined benefit pension benefits,notes and accounts receivable, goodwill, long-lived asset impairment, inventories, insurance reserves, legal and other contingencies and income taxes. Theimpact of changes in these estimates, as necessary, is reflected in the respective segment's results of operations in the period of the change. The Companybases estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which formthe basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differfrom these estimates under different outcomes, assumptions or conditions.The Company believes the following critical accounting policies are affected by the Company's more significant judgments and estimates used in thepreparation of the consolidated financial statements. Management has discussed the development and selection of the critical accounting estimates describedbelow with the Audit Committee of the Board of Directors (the "Board") and they have reviewed the Company's disclosures relating to these estimates in thisManagement's Discussion and Analysis of Financial Condition and Results of Operations. These items should be read in conjunction with Note 1, Summaryof Significant Accounting Policies, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data."Defined Benefit Pension BenefitsThe Company has defined benefit pension plans in several countries. The largest of these plans are in the U.K. and the U.S. The Company's funding policy forthese plans is to contribute amounts sufficient to meet the minimum funding pursuant to U.K. and U.S. statutory requirements, plus any additional amountsthat the Company may determine to be appropriate.Changes in the discount rate assumption and the actual performance of plan assets compared with the expected long-term rate of return on plan assets are theprimary drivers in the change in funded status of the Company's defined benefit pension plans. These factors are components of actuarial loss (gain) andimpact the amount recognized in Other comprehensive income (loss), as such actuarial changes are not reflected directly in the Consolidated Statements ofOperations, but amortized over time in accordance with U.S. GAAP.Critical Estimate—Defined Benefit Pension BenefitsAccounting for defined benefit pension plans requires the use of actuarial assumptions. The principal assumptions used include the discount rate and theexpected long-term rate of return on plan assets. Each assumption is reviewed annually and represents management's best estimate at that time. Theassumptions are selected to represent the average expected experience over time and may differ in any one year from actual experience due to changes incapital markets and the overall economy. These differences will impact the amount of unfunded benefit obligation and the expense recognized.The discount rates used in calculating the Company's projected benefit obligations at the December 31, 2015 measurement date for the U.K. and U.S. definedbenefit pension plans were 3.8% and 4.2%, respectively, and the global weighted-average discount rate was 3.9%. The discount rates selected represent level-equivalent rates using the yield curve spot rates on a year-by-year expected cash flow basis, using yield curves of high-quality corporate bonds. AnnualNPPC is determined using the discount rates at the beginning of the year. The discount rates for 2015 expense were 3.6% for the U.K. plan, 3.9% for the U.S.plans and 3.7% for the global weighted-average of plans. NPPC and the projected benefit obligation generally increase as the selected discount ratedecreases.The expected long-term rate of return on plan assets is determined by evaluating the asset return expectations with the Company's advisors as well as actual,long term, historical results of asset returns for the pension plans. Generally the NPPC increases as the expected long term rate of return on assets decreases.For 2016 and 2015, the global weighted-average expected long-term rate of return on asset assumption is 6.7% and 7.0%, respectively. This rate wasdetermined based on a model of expected asset returns for an actively managed portfolio.35Table of ContentsChanges in NPPC may occur in the future due to changes in actuarial assumptions and due to changes in returns on plan assets resulting from financialmarket conditions. Holding all other assumptions constant, using December 31, 2015 plan data, a one-half percent increase or decrease in the discount rateand the expected long-term rate of return on plan assets would increase or decrease annual 2015 pre-tax defined benefit NPPC as follows:Approximate Changes in Pre-tax Defined Benefit Net Periodic Pension Cost U.S. Plans U.K. PlanDiscount rate One-half percent increase Increase of $0.1 million Decrease of $1.0 millionOne-half percent decrease Decrease of $0.2 million Increase of $1.1 millionExpected long-term rate of return on plan assets One-half percent increase Decrease of $1.0 million Decrease of $3.6 millionOne-half percent decrease Increase of $1.0 million Increase of $3.6 millionIncreases or decreases to the net pension obligations may be required should circumstances that affect these estimates change. Additionally, certain eventscould result in the pension obligation changing at a time other than the annual measurement date. This would occur when a benefit plan is amended or whenplan curtailments or settlements occur.The Company has changed the method utilized to estimate the 2016 service cost and interest cost components of NPPC for defined benefit pension plans.The more precise application of discount rates for measuring both service costs and interest costs employs yield curve spot rates on a year-by-year expectedcash flow basis, using the same yield curves that the Company has previously used. This change in method represents a change in accounting estimate andwill have the impact of reducing 2016 NPPC by approximately $7 million when compared to what NPPC would have been under the prior method.See Note 10, Employee Benefit Plans, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," foradditional disclosures related to these items.Notes and Accounts ReceivableNotes and accounts receivable are stated at net realizable value through the use of an allowance for doubtful accounts. The allowance is maintained forestimated losses resulting from the inability or unwillingness of customers to make required payments. The Company has policies and procedures in placerequiring customers to be evaluated for creditworthiness prior to the execution of new service contracts or shipments of products. These reviews are structuredto minimize the Company's risk related to realizability of receivables. Despite these policies and procedures, the Company may at times still experiencecollection problems and potential bad debts due to economic conditions within certain industries (e.g., steel industry), countries or regions in which theCompany operates. At December 31, 2015 and 2014, trade accounts receivable of $254.9 million and $325.1 million, respectively, were net of reserves of$25.6 million and $15.1 million, respectively. The increase in Allowance for doubtful accounts since December 31, 2014, relates primarily to a large steelmill customer in Europe. As the Company has previously disclosed, this customer ceased operations and began the formal process of liquidation in late 2015.The Company previously recorded bad debt reserves of approximately $3 million related to this customer and as a result of these events recorded anadditional bad debt reserve related to the remaining receivables balance of $9.9 million during 2015.Critical Estimate—Notes and Accounts ReceivableA considerable amount of judgment is required to assess the realizability of receivables, including the current creditworthiness of each customer, relatedaging of past due balances and the facts and circumstances surrounding any non-payment. The Company's provisions for bad debts during 2015, 2014 and2013 were $13.0 million, $9.9 million and $10.2 million, respectively.On a monthly basis, customer accounts are analyzed for collectability. Reserves are established based upon a specific-identification method as well ashistorical collection experience, as appropriate. The Company also evaluates specific accounts when it becomes aware of a situation in which a customer maynot be able to meet its financial obligations due to a deterioration in financial condition, credit ratings, bankruptcy or receivership. The reserves are based onthe facts available to the Company and are re-evaluated and adjusted as additional information becomes available. Reserves are also determined by usingpercentages (based upon experience) applied to certain aged receivable categories. Specific issues are discussed with corporate management, and anysignificant changes in reserve amounts or the write-off of balances must be approved by specifically designated corporate personnel. All approved items aremonitored to ensure they are recorded in the proper period. Additionally, any significant changes in reserve balances are reviewed to ensure the propercorporate approval has occurred.If the financial condition of the Company's customers were to deteriorate, resulting in their inability to make payments, additional allowances may berequired. Conversely, an improvement in a customer's ability to make payments could result in a36Table of Contentsdecrease of the allowance for doubtful accounts. Changes in the allowance for doubtful accounts related to both of these situations would be recordedthrough Operating income (loss) from continuing operations in the period the change was determined. As previously disclosed, during the fourth quarter of2013, the Company recorded a bad debt reserve of $2.6 million on receivables with a large steel mill customer who filed for protection under the MarzanoLaw. During the second quarter of 2014, the customer terminated its contract with the Company under the provisions of the Marzano Law. As a result, duringthe second quarter of 2014, the Company recorded an additional bad debt reserve of $3.9 million on the remaining pre-receivership receivables with thiscustomer. During 2014, the Company recorded a bad debt reserve of $2.6 million for one of its Canadian steel mill customers that filed for receivershipprotection during the course of the year as the Company has previously disclosed. The amount of the bad debt reserve for this customer represents the fullpre-receivership balance.The Company has not materially changed the methodology for calculating allowances for doubtful accounts for the years presented. See Note 4, AccountsReceivable and Inventories, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additionaldisclosures related to these items.GoodwillThe Company's goodwill balances were $400.4 million and $416.2 million at December 31, 2015 and 2014, respectively. The Company performs the annualgoodwill impairment test as of October 1. The Company has five reporting units (only three of which have goodwill associated with them as of December 31,2015). The Company's reporting units with goodwill are the Harsco Metals & Minerals Segment, the Harsco Rail Segment and the air-cooled heat exchangerbusiness of the Harsco Industrial Segment. Almost all of the Company's goodwill is allocated to the Harsco Metals & Minerals Segment.Critical Estimate—GoodwillIn accordance with U.S. GAAP, goodwill is not amortized and is tested for impairment at least annually or more frequently if indicators of impairment exist orif a decision is made to dispose of a business. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as anoperating segment or one level below an operating segment for which discrete financial information is available. A significant amount of judgment isinvolved in determining if an indicator of impairment has occurred. Such indicators may include declining cash flows or operating losses at the reporting unitlevel, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a lossof key personnel, or a more likely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of,among others.The evaluation of potential goodwill impairment involves comparing the current fair value of each reporting unit to the net book value, including goodwill.The Company uses a discounted cash flow model (“DCF model”) to estimate the current fair value of reporting units, as management believes forecastedoperating cash flows are the best indicator of current fair value. A number of significant assumptions and estimates are involved in the preparation of DCFmodels including future revenues and operating margin growth, the weighted-average cost of capital (“WACC”), tax rates, capital spending, pension funding,the impact of strategic business initiatives, and working capital projections. These assumptions and estimates may vary significantly between reporting units.DCF models are based on approved long-range plans for the early years and historical relationships and projections for later years. WACC rates are derivedfrom internal and external factors including, but not limited to, the average market price of the Company's stock, shares outstanding, book value of theCompany's debt, the long-term risk free interest rate, and both market and size-specific risk premiums. Due to the many variables noted above and the relativesize of the Company's goodwill, differences in assumptions may have a material impact on the results of the Company's annual goodwill impairment testing.If the net book value of a reporting unit were to exceed the current fair value, the second step of the goodwill impairment test would be required to determineif an impairment existed and the amount of goodwill impairment to record, if any. The second step of the goodwill impairment test compares the net bookvalue of a reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwill represents the excess of fair value of thereporting unit over the fair value amounts assigned to all of the assets and liabilities of the reporting unit if it were to be acquired in a hypothetical businesscombination and the current fair value of the reporting unit represented the purchase price. The second step of the goodwill impairment test requires theutilization of valuation experts.The performance of the Company’s 2015 annual impairment tests did not result in any impairment of the Company’s goodwill.For the Company's 2015 annual goodwill impairment test, the average annual revenue growth rates over the duration of the DCF models ranged from 2.5% to5.3%. The average annual cash flow growth rates over the duration of the DCF models ranged from 5.0% to 12.5%. The WACCs used in the 2015 annualgoodwill impairment test ranged from 9.25% to 10.25%.The Harsco Metals & Minerals Segment reporting unit's fair value at October 1, 2015 was approximately 15% more than the net book value. The related DCFmodel for this reporting unit included several key assumptions related to Project Orion and the expected benefits to be realized by this business initiative.Significant assumptions utilized in the DCF model include a WACC of 10.25%, an average annual revenue growth rate of 2.5% and average annual cash flowgrowth rate of 5.0%.37Table of ContentsAdditionally, should the expected benefits associated with Project Orion not materialize as anticipated or there is continued degradation in the overallmarkets served by the Harsco Metals & Minerals Segment, it may result in an impairment of the Harsco Metal & Minerals Segment goodwill.It is important to note that fair values that could be realized in an actual transaction could differ materially from those used to evaluate the annual goodwillimpairment test. The Company has not materially changed its methodology for goodwill impairment testing for the years presented. See Note 1, Summary ofSignificant Accounting Policies and Note 7, Goodwill and Other Intangible Assets, to the Consolidated Financial Statements under Part II, Item 8, “FinancialStatements and Supplementary Data,” for additional disclosure related to these items.Long-lived Asset ImpairmentLong-lived assets are reviewed for impairment when events and circumstances indicate that the book value of an asset may be impaired. During 2013, theCompany recorded a $272.3 million loss on disposal of the Harsco Infrastructure Segment related to the Infrastructure Transaction. Additionally, the amountscharged against pre-tax income from continuing operations related to impaired long-lived assets included in the caption, Other expenses, on theConsolidated Statements of Operations were $8.2 million, $39.5 million and $9.7 million in 2015, 2014 and 2013 respectively. The decrease in long-livedasset impairments in 2015 was due primarily to higher long-lived asset impairments in 2014 in the Harsco Metals & Minerals Segment as part of ProjectOrion.Critical Estimate—Asset ImpairmentThe determination of a long-lived asset impairment involves significant judgments based upon short-term and long-term projections of future assetperformance. If the undiscounted cash flows associated with an asset (or asset group) do not exceed the asset's book value, impairment loss estimates wouldbe based upon the difference between the book value and fair value of the asset. The fair value is generally based upon the Company's estimate of the amountthat the assets could be bought or sold for in a transaction between willing parties. If quoted market prices for the asset or similar assets are unavailable, thefair value estimate is generally calculated using a DCF model. Should circumstances change that affect these estimates, additional impairment charges maybe required and would be recorded through income in the period the change was determined.As a result of the Infrastructure Transaction, the Company recorded an estimated non-cash long-lived asset impairment charge of $241.3 million during thethird quarter of 2013. The Company recorded an additional loss on disposal of the Harsco Infrastructure Segment of $30.9 million during the fourth quarter of2013 related to the Infrastructure Transaction. The increased loss on disposal of the Harsco Infrastructure Segment from September 30, 2013 was dueprincipally to the final valuation of the equity interest in the Infrastructure strategic venture and changes in working capital and other adjustments. The Company has not materially changed the methodology for calculating long-lived asset impairments for the years presented. U.S. GAAP requiresconsideration of all valuation techniques for which market participant inputs can be obtained without undue cost and effort. The use of a DCF modelcontinues to be an appropriate method for determining fair value, however, methodologies such as quoted market prices must also be evaluated. See Note 17,Other Expenses, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional disclosurerelated to these items.InventoriesInventories are stated at the lower of cost or market. Inventory balances are adjusted for estimated obsolete or unmarketable inventory equal to the differencebetween the cost of inventory and its estimated market value. At December 31, 2015 and 2014, inventories of $217.0 million and $178.9 million,respectively, are net of lower of cost or market reserves and obsolescence reserves of $10.8 million and $10.0 million, respectively.Critical Estimate—InventoriesIn assessing the realization of inventory balances, the Company is required to make judgments as to future demand and compare these with current orcommitted inventory levels. If actual market conditions are determined to be less favorable than those projected by management, additional inventory write-downs may be required and would be recorded through Operating income (loss) from continuing operations in the period the determination is made.Additionally, the Company records reserves to adjust a substantial portion of its U.S. inventory balances to the last-in, first-out ("LIFO") method of inventoryvaluation. In adjusting these reserves throughout the year, the Company estimates its year-end inventory costs and quantities. At December 31 of each year,the reserves are adjusted to reflect actual year-end inventory costs and quantities. During periods of inflation, LIFO expense usually increases and duringperiods of deflation it decreases. These year-end adjustments resulted in pre-tax expense of $0.1 million in 2015, pre-tax expense of $1.4 million in 2014 andpre-tax income of $1.8 million in 2013.The Company has not materially changed the methodology for calculating inventory reserves for the years presented. See Note 4, Accounts Receivable andInventories, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional disclosures relatedto these items.38Table of ContentsInsurance ReservesThe Company retains a significant portion of the risk for U.S. workers' compensation, U.K. employers' liability, automobile, general and product liabilitylosses. At December 31, 2015 and 2014, the Company recorded liabilities of $41.8 million and $47.9 million, respectively, related to both asserted andunasserted insurance claims. At December 31, 2015 and 2014, $3.4 million and $3.8 million, respectively, was included in insurance liabilities related toclaims covered by insurance carriers for which a corresponding receivable has been recorded.Critical Estimate—Insurance ReservesInsurance reserves have been recorded based upon actuarial calculations that reflect the undiscounted estimated liabilities for ultimate losses, includingclaims incurred but not reported. Inherent in these estimates are assumptions that are based on the Company's history of claims and losses, a detailed analysisof existing claims with respect to potential value, and current legal and legislative trends. If actual claims differ from those projected by management,changes (either increases or decreases) to insurance reserves may be required and would be recorded through Operating income (loss) from continuingoperations in the period the change was determined. During 2015, 2014 and 2013, the Company recorded a retrospective insurance reserve adjustment thatdecreased pre-tax insurance expense from continuing operations for self-insured programs by $8.5 million, $7.0 million and $4.9 million, respectively. TheCompany has programs in place to improve claims experience, such as disciplined claim and insurance litigation management and a focused approach toworkplace safety.The Company has not materially changed the methodology for calculating insurance reserves for the years presented. There are currently no known trends,demands, commitments, events or uncertainties that are reasonably likely to occur that would materially affect the methodology or assumptions describedabove. See Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements andSupplementary Data," for additional information related these out-of-period adjustments.Income TaxesThe Company's income tax expense, deferred tax assets and liabilities and reserves for uncertain tax positions reflect management's best estimate of taxes tobe paid. The Company is subject to various international, federal, state and local income taxes in jurisdictions where the Company operates. In determiningincome tax expense, the Company makes its best estimate of the annual effective income tax rate at the end of each quarter and applies that rate to year-to-date income (loss) before income taxes to arrive at the year-to-date income tax provision (exclusive of loss jurisdictions for which no tax benefit is realizablewith any discrete tax items recorded separately). At December 31, 2015, 2014 and 2013, the Company's annual effective income tax rate on income fromcontinuing operations was 79.5%, 214.8% and (16.7)%, respectively.Critical Estimate—Income TaxesAnnual effective income tax rates are estimated by giving recognition to currently enacted tax rates, tax holidays, tax credits, capital losses, and taxdeductions as well as certain exempt income and non-deductible expenses for all jurisdictions where the Company operates. Quarterly income tax provisionsincorporate any change in the year-to-date provision from the previous quarterly periods.The Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination,the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income, feasible andprudent tax planning strategies and recent financial operating results. In the event the Company was to determine that it would be able to realize deferred taxassets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be made that would reduce the provision forincome taxes.Valuation allowances of $110.7 million and $131.4 million at December 31, 2015 and 2014, respectively, related principally to deferred tax assets for U.K.pension liabilities, net operating loss carryforwards, capital losses, currency translation and foreign investment tax credits that are uncertain as torealizability. In 2015, the Company recorded a net decrease in the valuation allowance of $16.1 million related to current year pension adjustments recordedthrough Accumulated other comprehensive loss, the current year decrease from the currency translation in the amount of $11.5 million, and $6.3 milliondecrease related to a U.K. tax rate change. This was offset by a net increase of $13.2 million related to losses in certain jurisdictions where the Companydetermined that it is more likely than not that these assets will not be realized. In 2014, the Company recorded a net increase in the valuation allowance of$8.0 million related to current year pension adjustments recorded through Accumulated other comprehensive loss and a net increase of $6.6 million related tolosses in certain jurisdictions where the Company determined that it is more likely than not that these assets will not be realized. This was offset by a $9.3million reduction in valuation allowance from the effects of currency translation and a reduction of $1.1 million related to usage of a capital losscarryforward.A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination,including resolutions of any related appeals or litigation processes, based on its technical merits.39Table of ContentsThe unrecognized tax benefits at December 31, 2015 and 2014 were $5.1 million and $12.3 million, respectively, excluding accrued interest and penalties.The unrecognized tax benefit may decrease as a result of the lapse of statute of limitations or as a result of final settlement and resolution of outstanding taxmatters in various state and international jurisdictions.The Company has not provided U.S. income taxes on certain non-U.S. subsidiaries' undistributed earnings as such amounts are permanently reinvestedoutside the U.S. The Company evaluates future financial projections for its most significant subsidiaries, the need to reinvest earnings locally and the overallcash requirements of the Company. Based upon this evaluation, the Company determined that certain undistributed earnings from non-U.S. subsidiaries areindefinitely reinvested. The Company believes that it can generate sufficient cash flows to avoid the one-time tax costs associated with repatriation ofundistributed earnings to the U.S. from prior periods. At December 31, 2015 and 2014, such earnings were approximately $547 million and $705 million,respectively. It is not practical to determine the deferred income tax liability on these earnings if, in the future, they are remitted to the U.S. because theincome tax liability to be incurred, if any, is dependent on circumstances existing when remittance occurs.The Company has not materially changed the methodology for calculating income tax expense, deferred tax assets and liabilities and reserves for uncertaintax positions for the years presented or for quarterly periods. See Note 11, Income Taxes, to the Consolidated Financial Statements under Part II, Item 8,"Financial Statements and Supplementary Data," for additional disclosures related to these items.Research and DevelopmentInternal funding for research and development was as follows: Research and Development Expenses(In millions) 2015 2014 2013Harsco Metals & Minerals Segment $0.9 $1.4 $2.5Harsco Infrastructure Segment — — 2.9Harsco Rail Segment 1.9 2.5 3.4Harsco Industrial Segment 1.7 1.6 1.3Consolidated Totals $4.5 $5.5 $10.2The amounts shown exclude technology development and engineering costs classified in cost of services sold; cost of products sold; or selling, general andadministrative expenses.Recently Adopted and Recently Issued Accounting StandardsInformation on recently adopted and recently issued accounting standards is included in Note 2, Recently Adopted and Recently Issued AccountingStandards, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data."Dividend ActionThe Board normally reviews the dividend and the dividend rate on a quarterly basis.The Company paid four quarterly cash dividends of $0.205 per share in 2015. In November 2015, the Company reduced the quarterly dividend to $0.05125.This dividend was paid on February 16, 2016.Item 7A. Quantitative and Qualitative Disclosures about Market Risk.See Part I, Item 1A, "Risk Factors," for quantitative and qualitative disclosures about market risk.40Table of ContentsItem 8. Financial Statements and Supplementary Data.Index to Consolidated Financial Statements and Supplementary Data PageConsolidated Financial Statements of Harsco Corporation: Management's Report on Internal Control Over Financial Reporting42Report of Independent Registered Public Accounting Firm43Consolidated Balance Sheets44Consolidated Statements of Operations45Consolidated Statements of Comprehensive Income (Loss)46Consolidated Statements of Cash Flows47Consolidated Statements of Changes in Equity49Notes to Consolidated Financial Statements51 Supplementary Data (Unaudited): Two-Year Summary of Quarterly Results94Common Stock Price and Dividend Information9541Table of ContentsManagement's Report on Internal Control Over Financial ReportingManagement of Harsco Corporation, together with its consolidated subsidiaries (the "Company"), is responsible for establishing and maintaining adequateinternal control over financial reporting, as defined in Securities Exchange Act Rule 13a-15(f) or 15d-15(e). The Company's internal control over financialreporting is a process designed under the supervision of the Company's principal executive and principal financial officers to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external reporting purposes inaccordance with accounting principles generally accepted in the United States of America.The Company's internal control over financial reporting includes policies and procedures that:•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of theCompany;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements inaccordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Companyare 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'sassets that could have a material effect on the Company's consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies and procedures may deteriorate.Management has assessed the effectiveness of its internal control over financial reporting at December 31, 2015 based on the framework established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on thisassessment, management has determined that the Company's internal control over financial reporting was effective at December 31, 2015.The effectiveness of the Company's internal control over financial reporting at December 31, 2015 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report appearing in this Annual Report on Form 10-K, which expresses an unqualifiedopinion on the effectiveness of the Company's internal control over financial reporting at December 31, 2015./s/ F. NICHOLAS GRASBERGER, III /s/ PETER F. MINANF. Nicholas Grasberger, IIIPresident and Chief Executive Officer Peter F. MinanSenior Vice President and Chief Financial OfficerFebruary 26, 2016 February 26, 201642Table of ContentsReport of Independent Registered Public Accounting FirmTo The Stockholders of the Corporation:In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Harsco Corporation atDecember 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statementschedule listed in the accompanying index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when readin conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework 2013 issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, formaintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, includedin the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financialstatements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reportingwas maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overallfinancial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on theassessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits providea reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania February 26, 201643Table of ContentsHARSCO CORPORATIONCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts) December 31 2015 December 31 2014ASSETS Current assets: Cash and cash equivalents $79,756 $62,843Trade accounts receivable, net 254,877 325,104Other receivables 30,395 28,145Inventories 216,967 178,922Other current assets 82,527 88,465Total current assets 664,522 683,479Investments 252,609 288,505Property, plant and equipment, net 564,035 663,244Goodwill 400,367 416,155Intangible assets, net 53,043 58,524Other assets 136,751 159,320Total assets $2,071,327 $2,269,227LIABILITIES Current liabilities: Short-term borrowings $30,229 $16,748Current maturities of long-term debt 25,084 25,188Accounts payable 136,018 146,506Accrued compensation 38,899 53,780Income taxes payable 4,408 1,985Dividends payable 4,105 16,535Insurance liabilities 11,420 12,415Advances on contracts 107,250 117,398Due to unconsolidated affiliate 7,733 8,142Unit adjustment liability 22,320 22,320Other current liabilities 118,657 144,543Total current liabilities 506,123 565,560Long-term debt 855,751 829,709Deferred income taxes 12,095 6,379Insurance liabilities 30,400 35,470Retirement plan liabilities 241,972 350,889Due to unconsolidated affiliate 13,674 20,169Unit adjustment liability 57,614 71,442Other liabilities 42,895 37,699Total liabilities 1,760,524 1,917,317COMMITMENTS AND CONTINGENCIES HARSCO CORPORATION STOCKHOLDERS' EQUITY Preferred stock, Series A junior participating cumulative preferred stock — —Common stock, par value $1.25 (issued 112,405,302 and 112,357,348 shares at December 31, 2015 and 2014, respectively) 140,503 140,444Additional paid-in capital 170,699 165,666Accumulated other comprehensive loss (515,688) (532,256)Retained earnings 1,236,355 1,283,549Treasury stock, at cost (32,310,937 and 31,697,498 shares at December 31, 2015 and 2014, respectively) (760,299) (749,815)Total Harsco Corporation stockholders' equity 271,570 307,588Noncontrolling interests 39,233 44,322Total equity 310,803 351,910Total liabilities and equity $2,071,327 $2,269,227See accompanying notes to consolidated financial statements.44Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31 (In thousands, except per share amounts) 2015 2014 2013 Revenues from continuing operations: Service revenues $1,092,725 $1,366,246 $2,229,416 Product revenues 630,367 700,042 666,554 Total revenues 1,723,092 2,066,288 2,895,970 Costs and expenses from continuing operations: Cost of services sold 909,995 1,149,360 1,771,078 Cost of products sold 446,366 494,510 467,816 Selling, general and administrative expenses 242,112 284,737 482,117 Research and development expenses 4,510 5,467 10,166 Loss on disposal of the Harsco Infrastructure Segment and transaction costs 1,000 5,103 292,326 Other expenses 30,573 57,824 15,110 Total costs and expenses 1,634,556 1,997,001 3,038,613 Operating income (loss) from continuing operations 88,536 69,287 (142,643) Interest income 1,574 1,702 2,087 Interest expense (46,804) (47,111) (49,654) Change in fair value to the unit adjustment liability (8,491) (9,740) (966) Income (loss) from continuing operations before income taxes and equity income (loss) 34,815 14,138 (191,176) Income tax expense (27,678) (30,366) (31,975) Equity in income (loss) of unconsolidated entities, net 175 (1,558) 1,548 Income (loss) from continuing operations 7,312 (17,786) (221,603) Discontinued operations: Income (loss) on disposal of discontinued business (1,553) 176 (2,398) Income tax (expense) benefit related to discontinued business 573 (66) 906 Income (loss) from discontinued operations (980) 110 (1,492) Net income (loss) 6,332 (17,676) (223,095) Less: Net income attributable to noncontrolling interests (144) (4,495) (9,753) Net income (loss) attributable to Harsco Corporation $6,188 $(22,171) $(232,848) Amounts attributable to Harsco Corporation common stockholders: Income (loss) from continuing operations, net of tax $7,168 $(22,281) $(231,356) Income (loss) from discontinued operations, net of tax (980) 110 (1,492) Net Income (loss) attributable to Harsco Corporation common stockholders $6,188 $(22,171) $(232,848) Weighted average shares of common stock outstanding 80,234 80,884 80,755 Basic earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.09 $(0.28) $(2.86) Discontinued operations (0.01) — (0.02) Basic earnings (loss) per share attributable to Harsco Corporation common stockholders $0.08 $(0.27)(a)$(2.88) Diluted weighted average shares of common stock outstanding 80,365 80,884 80,755 Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.09 $(0.28) $(2.86) Discontinued operations (0.01) — (0.02) Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders $0.08 $(0.27)(a)$(2.88) (a) Does not total due to rounding.See accompanying notes to consolidated financial statements.45Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Years ended December 31(In thousands) 2015 2014 2013Net income (loss) $6,332 $(17,676) $(223,095)Other comprehensive income (loss): Foreign currency translation adjustments, net of deferred income taxes of $(2,314), $7,151 and$(5,924) in 2015, 2014 and 2013, respectively (88,255) (47,695) (55,827)Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(975), $(338) and$(1,410) in 2015, 2014 and 2013, respectively 8,617 (1,957) 1,047Pension liability adjustments, net of deferred income taxes of $(14,240), $13,454 and $(11,095) in2015, 2014 and 2013, respectively 93,582 (113,596) 95,604Unrealized gain (loss) on marketable securities, net of deferred income taxes of $10, $(3) and $(18) in2015, 2014 and 2013, respectively (16) 5 31Total other comprehensive income (loss) 13,928 (163,243) 40,855Total comprehensive income (loss) 20,260 (180,919) (182,240)Less: Comprehensive (income) loss attributable to noncontrolling interests 2,496 (2,893) (10,055)Comprehensive income (loss) attributable to Harsco Corporation $22,756 $(183,812) $(192,295)See accompanying notes to consolidated financial statements.46Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31(In thousands) 2015 2014 2013Cash flows from operating activities: Net income (loss) $6,332 $(17,676) $(223,095)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation 144,652 164,588 221,266Amortization 11,823 11,738 15,775Change in fair value to the unit adjustment liability 8,491 9,740 966Deferred income tax expense (benefit) 5,174 7,241 (24,277)Equity in (income) loss of unconsolidated entities, net (175) 1,558 (1,548)Dividends from unconsolidated entities 28 — 37Loss on disposal of the Harsco Infrastructure Segment — 2,911 272,250Other, net (6,429) 39,376 2,735Changes in assets and liabilities, net of acquisitions and dispositions of businesses:Accounts receivable 41,650 6,475 (33,953)Inventories (44,806) (20,788) 18,740Accounts payable (401) (29,416) 14,834Accrued interest payable (2,753) 70 (1,836)Accrued compensation (10,319) 5,699 (9,860)Advances on contracts (795) 92,769 (21,365)Harsco Infrastructure Segment 2010 Restructuring Program accrual — — (6,788)Harsco 2011/2012 Restructuring Program accrual (398) (2,672) (17,705)Other assets and liabilities (30,567) (44,886) (18,517)Net cash provided by operating activities 121,507 226,727 187,659Cash flows from investing activities: Purchases of property, plant and equipment (123,552) (208,859) (245,551)Proceeds from the Infrastructure Transaction — 15,699 303,039Proceeds from sales of assets 25,966 14,976 18,984Purchase of businesses, net of cash acquired* (7,788) (26,336) (2,849)Payment of unit adjustment liability (22,320) (22,320) (2,123)Other investing activities, net (2,679) (2,721) (8,219)Net cash provided (used) by investing activities (130,373) (229,561) 63,281Cash flows from financing activities: Short-term borrowings, net 18,875 8,851 (1,901)Current maturities and long-term debt: Additions 427,996 177,499 316,804Reductions (399,533) (131,007) (498,600)Cash dividends paid on common stock (65,730) (66,322) (66,211)Dividends paid to noncontrolling interests (4,498) (2,186) (3,381)Purchase of noncontrolling interests (395) — (166)Contributions from noncontrolling interests — — 4,825Common stock issued—options — — 371Common stock acquired for treasury (12,143) (941) —Proceeds from cross-currency interest rate swap termination 75,057 — —Deferred pension underfunding payment to unconsolidated affiliate (7,688) (7,688) —Deferred financing costs (9,487) — (405)Net cash provided (used) by financing activities 22,454 (21,794) (248,664)Effect of exchange rate changes on cash 3,325 (6,134) (3,921)Net increase (decrease) in cash and cash equivalents 16,913 (30,762) (1,645)Cash and cash equivalents at beginning of period 62,843 93,605 95,250Cash and cash equivalents at end of period $79,756 $62,843 $93,605 47Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years ended December 31(In thousands) 2015 2014 2013*Purchase of businesses, net of cash acquired Working capital $(560) $(1,107) $—Property, plant and equipment (72) (330) (2,437)Goodwill (3,490) (6,839) —Intangible Assets (4,078) (17,575) —Other noncurrent assets and liabilities, net 412 (485) (412)Net cash used to acquire businesses $(7,788) $(26,336) $(2,849)See accompanying notes to consolidated financial statements.48Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In thousands, except share and per shareamounts) Common Stock AdditionalPaid-inCapital RetainedEarnings Accumulated OtherComprehensiveIncome (Loss)(a) NoncontrollingInterests Issued Treasury TotalBalances, January 1, 2013 $140,080 $(745,205) $152,645 $1,671,117 $(411,168) $49,782 $857,251Net income (loss) (232,848) 9,753 (223,095)Cash dividends declared: Common @ $0.82 per share (66,228) (66,228)Noncontrolling interests (4,764) (4,764)Total other comprehensive income (loss), netof deferred income taxes of $(18,447) 40,553 302 40,855Contributions from noncontrolling interests 4,825 4,825Purchase of subsidiary shares fromnoncontrolling interest (292) 107 (185)Noncontrolling interests transferred in theInfrastructure Transaction (see Note 3,Acquisitions and Dispositions) 1,003 (16,912) (15,909)Stock options exercised, net 20,000 shares 25 375 400Vesting of restricted stock units and otherstock grants, net 74,297 shares 143 (1,032) 2,074 1,185Amortization of unearned stock-based,compensation, net of forfeitures 3,220 3,220Balances, December 31, 2013 $140,248 $(746,237) $159,025 $1,372,041 $(370,615) $43,093 $597,555(a) Includes changes due to the Infrastructure Transaction. See Note 18, Components of Other Comprehensive Loss.HARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)(In thousands, except share and per shareamounts) Common Stock AdditionalPaid-inCapital RetainedEarnings Accumulated OtherComprehensiveIncome (Loss) NoncontrollingInterests Issued Treasury TotalBalances, January 1, 2014 $140,248 $(746,237) $159,025 $1,372,041 $(370,615) $43,093 $597,555Net income (loss) (22,171) 4,495 (17,676)Cash dividends declared: Common @ $0.82 per share (66,321) (66,321)Noncontrolling interests (2,319) (2,319)Total other comprehensive loss, net ofdeferred income taxes of $20,264 (161,641) (1,602) (163,243)Contributions from noncontrolling interests 1,560 1,560Noncontrolling interests transferred in theInfrastructure Transaction (see Note 3,Acquisitions and Dispositions) (905) (905)Vesting of restricted stock units and otherstock grants, net 130,925 shares 196 (714) 2,069 1,551Treasury shares repurchased, 150,000 shares (2,864) (2,864)Amortization of unearned stock-basedcompensation, net of forfeitures 4,572 4,572Balances, December 31, 2014 $140,444 $(749,815) $165,666 $1,283,549 $(532,256) $44,322 $351,91049Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)(In thousands, except share and per shareamounts) Common Stock AdditionalPaid-inCapital RetainedEarnings Accumulated OtherComprehensiveIncome(Loss) NoncontrollingInterests Issued Treasury TotalBalances, January 1, 2015 $140,444 $(749,815) $165,666 $1,283,549 $(532,256) $44,322 $351,910Net income 6,188 144 6,332Cash dividends declared: Common @ $0.666 per share (b) (53,382) (53,382)Noncontrolling interests (4,498) (4,498)Total other comprehensive income (loss), netof deferred income taxes of $(17,519) 16,568 (2,640) 13,928Contributions from noncontrolling interests 2,100 2,100Purchase of subsidiary shares fromnoncontrolling interest (3) (395) (398)Sale of investment in consolidated subsidiary 200 200Vesting of restricted stock units and otherstock grants, net 31,147 shares 59 (264) (99) (304)Treasury shares repurchased, 596,632 shares (10,220) (10,220)Amortization of unearned stock-basedcompensation, net of forfeitures 5,135 5,135Balances, December 31, 2015 $140,503 $(760,299) $170,699 $1,236,355 $(515,688) $39,233 $310,803(b) In November 2015, the Company reduced the quarterly dividend to $0.051 per share.See accompanying notes to consolidated financial statements.50Table of ContentsHARSCO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Summary of Significant Accounting PoliciesConsolidationThe consolidated financial statements include all accounts of Harsco Corporation (the "Company"), all entities in which the Company has a controllingvoting interest and variable interest entities required to be consolidated in accordance with generally accepted accounting principles in the U.S.("U.S. GAAP"). Intercompany accounts and transactions have been eliminated among consolidated entities.The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company'sconsolidated financial statements and notes as required by U.S. GAAP.ReclassificationsCertain reclassifications have been made to prior year amounts to conform with current year classifications.Cash and Cash EquivalentsCash and cash equivalents include cash on hand, demand deposits and short-term investments that are highly liquid in nature and have an original maturityof three months or less.Equity Method InvestmentsThe equity method of accounting is used for investments in which the Company has the ability to exercise significant influence over, but not control of, aninvestee. Significant influence generally exists if the Company has an ownership interest representing between 20% and 50% of the voting stock of aninvestee. Equity method investments are recorded at initial fair value and are adjusted to recognize the Company's proportionate share of the investee's netincome or losses after the date of the investment, additional contributions made, distributions received and impairments resulting from other-than-temporarydeclines in estimated fair value.Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that an other-than-temporary decline in theestimated fair value of the investment has occurred. In these instances, the Company compares the estimated fair value of the investment to the book value ofthe investment to determine if an impairment has occurred. If the estimated fair value of the investment is less than the book value of the investment and thedecline is considered to be other-than-temporary, the excess of the book value over the estimated fair value is recognized as an impairment.See Note 5, Equity Method Investments, for additional information on equity method investments.InventoriesInventories are stated at the lower of cost or market. Inventories in the U.S. are principally accounted for using the last-in, first-out ("LIFO") method. TheCompany's remaining inventories are accounted for using the first-in, first-out ("FIFO") or average cost methods. See Note 4, Accounts Receivable andInventories, for additional information on inventories.DepreciationProperty, plant and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using, principally, the straight-line method.When property, plant and equipment is retired from service, the cost of the retirement is charged to the allowance for depreciation to the extent of theaccumulated depreciation and the balance is charged to income. Long-lived assets to be disposed of by sale are not depreciated while they are classified asheld-for-sale.LeasesThe Company leases certain property and equipment under noncancelable lease agreements. All lease agreements are evaluated and classified as either anoperating or capital lease in accordance with U.S. GAAP. A lease is classified as a capital lease if any of the following criteria are met: transfer of ownership tothe Company by the end of the lease term; the lease contains a bargain purchase option; the lease term is equal to or greater than 75% of the asset's economiclife; or the present value of future minimum lease payments is equal to or greater than 90% of the asset's fair market value. Operating lease expense isrecognized ratably over the lease term, including rent abatement periods and rent holidays. See Note 6, Property, Plant and Equipment, and Note 8, Debt andCredit Agreements, for additional information on capital leases and Note 9, Operating Leases, for additional information on operating leases.51Table of ContentsGoodwill and Other Intangible AssetsIn accordance with U.S. GAAP, goodwill is not amortized and is tested for impairment annually, or more frequently if indicators of impairment exist, or if adecision is made to dispose of a business. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as anoperating segment or one level below for which discrete financial information is available. A significant amount of judgment is involved in determining if anindicator of impairment has occurred. Such indicators may include declining cash flows or operating losses at the reporting unit level, a significant adversechange in legal factors or business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, or a morelikely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of, among others.The Company performs the annual goodwill impairment test as of October 1. The Company has five reporting units, only three of which have goodwillassociated with them as of December 31, 2015. Almost all of the Company's goodwill is included in the Harsco Metals & Minerals Segment.The evaluation of potential goodwill impairment involves comparing the current fair value of each reporting unit to the net book value, including goodwill.The Company uses a discounted cash flow model (“DCF model”) to estimate the current fair value of reporting units, as management believes forecastedoperating cash flows are the best indicator of current fair value. A number of significant assumptions and estimates are involved in the preparation of DCFmodels including future revenues and operating margin growth, the weighted-average cost of capital (“WACC”), tax rates, capital spending, pension funding,the impact of business initiatives, and working capital projections. These assumptions and estimates may vary significantly between reporting units. DCFmodels are based on approved long-range plans for the early years and historical relationships and projections for later years. WACC rates are derived frominternal and external factors including, but not limited to, the average market price of the Company's stock, shares outstanding, book value of the Company'sdebt, the long-term risk free interest rate, and both market and size-specific risk premiums. Due to the many variables noted above and the relative size of theCompany's goodwill, differences in assumptions may have a material impact on the results of the Company's annual goodwill impairment testing. If the netbook value of a reporting unit were to exceed the current fair value, the second step of the goodwill impairment test would be required to determine if animpairment existed and the amount of goodwill impairment to record, if any. The second step of the goodwill impairment test compares the net book value ofa reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwill represents the excess of fair value of the reportingunit over the fair value amounts assigned to all of the assets and liabilities of the reporting unit if it were to be acquired in a hypothetical businesscombination and the current fair value of the reporting unit represented the purchase price. As necessary, the Company may use valuation experts to assistwith the second step of the goodwill impairment test.See Note 7, Goodwill and Other Intangible Assets, for additional information on goodwill.Impairment of Long-Lived Assets (Other than Goodwill)Long-lived assets are reviewed for impairment when events and circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are reviewed for impairment when events and circumstances indicate the book value of an asset may be impaired. The Company's policy is todetermine if an impairment loss exists when it is determined that the carrying amount of the asset exceeds the sum of the expected undiscounted future cashflows resulting from use of the asset, and its eventual disposition. Impairment losses are measured as the amount by which the carrying amount of the assetexceeds its fair value, normally as determined in either open market transactions or through the use of a DCF model. Long-lived assets to be disposed of arereported at the lower of the carrying amount or fair value less cost to sell. See Note 3, Acquisitions and Dispositions, and Note 17, Other Expenses, foradditional information on impairment of long-lived assets (other than goodwill).Deferred Financing CostsThe Company has incurred debt issuance costs which are recognized as Other assets in the Consolidated Balance Sheets. Debt issuance costs are amortizedand recognized as interest expense over the contractual term of the related indebtedness or shorter period if appropriate based upon contractual terms.Whenever indebtedness is modified from its original terms, an evaluation is made whether an accounting modification or extinguishment has occurred inorder to determine the accounting treatment for debt issuance costs related to the debt modification.52Table of ContentsRevenue RecognitionService revenues and product revenues are recognized when they are realized or realizable and when earned. Revenue is realized or realizable and earnedwhen all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the Company'sprice to the buyer is fixed or determinable and collectability is reasonably assured. Service revenues include the service components of the Harsco Metals &Minerals and Harsco Rail Segments. Product revenues include the Harsco Industrial Segment and the product revenues of the Harsco Metals & Minerals andHarsco Rail Segments.Harsco Metals & Minerals Segment—This Segment provides services predominantly on a long-term, volume-of-production contract basis. Contracts mayinclude both fixed monthly fees as well as variable fees based upon specific services provided to the customer. The fixed-fee portion is recognizedperiodically as earned (normally monthly) over the contractual period. The variable-fee portion is recognized as services are performed and differs fromperiod to period based upon the actual provision of services. This Segment also sells industrial abrasives and roofing granule products. Product revenues arerecognized generally when title and risk of loss transfer, and when all revenue recognition criteria have been met. Title and risk of loss for domesticshipments generally transfer to the customer at the point of shipment. For export sales, title and risk of loss transfer in accordance with the internationalcommercial terms included in the specific customer contract.Harsco Industrial Segment—This Segment sells industrial grating products, heat exchangers, and heat transfer products. Product revenues are generallyrecognized when title and risk of loss transfer, and when all of the revenue recognition criteria have been met. Title and risk of loss for domestic shipmentsgenerally transfer to the customer at the point of shipment. For export sales, title and risk of loss transfer in accordance with the international commercialterms included in the specific customer contract or purchase order.Harsco Rail Segment—This Segment sells railway track maintenance equipment, after-market parts and provides railway track maintenance services. Productrevenue is recognized generally when title and risk of loss transfer, and when all of the revenue recognition criteria have been met. Title and risk of loss fordomestic shipments generally transfer to the customer at the point of shipment. For export sales, title and risk of loss transfer in accordance with theinternational commercial terms included in the specific customer contract. Revenue may be recognized subsequent to the transfer of title and risk of loss forcertain product sales, if the specific sales contract includes a customer acceptance clause that provides for different timing. In those situations, revenue isrecognized after transfer of title and risk of loss and after customer acceptance. Services are predominantly on a long-term, time-and-materials contract basis.Revenue is recognized when earned as services are performed within the long-term contracts.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of the events that have been included in the consolidated financial statements. Under this method, deferred tax assets andliabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect forthe year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in theperiod that includes the enactment date.The Company records deferred tax assets to the extent that the Company believes that these assets will more likely than not be realized. In making suchdeterminations, the Company considers all available positive and negative evidence, including future reversals of existing deferred tax liabilities, projectedfuture taxable income, tax planning strategies and recent financial results. In the event the Company was to determine that it would be able to realize deferredincome tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be made that would reduce theprovision for income taxes.The Company prepares and files tax returns based on interpretation of tax laws and regulations and records its provision for income taxes based on theseinterpretations. Uncertainties may exist in estimating the Company's tax provisions and in filing tax returns in the many jurisdictions in which the Companyoperates, and as a result these interpretations may give rise to an uncertain tax position. The tax benefit from an uncertain tax position is recognized when itis more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on itstechnical merits. Each subsequent period the Company determines if existing or new uncertain tax positions meet a more likely than not recognitionthreshold and adjust accordingly.The Company recognizes interest and penalties related to unrecognized tax benefits within Income tax expense in the accompanying ConsolidatedStatements of Operations. Accrued interest and penalties are included in Other liabilities on the Consolidated Balance Sheets.53Table of ContentsIn general, it is the practice and the intention of the Company to reinvest the undistributed earnings of its non-U.S. subsidiaries. Should the Companyrepatriate future earnings, such amounts would become subject to U.S. taxation upon remittance of dividends and under certain other circumstances, therebygiving recognition to current tax expense and to international tax credits.The significant assumptions and estimates described in the preceding paragraphs are important contributors to the effective tax rate each year.See Note 11, Income Taxes, for additional information on income taxes.Accrued Insurance and Loss ReservesThe Company retains a significant portion of the risk for U.S. workers' compensation, U.K. employers' liability, automobile, general and product liabilitylosses. During 2015, 2014 and 2013, the Company recorded insurance expense from continuing operations related to these lines of coverage of $13.6million, $19.1 million and $32.3 million, respectively. Reserves have been recorded that reflect the undiscounted estimated liabilities including claimsincurred but not reported. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect thecovered liability. Changes in the estimates of the reserves are included in net income (loss) in the period determined. During 2015, 2014 and 2013, theCompany recorded retrospective insurance reserve adjustments that decreased pre-tax insurance expense from continuing operations for self-insuredprograms by $8.5 million, $7.0 million and $4.9 million, respectively. At December 31, 2015 and 2014, the Company has recorded liabilities of $41.8million and $47.9 million, respectively, related to both asserted as well as unasserted insurance claims. Included in the balances at December 31, 2015 and2014 were $3.4 million and $3.8 million, respectively, of recognized liabilities covered by insurance carriers. Amounts estimated to be paid within one yearhave been included in current caption, Insurance liabilities, with the remainder included in non-current caption, Insurance liabilities, on the ConsolidatedBalance Sheets.WarrantiesThe Company has recorded product warranty reserves of $7.8 million, $8.9 million and $9.5 million at December 31, 2015, 2014 and 2013, respectively. TheCompany provides for warranties of certain products as they are sold. The following table summarizes the warranty activity for 2015, 2014 and 2013:(In thousands) 2015 2014 2013Warranty reserves, beginning of the year $8,886 $9,548 $8,628Accruals for warranties issued during the year 3,656 3,208 5,016Reductions related to pre-existing warranties (3,042) (2,680) (1,502)Warranties paid (1,629) (1,186) (2,573)Other (principally foreign currency translation) (27) (4) (21)Warranty reserves, end of the year $7,844 $8,886 $9,548Warranty expense and payments are incurred principally in the Harsco Industrial and Harsco Rail Segments. Warranty activity may vary from year to yeardepending upon the mix of revenues and contractual terms related to product warranties.Foreign Currency TranslationThe financial statements of the Company's subsidiaries outside the U.S., except for those subsidiaries located in highly inflationary economies and thoseentities for which the U.S. dollar is the currency of the primary economic environment in which the entity operates, are measured using the local currency asthe functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates at the balance sheet date. Resulting translationadjustments are recorded in the cumulative translation adjustment account, a separate component of Accumulated other comprehensive loss on theConsolidated Balance Sheets. Income and expense items are translated at average monthly exchange rates. Gains and losses from foreign currencytransactions are included in Operating income (loss) from continuing operations. For subsidiaries operating in highly inflationary economies, and thoseentities for which the U.S. dollar is the currency of the primary economic environment in which the entity operates, gains and losses on foreign currencytransactions and balance sheet translation adjustments are included in Operating income (loss) from continuing operations. In 2015, 2014 and 2013, theCompany had no subsidiaries operating in highly inflationary economies.54Table of ContentsFinancial Instruments and HedgingThe Company has operations throughout the world that are exposed to fluctuations in related foreign currencies in the normal course of business. TheCompany seeks to reduce exposure to foreign currency fluctuations through the use of forward exchange contracts. The Company does not hold or issuefinancial instruments for trading purposes, and it is the Company's policy to prohibit the use of derivatives for speculative purposes. The Company has aForeign Currency Risk Management Committee that meets periodically to monitor foreign currency risks.The Company executes foreign currency exchange forward contracts to hedge transactions for firm purchase commitments, to hedge variable cash flows offorecasted transactions and for export sales denominated in foreign currencies. These contracts are generally for 90 days or less; however, where appropriate,longer-term contracts may be utilized. For those contracts that are designated as qualified cash flow hedges, gains or losses are recorded in Accumulated othercomprehensive loss on the Consolidated Balance Sheets.The Company uses cross-currency interest rate swaps ("CCIRs") in conjunction with certain debt issuances in order to lock in fixed local currency interestrates. Under these CCIRs, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest based on a fixed local currency ratebased on the contractual amounts in U.S. dollars and the local currency, respectively.Amounts recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets are reclassified into operations in the same period orperiods during which the hedged forecasted transaction affects income. The cash flows from these contracts are classified consistent with the cash flows fromthe transaction being hedged (e.g., the cash flows related to contracts to hedge the purchase of fixed assets are included in cash flows from investingactivities, etc.). The Company also enters into certain forward exchange contracts that are not designated as hedges. Gains and losses on these contracts arerecognized in operations based on changes in fair market value. For fair value hedges of a firm commitment, the gain or loss on the derivative and theoffsetting gain or loss on the hedged firm commitment are recognized currently in operations.See Note 15, Financial Instruments, for additional information on financial instruments and hedging.Earnings Per ShareBasic earnings per share are calculated using the weighted-average shares of common stock outstanding, while diluted earnings per share reflect the dilutiveeffects of stock-based compensation. All share and per share amounts are restated for any stock splits and stock dividends that occur prior to the issuance ofthe financial statements. See Note 13, Capital Stock, for additional information on earnings per share.Use of Estimates in the Preparation of Financial StatementsThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts ofrevenues and expenses. Actual results could differ from those estimates.2. Recently Adopted and Recently Issued Accounting StandardsThe following accounting standards have been adopted in 2015:On January 1, 2015, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to reporting discontinuedoperations and the disclosure of disposals of components of an entity. The changes modify the criteria related to what transactions constitute discontinuedoperations and expand disclosure requirements. The adoption of these changes did not have a material impact on the Company's consolidated financialstatements.The following accounting standards have been issued and become effective for the Company at a future date:In May 2014, the FASB issued changes related to the recognition of revenue from contracts with customers. The changes clarify the principles forrecognizing revenue and develop a common revenue standard. The core principle of the changes is that an entity should recognize revenue to depict thetransfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods or services. The changes also require additional disclosures related to revenue recognition. In July 2015, the FASB deferred the effective date ofthese changes by one year, but will permit entities to adopt one year earlier. The changes become effective for the Company on January 1, 2018. Managementis currently evaluating these changes.55Table of ContentsIn August 2014, the FASB issued changes related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability tocontinue as a going concern and to provide related footnote disclosures. The changes become effective for the Company on January 1, 2017. Managementhas determined that these changes will not have a material impact on the Company's consolidated financial statements.In January 2015, the FASB issued changes related to reporting extraordinary and unusual items. The changes simplify income statement presentation byeliminating the concept of extraordinary items. The changes become effective for the Company on January 1, 2016. Management has determined that thesechanges will not have a material impact on the Company's consolidated financial statements.In February 2015, the FASB issued changes related to consolidation. The changes update consolidation analysis and affect reporting entities that are requiredto evaluate whether they should consolidate certain legal entities. The changes become effective for the Company on January 1, 2016. Management hasdetermined that these changes will not have a material impact on the Company's consolidated financial statements.In April 2015, the FASB issued changes related to simplifying the presentation of debt issuance costs. The changes require that debt issuance costs related toa recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability. In August 2015, the FASBadded guidance about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The changes becomeeffective for the Company on January 1, 2016. Management has determined that these changes will not have a material impact on the Company'sconsolidated financial statements.In April 2015, the FASB issued changes related to the determination of whether a cloud computing arrangement includes a software license. If a cloudcomputing arrangement is determined to include a software license, then the customer accounts for the software license element consistent with theacquisition of other software licenses. If the arrangement is determined not to contain a software license, the customer should account for the arrangement as aservice contract. The changes become effective for the Company on January 1, 2016. Management has determined that these changes will not have a materialimpact on the Company's consolidated financial statements.In July 2015, the FASB issued changes related to the simplification of the measurement of inventory. The changes require entities to measure most inventoryat the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost ormarket. The changes do not apply to inventories that are measured using either the last-in, first-out method or the retail inventory method. The changesbecome effective for the Company on January 1, 2017. Management has determined that these changes will not have a material impact on the Company'sconsolidated financial statements.In September 2015, the FASB issued changes simplifying the accounting for measurement period adjustments for business combinations. The changes resultin an acquirer no longer being required to retrospectively reflect adjustments to provisional amounts during the measurement period as if they wererecognized as of the acquisition date. Instead the acquirer would record the effect of the change to the provisional amounts during the measurement period inwhich the adjustment is identified. The changes also require additional disclosure related to such measurement period adjustments. The changes becomeeffective for the Company on January 1, 2016. Management has determined that these changes will not have a material impact on the Company'sconsolidated financial statements.In November 2015, the FASB issued changes that require deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financialposition. The changes apply to all entities that present a classified statement of financial position. The current requirement that deferred tax assets andliabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected. The changes become effective for the Companyon January 1, 2017. Had these changes been adopted at December 31, 2015, the Company's working capital would have decreased by $38.1 million.56Table of Contents3. Acquisitions and DispositionsAcquisitionsIn January 2014, the Company acquired Hammco Corporation ("Hammco"), a U.S. manufacturer of high specification air-cooled heat exchangers for thenatural gas and petrochemical processing markets. Hammco has been included in the results of the Harsco Industrial Segment. In March 2015, the Companyacquired Protran Technology ("Protran"), a U.S. designer and producer of safety systems for transportation and industrial applications; and in April 2015, theCompany acquired JK Rail Products, LLC ("JK Rail"), a provider of after-market parts for railroad track maintenance. Protran and JK Rail have been includedin the results of the Harsco Rail Segment. Inclusion of pro forma financial information for these transactions is not necessary as the acquisitions areimmaterial. The purchase price allocations for these acquisitions are final.DispositionsInfrastructure TransactionIn November 2013, the Company consummated the previously announced transaction to sell the Company's Harsco Infrastructure Segment into a strategicventure with Clayton, Dubilier & Rice ("CD&R") as part of a transaction that combines the Harsco Infrastructure Segment with Brand Energy & InfrastructureServices, Inc., which CD&R simultaneously acquired (the "Infrastructure Transaction"). The Company has contributed substantially all of the Company'sequity interest in, and the net assets of, the Harsco Infrastructure Segment to the strategic venture in exchange for $300 million, subject to working capitaland other adjustments, and an approximate 29% equity interest in the resulting entity (the "Infrastructure strategic venture" or "Brand"). The Company'sequity interest in the Infrastructure strategic venture is accounted for under the equity method of accounting as prescribed by U.S. GAAP. See Note 1,Summary of Significant Accounting Policies, and Note 5, Equity Method Investments, for additional information on equity method investments.As a result of the Infrastructure Transaction, the Company recorded an estimated loss on disposal of the Harsco Infrastructure Segment of $272.3 millionduring 2013 and recorded additional losses of $2.9 million and $1.0 million during 2014 and 2015, respectively. Further adjustment to the loss on disposalof the Harsco Infrastructure Segment may be necessary as the result of the final valuation of certain items. The Company does not expect that the ultimateconclusion of these items will have a material adverse effect on the Company's financial condition, results of operations or cash flows. The loss on disposal ofthe Harsco Infrastructure Segment represents the difference between the book value of the Harsco Infrastructure Segment, less costs to sell, and the sum of thecash consideration plus the fair value of the Company's approximate 29% equity interest in the Infrastructure strategic venture. The fair value of the equityinterest was determined based on the expected future discounted cash flows of the Infrastructure strategic venture. Additionally, the Company incurred $2.2 million and $20.1 million of transaction costs during the years ended 2014 and 2013, respectively, in conjunctionwith the Infrastructure Transaction.4. Accounts Receivable and InventoriesAccounts receivable consist of the following: Accounts Receivable(In thousands) December 31 2015 December 31 2014Trade accounts receivable $280,526 $340,223Less: Allowance for doubtful accounts (25,649) (15,119)Trade accounts receivable, net $254,877 $325,104 Other receivables (a) $30,395 $28,145(a)Other receivables include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable,net.The following table reflects the provision for doubtful accounts related to trade accounts receivable for the years ended December 31, 2015, 2014 and 2013: Years Ended December 31(In thousands) 2015 2014 2013Provision for doubtful accounts related to trade accounts receivable $13,047 $9,892 $10,17557Table of ContentsInventories consist of the following: Inventories(In thousands) December 31 2015 December 31 2014Finished goods $32,586 $30,525Work-in-process 86,745 28,690Raw materials and purchased parts 70,755 87,985Stores and supplies 26,881 31,722Total inventories $216,967 $178,922Valued at lower of cost or market: LIFO basis $102,309 $109,348FIFO basis 64,760 13,383Average cost basis 49,898 56,191Total inventories $216,967 $178,922Inventories valued on the LIFO basis at December 31, 2015 and 2014 were approximately $32 million and $31 million, respectively, less than the amounts ofsuch inventories valued at current costs.During 2015, there was no significant impact on net income as a result of reducing certain inventory quantities valued on a LIFO basis. During 2014, as aresult of reducing certain inventory quantities valued on the LIFO basis, net income (loss) decreased from that which would have been recorded under theFIFO basis of valuation by $0.1 million. During 2013, there was no significant impact on net income (loss) as a result of reducing certain inventory quantitiesvalued on a LIFO basis.5. Equity Method InvestmentsAs a result of the Infrastructure Transaction, the Company owns an approximate 29% equity interest in Brand at December 31, 2015. See Note 3, Acquisitionsand Dispositions, for additional information related to the Infrastructure Transaction.The book value of the Company's equity method investment in Brand at December 31, 2015 and 2014 was $250.1 million and $285.7 million, respectively.The Company's initial underlying equity in the net assets of Brand, upon consummation of the Infrastructure Transaction, was approximately $225 million.The difference between the initial fair value of the Company's equity method investment in Brand and the Company's underlying equity in the net assets ofBrand was determined to be equity method goodwill and is not amortized. No instances of impairment were noted on the Company's equity methodinvestment at December 31, 2015.The Company's proportionate share of Brand's net income or loss is recorded one quarter in arrears. Accordingly, the Consolidated Statement of Operationsfor the year ended December 31, 2013 does not include any amounts related to the Infrastructure strategic venture in the caption, Equity in income (loss) ofunconsolidated entities, net. Brand's summarized balance sheet information at September 30, 2015 and 2014 and summarized statement of operationsinformation for the year ended September 30, 2015 and the period from November 27, 2013 through September 30, 2014 are summarized as follows: (In thousands) September 30 2015 September 30 2014Summarized Balance Sheet Information of Brand: Current assets $806,510 $815,809Property and equipment , net 894,537 923,056Other noncurrent assets 1,519,722 1,594,669Total assets $3,220,769 $3,333,534 Short-term borrowings, including current portion of long-term debt $68,687 $68,748Other current liabilities 397,759 360,714Long-term debt 1,736,081 1,747,522Other noncurrent liabilities 383,638 406,636Total liabilities 2,586,165 2,583,620Equity 634,604 749,914Total liabilities and equity $3,220,769 $3,333,53458Table of Contents(In thousands) Year EndedSeptember 30 2015 Period FromNovember 27 2013Through September30 2014 (a)Summarized Statement of Operations Information of Brand: Net revenues $2,976,471 $2,559,556Gross profit 649,596 559,376Net income (loss) attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries 605 (4,848)Harsco's equity in income (loss) of Brand 175 (1,595)(a) The Company's equity method investment in Brand began on November 26, 2013; accordingly, there is only approximately ten months of related equity income (loss). The resultsof the Harsco Infrastructure Segment from January 1, 2013 through the date of closing are reported in the Company's results of operations for 2013.The Company is required to make quarterly payments to the Company's partner in the Infrastructure strategic venture, either (at the Company's election) (i) incash, with total payments to equal approximately $22 million per year on a pre-tax basis (approximately $15 million per year after-tax), or (ii) in kindthrough the transfer of approximately 2.5% of the Company's ownership interest in the Infrastructure strategic venture on an annual basis (the "unitadjustment liability"). The Company will recognize the change in fair value to the unit adjustment liability each period until the Company is no longerrequired to make these payments or chooses not to make these payments. The change in fair value to the unit adjustment liability is a non-cash expense. Forthe years ended December 31, 2015 and 2014, the Company recognized $8.5 million and $9.7 million, respectively, of change in fair value to the unitadjustment liability.The Consolidated Balance Sheets as of December 31, 2015 and 2014 include balances related to the unit adjustment liability of $79.9 million and $93.8million, respectively, in the current and non-current captions, Unit adjustment liability. A reconciliation of beginning and ending balances related to the unitadjustment liability is included in Note 15, Financial Instruments.The Company will continue to evaluate the implications of making payments in cash or in kind based upon performance of the Infrastructure strategicventure and the Company's liquidity and capital resources. In the future, should the Company decide not to make the cash payment, the value of both theequity method investment in Brand and the related unit adjustment liability may be impacted, and the change may be reflected in earnings in that period.Balances related to transactions between the Company and Brand are as follows:(In thousands) December 31 2015 December 31 2014Balances due from Brand $1,557 $1,860Balances due to Brand 21,407 28,311The remaining balances between the Company and Brand, at December 31, 2015, relate primarily to transition services and the funding of certain transferreddefined benefit pension plan obligations through 2018. There is not expected to be any significant level of revenue or expense between the Company andBrand on an on-going basis once all aspects of the Infrastructure Transaction have been finalized.59Table of Contents6. Property, Plant and EquipmentProperty, plant and equipment consist of the following:(In thousands) EstimatedUseful Lives December 31 2015 December 31 2014Land — $10,932 $15,721Land improvements 5-20 years 15,277 15,898Buildings and improvements (a) 5-40 years 191,356 205,409Machinery and equipment 3-20 years 1,661,914 1,861,965Uncompleted construction — 36,990 87,414Gross property, plant and equipment 1,916,469 2,186,407Less: Accumulated depreciation (1,352,434) (1,523,163)Property, plant and equipment, net $564,035 $663,244(a) Buildings and improvements include leasehold improvements that are amortized over the shorter of their useful lives or the initial term of the lease.Included in the amounts are $16.0 million and $22.3 million of property, plant and equipment under capital leases at December 31, 2015 and 2014,respectively.7. Goodwill and Other Intangible AssetsGoodwill by SegmentThe following table reflects the changes in carrying amounts of goodwill by segment for the years ended December 31, 2015 and 2014:(In thousands) Harsco Metals& MineralsSegment HarscoIndustrialSegment HarscoRailSegment ConsolidatedTotalsBalance at December 31, 2013 $421,955 $— $9,310 $431,265Changes to goodwill (300) 6,839(a)— 6,539Foreign currency translation (21,649) — — (21,649)Balance at December 31, 2014 400,006 6,839 9,310 416,155Changes to goodwill (493) (33) 3,490(b)2,964Foreign currency translation (18,752) — — (18,752)Balance at December 31, 2015 $380,761 $6,806 $12,800 $400,367(a)Changes to goodwill relate to the initial acquisition of Hammco and related purchase price adjustments in accordance with U.S. GAAP occurring during the measurement period.See Note 3, Acquisitions and Dispositions.(b)Changes to goodwill in the Harsco Rail Segment relate to the acquisitions of Protran and JK Rail. See Note 3, Acquisitions and Dispositions.The Company's methodology for determining reporting unit fair value is described in Note 1, Summary of Significant Accounting Policies. Performance ofthe Company's 2015 annual impairment test did not result in impairment of any of the Company's reporting units.Intangible AssetsIntangible assets totaled $53.0 million, net of accumulated amortization of $149.8 million at December 31, 2015 and $58.5 million, net of accumulatedamortization of $147.9 million at December 31, 2014. The following table reflects these intangible assets by major category: December 31, 2015 December 31, 2014(In thousands) Gross CarryingAmount AccumulatedAmortization Gross CarryingAmount AccumulatedAmortizationCustomer related $153,287 $111,227 $157,530 $112,211Non-compete agreements 1,092 1,092 1,107 1,039Patents 5,882 5,495 6,079 5,399Technology related 25,559 23,089 26,548 21,233Trade names 8,303 4,194 7,745 3,733Other 8,701 4,669 7,420 4,290Total $202,824 $149,766 $206,429 $147,90560Table of ContentsAs part of the acquisition of Protran and JK Rail as discussed in Note 3, Acquisitions and Dispositions, the Company acquired the following finite-livedintangible assets (by major class):(In thousands) Gross CarryingAmount ResidualValue Weighted-averageamortization periodCustomer related $3,398 None 19 yearsTrade names 580 None 20 yearsOther 100 None 1 yearTotal $4,078 Amortization expense for intangible assets was $8.8 million, $9.9 million and $13.8 million for 2015, 2014 and 2013, respectively. The following tableshows the estimated amortization expense for the next five fiscal years based on current intangible assets.(In thousands) 2016 2017 2018 2019 2020Estimated amortization expense (a) $8,000 $5,500 $5,250 $4,750 $4,500(a)These estimated amortization expense amounts do not reflect the potential effect of future foreign currency exchange rate fluctuations.8. Debt and Credit AgreementsThe Company has a multi-year revolving credit facility that is available for use throughout the world. The following table illustrates the amount outstandingunder the multi-year revolving credit facility and available credit at December 31, 2015. The multi-year revolving credit facility is described in more detailbelow the table. Summary of Revolving Credit Facility December 31, 2015(In thousands) FacilityLimit OutstandingBalance OutstandingLetters of Credit AvailableCreditMulti-year revolving credit facility (a U.S.-based program) $350,000 $165,000 $44,400 $140,600In March 2012, the Company entered into an Amended and Restated Five Year Credit Agreement (the "Initial Credit Agreement") providing for $525 millionof borrowing capacity through a syndicate of 14 banks.On September 12, 2013, the Company entered into Amendment No.1 ("Amendment No. 1") to the Initial Credit Agreement. In addition to certainadministrative and conforming modifications, Amendment No. 1 replaced the total consolidated debt to total consolidated capital ratio debt covenant. OnDecember 20, 2013, the Company entered into Amendment No. 2 ("Amendment No. 2") to the Initial Credit Agreement. Amendment No. 2 modified certaindefined terms to reflect the impact of the Infrastructure Transaction.On March 27, 2015, the Company entered into Amendment No. 3 ("Amendment No. 3") to the Initial Credit Agreement. Amendment No. 3 provided for (i)decreased borrowing capacity; (ii) contingent extension of the termination date; (iii) modified certain debt covenants; and (iv) modified certain definedterms. During the three months ended March 31, 2015, the Company expensed $0.6 million of fees associated with Amendment No. 3.On December 2, 2015, the Company, entered into (i) an amendment and restatement agreement (the “Amendment Agreement”) and (ii) a second amended andrestated credit agreement (the “Credit Agreement” and, together with the Amendment Agreement, the “Financing Agreements”). The Financing Agreementsincreased the Company's overall borrowing capacity from$500 million to $600 million by (i) amending and restating the Company’s existing creditagreement, (ii) establishing a term loan facility in an initial aggregate principal amount of $250 million, by converting a portion of the outstanding balanceunder the Initial Credit Agreement on a dollar-for-dollar basis (such facility, the “Term Loan Facility”) and (iii) reducing the revolving credit facility limit to$350 million (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”).Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum ranging from 87.5 to 200 basis points over the Base Rate or 187.5 to300 basis points over the Adjusted LIBOR Rate (for borrowings in US dollars or Sterling) or the Adjusted EURIBOR Rate (for borrowing in Euro), each asdefined in the Credit Agreement.61Table of ContentsThe Senior Secured Credit Facilities impose certain restrictions including, but not limited to, restrictions as to types and amounts of debt or liens that may beincurred by the Company; limitations on increases in dividend payments and limitations on certain acquisitions by the Company.The Senior Secured Credit Facilities mature on June 2, 2019, provided that if the notes issued by the Company on May 15, 2008 have not been tendered,repurchased, redeemed, discharged or refinanced in full prior to February 13, 2018, the Senior Secured Credit Facilities become due on such date.The Term Loan Facility requires scheduled quarterly payments, each equal to (i) with respect to quarterly payments made in 2016, 1.25% of the originalprincipal amount of the loans under the Term Loan Facility made at closing and (ii) with respect to quarterly payments made in any year thereafter, 2.50% ofthe original principal amount of the loans under the Term Loan Facility made at closing. These payments are reduced by the application of any prepayments,and any remaining balance is due and payable at maturity. The Credit Agreement requires certain mandatory prepayments of outstanding loans under theTerm Loan Facility, subject to certain exceptions, based on the net cash proceeds of certain asset sales and casualty and condemnation events, in some casessubject to reinvestment rights and certain other exceptions, and the net cash proceeds of any issuance of debt, excluding permitted debt issuances.With respect to the Senior Secured Credit Facilities, the obligations of the Company are guaranteed by substantially all of the Company’s current and futurewholly-owned domestic subsidiaries (the “Guarantors”). All obligations under the Senior Secured Credit Facilities, and the guarantees of those obligations,are secured, subject to certain exceptions, by substantially all of the parent company’s assets and the assets of the Guarantors.At December 31, 2015, the Company had $415.0 million of borrowings under the Senior Secured Credit Facilities consisting of $250.0 million under theTerm Loan Facility and $165.0 million under the Revolving Credit Facility. At December 31, 2015, of this balance $380.5 million was classified as long-term debt, $22.0 million was classified as short-term borrowings and $12.5 million was classified as current maturities of long-term debt in the ConsolidatedBalance Sheets. At December 31, 2014, the Company had $98.5 million of borrowings under the Initial Credit Agreement and all such balances wereclassified as long-term debt in the Consolidated Balance Sheets. Classification of such balances is based on the Company's ability and intent to repay suchamounts over the subsequent twelve months, as well as reflects the Company's ability and intent to borrow for a period longer than a year. To the extent theCompany expects to repay any amounts within the subsequent twelve months, the amounts are classified as short-term borrowings or current maturities oflong-term debt.Short-term borrowings amounted to $30.2 million and $16.7 million at December 31, 2015 and 2014, respectively. At December 31, 2015, Short-termborrowings consist primarily of $22.0 million of Revolving Credit Facility borrowings and bank overdrafts and at December 31, 2014, such borrowingsconsist primarily of bank overdrafts. The weighted-average interest rate for short-term borrowings at December 31, 2015 and 2014 was 4.3% and 11.7%,respectively. Long-Term Debt(In thousands) December 31 2015 December 31 20145.75% notes due May 15, 2018 $449,005 $448,626Senior Secured Credit Facilities: Term Loan Facility 250,000 —Revolving Credit Facility (long-term portion) 143,000 —2.7% Notes due October 15, 2015 — 249,733Other financing payable (including capital leases) in varying amounts due principally through 2017 with aweighted-average interest rate of 5.6% and 4.0% at December 31, 2015 and 2014, respectively 38,830 156,538Total debt 880,835 854,897Less: current maturities (25,084) (25,188)Total long-term debt $855,751 $829,709The maturities of long-term debt for the four years following December 31, 2016 are as follows:(In thousands) 2017 $45,2942018 479,0122019 331,2252020 18962Table of ContentsCash payments for interest on all debt were $44.4 million, $44.2 million and $50.1 million in 2015, 2014 and 2013, respectively.The Credit Agreement contains a consolidated net debt to consolidated EBITDA ratio covenant, which is not to exceed 4.0 to 1.0, and a minimumconsolidated EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0 to 1.0. The consolidated net debt to consolidatedEBITDA ratio covenant is reduced to 3.75 to 1.0 after December 31, 2016 and to 3.5 to 1.0 after June 30, 2017. The Company’s 5.75% notes includecovenants that require the Company to offer to repurchase the notes at 101% of par in the event of a change of control of the Company or disposition ofsubstantially all of the Company’s assets in combination with a downgrade in the Company’s credit rating to non-investment grade. At December 31, 2015,the Company was in compliance with these and all other covenants.Additionally, upon the completion of the potential separation of the Harsco Metals & Minerals Segment, the Company would be required to repay the TermLoan Facility and the consolidated net debt to consolidated EBITDA ratio would be reduced to 3.0 to 1.0 for the Credit Agreement.9. Operating LeasesThe Company leases certain property and equipment under noncancelable operating leases. Rental expense under such operating leases was $18.9 million,$19.7 million and $51.7 million in 2015, 2014 and 2013, respectively.Future minimum payments under operating leases with noncancelable terms are as follows:(In thousands) 2016 $12,9182017 9,2452018 6,7092019 5,2712020 4,935After 2020 20,643Total minimum rentals to be received in the future under noncancelable subleases at December 31, 2015 are $0.4 million.The decrease in 2014 rental expense under operating leases is due to the Infrastructure Transaction. See Note 3, Acquisitions and Dispositions, for additionalinformation related to the Infrastructure Transaction.10. Employee Benefit PlansPension BenefitsThe Company has defined benefit pension retirement plans covering a substantial number of employees. The defined benefits for salaried employeesgenerally are based on years of service and the employee's level of compensation during specified periods of employment. Defined benefit plans coveringhourly employees generally provide benefits of stated amounts for each year of service. The multiemployer pension plans ("MEPPs") in which the Companyparticipates provide benefits to certain unionized employees. The Company's funding policy for qualified plans is consistent with statutory regulations andcustomarily equals the amount deducted for income tax purposes. Periodic voluntary contributions are made, as recommended, by the Company's PensionCommittee. The Company's policy is to amortize prior service costs of defined benefit pension plans over the average future service period of active planparticipants.For most U.S. defined benefit pension plans and a majority of international defined benefit pension plans, accrued service is no longer granted. In place ofthese plans, the Company has established defined contribution pension plans providing for the Company to contribute a specified matching amount forparticipating employees' contributions to the plan. For U.S. employees, this match is made on employee contributions up to 4% of their eligiblecompensation. Additionally, the Company may provide a discretionary contribution for eligible employees. There have been no discretionary contributionsprovided for the years 2015, 2014 and 2013. For non-U.S. employees, this match is up to 6% of eligible compensation with an additional 2% going towardsinsurance and administrative costs.63Table of ContentsNet periodic pension cost ("NPPC") for U.S. and international pension plans for 2015, 2014 and 2013 is as follows: U.S. Plans International Plans(In thousands) 2015 2014 2013 2015 2014 2013Defined benefit plans: Service cost $2,889 $2,233 $2,565 $1,648 $1,610 $3,457Interest cost 12,357 12,868 11,767 36,282 43,230 42,707Expected return onplan assets (16,812) (16,786) (15,642) (50,091) (49,927) (46,920)Recognized priorservice costs 81 90 248 188 184 335Recognized losses 4,919 3,352 5,052 16,875 14,102 16,447Settlement/curtailmentloss (gain) — — — (23) 60 (372)Defined benefit planspension cost 3,434 1,757 3,990 4,879 9,259 15,654Multiemployer plans 853 1,199 12,444 1,463 1,762 5,449Defined contributionplans 3,921 4,704 4,945 6,765 8,033 11,139Net periodic pensioncost $8,208 $7,660 $21,379 $13,107 $19,054 $32,242The change in the financial status of the defined benefit pension plans and amounts recognized on the Consolidated Balance Sheets at December 31, 2015and 2014 are as follows: U.S. Plans International Plans(In thousands) 2015 2014 2015 2014Change in benefit obligation: Benefit obligation at beginning of year $325,319 $283,571 $1,049,603 $958,705Service cost 2,889 2,233 1,648 1,610Interest cost 12,357 12,868 36,282 43,230Plan participants' contributions — — 61 75Amendments — — 47 —Actuarial (gain) loss (14,417) 49,939 (85,028) 150,289Settlements/curtailments — — (250) (589)Benefits paid (18,758) (23,292) (38,197) (41,522)Effect of foreign currency — — (64,062) (62,250)Other — — — 55Benefit obligation at end of year $307,390 $325,319 $900,104 $1,049,603Change in plan assets: Fair value of plan assets at beginning of year $233,350 $233,579 $791,045 $770,911Actual return on plan assets (8,011) 15,465 22,602 80,518Employer contributions 2,289 7,598 27,402 28,112Plan participants' contributions — — 61 75Settlements/curtailments — — (250) —Benefits paid (18,758) (23,292) (37,693) (40,948)Effect of foreign currency — — (47,201) (47,623)Fair value of plan assets at end of year $208,870 $233,350 $755,966 $791,045 Funded status at end of year $(98,520) $(91,969) $(144,138) $(258,558)Amounts recognized on the Consolidated Balance Sheets consist of the following at December 31, 2015 and 2014: U.S. Plans International Plans December 31 December 31(In thousands) 2015 2014 2015 2014Noncurrent assets $229 $615 $1,229 $1,746Current liabilities 2,072 2,102 479 524Noncurrent liabilities 96,678 90,482 144,888 259,780Accumulated other comprehensive loss before tax 162,571 157,165 376,641 479,38264Table of ContentsAmounts recognized in Accumulated other comprehensive loss, before tax, consist of the following at December 31, 2015 and 2014: U.S. Plans International Plans(In thousands) 2015 2014 2015 2014Net actuarial loss $162,475 $156,989 $375,725 $478,396Prior service cost 96 176 916 986Total $162,571 $157,165 $376,641 $479,382The estimated amounts that will be amortized from accumulated other comprehensive loss into defined benefit NPPC in 2016 are as follows:(In thousands) U.S. Plans International PlansNet actuarial loss $5,489 $13,139Prior service cost 63 173Total $5,552 $13,312The Company's estimate of expected contributions to be paid in 2016 for the U.S. and international defined benefit plans are $2.1 million and $21.6 million,respectively.Future Benefit PaymentsThe expected benefit payments for defined benefit plans over the next 10 years are as follows:(In millions) 2016 2017 2018 2019 2020 2021-2025U.S. Plans $19.1 $19.1 $18.9 $18.7 $18.8 $94.8International Plans 39.7 40.3 41.2 42.6 44.5 244.4Net Periodic Pension Cost and Defined Benefit Pension Obligation AssumptionsThe weighted-average actuarial assumptions used to determine the NPPC for 2015, 2014 and 2013 were as follows: U.S. PlansDecember 31 International PlansDecember 31 Global Weighted-AverageDecember 31 2015 2014 2013 2015 2014 2013 2015 2014 2013Discount rates 3.9% 4.7% 3.8% 3.7% 4.7% 4.3% 3.7% 4.7% 4.2%Expected long-term ratesof return on plan assets 7.5% 7.5% 7.5% 6.8% 6.8% 6.6% 7.0% 7.0% 6.8%Rates of compensationincrease 3.0% 3.0% 3.0% 3.2% 3.4% 2.8% 3.2% 3.4% 2.8%The expected long-term rates of return on plan assets for the 2016 NPPC are 7.25% for the U.S. plans and 6.5% for the international plans. The expectedglobal long-term rate of return on assets for 2016 is 6.7%.The weighted-average actuarial assumptions used to determine the defined benefit pension plan obligations at December 31, 2015 and 2014 were as follows: U.S. Plans International Plans Global Weighted-Average December 31 December 31 December 31 2015 2014 2015 2014 2015 2014Discount rates 4.2% 3.9% 3.8% 3.7% 3.9% 3.7%Rates of compensation increase 3.0% 3.0% 3.2% 3.2% 3.2% 3.2%The U.S. discount rate was determined using a yield curve that was produced from a universe containing approximately 700 U.S. dollar-denominated, AA-graded corporate bonds, all of which were noncallable (or callable with make-whole provisions), and excluding the 10% of the bonds with the highest yieldsand the 10% with the lowest yields within each maturity group. The discount rate was then developed as the level-equivalent rate that would produce thesame present value as that using spot rates to discount the projected benefit payments. For international plans, the discount rate is aligned to corporate bondyields in the local markets, normally AA-rated corporations. The process and selection seeks to approximate the cash inflows with the timing and amounts ofthe expected benefit payments.65Table of ContentsThe Company has changed the method utilized to estimate the 2016 service cost and interest cost components of NPPC for defined benefit pension plans.The more precise application of discount rates for measuring both service costs and interest costs employs yield curve spot rates on a year-by-year expectedcash flow basis, using the same yield curves that the Company has previously used. This change in method represents a change in accounting estimate andwill be accounted for in the period of change.Accumulated Benefit ObligationThe accumulated benefit obligation for all defined benefit pension plans at December 31, 2015 and 2014 was as follows: U.S. Plans International Plans December 31 December 31(In millions) 2015 2014 2015 2014Accumulated benefit obligation $307.4 $325.3 $894.8 $1,043.2Plans with Accumulated Benefit Obligation in Excess of Plan AssetsThe projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations inexcess of plan assets at December 31, 2015 and 2014 were as follows: U.S. Plans International Plans December 31 December 31(In millions) 2015 2014 2015 2014Projected benefit obligation $297.5 $314.9 $876.9 $1,032.1Accumulated benefit obligation 297.5 314.9 871.9 1,026.0Fair value of plan assets 198.8 222.3 731.6 771.8The asset allocations attributable to the Company's U.S. defined benefit pension plans at December 31, 2015 and 2014, and the long-term target allocation ofplan assets, by asset category, are as follows: Target Long-TermAllocation Percentage of Plan Assets atDecember 31U.S. Plans Asset Category 2015 2014Domestic equity securities 32%-42% 37.2% 39.1%International equity securities 15%-25% 18.5% 18.2%Fixed income securities 28%-38% 32.6% 30.3%Cash and cash equivalents Less than 5% 1.7% 3.1%Other 5%-15% 10.0% 9.3%Plan assets are allocated among various categories of equities, fixed income securities and cash and cash equivalents with professional investment managerswhose performance is actively monitored. The primary investment objective is long-term growth of assets in order to meet present and future benefitobligations. The Company periodically conducts an asset/liability modeling study and accordingly adjusts investments among and within asset categories toensure the long-term investment strategy is aligned with the profile of benefit obligations.The Company reviews the long-term expected return on asset assumption on a periodic basis taking into account a variety of factors including the historicalinvestment returns achieved over a long-term period, the targeted allocation of plan assets and future expectations based on a model of asset returns for anactively managed portfolio. The model simulates 1,000 different capital market results over 20 years. For 2016 and 2015, the expected return-on-assetassumption for U.S. plans was 7.25% and 7.5%, respectively.The U.S. defined benefit pension plans assets include 450,000 shares of the Company's common stock at both December 31, 2015 and 2014, valued at $3.5million and $8.5 million, respectively. These shares represented 1.7% and 3.6% of total plan assets at December 31, 2015 and 2014, respectively. Dividendspaid to the pension plans on the Company's common stock amounted to $0.4 million in 2015, 2014 and 2013.66Table of ContentsThe asset allocations attributable to the Company's international defined benefit pension plans at December 31, 2015 and 2014 and the long-term targetallocation of plan assets, by asset category, are as follows:International Plans Asset Category Target Long-TermAllocation Percentage of Plan Assets atDecember 31 2015 2014Equity securities 32.5% 33.7% 36.9%Fixed income securities 42.5% 43.3% 45.3%Cash and cash equivalents — 0.3% 0.3%Other (a) 25.0% 22.7% 17.5%(a) Investments within this caption include diversified growth funds, real estate funds and infrastructure funds.Plan assets at December 31, 2015 in the U.K. defined benefit pension plan amounted to approximately 95% of the international pension assets. These assetsare allocated among various categories of equities, fixed income securities and cash and cash equivalents with professional investment managers whoseperformance is actively monitored. The primary investment objective is long-term growth of assets in order to meet present and future benefit obligations.The Company periodically conducts asset/liability modeling studies and accordingly adjusts investment amounts within asset categories to ensure the long-term investment strategy is aligned with the profile of benefit obligations.For the international long-term rate of return assumption, the Company considered the current level of expected returns in risk-free investments (primarilygovernment bonds), the historical level of the risk premium associated with other asset classes in which the portfolio is invested and the expectations forfuture returns of each asset class and plan expenses. The expected return for each asset class was then weighted based on the target asset allocation to developthe expected long-term rate of return on assets. The 2016 and 2015, the expected return on asset assumption for the U.K. plan was 6.6% and 6.8%,respectively. The remaining international pension plans, with assets representing approximately 5% of the international pension assets, are under theguidance of professional investment managers and have similar investment objectives.The fair values of the Company's U.S. pension plans' assets at December 31, 2015 by asset class are as follows:(In thousands) Total Level 1 Level 2Domestic equities: Common stocks $35,619 $35,619 $—Mutual funds—equities 42,093 11,595 30,498International equities—mutual funds 38,787 38,787 —Fixed income investments: U.S. Treasuries and collateralized securities 15,506 — 15,506Corporate bonds and notes 12,987 12,987 —Mutual funds—bonds 39,594 12,094 27,500Other—mutual funds 20,803 20,803 —Cash and money market accounts 3,481 3,481 —Total $208,870 $135,366 $73,504The fair values of the Company's U.S. pension plans' assets at December 31, 2014 by asset class are as follows:(In thousands) Total Level 1 Level 2Domestic equities: Common stocks $44,064 $44,064 $—Mutual funds—equities 47,313 13,335 33,978International equities—mutual funds 42,446 42,446 —Fixed income investments: U.S. Treasuries and collateralized securities 18,759 — 18,759Corporate bonds and notes 11,347 11,347 —Mutual funds—bonds 40,568 11,936 28,632Other—mutual funds 21,700 21,700 —Cash and money market accounts 7,153 7,153 —Total $233,350 $151,981 $81,36967Table of ContentsThe fair values of the Company's international pension plans' assets at December 31, 2015 by asset class are as follows:(In thousands) Total Level 1 Level 2 Level 3Equity securities: Mutual funds—equities $255,937 $— $255,937 $—Fixed income investments: Mutual funds—bonds 320,259 — 320,259 —Insurance contracts 7,306 — 7,306 —Other: Real estate funds/limited partnerships 52,313 — 27,951 24,362Other mutual funds 117,646 — 117,646 —Cash and money market accounts 2,505 2,505 — —Total $755,966 $2,505 $729,099 $24,362The fair values of the Company's international pension plans' assets at December 31, 2014 by asset class are as follows:(In thousands) Total Level 1 Level 2 Level 3Equity securities: Mutual funds—equities $292,150 $— $292,150 $—Fixed income investments: Mutual funds—bonds 350,073 — 350,073 —Insurance contracts 8,233 — 8,233 —Other: Real estate funds / limited partnerships 53,926 — 31,279 22,647Other mutual funds 84,120 — 84,120 —Cash and money market accounts 2,543 2,543 — —Total $791,045 $2,543 $765,855 $22,647The following table summarizes changes in the fair value of Level 3 assets for 2015, 2014 and 2013:Level 3 Asset Changes for the Twelve Months Ended December 31 (In thousands) 2015 2014 2013Real Estate Limited Partnership: Balance at beginning of year $22,647 $20,423 $17,746Contributions to partnership 109 385 838Cash distributions received (10,062) (1,614) (1,380)Actual return on plan assets: Related to asset still held at end of year 11,668 3,453 3,219Balance at end of year $24,362 $22,647 $20,423Following is a description of the valuation methodologies used for the plans' investments measured at fair value:•Level 1 Fair Value Measurements—Investments in interest-bearing cash are stated at cost, which approximates fair value. The fair values of moneymarket accounts and certain mutual funds are based on quoted net asset values of the shares held by the plan at year-end. The fair values ofdomestic and international stocks and corporate bonds, notes and convertible debentures are valued at the closing price reported in the activemarket on which the individual securities are traded.•Level 2 Fair Value Measurements—The fair values of investments in mutual funds for which quoted net asset values in an active market are notavailable are valued by the investment advisor based on the current market values of the underlying assets of the mutual fund based oninformation reported by the investment consistent with audited financial statements of the mutual fund. Further information concerning thesemutual funds may be obtained from their separate audited financial statements. Investments in U.S. Treasury notes and collateralized securities arevalued based on yields currently available on comparable securities of issuers with similar credit ratings.•Level 3 Fair Value Measurements—Real estate limited partnership interests are valued by the general partners based on the underlying assets. Thelimited partnership interests are valued using unobservable inputs and have been classified within Level 3 of the fair value hierarchy.68Table of ContentsMultiemployer PlansThe Company, through the Harsco Metals & Minerals Segment, contributes to several MEPPs under the terms of collective-bargaining agreements that coverunion-represented employees, many of whom are temporary in nature. The Company's total contributions to MEPPs were $2.5 million, $3.0 million and$17.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. The decrease in contributions by the Company for 2014 and 2015primarily relates to the consummation of the Infrastructure Transaction. See Note 3, Acquisitions and Dispositions, for additional information related to theInfrastructure Transaction.11. Income TaxesIncome (loss) from continuing operations before income taxes and equity income (loss) as reported in the Consolidated Statements of Operations consists ofthe following:(In thousands) 2015 2014 2013U.S. $16,169 $22,951 $(30,422)International 18,646 (8,813) (160,754)Total income (loss) before income taxes and equity income (loss) $34,815 $14,138 $(191,176)Income tax expense as reported in the Consolidated Statements of Operations consists of the following:(In thousands) 2015 2014 2013Income tax expense (benefit): Currently payable: U.S. federal $408 $5,622 $9,822U.S. state 546 557 1,375International 23,095 14,569 41,015Total income taxes currently payable 24,049 20,748 52,212Deferred U.S. federal 2,651 3,447 (18,615)Deferred U.S. state 812 893 473Deferred international 166 5,278 (2,095)Total income tax expense $27,678 $30,366 $31,975Cash payments for income taxes, including taxes on the gain or loss from discontinued business, were $18.9 million, $36.0 million and $44.4 million for2015, 2014 and 2013, respectively.The following is a reconciliation of the normal expected statutory U.S. federal income tax expense (benefit) to the actual income tax expense as reported inthe Consolidated Statements of Operations:(In thousands) 2015 2014 2013U.S. federal income tax $12,185 $4,949 $(66,912)U.S. state income taxes, net of federal income tax benefit 496 713 (917)U.S. domestic manufacturing deductions and credits (2,504) (1,882) (4,700)Tax costs of repatriation from the Infrastructure Transaction — — 13,181Difference in effective tax rates on international earnings and remittances 5,095 4,397 581Uncertain tax position contingencies and settlements 1,416 (5,298) (5,548)Changes in realization on beginning of the year deferred tax assets 923 2,283 20,125Restructuring and impairment charges with no realizable tax benefits 8,508 21,969 —U.S. nondeductible items 874 1,216 2,953Loss from disposal from the Infrastructure Transaction 580 2,592 73,819Cumulative effect of change in statutory tax rates/laws 340 246 (370)Income (loss) from unconsolidated entities 62 (587) —Other, net (297) (232) (237)Total income tax expense $27,678 $30,366 $31,975At December 31, 2015, 2014 and 2013, the Company's annual effective income tax rate on income from continuing operations was 79.5%, 214.8% and(16.7)%, respectively.The income tax expense for 2015 compared with 2014 decreased primarily due to a reduction in restructuring and asset impairment charges in the HarscoMetals & Minerals Segment for which no tax benefit was recorded.69Table of ContentsTotal income tax expense changed between 2013 and 2014 primarily due to the jurisdictional mix of the $272.3 million loss on disposal of the HarscoInfrastructure Segment and for the tax costs of repatriation from the Infrastructure Transaction recorded in 2013 compared with the restructuring and assetimpairment charges recorded in the Harsco Metals & Minerals Segment for which no tax benefit was recorded in 2014.The tax effects of the temporary differences giving rise to the Company's deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows: 2015 2014(In thousands) Asset Liability Asset LiabilityDepreciation and amortization $— $11,474 $— $16,026Expense accruals 24,538 — 27,737 —Inventories 5,588 — 4,396 —Provision for receivables 1,049 — 798 —Deferred revenue — 1,904 — 1,708Operating loss carryforwards 77,151 — 75,635 —Foreign tax credit carryforwards 19,199 — 16,476 —Capital loss carryforwards 2,102 — 2,102 —Pensions 66,675 — 91,377 —Currency adjustments 28,589 — 35,386 —Equity investment in Infrastructure strategic venture — 10,688 — 23,885Unit adjustment liability 29,491 — 34,675 —Post-retirement benefits 869 — 905 —Other 8,446 — 9,079 —Subtotal 263,697 24,066 298,566 41,619Valuation allowance (110,680) — (131,422) —Total deferred income taxes $153,017 $24,066 $167,144 $41,619The deferred tax asset and liability balances recognized on the Consolidated Balance Sheets at December 31, 2015 and 2014 are as follows:(In thousands) 2015 2014Other current assets $38,899 $39,003Other assets 102,914 94,021Other current liabilities 767 1,120Deferred income taxes 12,095 6,379At December 31, 2015, the tax-effected amount of net operating loss carryforwards ("NOLs") totaled $77.2 million. Tax-effected NOLs from internationaloperations are $67.2 million. Of that amount, $46.8 million can be carried forward indefinitely, and $20.4 million will expire at various times between 2016and 2031. Tax-effected U.S. state NOLs are $10.0 million. Of that amount, $0.4 million expire at various times between 2016 and 2019, $4.3 million expire atvarious times between 2020 and 2024, $1.5 million expire at various times between 2025 and 2029, and $3.8 million expire at various times between 2030and 2035. At December 31, 2015, the tax-effected amount of capital loss carryforwards totaled $2.1 million which expire in 2018.The valuation allowances of $110.7 million and $131.4 million at December 31, 2015 and 2014, respectively, related principally to deferred tax assets forpension liabilities, NOLs, capital losses, foreign currency translation and foreign investment tax credits that are uncertain as to realizability. In 2015, theCompany recorded a net decrease in the valuation allowance of $16.1 million related to current year pension adjustments recorded through Accumulatedother comprehensive loss, the current year decrease from foreign currency translation in the amount of $11.5 million and a $6.3 million decrease related to aU.K. tax rate change. This was partially offset by a net increase of $13.2 million related to losses in certain jurisdictions where the Company determined thatit is more likely than not that these assets will not be realized. Additionally, in 2014, the Company recorded a net increase in the valuation allowance of $8.0million related to pension adjustments recorded through Accumulated other comprehensive loss and a net increase of $6.6 million related to losses in certainjurisdictions where the Company determined that it is more likely than not that these assets will not be realized. This was partially offset by a $9.3 millionreduction in valuation allowance from the effects of foreign currency translation and a reduction of $1.1 million related to usage of a capital losscarryforward.70Table of ContentsThe Company has not provided U.S. income taxes on certain non-U.S. subsidiaries' undistributed earnings as such amounts are indefinitely reinvested outsidethe U.S. At December 31, 2015 and 2014, such earnings were approximately $547 million and $705 million, respectively. It is not practical to determine thedeferred income tax liability on these earnings if, in the future, they are remitted to the U.S. because the income tax liability to be incurred, if any, isdependent on circumstances existing when remittance occurs.The Company recognizes accrued interest and penalty expense related to unrecognized income tax benefits in income tax expense. The Company did notrecognize any income tax benefit for interest and penalties during 2015. During 2014 and 2013, the Company recognized an income tax benefit of $2.1million and $3.1 million, respectively, for interest and penalties primarily due to the expiration of statutes of limitation and resolution of examinations. TheCompany has accrued $2.8 million, $2.8 million and $4.9 million for the payment of interest and penalties at December 31, 2015, 2014 and 2013respectively.A reconciliation of the change in the unrecognized income tax benefits balance from January 1, 2013 to December 31, 2015 is as follows:(In thousands) UnrecognizedIncome TaxBenefits DeferredIncome TaxBenefits UnrecognizedIncome TaxBenefits, Net ofDeferred IncomeTax BenefitsBalances, January 1, 2013 $24,918 $(369) $24,549Additions for tax positions related to the current year (includes currency translationadjustment) 500 (5) 495Additions for tax positions related to prior years (includes currency translationadjustment) 145 (4) 141Other reductions for tax positions related to prior years (3,050) — (3,050)Statutes of limitation expirations (3,348) 180 (3,168)Settlements (1,616) — (1,616)Balance at December 31, 2013 17,549 (198) 17,351Additions for tax positions related to the current year (includes currency translationadjustment) 288 (2) 286Additions for tax positions related to prior years (includes currency translationadjustment) 156 (55) 101Other reductions for tax positions related to prior years (3,056) — (3,056)Statutes of limitation expirations (2,481) 143 (2,338)Settlements — — —Balance at December 31, 2014 12,456 (112) 12,344Additions for tax positions related to the current year (includes currency translationadjustment) (483) (2) (485)Additions for tax positions related to prior years (includes currency translationadjustment) 1,249 (4) 1,245Other reductions for tax positions related to prior years (7,846) — (7,846)Statutes of limitation expirations (173) 59 (114)Settlements (42) 15 (27)Total unrecognized income tax benefits that, if recognized, would impact the effectiveincome tax rate at December 31, 2015 $5,161 $(44) $5,117Included in the other reductions for tax positions related to prior years for 2015 is $7.8 million resulting from the adjustment by a foreign tax authority as aresult of tax audit. The unrecognized tax benefit was related to a net operating loss carryforward that carried a full valuation allowance. As a result, the relateddeferred tax asset was decreased by the same amount.Within the next twelve months, it is reasonably possible that up to $2.3 million of unrecognized income tax benefits will be recognized upon settlement oftax examinations and the expiration of various statutes of limitations.The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. With few exceptions, the Company is no longersubject to U.S and international income tax examinations by tax authorities through 2009.71Table of Contents12. Commitments and ContingenciesEnvironmentalThe Company is involved in a number of environmental remediation investigations and cleanups and, along with other companies, has been identified as a"potentially responsible party" for certain waste disposal sites. While each of these matters is subject to various uncertainties, it is probable that the Companywill agree to make payments toward funding certain of these activities and it is possible that some of these matters will be decided unfavorably to theCompany. The Company has evaluated its potential liability, and its financial exposure is dependent upon such factors as the continuing evolution ofenvironmental laws and regulatory requirements, the availability and application of technology, the allocation of cost among potentially responsible parties,the years of remedial activity required and the remediation methods selected. The Company did not have any material accruals or record any materialexpenses related to environmental matters during the periods presented.The Company evaluates its liability for future environmental remediation costs on a quarterly basis. Although actual costs to be incurred at identified sites infuture periods may vary from the estimates (given inherent uncertainties in evaluating environmental exposures), the Company does not expect that any coststhat are reasonably possible to be incurred by the Company in connection with environmental matters in excess of the amounts accrued would have amaterial adverse effect on the Company's financial condition, results of operations or cash flows.Brazilian Tax DisputesThe Company is involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil. These disputes are at various stages of thelegal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties,plus interest charges that increase at statutorily determined amounts per month and are assessed on the aggregate amount of the principal and penalties. Inaddition, the losing party at the collection action or court of appeals phase could be subject to a charge to cover statutorily mandated legal fees, which aregenerally calculated as a percentage of the total assessed amounts due, inclusive of penalty and interest. A large number of the claims relate to value-added("ICMS"), services and social security ("INSS") tax disputes. The largest proportion of the assessed amounts relate to ICMS claims filed by the State RevenueAuthorities from the State of São Paulo, Brazil (the "SPRA"), encompassing the period from January 2002 to May 2005.In October 2009, the Company received notification of the SPRA's final administrative decision regarding the levying of ICMS in the State of São Paulo inrelation to services provided to a customer in the State between January 2004 and May 2005. As of December 31, 2015, the principal amount of the taxassessment from the SPRA with regard to this case is approximately $2 million, with penalty, interest and fees assessed to date increasing such amount by anadditional $18 million. Any change in the aggregate amount since the Company's last Annual Report on Form 10-K, as revised on Form 8-K filed on June 1,2015, is due to an increase in assessed interest and statutorily mandated legal fees for the year, as well as foreign currency translation.Another ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003, and is still pending at the administrative phase,where the aggregate amount assessed by the tax authorities in August 2005 was $6.4 million (the amounts with regard to this claim are valued as of the dateof the assessment since it has not yet reached the collection phase), composed of a principal amount of $1.5 million, with penalty and interest assessedthrough that date increasing such amount by an additional $4.9 million. All such amounts include the effect of foreign currency translation.The Company continues to believe that it is not probable it will incur a loss for these assessments by the SPRA. The Company also continues to believe thatsufficient coverage for these claims exists as a result of the Company's customer's indemnification obligations and such customer's pledge of assets inconnection with the October 2009 notice, as required by Brazilian procedure.The Company intends to continue its practice of vigorously defending itself against these tax claims under various alternatives, including judicial appeal.The Company will continue to evaluate its potential liability with regard to these claims on a quarterly basis; however, it is not possible to predict theultimate outcome of these tax-related disputes in Brazil. No loss provision has been recorded in the Company's consolidated financial statements for thedisputes described above because the loss contingency is not deemed probable, and the Company does not expect that any costs that are reasonably possibleto be incurred by the Company in connection with Brazilian tax disputes would have a material adverse effect on the Company's financial condition, resultsof operations or cash flows.72Table of ContentsBrazilian Labor DisputesThe Company is subject to collective bargaining and individual labor claims in Brazil through the Harsco Metals & Minerals Segment which allege, amongother things, the Company's failure to pay required amounts for overtime and vacation at certain sites. The Company is vigorously defending itself againstthese claims; however, litigation is inherently unpredictable, particularly in foreign jurisdictions. While the Company does not currently expect that theultimate resolution of these claims will have a material adverse effect on the Company’s financial condition, results of operations or cash flows, it is notpossible to predict the ultimate outcome of these labor-related disputes. The Company is continuing to review all known labor claims and as of December 31, 2015 and 2014, the Company has established reserves of $6.9 millionand $8.6 million, respectively, on the Consolidated Balance Sheets for amounts considered to be probable and estimable. As the Company continues toevaluate these claims and takes actions to address them, the amount of established reserves may be impacted.Customer DisputesThe Company, through its Harsco Metals & Minerals Segment, may, in the normal course of business, become involved in commercial disputes withsubcontractors or customers.During the first quarter of 2015, a rail grinder manufactured by the Company's Harsco Rail Segment and operated by a subcontractor caught fire, causing acustomer to incur monetary damages. There is a legal action pending to determine the cause of the incident. Depending on the cause of the fire and theextent of insurance coverage, the Company's results of operations and cash flows may be impacted in future periods.Although results of operations and cash flows for a given period could be adversely affected by a negative outcome in these or other lawsuits, claims orproceedings, management believes that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial condition,results of operations or cash flows.OtherThe Company is named as one of many defendants (approximately 90 or more in most cases) in legal actions in the U.S. alleging personal injury fromexposure to airborne asbestos over the past several decades. In their suits, the plaintiffs have named as defendants, among others, many manufacturers,distributors and installers of numerous types of equipment or products that allegedly contained asbestos.The Company believes that the claims against it are without merit. The Company has never been a producer, manufacturer or processor of asbestos fibers. Anyasbestos-containing part of a Company product used in the past was purchased from a supplier and the asbestos encapsulated in other materials such thatairborne exposure, if it occurred, was not harmful and is not associated with the types of injuries alleged in the pending actions.At December 31, 2015, there were 17,153 pending asbestos personal injury actions filed against the Company. Of those actions, 16,831 were filed in the NewYork Supreme Court (New York County), 125 were filed in other New York State Supreme Court Counties and 197 were filed in courts located in other states.The complaints in most of those actions generally follow a form that contains a standard damages demand of $20 million or $25 million, regardless of theindividual plaintiff's alleged medical condition, and without identifying any specific Company product.At December 31, 2015, 16,758 of the actions filed in New York Supreme Court (New York County) were on the Deferred/Inactive Docket created by the courtin December 2002 for all pending and future asbestos actions filed by persons who cannot demonstrate that they have a malignant condition or discerniblephysical impairment. The remaining 73 cases in New York County are pending on the Active or In Extremis Docket created for plaintiffs who candemonstrate a malignant condition or physical impairment.The Company has liability insurance coverage under various primary and excess policies that the Company believes will be available, if necessary, tosubstantially cover any liability that might ultimately be incurred in the asbestos actions referred to above. The Company believes that a substantial portionof the costs and expenses of the asbestos actions will be paid by the Company’s insurers.In view of the persistence of asbestos litigation in the U.S., the Company expects to continue to receive additional claims in the future. The Company intendsto continue its practice of vigorously defending these claims and cases. At December 31, 2015, the Company has obtained dismissal in 27,773 cases bystipulation or summary judgment prior to trial.73Table of ContentsIt is not possible to predict the ultimate outcome of asbestos-related actions in the U.S. due to the unpredictable nature of this litigation, and no lossprovision has been recorded in the Company's consolidated financial statements because a loss contingency is not deemed probable or estimable. Despitethis uncertainty, and although results of operations and cash flows for a given period could be adversely affected by asbestos-related actions, the Companydoes not expect that any costs that are reasonably possible to be incurred by the Company in connection with asbestos litigation would have a materialadverse effect on the Company's financial condition, results of operations or cash flows.The Company is subject to various other claims and legal proceedings covering a wide range of matters that arose in the ordinary course of business. In theopinion of management, all such matters are adequately covered by insurance or by established reserves, and, if not so covered, are without merit or are ofsuch kind, or involve such amounts, as would not have a material adverse effect on the financial position, results of operations or cash flows of the Company.Insurance liabilities are recorded when it is probable that a liability has been incurred for a particular event and the amount of loss associated with the eventcan be reasonably estimated. Insurance reserves have been estimated based primarily upon actuarial calculations and reflect the undiscounted estimatedliabilities for ultimate losses, including claims incurred but not reported. Inherent in these estimates are assumptions that are based on the Company's historyof claims and losses, a detailed analysis of existing claims with respect to potential value, and current legal and legislative trends. If actual claims differ fromthose projected by management, changes (either increases or decreases) to insurance reserves may be required and would be recorded through income in theperiod the change was determined. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable toreflect the covered liability. Insurance claim receivables are included in Other receivables on the Consolidated Balance Sheets. See Note 1, Summary ofSignificant Accounting Policies, for additional information on Accrued Insurance and Loss Reserves.13. Capital StockThe authorized capital stock of the Company consists of 150,000,000 shares of common stock and 4,000,000 shares of preferred stock, both having a parvalue of $1.25 per share. The preferred stock is issuable in series with terms as fixed by the Board of Directors (the "Board"). No preferred stock has beenissued. Under the Company's Preferred Stock Purchase Rights Agreement (the "Agreement"), the Board authorized and declared a dividend distribution of oneright for each share of common stock outstanding on the record date. The rights may only be exercised if, among other things and with certain exceptions, aperson or group has acquired 15% or more of the Company's common stock without the prior approval of the Board. Each right entitles the holder to purchase1/100th share of Harsco Series A Junior Participating Cumulative Preferred Stock at an exercise price of $230. Once the rights become exercisable, the holderof a right will be entitled, upon payment of the exercise price, to purchase a number of shares of common stock calculated to have a value of two times theexercise price of the right. The rights expire on October 9, 2017, do not have voting power, and may be redeemed by the Company at a price of $0.001 perright at any time until the 10th business day following public announcement that a person or group has accumulated 15% or more of the Company's commonstock. The Agreement also includes an exchange feature. At December 31, 2015 and 2014, 800,944 and 806,599 shares, respectively, of $1.25 par valuepreferred stock were reserved for issuance upon exercise of the rights.The Company's share repurchase program expired on January 31, 2015. The Board had previously authorized the repurchase of shares of common stock asfollows: Shares Authorized forPurchaseJanuary 1 Additional SharesAuthorized forPurchase SharesPurchased Plan Expiration SharesAuthorized forPurchaseDecember 312013 1,713,423 286,577 — — 2,000,0002014 2,000,000 — 150,000 — 1,850,0002015 1,850,000 — 596,632 1,253,368 —74Table of ContentsThe following table summarizes the Company's common stock: Common Stock SharesIssued TreasuryShares (a) OutstandingSharesOutstanding, January 1, 2013 112,063,938 31,479,310 80,584,628Stock options exercised 20,000 — 20,000Vested restricted stock units 25,215 9,358 15,857Stock appreciation rights exercised 2,713 521 2,192Other stock grants 86,827 30,579 56,248Outstanding, December 31, 2013 112,198,693 31,519,768 80,678,925Vested restricted stock units 65,851 4,418 61,433Stock appreciation rights exercised 9,213 2,985 6,228Other stock grants 83,591 20,327 63,264Treasury shares purchased — 150,000 (150,000)Outstanding, December 31, 2014 112,357,348 31,697,498 80,659,850Vested restricted stock units 47,954 16,807 31,147Treasury shares purchased — 596,632 (596,632)Outstanding, December 31, 2015 112,405,302 32,310,937 80,094,365(a) The Company repurchases shares in connection with the issuance of shares under stock-based compensation programs and in accordance with Board authorized share repurchaseprograms.The following is a reconciliation of the average shares of common stock used to compute basic earnings per common share to the shares used to computediluted earnings per common share as shown in the Consolidated Statements of Operations:(In thousands, except per share data) 2015 2014 2013Income (loss) from continuing operations attributable to Harsco Corporation commonstockholders $7,168 $(22,281) $(231,356) Weighted-average shares outstanding—basic 80,234 80,884 80,755Dilutive effect of stock-based compensation 131 — —Weighted-average shares outstanding—diluted 80,365 80,884 80,755Income (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:Basic $0.09 $(0.28) $(2.86) Diluted $0.09 $(0.28) $(2.86)The following average outstanding stock-based compensation units were not included in the computation of diluted earnings per share because the effect wasantidilutive:(In thousands) 2015 2014 2013Restricted stock units — 301 265Stock options 98 188 286Stock appreciation rights 1,142 912 1,078Performance share units 278 93 —Other stock-based compensation units — — 10114. Stock-Based CompensationThe 2013 Equity and Incentive Compensation Plan (the "2013 Plan") authorizes the issuance of up to 6,800,000 shares of the Company's common stock foruse in paying incentive compensation awards in the form of stock options or other equity awards such as restricted stock, restricted stock units ("RSUs"),stock appreciation rights ("SARs"), or performance share units ("PSUs"). Of the 6,800,000 shares authorized, a maximum of 3,400,000 shares may be issued forawards other than option rights or SARs, as defined in the 2013 Plan. The 1995 Non-Employee Directors' Stock Plan (the "1995 Plan") authorizes the issuanceof up to 600,000 shares of the Company's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31,2015, there were 5,097,341 shares available for granting equity awards under the 2013 Plan, of which 2,734,087 shares were available for awards other thanoption rights or SARs. At December 31, 2015, there were 47,078 shares available for granting equity awards under the 1995 Plan.75Table of ContentsRestricted Stock UnitsThe Company's Board approves the granting of performance-based RSUs as the long-term equity component of director, officer and certain key employeecompensation. The RSUs require no payment from the recipient and compensation cost is measured based on the market price of the Company's commonstock on the grant date and is generally recorded over the vesting period. RSUs granted to officers and certain key employees in 2012, and prior, vested on apro rata basis over a three-year period or upon obtainment of specified retirement criteria. RSUs granted to officers and certain key employees in 2013, either"cliff" vest at the end of three years or upon obtainment of specified retirement criteria. RSUs granted to officers and certain key employees in 2014 and 2015,either "cliff" vest at the end of three years, upon obtainment of specified retirement or years of service criteria. The vesting period for RSUs granted to non-employee directors is one year, and each RSU is exchanged for an equal number of shares of the Company's common stock following the termination of theparticipant's service as a director. Upon vesting, each RSU is exchanged for an equal number of shares of the Company's common stock. RSUs do not have anoption for cash payment.The following table summarizes RSUs issued and the compensation expense recorded for the years ended December 31, 2015, 2014 and 2013: RSUs Weighted AverageFair Value Expense(Dollars in thousands, except per unit) 2015 2014 2013Directors: 2012 30,618 $21.44 — — 2552013 46,287 $20.60 — 318 6362014 36,840 $24.80 311 602 —2015 59,985 $15.69 627 — —Employees: 2011 17,250 $23.55 — 3 692012 141,486 $18.75 (71)(a)151 3832013 170,582 $20.63 87 325 6332014 190,832 $25.21 504 1,114 —2015 239,679 $16.53 919 — —Total $2,377 $2,513 $1,976(a) Represents the impact of forfeitures during 2015.RSU activity for the years ended December 31, 2015, 2014 and 2013 was as follows: RSUs Number of Shares Weighted AverageGrant-DateFair ValueNon-vested at January 1, 2013 141,473 $19.19Granted 216,869 $20.62Vested (69,955) $20.54Forfeited (74,546) $22.61Non-vested at December 31, 2013 213,841 $19.95Granted 227,672 $25.14Vested (52,041) $23.58Forfeited (84,956) $20.92Non-vested at December 31, 2014 304,516 $22.94Granted 299,664 $16.36Vested (58,760) $19.34Forfeited (107,062) $22.14Non-vested at December 31, 2015 438,358 $19.12At December 31, 2015, the total unrecognized compensation cost related to non-vested RSUs was $3.9 million, which will be recognized over a weighted-average period of 1.9 years. There was no change in excess tax benefits from RSUs recognized in 2015 and 2014. There was a $0.1 million increase of excesstax benefits in 2013.76Table of ContentsStock Appreciation RightsThe Company may grant SARs to officers and certain key employees under the 2013 Plan. The SARs generally vest on a pro-rata basis from one to five yearsfrom the grant date or upon specified retirement or years of service criteria, and expire no later than ten years after the grant date. The exercise price of theSARs is the fair value on the grant date. Upon exercise, shares of Company's common stock are issued based on the increase in the fair value of theCompany's common stock over the exercise price of the SAR. SARs do not have an option for cash payment.During 2013, the Company issued SARs covering 903,814 shares in May, 5,018 shares in June and 15,000 shares in November under the 2013 Plan. During2014, the Company issued SARs covering 51,900 shares in April, 255,090 shares in May, 31,405 shares in July, 84,290 shares in August, 15,808 shares inSeptember and 12,401 shares in November under the 2013 Plan. During 2015, the Company issued SARs covering 532,615 shares in May under the 2013Plan.The fair value of each SAR grant was estimated on the grant date using a Black-Scholes pricing model with the following assumptions: SARs Issued Risk-free Interest rate Dividend Yield Expected Life(Years) Volatility SAR Grant Price Fair Value of SARMay 2013 Grant 1.17% 3.61% 6.5 44.1% $22.70 $6.86June 2013 Grant 1.41% 3.56% 6.5 44.1% $23.03 $7.07November 2013 Grant 1.91% 3.13% 6.5 43.8% $26.22 $8.60April 2014 Grant 1.98% 3.53% 6.0 44.3% $23.25 $7.25May 2014 Grant (1st) 1.90% 3.16% 6.0 43.2% $25.93 $8.16May 2014 Grant (2nd) 1.82% 3.05% 6.0 42.8% $26.92 $8.47July 2014 Grant 2.00% 3.24% 6.0 41.2% $25.27 $7.55August 2014 Grant 1.92% 3.27% 6.0 41.2% $25.11 $7.46September 2014 Grant 2.03% 3.50% 6.0 40.6% $23.43 $6.72November 2014 Grant 1.78% 4.00% 6.0 38.6% $20.48 $5.17May 2015 Grant 1.70% 4.96% 6.0 35.8% $16.53 $3.39SARs activity for the years ended December 31, 2015, 2014 and 2013 was as follows: SARs Number of Shares Weighted AverageExercise Price Aggregate IntrinsicValue (in millions) (a)Outstanding, January 1, 2013 525,287 $21.23 $1.2Granted 923,832 $22.76 Exercised (11,037)$19.65 Forfeited/Expired (476,624) $22.28 Outstanding, December 31, 2013 961,458 $22.20 $5.6Granted 450,894 $25.20 Exercised (52,667) $20.21 Forfeited/Expired (406,637) $22.65 Outstanding, December 31, 2014 953,048 $23.53 $—Granted 532,615 $16.53 Forfeited/Expired (385,253) $22.36 Outstanding, December 31, 2015 1,100,410 $20.55 $—(a) Intrinsic value is defined as the difference between the current market value and the exercise price, for those SARs where the market price exceeds the exercise price.No SARs were exercised in 2015. The total intrinsic value of SARs exercised during 2014 and 2013 was $0.2 million and $0.1 million.77Table of ContentsThe following table summarizes information concerning outstanding and exercisable SARs at December 31, 2015: SARs Outstanding SARs ExercisableRange of exercisable prices Vested Non-vested Weighted-AverageExercise Price perShare Weighted-AverageRemainingContractual Life inYears Number Exercisable Weighted-AverageExercise Price perShare$16.53 - $22.70 121,020 628,692 $18.49 8.58 121,020 $21.71$23.03 - $26.92 127,291 223,407 $24.97 8.24 127,291 $24.89 248,311 852,099 $20.55 8.47 248,311 $23.34Total compensation expense related to SARs was $1.2 million, $1.0 million and $0.4 million for the years ended December 31, 2015, 2014 and 2013,respectively. At December 31, 2015, outstanding SARs have a weighted-average remaining contractual life of 8.47 years and no intrinsic value as theexercise price for all SARs exceeds the current market value. Vested and currently exercisable SARs have a weighted-average remaining contractual life of7.62 years and no aggregate intrinsic value. At December 31, 2015, total unrecognized compensation expense related to non-vested SARs was $2.9 million,which is expected to be recognized over a weighted average period of 2.0 years.Weighted-average grant date fair value of non-vested SARs for the years ended December 31, 2015 and 2014 was as follows: SARs Number of Shares Weighted-AverageGrant Date FairValueNon-vested shares, January 1, 2014 839,505 $22.27Granted 450,894 $25.20Vested (84,685) $23.23Exercised (52,667) $20.21Forfeited (406,637) $22.65Non-vested shares, December 31, 2014 746,410 $23.87Granted 532,615 $16.53Vested (41,673) $24.05Forfeited (385,253) $22.36Non-vested shares, December 31, 2015 852,099 $19.74Performance Share UnitsBeginning in 2014, the Company granted PSUs to officers and certain key employees that may be earned based on the Company's total shareholder returnover the three-year performance period. PSUs are paid out at the end of each performance period based on the Company’s performance which is measured bydetermining the percentile rank of the total shareholder return of the Company's common stock in relation to the total shareholder return of the S&P Midcap400 Index during the performance period. The payment of PSUs following the performance period will be based in accordance with the scale set forth in thePSU agreements and may range from 0% to 200% of the initial grant. PSUs do not have an option for cash payment.During the year ended December 31, 2014, the Company granted 15,700 shares in April, 82,526 shares in May, 11,487 shares in July, 26,550 shares inAugust, 4,980 shares in September and 3,906 shares in November under the 2013 Plan. During the year ended December 31, 2015, the Company granted237,063 shares in May under the 2013 Plan. The fair value of PSUs granted was estimated on the grant date using a Monte Carlo pricing model with thefollowing assumptions: PSUs Issued Risk-free Interest rate Dividend Yield Expected Life(Years) Volatility Fair Value of PSUApril 2014 Grant 0.75% —% 2.73 34.3% $18.00May 2014 Grant (1st) 0.70% —% 2.65 31.8% $25.26May 2014 Grant (2nd) 0.63% —% 2.61 30.1% $27.53July 2014 Grant 0.74% —% 2.42 26.9% $22.31August 2014 Grant 0.67% —% 2.42 26.9% $21.86September 2014 Grant 0.72% —% 2.29 25.7% $15.26November 2014 Grant 0.55% —% 2.10 26.3% $7.42May 2015 Grant 0.83% —% 2.65 28.5% $14.4878Table of ContentsTotal compensation expense related to PSUs was $1.4 million and $0.9 million for the years ended December 31, 2015 and 2014, respectively. AtDecember 31, 2015, total unrecognized compensation expense related to non-vested PSUs was $2.6 million, which is expected to be recognized over aweighted average period of 1.7 years.A summary of the Company's non-vested PSU activity during the years ending December 31, 2015 and 2014 is presented in the following table: PSUs Number of Shares Weighted-AverageGrant Date FairValueNon-vested shares, January 1, 2014 — $—Granted 145,149 $22.82Forfeited (9,796) $25.26Non-vested shares, December 31, 2014 135,353 $22.65Granted 237,063$14.48Forfeited (57,204)$20.26Non-vested shares, December 31, 2015 315,212$16.94Stock OptionsThe Company may grant incentive stock options and nonqualified stock options to officers, certain key employees and non-employee directors under theplans noted above. The stock options would generally vest three years from the grant date, which is the date the Board approved the grants, and expire nolater than seven years after the grant date. The exercise price of the stock option would be fair value on the grant date. Upon exercise, a new share ofCompany common stock is issued for each stock option. Stock option activity for the years ended December 31, 2015, 2014 and 2013 was as follows: Stock Options Number of Shares Weighted AverageExercise Price AggregateIntrinsic Value(in millions)(a)Outstanding, January 1, 2013 328,000 $30.67 $0.2Exercised (20,000) $16.96 $—Forfeited/Expired (79,000) $31.00 $—Outstanding, December 31, 2013 229,000 $31.75 $—Forfeited/Expired (107,500) $31.75 $—Outstanding, December 31, 2014 121,500 $31.75 $—Forfeited/Expired (31,500) $31.75 $—Outstanding, December 31, 2015 90,000 $31.75 $—(a)Intrinsic value is defined as the difference between the current market value and the exercise price, for those options where the market price exceeds the exercise price.There was no compensation expense related to stock options in 2015. Compensation expense related to stock options totaled less than $0.1 million in 2014and $0.2 million in 2013. At December 31, 2015, there was no unrecognized compensation expense related to non-vested stock options. There were no stockoptions exercised and no net cash proceeds from the exercise of stock options in 2015 and 2014. Net cash proceeds from the exercise of stock options totaled$0.4 million in 2013. The total intrinsic value of options exercised during 2013 was $0.1 million.The following table summarizes information concerning outstanding and exercisable options at December 31, 2015: Stock Options Outstanding Stock Options ExercisableRange of ExercisablePrices Vested Non-vested Weighted AverageExercisePrice PerShare Weighted AverageRemainingContractualLife inYears NumberExercisable Weighted AverageExercisePrice PerShare$31.75 - $31.75 90,000 — $31.75 2.1 90,000 $31.75During 2014, the Company issued 27,672 common shares to the Interim Chief Executive Officer as part of his compensation agreement. These shares vestedimmediately and were not subject to any holding period restrictions. The fair value of these other stock grants were based on the market price of theCompany's stock at the grant date. Expense recognized in 2014 for these other stock grants totaled $0.7 million. In addition, 55,919 common shares wereissued to other officers and key employees to settle previous fully-vested liability-based long-term incentive award programs.79Table of Contents15. Financial InstrumentsOff-Balance Sheet RiskAs collateral for the Company's performance and to insurers, the Company is contingently liable under standby letters of credit, bonds and bank guarantees inthe amounts of $232.5 million, $269.4 million and $216.3 million at December 31, 2015, 2014 and 2013, respectively. The decrease at December 31, 2015primarily relates to the expiration of several guarantees and lower negotiated amounts for certain insurance letters of credit. The increase at December 31,2014 primarily relates to the issuance of performance bonds associated with the Company's large Switzerland rail order in the Harsco Rail Segment. Thesestandby letters of credit, bonds and bank guarantees are generally in force for up to 4 years. Certain issues have no scheduled expiration date. The Companypays fees to various banks and insurance companies that range from 0.75% to 3.30% per annum of the instrument's face value. If the Company were requiredto obtain replacement standby letters of credit, bonds and bank guarantees at December 31, 2015 for those currently outstanding, it is the Company's opinionthat the replacement costs would be within the present fee structure.The Company has currency exposures in approximately 30 countries. The Company's primary foreign currency exposures during 2015 were in the EuropeanEconomic and Monetary Union, the U.K. and Brazil.Off-Balance Sheet Risk—Third-Party GuaranteesIn connection with the Infrastructure Transaction, the Company has outstanding guarantees and letters of credit related to the Harsco Infrastructure Segmentthat are still in force. These guarantees and letters of credit are provided to enable the legacy business to obtain financing for their operations. The maximumpotential amount of future payments (undiscounted) related to these guarantees was approximately $5 million and $15 million at December 31, 2015 and2014, respectively. These guarantees and letters of credit are expected to be replaced by Brand during 2016. There is no recognition of a liability related tothese guarantees or letters of credit as the Company believes that the potential for making any payments is remote and they have been indemnified by Brandas part of the Infrastructure Transaction.During June 2014, the Company provided a guarantee to Brand, as part of the net working capital settlement related to the Infrastructure Transaction, forcertain matters occurring prior to closing. The remaining term of this guarantee is 5 years at December 31, 2015. The maximum potential amount of futurepayments related to this guarantee is approximately $3 million at December 31, 2015. There is no recognition of this potential future payment in theconsolidated financial statements as the Company believes the potential for making this payment is remote.The Company provided an environmental indemnification for properties that were sold to a third party in 2007. The maximum term of this guarantee is20 years, and the Company would be required to perform under the guarantee only if an environmental matter is discovered on the properties. The Companyis not aware of environmental issues related to these properties. There is no recognition of this potential future payment in the consolidated financialstatements as the Company believes the potential for making this payment is remote.The Company provided an environmental indemnification for property from a lease that terminated in 2006. The term of this guarantee is indefinite, and theCompany would be required to perform under the guarantee only if an environmental matter was discovered on the property relating to the time the Companyleased the property. The Company is not aware of any environmental issues related to this property. The maximum potential amount of future payments(undiscounted) related to this guarantee is estimated to be $3.0 million at December 31, 2015, 2014 and 2013. There is no recognition of this potential futurepayment in the consolidated financial statements as the Company believes the potential for making this payment is remote.Any liabilities related to the Company's obligation to stand ready to act on third-party guarantees are included in the captions, Other current liabilities orOther liabilities (as appropriate), on the Consolidated Balance Sheets. Any recognition of these liabilities did not have a material impact on the Company'sfinancial position or results of operations for 2015, 2014 or 2013.In the normal course of business, legal indemnifications are provided related primarily to the performance of the Company's products and services and patentand trademark infringement of the products and services sold. These indemnifications generally relate to the performance (regarding function, not price) ofthe respective products or services and therefore no liability is recognized related to the fair value of such guarantees.80Table of ContentsDerivative Instruments and Hedging ActivitiesThe Company uses derivative instruments, including foreign currency exchange forward contracts and CCIRs, to manage certain foreign currency andinterest rate exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes.All derivative instruments are recorded on the Consolidated Balance Sheets at fair value. Changes in the fair value of derivatives used to hedge foreigncurrency denominated balance sheet items are reported directly in earnings along with offsetting transaction gains and losses on the items being hedged.Derivatives used to hedge forecasted cash flows associated with foreign currency commitments or forecasted commodity purchases may be accounted for ascash flow hedges, as deemed appropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges aredeferred as a separate component of equity and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.Generally, at December 31, 2015, deferred gains and losses related to asset purchases are reclassified to earnings over 10 to 15 years from the balance sheetdate and those related to revenue are deferred until the revenue is recognized. The ineffective portion of all hedges, if any, is recognized currently in earnings.The fair value of outstanding derivative contracts recorded as assets and liabilities on the Consolidated Balance Sheets at December 31, 2015 and 2014 wasas follows: Asset Derivatives Liability Derivatives(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair ValueDecember 31, 2015 Derivatives designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $1,640 Other current liabilities $—Cross-currency interest rate swaps Other assets 15,417 Other liabilities —Total derivatives designated as hedging instruments $17,057 $— Derivatives not designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $4,188 Other current liabilities $1,738 Asset Derivatives Liability Derivatives(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair ValueDecember 31, 2014 Derivatives designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $420 $—Cross-currency interest rate swaps Other assets 52,989 Other liabilities 2,599Total derivatives designated as hedging instruments $53,409 $2,599 Derivatives not designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $4,065 Other current liabilities $4,618All of the Company's derivatives are recorded in the Consolidated Balance Sheets at gross amounts and not offset. All of the Company's CCIRs and certainforeign currency exchange forward contracts are transacted under International Swaps and Derivatives Association ("ISDA") documentation. Each ISDAmaster agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets and liabilities subject to enforceablemaster netting arrangements did not result in a net asset or net liability at either December 31, 2015 or 2014.81Table of ContentsThe effect of derivative instruments in the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) during2015, 2014 and 2013 was as follows:Derivatives Designated as Hedging Instruments(In thousands) Amount ofGain (Loss)Recognized inOtherComprehensiveIncome("OCI") onDerivative—EffectivePortion Location of Gain(Loss) Reclassifiedfrom AccumulatedOCI into Income—EffectivePortionAmount ofGain (Loss)ReclassifiedfromAccumulatedOCI intoIncome—EffectivePortion Location of Gain(Loss) Recognizedin Income onDerivative—IneffectivePortionand AmountExcluded fromEffectivenessTestingAmount ofGain (Loss)Recognizedin Incomeon Derivative—IneffectivePortion andAmountExcludedfrom EffectivenessTesting Twelve Months Ended December 31, 2015:Foreign currency exchange forwardcontracts $580 Cost of services andproducts sold$53 $— Cross-currency interest rate swaps 9,012 — Cost of services andproducts sold30,359(a) $9,592 $53 $30,359 Twelve Months Ended December 31, 2014:Foreign currency exchange forwardcontracts $358 Cost of services andproducts sold$4 $— Cross-currency interest rate swaps (1,977) — Cost of services andproducts sold39,823(a) $(1,619) $4 $39,823 Twelve Months Ended December 31, 2013:Foreign currency exchange forwardcontracts $48 Cost of services andproducts sold$(8) Cost of services andproducts sold$(6) Cross-currency interest rate swaps 2,409 — Cost of services andproducts sold(12,061)(a) $2,457 $(8) $(12,067) (a)These gains (losses) offset foreign currency fluctuation effects on the debt principal.Derivatives Not Designated as Hedging Instruments Location of Loss Recognized in Incomeon Derivative Amount of Loss Recognized in Income on Derivative for the TwelveMonths Ended December 31(a)(In thousands) 2015 2014 2013Foreign currency exchange forward contracts Cost of services and products sold $(158) $(2,307) $(10,463)(a)These losses offset amounts recognized in cost of service and products sold principally as a result of intercompany or third-party foreign currency exposures.Foreign Currency Exchange Forward ContractsThe Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements.The financial position and results of operations of substantially all of the Company's foreign subsidiaries are measured using the local currency as thefunctional currency. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respectivebalance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The aggregate effects oftranslating the balance sheets of these subsidiaries are deferred and recorded in Accumulated other comprehensive loss, which is a separate component ofequity.The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward contractsoutstanding are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreigncurrency exposures of certain future payments between the Company and various subsidiaries, suppliers or customers. The unsecured contracts are with majorfinancial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluatesthe creditworthiness of the counterparties and does not expect default by them. Foreign currency exchange forward contracts are used to hedge commitments,such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.82Table of ContentsThe following tables summarize, by major currency, the contractual amounts of the Company's foreign currency exchange forward contracts in U.S. dollars atDecember 31, 2015 and 2014. The "Buy" amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the "Sell" amountsrepresent the U.S. dollar equivalent of commitments to sell foreign currencies. The recognized gains and losses offset amounts recognized in cost of servicesand products sold principally as a result of intercompany or third-party foreign currency exposures.Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, 2015:(In thousands) Type U.S. DollarEquivalent Maturity RecognizedGain (Loss)British pounds sterling Sell $43,511 January 2016 $822British pounds sterling Buy 2,062 January 2016 (54)Euros Sell 336,397 January 2016 through December 2016 547Euros Buy 167,037 January 2016 through August 2016 2,497Other currencies Sell 35,426 January 2016 through March 2016 316Other currencies Buy 7,981 January 2016 (38)Total $592,414 $4,090Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, 2014:(In thousands) Type U.S. DollarEquivalent Maturity RecognizedGain (Loss)British pounds sterling Sell $37,943 January 2015 $179British pounds sterling Buy 2,783 January 2015 (4)Euros Sell 193,370 January 2015 through March 2015 2,993Euros Buy 194,084 January 2015 through March 2015 (3,767)Other currencies Sell 12,641 January 2015 through December 2015 439Other currencies Buy 28,001 January 2015 through June 2015 27Total $468,822 $(133)In addition to foreign currency exchange forward contracts, the Company designates certain loans as hedges of net investments in international subsidiaries.The Company recorded pre-tax net gains of $2.7 million and pre-tax net gains of $22.6 million and pre-tax net losses $9.8 million related to hedges of netinvestments during 2015, 2014 and 2013, respectively, in the caption, Accumulated other comprehensive loss.Cross-Currency Interest Rate SwapsThe Company uses CCIRs in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these CCIRs, the Companyreceives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars andthe local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. The CCIRs are recorded on the ConsolidatedBalance Sheets at fair value, with changes in value attributed to the effect of the swaps' interest spread and changes in the credit worthiness of the counter-parties recorded in the caption, Accumulated other comprehensive loss. Changes in value attributed to the effect of foreign currency fluctuations are recordedin the Consolidated Statements of Operations and offset currency fluctuation effects on the debt principal. The following table indicates the contractualamounts of the Company's CCIRs: ContractualAmounts Interest Rates(In millions) Receive PayMaturing 2020 $220.0 Fixed U.S. dollar rate Fixed British pound sterling rateMaturing 2016 through 2017 6.5 Floating U.S. dollar rate Fixed rupee rateDuring August 2015, the Company effected the early termination of the euro CCIR with an original maturity date of 2018. The Company received $75.1million in cash related to this termination. There was no gain or loss recorded on the termination as any change in value attributable to the effect of foreigncurrency translation was previously recognized in the Consolidated Statements of Operations. Euro denominated foreign currency exchange forwardcontracts were entered into later in 2015 that provide similar protection from changes in foreign exchange rates to the terminated CCIR contract.83Table of ContentsFair Value of Derivative Assets and Liabilities and Other Financial InstrumentsFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (an exit price). The Company utilizes market data or assumptions that the Company believes market participants would use in valuing theasset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources(observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active marketsfor identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are describedbelow:•Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, includingquoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active;inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from orcorroborated by observable market data by correlation or other means.•Level 3—Inputs that are both significant to the fair value measurement and unobservable.In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant tothe fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entiretyrequires judgment, and considers factors specific to the asset or liability.The following table indicates the fair value hierarchy of the financial instruments of the Company at December 31, 2015 and 2014:Level 2 Fair Value Measurements(In thousands) December 31 2015 December 31 2014Assets Foreign currency exchange forward contracts $5,828 $4,485Cross-currency interest rate swaps 15,417 52,989Liabilities Foreign-currency forward exchange contracts 1,738 4,618Cross currency interest rate swaps — 2,599The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3) for theyears ended December 31, 2015 and 2014:Level 3 Liabilities—Unit Adjustment Liability (a) for the Twelve Months Ended December 31 (In thousands) 2015 2014 Balance at beginning of year $93,762 $106,343 Payments (22,320) (22,320) Change in fair value to the unit adjustment liability 8,491 9,740 Balance at end of year $79,934(b)$93,762(b)(a)See Note 5, Equity Method Investments, for additional information related to the unit adjustment liability.(b)Does not total due to rounding.The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information.Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company'scredit risk and counterparties' credit risks, and which minimize the use of unobservable inputs. The Company is able to classify fair value balances based onthe ability to observe those inputs. Foreign currency exchange forward contracts and CCIRs are classified as Level 2 fair value based upon pricing modelsusing market-based inputs. Model inputs can be verified, and valuation techniques do not involve significant management judgment.84Table of ContentsThe carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fairvalue due to the short-term maturities of these assets and liabilities. At December 31, 2015 and 2014, the total fair value of long-term debt, including currentmaturities, was $834.6 million and $885.0 million, respectively, compared to carrying value of $880.8 million and $854.9 million, respectively. Fair valuesfor debt are based on quoted market prices (Level 1) for the same or similar issues or on the current rates offered to the Company for debt of the sameremaining maturities.Concentrations of Credit RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accountsreceivable. The Company places cash and cash equivalents with high-quality financial institutions and, by policy, limits the amount of credit exposure toany single institution.Concentrations of credit risk with respect to accounts receivable are generally limited in the Harsco Industrial Segments due to the Company's large numberof customers and their dispersion across different industries and geographies. However, the Company's Harsco Metals & Minerals Segment and, to a lesserextent, the Harsco Rail Segment have several large customers throughout the world with significant accounts receivable balances. Consolidation in theglobal steel or rail industries could result in an increase in concentration of credit risk for the Company.The Company generally does not require collateral or other security to support customer receivables. If a receivable from one or more of the Company's largercustomers becomes uncollectible, it could have a material effect on the Company's results of operations or cash flows.16. Information by Segment and Geographic AreaThe Company reports information about operating segments using the "management approach," which is based on the way management organizes andreports the segments within the enterprise for making operating decisions and assessing performance. The Company's reportable segments are identifiedbased upon differences in products, services and markets served.In 2015, the Company had three reportable segments. These segments and the types of products and services offered include the following:Harsco Metals & Minerals SegmentGlobal expertise in providing on-site services of material logistics, product quality improvement and resource recovery for iron, steel and metalsmanufacturing; as well as value added environmental solutions for industrial co-products. Major customers include steel mills and asphalt roofingmanufacturers.Harsco Industrial SegmentMajor products include air-cooled heat exchangers; industrial grating; and boilers and water heaters. Major customers include industrial plants and the non-residential, commercial and public construction and retrofit markets; and the natural gas, natural gas processing and petrochemical industries.Harsco Rail SegmentThis Segment manufactures railway track maintenance equipment and provides track maintenance services. The major customers include private andgovernment-owned railroads and urban mass transit systems worldwide.In 2013, the Company's reportable segments also included the following:Harsco Infrastructure SegmentHistorically, major services included project engineering and equipment installation, as well as the sale and rental of scaffolding, shoring and concreteforming systems for industrial maintenance and capital improvement projects, civil infrastructure projects, non-residential construction, and internationalmulti-dwelling residential construction projects. Services were provided to industrial and petrochemical plants; the infrastructure construction, repair andmaintenance markets; commercial and industrial construction contractors; and public utilities. As a result of the Infrastructure Transaction, this Segment isnot included in the Company's results of operations for 2015 and 2014. See Note 3, Acquisitions and Dispositions, for additional information on theInfrastructure Transaction.85Table of ContentsOther InformationThe measurement basis of segment profit or loss is operating income (loss). There are no significant inter-segment sales. Corporate assets, at December 31,2015 and 2014, include principally cash, prepaid taxes, fair value of derivative instruments, the equity method investment in Brand and U.S. deferred incometaxes. Countries with revenues from unaffiliated customers or net property, plant and equipment of ten percent or more of the consolidated totals (in at leastone period presented) are as follows:Information by Geographic Area (a) Revenues from Unaffiliated Customers Year Ended December 31(In thousands) 2015 2014 2013U.S. $758,820 $880,884 $1,021,770U.K. 217,011 257,885 353,915All Other 747,261 927,519 1,520,285Totals including Corporate $1,723,092 $2,066,288 $2,895,970(a)Revenues are attributed to individual countries based on the location of the facility generating the revenue. Property, Plant and Equipment, Net Balances at December 31(In thousands) 2015 2014 2013U.S. $142,506 $151,397 $146,939China 97,305 102,842 86,822Brazil 57,381 69,515 63,161All Other 266,843 339,490 413,543Totals including Corporate $564,035 $663,244 $710,465No single customer provided in excess of 10% of the Company's consolidated revenues in 2015, 2014 and 2013.In 2015, 2014 and 2013, the Harsco Metals & Minerals Segment had two customers that each provided in excess of 10% of this Segment's revenues undermultiple long-term contracts at several mill sites. Should additional consolidations occur involving some of the steel industry's larger companies which arecustomers of the Company, it would result in an increase in concentration of credit risk for the Company. In 2015, the Harsco Industrial Segment had twocustomers and in 2014 and 2013 one customer that provided in excess of 10% of the Segment's revenues. In 2015 and 2013, the Harsco Rail Segment had twocustomers and in 2014 one customer that provided in excess of 10% of the Segment's revenues. The loss of any of these customers would not have a materialadverse impact on the Company's financial positions or cash flows; however, it could have a material effect on quarterly or annual results of operations.86Table of ContentsOperating Information by Segment:The Company has reclassified segment operating results for the year ended December 31, 2013 to conform to the revised manner in which the Company nowallocates corporate expenses to operating segments as a result of changes in organizational structure resulting from the Infrastructure Transaction. Thechanges do not impact the Company's previously reported consolidated revenues from continuing operations, operating income (loss) from continuingoperations or income (loss) from continuing operations before income taxes and equity income. Twelve Months Ended December 31(In thousands) 2015 2014 2013Revenues Harsco Metals & Minerals $1,106,162 $1,378,142 $1,358,454Harsco Infrastructure — — 885,377Harsco Industrial 357,256 412,532 365,972Harsco Rail 259,674 275,614 286,167Total Revenues $1,723,092 $2,066,288 $2,895,970Operating Income (Loss) Harsco Metals & Minerals $26,289 $13,771 $91,781Harsco Infrastructure — — (257,291)Harsco Industrial 57,020 64,114 59,110Harsco Rail 50,896 37,137 26,695Corporate (45,669) (45,735) (62,938)Total Operating Income (Loss) $88,536 $69,287 $(142,643)Total Assets Harsco Metals & Minerals $1,294,759 $1,476,660 $1,599,329Harsco Infrastructure (a) — — 456,316Harsco Industrial 119,830 127,591 83,946Harsco Rail 219,753 169,035 159,752Corporate 436,985 495,941 147,174Total Assets $2,071,327 $2,269,227 $2,446,517Depreciation and Amortization Harsco Metals & Minerals $136,579 $159,844 $158,837Harsco Infrastructure — — 58,449Harsco Industrial 6,266 4,928 3,329Harsco Rail 6,093 5,591 10,362Corporate 7,537 5,963 6,064Total Depreciation and Amortization $156,475 $176,326 $237,041Capital Expenditures Harsco Metals & Minerals $99,563 $187,665 $172,583Harsco Infrastructure — — 62,889Harsco Industrial 17,382 9,298 3,936Harsco Rail 1,957 3,120 3,502Corporate 4,650 8,776 2,641Total Capital Expenditures $123,552 $208,859 $245,551(a) The total assets of the Harsco Infrastructure Segment at December 31, 2013 represent assets held-for-sale, the value of the equity method investment in Brand, and related netdeferred tax assets.87Table of ContentsReconciliation of Segment Operating Income (Loss) to Consolidated Income (Loss) From Continuing Operations Before Income Taxes and EquityIncome (Loss): Twelve Months Ended December 31(In thousands) 2015 2014 2013Segment operating income (loss) $134,205 $115,022 $(79,705)General Corporate expense (45,669) (45,735) (62,938)Operating income (loss) from continuing operations 88,536 69,287 (142,643)Interest income 1,574 1,702 2,087Interest expense (46,804) (47,111) (49,654)Change in fair value to the unit adjustment liability (8,491) (9,740) (966)Income (loss) from continuing operations before income taxes and equity income (loss) $34,815 $14,138 $(191,176)Information about Products and Services: Revenues from Unaffiliated Customers Twelve Months Ended December 31(In thousands) 2015 2014 2013Key Product and Services Groups Global expertise in providing on-site services of material logistics, product qualityimprovement and resource recovery for iron, steel and metals manufacturing; as well asvalue added environmental solutions for industrial co-products $1,106,162 $1,378,142 $1,358,454Engineered scaffolding, concrete forming and shoring, and other access-related services,rentals and sales (a) — — 885,377Railway track maintenance services and equipment 259,674 275,614 286,167Air-cooled heat exchangers 186,243 226,529 180,738Industrial grating products 129,869 139,711 142,355Heat transfer products 41,144 46,292 42,879Consolidated Revenues $1,723,092 $2,066,288 $2,895,970(a) The Engineered scaffolding, concrete forming and shoring, and other access-related services, rentals and sales product group is associated with the Harsco Infrastructure Segmentwhich was disposed of as part of the Infrastructure Transaction. See Note 3, Acquisitions and Dispositions, for additional information on the Infrastructure Transaction.17. Other ExpensesDuring 2015, 2014 and 2013, the Company recorded pre-tax other expenses from continuing operations of $30.6 million, $57.8 million and $15.1 million,respectively. The major components of this Consolidated Statements of Operations caption are as follows: Other (Income) Expenses(In thousands) 2015 2014 2013Net gains $(10,613) $(6,718) $(4,657)Employee termination benefit costs 14,914 19,120 3,928Other costs to exit activities 13,451 4,908 5,382Impaired asset write-downs 8,170 39,455 9,688Foreign currency gains related to Harsco Rail Segment advances on contracts (10,940) — —Harsco Metals & Minerals Segment separation costs 9,922 — —Subcontractor settlement 4,220 — —Other expense 1,449 1,059 769Total $30,573 $57,824 $15,11088Table of ContentsNet GainsNet gains result from the sales of redundant properties (primarily land, buildings and related equipment) and non-core assets. In 2015, gains related to assetssold principally in North America and Latin America. In 2014, gains related to assets sold primarily in North America and Latin America. In 2013, gainsrelated to assets sold principally in the U.S. and Western Europe. Net Gains(In thousands) 2015 2014 2013Harsco Metals & Minerals Segment $(7,059) $(3,538) $(1,043)Harsco Infrastructure Segment — — (2,864)Harsco Industrial Segment (3,554) (2,077) (750)Corporate — (1,103) —Total $(10,613) $(6,718) $(4,657)Cash proceeds associated with these gains are included in the caption, Proceeds from sales of assets, in the cash flows from investing activities section of theConsolidated Statements of Cash Flows.Employee Termination Benefit CostsCosts and the related liabilities associated with involuntary termination benefit costs associated with one-time benefit arrangements provided as part of anexit or disposal activity are recognized by the Company when a formal plan for reorganization is approved at the appropriate level of management andcommunicated to the affected employees. Additionally, costs associated with ongoing benefit arrangements, or in certain countries where statutoryrequirements dictate a minimum required benefit, are recognized when they are probable and estimable.The employee termination benefits costs in 2015 related principally to the Harsco Metals & Minerals Segment, including the impact of Project Orion,primarily in Western Europe, North America and Asia Pacific. Additionally, employee termination benefits costs were incurred at Corporate. The employeetermination benefits costs in 2014 related primarily to the Harsco Metals & Minerals Segment, including the impact of Project Orion, primarily in LatinAmerica and Western Europe. The employee termination benefit costs in 2013 related primarily to the Harsco Metals & Minerals Segment and were primarilyin Latin America, Western Europe, the Middle East and Africa, and North America. Employee Termination Benefit Costs(In thousands) 2015 2014 2013Harsco Metals & Minerals Segment $11,454 $18,169 $3,561Harsco Infrastructure Segment (a) — — (326)Harsco Rail Segment 145 185 235Harsco Industrial Segment 561 421 115Corporate 2,754 345 343Total $14,914 $19,120 $3,928(a) Amounts related to the Harsco Infrastructure Segment during 2013 primarily relate to the finalization of certain accrued amounts associated with the Company's restructuringprograms.Other Costs to Exit ActivitiesCosts associated with exit or disposal activities are recognized as follows:•Costs to terminate a contract that is not a capital lease are recognized when an entity terminates the contract or when an entity ceases using theright conveyed by the contract. This includes the costs to terminate the contract before the end of its term or the costs that will continue to beincurred under the contract for its remaining term without economic benefit to the entity (e.g., lease run-out costs).•Other costs associated with exit or disposal activities (e.g., costs to consolidate or close facilities and relocate equipment or employees) arerecognized and measured at their fair value in the period in which the liability is incurred.In 2015, $13.5 million of exit costs were incurred, principally in the Harsco Metals & Minerals Segment, primarily related to the Middle East, North America,Latin America and Western Europe.Other costs to exit activities during 2015 include costs associated with the Company's exit of operations in Bahrain. Over the past several years the Companyhas been in discussions with officials at the Supreme Council for Environment in Bahrain with regard to a processing by-product ("salt cakes") located atHafeera. During 2015, the Company completed the assessment of options available for processing or removing the salt cakes. As a result, the Company hasentered into a service agreement with a third party for processing the salt cakes and recorded a charge of $7.0 million, payable over five to seven years,related to the89Table of Contentsestimated cost of processing and disposal. The Company's Bahrain operations are operated under a strategic venture for which its strategic venture partner hasa 35% minority interest. Accordingly, the net impact of the charge to the Company's net income (loss) attributable to Harsco Corporation was $4.6 million.In 2014, $4.9 million of exit costs were incurred, principally in the Harsco Metals & Minerals Segment, primarily related to North America and WesternEurope, partially offset at Corporate by gains from currency translation adjustments recognized in earnings related to historic Harsco Infrastructure Segmententities which were not included as part of the Infrastructure Transaction and retained by the Company. The currency translation adjustments are non-cashitems recognized when the Company has substantially liquidated the related investment in a foreign entity.In 2013, $5.4 million of exit costs were incurred, principally at Corporate related to the preliminary phases of the Infrastructure Transaction and the HarscoMetals & Minerals Segment at various sites. Costs to Exit Activities(In thousands) 2015 2014 2013Harsco Metals & Minerals Segment $12,638 $6,395 $2,705Harsco Infrastructure Segment (a) — — (254)Corporate 813 (1,487) 2,931Total $13,451 $4,908 $5,382(a) Amounts related to the Harsco Infrastructure Segment during 2013 primarily relate to the finalization of certain accrued amounts associated with the Company's restructuringprograms.Impaired Asset Write-downsImpaired asset write-downs are measured as the amount by which the carrying amount of assets exceeds their fair value. Fair value is estimated based upon theexpected future realizable cash flows including anticipated selling prices. Non-cash impaired asset write-downs are included in the caption, Other, net, on theConsolidated Statements of Cash Flows as adjustments to reconcile net income (loss) to net cash provided by operating activities.In 2015, $8.2 million of impaired asset write-downs were incurred in the Harsco Metals & Minerals Segment mostly in North America, Middle East and Africaand the Asia Pacific region. In 2014, $39.5 million of impaired asset write-downs were incurred, principally in the Harsco Metals & Minerals Segment mostlyin Western Europe, the Middle East and Africa and the Asia Pacific region as part of Project Orion. In 2013, $9.7 million of impaired asset write-downs wereincurred, principally in the Harsco Rail Segment related to certain contract services assets being written-down to the net realizable value. Impaired Asset Write-downs(In thousands) 2015 2014 2013Harsco Metals & Minerals Segment $8,170 $38,791 $689Harsco Rail Segment — 590 8,999Harsco Industrial Segment — 74 —Total $8,170 $39,455 $9,688Foreign Currency Gains Related to Harsco Rail Segment Advances on ContractsIn January 2015, the Swiss National Bank ended its policy of maintaining a stable exchange rate between the Swiss franc and the euro. As a result of thischange in policy, the Swiss franc experienced significant appreciation against the euro. During 2015, the Company recognized $10.9 million in foreigncurrency gains primarily related to converting Swiss franc bank deposits to euros. This gain was associated with advances received for the Harsco RailSegment's two contracts with the federal railway system of Switzerland. Harsco Metals & Minerals Segment Separation CostsThe Company has announced its intention to pursue strategic options for the separation of the Harsco Metals & Minerals Segment from the rest of theCompany. The Company has incurred $9.9 million of expenses related to the strategic review of this initiative.Subcontractor SettlementA subcontractor at the site of a large customer in the Harsco Metals & Minerals Segment had filed arbitration against the Company, claiming that it was owedmonetary damages from the Company in connection with its processing certain materials. Additionally, related to this matter, the Company has brought suitagainst its customer which the Company believed had responsibility for any damages. During 2015, all parties involved reached a binding settlementagreement. The Company recorded a charge of $4.2 million related to its obligations under the settlement agreement.90Table of Contents18. Components of Accumulated Other Comprehensive LossAccumulated other comprehensive loss is included on the Consolidated Statements of Stockholders' Equity. The components of Accumulated othercomprehensive loss, net of the effect of income taxes, and activity for the years ended December 31, 2015 and 2014 are as follows: Components of Accumulated Other Comprehensive Income (Loss) - Net of Tax(In thousands) CumulativeForeign ExchangeTranslationAdjustments Effective Portionof DerivativesDesignated asHedgingInstruments CumulativeUnrecognizedActuarial Losseson PensionObligations Unrealized Loss onMarketableSecurities TotalBalance at December 31, 2013 $6,110 $(7,023) $(369,682) $(20) $(370,615)Other comprehensive income (loss) beforereclassifications (39,818)(a)(1,961)(b)(130,659)(c)5 (172,433)Other comprehensive loss from equity methodinvestee (8,635)—632—(8,003)Amounts reclassified from accumulated othercomprehensive loss, net of tax 2,205 4 16,431 — 18,640Amounts reclassified from accumulated othercomprehensive loss in connection with theInfrastructure Transaction (See Note 3,Acquisitions and Dispositions) (1,447) — — — (1,447)Total other comprehensive income (loss) (47,695) (1,957) (113,596) 5 (163,243)Less: Other comprehensive (income) lossattributable to noncontrolling interests 1,647 (45) — — 1,602Other comprehensive income (loss) attributable toHarsco Corporation (46,048) (2,002) (113,596) 5 (161,641)Balance at December 31, 2014 $(39,938) $(9,025) $(483,278) $(15) $(532,256) Components of Accumulated Other Comprehensive Income (Loss) - Net of Tax(In thousands) CumulativeForeign ExchangeTranslationAdjustments Effective Portionof DerivativesDesignated asHedgingInstruments CumulativeUnrecognizedActuarial Losseson PensionObligations Unrealized Loss onMarketableSecurities TotalBalance at December 31, 2014 $(39,938) $(9,025) $(483,278) $(15) $(532,256)Other comprehensive income (loss) beforereclassifications (66,305)(a)9,796(b)72,796(c)(16) 16,271Other comprehensive income (loss) from equitymethod investee (21,950) (1,232) 596 — (22,586)Amounts reclassified from accumulated othercomprehensive loss, net of tax — 53 20,190 — 20,243Total other comprehensive income (loss) (88,255) 8,617 93,582 (16) 13,928Less: Other comprehensive loss attributable tononcontrolling interests 2,632 8 — — 2,640Other comprehensive income (loss) attributable toHarsco Corporation (85,623) 8,625 93,582 (16) 16,568Balance at December 31, 2015 $(125,561) $(400) $(389,696) $(31) $(515,688)(a) Principally foreign currency fluctuation.(b) Net change from periodic revaluations.(c) Principally changes due to annual actuarial remeasurements.91Table of ContentsAmounts reclassified from accumulated other comprehensive loss for the nine months ended December 31, 2015 and 2014 are as follows: Year EndedDecember 31 2015 Year EndedDecember 312014 Affected Caption in the Consolidated Statements ofOperations(In thousands) Amortization of defined benefit pension items (d):Actuarial losses $15,810 $11,556 Selling, general and administrative expensesActuarial losses 5,984 5,898 Cost of services and products soldPrior-service costs 121 103 Selling, general and administrative expensesPrior-service costs 148 171 Cost of services and products soldTotal before tax 22,063 17,728 Tax benefit (1,873) (1,297) Total reclassification of defined benefit pension items,net of tax $20,190 $16,431 Amortization of cash flow hedging instruments:Foreign currency exchange forward contracts $81 $4 Cost of services and products soldTax benefit (28) — Total reclassification of cash flow hedginginstruments $53 $4 Amortization of cumulative foreign exchange translation adjustments:Foreign exchange translation adjustments, before tax $— $2,205 Other expensesTax benefit — — Total reclassification of cumulative foreign exchangetranslation adjustments $— $2,205 (d) These accumulated other comprehensive loss components are included in the computation of NPPC. Please refer to Note 10, Employee Benefit Plans, for additional details.Amounts reclassified from accumulated other comprehensive loss in connection with the asset impairment loss recognized in the Infrastructure Transactionfor the years ended December 2014 are as follows: Year EndedDecember 312014 Affected Caption in the Consolidated Statements ofOperations(In thousands) Foreign exchange translation adjustments, before tax $(1,447) Loss on disposal of the Harsco Infrastructure Segmentand transaction costsTax effect — Total reclassification of foreign exchange transaction adjustments $(1,447) 92Table of Contents19. Restructuring ProgramsIn recent years, the Company has instituted restructuring programs to balance short-term profitability goals with long-term strategies. A primary objective ofthese programs has been to establish platforms upon which the affected businesses can grow with reduced fixed investment and generate annual operatingexpense savings. The restructuring programs have been instituted in response to the continuing impact of global financial and economic uncertainty on theCompany’s end markets. Restructuring costs incurred in these programs were recorded in the caption, Other expenses, of the Consolidated Statements ofOperations. The timing of associated cash payments is dependent on the type of restructuring cost and can extend over a multi-year period.Project OrionUnder Project Orion, the Harsco Metals & Minerals Segment made organizational and process improvement changes, which are expected to improve returnon capital and deliver a higher and more consistent level of service to customers. These changes include improving several core processes and simplifyingthe organizational structure. Annual recurring benefits under Project Orion were approximately $36 million at the end of 2015. During the fourth quarter of2015, Project Orion was expanded with additional targeted workforce and operational savings of $20 million to $25 million; the majority of these benefitsare expected to be realized in 2016. The Company incurred $5.1 million in severance and related charges associated with the expansion of Project Orionduring the fourth quarter of 2015.The restructuring accrual for Project Orion at December 31, 2015 and 2014 and the activity for the years ended December 31, 2015 and 2014 were as follows:(In thousands) EmployeeTerminationBenefit CostsBalance January 1, 2014 $—Expense incurred 11,992Other adjustments 1,190Cash expenditures (5,331)Foreign currency translation (183)Balance, December 31, 2014 $7,668Expense incurred 5,070Other adjustments (1,003)Cash expenditures (5,854)Foreign currency translation (74)Balance, December 31, 2015 $5,807 The remaining accrual related to Project Orion is expected to be paid through the first half of 2016.Prior Restructuring ProgramsThe remaining accrual for restructuring programs was $2.0 million and $2.4 million at December 31, 2015 and 2014, respectively. The remaining accrualrelates primarily to exit activity costs for lease terminations expected to be paid over the remaining life of the leases.93Table of ContentsTwo-Year Summary of Quarterly Results (Unaudited)(In millions, except per share amounts) 2015 (a) Quarterly First Second Third Fourth Revenues $451.6 $455.7 $428.3 $387.4 Gross profit (b) 90.5 95.3 91.7 89.2 Net income (loss) attributable to Harsco Corporation 15.3 6.6 (8.7) (7.0) Basic earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.20 $0.08 $(0.10) $(0.08) Discontinued operations (c) (0.01) — (0.01) (0.01) Basic earnings (loss) per share attributable toHarsco Corporation common stockholders $0.19 $0.08 $(0.11) $(0.09) Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.20 $0.08 $(0.10) $(0.08) Discontinued operations (c) (0.01) — (0.01) (0.01) Diluted earnings (loss) per share attributable toHarsco Corporation common stockholders $0.19 $0.08 $(0.11) $(0.09) 2014 (a) Quarterly First Second Third Fourth Revenues $512.5 $535.3 $526.4 $492.1 Gross profit (b) 102.7 118.2 117.6 83.9 Net income (loss) attributable to Harsco Corporation 10.2 (12.6) 24.6 (44.4) Basic earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.13 $(0.17) $0.31 $(0.55) Discontinued operations (c) — 0.01 — — Basic earnings (loss) per share attributable toHarsco Corporation common stockholders $0.13 $(0.16) $0.30(d)$(0.55) Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.13 $(0.17) $0.31 $(0.55) Discontinued operations (c) — 0.01 — — Diluted earnings (loss) per share attributable toHarsco Corporation common stockholders $0.13 $(0.16) $0.30(d)$(0.55) (a)Sum of the quarters may not equal the total year due to rounding.(b)Gross profit is defined as Revenues less costs and expenses associated directly with or allocated to products sold or services rendered.(c)Discontinued operations related principally to the Gas Technologies Segment which was sold in the fourth quarter of 2007.(d)Does not total due to rounding.94Table of ContentsCommon Stock Price and Dividend Information(Unaudited) Market Price Per Share Dividends DeclaredPer Share High Low 2015 First quarter $19.12 $14.50 $0.205Second quarter 17.80 15.31 0.205Third quarter 18.00 8.71 0.205Fourth quarter 12.54 7.69 0.0512014 First quarter $28.19 $21.16 $0.205Second quarter 27.77 22.43 0.205Third quarter 27.56 19.26 0.205Fourth quarter 21.81 16.48 0.205Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.None.Item 9A. Controls and Procedures.Based on the evaluation required by Securities Exchange Act Rules 13a-15(b) and 15d-15(b), the Company's management, including the Chief ExecutiveOfficer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures, as defined in Securities Exchange ActRules 13a-15(e) and 15d-15(e), at December 31, 2015. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that thedisclosure controls and procedures were effective at December 31, 2015. There were no changes in internal control over financial reporting that havematerially affected, or are reasonably likely to materially affect, internal control over financial reporting during the fourth quarter of 2015.Management's Report on Internal Controls Over Financial Reporting is included in Part II, Item 8, "Financial Statements and Supplementary Data." Theeffectiveness of the Company's internal control over financial reporting at December 31, 2015 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in the Report of Independent Registered Public Accounting Firm appearing in Part II, Item 8,"Financial Statements and Supplementary Data."Item 9B. Other Information.None.95Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate Governance.The information regarding executive officers of the Company required by this Item is set forth as a Supplementary Item, titled "Executive Officers of theRegistrant," at the end of Part I of this Annual Report on Form 10-K (pursuant to Instruction 3 to Item 401(b) of Regulation S-K) and is incorporated herein byreference. The other information required by this Item is incorporated herein by reference from the disclosures that will be included under the sectionsentitled "Corporate Governance," "Proposal 1: Election of Directors - Nominees for Director," "Meetings and Committees of the Board," "Report of the AuditCommittee" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Company's Definitive Proxy Statement for its 2016 Annual Meeting ofStockholders (the "2016 Proxy Statement"), which will be filed pursuant to SEC Regulation 14A not later than 120 days after the end of the Company's fiscalyear ended December 31, 2015.The Company's Code of Conduct (the "Code"), which applies to all officers, directors and employees of the Company, may be found on the Company'sInternet website, www.harsco.com. The Company intends to disclose on its website any amendments to the Code or any waiver from a provision of the Codegranted to an executive officer or director of the Company. The Code is available in print, without charge, to any person who requests it. To request a copy ofthe Code please contact the Company's Senior Director—Corporate Communications at (717) 730-3683.Item 11. Executive Compensation.The information regarding compensation of executive officers and directors required by this Item is incorporated herein by reference from the disclosures thatwill be included under the sections entitled "Compensation Discussion and Analysis - Executive Summary," "Discussion and Analysis of 2015Compensation" and "Non-Employee Director Compensation" of the 2016 Proxy Statement. The other information required by this Item is incorporated hereinby reference from the disclosures that will be included under the sections entitled "Compensation Committee Interlocks and Insider Participation" and"Compensation Committee Report" of the 2016 Proxy Statement.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The information regarding security ownership of certain beneficial owners and management required by this Item is incorporated herein by reference from thedisclosures that will be included under the section entitled "Share Ownership of Directors, Management and Certain Beneficial Owners" of the 2016 ProxyStatement.Equity compensation plan information is incorporated herein by reference from the disclosures that will be included under the section entitled "EquityCompensation Plan Information (As of December 31, 2015)" of the 2016 Proxy Statement.Item 13. Certain Relationships and Related Transactions, and Director Independence.The information regarding certain relationships and related transactions required by this Item is incorporated herein by reference from the disclosures thatwill be included under the section entitled "Transactions with Related Persons" of the 2016 Proxy Statement. The information regarding directorindependence required by this Item is incorporated herein by reference from the disclosures that will be included under the section entitled "CorporateGovernance" of the 2016 Proxy Statement.Item 14. Principal Accounting Fees and Services.The information regarding principal accounting fees and services required by this Item is incorporated herein by reference from the disclosures that will beincluded under the sections entitled "Report of the Audit Committee" and "Fees Billed by the Independent Auditors for Audit and Non-Audit Services" of the2016 Proxy Statement.96Table of ContentsPART IVItem 15. Exhibits, Financial Statement Schedules.(a)1. The Index to Consolidated Financial Statements and Supplementary Data is located under Part II, Item 8, "Financial Statements andSupplementary Data." PageIndex to Consolidated Financial Statements and Supplementary Data412. The following financial statement schedule should be read in conjunction with the Consolidated Financial Statements under Part II, Item 8,"Financial Statements and Supplementary Data": PageSchedule II—Valuation and Qualifying Accounts for the years 2015, 2014 and 201398Financial statement schedules other than that listed above are omitted because the required information is not applicable, or because the information requiredis included in the consolidated financial statements.97Table of ContentsSCHEDULE II. VALUATION AND QUALIFYING ACCOUNTSContinuing Operations(In thousands)COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E Additions Additions (Deductions) Description Balance atBeginning ofPeriod Charged toCost andExpenses Due toCurrencyTranslationAdjustments Other Balance at Endof PeriodFor the year 2015: Allowance for Doubtful Accounts $15,119 $13,047 $(1,585) $(932) $25,649Deferred Tax Assets—Valuation Allowance $131,422 $13,175 $(11,519) $(22,398)(a)$110,680For the year 2014: Allowance for Doubtful Accounts $6,638 $9,892 $(969) $(442) $15,119Deferred Tax Assets—Valuation Allowance $127,164 $24,332 $(9,254) $(10,820) $131,422For the year 2013: Allowance for Doubtful Accounts $17,253 $10,175 $(191) $(20,599)(b)$6,638Deferred Tax Assets—Valuation Allowance $126,078 $4,618 $(5,769) $2,237 $127,164(a)Includes a decrease of $16.1 million related to current year pension adjustments recorded through Accumulated other comprehensive loss and a $6.3 million decrease related to aU.K. tax rate change.(b)Includes principally the decrease in the allowance for doubtful accounts since December 31, 2012 related to the consummation of the Infrastructure Transaction and utilization ofpreviously reserved amounts.98Table of ContentsListing of Exhibits Filed with Form 10-K Description of Exhibit2(a) Purchase Agreement, dated as of September 15, 2013, by and among Harsco Corporation, on behalf of itself and the other sellers namedtherein, Bullseye, Inc., on behalf of itself and the other buyers named therein, Bullseye Investors, Inc. and CD&R Bullseye Holdings,L.P. (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2013, CommissionFile Number 001-03970). The registrant has omitted certain immaterial schedules and exhibits to this exhibit pursuant to the provisionsof Regulation S-K, Item 601(b)(2). The registrant will furnish a copy of any of the omitted schedules and exhibits to the Securities andExchange Commission upon request.3(a) Restated Certificate of Incorporation (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period endedJune 30, 2013, Commission File Number 001-03970).3(b) Certificate of Designation filed September 25, 1997 (incorporated by reference to the Company's Annual Report on Form 10-K for theperiod ended December 31, 1997, Commission File Number 001-03970).3(c) Certificate of Amendment to the Restated Certificate of Incorporation, dated April 29, 2015 (incorporated by reference to the Company'sCurrent Report on Form 8-K/A dated May 22, 2015, Commission File Number 001-03970).3(d) By-laws, as amended October 28, 2014 (incorporated by reference to the Company's Current Report on Form 8-K dated October 28,2014, Commission File Number 001-03970).4(a) Preferred Stock Purchase Rights Agreement (incorporated by reference to Registration Statement on Form 8-A dated October 2, 1987,Commission File Number 001-03970).4(b) Rights Agreement, dated as of September 25, 2007, by and between Harsco Corporation and Mellon Investor Services LLC, as RightsAgent (incorporated by reference to the Company's Current Report on Form 8-K dated September 26, 2007, Commission FileNumber 001-03970).4(c) Debt and Equity Securities (incorporated by reference to the Company's Registration Statement on Form S-3 dated December 15, 1994,Registration No. 33-56885).4(d) (i) Indenture, dated as of May 15, 2008, by and between Harsco Corporation and the Bank of New York, as trustee (incorporated byreference to the Company's Current Report on Form 8-K dated May 20, 2008, Commission File Number 001-03970).4(d) (ii) Supplemental Indenture, dated as of May 15, 2008, by and between Harsco Corporation and the Bank of New York, as trustee(incorporated by reference to the Company's Current Report on Form 8-K dated May 20, 2008, Commission File Number 001-03970).4(d) (iii) Form of Global Security representing Harsco Corporation's 5.75% Senior Notes due 2018 (incorporated by reference to the Company'sCurrent Report on Form 8-K dated May 20, 2008, Commission File Number 001-03970).Material Contracts—Credit and Underwriting Agreements10(a)(i) Amended and Restated Five-Year Credit Agreement, dated March 2, 2012, among Harsco Corporation, the lenders named therein,Citibank, N.A., as administrative agent, RBS Securities Inc., as syndication agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd., HSBCBank USA, National Association, ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A. and Lloyds TSB Bank PLC, asdocumentation agents (incorporated by reference to the Company's Current Report on Form 8-K dated March 7, 2012, Commission FileNo. 001-03970).10(a)(ii) Amendment No. 1, dated September 12, 2013, to the Amended and Restated Five-Year Credit Agreement, dated March 2, 2012, amongHarsco Corporation, the lenders named therein, Citibank, N.A., as administrative agent, RBS Securities Inc., as syndication agent, andthe Bank of Tokyo-Mitsubishi UFJ, Ltd., HSBC Bank USA, National Association, ING Bank N.V., Dublin Branch, JPMorgan ChaseBank, N.A. and Lloyds TSB Bank PLC, as documentation agents (incorporated by reference to the Company's Quarterly Report on Form10-Q for the period ended September 30, 2013, Commission File Number 001-03970).10(a)(iii) Amendment No. 2, dated December 20, 2013, to the Amended and Restated Five-Year Credit Agreement, dated March 2, 2012, amongHarsco Corporation, the lenders named therein, Citibank, N.A., as administrative agent, RBS Securities Inc., as syndication agent, andthe Bank of Tokyo-Mitsubishi UFJ, Ltd., HSBC Bank USA, National Association, ING Bank N.V., Dublin Branch, JPMorgan ChaseBank, N.A. and Lloyds TSB Bank PLC, as documentation agents (incorporated by reference to the Company's Annual Report on Form10-K for the fiscal year ended December 31, 2014, Commission File Number 001-03970).10(a)(iv) Amendment No. 3, dated as of March 27, 2015, to the Amended and Restated Five-Year Credit Agreement among Harsco Corporation, aDelaware corporation, as Borrower, the Lenders party thereto and Citibank, N.A., as Administrative Agent (incorporated by reference tothe Company's Current Report on Form 8-K filed April 1, 2015, Commission File Number 001-03970).99Table of Contents10(a)(v) Amendment and Restatement Agreement, dated as of December 2, 2015, among Harsco Corporation, the subsidiaries of the Companyparty thereto, Citibank N.A., as administrative agent, the other agents party thereto and the lenders party thereto including SecondAmended and Restated Credit Agreement, dated as of December 2, 2015, among Harsco Corporation, the lenders named therein,Citibank, N.A. and Royal Bank of Canada, as issuing lenders, and Citibank N.A., as administrative agent and as collateral agent(incorporated by reference to the Company's Current Report on Form 8-K dated December 4, 2015, Commission File No. 001-03970).Material Contracts—Management Contracts and Compensatory Plans10(b) Harsco Corporation Supplemental Retirement Benefit Plan as amended and restated January 1, 2009 (incorporated by reference to theCompany's Annual Report on Form 10-K, for the period ended December 31, 2008, Commission File Number 001-03970).10(c) Trust Agreement between Harsco Corporation and Dauphin Deposit Bank and Trust Company dated July 1, 1987 relating to theSupplemental Retirement Benefit Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the period endedDecember 31, 1987, Commission File Number 001-03970).10(d) Harsco Corporation Supplemental Executive Retirement Plan as amended (incorporated by reference to the Company's Annual Reporton Form 10-K for the period ended December 31, 1991, Commission File Number 001-03970).10(e) Trust Agreement between Harsco Corporation and Dauphin Deposit Bank and Trust Company dated November 22, 1988 relating to theSupplemental Executive Retirement Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the periodended December 31, 1988, Commission File Number 001-03970).10(f) Special Supplemental Retirement Benefit Agreement for D. C. Hathaway (incorporated by reference to the Company's Annual Report onForm 10-K for the period ended December 31, 1988, Commission File Number 001-03970).10(g) Harsco Corporation 1995 Executive Incentive Compensation Plan, as Amended and Restated effective March 12, 2012 (incorporated byreference to the Company's Current Report on Form 8-K dated March 13, 2012, Commission File No. 001-03970).10(h) Authorization, Terms and Conditions of the Annual Incentive Awards, as Amended and Restated April 27, 2004, under the 1995Executive Incentive Compensation Plan (incorporated by reference to the Company's Current Report on Form 8-K dated March 23,2006, Commission File Number 001-03970).10(i) Authorization, Terms and Conditions of Other Performance Awards under the 1995 Executive Incentive Compensation Plan (asamended and restated) (incorporated by reference to the Company's Current Report on Form 8-K dated March 22, 2007, CommissionFile Number 001-03970).10(j) Restricted Stock Units Agreement (incorporated by reference to the Company's Current Report on Form 8-K dated January 23, 2007,Commission File Number 001-03970).10(k) Restricted Stock Units Agreement for International Employees (incorporated by reference to the Company's Annual Report on Form 10-K for the period ended December 31, 2007, Commission File Number 001-03970).10(l) Stock Option Contract (incorporated by reference to the Company's Current Report on Form 8-K dated January 31, 2011, CommissionFile Number 001-03970).10(m) Harsco Corporation 2013 Equity and Incentive Compensation Plan (incorporated by reference to the Company's Current Report onForm 8-K dated April 26, 2013, Commission File Number 001-03970).10(n) Harsco Corporation Form of Restricted Stock Units Agreement (effective for grants on and after May 10, 2013) (incorporated byreference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2013, Commission File Number 001-03970).10(o) Harsco Corporation Form of Stock Appreciation Rights Agreement (effective for grants on and after May 10, 2013) (incorporated byreference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2013, Commission File Number 001-03970).10(p)(i) Harsco Corporation 1995 Non-Employee Directors' Stock Plan as Amended and Restated at January 27, 2004 (incorporated by referenceto Proxy Statement dated March 23, 2004 on Exhibit A, pages A-1 through A-9, Commission File Number 001-03970).10(p)(ii) Amendment No. 1 to the Harsco Corporation 1995 Non-Employee Directors' Stock Plan (incorporated by reference to the Company'sAnnual Report on Form 10-K for the period ended December 31, 2008, Commission File Number 001-03970).10(q) Harsco Corporation Form of Restricted Stock Units Agreement (Directors) (incorporated by reference to the Company's Current Reporton Form 8-K dated April 26, 2005, Commission File Number 001-03970).10(r) Harsco Corporation Deferred Compensation Plan for Non-Employee Directors (as Amended and Restated as of December 31, 2008)(incorporated by reference to the Company's Annual Report on Form 10-K for the period ended December 31, 2008, Commission FileNumber 001-03970).100Table of Contents10(s) Settlement and Consulting Agreement (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period endedMarch 31, 2003, Commission File Number 001-03970).10(t) Harsco Non-Qualified Retirement Savings & Investment Plan Part B—Amendment and Restatement as of January 1, 2009 (incorporatedby reference to the Company's Annual Report on Form 10-K for the period ended December 31, 2008, Commission File Number 001-03970).10(u) Form of Change in Control Severance Agreement (incorporated by reference to the Company's Quarterly Report on Form 10-Q for theperiod ended September 30, 2014, Commission File Number 001-03970).10(v) Notification Letter to Henry W. Knueppel, dated March 7, 2012 (incorporated by reference to the Company's Quarterly Report on Form10-Q for the period ended March 31, 2012, Commission File Number 001-03970).10(w) Separation and Release Agreement, dated March 9, 2012, between the Company and Salvatore D. Fazzolari (incorporated by referenceto the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2012, Commission File Number 001-03970).10(x) Notification Letter to Patrick Decker dated July 28, 2012 (incorporated by reference to the Company's Quarterly Report on Form 10-Qfor the period ended June 30, 2012, Commission File Number 001-03970).10(y) Separation Agreement, dated as of December 5, 2012, by and between the Company and Stephen J. Schnoor (incorporated by referenceto the Company's Current Report on Form 8-K dated December 11, 2012, Commission File Number 001-03970).10(z) Release Agreement, dated as of December 5, 2012, by and between the Company and Stephen J. Schnoor (incorporated by reference tothe Company's Current Report on Form 8-K dated December 11, 2012, Commission File Number 001-03970).10(aa) Notification Letter to F. Nicholas Grasberger, III dated March 20, 2013 (incorporated by reference to the Company's Quarterly Report onForm 10-Q for the period ended March 31, 2013, Commission File Number 001-03970).10(bb) Retention and Severance Agreement, made as of October 27, 2013, by and between Harsco Corporation and Mark Kimmel (incorporatedby reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2013, Commission File Number 001-03970).10(cc) Notification Letter to David Everitt dated March 14, 2014 (incorporated by reference to the Company's Quarterly Report on Form 10-Qfor the period ended March 31, 2014, Commission File Number 001-03970).10(dd) Notification Letter to F. N. Grasberger dated April 8, 2014 (incorporated by reference to the Company's Quarterly Report on Form 10-Qfor the period ended June 30, 2014, Commission File Number 001-03970).10(ee) Notification Letter to C. Stump dated April 29, 2014 (incorporated by reference to the Company's Quarterly Report on Form 10-Q for theperiod ended June 30, 2014, Commission File Number 001-03970).10(ff) Notification Letter to F. N. Grasberger dated August 1, 2014 (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2014, Commission File Number 001-03970).10(gg) Form of Restricted Stock Units Agreement (effective for grants on or after April 28, 2014) (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended June 30, 2014, Commission File Number 001-03970).10(hh) Form of Stock Appreciation Rights Agreement (effective for grants on or after April 28, 2014) (incorporated by reference to theCompany's Quarterly Report on Form 10-Q for the period ended June 30, 2014, Commission File Number 001-03970).10(ii) Form of Performance Share Units Agreement (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the periodended June 30, 2014, Commission File Number 001-03970).10(jj) Separation Agreement and General Release, dated May 11, 2015, between Harsco Corporation and A. Verona Dorch (incorporated byreference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2015, Commission File Number 001-03970).10(kk) Separation Agreement and General Release, dated August 5, 2015, between Harsco Corporation and Richard E. Lundgren, Jr.(incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2015).10(ll) Form of Performance Share Units Agreement (effective for grants on or after April 28, 2015) (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended March 31, 2015, Commission File Number 001-03970).10(mm) Form of Restricted Stock Units Agreement (effective for grants on or after April 28, 2015) (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended March 31, 2015, Commission File Number 001-03970).10(nn) Form of Stock Appreciation Rights Agreement (effective for grants on or after April 28, 2015) (incorporated by reference to theCompany's Quarterly Report on Form 10-Q for the period ended March 31, 2015, Commission File Number 001-03970).101Table of Contents Director Indemnity Agreements10(oo)(i) K. G. Eddy (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, Commission FileNumber 001-03970).10(oo)(ii) T. D. Growcock (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K.G. Eddy, Commission File Number 001-03970).10(oo)(iii) H. W. Knueppel (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K.G. Eddy, Commission File Number 001-03970).10(oo)(iv) S. E. Graham (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).10(oo)(v) D. C. Everitt (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).10(oo)(vi) J. M. Loree (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).10(oo)(vii) J. F. Earl (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).10(oo)(viii) E. La Roche (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).10(oo)(ix) P. C. Widman (incorporated by reference to the Company's Current Report on Form 8-K dated August 27, 2004, same as shown for K. G.Eddy, Commission File Number 001-03970).12 Computation of Ratios of Earnings to Fixed Charges.21 Subsidiaries of the Registrant.23 Consent of Independent Registered Public Accounting Firm.31.1 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (ChiefExecutive Officer).31.2 Certification Pursuant to Rule 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (ChiefFinancial Officer).32 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (ChiefExecutive Officer and Chief Financial Officer).101 The following financial statements from Harsco Corporation's Annual Report on Form 10-K for the year ended December 31, 2015,formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements ofOperations; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements of Changes in Equity; (v) theConsolidated Statements of Comprehensive Income (Loss) and (vi) the Notes to Consolidated Financial Statements.Exhibits other than those listed above are omitted for the reason that they are either not applicable or not material.102Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. HARSCO CORPORATION(Registrant)DATEFebruary 26, 2016 /s/ PETER F. MINAN Peter F. MinanChief Financial Officer(Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.Signature Capacity Date/s/ F. NICHOLAS GRASBERGER, III President, Chief Executive Officer and Director (PrincipalExecutive Officer) February 26, 2016F. Nicholas Grasberger, III /s/ PETER F. MINAN Chief Financial Officer (Principal Financial and AccountingOfficer) February 26, 2016Peter F. Minan /s/ DAVID C. EVERITT Non-Executive Chairman and Director February 26, 2016David C. Everitt /s/ JAMES F. EARL Director February 26, 2016James F. Earl /s/ KATHY G. EDDY Director February 26, 2016Kathy G. Eddy /s/ STUART E. GRAHAM Director February 26, 2016Stuart E. Graham /s/ TERRY D. GROWCOCK Director February 26, 2016Terry D. Growcock /s/ HENRY W. KNUEPPEL Director February 26, 2016Henry W. Knueppel /s/ ELAINE LA ROCHE Director February 26, 2016Elaine La Roche /s/ JAMES M. LOREE Director February 26, 2016James M. Loree /s/ PHILLIP C. WIDMAN Director February 26, 2016Phillip C. Widman 103Exhibit 12HARSCO CORPORATIONComputation of Ratios of Earnings to Fixed Charges YEARS ENDED DECEMBER 31(In thousands)2015 (a) 2014 (a) 2013 (a) 2012 (a) 2011 (a) Pre-tax income from continuingoperations attributable to Harscoshareholders$34,846 $8,085 $(199,381)(b)$(227,211)(c)$41,172 Add: Consolidated Fixed Chargescomputed below62,720 67,181 78,637 80,073 86,608 Net adjustments for unconsolidatedentities(147) 1,558 (1,511) (256) (464) Net adjustments for capitalized interest466 (46) 53 128 165 Consolidated Earnings Available forFixed Charges$97,885 $76,778 $(122,202)(b)$(147,266)(c)$127,481 Consolidated Fixed Charges: Interest expense per financial statements(d)$46,804 $47,111 $49,654 $47,381 $48,735 Interest expense capitalized— 541 577 476 250 Portion of rentals (1/3) representing areasonable approximation of the interestfactor15,916 19,529 28,406 32,216 37,623 Consolidated Fixed Charges$62,720 $67,181 $78,637 $80,073 $86,608 Consolidated Ratio of Earnings to FixedCharges1.56 1.14 —(b)(e)—(c)(f)1.47 (a)Does not include interest related to uncertain tax position obligations.(b)During 2013, the Company recorded a $272.3 million, non-cash pre-tax long-lived asset impairment charge, or $3.17 per basic and diluted share.(c)In the fourth quarter of 2012, the Company incurred a $265.0 million, pre-tax goodwill impairment charge, or $3.29 per basic and diluted share.(d)Includes amortization of debt discount.(e)For the year ended December 31, 2013, the ratio coverage was less than 1:1. We would have needed to generate additional earnings of $200.8million to achieve a coverage of 1:1.(f)For the year ended December 31, 2012, the ratio coverage was less that 1:1. We would have needed to generate additional earnings of $227.3million to achieve a coverage of 1:1.HARSCO CORPORATION Exhibit 21Subsidiaries of Registrant SubsidiaryCountry of IncorporationOwnership Percentage Harsco Metals Argentina S.A.Argentina100%Harsco (Australia) Pty. LimitedAustralia100%Harsco Industrial Air-X-Changers Pty. Ltd.Australia100%Harsco Metals Australia Pty. Ltd.Australia100%Harsco Metals Australia Holding Investment Co. Pty. Ltd.Australia100%Harsco Rail Pty. Ltd.Australia100%Harsco Minerals Austria GmbHAustria100%Harsco Metals AluServ Middle East W.L.L.Bahrain65%Harsco Belgium S.P.R.L.Belgium100%Harsco Metals Belgium Societe PriveeBelgium100%Harsco Metals Emirates PartnershipBelgium65%Harsco Rail Emirates Maatschap/Societe de Droit CommunBelgium100%Harsco Brazil Investments SPRLBelgium100%Harsco Chile Investments SPRLBelgium100%Harsco do Brasil Participacoes e Servicos Siderurgicos Ltda.Brazil100%Harsco Metals LimitadaBrazil100%Harsco Minerais LimitadaBrazil100%Harsco Rail LtdaBrazil100%Heckett Comercio de Rejeitos Industriais, Importacao e Exportacao LtdaBrazil100%Harsco Canada Corporation Societe Harsco CanadaCanada100%Harsco Canada General Partner LimitedCanada100%Harsco Canada Limited PartnershipCanada100%Harsco Nova Scotia Holding CorporationCanada100%Harsco Metals Chile S.A.Chile100%Harsco Metals (Ningbo) Co. Ltd.China70%Harsco (Tangshan) Metallurgical Materials Technology Co.,LTD.China65%Harsco Metals Zhejiang Co. Ltd.China70%JiangSu Harsco Industrial Grating Company LimitedChina100%Shanxi TISCO-Harsco Technology Co., Ltd.China60%Harsco APAC Rail Machinery (Beijing) Co., Ltd.China100%Harsco Technology China Co., Ltd.China100%Harsco Infrastructure CZ s.r.oCzech Republic100%Harsco Metals Czech s.r.o.Czech Republic65%Harsco Metals CZ s.r.oCzech Republic100%Hunnebeck Middle East FZEDubai100%Harsco Metals Egypt L.L.C.Egypt100%Heckett Bahna Co. For Industrial Operations S.A.E.Egypt65%Heckett MultiServ Bahna S.A.E.Egypt65%Slag Processing Company Egypt (SLAR) S.A.E.Egypt60%MultiServ OyFinland100% HARSCO CORPORATION Exhibit 21Subsidiaries of Registrant SubsidiaryCountry of IncorporationOwnership PercentageHarsco Metals France S.A.S.France100%Harsco Minerals France S.A.S.France100%Harsco France S.A.S.France100%Harsco Metals & Minerals SASFrance100%Harsco Minerals Deutschland GmbHGermany100%Harsco Rail Europe GmbHGermany100%Harsco Metals Germany GmbhGermany100%Harsco (Gibraltar) Holding LimitedGibraltar100%Harsco Metals Guatemala S.A.Guatemala100%Harsco China Holding Company LimitedHong Kong100%Harsco Industrial Grating China Holding Co. Ltd.Hong Kong70%Harsco India Metals Private LimitedIndia99.99%Harsco India Private Ltd.India74%Harsco India Services Private Ltd.India100%Harsco Track Machines and Services Private LimitedIndia100%Harsco Metals Italia S.R.L.Italy100%Ilserv S.R.L.Italy65%Harsco Metals Nord Italia S.R.L.Italy100%Harsco Luxembourg S.a.r.lLuxembourg100%Harsco Metals Luxembourg S.A.Luxembourg100%Harsco Metals Luxequip S.A.Luxembourg100%Excell Americas Holdings Ltd S.a.r.L.Luxembourg100%Harsco Americas Investments S.a.r.l.Luxembourg100%Harsco International Finance S.a.r.l.Luxembourg100%Excell Africa Holdings Ltd SarlLuxembourg100%Ballagio S.A.R.L.Luxembourg100%Harsco Metals Kemaman Sdn BhdMalaysia100%Harsco Industrial IKG de Mexico, S.A. de C.V.Mexico100%Harsco Metals de Mexico S.A. de C.V.Mexico100%Irving, S.A. de C.V.Mexico100%Harsco Asia Investment B.V.Netherlands100%Harsco Asia China Investment B.V.Netherlands100%Harsco Asia Pacific Investment B.V.Netherlands100%GasServ (Netherlands) VII B.V.Netherlands100%Harsco (Mexico) Holdings B.V.Netherlands100%Harsco Infrastructure Industrial Services B.V.Netherlands100%Harsco Infrastructure B.V.Netherlands100%Harsco Infrastructure Construction Services B.V.Netherlands100%Harsco Infrastructure Logistic Services B.V.Netherlands100%Harsco Investments Europe B.V.Netherlands100%Harsco Metals Holland B.V.Netherlands100%Harsco Metals Transport B.V.Netherlands100% HARSCO CORPORATION Exhibit 21Subsidiaries of Registrant SubsidiaryCountry of IncorporationOwnership PercentageHarsco Metals Oostelijk Staal International B.V.Netherlands100%Harsco Minerals Europe B.V.Netherlands100%Harsco Nederland Slag B.V.Netherlands100%Heckett MultiServ China B.V.Netherlands100%Heckett MultiServ Far East B.V.Netherlands100%MultiServ International B.V.Netherlands100%MultiServ Finance BVNetherlands100%Slag Reductie (Pacific) B.V.Netherlands100%Slag Reductie Nederland B.V.Netherlands100%Harsco (Peru) Holdings B.V.Netherlands100%Harsco Europa B.V.Netherlands100%Harsco Finance B.V.Netherlands100%SGB Industrial Services BVNetherlands100%Harsco Infrastructure SSH BVNetherlands100%Verhuurservice Gereedschap en Materialen Holland BVNetherlands100%Minerval Metallurgic Additives BVNetherlands100%Harsco Metals SteelServ LimitedNew Zealand50%Harsco Infrastructure Norge A.S.Norway100%Harsco Metals Norway A.S.Norway100%Harsco Minerals Arabia LLC (FZC)Oman100%Harsco Steel Mill Trading Arabia LLCOman100%Harsco Metals Peru S.A.Peru100%Harsco Metals Polska SP Z.O.O.Poland100%Harsco Metals CTS Prestacao de Servicos Tecnicos e Aluguer de Equipamentos LDAUnipessoalPortugal100%Harsco Al Darwish United W.L.L.Qatar49%Harsco Metals Romania S.R.L.Romania100%Harsco Metals Saudi Arabia Ltd.Saudi Arabia55%Harsco Metals D.O.O. SmederevoSerbia100%Harsco Infrastructure Slovensko s.r.o.Slovak Republic100%Harsco Metals Slovensko s.r.o.Slovak Republic100%Harsco Minerali d.o.o.Slovenia100%Harsco Metals RSA Africa (Pty.) Ltd.South Africa100%Harsco Metals South Africa (Pty.) Ltd.South Africa100%Harsco Metals SRH Mill Services (Pty.) Ltd.South Africa100%Harsco Metals SteelServ (Pty.) Ltd.South Africa100%Harsco Metals Ilanga Pty. Ltd.South Africa100%Harsco Infrastructure South Africa (Pty.) Ltd.South Africa100%Heckett MultiServ (FS) Pty LtdSouth Africa100%Harsco Metals Gesmafesa Sociedad de LimitadaSpain100%Harsco Metals Intermetal S.A.Spain100%Harsco Metals Lycrete S.A.Spain100%Harsco Metals Reclamet S.A.Spain100%Harsco Infrastructure Sverige A.B.Sweden100%Harsco Metals Sweden A.B.Sweden100%Harsco Metals (Thailand) Company Ltd.Thailand100%Harsco Sun Demiryolu Ekipmanlari Uretim Ve Ticaret Limited SirketiTurkey51%HARSCO CORPORATION Exhibit 21Subsidiaries of Registrant SubsidiaryCountry of IncorporationOwnership PercentageFaber Prest LimitedU.K.100%Fourninezero Ltd.U.K.100%Harsco (U.K.) LimitedU.K.100%Harsco (UK) Group LtdU.K.100%Harsco (UK) Holdings LtdU.K.100%Harsco (York Place) LimitedU.K.100%Harsco Fairerways Limited PartnershipU.K.100%Harsco Fairestways Limited PartnershipU.K.100%Harsco Fairways PartnershipU.K.100%Harsco Higherlands Limited PartnershipU.K.100%Harsco Highestlands Limited PartnershipU.K.100%Harsco Infrastructure Group Ltd.U.K.100%Harsco Infrastructure Services Ltd.U.K.100%Harsco Investment Ltd.U.K.100%Harsco Leatherhead LimitedU.K.100%Harsco Metals 385 LtdU.K.100%Harsco Metals Group LimitedU.K.100%Harsco Metals Holdings LimitedU.K.100%Harsco Mole Valley LimitedU.K.100%Harsco Rail LimitedU.K.100%Harsco Surrey LimitedU.K.100%MultiServ Investment LimitedU.K.100%SGB Investments Ltd.U.K.100%Short Brothers (Plant) Ltd.U.K.100%Harsco Global Sourcing LimitedU.K.100%Harsco Metals 373 LtdU.K.100%Heckett LimitedU.K.100%Harsco Metals LtdU.K.100%Masterclimbers LtdU.K.100%Harsco Track Technologies LtdU.K.100%MultiServ LimitedU.K.100%MultiServ Logistics LimitedU.K.100%The Slag Reduction Company LimitedU.K.100%Cuplok LimitedU.K.100%Extraguard LimitedU.K.100%Parker Scaffolding Co LimitedU.K.100%Rovacabin LimitedU.K.100%Scaffolding (Great Britain) LimitedU.K.100%SGB Middle East LimitedU.K.100%SGB Services (Scaffolding) LimitedU.K.100%Harsco Defense Holding, LLCU.S.A.100%Harsco Financial Holding CorporationU.S.A.100%Harsco Holdings, Inc.U.S.A.100%Harsco Infrastructure Holdings, Inc.U.S.A.100%Harsco Metals Holding LLCU.S.A.100%Harsco Metals Intermetal LLCU.S.A.100%Harsco Metals Investment LLCU.S.A.100%Harsco Metals Operations LLCU.S.A.100%Harsco Metals SRI LLCU.S.A.100%Harsco Metals VB LLCU.S.A.100%Harsco Minerals Technologies LLCU.S.A.100%Harsco Minnesota Finance, Inc.U.S.A.100%Harsco Minnesota LLCU.S.A.100%Harsco Technologies LLCU.S.A.100%Harsco Industrial Hammco LLCU.S.A.100%Protran Technology LLCU.S.A100%Harsco Metals Ukraine L.L.C.Ukraine100%Companies in which Harsco Corporation does not exert management control are not consolidated. These companies are listed below as unconsolidatedentities.Company NameCountry of IncorporationOwnershipPercentage Phooltas Harsco Rail Solutions Private LimitedIndia40%P.T. Purna Baja HeckettIndonesia40%Brand Energy & Infrastructure Holdings, Inc.U.S.A.29%Exhibit 23CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statement on Forms S‑8 (Nos. 333-13175, 333-13173, 333-59832, 333-70710, 333-114958, and 333-188448) and on Form S-3 (No. 333-191104) of Harsco Corporation of our report dated February 26, 2016 relating to the financialstatements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K./s/PricewaterhouseCoopers LLPPhiladelphia, PennsylvaniaFebruary 26, 2016Exhibit 31.1 HARSCO CORPORATIONCERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a)AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, F. Nicholas Grasberger, III, certify that:1. I have reviewed this Annual Report on Form 10-K of Harsco Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. February 26, 2016 /s/ F. NICHOLAS GRASBERGER, IIIF. Nicholas Grasberger, IIIPresident and Chief Executive Officer Exhibit 31.2 HARSCO CORPORATIONCERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a)AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Peter F. Minan, certify that:1. I have reviewed this Annual Report on Form 10-K of Harsco Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. February 26, 2016 /s/ PETER F. MINANPeter F. MinanChief Financial OfficerExhibit 32HARSCO CORPORATIONCERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Harsco Corporation (the "Company") on Form 10-K for the period ending December 31, 2015, as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), we certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.February 26, 2016/s/ F. NICHOLAS GRASBERGER, IIIF. Nicholas Grasberger, III President and Chief Executive Officer/s/ PETER F. MINANPeter F. Minan Chief Financial OfficerA signed original of this written statement required by Section 906 has been provided to Harsco Corporation and will be retained by Harsco Corporation andfurnished to the Securities and Exchange Commission or its staff upon request.

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