Harsco Corporation
Annual Report 2017

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, 2017ORoTRANSITION 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 share 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. oIndicate 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," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large accelerated filer ýAccelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company o Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate 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, 2017 was $1,294,742,000Indicate 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 31, 2018Common stock, par value $1.25 per share 80,453,852DOCUMENTS INCORPORATED BY REFERENCESelected portions of the 2018 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. 5Item 1B.Unresolved Staff Comments. 13Item 2.Properties. 14Item 3.Legal Proceedings. 14Item 4.Mine Safety Disclosures.14SupplementaryItem.Executive Officers of the Registrant (Pursuant to Instruction 3 to Item 401(b) of Regulation S-K). 15PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities. 16Item 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. 39Item 8.Financial Statements and Supplementary Data. 40Item 9.Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. 93Item 9A.Controls and Procedures. 93Item 9B.Other Information. 93PART III Item 10.Directors, Executive Officers and Corporate Governance. 94Item 11.Executive Compensation. 94Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 94Item 13.Certain Relationships and Related Transactions, and Director Independence. 94Item 14.Principal Accounting Fees and Services. 94PART IV Item 15.Exhibits, Financial Statement Schedules. 95Item 16.Form 10-K Summary.99SIGNATURES100Table of ContentsPART I Item 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 consist of three reportable segments: HarscoMetals & Minerals, Harsco Industrial and Harsco Rail. The Company has locations in approximately 30 countries, including the U.S. The Company wasincorporated in 1956.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 for material logistics,product quality improvement and resource recovery from 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 lInvestment in natural gas production capabilities and distribution lDemand in the natural gas and related downstream refined and derivativeproductslIndustrial grating and high-security fencing products lIndustrial plant and warehouse construction and expansion lOff-shore drilling and new rig construction lSecurity fencing requirements to protect major facilities andinfrastructurelHeat 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 byrailroads lIncreased market attention on safety, including collision avoidance andwarning systems lMeasurement and inspection technologies to monitor track conditionsand plan maintenance practicesThe 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.In 2017, 2016 and 2015, sales in the U.S. contributed total revenues of $0.7 billion, $0.6 billion and $0.8 billion, equal to approximately 43%, 42% and 44%of total revenues, respectively. The Company's sales in euro-currency countries contributed total revenues of $0.3 billion, $0.3 billion and $0.3 billion in2017, 2016 and 2015, equal to approximately 18%, 18% and 16% of total revenues, respectively. Sales in the U.K. contributed total revenues of $0.1 billion,$0.2 billion and $0.2 billion in 2017, 2016 and 2015, equal to approximately 9%, 11% and 13% of total revenues, respectively. There were no significantinter-segment revenues.1Table of Contents(b)Financial Information about SegmentsFinancial information concerning segments is included in Note 15, Information by Segment and Geographic Area, in Part II, Item 8, "Financial Statementsand 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—63% of consolidated revenues for 2017The Harsco Metals & Minerals Segment is one of the world's largest providers of on-site services for material logistics, product quality improvement andresource recovery from iron, steel and metals manufacturing.The Harsco Metals & Minerals Segment extracts high-value metallic content from stainless steel by-products and also specializes in the development ofminerals technologies for commercial applications, including agriculture fertilizers. This Segment also produces industrial abrasives and roofing granulesfrom power-plant utility coal slag at a number of locations throughout the U.S. Harsco's BLACK BEAUTY® abrasives are used for industrial surfacepreparation, such as rust removal and cleaning of bridges, ship hulls and various structures. Roofing granules are sold to residential roofing shinglemanufacturers in the U.S., primarily for the replacement roofing market. This business is one of the largest U.S. producers of slag abrasives and residentialroofing 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 2017 and 2016, this Segment's revenues were generated in the followingregions: Percentage of RevenuesRegion 2017 2016Western Europe 37% 40%North America 27% 26%Latin America (a) 16% 14%Asia-Pacific 13% 12%Middle East and Africa 4% 5%Eastern Europe 3% 3%(a)Including Mexico.For 2017, 2016 and 2015, the Harsco Metals & Minerals Segment's percentage of the Company's consolidated revenues were 63%, 67% and 64%,respectively.Harsco Industrial Segment—19% of consolidated revenues for 2017The Harsco Industrial Segment includes the Harsco Industrial Air-X-Changers, Harsco Industrial IKG and Harsco Industrial Patterson-Kelley businesses.Approximately 91% 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.Harsco Industrial IKG manufactures a varied line of industrial grating products at several plants in the U.S. and an international plant located in Mexico. 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 Patterson-Kelley is a leading manufacturer of energy-efficient heat transfer products such as boilers and water heaters for commercial andinstitutional applications.For 2017, 2016 and 2015, this Segment's percentage of the Company's consolidated revenues were 19%, 17% and 21%, respectively.2Table of ContentsHarsco Rail Segment—18% of consolidated revenues for 2017The 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 2017, 2016 and 2015, exportproduct sales from the U.S. for the Harsco Rail Segment were $82.7 million, $67.9 million and $67.1 million, respectively.For 2017, 2016 and 2015, the Harsco Rail Segment's percentage of the Company's consolidated revenues were 18%, 16% and 15%, 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 15, Information by Segment and Geographic Area, in Part II, Item 8, "Financial Statements and Supplementary Data." The product groups thatcontributed 10% or more as a percentage of consolidated revenues in any of the last three fiscal years are set forth in the following table: Percentage of Consolidated RevenuesProduct Group 2017 2016 2015Outsourced, 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 63% 67% 64%Railway track maintenance services and equipment 18% 16% 15%Air-cooled heat exchangers 9% 6% 11%(1)(ii) New products and services are added from time to time; however, in 2017, 2016 and 2015 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.(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 quarter ending June 30 and thethird quarter ending September 30. Additionally, the Company has historically generated the majority of its cash flows in the second half of the year. This is aresult of normally higher income during the second half of the year.(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.3Table of Contents(1)(vii) In 2017 and 2016, the Harsco Metals & Minerals Segment had one customer and in 2015 had two customers that each provided in excess of 10% ofthis Segment's revenues under multiple long-term contracts at several mill sites. The loss of any one of the contracts would not have a material adverse effectupon the Company's financial position or cash flows; however, it could have a significant effect on quarterly or annual results of operations. Additionally, adecline in economic conditions may further impact the ability of the Company's customers to meet their obligations to the Company on a timely basis andcould result in bankruptcy or receivership filings by any of such customers. If customers are unable to meet their obligations on a timely basis, or if theCompany is unable to collect amounts due from customers for any reason, it could adversely impact the realizability of receivables and inventories, and therecoverability 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.The Harsco Industrial Segment had one customer in 2017, no customers in 2016 and two customers in 2015 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.The Harsco Rail Segment had one customer in 2017 and 2016 and two customers in 2015 that provided in excess of 10% of the Segment's revenues. The lossof any of these customers would not have a material adverse impact on the Company's financial positions or cash flows; however, it could have a materialeffect on quarterly or annual results of operations.(1)(viii) At December 31, 2017, the Company's metals services contracts had estimated future revenues of $2.8 billion at expected production levels,compared with $2.7 billion at December 31, 2016. This provides the Company with a substantial base of long-term revenues. The increase is primarily due tothe timing of contract expirations, new and renewed contracts, and foreign currency translation. Approximately 25% of these revenues are expected to berecognized by December 31, 2018; approximately 40% of these revenues are expected to be recognized between January 1, 2019 and December 31, 2021;approximately 13% of these revenues are expected to be recognized between January 1, 2022 and December 31, 2024; and the remaining revenues areexpected to be recognized thereafter. There are no significant metals services contracts for which the estimated costs to complete the contract currentlyexceed the estimated revenue to be realized included in the estimated future revenues. The estimated future revenues are exclusive of anticipated contractrenewals, projected volume increases and ad-hoc services.At December 31, 2017, the Company had an estimated order backlog of $85.3 million in the Harsco Industrial Segment, compared with $54.4 million atDecember 31, 2016. This increase is primarily due to fundamental market improvement for the segment's air-cooled heat exchangers businesses for customersprimarily in the upstream compression and gas processing markets due to improved oil prices, ultimately driving higher capital spending. There is alsomoderate growth in the segment's industrial and commercial boilers and hot water heater group. In addition, at December 31, 2017, the Harsco Rail Segmenthad an estimated order backlog of $260.5 million, compared with $273.0 million at December 31, 2016. This decrease is primarily due to shipments,including those to the federal railway system of Switzerland, which were not replaced due to decreased demand, primarily in the U.S., during 2017. AtDecember 31, 2017, $155.5 million or 45% of the Company's manufactured products order backlog is not expected to be filled in 2018. The remainder of thisbacklog is expected to be filled in 2019 and 2020. The order backlog is exclusive of long-term metals industry services contracts, roofing granules andindustrial abrasives products, and minerals and metal recovery technologies services.(1)(ix) At December 31, 2017, 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, China and Brazil. This Segment is one of the world's largest providers of these services. ThisSegment's key competitive factors are innovative resource recovery solutions, significant industry experience, technology, safety performance, service andvalue. This Segment competes principally with a number of privately-held businesses for services outsourced by customers. Additionally, due to the nature ofthis Segment's services, it encounters a certain degree of "competition" from customers' desire to perform similar services themselves instead of using anoutsourced solution.4Table of ContentsHarsco Industrial Segment—This Segment includes manufacturing businesses located principally in the U.S. Key competitive factors include quality, value,technology and energy-efficiency. Primary competitors are U.S.-based manufacturers of similar products.Harsco Rail Segment—This Segment manufactures and sells highly-engineered railway track maintenance equipment and collision avoidance and warningsystems to support passenger, rail worker and pedestrian safety, produced primarily in the U.S. for customers throughout the world. Additionally, thisSegment provides railway track maintenance services principally in the U.S. and the U.K. This Segment's key competitive factors are quality, technology,customer service and value. Primary competitors for both products and services are privately-held global businesses as well as certain regional competitors. InMarch 2015, the Company acquired Protran, a U.S. designer and producer of safety systems for transportation and industrial applications; and in April 2015,the Company acquired JK Rail, a provider of after-market parts for railroad track maintenance.(1)(xi) The Company's expense for research and development activities was $4.2 million, $4.3 million and $4.5 million in 2017, 2016 and 2015,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 Research and Development, in Part 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 expenditures for air and water quality control willcontinue, the Company cannot predict the effect on its business of such expanded regulations. For additional information regarding environmental matterssee Note 11, Commitments and Contingencies, in Part II, Item 8, "Financial Statements and Supplementary Data."(1)(xiii) At December 31, 2017, the Company had approximately 9,400 employees.(d)Financial Information about Geographic AreasFinancial information concerning international and domestic operations is included in Note 15, Information by Segment and Geographic Area, in Part II,Item 8, "Financial Statements and Supplementary Data," which information is incorporated herein by reference. Export sales from the U.S. totaled $101.6million, $86.5 million and $80.8 million in 2017, 2016 and 2015, respectively.(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.5Table of ContentsCyclical 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 prolonged slowdowns in steel mill production, excess production capacity,bankruptcy or receivership of steel producers and changes in outsourcing practices in the steel industry;•The resource recovery technologies business of the Harsco Metals & Minerals Segment can also be adversely impacted by prolonged 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;•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 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, 2017, the Company’s top five customers in the Harsco Metals & Minerals Segment accounted for approximately 31% ofrevenues in that Segment and 20% 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 the Company's largest customers, or customers with long-term contracts, could adversely affect the Company’s financial condition.The Company routinely enters into multiple contracts with 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 approximately 9% of total revenues for theyear ended December 31, 2017. These contracts cover a variety of services and vary in contract length. From time to time, the Company may be negotiatingthe terms of current and potential future services to be rendered due to the scope and complexity of this relationship. Disagreements between the parties canarise as 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.6Table of ContentsThe Company's global presence subjects it to a variety of risks arising from doing business internationally.The Company operates in approximately 30 countries, generating 57% of its revenues outside of the U.S. (based on location of the facility generating therevenue) for the year ended December 31, 2017. In addition, as of December 31, 2017, 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;•political, economic and social instability, civil and political unrest, terrorist actions and armed hostilities in the regions or countries in which theCompany does business;•increasing complex laws and regulations concerning privacy and data security, including the European Union's ("EU") General Data ProtectionRegulation;•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, including, 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, Saudi Arabia and Oman, as well as India, some of which haveexperienced armed hostilities and civil unrest. Additionally, these countries are geographically close to other countries that may have a continued high riskof 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.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 employees or agents and may be exposed to liability due to pre-acquisitionconduct of employees or agents of businesses or operations the Company may acquire. Violations of these laws, or allegations of such violations, coulddisrupt the Company’s operations, require significant management involvement and have a material adverse effect on the Company’s results of operations,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 inadvertence or due tothe acts or inadvertence of others), the Company could also be subject to severe criminal or civil penalties or other sanctions; disgorgement; further changesor enhancements to its procedures, policies and controls; personnel changes and other remedial actions.Furthermore, 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, as well as other laws and regulations administered by the Department of Commerce. These regulations limit the Company’s ability to market, sell,distribute or otherwise transfer its products to prohibited countries or persons. Failure to comply with these rules and regulations may result in substantialcivil and criminal penalties, including fines and disgorgement of profits, the imposition of a court-appointed monitor, the denial of export privileges anddebarment from participation in U.S. Government contracts.7Table of ContentsExchange 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 the EU, theU.K. and Brazil. Given the structure of the Company's operations, an increase in the value of the U.S. dollar relative to the foreign currencies in which theCompany earns its revenues generally has a negative impact on the translated amounts of the assets and liabilities, results of operations and cash flows. TheCompany's foreign currency exposures increase the risk of volatility in its financial position, results of operations and cash flows. If currencies in the belowregions change materially in relation to the U.S. dollar, the Company's financial position, results of operations, or cash flows may be materially affected.Compared with the corresponding full-year period in 2016, the average value of major currencies changed as follows in relation to the U.S. dollar during thefull-year 2017, impacting the Company's revenues and income:•British pound sterling weakened by 4%•euro strengthened by 3%•Brazilian real strengthened by 8%Compared with exchange rates at December 31, 2016, the value of major currencies at December 31, 2017 changed as follows:•British pound sterling strengthened by 9%•euro strengthened by 14%•Brazilian real weakened by 2%To illustrate the effect of foreign exchange rate changes in certain key markets of the Company, in 2017 revenues would have been less than 1% or $8million lower and operating income would have been approximately less than 1% or less than $1 million higher if the average exchange rates for 2016 wereutilized. In a similar comparison for 2016, revenues would have been approximately 4% or $51 million higher and operating income would have beenapproximately 5% or $3 million lower if the average exchange rates for 2015 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.Economic conditions and regulatory changes following the United Kingdom’s referendum on withdrawal from the EU could impact on the Company'sbusiness and results of operations.In June 2016, a majority of voters in the U.K. approved a withdrawal from the EU in a national referendum (often referred to as Brexit). In March 2017 theU.K. invoked Article 50 of the Lisbon Treaty, initiating the withdrawal process, and the U.K. is scheduled to depart from the EU on March 29, 2019. The U.K.and the EU are negotiating their future relationship, including whether there will be a transition period. The scheduled withdrawal of the U.K. from the EUhas created significant uncertainty about the future relationship between the U.K. and the EU, including with respect to the laws and regulations that willapply as the U.K. determines which EU laws to replace or replicate in the event of a withdrawal. The Company's business, particularly the Harsco Metals & Minerals Segment, whose headquarters is in the U.K., could be adversely impacted by the likelyexit of the U.K. from the EU. Adverse consequences such as deterioration in economic conditions and volatility in currency exchange rates could have anegative impact on the Company's operations, financial condition and results of operations. In addition, incremental regulatory controls and regulationsgoverning trade between the U.K. and the rest of the EU could have adverse consequences on the steel industry in the U.K. and/or the EU, and couldnegatively impact the Company's operations and financial condition.8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. In addition, certain competitors may from time to time sell their products below their cost of production in anattempt to increase their market share. Such practices may limit the prices the Company can charge for its products and services. Unfavorable foreignexchange rates can also adversely impact the Company's ability to match the prices charged by international competitors. If the Company is unableto match the prices charged by 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. Under the Company's Senior Secured CreditFacility, the Company must comply with certain financial covenants on a quarterly basis. The covenants also place limitations on dividends, acquisitions,investments in joint ventures, unrestricted subsidiaries, indebtedness and the imposition of liens on the Company's assets. In the event of a default, theCompany's lenders and the counterparties to the Company's other financing arrangements could terminate their commitments to the Company and declare allamounts borrowed, together with accrued interests and fees, immediately due and payable. If this were to occur, the Company might not be able to pay theseamounts, or the Company might be forced to seek an amendment to the Company's financing arrangements which could make the terms of thesearrangements more onerous for the Company. In addition, this could also trigger an event of default under the cross-default provisions of the Company's otherobligations. As a result, a default 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 interest rate swaps and foreign currency exchange forward contracts, for a variety of purposes.The Company uses interest rate swaps in conjunction with certain debt issuances in order to secure either a fixed or floating interest rate. The Company usesforeign currency exchange forward contracts as part of a worldwide program to minimize foreign currency operating income and balance sheet exposure. Inparticular, the Company uses foreign currency exchange forward contracts to hedge commitments, such as foreign currency debt, firm purchase commitmentsand foreign currency cash flows for certain export sales transactions. The unsecured contracts for foreign currency exchange forward contracts outstanding atDecember 31, 2017 mature at various times through 2018 and are with major financial institutions. The Company may also enter into derivative contracts tohedge 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, 2017 was $586.6 million. Of this amount, approximately 99% had variable rates of interest and 1% had fixed ratesof interest. The weighted average interest rate of total debt was approximately 4.8%. At debt levels as of December 31, 2017, a one percentage point increasein variable interest rates would increase interest expense by $6 million per year. If the Company is unable to successfully manage its exposure to variableinterest rates, including through interest rates swaps that the Company has put into place, its debt service obligations may increase even though the amountborrowed remains the same, and in 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.9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.Recently enacted tax reform legislation has made substantial changes to U.S. tax law, including a reduction in the corporate tax rate, a limitation ondeductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the allowance of immediate expensing ofcapital expenditures, deemed repatriation of non-U.S. earnings and the change from a worldwide tax system to territorial. The Company expects thislegislation to have significant effects on the Company, some of which may be adverse. For example, the reduction in the corporate tax rate is expected toresult in a reduction in the value of the Company's existing deferred tax assets and consequently a noncash charge to the Company's earnings. While theCompany recorded a provisional charge of $48.7 million in 2017, the magnitude of the net impact remains uncertain at this time and is subject to any otherregulatory or administrative developments, including any regulations or other guidance promulgated by the U.S. Internal Revenue Service as well as stategovernments.The Company's defined benefit net periodic pension cost ("NPPC") is directly affected by the equity and bond markets. A downward trend in those marketscould adversely 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 NPPC, pension liabilities and the valuation of the assets in the Company'sdefined benefit pension plans. Financial market deterioration would most likely have a negative impact on the Company's NPPC and the pension assets andliabilities. 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.10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.11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. Although it is not possible to predict changes in laws or othergovernmental standards, the development, proposal or adoption of more stringent laws or governmental standards may require the Company to change itsmanufacturing processes, for example, by reducing or eliminating use of the regulated component or material in its manufacturing process. The Companymay not be able to develop a new manufacturing process to comply with such legal and regulatory changes without investing significant time and resources,if at all. In addition, such legal and regulatory changes may also affect buying decisions by the users of the Company’s products that contain regulatedmaterials or that involve the use of such materials in the manufacturing process. If applicable laws and governmental standards become more stringent, theCompany’s results of operations, liquidity and financial condition 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 good faith judgment, these estimates can be unreliable and may frequently change based on newly availableinformation. In the case of large-scale domestic and international projects where timing is often uncertain, it is particularly difficult to predict whether andwhen the Company will receive a contract award. The uncertainty of contract award timing can present difficulties in matching the Company's workforce sizewith contract needs. If an expected contract award is delayed or not received, the Company could incur cost resulting from reductions in staff or redundancyof 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 computer crime and advancedpersistent threats. These threats pose a risk to the security of the Company's systems and networks and the confidentiality, availability and integrity of theCompany's data. Should an attack on the Company's information technology systems and networks succeed, it could expose the Company and theCompany's employees, customers, dealers and suppliers12Table of Contentsto misuse of information or systems, the compromising of confidential information, manipulation and destruction of data, production downtimes andoperations disruptions. The occurrence of any of these events could adversely affect the Company's reputation, competitive position, business, results ofoperations and cash flows. In addition, such breaches in security could result in litigation, regulatory action, potential liability and the costs and operationalconsequences 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 of December 31, 2017, the Company had $401.8 million of goodwill. In connection with the Company's goodwill impairment testing, the Company maybe required to record future impairment charges to the extent it cannot generate future cash flows at a level sufficient to recover the net book value of any ofthe Company's reporting units. The Company's estimates of fair value are based on assumptions about the future operating cash flows and growth rates ofeach reporting unit and discount rates applied to these cash flows. Based on the uncertainty of future growth rates and other assumptions used to estimategoodwill recoverability, future reductions in the Company's expected cash flows could cause a material non-cash goodwill impairment charge, which couldhave a material adverse effect on the Company's results of operations and financial condition.Item 1B. Unresolved Staff Comments.None.13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 Taiyuan City, China Minerals and Resource Recovery Technologies LeasedTangshan, China Minerals and Resource Recovery Technologies LeasedRotherham, UK Minerals and Resource Recovery Technologies OwnedDrakesboro, Kentucky, U.S. Roofing Granules/Abrasives OwnedSarver, Pennsylvania, U.S. Minerals and Resource Recovery Technologies OwnedHarsco Rail Segment Columbia, South Carolina, U.S. Rail Maintenance Equipment OwnedLudington, Michigan, 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 LeasedThe Harsco Metals business, which is part of the Harsco Metals & Minerals Segment, principally operates on customer-owned sites and has administrativeoffices throughout the world, including Camp Hill, Pennsylvania and Leatherhead, U.K. The above table includes the principal properties owned or leased bythe Company. The Company also operates from a number of other smaller plants, warehouses and offices in addition to the above. The Company considers allof its properties at which operations are currently performed to be in satisfactory condition and suitable for their intended use.Item 3. Legal Proceedings.Information regarding legal proceedings is included in Note 11, in Part II, Item 8, "Financial Statements and Supplementary Data."Item 4. Mine Safety Disclosures.Not applicable.14Table of ContentsSupplementary Item. Executive Officers of the Registrant.Set forth below, at February 22, 2018, 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 54 President and Chief Executive OfficerPeter F. Minan 56 Senior Vice President and Chief Financial OfficerScott H. Gerson 47 Senior Vice President and Group President - Harsco IndustrialJeswant Gill 55 Senior Vice President and Group President - Harsco RailRussell C. Hochman 53 Senior Vice President and General Counsel, Chief Compliance Officer & Corporate SecretaryTracey L. McKenzie 50 Senior Vice President and Chief Human Resources OfficerF. Nicholas Grasberger, III - President and Chief Executive Officer since August 1, 2014, and became a member of the Board of Directors on April 29, 2014.Served as Senior Vice President and Chief Financial Officer from April 2013 to November 2014, and President and Chief Operating Officer from April 2014 toAugust 2014. Prior to joining the Company, Mr. Grasberger was Managing Director of Fenner Plc’s Precision Polymer division from March 2011 to April2013. From April 2009 to November 2009 he served as Executive Vice President and Chief Executive Officer of Armstrong Building Products. From January2005 to March 2009 he served as Senior Vice President and Chief Financial Officer of Armstrong World Industries, Inc. Prior to his employment withArmstrong, Mr. Grasberger served as Vice President and Chief Financial Officer of Kennametal Inc. and before that as Corporate Treasurer and Director of thecorporate planning process at H.J. Heinz Company. He started his career with USX Corporation.Peter F. Minan - Senior Vice President and Chief Financial Officer since November 11, 2014. Mr. Minan has an extensive background in global financialmanagement acquired through a nearly 30-year career with KPMG from 1983 to 2012. He became a partner at KPMG in 1993 and served as global leadpartner for several multi-national Fortune 500 industrial and consumer audits. His roles included National Managing Partner, U.S. Audit practice, and Partnerin Charge, Washington/Baltimore Audit practice. His most recent role was with Computer Sciences Corporation, where he served as Vice President ofEnterprise Risk Management and Internal Audit from 2012 to 2013.Scott H. Gerson - Senior Vice President and Group President–Harsco Industrial since April 29, 2015. Served as Vice President and Group President– HarscoIndustrial from July 2010 to April 2015. Served as Chief Information Officer from April 2005 to January 2011. Prior to joining the Company in April 2005,Mr. Gerson was with Kulicke & Soffa Industries, Inc., where he served as IT director of their worldwide application services. He has also served in ITmanagement capacities with Compaq Computers and TRW Inc.Jeswant Gill - Senior Vice President and Group President - Harsco Rail since November 2016. Prior to joining the Company, Mr. Gill served as SeniorExecutive/Managing Director, Global Solutions of The Arcadia Group International, LLC from October 2015 to November 2016. From June 2014 toSeptember 2015 Mr. Gill served as Vice President and Executive Vice President, Industrial Segment of Kennametal, Inc. From January 2008 to May 2014 Mr.Gill worked for Ingersoll Rand Company Limited, acting as Vice President of Global Services, Industrial Technologies from January 2011 to May 2014, andas President of Security Technologies, Asia Pacific from January 2008 until December 2010. Prior to his employment with Ingersoll Rand Company Limited,Mr. Gill worked for Invensys, Johnson Controls Inc. and Schlumberger. Mr. Gill holds a B.S. in engineering physics and an MBA, both from Queen'sUniversity in Ontario, Canada.Russell C. Hochman - Senior Vice President and General Counsel, Chief Compliance Officer and Corporate Secretary since May 2015. Served as VicePresident, Interim General Counsel, Chief Compliance Officer and Corporate Secretary from March 2015 to May 2015. Served as Deputy General Counselfrom July 2013 to March 2015. Prior to joining Harsco in 2013, Mr. Hochman served in senior legal roles with Pitney Bowes Inc. and leading law firms basedin New York. Mr. Hochman holds a J.D. from Albany Law School of Union University and a B.A. from Cornell University.Tracey L. McKenzie - Senior Vice President and Chief Human Resources Officer since September 2014. Prior to joining the Company, Ms. McKenzie servedas Global HR Vice President for JLG Industries, a leader in the manufacturing sector for advanced aerial lift systems. Ms. McKenzie previously heldexecutive level HR positions in her native Australia, and worked at Pacific Scientific Aerospace (a division of Danaher). She moved to the U.S. in 2003, andholds an MBA from the University of New England and a bachelor's in business administration from Royal Melbourne Institute of Technology (RMIT). 15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, 2017, there were 80,453,852 shares outstanding. In 2017, theCompany's common stock traded in a range of $11.40 to $22.00 and closed at $18.65 at year-end. At December 31, 2017, there were approximately 18,900stockholders. For additional information regarding the Company's equity compensation plans see Note 13, Stock-Based Compensation, in Part II, Item 8,"Financial Statements and Supplementary Data," and Part III, Item 11, "Executive Compensation."The following table sets forth, for the periods indicated, the high and low sales prices of the Company's common stock, reported by the New York StockExchange. Market Price Per Share High Low2017 First quarter $14.80 $11.75Second quarter 17.08 11.40Third quarter 21.10 15.05Fourth quarter 22.00 16.102016 First quarter $7.75 $3.55Second quarter 7.56 5.00Third quarter 11.18 6.55Fourth quarter 15.25 9.05Dividend ActionThe Company's Senior Secured Credit Facilities contain limitations on the payment of dividends. For additional information regarding Harsco Corporation'slimitations on the payment of dividends, see Liquidity and Capital Resources, in Part II, Item 7, "Management's Discussion and Analysis of FinancialCondition and Results of Operations" and Note 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements and Supplementary Data." TheCompany has not declared any dividends during the two most recent fiscal years. The Board normally reviews the dividend policy and the dividend rate on aquarterly basis.16Table of ContentsStock Performance Graph*$100 invested on December 31, 2012 in stock or index, including reinvestment of dividends. Fiscal year ending December31.Copyright© 2018 Standard & Poor's, a division of S&P Global. All rights reserved.Copyright© 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. December2012December2013December2014December2015December2016December2017Harsco Corporation100.00123.3186.0838.0766.2590.85S&P Smallcap 600100.00141.31149.45146.50185.40209.94Dow Jones US Diversified Industrials100.00142.13143.62162.07179.82167.9717Table of ContentsItem 6. Selected Financial Data.Five-Year Statistical Summary(In thousands, except per share,employee information andpercentages) 2017 2016 2015 2014 2013 (a) Statement of operations information Revenues from continuingoperations $1,607,062 $1,451,223 $1,723,092 $2,066,288 $2,895,970 Amounts attributable to Harsco Corporation common stockholders Income (loss) from continuingoperations $7,626 $(86,336) $7,168 $(22,281) $(231,356) Income (loss) from discontinuedoperations 196 669 (980) 110 (1,492) Net income (loss) 7,822 (85,667) 6,188 (22,171) (232,848) Financial position and cash flow information Working capital (b) $117,964 $122,602 $120,267 $80,036 $185,759 Total assets (c) 1,578,685 1,581,338 2,051,887 2,263,664 2,439,084 Long-term debt (c) 566,794 629,239 845,621 827,428 779,849 Total debt (c) 586,623 659,072 900,934 869,364 807,595 Depreciation and amortization 129,937 141,486 156,475 176,326 237,041 Capital expenditures (98,314) (69,340) (123,552) (208,859) (245,551) Cash provided by operatingactivities (d) 176,892 159,876 121,772 227,442 188,690 Cash provided (used) byinvesting activities (103,325) 122,887 (130,373) (229,561) 63,281 Cash provided (used) byfinancing activities (d) (83,715) (292,364) 22,189 (22,509) (249,695) Ratios Return on average equity (e) 4.1% (29.5)% 2.3% (4.0)% (30.0)% Current ratio (b) (f) 1.2:1 1.3:1 1.2:1 1.1:1 1.3:1 Per share information attributable to Harsco Corporation common stockholders Basic—Income (loss) fromcontinuing operations $0.09 $(1.07) $0.09 $(0.28) $(2.86) Income (loss) fromdiscontinued operations — 0.01 (0.01) — (0.02) Net income (loss) $0.10(g)$(1.07)(g)$0.08 $(0.27)(g)$(2.88) Diluted—Income (loss) fromcontinuing operations $0.09 $(1.07) $0.09 $(0.28) $(2.86) Income (loss) fromdiscontinued operations — 0.01 (0.01) — (0.02) Net income (loss) $0.09(g)$(1.07)(g)$0.08 $(0.27)(g)$(2.88) Other information Book value per share (h) $2.67 $1.72 $3.88 $4.36 $7.41 Cash dividends declared pershare — — 0.666 0.820 0.820 Diluted weighted-averagenumber of shares outstanding 82,840 80,333 80,365 80,884 80,755 Number of employees 9,400 9,400 10,800 12,200 12,300 (a)Includes impacts of the Infrastructure Transaction consummated on November 26, 2013.(b)On January 1, 2017, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to the reclassification of current deferred tax assets andliabilities to non-current. As a result of these changes, the Company reclassified its net current deferred tax assets and liabilities to non-current, which reduced Net working capitalby $27.1 million, $38.1 million, $37.9 million and $43.8 million at December 31, 2016, 2015, 2014 and 2013, respectively.(c)On January 1, 2016, the Company adopted changes issued by the FASB related to simplifying the presentation of debt issuance costs. The changes required that debt issuancecosts related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability. The Company reclassified debtissuance costs in the amount of $10.1 million, $2.3 million and $3.3 million at December 31, 2015, 2014 and 2013, respectively.(d)On January 1, 2017, the Company adopted changes issued by the FASB to the accounting for stock-based compensation. The Company reclassified employee taxes paid on stockcompensation in the amount of $0.1 million, $0.3 million, $0.7 million and $1.0 million for the year ended December 31, 2016, 2015, 2014 and 2013, respectively, from Cashprovided by operating activities to Cash provided (used by) financing activities on its Consolidated Statement of Cash Flows.(e)Return on average equity is calculated by dividing income (loss) from continuing operations by average Harsco Corporation stockholders' equity throughout the year.(f)Current ratio is calculated by dividing total current assets by total current liabilities.(g)Does not total due to rounding.(h)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," "outlook," "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 currencyexchange rates, interest rates, commodity and fuel costs and capital costs;(3) changes in the performance of equity and bond markets that could affect, amongother things, 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 outcome of any disputes with customers, contractors and subcontractors; (15) the financial condition of the Company's customers,including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability;(16) implementation of environmental remediation matters; (17) risk and uncertainty associated with intangible assets; and (18) other risk factors listed fromtime to time in the Company's SEC reports. A further discussion of these, along with other potential risk factors, can be found in Part I, Item 1A, "RiskFactors," of this Annual Report on Form 10-K. The Company cautions that these factors may not be exhaustive and that many of these factors are beyond theCompany's ability to control or predict. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Companyundertakes no duty to update forward-looking statements except as may be required by law.19Table of ContentsExecutive OverviewOn December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the" Act") was signed into law. The Act, among otherthings, reduces the U.S. corporate income tax rate to 21% starting in 2018 and creates a territorial tax system with a one-time mandatory tax on previouslydeferred foreign earnings of U.S. subsidiaries. The Company recorded a provisional charge of $48.7 million as a result of revaluing the U.S. ending netdeferred tax asset at the lower rate and establishing a valuation allowance on the full amount of foreign tax credit carryforwards. This amount is included inIncome tax expense on the Company's Consolidated Statement of Operations. See Note 10, Income Taxes, in Part II, Item 8, "Financial Statements andSupplementary Data" for additional information.Markets served by the Company's Harsco Metals & Minerals Segment continued to demonstrate improvement during 2017 as increased customer steelproduction and higher commodity volumes and prices positively affected both revenues and operating income. In addition, results were positively affectedby the new contracts, more favorable services mix, operational benefits and discipline achieved in recent years.As previously disclosed, one of the Company’s customers for the Harsco Metals & Minerals Segment in Australia had entered into the process of voluntaryadministration under Australian law, the purpose of which was to focus on long-term solvency. The result of this administration process was that thecustomer’s operation was sold to a new owner in August 2017. In September 2017, the administrators informed the Company that most of the pre-administration accounts receivable balance would not be paid and, as a result, the Company recorded a bad debt expense of $4.6 million during 2017. TheCompany continues to provide services for the new owner pending formalization of a new contract.Energy markets also demonstrated some fundamental improvement during 2017. The Harsco Industrial Segment’s air-cooled heat exchangers business hasseen steadily improving results. The Harsco Industrial Segment's industrial grating business continues to be impacted by a lack of large-scale projects,delayed capital expenditures, competitive market dynamics and increased material costs. Accordingly, these factors impacted revenue and operating incomeduring 2017 in the Harsco Industrial Segment. In addition, operating income during 2017 was positively affected by a gain on the sale of a property ofapproximately $4 million.Results for the Harsco Rail Segment for 2016 included an estimated forward loss provision of $45.1 million related to the Company's contracts with thefederal railway system of Switzerland ("SBB"). The estimated loss provision resulted from increased vendor costs, ongoing discussions with the customer, andincreased estimates for commissioning, certification and testing costs, as well as expected settlement with respect to the customer. Excluding the impact ofthe estimated loss provision, the Harsco Rail Segment's operating results during 2017 improved due to higher demand for equipment and after-market partsfrom international customers and Protran Technology products. The Harsco Rail Segment recognized $42.5 million of revenue under the contracts with SBBin 2017 at zero gross margin.Revenues by Segment(Dollars in millions) 2017 2016 Change %Harsco Metals & Minerals $1,011.3 $965.5 $45.8 4.7%Harsco Industrial 299.6 247.5 52.1 21.0Harsco Rail 296.0 238.1 57.9 24.3Corporate 0.1 — 0.1 nmfTotal Revenues $1,607.1 $1,451.2 $155.8 10.7%nmf = not meaningfulRevenues by Region(Dollars in millions) 2017 2016 Change %Western Europe $448.5 $418.6 $29.8 7.1 %North America 745.0 654.3 90.6 13.8Latin America (a) 183.3 164.3 19.0 11.6Asia-Pacific 160.7 136.9 23.8 17.4Middle East and Africa 42.7 46.7 (4.0) (8.6)Eastern Europe 26.9 30.3 (3.4) (11.1)Total Revenues $1,607.1 $1,451.2 $155.8 10.7 %(a)Includes Mexico.20Table of ContentsRevenues for the Company totaled $1.6 billion and $1.5 billion for 2017 and 2016, respectively. The change is primarily related to the effect of highervolumes and commodity prices in the Harsco Metals & Minerals Segment and the Harsco Industrial Segment's air-cooled heat exchangers business and higherequipment sales for the Harsco Rail Segment including deliveries under the contracts with SBB. Foreign currency translation increased revenues by $8.0million for 2017 in comparison with the prior year.Operating Income (Loss) and Operating Margins by Segment(Dollars in millions) 2017 2016 Change %Harsco Metals & Minerals $105.3 $81.6 $23.6 28.9 %Harsco Industrial 35.2 23.2 12.0 51.7Harsco Rail 32.1 (17.5) 49.6 283.1Corporate (29.7) (23.8) (5.9) (24.8)Total Operating Income $142.8 $63.5 $79.3 125.0 % 2017 2016Harsco Metals & Minerals 10.4% 8.5 %Harsco Industrial 11.7 9.4Harsco Rail 10.8 (7.4)Consolidated Operating Margin 8.9% 4.4 %Operating income from continuing operations for 2017 was $142.8 million compared with $63.5 million in 2016. Refer to the segment discussions below forinformation pertaining to factors positively affecting and negatively impacting operating income.Harsco Metals & Minerals Segment:Significant Impacts on Revenues (In millions) Revenues—2016 $965.5Net effects of price/volume changes, primarily attributable to volume changes. 55.9Foreign currency translation. 8.6Net impact of new contracts and lost contracts (including exited underperforming contracts). (18.4)Other. (0.3)Revenues—2017 $1,011.3Factors Positively Affecting Operating Income:•Increased global steel production. Overall, steel production by customers under services contracts, including the impact of new and exited contracts,increased by 8% for 2017 compared with the prior year. Excluding the impact of new and exited contracts, steel production by customers underservices contracts increased by 5% for 2017 compared with the prior year.•Increased income attributable to the impact of improved nickel, chrome and scrap prices. Nickel-related prices increased 9% during 2017 comparedwith the prior year.•The effect of new contracts, cost improvements and operating discipline for existing contracts, and the overall mix of services continue to improveoperating results.•Severance costs resulting from a site exit of $5.1 million during 2016, which did not repeat in 2017.Factors Negatively Impacting Operating Income:•Moderately higher selling, general and administrative costs due to higher compensation costs and professional fees.•Bad debt expense of $4.6 million related to certain pre-administration accounts receivable balances for one of the Company's customers in Australiafor 2017.21Table of ContentsHarsco Industrial Segment:Significant Impacts on Revenues (In millions) Revenues—2016 $247.5Net effects of price/volume changes, primarily attributable to volume changes. 52.0Foreign currency translation. 0.1Revenues—2017 $299.6Factors Positively Affecting Operating Income:•Increased customer demand and a favorable sales mix in the air-cooled heat exchanger business, resulting in increased operating income during2017 compared with the prior year.•Gain on sale of property of approximately $4 million for 2017.Factors Negatively Impacting Operating Income:•An unfavorable sales mix in the industrial grating products business for 2017.•Increased operating expenses including higher commissions due to the increase in volumes in the air-cooled heat exchanger business and highercompensation costs.Harsco Rail Segment:Significant Impacts on Revenues (In millions) Revenues—2016 $238.1Revenues under the contracts with SBB. 42.5Net effects of price/volume changes (exclusive of revenues under the SBB contracts), primarily attributable to volume changes. 16.4Foreign currency translation. (0.7)Other. (0.3)Revenues—2017 $296.0Factors Positively Affecting Operating Income (Loss):•During 2016, the Harsco Rail Segment recorded an estimated loss provision of $45.1 million related to the Company's contracts with SBB which didnot repeat in 2017.•Higher international machine sales volume in 2017 compared with the prior year.•Higher international after-market part sales increased operating income during 2017 compared with the prior year.•Higher sales of the Protran Technology products.Factors Negatively Impacting Operating Income (Loss):•Increased selling, general and administrative expenses primarily related to higher compensation costs and professional fees for 2017.Outlook, Trends and StrategiesThere has been gradual and steady underlying improvement in many of the end markets served by the Company. These trends have benefited the Companyalthough some volatility is expected to persist in relevant markets in the future. Given these expectations, the Company believes it is well positioned toexecute actions through a disciplined focus on return-based capital allocations and business portfolio strategies. The Company believes these actions willenable it to generate returns above its cost of capital, with a balanced business portfolio, without endangering its financial profile with unreasonableleverage.These business portfolio strategies will continue to focus on improving the performance of the Harsco Metals & Minerals Segment while pursuing selectgrowth opportunities. For the Harsco Rail and Harsco Industrial Segments, the Company will focus on disciplined growth, organically and throughacquisitions, that improve these businesses' competitive positions in core or adjacent markets. The Company will continue to pursue efficiency initiatives,including Continuous Improvement and operational excellence, which have significantly reduced, and are expected to continue to reduce, the Company'scost structure and further enhance its financial strength without diminishing its services and products capabilities. As part of these initiatives, the Companywill continue to focus on maintaining an active, lean corporate center that optimizes corporate costs while continuing to develop value added activities tosupport the Company.22Table of ContentsThe 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; and efficiency initiatives, help mitigate the Company's overall long-term exposure to changes in the economic outlook in any single economy orindustry. However, deterioration of global economies and industries could still have an adverse impact on the Company's results of operations, financialcondition and cash flows.The following significant items, risks, trends and strategies are expected to affect the Company in 2018 and beyond:•The Company will assess capital needs in the context of operational trends and strategic initiatives. Management will be selective and disciplined inallocating capital by rigorously analyzing projects and utilizing a return-based capital allocation process.•The Company expects its operational effective income tax rate to approximate 26% to 28% in 2018.•The potential consequences related to uncertainty surrounding the United Kingdom's proposed exit from the European Union may have an impacton the Company results of operations, cash flows and asset valuations in any period particularly in the Harsco Metals & Minerals Segment. See PartI, Item 1A, Risk Factors for additional information.Harsco Metals & Minerals Segment:•Steel markets have demonstrated some pricing improvement since early 2016 and the Company experienced improvements in demand and certaincommodity prices during 2017. The Company expects these trends to continue in the near-term, which along with the effect of new contracts andadditional improvement initiatives, to positively affect operating income in 2018 in the Harsco Metals & Minerals Segment.•The Company will continue to focus on ensuring that forecasted results and other requirements for contracts meet certain established standards anddeliver returns above its cost of capital. In connection with this focus, the possibility exists that the Company may take strategic actions that resultin exit costs and non-cash asset impairment charges that may have an adverse effect on the Company's results of operations and liquidity.•During 2017, the Company entered into the following contracts and agreements:◦In January 2017, the Company announced two multi-year contracts for steel mill services in China and Brazil with projected revenuestotaling more than $100 million;◦In March 2017, the Company announced a joint agreement with Hydro Industries for waste recycling solutions;◦In April 2017, the Company announced a ten year mill services contract in Egypt with projected revenues totaling approximately $60million;◦In May 2017, the Company announced a multi-year contract in India to provide metal recovery and slag sales services with projectedrevenues totaling more than $25 million, and formation of a joint venture for metal recovery and slag sales services in Turkey;◦In August 2017, the Company renewed a scrap management contract for five years in Egypt and announced multi-year contracts for scraphandling at two major steelmaking plans in Latin America totaling more than $50 million in projected revenues; and◦In December 2017, the Company announced the renewal of a multi-year services contract with the SULB Company to provide slagmanagement, raw material and finished product handling, and other services.•As the Company has previously disclosed, over the past several years the Company has been in discussions with various governmental regulatoryagencies and officials in Bahrain ("Bahrain Agencies") with regard to a processing byproduct ("salt cakes") located at Hafeera. The Companypreviously recorded a charge of $7.0 million, payable over several years, related to the estimated cost of processing and disposal of the salt cakes.The Company's Bahrain operations that produced the salt cakes has ceased operations, and are owned under a strategic venture for which its strategicventure partner has a 35% minority interest. The Company is currently in active discussions with the Bahrain Agencies over the timing and methodfor the proposed processing and disposal method. If the Bahrain Agencies do not approve the proposed timing or method, or mandate alternativesolutions, the Company’s estimated liability could change, and such change could be material in any one period.•During 2016, one of the Company's customers announced its intention to conduct a strategic review of its steelmaking operations in Europe. As aresult the customer has entered into a memorandum of understanding with another major steelmaker which is also a customer of the Company.Depending on the outcome of any potential transactions, there could be a material impact on the Company's results of operations, cash flows andasset valuations in any one period.•The Company will focus on growing the Harsco Metals & Minerals Segment through the provision of innovative solutions to handle customers'waste and by-products, improving commercial effectiveness and disciplined investments and acquisitions to improve competitive positioning incore and adjacent markets.23Table of ContentsHarsco Industrial Segment:•As energy markets demonstrated fundamental improvement through 2017, the Harsco Industrial Segment’s air-cooled heat exchangers business hasseen steadily improving results and bookings due to market dynamics and improved manufacturing efficiencies. Accordingly, these factors areexpected to positively affect revenue and operating income in 2018 in the Harsco Industrial Segment.•The Harsco Industrial Segment's industrial grating business continues to be impacted by a lack of large-scale projects, delayed capital andmaintenance expenditures, competitive market dynamics and increased material costs. Some of these pressures abated in 2017. Customer activityremains lower by historical standards, although recent favorable trends should benefit this Segment in 2018. Accordingly, these factors are expectedto positively affect revenue and operating income in 2018 in the Harsco Industrial Segment.•The Harsco Industrial Segment's heat transfer products should experience improved results due to underlying demand trends and the introduction ofnew product innovations.•The Company is committed to maintaining recent efficiency gains in the air-cooled heat exchangers and industrial grating products businessesresulting from improvements implemented in response to the recent industry and economic challenges.•The Company will continue to focus on product innovation and development to drive strategic growth in its businesses. During January 2017, theCompany announced the launch of an all-new capability for remote indoor boiler monitoring that can be downloaded directly to wireless anddesktop devices.•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 over the long-term, though theNorth American market has experienced weakness due to reduced capital and operating spending directed to maintenance-of-way by Class Irailways. This Segment's results are anticipated to improve primarily due to continued growth and penetration in after-market parts and growingdemand for safety systems.•During January 2017, the Company announced a new order to equip the entire Denver, Colorado regional railway fleet with enhanced safetysystems. During June 2017, the Company announced a new order in the U.K. for seven Stoneblower track geometry machines with deliveriesoccurring over a two year period starting in late 2019. During September 2017, the Company announced new orders from the regional transitdistricts serving Washington, D.C. and Sacramento, CA to install enhanced safety systems that alert railway track workings on the ground beforetrains enter their work zones.•In prior years, the Company secured two contract awards with initial contract values totaling approximately $200 million from SBB. The majority ofdeliveries under these contracts are anticipated to occur during late 2017 through 2020 with approximately $42 million of deliveries under the firstcontract made during 2017. The Harsco Rail Segment recorded an estimated forward loss provision of $45.1 million in 2016 which resulted fromincreased vendor costs, ongoing discussions with SBB, and increased estimates for commissioning, certification and testing costs, as well asexpected settlements with SBB. It is possible that the Company's overall estimate of costs to complete these contracts may increase which wouldresult in an additional estimated forward loss provision at such time.•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(In millions, except per share information and percentages) 2017 2016 2015Total revenues $1,607.1 $1,451.2 $1,723.1Cost of services and products sold 1,220.7 1,170.5 1,356.4Selling, general and administrative expenses 234.7 200.4 242.1Research and development expenses 4.2 4.3 4.5Loss on disposal of the Harsco Infrastructure Segment and transaction costs — — 1.0Other expenses, net 4.6 12.6 30.6Operating income from continuing operations 142.8 63.5 88.5Interest income 2.5 2.5 1.6Interest expense (47.6) (51.6) (46.8)Loss on early extinguishment of debt (2.3) (35.3) —Change in fair value to the unit adjustment liability and loss on dilution and sale ofequity method investment — (58.5) (8.5)Income tax expense from continuing operations (83.8) (6.6) (27.7)Equity in income of unconsolidated entities, net — 5.7 0.2Income (loss) from continuing operations 11.6 (80.4) 7.3Income (loss) from discontinued operations 0.2 0.7 (1.0)Net income (loss) 11.8 (79.8) 6.3Total other comprehensive income (loss) 63.2 (93.6) 13.9Total comprehensive income (loss) 75.0 (173.4) 20.3Diluted income (loss) per common share from continuing operations attributable toHarsco Corporation common stockholders 0.09 (1.07) 0.09Effective income tax rate for continuing operations 87.8% (8.4)% 79.5%Comparative Analysis of Consolidated ResultsTotal RevenuesRevenues for 2017 increased $155.8 million or 11% from 2016. This increase was attributable to the following significant items:Changes in Revenues - 2017 vs. 2016 (In millions) Net effect of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. $55.9Net effect of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes. 52.0Revenues under the contracts with SBB in the Harsco Rail Segment. 42.5Net effect of price/volume changes (exclusive of revenues under the SBB contracts), primarily attributable to volume changes in theHarsco Rail Segment. 16.4Foreign currency translation. 8.0Net impact of new contracts and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (18.4)Other. (0.6)Total change in revenues - 2017 vs. 2016 $47.9Revenues for 2016 decreased $271.9 million or 16% from 2015. This decrease was attributable to the following significant items:Changes in Revenues - 2016 vs. 2015 (In millions) Net impacts of price/volume changes in the Harsco Industrial Segment, primarily attributable to volume changes. $(106.4)Net impact of new contracts and lost contracts (including exited underperforming contracts) in the Harsco Metals & Minerals Segment. (67.2)Foreign currency translation. (51.0)Net impacts of price/volume changes in the Harsco Metals & Minerals Segment, primarily attributable to volume changes. (30.1)Net impacts of price/volume changes, primarily attributable to volume changes in the Harsco Rail Segment. (17.4)Other. 0.2Total change in revenues - 2016 vs. 2015 $(271.9)25Table of ContentsCost of Services and Products SoldCost of services and products sold for 2017 increased $50.3 million or 4% from 2016. This increase was attributable to the following significant items:Change in Cost of Services and Products Sold - 2017 vs. 2016 (In millions) Increased costs due to changes in revenues; and product and service mix (exclusive of foreign currency translation and fluctuations incommodity costs included in selling prices). $96.4Foreign currency translation. 7.5Decreased costs due to estimated forward loss provision in the Harsco Rail Segment during the prior year (a). (45.1)Other. (8.5)Total Change in Cost of Services and Products Sold 2017 vs. 2016 $50.3Cost of services and products sold for 2016 decreased $185.9 million or 14% from 2015. This decrease was attributable to the following significant items:Change in Cost of Services and Products Sold - 2016 vs. 2015 (In millions) Decreased costs due to changes in revenues; and product and service mix (exclusive of the effects of foreign currency translation andfluctuations in commodity costs included in selling prices). $(165.3)Foreign currency translation. (47.2)Other. (18.5)Increased costs due to estimated forward loss provision in the Harsco Rail Segment (a). 45.1Total Change in Cost of Services and Products Sold 2016 vs. 2015 $(185.9)(a)See Note 3, Accounts Receivable and Inventories, in Part II, Item 8, "Financial Statements and Supplementary Data" for additional information.Selling, General and Administrative ExpensesSelling, general and administrative expenses for 2017 increased $34.3 million or 17% from 2016. This increase was primarily related to higher compensationexpense related to the timing of stock-based compensation issuances and higher incentive compensation earned; higher bad debt expense in the Metals &Minerals Segment; increased commissions in the Harsco Industrial Segment; and increased professional fees.Selling, general and administrative expenses for 2016 decreased $41.7 million or 17% from 2015. This decrease was primarily related to the impact ofreduced bad debt expense in the Harsco Metals & Minerals Segment; decreased agent and broker commissions in the Harsco Industrial Segment due to lowervolume; and foreign currency translation. Additionally, results for 2016 were also impacted by lower pension expense, professional fees and compensationcosts associated with Project Orion in the Harsco Metals & Minerals Segment and travel costs.Other Expenses, NetThis income statement classification includes: certain foreign currency gains, net gains on disposal of non-core assets, employee termination benefit costsand costs to exit activities. Additional information on Other expenses, net is included in Note 16, Other Expenses, Net in Part II, Item 8, “Financial Statementsand Supplementary Data." During 2017, 2016 and 2015, the Company recorded pre-tax Other expenses, net of $4.6 million, $12.6 million and $30.6 million,respectively. The major components of this income statement caption are as follows: Other (Income) Expenses(In thousands) 2017 2016 2015Net gains $(5,136) $(1,764) $(10,613)Employee termination benefits costs 7,350 10,777 14,914Other costs to exit activities 1,633 440 13,451Impaired asset write-downs 1,025 399 8,170Foreign currency gains related to Harsco Rail Segment advances on contracts — — (10,940)Harsco Metals & Minerals Segment separation costs — 3,235 9,922Subcontractor settlement — — 4,220Other expense (231) (467) 1,449Total $4,641 $12,620 $30,57326Table of ContentsInterest ExpenseInterest expense in 2017 was $47.6 million, a decrease of $4.0 million or 8% compared with 2016. The decrease primarily relates to the Company's overallreduction in debt levels, partially offset by an increase in interest rates associated with the Company's debt. See Note 7, Debt and Credit Agreements, in PartII, Item 8, "Financial Statements and Supplementary Data" for additional information.Interest expense in 2016 was $51.6 million, an increase of $4.8 million or 10% compared with 2015. The increase primarily relates to $1.1 million of deferredfinancing costs expensed by the Company during the third quarter of 2016 related to payments for the Term Loan Facility and increased interest ratesassociated with the Company's borrowings, as well as other financing costs partially offset by lower debt levels. See Note 7, Debt and Credit Agreements, inPart II, Item 8, "Financial Statements and Supplementary Data" for additional information.Loss on Early Extinguishment of DebtIn December 2017, the Company amended the existing Senior Secured Credit Facility in order to, among other things, reduce the interest rate applicable tothe Term Loan Facility, improve certain covenants and extend the maturity date by a year until December 2024. As a result, a charge of $2.3 million wasrecorded during the fourth quarter of 2017 consisting principally of fees associated with the transaction and the write-off of unamortized deferred financingcosts. See Note 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements and Supplementary Data" for additional information.In November 2016, the Company entered into a New Credit Facility, consisting of a $400 million revolving credit facility and a $550 million term loanfacility. Upon closing of the New Credit Facility, the Company has amended and extended the existing Revolving Credit Facility, repaid the existing TermLoan Facility and has redeemed, satisfied and discharged the 5.75% Senior Notes due 2018 (the "Notes") in accordance with the indenture governing theNotes. As a result, a charge of $35.3 million was recorded during the fourth quarter of 2016 consisting principally of the cost of early extinguishment of theNotes and the write-off of unamortized deferred financing costs associated with the Company's existing Senior Secured Credit Facilities and the Notes. SeeNote 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements and Supplementary Data" for additional information.Change in Fair Value to the Unit Adjustment Liability and Loss on Dilution and Sale of Equity Method InvestmentThe Change in fair value to the unit adjustment liability and loss on dilution and sale of equity method investment during 2016 increased $50.0 millioncompared with 2015. The increase relates to the loss associated with Company's first quarter of 2016 election not to make the quarterly cash payments to theCompany's partner in the Infrastructure strategic venture for the remainder of 2016 and the Company's third quarter of 2016 sale of its remaining equityinterest in the Infrastructure strategic venture. See Note 4, Equity Method Investments and Note 14, Financial Instruments, in Part II, Item 8, "FinancialStatements and Supplementary Data" for additional information.Income Tax Expense from Continuing OperationsIncome tax expense from continuing operations in 2017 was $83.8 million, an increase of $77.2 million compared with 2016. The effective income tax raterelating to continued operations for 2017 was 87.8% versus (8.4)% for 2016. The increase in income tax expense and the change in the effective income taxrate related to continuing operations was primarily due to the impact of the Act as well as an increase in income. The Company recognized a provisionalcharge of $48.7 million as a result of revaluing the U.S. ending net deferred tax asset from 35% to the newly enacted U.S. corporate income tax rate of 21%and establishing a valuation allowance on the full amount of foreign tax credit carryforwards of $27.3 million.Income tax expense from continuing operations in 2016 was $6.6 million, a decrease of $21.0 million compared with 2015. The effective income tax raterelating to continued operations for 2016 was (8.4)% versus 79.5% for 2015. The decrease in income tax expense and the change in the effective income taxrate related to continuing operations was primarily due to the change in the mix in earnings between international jurisdictions and the non-recurring loss onearly extinguishment of debt. Additionally, there was no income tax benefit realized from the loss on the sale of the Company's equity interest in Brand, as avaluation allowance of $16.1 million was established to offset the deferred tax assets on the resulting capital loss carryforward. There was also no income taxbenefit realized from the estimated forward loss provisions related to the SBB contracts, as a valuation allowance of $13.5 million was established to offsetthe deferred tax assets on the resulting loss carryforward, because the Company determined that it is not more likely than not that these benefits will berealized in the future.See Note 10, Income Taxes, in Part II, Item 8, “Financial Statements and Supplementary Data" for additional information.27Table of ContentsTotal Other Comprehensive Income (Loss)Total other comprehensive income was $63.2 million in 2017, compared with total other comprehensive loss of $93.6 million in 2016. The major drivers forthis change were pension liability adjustments and foreign currency translation adjustments. The pension liability adjustments were favorably impacted byactual returns on plan assets that were significantly higher than expected returns, partially offset by lower discount rates for the U.S. and U.K. defined benefitplans. The foreign currency translation adjustments were positively impacted by the weakening of the U.S. dollar, particularly against the Euro and BritishPound Sterling.Total other comprehensive loss was $93.6 million in 2016, compared with total other comprehensive income of $13.9 million in 2015. The major drivers forthis change were pension liability adjustments and foreign currency translation adjustments. The pension liability adjustments were the result of lower globalweighted average discount rates, principally for the U.K. plan, which decreased from 3.9% to 3.1% during the year. This was partially offset by actual returnson plan assets that were higher than expected returns. Foreign currency translation adjustments were negatively impacted by the continued strengthening ofthe U.S. dollar.Liquidity and Capital ResourcesOverviewIn December 2017, the Company amended its existing Senior Secured Credit Facility in order to, among other things, reduce the interest rate applicable tothe $546 million of term loans outstanding, improve certain covenants and extend the maturity date by a year until December 2024. As a result of thisamendment, a charge of $2.3 million was recorded during the fourth quarter of 2017 consisting principally of fees associated with the transaction and thewrite-off of unamortized deferred financing costs. See Note 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements and Supplementary Data"for additional information.The Company has sufficient financial liquidity and borrowing capacity to support the strategies within each of its businesses. The Company currentlyexpects operational and business needs to be met by cash provided by operations supplemented with borrowings from time to time due to historical patternsof seasonal cash flow and for the funding of various projects. The Company regularly assesses its capital needs in the context of operational trends andstrategic initiatives.The Company continues to implement and perform capital efficiency initiatives to enhance liquidity and working capital efficiency. These initiatives haveincluded: prudent allocation of capital spending to those projects where the highest results can be achieved; optimization of worldwide cash positions;reductions in discretionary spending; frequent evaluation of customer and business-partner credit risk; and Continuous Improvement initiatives aimed atimproving the effective and efficient use of working capital, particularly in accounts receivable and inventories.During 2017, the Company generated $176.9 million in operating cash flow, an increase from the $159.9 million generated in 2016.In 2017, the Company invested $98.3 million in capital expenditures, mostly for the Harsco Metals & Minerals Segment, compared with $69.3 million in2016. The Company generated $13.4 million in cash flow from asset sales in 2017 compared with $9.3 million in 2016. Asset sales have been a normal partof the Company's business model, primarily for the Harsco Metals & Minerals Segment.In September 2016, the Company received approximately $145 million in cash, net, from the sale of its remaining 26% equity interest in Brand. In 2016, theCompany received proceeds from the termination of cross-currency interest rate swaps ("CCIRs") of $16.6 million in 2016. The Company paid $4.1 million individends to stockholders in 2016. In 2016, the Company suspended the quarterly dividend to preserve financial flexibility. The Board of Directors (the"Board") will continue to evaluate the Company's dividend policy each quarter.Net cash outflows related to the Company's borrowings were $75.2 million in 2017 principally due to the utilization of operating cash flows to reduce debt.There were net cash outflows of $261.2 million in 2016 related to the Company's borrowings principally due to proceeds from the sale of the Company'sequity interest in Brand, utilization of operating cash flows and proceeds from the termination of CCIRs. The Company’s consolidated net debt toconsolidated adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") ratio, as defined by the Credit Agreement, was 1.9 to 1.0 atDecember 31, 2017 compared with 2.3 to 1.0 at December 31, 2016.28Table of ContentsCash RequirementsThe following summarizes the Company's expected future payments related to contractual obligations and commercial commitments at December 31, 2017:Contractual Obligations and Commercial Commitments at December 31, 2017 (a) Payments Due by Period(In millions) Total Less than1 year 1-3years 3-5years After 5yearsShort-term borrowings $8.6 $8.6 $— $— $—Long-term debt (including current maturitiesand capital leases) 593.7 11.2 11.9 52.0 518.6Projected interest payments on long-term debt(b) 177.1 26.8 53.5 51.1 45.7Purchase obligations (c) 147.7 86.5 32.8 28.4 —Operating leases (non-cancellable) 57.4 12.8 17.9 10.5 16.2Pension obligations (d) 29.1 29.1 — — —Foreign currency exchange forward contracts(e) 1.9 1.9 — — —Total contractual obligations (f) $1,015.5 $176.9 $116.1 $142.0 $580.5(a)See Note 7, Debt and Credit Agreements; Note 8, Operating Leases; Note 9, Employee Benefit Plans; Note 10, Income Taxes; and Note 14, Financial Instruments, in Part II,Item 8, "Financial Statements and Supplementary Data," for additional information on short-term borrowings and long-term debt (including capital leases); operating leases;employee benefit plans; income taxes and foreign currency exchange forward contracts, 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, 2017, including interestrate swaps currently in effect. The interest rates on variable-rate debt and the foreign currency exchange rates are subject to changes beyond the Company's control and may resultin actual interest expense and payments differing from the amounts projected above.(c)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.(d)Amounts represent expected employer contributions to defined benefit pension plans for the next year.(e)Amounts represent the fair value of the foreign currency exchange contracts outstanding at December 31, 2017. Due to the nature of these contracts, based on fair values atDecember 31, 2017 there will be net cash payable of $1.9 million comprised of cash payments of $671.9 million and cash receipts of $670.0 million. The foreign currencyexchange contracts are recorded on the Consolidated Balance sheets at fair value.(f)At December 31, 2017, in addition to the above contractual obligations, the Company had $4.7 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.Off-Balance Sheet ArrangementsThe following table summarizes the Company's contingent commercial commitments at December 31, 2017. 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, 2017 Amount of Commercial Commitment Expiration Per Period(In millions) Total Less than1 Year 1-3Years 3-5Years Over 5Years IndefiniteExpirationPerformance bonds $132.2 $127.3 $3.2 $— $— $1.7Standby letters of credit 70.2 63.4 6.8 — — —Guarantees 78.9 10.5 2.9 4.6 — 60.9Other commercialcommitments 11.1 — — — — 11.1Total commercialcommitments $292.4 $201.2 $12.9 $4.6 $— $73.7Certain commercial commitments that are of a continuous nature do not have an expiration date and are therefore considered to be indefinite in nature. SeeNote 14, Financial Instruments, in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.Sources and Uses of CashThe Company’s principal sources of liquidity are cash provided by operations and borrowings under its Senior Secured Credit Facility, augmented by cashproceeds from asset sales. The primary drivers of the Company’s cash flow from operations are the Company’s revenues and income. Cash returns on capitalinvestments made in the prior years, for which limited cash is currently required, are a significant source of cash provided by operations. Depreciationexpense related to these investments is a non-cash charge. 29Table of ContentsThe Company plans to redeploy discretionary cash for potential growth opportunities, such as disciplined organic growth, higher-return service contractopportunities, disciplined investments and possible acquisitions to improve competitive positioning in core and adjacent markets for the Harsco Metals &Minerals Segment and strategic investments or possible acquisitions in the Harsco Rail and Harsco Industrial Segments that improve competitive positioningin core markets or adjacent markets.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 December 2017, the Company amended its Senior Secured Credit Facility, originally entered into by the Company in November 2016, in order to, amongother things, reduce the interest rate applicable to the $546 million of term loans outstanding, improve certain covenants and extend the maturity date by ayear until December 2024. See Note 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements and Supplementary Data" for additionalinformation.Borrowings under the $400 million Revolving Credit Facility bear interest at a rate per annum ranging from 87.5 to 200 basis points over the base rate or187.5 to 300 basis points over the adjusted London Interbank Offered Rate ("LIBOR") as defined in the credit agreement governing the Senior Secured CreditFacility (the "Credit Agreement"). Any principal amount outstanding under the Revolving Credit Facility is due and payable on the maturity of theRevolving Credit Facility. The Revolving Credit Facility matures on November 2, 2021.Borrowings under the $546 million Term Loan Facility bear interest at a rate per annum of 200 basis points over the base rate or 300 basis points over theadjusted LIBOR rate, subject to a 1% floor, as defined in the Credit Agreement. The Term Loan Facility requires scheduled quarterly payments, each equal to0.25% of the original principal amount of the loans under the Term Loan Facility. These payments are reduced by the application of any prepayments andany remaining balance is due and payable on the maturity of the Term Loan Facility. The Term Loan Facility matures on December 8, 2024.The Senior Secured Credit Facility imposes certain restrictions including, but not limited to, restrictions as to types and amounts of debt and liens that maybe incurred by the Company; limitations on increases in dividend payments and limitations on certain acquisitions by the Company.The obligations of the Company are guaranteed by substantially all of the Company’s current and future wholly-owned domestic subsidiaries (“Guarantors”).All obligations under the Senior Credit Facility, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of theCompany’s assets and the assets of the Guarantors.In January 2017, the Company entered into a series of fixed-floating interest rate swaps that cover the period from 2018 through 2021, and had the effect ofconverting $300 million of the Term Loan Facility from floating-rate to fixed-rate. The fixed rates provided by the swaps replace the adjusted LIBOR rate inthe interest calculation, range from 1.65% for 2018 to 2.71% for 2021.The following table illustrates available credit at December 31, 2017:(In millions) Facility Limit OutstandingBalance Outstanding Letters ofCredit AvailableCreditMulti-year revolving credit facility $400.0 $41.0 $31.4 $327.6At December 31, 2017, the Company had $586.9 million of borrowings under the Senior Secured Credit Facility consisting of $545.9 million under the TermLoan Facility and $41.0 million under the Revolving Credit Facility. At December 31, 2017, of this balance, $581.4 million was classified as long-term debtand $5.5 million was classified as current maturities of long-term debt on the Consolidated Balance Sheet. At December 31, 2016, the Company had $648.0million of borrowings under the Senior Secured Credit Facilities consisting of $550.0 million under the term loan A facility and $98.0 million under theRevolving Credit Facility. At December 31, 2016, of this balance, $642.5 million was classified as long-term debt and $5.5 million was classified as currentmaturities of long-term debt on the Consolidated Balance Sheets. See Note 7, Debt and Credit Agreements, in Part II, Item 8, "Financial Statements andSupplementary Data," for additional information on the Company's Credit Agreement.30Table of ContentsWorking Capital PositionChanges in the Company's working capital are reflected in the following table:(Dollars in millions) December 31 2017 December 31 2016 Increase(Decrease)Current Assets Cash and cash equivalents $62.1 $69.8 $(7.7)Restricted cash 4.1 2.0 2.1Trade accounts receivable, net 288.0 236.6 51.5Other receivables, net 20.2 21.1 (0.8)Inventories 178.3 187.7 (9.4)Other current assets 39.3 33.1 6.2Total current assets 592.1 550.3 41.8Current Liabilities Short-term borrowings and current maturities 19.8 29.8 (10.0)Accounts payable 126.2 108.0 18.3Accrued compensation 60.5 46.7 13.8Income taxes payable 5.1 4.3 0.8Advances on contracts and other customer advances 118.0 117.3 0.6Other current liabilities 144.5 121.6 22.9Total current liabilities 474.1 427.7 46.5Working Capital $118.0 $122.6 $(4.6)Current Ratio (g) 1.2:1 1.3:1 (g)Calculated as Current assets / Current liabilitiesWorking capital decreased $4.6 million or 3.8% in 2017 due primarily to the following factors:•Working capital was negatively impacted by an increase in Other current liabilities of $22.9 million, primarily due to the timing of settlement of theCompany's foreign currency exchange forward contracts, foreign currency translation and timing of non-income tax payments;•Working capital was negatively impacted by an increase in Accounts payable of $18.3 million, primarily due to the timing of payments and theimpact of foreign currency translation; and•Working capital was negatively impacted by an increase in Accrued compensation of $13.8 million, primarily due to higher incentive compensationearned in 2017.These working capital decreases were partially offset by the following factors:•Working capital was positively affected by an increase in Trade accounts receivable, net of $51.5 million, primarily due to increased sales and thetiming of sales and collections in all segments, as well as foreign currency translation; and•Working capital was positively affected by a decrease in Short-term borrowings and current maturities of$10.0 million, primarily due to debt repayments.Certainty of Cash FlowsThe Company has historically generated the majority of its cash flows in the second half of the year. The certainty of the Company's future cash flows isunderpinned by the long-term nature of the Company's metals services contracts, the order backlog for the Company's railway track maintenance services andequipment and overall discretionary cash flows (operating cash flows plus cash from asset sales in excess of the amounts necessary for capital expenditures tomaintain current revenue levels) generated by the Company. Historically, the Company has utilized these discretionary cash flows for growth-related capitalexpenditures, strategic acquisitions, debt repayment and dividend payments.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.31Table of ContentsCash 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) 2017 2016 2015Net cash provided (used) by: Operating activities $176.9 $159.9 $121.8Investing activities (103.3) 122.9 (130.4)Financing activities (83.7) (292.4) 22.2Impact of exchange rate changes on cash 4.5 1.7 3.3Net change in cash and cash equivalents $(5.7) $(7.9) $16.9Cash provided by operating activities — Net cash provided by operating activities in 2017 was $176.9 million, an increase of $17.0 million from 2016. Theincrease is primarily attributable to the timing of accounts payable, lower inventories and an increase in cash net income. This increase was partially offset bytiming of sales and collections of accounts receivable and a net decrease in advances on contracts and other customer advances received and utilized. Netcash provided by operating activities in 2016 was $159.9 million, an increase of $38.1 million from 2015. The increase is primarily attributable to timing ininventory purchases, increases in accrued compensation and increases on advances on contracts; partially offset by the timing of accounts receivableinvoicing and collections and the timing of accounts payable.Included in the Cash flows from operating activities section of the Consolidated Statement of Cash Flows is the caption, Other, net. In 2015, this captionincluded the Harsco Rail Segment foreign exchange gain which is reflected in the Effect of exchange rate changes on cash.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 year ended December 31, 2017, the increase in this caption was $3.4 million and for the years ended 2016 and 2015, the decreases in this caption were$13.3 million and $6.7 million, respectively. A summary of the major components of this caption for the periods presented is as follows:(In millions) 2017 2016 2015Net cash provided by (used in): Change in prepaid expenses $(3.7) $6.7 $— Change in non-current insurance accruals (3.0) (5.0) (5.0) Other (h) 10.1 (15.0) (1.7) Total $3.4 $(13.3) $(6.7)(h)Other relates primarily to other accruals that are individually not significant.Cash provided (used) by investing activities — Net cash used by investing activities in 2017 was $103.3 million, a decrease of $226.2 million from 2016.The decrease was primarily due to the gross proceeds received from the sale of the Company's investment in Brand which occurred in September 2016 and anincrease in capital expenditures, primarily in the Company's Harsco Metals & Minerals Segment, in 2017, compared with 2016 and higher net foreigncurrency hedge settlement payments. In 2016, net cash provided by investing activities was $122.9 million, an increase of $253.3 million from 2015. Theincrease is primarily due to the gross proceeds received from the sale of the Company's remaining 26% equity interest in Brand; a lower level of capitalexpenditures in the Harsco Metals & Minerals Segment, no payments for the unit adjustment liability; and an increase related to foreign currency hedgesettlement proceeds.Cash provided (used) by financing activities — Net cash used by financing activities in 2017 was $83.7 million, a decrease of $208.6 million from 2016. The change was primarily due to lower repayments of the Company's borrowings in 2017; a deferred pension underfunding payment related to the Company'sequity interest in Brand and payment of deferred financing costs which occurred in 2016 and did not repeat in 2017. This increase was partially offset byproceeds from the termination of CCIRs which occurred in 2016 but did not repeat in 2017. In 2016, net cash provided by financing activities was$292.4 million, an increase of $314.6 million from 2015. The change was primarily due to net cash payments on debt of $261.2 million in 2016 comparedwith $47.3 million in 2015; reduction in proceeds from the termination of CCIRs and a deferred pension underfunding payment related to the Company'sequity interest in Brand; partially offset by lower dividends paid and no repurchases of the Company's common stock in 2016.32Table of ContentsDebt CovenantsThe Credit Agreement contains a consolidated net debt to consolidated adjusted EBITDA ratio covenant, which is not to exceed 3.75 to 1.0 and a minimumconsolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0 to 1.0. The consolidated net debt toconsolidated adjusted EBITDA ratio covenant is reduced to 3.5 to 1.0 after December 31, 2018. At December 31, 2017, the Company was in compliance withthese covenants as the net leverage ratio was 1.9 to 1.0 and interest coverage ratio was 6.0 to 1.0. Based on balances and covenants in effect at December 31,2017, the Company could increase net debt by $537.9 million and still be in compliance with these debt covenants. Alternatively, keeping all other factorsconstant, the Company's adjusted EBITDA could decrease by $143.4 million and the Company would still be within these debt covenants. The Companyexpects to continue to be in compliance with these debt covenants for at least the next twelve months.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 creditworthy 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, 2017, the Company's consolidated cash and cash equivalents included $60.8 million held by non-U.S. subsidiaries. At December 31, 2017,approximately 1.2% of the Company's consolidated cash and cash equivalents had regulatory restrictions that would preclude the transfer of funds with andamong subsidiaries. Non-U.S. subsidiaries also held $18.9 million of cash and cash equivalents in consolidated strategic ventures. The strategic ventureagreements may require strategic venture partner approval to transfer funds with and among subsidiaries. While the Company's remaining non-U.S. cash andcash equivalents can be transferred with and among subsidiaries, the majority of these non-U.S. cash balances will be used to support the ongoing workingcapital needs and continued growth of the Company's non-U.S. operations.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, capital market conditions and strategic initiatives.Application 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. On anongoing basis, the Company evaluates the estimates, including those related to defined benefit pension benefits, notes and accounts receivable, goodwill,long-lived asset impairment, inventories, revenue recognition long-term contracts, insurance reserves and income taxes. The impact of changes in theseestimates, as necessary, is reflected in the respective segment's results of operations in the period of the change. The Company bases estimates on historicalexperience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimatesunder 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 and they have reviewed the Company's disclosures relating to these estimates in this Management's Discussionand Analysis of Financial Condition and Results of Operations. These items should be read in conjunction with Note 1, Summary of Significant AccountingPolicies, in Part II, Item 8, "Financial Statements and Supplementary Data."33Table of ContentsDefined 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 on 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, 2017 measurement date for the U.K. and U.S. definedbenefit pension plans were 2.5% and 3.5%, respectively, and the global weighted-average discount rate was 2.8%. 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. Annual netperiodic pension cost ("NPPC") is determined using the discount rates at the beginning of the year. The discount rates for 2017 expense were 2.7% for theU.K. plan, 4.0% for the U.S. plans and 3.1% for the global weighted-average of plans.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 2018 and 2017, the global weighted-average expected long-term rate of return on asset assumption is 6.0% and 6.2%, respectively. This rate wasdetermined based on a model of expected asset returns for an actively managed portfolio.Changes 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, 2017 plan data, a one-quarter percent increase or decrease in the discount rateand the expected long-term rate of return on plan assets would increase or decrease annual 2017 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-quarter percent increase Increase of $0.1 million Decrease of $0.3 millionOne-quarter percent decrease Decrease of $0.1 million Increase of $0.2 millionExpected long-term rate of return on plan assets One-quarter percent increase Decrease of $0.6 million Decrease of $2.0 millionOne-quarter percent decrease Increase of $0.6 million Increase of $2.0 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 service cost and interest cost components of NPPC for defined benefit pension plans for 2016and later. The more precise application of discount rates for measuring both service costs and interest costs employs yield curve spot rates on a year-by-yearexpected cash flow basis, using the same yield curves that the Company has previously used. This change in method represented a change in accountingestimate and was accounted for in the period of change.See Note 9, Employee Benefit Plans, in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.34Table of ContentsNotes and Accounts ReceivableNotes and accounts receivable are stated at net realizable value through the use of an allowance for doubtful accounts. The allowance for doubtful accounts ismaintained for estimated losses resulting from the inability or unwillingness of customers to make required payments. The Company has policies andprocedures in place requiring customers to be evaluated for creditworthiness prior to the execution of new service contracts or shipments of products. Thesereviews are structured to minimize the Company's risk related to realizability of receivables. Despite these policies and procedures, the Company may attimes still experience collection problems and potential bad debts due to economic conditions within certain industries (e.g., steel industry), countries orregions in which the Company operates. At December 31, 2017 and 2016, trade accounts receivable of $288.0 million and $236.6 million, respectively, werenet of reserves of $4.7 million and $11.8 million, respectively.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 2017 and 2015were $5.3 million and $13.0 million, respectively. The Company did not make any significant provisions for bad debts during 2016.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 a decrease of the allowance for doubtful accounts. Changes inthe allowance for doubtful accounts related to both of these situations would be recorded through Operating income from continuing operations in the periodthe change was determined. As previously disclosed, one of the Company's customers for the Harsco Metals & Minerals Segment in Australia had entered intothe process of voluntary administration under Australian law, the purpose of which was to focus on long-term solvency. The result of this administrationprocess was that the customer's operations were sold to a new owner in August 2017. In September 2017, the administrators informed the Company that mostof the pre-administration accounts receivable balance would not be paid, and as a result the Company recorded a bad debt expense of $4.6 million during thethird quarter of 2017. The Company continues to provide services for the new owner pending a formalization of a new contract. As previously disclosedduring 2015, one of the Company's steel mill customers in Europe ceased operations and began a formal process of liquidation in late 2015. The Companyhad recorded bad debt reserves of approximately $13 million related to this customer during 2015.The Company has not materially changed the methodology for calculating allowances for doubtful accounts for the years presented. See Note 3, AccountsReceivable and Inventories, in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.GoodwillThe Company's goodwill balances were $401.8 million and $382.3 million at December 31, 2017 and 2016, 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 31,2017). 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.35Table of ContentsCritical 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, pensionfunding, the impact of strategic business initiatives and working capital projections. These assumptions and estimates may vary significantly amongreporting units. DCF models are based on approved long-range plans for the early years and historical relationships and projections for later years. WACCrates are derived from internal and external factors including, but not limited to, the average market price of the Company's stock, shares outstanding, bookvalue of the Company's debt, the long-term risk free interest rate, and both market and size-specific risk premiums. Due to the many variables noted aboveand the relative size of the Company's goodwill, differences in assumptions may have a material impact on the results of the Company's annual goodwillimpairment 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 wouldcurrently be required to determine if an impairment existed and the amount of goodwill impairment to record, if any. The second step of the goodwillimpairment test compares the net book value of a reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwillrepresents the excess of fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of the reporting unit if it were tobe acquired in a hypothetical business combination and the current fair value of the reporting unit represented the purchase price. The second step of thegoodwill impairment test may require the utilization of valuation experts.The performance of the Company’s 2017 annual impairment tests did not result in any impairment of the Company’s goodwill.For the Company's 2017 annual goodwill impairment test, the average annual revenue growth rates over the duration of the DCF models ranged from 1.6% to4.5%. The WACCs used in the 2017 annual goodwill impairment test ranged from 8.75% to 11.50%.See Note 1, Summary of Significant Accounting Policies and Note 6, Goodwill and Other Intangible Assets, in Part II, Item 8, “Financial Statements andSupplementary Data,” for additional information.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. The amounts chargedagainst pre-tax income from continuing operations related to impaired long-lived assets included in Other expenses, net on the Consolidated Statements ofOperations were $1.0 million, $0.4 million and $8.2 million in 2017, 2016 and 2015, respectively. The increased level in long-lived asset impairments in2015 was due primarily to site exits in the Harsco Metals & Minerals Segment associated with actions related to Project Orion.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.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 16,Other Expenses, Net in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.36Table of ContentsInventoriesInventories are stated at the lower of cost or market for those inventories accounted for using the last-in, first-out ("LIFO") method and at the lower of cost ornet realizable value for all other inventory balances. Inventory balances are adjusted for estimated obsolete or unmarketable inventory equal to the differencebetween the cost of inventory and its net realiazble value or estimated market value, as applicable. At December 31, 2017 and 2016, inventories of $178.3million and $187.7 million, respectively, are net of reserves of $14.1 million and $10.6 million, respectively.Certain contracts within the Harsco Rail Segment, which meet specific criteria established in U.S. GAAP, are accounted for as long-term contracts. Inventoriesrelated to these contracts are considered Contracts-in-process and represent a separate component of Inventories. At December 31, 2017 and 2016, Contracts-in-process of $45.6 million and $54.0 million, respectively, were included in Inventories. Contracts-in-process at December 31, 2017 and 2016 were net ofestimated forward loss-provisions related to these contacts of $28.1 and $36.2 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 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 LIFO method of inventory valuation. In adjusting thesereserves throughout the year, the Company estimates its year-end inventory costs and quantities. At December 31 of each year, the reserves are adjusted toreflect actual year-end inventory costs and quantities. During periods of inflation, LIFO expense usually increases and during periods of deflation itdecreases. These year-end adjustments resulted in pre-tax income of $2.0 million in 2017 and $1.2 million in 2016 and pre-tax expense of $0.1 million in2015.The Company has not materially changed the methodology for calculating inventory reserves for the years presented. See Note 3, Accounts Receivable andInventories, in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.Revenue Recognition - Long-term ContractsCertain contracts within the Harsco Rail Segment, which meet specific criteria established in U.S. GAAP, are accounted for as long-term contracts, under thepercentage-of-completion (units-of-delivery) method of accounting.Critical Estimate—Revenue Recognition - Long-term ContractsAccounting for contracts using the percentage-of-completion method requires significant judgment relative to assessing risks, estimating contract revenuesand costs (including estimating any liquidating damages or penalties related to performance) and making assumptions for schedule and technical items. Dueto the number of years it may take to complete these contracts and the scope and nature of the work required to be performed on those contracts, estimatingtotal sales and costs at completion is inherently complicated and subject to many variables. Accordingly, estimates are subject to change as experience isgained and as more information is obtained, even though the scope of the work under the contract may not have changed. When adjustments in estimatedtotal contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effectof such changes. When estimates of total costs to be incurred on a contract using the percentage-of-completion method exceed estimates of total sales to beearned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.During 2016, as a result of increased vendor costs, ongoing discussions with SBB, and increased estimates for commissioning, certification and testing costs,as well as expected settlements with SBB, the Company concluded it will have a loss on the contracts with SBB. The Company recognized an estimatedforward loss provision related to the SBB contracts of$45.1 million for the year ended December 31, 2016 in Costs of products sold on the Consolidated Statements of Operations. No incremental provision wasrecorded for the year ended December 31, 2017 and the company made deliveries under the contract for which some of the provision was utilized. Theremaining estimated forward loss provision of $31.1 million at December 31, 2017 represents the Company's best estimate based on currently availableinformation. It is possible that the Company's overall estimate of costs to complete these contracts may change which would result in an adjustment to theestimated forward loss provision at such time, but the Company is unable to estimate any further possible loss or range of loss at December 31, 2017.37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, 2017 and 2016, the Company recorded liabilities of $33.6 million and $37.1 million, respectively, related to both asserted andunasserted insurance claims. At December 31, 2017 and 2016,$4.1 million and $3.5 million, respectively, was included in insurance liabilities related to claims covered by insurance carriers for which a correspondingreceivable 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 from continuing operations inthe period the change was determined. During 2017, 2016 and 2015, the Company recorded a retrospective insurance reserve adjustment that decreased pre-tax insurance expense from continuing operations for self-insured programs by $2.6 million,$5.4 million and $8.5 million, respectively. The Company has programs in place to improve claims experience, such as disciplined claim and insurancelitigation management and a focused approach to workplace 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, in Part II, Item 8, "Financial Statements and Supplementary Data," for additionalinformation.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, 2017, 2016 and 2015, the Company's annual effective income tax rate on income fromcontinuing operations was 87.8%, (8.4)% and 79.5%, 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 suchdeterminations, the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income,feasible and prudent tax planning strategies and recent financial operating results. In the event the Company was to determine that it would be able to realizedeferred 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 Act significantly changes how the U.S. taxes corporations. The Act requires complex computations to be performed that were not previously required inU.S. tax law, significant judgments to be made in interpretation of the provisions of the Act and significant estimates in calculations and the preparation andanalysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS and other standard-setting bodies couldinterpret or issue guidance on how provisions of the Act will be applied or otherwise administered that differs from the Company's interpretation. As theCompany completes the analysis of the Act, collects and prepares necessary data, and interprets any additional guidance, it may be necessary to makeadjustments to provisional amounts previously recorded that may materially impact the Company's provision for income taxes in the period in which theadjustments are made.38Table of ContentsValuation allowances of $174.2 million and $146.1 million at December 31, 2017 and 2016, respectively, related principally to deferred tax assets for U.K.pension liabilities, net operating loss carryforwards, foreign tax credit carryforwards, capital loss carryforwards and currency translation that are uncertain asto realizability. In 2017, the Company recorded a valuation allowance of $27.3 million related to foreign tax credit carryforwards due to the impact of theAct, an increase from foreign currency translation in the amount of $10.1 million and a net increase of $6.9 million related to losses in certain jurisdictionswhere the Company determined that it is more likely than not that these assets will not be realized. This was partially offset by a reduction related to currentyear pension adjustments recorded through Accumulated other comprehensive loss and a decrease related to U.S., Argentina and Belgium tax rate changes. In2016, the Company recorded a valuation allowance of $16.1 million related to loss on sale of the Company's equity interest in Brand, $13.5 million relatedto estimated forward loss provisions related to the SBB contracts and current year pension adjustments of $19.2 million recorded through Accumulated othercomprehensive loss. This was partially offset by the reduction from the effects of foreign currency translation adjustments and the decrease related to U.K. andFrance tax rate changes.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. The unrecognized tax benefits at December 31, 2017 and2016 were $3.6 million and $4.6 million, respectively, excluding accrued interest and penalties. The unrecognized tax benefit may decrease as a result of thelapse of statute of limitations or as a result of final settlement and resolution of outstanding tax matters in various state and international jurisdictions.Based on an analysis of the earnings and profits ("E&P") for the Company's foreign subsidiaries, no toll charge has been recorded in 2017 related to the Act.Given the complexities of the E&P calculations and the guidance provided by the SEC Staff Accounting Bulletin 118 ("SAB 118"), which addresses theapplication of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations)in reasonable detail to complete the accounting for certain income tax effects of the Act, the Company will continue to analyze this provisional amount untilthe Company's 2017 U.S. tax return is filed in 2018. The Company does not anticipate a change in the indefinite reinvestment assertion, as a result of the Act.However, the Company considers the indefinite reinvestment assertion to be provisional and will continue to analyze the impact of the Act on this assertionduring the SAB 118 measurement period.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 10, Income Taxes, in Part II, Item 8, "Financial Statements and Supplementary Data," for additional information.Research and DevelopmentInternal funding for research and development was as follows: Research and Development Expenses(In millions) 2017 2016 2015Harsco Metals & Minerals $1.3 $0.9 $0.9Harsco Industrial 1.5 1.5 1.7Harsco Rail 1.4 1.9 1.9Total Research and Development $4.2 $4.3 $4.5The 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, in Part II, Item 8, "Financial Statements and Supplementary Data."Item 7A. Quantitative and Qualitative Disclosures about Market Risk.See Part I, Item 1A, "Risk Factors," for quantitative and qualitative disclosures about market risk.39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 Reporting41Report of Independent Registered Public Accounting Firm42Consolidated Balance Sheets44Consolidated Statements of Operations45Consolidated Statements of Comprehensive Income (Loss)46Consolidated Statements of Cash Flows47Consolidated Statements of Changes in Equity49Notes to Consolidated Financial Statements50 Supplementary Data (Unaudited): Two-Year Summary of Quarterly Results9240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, 2017 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, 2017.The effectiveness of the Company's internal control over financial reporting at December 31, 2017 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, 2017./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 22, 2018 February 22, 201841Table of ContentsReport of Independent Registered Public Accounting FirmTo the Stockholders of Harsco Corporation:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Harsco Corporation as of December 31, 2017 and December 31, 2016, and the relatedconsolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of cash flows, and consolidatedstatements of changes in equity for each of the three years in the period ended December 31, 2017, including the related notes and schedule of valuation andqualifying accounts for each of the three years in the period ended December 31, 2017 appearing under Item 15(a)(2) (collectively referred to as the“consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the COSO.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for the presentation and classificationof deferred tax assets and liabilities due to the adoption of ASU 2015-17, Income Taxes (Topic 740) in 2017.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Controlover Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internalcontrol over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.42Table of ContentsDefinition and Limitations of Internal Control over Financial ReportingA 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 22, 2018We have served as the Company's auditor since at least 1933. We have not determined the specific year we began serving as the auditor of the Company. 43Table of ContentsHARSCO CORPORATIONCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts) December 31 2017 December 31 2016ASSETS Current assets: Cash and cash equivalents $62,098 $69,831Restricted cash 4,111 2,048Trade accounts receivable, net 288,034 236,554Other receivables 20,224 21,053Inventories 178,293 187,681Other current assets 39,332 33,108Total current assets 592,092 550,275Property, plant and equipment, net 479,747 490,255Goodwill 401,758 382,251Intangible assets, net 38,251 41,567Deferred income tax assets 51,574 106,311Other assets 15,263 10,679Total assets $1,578,685 $1,581,338LIABILITIES Current liabilities: Short-term borrowings $8,621 $4,259Current maturities of long-term debt 11,208 25,574Accounts payable 126,249 107,954Accrued compensation 60,451 46,658Income taxes payable 5,106 4,301Insurance liabilities 11,167 11,850Advances on contracts and other customer advances 117,958 117,329Other current liabilities 133,368 109,748Total current liabilities 474,128 427,673Long-term debt 566,794 629,239Insurance liabilities 22,385 25,265Retirement plan liabilities 259,367 319,597Other liabilities 40,846 42,001Total liabilities 1,363,520 1,443,775COMMITMENTS AND CONTINGENCIES HARSCO CORPORATION STOCKHOLDERS' EQUITY Preferred stock, Series A junior participating cumulative preferred stock — —Common stock, par value $1.25 (issued 112,888,126 and 112,499,874 shares at December 31, 2017 and 2016, respectively) 141,110 140,625Additional paid-in capital 180,201 172,101Accumulated other comprehensive loss (546,582) (606,722)Retained earnings 1,157,801 1,150,688Treasury stock, at cost (32,434,274 and 32,324,911 shares at December 31, 2017 and 2016, respectively) (762,079) (760,391)Total Harsco Corporation stockholders' equity 170,451 96,301Noncontrolling interests 44,714 41,262Total equity 215,165 137,563Total liabilities and equity $1,578,685 $1,581,338See accompanying notes to consolidated financial statements.44Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31(In thousands, except per share amounts) 2017 2016 2015Revenues from continuing operations: Service revenues $981,672 $939,129 $1,092,725Product revenues 625,390 512,094 630,367Total revenues 1,607,062 1,451,223 1,723,092Costs and expenses from continuing operations: Cost of services sold 767,081 759,120 909,995Cost of products sold 453,641 411,343 446,366Selling, general and administrative expenses 234,673 200,391 242,112Research and development expenses 4,227 4,280 4,510Loss on disposal of the Harsco Infrastructure Segment and transaction costs — — 1,000Other expenses, net 4,641 12,620 30,573Total costs and expenses 1,464,263 1,387,754 1,634,556Operating income from continuing operations 142,799 63,469 88,536Interest income 2,469 2,475 1,574Interest expense (47,552) (51,584) (46,804)Loss on early extinguishment of debt (2,265) (35,337) —Change in fair value to the unit adjustment liability and loss on dilution and sale of equity methodinvestment — (58,494) (8,491)Income (loss) from continuing operations before income taxes and equity income 95,451 (79,471) 34,815Income tax expense (83,803) (6,637) (27,678)Equity in income of unconsolidated entities, net — 5,686 175Income (loss) from continuing operations 11,648 (80,422) 7,312Discontinued operations: Income (loss) on disposal of discontinued business 306 1,061 (1,553)Income tax (expense) benefit related to discontinued business (110) (392) 573Income (loss) from discontinued operations 196 669 (980)Net income (loss) 11,844 (79,753) 6,332Less: Net income attributable to noncontrolling interests (4,022) (5,914) (144)Net income (loss) attributable to Harsco Corporation $7,822 $(85,667) $6,188Amounts attributable to Harsco Corporation common stockholders: Income (loss) from continuing operations, net of tax $7,626 $(86,336) $7,168Income (loss) from discontinued operations, net of tax 196 669 (980)Net income (loss) attributable to Harsco Corporation common stockholders $7,822 $(85,667) $6,188 Weighted average shares of common stock outstanding 80,553 80,333 80,234Basic earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.09 $(1.07) $0.09Discontinued operations — 0.01 (0.01)Basic earnings (loss) per share attributable to Harsco Corporation common stockholders $0.10(a)$(1.07)(a)$0.08 Diluted weighted average shares of common stock outstanding 82,840 80,333 80,365Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.09 $(1.07) $0.09Discontinued operations — 0.01 (0.01)Diluted earnings (loss) per share attributable to Harsco Corporation common stockholders $0.09 $(1.07)(a)$0.08(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) 2017 2016 2015Net income (loss) $11,844 $(79,753) $6,332Other comprehensive income (loss): Foreign currency translation adjustments, net of deferred income taxes of $3,471, $(13,670) and$(2,314) in 2017, 2016 and 2015, respectively 36,011 (21,560) (88,255)Net gain (loss) on cash flow hedging instruments, net of deferred income taxes of $(759), $(544) and$(975) in 2017, 2016 and 2015, respectively 1,897 (682) 8,617Pension liability adjustments, net of deferred income taxes of $(4,084), $34 and $1,443 in 2017, 2016and 2015, respectively 25,254 (71,398) 93,582Unrealized gain (loss) on marketable securities, net of deferred income taxes of $(12), $(16) and $10in 2017, 2016 and 2015, respectively 22 26 (16)Total other comprehensive income (loss) 63,184 (93,614) 13,928Total comprehensive income (loss) 75,028 (173,367) 20,260Less: Comprehensive (income) loss attributable to noncontrolling interests (7,068) (3,334) 2,496Comprehensive income (loss) attributable to Harsco Corporation $67,960 $(176,701) $22,756See accompanying notes to consolidated financial statements.46Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31(In thousands) 2017 2016 2015Cash flows from operating activities: Net income (loss) $11,844 $(79,753) $6,332Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation 121,839 129,083 144,652Amortization 8,098 12,403 11,823Change in fair value to the unit adjustment liability and loss on dilution and sale of equitymethod investment — 58,494 8,491Contract estimated forward loss provision for Harsco Rail Segment — 45,050 —Loss on early extinguishment of debt — 35,337 —Deferred income tax expense (benefit) 57,349 (7,654) 5,174Equity income of unconsolidated entities, net — (5,686) (175)Dividends from unconsolidated entities 93 16 28Other, net 749 2,633 (5,740)Changes in assets and liabilities, net of acquisitions and dispositions of businesses:Accounts receivable (32,012) 16,041 41,650Inventories 19,557 (12,313) (44,806)Accounts payable 12,554 (20,194) (136)Accrued interest payable 438 (3,197) (2,753)Accrued compensation 11,126 8,865 (10,319)Advances on contracts and other customer advances (16,811) 14,485 (795)Harsco 2011/2012 Restructuring Program accrual — — (398)Retirement plan liabilities, net (21,300) (20,420) (24,593)Other assets and liabilities 3,368 (13,314) (6,663)Net cash provided by operating activities 176,892 159,876 121,772Cash flows from investing activities: Purchases of property, plant and equipment (98,314) (69,340) (123,552)Proceeds from sales of assets 13,418 9,305 25,966Purchase of businesses, net of cash acquired* — (26) (7,788)Payment of unit adjustment liability — — (22,320)Proceeds from sale of equity investment — 165,640 —Net proceeds (payments) from settlement of foreign currency forward exchange contracts (18,429) 17,238 (3,161)Other investing activities, net — 70 482Net cash provided (used) by investing activities (103,325) 122,887 (130,373)Cash flows from financing activities: Short-term borrowings, net 5,061 (2,350) 18,875Current maturities and long-term debt: Additions 27,985 720,727 427,996Reductions (108,280) (979,567) (399,533)Cash dividends paid on common stock — (4,105) (65,730)Dividends paid to noncontrolling interests (2,445) (1,702) (4,498)Purchase of noncontrolling interests (3,412) (4,731) (395)Stock-based compensation - Employee taxes paid (1,688) (91) (265)Common stock acquired for treasury — — (12,143)Proceeds from cross-currency interest rate swap termination — 16,625 75,057Deferred pension underfunding payment to unconsolidated affiliate — (20,640) (7,688)Deferred financing costs (42) (16,530) (9,487)Other investing activities, net (894) — —Net cash provided (used) by financing activities (83,715) (292,364) 22,189Effect of exchange rate changes on cash, including restricted cash 4,478 1,724 3,325Net increase (decrease) in cash and cash equivalents, including restricted cash (5,670) (7,877) 16,913Cash and cash equivalents, including restricted cash, at beginning of period 71,879 79,756 62,843Cash and cash equivalents, including restricted cash, at end of period $66,209 $71,879 $79,756 47Table of ContentsHARSCO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years ended December 31(In thousands) 2017 2016 2015*Purchase of businesses, net of cash acquired Working capital $— $— $(560)Property, plant and equipment — — (72)Goodwill — — (3,490)Intangible Assets — — (4,078)Other noncurrent assets and liabilities, net — (26) 412Net cash used to acquire businesses $— $(26) $(7,788)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) 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 (a) (53,382) (53,382)Noncontrolling interests (4,498) (4,498)Total other comprehensive income (loss), netof deferred income taxes of $(1,836) 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-based,compensation, net of forfeitures 5,135 5,135Balances, December 31, 2015 140,503(760,299)170,6991,236,355(515,688)39,233310,803Net income (loss) (85,667) 5,914 (79,753)Cash dividends declared: Noncontrolling interests (1,702) (1,702)Total other comprehensive loss, net ofdeferred income taxes of $(14,196) (91,034) (2,580) (93,614)Purchase of subsidiary shares fromnoncontrolling interest (5,128) 397 (4,731)Vesting of restricted stock units and otherstock grants, net 80,598 shares 122 (92) (1,194) (1,164)Amortization of unearned stock-basedcompensation, net of forfeitures 7,724 7,724Balances, December 31, 2016 140,625 (760,391)172,1011,150,688(606,722)41,262137,563Adoption of new accounting standard (SeeNote 2) 1,106 (709) 397Net income 7,822 4,022 11,844Cash dividends declared: Noncontrolling interests (2,445) (2,445)Total other comprehensive income, net ofdeferred income taxes of $(1,384) 60,140 3,044 63,184Purchase of subsidiary shares fromnoncontrolling interest (2,242) (1,194) (3,436)Sale of investment in consolidated subsidiary 25 25Stock Appreciation Rights exercised, net 8,965shares 16 (63) (16) (63)Vesting of restricted stock units and otherstock grants, net 269,924 shares 469 (1,625) (469) (1,625)Amortization of unearned stock-basedcompensation, net of forfeitures 9,721 9,721Balances, December 31, 2017 $141,110 $(762,079)$180,201$1,157,801$(546,582)$44,714$215,165(a)In November 2015, the Company reduced the quarterly dividend to $0.051 per share.See accompanying notes to consolidated financial statements.49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.Restricted CashThe Company had restricted cash of $4.1 million and $2.0 million at December 31, 2017 and December 31, 2016, respectively, and the restrictions areprimarily related to collateral provided for certain guarantees of the Company’s performance.InventoriesInventories in the U.S. are principally accounted for using the last-in, first-out ("LIFO") method and are stated at the lower of cost or market. The Company'sremaining inventories are accounted for using the first-in, first-out ("FIFO") or average cost methods and are stated at the lower of cost and net realizablevalue. See Note 3, Accounts Receivable and Inventories, for additional information.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 5, Property, Plant and Equipment and Note 7, Debt andCredit Agreements, for additional information on capital leases and Note 8, Operating Leases, for additional information on operating leases.Goodwill 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.50Table of ContentsThe 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, 2017. 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 among 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 currently 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. As necessary, the Company may use valuation experts to assistwith the second step of the goodwill impairment test. See Note 6, Goodwill and Other Intangible Assets, for additional information.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 16, Other Expenses, Net for additional information.Deferred Financing CostsThe Company has incurred debt issuance costs which are recognized as a reduction of Long-term debt on the Consolidated Balance Sheets. Debt issuancecosts are amortized and recognized as interest expense over the contractual term of the related indebtedness or shorter period if appropriate based uponcontractual terms. Whenever indebtedness is modified from its original terms, an evaluation is made whether an accounting modification or extinguishmenthas occurred in order to determine the accounting treatment for debt issuance costs related to the debt modification.Revenue 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 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.51Table of ContentsHarsco Industrial Segment—This Segment sells industrial grating products, high-security fencing, heat exchangers and heat transfer products. Productrevenues are generally recognized 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 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.Certain contracts within the Harsco Rail Segment, which meet specific criteria established in U.S. GAAP, are accounted for as long-term contracts. TheCompany recognizes revenues on two contracts from the federal railway system of Switzerland ("SBB") based on the percentage-of-completion (units-of-delivery) method of accounting, whereby revenues and estimated average costs of the units to be produced under the contracts are recognized as deliveriesare made or accepted. Contract revenues and cost estimates are reviewed and revised, at a minimum quarterly, and adjustments are reflected in the accountingperiod as such amounts are determined. The Company recognized $42.5 million, $0.2 million and $1.9 million of revenue for the contracts with SBB for theyears ended December 31, 2017, 2016 and 2015, respectively, under the percentage-of-completion (units-of-delivery) method. For 2017, product revenuegross margins would have been 200 basis points higher excluding the revenue recognized under the SBB contract. These revenues did not have a materialimpact on the Company's product revenue gross margins for 2016 and 2015. The Company is approximately 45% complete on its first contract and 0%completed on the second contract with SBB as of December 31, 2017 based on the amount of revenue recognized. See Note 3, Accounts Receivable andInventories, for additional information.Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract revenues and costs(including estimating any liquidating damages or penalties related to performance) and making assumptions for schedule and technical items. Due to thenumber of years it may take to complete these contracts and the scope and nature of the work required to be performed on those contracts, estimating totalsales and costs at completion is inherently complicated and subject to many variables and, accordingly estimates are subject to change. When adjustments inestimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract, using the percentage-of-completion method, exceed estimates of totalsales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.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.52Table of ContentsOn December 22, 2017, U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the" Act") was signed into law. The Act, among otherthings, reduces the U.S. corporate income tax rate to 21% starting in 2018 and creates a territorial tax system with a one-time mandatory tax on previouslydeferred foreign earnings of U.S. subsidiaries. The Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulletin No. 118 ("SAB 118")to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (includingcomputations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company has recognized the provisional taximpacts related to the revaluation of deferred tax assets and liabilities and included these amounts in the consolidated financial statements for the year endedDecember 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis,changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued and actions the Company may take asa result of the Act.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.Based on an analysis of the earnings and profits ("E&P") for the Company's foreign subsidiaries, no toll charge has been recorded in 2017 related to the Act.Given the complexities of the E&P calculations and the guidance provided by SAB 118, the Company will continue to analyze this provisional amount untilthe Company's U.S. tax return is filed in 2018. The Company does not anticipate a change in the indefinite reinvestment assertion, as a result of the Act.However, the Company considers the indefinite reinvestment assertion to be provisional and will continue to analyze the impact of the Act on this assertionduring the SAB 118 measurement period.The significant assumptions and estimates described in the preceding paragraphs are important contributors to the effective tax rate each year.See Note 10, Income Taxes, for additional information.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 2017, 2016 and 2015, the Company recorded insurance expense from continuing operations related to these lines of coverage of $16.4million, $15.0 million and $13.6 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 2017, 2016 and 2015, theCompany recorded retrospective insurance reserve adjustments that decreased pre-tax insurance expense from continuing operations for self-insuredprograms by $2.6 million, $5.4 million and $8.5 million, respectively. At December 31, 2017 and 2016, the Company has recorded liabilities of $33.6million and $37.1 million, respectively, related to both asserted as well as unasserted insurance claims. Included in the balances at December 31, 2017 and2016 were $4.1 million and$3.5 million, respectively, of recognized liabilities covered by insurance carriers. Amounts estimated to be paid within one year have been included incurrent caption, Insurance liabilities, with the remainder included in non-current caption, Insurance liabilities, on the Consolidated Balance Sheets.53Table of ContentsWarrantiesThe Company has recorded product warranty reserves of $6.0 million, $6.3 million and $7.8 million at December 31, 2017, 2016 and 2015, respectively. TheCompany provides for warranties of certain products as they are sold. The following table summarizes the warranty activity for 2017, 2016 and 2015:(In thousands) 2017 2016 2015Warranty reserves, beginning of the year $6,281 $7,844 $8,886Accruals for warranties issued during the year 5,528 6,439 3,656Reductions related to pre-existing warranties (3,792) (5,611) (3,042)Warranties paid (2,078) (2,372) (1,629)Other (principally foreign currency translation) 17 (19) (27)Warranty reserves, end of the year $5,956 $6,281 $7,844Warranty 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 from continuing operations. For subsidiaries operating in highly inflationary economies, and those entities forwhich the U.S. dollar is the currency of the primary economic environment in which the entity operates, gains and losses on foreign currency transactions andbalance sheet translation adjustments are included in Operating income from continuing operations.Financial 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 interest rate swaps in conjunction with certain debt issuances in order to secure a fixed interest rate. The interest rate swaps are recordedon the Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread and changes in the creditworthiness of the counter-parties recorded in Accumulated other comprehensive loss. 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 14, Financial Instruments, for additional information.54Table of ContentsEarnings 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. Dilutive securities are not included in the computation of loss per share when the Company reports a net loss fromcontinuing operations as the impact would be anti-dilutive. All share and per share amounts are restated for any stock splits and stock dividends that occurprior to the issuance of the financial statements.See Note 12, Capital Stock, for additional information.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 2017:On January 1, 2017, the Company adopted changes issued by the Financial Accounting Standards Board ("FASB") related to the simplification of themeasurement of inventory. The changes required entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying theprevious guidance under which an entity must measure inventory at the lower of cost or market. The changes did not apply to inventories that are measuredusing either the last-in, first-out method or the retail inventory method. The adoption of these changes did not have an impact on the Company's consolidatedfinancial statements.On January 1, 2017, the Company adopted changes issued by the FASB that required deferred tax assets and liabilities to be classified as non-current in aclassified statement of financial position. The changes applied to all entities that present a classified statement of financial position. The requirement thatdeferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount was not affected. The adoption of thesechanges resulted in the Company reclassifying approximately $27 million from reported current assets to Deferred income tax assets based on balances atDecember 31, 2016.On January 1, 2017, the Company adopted changes issued by the FASB amending the accounting for stock-based compensation and requiring excess taxbenefits and shortfalls to be recognized as a component of income tax expense rather than equity. These changes also required excess tax benefits andshortfalls to be presented as an operating activity on the Consolidated Statement of Cash Flows and allowed an entity to make an accounting policy electionto either estimate expected forfeitures or to account for them as they occur. These changes resulted in the Company recording the cumulative impact ofapproximately $1 million pre-tax on January 1, 2017 to retained earnings, related to the Company electing to not estimate forfeitures on stock compensationplans but rather recognize forfeitures as they occur. The inclusion of excess tax benefits and shortfalls as a component of the Company’s income tax expensewill increase volatility within the provision for income taxes as the amount of excess tax benefits or deficiencies from stock-based compensation awards aredependent on the Company's stock price at the date an award vests. The impact to income tax expense resulting from this change was tax benefit of $0.4million for the year ended December 31, 2017.During the second quarter of 2017, the Company early-adopted changes issued by the FASB that added and clarified guidance related to the classification,presentation and disclosure of restricted cash in the statement of cash flows. The adoption of these changes did not have an impact on the Company'sconsolidated statement of cash flows for the current and prior periods.55Table of ContentsThe following accounting standards have been issued and become effective for the Company at a future date:In May 2014, the FASB issued changes, with subsequent amendments, related to the recognition of revenue from contracts with customers. The changesclarify the principles for recognizing revenue and develop a common revenue standard. The core principle of the changes is that an entity should recognizerevenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to beentitled in exchange for those goods or services. The changes also require additional disclosures related to revenue recognition. These changes becomeeffective for the Company on January 1, 2018. The Company will adopt the standard using the modified retrospective method of implementation with thecumulative effect of initially applying the changes recognized in retained earnings at the date of initial application. Management has determined that themost significant impact will be with regard to the timing of revenue recognition associated with the air-cooled heat exchanger business of the HarscoIndustrial Segment and certain equipment sales in the Harsco Rail Segment. The Company currently recognizes revenues on such arrangements upon thecompletion of the efforts associated with these arrangements. However, as a result of these changes, revenue from these arrangements will be recognized overtime, increasing revenue in earlier periods, creating a new caption on the balance sheet related to Contract assets and reducing both Inventories and Advanceson contracts and other customer advances. The cumulative effect to retained earnings upon adoption is not expected to be material. Management hasdetermined that there will not be any significant impact with regard to the timing of revenue recognition associated with the Harsco Metals & MineralsSegment or the industrial grating and fencing or heat transfer businesses of the Harsco Industrial Segment. The Company does not expect any impact on thetiming of operating cash flows. Management is currently finalizing the impact of these changes, including the impact of income taxes, internal controls overfinancial reporting, and the new disclosure requirements; and the expected impact upon adoption may change based on this evaluation.In February 2016, the FASB issued changes in accounting for leases. The changes introduce a lessee model that brings most leases onto the balance sheet.The changes also align many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. Furthermore,the changes address other concerns related to the current leases model such as eliminating the requirement in current guidance for an entity to use bright-linetests in determining lease classification. The changes also require lessors to increase the transparency of their exposure to changes in value of their residualassets and how they manage that exposure. The changes become effective for the Company on January 1, 2019. Management is currently evaluating theimpact of these changes on its consolidated financial statements.In January 2017, the FASB issued changes that remove the second step of the annual goodwill impairment test, which requires a hypothetical purchase priceallocation. The changes provide that the amount of goodwill impairment will be equal to the amount by which a reporting unit’s carrying value exceeds itsfair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. The same one-stepimpairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose theamount of goodwill at reporting units with zero or negative carrying amounts. The changes become effective for the Company on January 1, 2020.Management has determined that these changes will not have a material impact on the Company's consolidated financial statements. However, should theCompany be required to record a goodwill impairment charge in future periods, the amount recorded may differ compared to any amounts that might berecorded under current practice.In March 2017, the FASB issued changes to how employers that sponsor defined benefit pension plans and other postretirement plans present the net periodicpension cost ("NPPC") in the statement of operations. An employer will be required to report the service cost component in the same line item or items asother compensation costs arising from services rendered by the pertinent employees during the period. Other components of NPPC are required to bepresented in the statement of operations separately from the service cost component and outside of the subtotal of income from operations. The changes alsoallow only the service cost component to be eligible for capitalization. The changes become effective for the Company onJanuary 1, 2018. There would be no change to Income from continuing operations before income taxes and equity income.In May 2017, the FASB issued changes to clarify when revisions to the terms or conditions of a share-based payment award require an entity to applymodification accounting. The changes require modification accounting only in circumstances when the terms or conditions result in changes to the fairvalue, vesting conditions or classification of the award as an equity instrument or a liability. The changes become effective for the Company on January 1,2018. Management does not believe these changes will impact its consolidated financial statements.56Table of ContentsIn August 2017, the FASB issued changes which expand and refine hedge accounting for both financial and non-financial risk components, aligns therecognition and presentation of the effects of hedging instruments and hedged items in the financial statements and includes certain targeted improvementsto ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this update should be applied to hedgingrelationships existing on the date of adoption, which includes a cumulative-effect adjustment to eliminate any ineffectiveness recorded to accumulated othercomprehensive income or loss with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in whichadoption occurred. Presentation and disclosure amendments are required to be applied prospectively. The changes become effective for the Company onJanuary 1, 2019. Management is currently evaluating the impact of these changes on its consolidated financial statements.3. Accounts Receivable and InventoriesAccounts receivable consist of the following:(In thousands) December 31 2017 December 31 2016Trade accounts receivable $292,765 $248,354Less: Allowance for doubtful accounts (4,731) (11,800)Trade accounts receivable, net $288,034 $236,554Other receivables (a) $20,224 $21,053(a)Other receivables include insurance claim receivables, employee receivables, tax claim receivables and other miscellaneous receivables not included in Trade accounts receivable,netThe decrease in Allowance for doubtful accounts in 2017 is due to the write-off of previously reserved accounts receivable balances.The provision for doubtful accounts related to trade accounts receivable was as follows: Years Ended December 31(In thousands) 2017 2016 2015Provision for doubtful accounts related to trade accounts receivable $5,346 $(38) $13,047The increase in the provision for doubtful accounts for the year ended 2017 is due principally to the write-off of certain pre-administration receivablebalances for one of the Company's customers in Australia.Inventories consist of the following:(In thousands) December 31 2017 December 31 2016Finished goods $26,415 $26,464Work-in-process 24,367 22,815Contracts-in-process 45,599 54,044Raw materials and purchased parts 58,943 61,450Stores and supplies 22,969 22,908Total inventories $178,293 $187,681Valued at lower of cost or market: LIFO basis $80,644 $79,933FIFO basis 52,832 64,742Average cost basis 44,817 43,006Total inventories $178,293 $187,681Inventories valued on the LIFO basis at both December 31, 2017 and 2016 were approximately $33 million less than the amounts of such inventories valuedat current costs. During 2017 and 2016, as a result of reducing certain inventory quantities valued on a LIFO basis, net income (loss) decreased from thatwhich would have been recorded under the FIFO basis of valuation by $0.4 million and $1.3 million, respectively. During 2015, there was no significantimpact on net income (loss) as a result of reducing certain inventory quantities valued on a LIFO basis.57Table of ContentsContracts-in-process consist of the following:(In thousands) December 31 2017 December 31 2016Contract costs accumulated to date $73,740 $90,276Estimated forward loss provisions for contracts-in-process (b) (28,141) (36,232)Contracts-in-process (c) $45,599 $54,044(b)To the extent that the estimated forward loss provision exceeds accumulated contract costs it is included in the caption Other current liabilities on the Consolidated Balance Sheets.At December 31, 2017 and December 31, 2016, this amount totaled $3.0 million and $6.7 million, respectively.(c)At December 31, 2017 and December 31, 2016, the Company has $97.9 million and $101.1 million, respectively, of customer advances related to contracts-in-process. Theseamounts are included in Advances on contracts and other customer advances on the Consolidated Balance Sheets.During 2016, as a result of increased vendor costs, ongoing discussions with SBB, and increased estimates for commissioning, certification and testing costs,as well as expected settlements with SBB, the Company concluded it will have a loss on the contracts with SBB. The Company recognized an estimatedforward loss provision related to the SBB contracts of$45.1 million for the year ended December 31, 2016 in Costs of products sold on the Consolidated Statements of Operations. There was no estimated forwardloss provision recognized for the years ended December 31, 2017 or 2015. The estimated forward loss provision represents the Company's best estimate beston currently available information. It is possible that the Company's overall estimate of costs to complete these contracts may increase which would result inan additional estimated forward loss provision at such time, but the Company is unable to estimate any further possible loss or range of loss at December 31,2017.4. Equity Method InvestmentsIn November 2013, the Company sold the Company's Harsco Infrastructure Segment into a strategic venture with Clayton, Dubilier & Rice ("CD&R") as partof a transaction that combined the Harsco Infrastructure Segment with Brand Energy & Infrastructure Services, Inc., which CD&R simultaneously acquired(the "Infrastructure Transaction"). As a result of the Infrastructure Transaction, the Company retained an equity interest in Brand Energy & InfrastructureService, Inc. and Subsidiaries ("Brand" or the "Infrastructure strategic venture") which was accounted for as an equity method investment in accordance withU.S. GAAP.As part of the Infrastructure Transaction, the Company was required to make a quarterly payment to the Company's partner in the Infrastructure strategicventure, either (at the Company's election) (i) in cash, with total payments to equal approximately $22 million per year on a pre-tax basis (approximately $15million per year after-tax), or (ii) in kind, through the transfer of approximately 3% of the Company's ownership interest in the Infrastructure strategic ventureon an annual basis (the "unit adjustment liability"). The Company recognized the change in fair value to the unit adjustment liability each period until theCompany was no longer required to make these payments or chose not to make these payments. The change in fair value to the unit adjustment liability was anon-cash expense.In March 2016, the Company elected not to make the quarterly cash payments to the Company's partner in the Infrastructure strategic venture for theremainder of 2016. Instead, the Company transferred approximately 3% of its ownership interest in satisfaction of the Company's 2016 obligation related tothe unit adjustment liability. As a result of not making the quarterly cash payments for 2016, the Company's ownership interest in the Infrastructure strategicventure decreased by approximately 3% and the value of the unit adjustment liability was updated to reflect this change. Accordingly, the book value of theCompany's equity method investment in Brand decreased by $29.4 million and the unit adjustment liability decreased by$19.1 million. The resulting net loss of $10.3 million was recognized in Change in fair value to the unit adjustment liability and loss on dilution and sale ofequity method investment on the Consolidated Statement of Operations. This net loss was a non-cash expense.In September 2016, the Company entered into an Omnibus Agreement with CDR Bullseye Holdings, L.P., Bullseye G.P., LLC, Bullseye Partnership, L.P.,Bullseye Holdings, L.P. and Brand Energy & Infrastructure Holdings, Inc. (the “Brand Entities”), pursuant to which the Brand Entities repurchased theCompany's remaining approximate 26% interest in Brand.In exchange for the Company's interest, (i) the Company received $145 million in cash, net, and (ii) the requirement for the Company to fund certainobligations to Brand through 2018 were satisfied, the present value of which equaled $20.6 million. In addition, the Company received $1.4 million inaccrued but unpaid fees, rent and expenses from the Brand Entities. As a result of the sale, the Company’s obligation to make quarterly payments related tothe unit adjustment liability under the terms of a limited partnership agreement that governed the operation of the strategic venture terminated. The Companyrecognized a loss on the sale of its equity interest in Brand in the amount of $43.5 million which was reflected in Change in fair value to unit adjustmentliability and loss on dilution and sale of equity method investment on the Consolidated Statement of Operations.58Table of ContentsThe Company's proportionate share of Brand's net income or loss is recorded one quarter in arrears. Brand's summarized balance sheet information at June 30,2016 and summarized statement of operations information for the period from October 1, 2015 through June 30, 2016 and the year ended September 30, 2015are summarized as follows:(In thousands) June 30 2016Summarized Balance Sheet Information of Brand: Current assets $896,933Property and equipment , net 884,979Other noncurrent assets 1,454,951Total assets $3,236,863 Short-term borrowings, including current portion of long-term debt $14,402Other current liabilities 341,979Long-term debt 1,857,162Other noncurrent liabilities 351,714Total liabilities 2,565,257Equity 671,606Total liabilities and equity $3,236,863(In thousands) Period From October1, 2015 ThroughJune 30 2016 (a) Year EndedSeptember 30 2015Summarized Statement of Operations Information of Brand: Net revenues $2,333,561 $2,976,471Gross profit 499,005 649,596Net income attributable to Brand Energy & Infrastructure Services, Inc. and Subsidiaries 20,756 605Harsco's equity in income of Brand 5,686 175(a)The Company's equity method investment in Brand was sold in September 2016; accordingly equity income was recorded for the period from October 1, 2015 through June 30,2016.There was no change in fair value to the unit adjustment liability for the year ended 2017 due to the sale of the interest in Brand. For the years ended 2016and 2015, the Company recognized $4.7 million and $8.5 million, respectively, of change in fair value to the unit adjustment liability, exclusive of the fairvalue adjustment resulting from the decision not to make the quarterly payments in 2016 and the loss related to the sale of the Company's interest, in Changein fair value to the unit adjustment liability and loss on dilution and sale of equity method investment on the Consolidated Statement of Operations. As aresult of the sale of the Company's equity interest in Brand, there were no remaining balances related to the unit adjustment liability at December 31, 2017and 2016. A reconciliation of beginning and ending balances related to the unit adjustment liability is included in Note 13, Financial Instruments.5. Property, Plant and EquipmentProperty, plant and equipment consist of the following:(In thousands) EstimatedUseful Lives December 31 2017 December 31 2016Land — $10,840 $10,606Land improvements 5-20 years 14,996 15,032Buildings and improvements (a) 5-40 years 198,582 185,657Machinery and equipment 3-20 years 1,599,713 1,525,156Uncompleted construction — 24,387 21,035Gross property, plant and equipment 1,848,518 1,757,486Less: Accumulated depreciation (1,368,771) (1,267,231)Property, plant and equipment, net $479,747 $490,255(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 $5.5 million and $8.7 million of property, plant and equipment under capital leases at December 31, 2017 and 2016,respectively.59Table of Contents6. 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, 2017 and 2016:(In thousands) Harsco Metals& MineralsSegment HarscoIndustrialSegment HarscoRailSegment ConsolidatedTotalsBalance at December 31, 2015 $380,761 $6,806 $12,800 $400,367Changes to goodwill — 33 226 259Foreign currency translation (18,375) — — (18,375)Balance at December 31, 2016 362,386 6,839 13,026 382,251Foreign currency translation 19,507 — — 19,507Balance at December 31, 2017 $381,893 $6,839 $13,026 $401,758The Company's methodology for determining reporting unit fair value is described in Note 1, Summary of Significant Accounting Policies. Performance ofthe Company's 2017 annual impairment test did not result in impairment of any of the Company's reporting units.Intangible AssetsIntangible assets totaled $38.3 million, net of accumulated amortization of $163.9 million at December 31, 2017 and$41.6 million, net of accumulated amortization of $153.5 million at December 31, 2016. The following table reflects these intangible assets by majorcategory: December 31, 2017 December 31, 2016(In thousands) Gross CarryingAmount AccumulatedAmortization Gross CarryingAmount AccumulatedAmortizationCustomer related $153,014 $121,385 $146,840 $112,610Patents 5,825 5,700 5,729 5,534Technology related 26,131 26,131 25,687 25,634Trade names 8,317 4,845 8,306 4,529Other 8,875 5,850 8,512 5,200Total $202,162 $163,911 $195,074 $153,507Amortization expense for intangible assets was $5.1 million, $7.9 million and $8.8 million for 2017, 2016 and 2015, respectively. The following table showsthe estimated amortization expense for the next five fiscal years based on current intangible assets.(In thousands) 2018 2019 2020 2021 2022Estimated amortization expense (a) $5,000 $4,750 $4,500 $4,250 $4,000(a)These estimated amortization expense amounts do not reflect the potential effect of future foreign currency exchange rate fluctuations.7. Debt and Credit AgreementsThe Company has a multi-year revolving credit facility (the "Revolving Credit Facility") that is available for use throughout the world. The following tableillustrates the amount outstanding under the Revolving Credit Facility and available credit at December 31, 2017. December 31, 2017(In thousands) FacilityLimit OutstandingBalance OutstandingLetters of Credit AvailableCreditRevolving Credit Facility (a U.S.-based program) $400,000 $41,000 $31,432 $327,568On December 2, 2015, the Company entered into (i) an amendment and restatement agreement and (ii) a second amended and restated credit agreement(together, the “Financing Agreements”). The Financing Agreements increased the Company's overall borrowing capacity from $500 million to $600 millionby (i) amending and restating the Company’s then existing credit agreement, (ii) establishing a term loan A facility in an initial aggregate principal amountof $250 million, by converting a portion of the outstanding balance under the then existing credit agreement on a dollar-for-dollar basis and (iii) reducing theRevolving Credit Facility limit to $350 million.60Table of ContentsDuring September 2016, the Company received approximately $145 million in cash, net, from its sale of its remaining 26% equity interest in theInfrastructure strategic venture. The Company used these proceeds to repay $85.0 million on the term loan A facility and $60.0 million on the RevolvingCredit Facility. Related to the repayment of the term loan A facility, the Company expensed $1.1 million of unamortized deferred financing costs.In November 2016, the Company entered into a senior secured credit facility (the “Senior Secured Credit Facility”), consisting of a $400 million RevolvingCredit Facility and a $550 million term loan facility (the "Term Loan Facility"). Upon closing of the Senior Secured Credit Facility, the Company amendedand extended the existing Revolving Credit Facility, repaid the existing term loan A facility and redeemed, satisfied and discharged its 5.75% notes (the"Notes") in accordance with the indenture governing the Notes. As a result, a charge of $35.3 million was recorded during the fourth quarter of 2016consisting principally of the cost of early extinguishment of the Notes and the write-off of unamortized deferred financing costs associated with theCompany’s existing Financing Agreements and the Notes and is reflected in the financing activities section of the Consolidated Statements of Cash Flows asa reduction of long-term debt.In December 2017, the Company amended its existing Senior Secured Credit Facility in order to, among other things, reduce the interest rate applicable tothe Term Loan Facility, improve certain covenants and extend the maturity date by a year until December 2024. As a result of this amendment, a charge of$2.3 million was recorded during the fourth quarter of 2017 consisting principally of fees associated with the transaction and the write-off of unamortizeddeferred financing costs and is reflected in the operating activities section of the Consolidated Statements of Cash Flows as part of Net income.Borrowings under the $400 million Revolving Credit Facility bear interest at a rate per annum ranging from 87.5 to 200 basis points over the base rate or187.5 to 300 basis points over the adjusted London Interbank Offered Rate ("LIBOR") as defined in the credit agreement governing the Senior Secured CreditFacility (the "Credit Agreement"). Any principal amount outstanding under the Revolving Credit Facility is due and payable on the maturity of theRevolving Credit Facility. The Revolving Credit Facility matures on November 2, 2021.Borrowings under the Term Loan Facility bear interest at a rate per annum of 200 basis points over the base rate or 300 basis points over the adjusted LIBORrate, subject to a 1% floor, as defined in the Credit Agreement. The Term Loan Facility requires scheduled quarterly payments, each equal to 0.25% of theoriginal principal amount of the loans under the Term Loan Facility. These payments are reduced by the application of any prepayments and any remainingbalance is due and payable on the maturity of the Term Loan Facility. The Term Loan Facility matures on December 8, 2024.The Credit Agreement requires certain mandatory prepayments of the Term Loan Facility, subject to certain exceptions, based on net cash proceeds of certainsales or distributions of assets, as well as certain casualty and condemnation events, in some cases subject to reinvestment rights and certain other exceptions;net cash proceeds of any issuance of debt, excluded permitted debt issuances; and a percentage of excess cash flow, as defined by the Credit Agreement,during a fiscal year.The Senior Secured Credit Facility imposes certain restrictions including, but not limited to, restrictions as to types and amounts of debt of liens that may beincurred by the Company; limitations on increases in dividend payments and limitations on certain acquisitions by the Company.With respect to the Senior Secured Facility, the obligations of the Company are guaranteed by substantially all of the Company’s current and future wholly-owned domestic subsidiaries (“Guarantors”). All obligations under the Senior Credit Facility, and the guarantees of those obligations, are secured, subject tocertain exceptions, by substantially all of the Company’s assets and the assets of the Guarantors.In January 2017, the Company entered into a series of fixed-floating interest rate swaps that cover the period from 2018 through 2021, and had the effect ofconverting $300 million of the Term Loan Facility from floating-rate to fixed-rate. The fixed rates provided by the swaps replace the adjusted LIBOR rate inthe interest calculation, range from 1.65% for 2018 to 2.71% for 2021.At December 31, 2017, the Company had $586.9 million of borrowings under the Senior Secured Credit Facility consisting of $545.9 million under the TermLoan Facility and $41.0 million under the Revolving Credit Facility. At December 31, 2017, of these balances $581.4 million was classified as Long-termdebt and $5.5 million was classified as Current maturities of long-term debt on the Consolidated Balance Sheets. At December 31, 2016, the Company had$648.0 million of borrowings under the Senior Secured Credit Facility consisting of $550.0 million under the Term Loan Facility and $98.0 million underthe Revolving Credit Facility. At December 31, 2016, of these balances $642.5 million was classified as Long-term debt and $5.5 million was classified asCurrent maturities of long-term debt on the Consolidated Balance Sheets.61Table of ContentsShort-term borrowings amounted to $8.6 million and $4.3 million at December 31, 2017 and 2016, respectively. At December 31, 2017 and 2016, Short-termborrowings consist primarily of bank overdrafts and other third party debt. The weighted-average interest rate for short-term borrowings at December 31, 2017and 2016 was 4.3% and 6.2%, respectively.Long-term debt consists of the following:(In thousands) December 31 2017 December 31 2016Senior Secured Credit Facilities: Term Loan Facility with an interest rate of 4.6% and 6.0% at December 31, 2017 and 2016, respectively $545,875 $550,000Revolving Credit Facility with an average interest rate of 4.2% and 3.6% at December 31, 2017 and 2016,respectively 41,000 98,000Other financing payable (including capital leases) in varying amounts due principally through 2017 with aweighted-average interest rate of 5.0% and 5.7% at December 31, 2017 and 2016, respectively 6,784 25,410Total debt obligations 593,659 673,410Less: deferred financing costs (15,657) (18,597)Total debt obligations, net of deferred financing costs 578,002 654,813Less: current maturities of long-term debt (11,208) (25,574)Long-term debt $566,794 $629,239The maturities of long-term debt for the four years following December 31, 2018 are as follows:(In thousands) 2019 $6,2742020 5,6402021 46,4982022 5,459Cash payments for interest on debt were $44.3 million, $49.6 million and $44.4 million in 2017, 2016 and 2015, respectively.The Credit Agreement contains a consolidated net debt to consolidated adjusted earnings before interest, tax, depreciation and amortization ("EBITDA")ratio covenant, which is not to exceed 3.75 to 1.0 and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which isnot to be less than 3.0 to 1.0. The consolidated net debt to consolidated adjusted EBITDA ratio covenant is reduced to 3.5 to 1.0 after December 31, 2018. AtDecember 31, 2017, the Company was in compliance with these and all other covenants.8. Operating LeasesThe Company leases certain property and equipment under noncancelable operating leases. Rental expense under such operating leases was $16.5 million,$16.9 million and $18.9 million in 2017, 2016 and 2015, respectively.Future minimum payments under operating leases with noncancelable terms are as follows:(In thousands) 2018 $12,8452019 9,8482020 8,0212021 6,3602022 4,090After 2022 16,169Total minimum rentals to be received in the future under noncancelable subleases at December 31, 2017 are $0.8 million.62Table of Contents9. Employee Benefit PlansPension BenefitsThe Company has defined benefit pension plans covering a substantial number of employees. The defined benefits for salaried employees generally are basedon years of service and the employee's level of compensation during specified periods of employment. Defined benefit pension plans covering hourlyemployees 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 plans providing for the Company to contribute a specified matching amount for participatingemployees' contributions to the plan. For U.S. employees, this match is made on employee contributions up to 4% of eligible compensation. Additionally,the Company may provide a discretionary contribution for eligible employees. There have been no discretionary contributions provided for the years 2017,2016 and 2015. For non-U.S. employees, this match is up to 6% of eligible compensation with an additional 2% going towards insurance and administrativecosts.NPPC for U.S. and international plans for 2017, 2016 and 2015 is as follows: U.S. Plans International Plans(In thousands) 2017 2016 2015 2017 2016 2015Defined benefit pension plans: Service cost $43 $102 $118 $1,724 $1,585 $1,648Interest cost 9,878 10,165 12,357 21,459 26,822 36,282Expected return onplan assets (10,485) (10,721) (14,041) (40,469) (42,979) (50,091)Recognized priorservice costs 33 63 81 186 189 188Recognized losses 5,701 5,493 4,919 16,283 12,002 16,875Settlement/curtailmentloss (gain) — 276 — (20) 79 (23)Defined benefit pensionplan cost (income) 5,170 5,378 3,434 (837) (2,302) 4,879Multiemployer pensionplans 650 636 853 1,306 1,368 1,463Defined contributionplans 4,239 3,833 3,921 5,905 5,807 6,765Net periodic pensioncost $10,059 $9,847 $8,208 $6,374 $4,873 $13,10763Table of ContentsThe change in the financial status of the defined benefit pension plans and amounts recognized on the Consolidated Balance Sheets at December 31, 2017and 2016 are as follows: U.S. Plans International Plans(In thousands) 2017 2016 2017 2016Change in benefit obligation: Benefit obligation at beginning of year $305,652 $307,390 $952,360 $900,104Service cost 43 102 1,724 1,585Interest cost 9,878 10,165 21,459 26,822Plan participants' contributions — — 61 68Amendments — — (4,459) —Actuarial (gain) loss 14,459 5,550 (3,613) 194,469Settlements/curtailments — — (3,362) (1,527)Benefits paid (15,171) (17,555) (40,379) (32,079)Effect of foreign currency — — 91,795 (137,082)Benefit obligation at end of year $314,861 $305,652 $1,015,586 $952,360Change in plan assets: Fair value of plan assets at beginning of year $205,271 $208,870 $732,743 $755,966Actual return on plan assets 33,942 11,935 67,136 105,027Employer contributions 5,899 2,021 18,187 17,192Plan participants' contributions — — 61 68Settlements/curtailments — — (3,241) (1,527)Benefits paid (15,171) (17,555) (39,800) (31,485)Effect of foreign currency — — 67,631 (112,498)Fair value of plan assets at end of year $229,941 $205,271 $842,717 $732,743 Funded status at end of year $(84,920) $(100,381) $(172,869) $(219,617)Amounts recognized on the Consolidated Balance Sheets for defined benefit pension plans consist of the following at December 31, 2017 and 2016: U.S. Plans International Plans December 31 December 31(In thousands) 2017 2016 2017 2016Noncurrent assets $1,860 $668 $1,820 $1,118Current liabilities 2,237 2,278 625 505Noncurrent liabilities 84,543 98,771 174,064 220,230Accumulated other comprehensive loss before tax 146,341 161,075 427,127 434,868Amounts recognized in Accumulated other comprehensive loss, before tax, for defined benefit pension plans consist of the following at December 31, 2017and 2016: U.S. Plans International Plans(In thousands) 2017 2016 2017 2016Net actuarial loss $146,340 $161,042 $430,377 $433,626Prior service cost (credit) 1 33 (3,250) 1,242Total $146,341 $161,075 $427,127 $434,868The estimated amounts that will be amortized from Accumulated other comprehensive loss into defined benefit pension plan NPPC in 2018 are as follows:(In thousands) U.S. Plans International PlansNet actuarial loss $5,203 $15,186Prior service cost (credit) 1 (149)Total $5,204 $15,037The Company's estimate of expected contributions to be paid in 2018 for the U.S. and international defined benefit plans are $9.9 million and $19.2 million,respectively.64Table of ContentsFuture Benefit PaymentsThe expected benefit payments for defined benefit pension plans over the next ten years are as follows:(In millions) 2018 2019 2020 2021 2022 2023-2027U.S. Plans $20.2 $19.3 $19.2 $19.2 $19.3 $94.1International Plans 40.1 41.2 42.7 44.5 45.2 247.9Net Periodic Pension Cost and Defined Benefit Pension Obligation AssumptionsThe weighted-average actuarial assumptions used to determine the defined benefit pension plan NPPC for 2017, 2016 and 2015 were as follows: U.S. PlansDecember 31 International PlansDecember 31 Global Weighted-AverageDecember 31 2017 2016 2015 2017 2016 2015 2017 2016 2015Discount rates 4.0% 4.2% 3.9% 2.8% 3.8% 3.7% 3.1% 3.9% 3.7%Expected long-term ratesof return on plan assets 7.3% 7.3% 7.5% 5.9% 6.5% 6.8% 6.2% 6.7% 7.0%The expected long-term rates of return on defined benefit pension plan assets for the 2018 NPPC are 7.3% for the U.S. plans and 5.6% for the internationalplans. The expected global long-term rate of return on assets for 2018 is 6.0%.The weighted-average actuarial assumptions used to determine the defined benefit pension plan obligations atDecember 31, 2017 and 2016 were as follows: U.S. Plans International Plans Global Weighted-Average December 31 December 31 December 31 2017 2016 2017 2016 2017 2016Discount rates 3.5% 4.0% 2.6% 2.8% 2.8% 3.1%Since accrued service is no longer granted to the U.S. defined benefit plans and the majority of the international defined benefit pension plans, the rate ofcompensation increase did not have a significant impact on the defined benefit pension obligation at December 31, 2017 and 2016 or the defined benefitpension plan NPPC for the years ended 2017, 2016 and 2015.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.The Company changed the method utilized to estimate the service cost and interest cost components of NPPC for defined benefit pension plans for 2016 andlater. The more precise application of discount rates for measuring both service costs and interest costs employs yield curve spot rates on a year-by-yearexpected cash flow basis, using the same yield curves that the Company has previously used. This change in method represents a change in accountingestimate and has been accounted for in the period of change. This change in method decreased the Company's NPPC by approximately $7 million for 2016,compared to what NPPC would have been under the prior method.Accumulated Benefit ObligationThe accumulated benefit obligation for all defined benefit pension plans at December 31, 2017 and 2016 was as follows: U.S. Plans International Plans December 31 December 31(In millions) 2017 2016 2017 2016Accumulated benefit obligation $314.9 $305.7 $1,010.6 $946.365Table of ContentsDefined Benefit Pension Plans with Accumulated Benefit Obligation in Excess of Plan AssetsThe projected benefit obligation, accumulated benefit obligation and fair value of plan assets for defined benefit pension plans with accumulated benefitobligations in excess of plan assets at December 31, 2017 and 2016 were as follows: U.S. Plans International Plans December 31 December 31(In millions) 2017 2016 2017 2016Projected benefit obligation $306.0 $296.7 $986.6 $913.0Accumulated benefit obligation 306.0 296.7 981.9 910.0Fair value of plan assets 219.2 195.6 812.0 694.9The asset allocations attributable to the Company's U.S. defined benefit pension plans at December 31, 2017 and 2016, and the long-term target allocation ofplan assets, by asset category, are as follows: Target Long-TermAllocation Percentage of Plan AssetsDecember 31U.S. Plans Asset Category 2017 2016Domestic equity securities 34%-44% 38.6% 39.7%International equity securities 19%-29% 24.5% 18.5%Fixed income securities 28%-38% 30.9% 30.9%Cash and cash equivalents Less than 5% 1.0% 1.0%Other (a) 0%-10% 5.0% 9.9%(a)Investments within this caption include diversified global asset allocation funds.Defined benefit pension plan assets are allocated among various categories of equities, fixed income securities and cash and cash equivalents withprofessional investment managers whose performance is actively monitored. The primary investment objective is long-term growth of assets in order to meetpresent and future benefit obligations. The Company periodically conducts an asset/liability modeling study and accordingly adjusts investments amongand within asset categories to ensure 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 both 2018 and 2017, the expected return-on-assetassumption for U.S. defined benefit pension plans was 7.3%.The U.S. defined benefit pension plans' assets include 450,000 shares of the Company's common stock at bothDecember 31, 2017 and 2016, valued at $8.4 million and $6.1 million, respectively. These shares represented 3.7% and 3.0% of total U.S. plan assets atDecember 31, 2017 and 2016, respectively.The asset allocations attributable to the Company's international defined benefit pension plans at December 31, 2017 and 2016 and the long-term targetallocation of plan assets, by asset category, are as follows:International Plans Asset Category Target Long-TermAllocation Percentage of Plan AssetsDecember 31 2017 2016Equity securities 29.0% 38.9% 37.1%Fixed income securities 50.0% 44.6% 43.9%Cash and cash equivalents — 0.3% 0.3%Other (b) 21.0% 16.2% 18.7%(b) Investments within this caption include diversified growth funds, real estate funds and infrastructure funds.International defined benefit pension plan assets at December 31, 2017 in the U.K. defined benefit pension plan amounted to approximately 94% of theinternational defined benefit pension plan assets. The U.K. plan assets are allocated among various categories of equities, fixed income securities and cashand cash equivalents with professional investment managers whose performance is actively monitored. The primary investment objective is long-term growthof assets in order to meet present and future benefit obligations. The Company periodically conducts asset/liability modeling studies and accordingly adjustsinvestment amounts within asset categories to ensure the long-term investment strategy is aligned with the profile of benefit obligations.66Table of ContentsFor 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. For 2018, the expected return on asset assumption for the U.K. plan is 5.5% and for 2017 the expected returnon asset assumption for the U.K. plan was 5.8%. The remaining international defined benefit pension plans, with plan assets representing approximately 6%of the international defined benefit pension plan assets, are under the guidance of professional investment managers and have similar investment objectives.The fair values of the Company's U.S. defined benefit pension plans' assets at December 31, 2017 by asset class are as follows:(In thousands) Total Level 1 Level 2Domestic equities: Common stocks $28,200 $28,200 $—Mutual funds—equities 60,785 11,062 49,723International equities: Common stocks 1,429 1,429 —Mutual funds—equities 54,879 54,879 —Fixed income investments: U.S. Treasuries and collateralized securities 18,407 — 18,407Corporate bonds and notes 10,878 10,878 —Mutual funds—bonds 41,745 12,184 29,561Other—mutual funds 11,336 11,336 —Cash and money market accounts 2,282 2,282 —Total $229,941 $132,250 $97,691The fair values of the Company's U.S. defined benefit pension plans' assets at December 31, 2016 by asset class are as follows:(In thousands) Total Level 1 Level 2Domestic equities: Common stocks $27,339 $27,339 $—Mutual funds—equities 54,102 9,928 44,174International equities: Mutual funds—equities 37,948 37,948 —Fixed income investments: U.S. Treasuries and collateralized securities 14,240 — 14,240Corporate bonds and notes 11,457 11,457 —Mutual funds—bonds 37,745 11,927 25,818Other—mutual funds 20,346 20,346 —Cash and money market accounts 2,094 2,094 —Total $205,271 $121,039 $84,232The fair values of the Company's international defined benefit pension plans' assets at December 31, 2017 by asset class are as follows:(In thousands) Total Level 1 Level 2Equity securities: Mutual funds—equities $328,002 $— $328,002Fixed income investments: Mutual funds—bonds 369,291 — 369,291Insurance contracts 6,189 — 6,189Other: Other mutual funds 136,843 — 136,843Cash and money market accounts 2,392 2,392 —Total $842,717 $2,392 $840,32567Table of ContentsThe fair values of the Company's international defined benefit pension plans' assets at December 31, 2016 by asset class are as follows:(In thousands) Total Level 1 Level 2Equity securities: Mutual funds—equities $272,070 $— $272,070Fixed income investments: Mutual funds—bonds 314,098 — 314,098Insurance contracts 7,657 7,657Other: Real estate funds / limited partnerships 23,714 — 23,714Other mutual funds 113,345 — 113,345Cash and money market accounts 1,859 1,859 —Total $732,743 $1,859 $730,884 Following is a description of the valuation methodologies used for the defined benefit pension 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.Multiemployer Pension 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 $2.0 million, $2.0 million and $2.5million for the years ended December 31, 2017, 2016 and 2015, respectively.10. Income TaxesOn December 22, 2017, the Act was signed into law. The Act, among other things, reduces the U.S. corporate income tax rate to 21% starting in 2018 andcreates a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries.The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for thefuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective taxbasis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporarydifferences are expected to reverse. As a result of the Act, the Company revalued the ending net deferred tax assets and liabilities at December 31, 2017 andrecorded a provisional charge of $48.7 million, included in Income tax expense on the Company’s Consolidated Statement of Operations for 2017.The Act provides for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary E&P through 2017. Based on an analysis ofE&P, no income tax expense was recorded in the Company’s Consolidated Statement of Operations for 2017.68Table of ContentsOn December 22, 2017, the SEC staff issued SAB 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessaryinformation available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of theAct. The Company has recognized the revaluation of deferred tax assets and liabilities and included these amounts in the consolidated financial statementsfor 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes ininterpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result ofthe Act. The accounting is expected to be completed when the Company's 2017 U.S. corporate income tax return is filed in 2018.Income (loss) from continuing operations before income taxes and equity income as reported on the Consolidated Statements of Operations consists of thefollowing:(In thousands) 2017 2016 2015U.S. $5,694 $(99,939) $16,169International 89,757 20,468 18,646Total income (loss) from continuing operations before income taxes and equity income $95,451 $(79,471) $34,815Income tax expense as reported on the Consolidated Statements of Operations consists of the following:(In thousands) 2017 2016 2015Income tax expense (benefit): Currently payable: U.S. federal $4,107 $(4,088) $408U.S. state 372 365 546International 21,975 18,014 23,095Total income taxes currently payable 26,454 14,291 24,049Deferred U.S. federal 46,470 (8,195) 2,651Deferred U.S. state 1,142 2,238 812Deferred international 9,737 (1,697) 166Total income tax expense $83,803 $6,637 $27,678Cash payments for income taxes were $24.9 million, $14.6 million and $18.9 million for 2017, 2016 and 2015, respectively.A reconciliation of the normal expected statutory U.S. federal income tax expense (benefit) to the actual Income tax expense as reported on the ConsolidatedStatements of Operations is as follows:(In thousands) 2017 2016 2015U.S. federal income tax expense (benefit) $33,408 $(27,815) $12,185U.S. state income taxes, net of federal income tax benefit 786 (355) 496U.S. domestic manufacturing deductions and credits (1,210) (661) (2,504)Capital loss on sale of equity interest in Brand with no realizable tax benefit — 16,106 —Difference in effective tax rates on international earnings and remittances 675 2,006 5,095Uncertain tax position contingencies and settlements (1,517) (1,886) 1,416Changes in realization on beginning of the year deferred tax assets 2,758 1,978 923Forward Loss Provisions in SBB Contract with no realizable tax benefits — 15,768 —Restructuring and impairment charges with no realizable tax benefits — — 8,508U.S. non-deductible expenses 664 724 874(Income) loss related to the Infrastructure Transaction — (644) 580Impact of U.S. tax reform 48,680 — —Cumulative effect of change in statutory tax rates/laws (153) (388) 340Income from unconsolidated entities — 2,098 62Other, net (288) (294) (297)Total income tax expense $83,803 $6,637 $27,678At December 31, 2017, 2016 and 2015, the Company's annual effective income tax rate on income from continuing operations was 87.8%, (8.4)% and 79.5%,respectively.69Table of ContentsThe Company’s international income from continuing operations before income taxes and equity income (loss) was$89.8 million and $20.5 million for 2017 and 2016, respectively. This includes the estimated forward loss provision related to the SBB contracts of $45.1million in 2016, on which no tax benefit was recognized because the losses occurred in entities where it is not more likely than not that the tax benefit will berealized. In 2017, because of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Act, the Company revalued its ending netdeferred tax asset related to the outside basis difference in its international branches and recognized a provisional $6.5 million tax expense in the Company’sConsolidated Statement of Operations for 2017. The increased international income from continuing operations, the additional valuation allowance on thedeferred tax assets in certain jurisdictions and the provisional tax expense because of the Act increased the Company’s total international income tax expenseto $31.7 million in 2017 from $16.3 million in 2016.The Company’s differences in effective tax rates for 2017 and 2016 on international earnings and remittances was $0.7 million and $2.0 million,respectively, which included U.S tax on international deemed remittances of $6.4 million and $7.3 million, respectively. This decrease is primarily due to thechange in the mix of earnings between jurisdictions.The Company's income from continuing operations before income taxes and equity income attributable to the U.S. was $5.7 million for 2017 compared toloss from continuing operations before income taxes and equity attributable to the U.S. of $99.9 million for 2016. In 2017, due to the impact of the Act, theCompany recognized a $14.9 million provisional tax expense because of revaluing the U.S. ending net deferred tax assets from 35% to the newly enactedU.S. corporate income tax rate of 21%, and established a provisional valuation allowance on the full amount of foreign tax credit carryforward of $27.3million due to the impact the Act had on future foreign source income. In 2016, a valuation allowance of $16.1 million was established for the deferred taxasset resulting from the capital loss on the sale of the Company's equity interest in Brand, because it is not more likely than not that the benefit will berealized in the future. However, the net operating loss created by the loss on early extinguishment of debt was realized through a carryback to prior years withtaxable income.The tax effects of the temporary differences giving rise to the Company's deferred tax assets and liabilities at December 31, 2017 and 2016 are as follows: 2017 2016(In thousands) Asset Liability Asset LiabilityDepreciation and amortization $6,616 $— $— $10,089Expense accruals 17,690 — 23,300 —Inventories 4,390 — 6,611 —Provision for receivables 649 — 1,015 —Deferred revenue — 979 — 1,852Operating loss carryforwards 90,193 — 80,178 —Foreign tax credit carryforwards 27,256 — 26,347 —Capital loss carryforwards 11,011 — 18,163 —Pensions 47,153 — 74,506 —Currency adjustments 7,160 — 17,597 —Deferred financing costs — 2,135 — —Post-retirement benefits 403 — 760 —Stock based compensation 4,761 — 5,812 —Other 7,684 — 7,206 —Subtotal 224,966 3,114 261,495 11,941Valuation allowance (174,227) — (146,097) —Total deferred income taxes $50,739 $3,114 $115,398 $11,941The deferred tax asset and liability balances recognized on the Consolidated Balance Sheets at December 31, 2017 and 2016 are as follows:(In thousands) 2017 2016Deferred income tax assets $51,574 $106,311Other liabilities 3,949 2,85470Table of ContentsAt December 31, 2017, the tax-effected amount of net operating loss carryforwards ("NOLs") totaled $90.2 million. Tax-effected NOLs from internationaloperations are $73.5 million. Of that amount, $60.5 million can be carried forward indefinitely and $13.0 million will expire at various times between 2018and 2038. Tax-effected U.S. state NOLs are $16.7 million. Of that amount, $3.9 million expire at various times between 2018 and 2022, $2.9 million expire atvarious times between 2023 and 2027, $4.3 million expire at various times between 2028 and 2032 and $5.6 million expire at various times between 2033and 2038. At December 31, 2017, the tax-effected amount of capital loss carryforwards totaled $11.0 million which expire between 2018 and 2021.Valuation allowances of $174.2 million and $146.1 million at December 31, 2017 and 2016, respectively, related principally to deferred tax assets forpension liabilities, NOLs, foreign tax credit carryforwards, capital loss carryforwards and foreign currency translation that are uncertain as to realizability. In2017, the Company recorded a valuation allowance of $27.3 million related to foreign tax credit carryforwards due to the impact of the Act, an increase fromforeign currency translation in the amount of $10.1 million and a net increase of $6.9 million related to losses in certain jurisdictions where the Companydetermined that it is more likely than not that these assets will not be realized. This was partially offset by a reduction related to current year pensionadjustments recorded through Accumulated other comprehensive loss and a decrease related to U.S., Argentina and Belgium tax rate changes. In 2016, theCompany recorded a valuation allowance of $16.1 million related to capital loss on sale of the Company's equity interest in Brand, $13.5 million related toestimated forward loss provisions related to the SBB contracts and current year pension adjustments of $19.2 million recorded through Accumulated othercomprehensive loss. This was partially offset by the reduction from the effects of foreign currency translation adjustments and the decrease related to U.K. andFrance tax rate changes.Based on an analysis of E&P for the Company's foreign subsidiaries, no toll charge has been recorded in 2017 related to the Act. Given the complexities ofthe E&P calculations and the guidance provided by SAB 118, the Company will continue to analyze this provisional amount until the Company's U.S. taxreturn is filed in 2018. The Company does not anticipate a change in the indefinite reinvestment assertion, as a result of the Act. However, the Companyconsiders the indefinite reinvestment assertion to be provisional and will continue to analyze the impact of the Act on this assertion during the SAB 118measurement period.The Company recognizes accrued interest and penalty expense related to unrecognized income tax benefits in income tax expense. During 2016, theCompany recognized an income tax benefit of $1.7 million, for interest and penalties primarily due to the expiration of statutes of limitation and resolutionof examinations. The Company did not recognize any income tax expense or benefit for interest and penalties during 2017 and 2015. The Company hasaccrued $1.1 million, $1.1 million and $2.8 million for the payment of interest and penalties at December 31, 2017, 2016 and 2015 respectively.A reconciliation of the change in the unrecognized income tax benefits balance from January 1, 2015 to December 31, 2017 is as follows:(In thousands) UnrecognizedIncome TaxBenefits DeferredIncome TaxBenefits UnrecognizedIncome TaxBenefits, Net ofDeferred IncomeTax BenefitsBalances, January 1, 2015 $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)Balance at December 31, 2015 5,161 (44) 5,117Additions for tax positions related to the current year (includes currency translationadjustment) 744 (1) 743Additions for tax positions related to prior years (includes currency translationadjustment) 358 (14) 344Other reductions for tax positions related to prior years (837) — (837)Statutes of limitation expirations (817) 27 (790)Settlements (27) 2 (25)Balance at December 31, 2016 4,582 (30) 4,552 71Table of Contents(In thousands) UnrecognizedIncome TaxBenefits DeferredIncome TaxBenefits UnrecognizedIncome TaxBenefits, Net ofDeferred IncomeTax BenefitsAdditions for tax positions related to the current year (includes currency translationadjustment) 658 (2) 656Other reductions for tax positions related to prior years (321) — (321)Statutes of limitation expirations (1,296) 1 (1,295)Total unrecognized income tax benefits that, if recognized, would impact the effectiveincome tax rate at December 31, 2017 $3,623 $(31) $3,592Included in the other reductions for tax positions related to prior year 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 $1.2 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 2011.11. 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 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, 2017, 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 $24 million. Any change in the aggregate amount since the Company's last Annual Report on Form 10-K is due to an increase in assessed interestand statutorily mandated legal fees for the year, as well as foreign currency translation.72Table of ContentsAnother ICMS tax case involving the SPRA refers to the tax period from January 2002 to December 2003, and has not yet reached the judicial phase. Theaggregate amount assessed by the tax authorities in August 2005 was $7.6 million (the amounts with regard to this claim are valued as of the date of theassessment since it has not yet reached the collection phase), composed of a principal amount of $1.8 million, with penalty and interest assessed through thatdate increasing such amount by an additional $5.8 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 law.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.Brazilian Labor DisputesThe Company is subject to ongoing collective bargaining and individual labor claims in Brazil through the Harsco Metals & Minerals Segment which allege,among other things, the Company's failure to pay required amounts for overtime and vacation at certain sites. The Company is vigorously defending itselfagainst these claims; however, litigation is inherently unpredictable, particularly in foreign jurisdictions. While the Company does not currently expect thatthe ultimate 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 evaluate all known labor claims and as of December 31, 2017 and 2016, the Company has established reserves of $9.6 millionand $7.9 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 may, in the normal course of business, become involved in commercial disputes with subcontractors 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. In August 2017, the Company reached a mutually agreed upon settlement with the customer whereby the Company (1)made a net payment of $5.4 million to the customer; (2) received ownership of the underlying equipment; and (3) was released from all claims and potentialclaims. Based on the evaluation of the terms of the settlement, this settlement did not have a material impact on the Company’s results of operations.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.Lima Refinery LitigationOn April 8, 2016, Lima Refining Company filed a lawsuit against the Company in the District Court of Harris County, Texas related to a January 2015explosion at an oil refinery operated by Lima Refining Company. The action seeks approximately more than $106 million in property damages andapproximately $289 million in lost profits and business interruption damages. The action alleges the explosion occurred because of a defect in a heatexchange cooler manufactured by Hammco Corporation ("Hammco") in 2009, prior to the Company’s acquisition of Hammco in 2014. The Company isvigorously contesting the allegations against it both as to liability for the accident and the amount of the claimed damages. As a result, the Companybelieves the situation will not result in a probable loss. The Company has both an indemnity right from the sellers of Hammco and liability insurancecoverage under various primary and excess policies that the Company believes will be available, if necessary, to cover substantially all of any such liabilitythat might ultimately be incurred in the above action.73Table of ContentsU.K. Health and Safety Executive MatterIn the third quarter of 2016, a subsidiary in the Company’s Harsco Metals & Minerals Segment, along with one of its customers, was named as a co-defendantin an action brought by the U.K. Health and Safety Executive in the U.K. Crown Court Sitting at Kingston-Upon-Hull. In September 2017, the U.K. Healthand Safety Executive withdrew its case against the Company, ending the Company’s involvement in these proceedings.Compliance MatterAs previously disclosed, the Company recently began an internal investigation, with the assistance of outside counsel, after it became aware of allegationsinvolving an employee and an agent of the Harsco Rail subsidiary in China (“Harsco Rail China”). During this investigation, which remains ongoing, theCompany learned about certain payments that potentially violate the Foreign Corrupt Practices Act. Revenues attributed to Harsco Rail China were less thanapproximately 2% of the Company’s consolidated revenues for each of the past three years.The Company has voluntarily self-reported its findings to the SEC and the U.S. Department of Justice (the “DOJ”) and intends to fully cooperate with theseagencies in their review. Based on information known to date, the Company believes the amount of the potential improper payments are not material to theconsolidated financial statements. Any determination that the Company's operations or activities were not in compliance with existing laws or regulationscould result in the imposition of fines and penalties. No provision with respect to this matter has been made in the Company’s consolidated financialstatements. At this time, the Company cannot predict the outcome or impact of the investigation or the reviews by the SEC and the DOJ. However, based oninformation available at this time, the Company does not believe any potential liability would be material to the Company's consolidated financial position,although an amount recorded, if any, could be material to the results of operations for the period in which it may be recorded.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, 2017, there were 17,144 pending asbestos personal injury actions filed against the Company. Of those actions, 16,742 were filed in the NewYork Supreme Court (New York County), 110 were filed in other New York State Supreme Court Counties and 292 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, 2017, 16,712 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 30 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 costs and expenses of the asbestos actionswill 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, 2017, the Company has obtained dismissal in 27,943 cases bystipulation or summary judgment prior to trial.74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.12. 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. The following table summarizes the Company's common stock: SharesIssued TreasuryShares (a) OutstandingSharesOutstanding, January 1, 2015 112,357,348 31,697,498 80,659,850Shares issued for vested 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 80,094,365Shares issued for vested restricted stock units 94,572 13,974 80,598Outstanding, December 31, 2016 112,499,874 32,324,911 80,174,963Shares issued for vested restricted stock units 375,355 105,431 269,924Stock appreciation rights exercised 12,897 3,932 8,965Outstanding, December 31, 2017 112,888,126 32,434,274 80,453,852(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 on the Consolidated Statements of Operations:(In thousands, except per share data) 2017 2016 2015Income (loss) from continuing operations attributable to Harsco Corporation commonstockholders $7,626 $(86,336) $7,168 Weighted-average shares outstanding—basic 80,553 80,333 80,234Dilutive effect of stock-based compensation 2,287 — 131Weighted-average shares outstanding—diluted 82,840 80,333 80,365Income (loss) from continuing operations per common share, attributable to Harsco Corporation common stockholders:Basic $0.09 $(1.07) $0.09 Diluted $0.09 $(1.07) $0.0975Table of ContentsThe following average outstanding stock-based compensation units were not included in the computation of diluted earnings per share because the effect wasantidilutive:(In thousands) 2017 2016 2015Restricted stock units — 810 —Stock options 52 89 98Stock appreciation rights 811 1,458 1,142Performance share units 201 684 27813. Stock-Based CompensationDuring 2017, the Company’s stockholders and Board of Directors approved Amendment No. 1 to the 2013 Equity and Incentive Compensation Plan("Amendment No. 1"). Amendment No. 1 increased the number of shares available for new awards and increased the number of shares that may be issued ortransferred by the Company in connection with awards other than option rights or stock appreciation rights ("SARs"). The 2013 Equity and Incentive Plan, asamended (the "2013 Plan") authorizes the issuance of up to 7,800,000 shares of the Company's common stock for use in paying incentive compensationawards in the form of stock options or other equity awards such as restricted stock, restricted stock units ("RSUs"), SARs, or performance share units ("PSUs").Of the 7,800,000 shares authorized, a maximum of 4,621,000 shares may be issued for awards other than option rights or SARs, as defined in the 2013 Plan.The 2016 Non-Employee Directors' Long-Term Equity Compensation Plan (the "2016 Plan") authorizes the issuance of up to 400,000 shares of theCompany's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31, 2017, there were 4,366,677shares available for granting equity awards under the 2013 Plan, of which 2,834,345 shares were available for awards other than option rights or SARs. AtDecember 31, 2017, there were 233,799 shares available for granting equity awards under the 2016 Plan.Restricted 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 2015, either "cliff" vest at theend of three years, upon obtainment of specified retirement or years of service criteria. RSUs granted to officers and certain key employees in 2016 and 2017either vest on a pro-rata basis over three years or upon obtainment of specified retirement or years of service criteria. Upon vesting, each RSU is exchanged foran equal number of shares of the Company's common stock. The vesting period for RSUs granted to non-employee directors is one year and each RSU isexchanged for an equal number of shares of the Company's common stock following the termination of the participant's service as a director. RSUs do nothave an option for cash payment.The following table summarizes RSUs issued and the compensation expense recorded for the years ended December 31, 2017, 2016 and 2015: RSUs (a) Weighted AverageFair Value Expense (Dollars in thousands, except per unit) 2017 2016 2015 Directors: 2014 36,840 $24.80 $— $— $311 2015 59,985 $15.69 — 314 627 2016 109,998 $7.00 257 513 — 2017 56,203 $13.70 641 — — Employees: 2012 141,486 $18.75 — — (71)(b)2013 170,582 $20.63 — 66 87 2014 190,832 $25.21 316 669 504 2015 239,679 $16.53 597 880 919 2016 536,773 $7.09 1,011 995 — 2017 286,251 $13.70 1,417 — — Total $4,239 $3,437 $2,377 (a)Represents number of awards originally issued.(b)Represents the impact of forfeitures during 2015.76Table of ContentsRSU activity for the year ended December 31, 2017 was as follows: Number of Shares Weighted AverageGrant-DateFair ValueNon-vested at December 31, 2016 927,082 $11.19Granted 342,454 13.70Vested (392,735) 11.96Forfeited (74,862) 12.96Non-vested at December 31, 2017 801,939 11.73At December 31, 2017, the total unrecognized compensation cost related to non-vested RSUs was $4.0 million, which will be recognized over a weighted-average period of 1.7 years. There was a $1.1 million decrease in excess tax benefits from RSUs recognized in equity in 2016 and none in 2015. Upon theadoption of changes issued by the FASB amending the accounting for stock-based compensation, the Company records any excess tax benefits or shortfallsas a component of income tax expense. See Note 1, Recently Adopted and Recently Issued Accounting Standards, for additional information.Stock Appreciation RightsThe Company's Board approves the granting of SARs to officers and certain key employees under the 2013 Plan. The SARs generally vest on a pro-rata basisfrom three to five years from the grant date or upon specified retirement or years of service criteria and expire no later than ten years after the grant date. Theexercise price of the SARs is equal to the fair value of Harsco common stock on the grant date. Upon exercise, shares of Company's common stock are issuedbased on the increase in the fair value of the Company's common stock over the exercise price of the SAR. SARs do not have an option for cash payment.During 2015, the Company issued SARs covering 532,615 shares in May under the 2013 Plan. During 2016, the Company issued SARS covering 554,719shares in May and 21,686 shares in November under the 2013 Plan. During 2017, the Company issued SARS covering 266,540 shares in March under the2013 Plan.The fair value of each SAR grant was estimated on the grant date using a Black-Scholes pricing model with the following assumptions: 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 3.39May 2016 Grant 1.39% —% 6.0 42.1% 7.00 2.93November 2016 Grant 1.74% —% 6.0 43.8% 12.25 5.38March 2017 Grant 2.17% —% 6.0 43.9% 13.70 6.13SARs activity for the years ended December 31, 2017 was as follows: Number of Shares Weighted AverageExercise Price Aggregate IntrinsicValue (in millions) (c)Outstanding, December 31, 2016 1,535,873 $15.81 $3.4Granted 266,540 13.70 Exercised (32,703) 10.73 Forfeited/Expired (90,434) 19.04 Outstanding, December 31, 2017 1,679,276 15.40 7.9(c)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.77Table of ContentsThe total intrinsic value of SARs exercised in 2017 was $0.3 million. No SARs were exercised in 2016 and 2015.The following table summarizes information concerning outstanding and exercisable SARs at December 31, 2017: SARs Outstanding SARs ExercisableRange of exercisableprices Vested Non-vested Weighted-AverageExercise Price perShare Weighted-AverageRemainingContractual Life inYears Number Exercisable Weighted-AverageExercise Price perShare$7.00 - $13.70 163,601 596,285 $9.40 8.65 163,601 $7.43$16.53 - $22.70 377,147 255,269 18.29 6.66 377,147 18.26$23.03 - $26.92 261,111 25,863 24.93 6.33 261,111 24.95 801,859 877,417 15.40 7.51 801,859 18.23Total compensation expense related to SARs was $2.0 million, $1.7 million and $1.2 million for the years ended December 31, 2017, 2016 and 2015,respectively. Vested and currently exercisable SARs have a weighted-average remaining contractual life of 7.51 years and an intrinsic value of $2.4 million atDecember 31, 2017 and total unrecognized compensation expense related to non-vested SARs was $2.1 million, which is expected to be recognized over aweighted average period of 1.7 years.Weighted-average grant date fair value of non-vested SARs for the year ended December 31, 2017 was as follows: Number of Shares Weighted-AverageGrant Date Fair ValueNon-vested shares, December 31, 2016 1,014,524 $3.84Granted 266,540 6.13Vested (280,510) 3.59Exercised (32,703) 3.11Forfeited (90,434) 5.96Non-vested shares, December 31, 2017 877,417 4.42Performance Share UnitsThe Company's Board approves the granting of PSUs to officers and certain key employees that may be earned based on the Company's total shareholderreturn over the three-year performance period. PSUs are paid out at the end of each performance period based on the Company’s performance, which ismeasured by determining the percentile rank of the total shareholder return of the Company's common stock in relation to the total shareholder return of aspecific peer group of companies. For PSUs issued in 2015, the peer group of companies utilized was the S&P Midcap 400 Index. For PSUs issued in 2016and 2017, the peer group of companies utilized is the S&P 600 Industrial Index. The payment of PSUs following the performance period will be based inaccordance with the scale set forth in the PSU 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, 2015, the Company granted 237,063 shares in May under the 2013 Plan. During the year ended December 31, 2016, theCompany granted 527,249 shares in May and 9,524 shares in November under the 2013 plan. During the year ended December 31, 2017 the Companygranted 286,251 shares in March under the 2013 Plan. The fair value of PSUs granted was estimated on the grant date using a Monte Carlo pricing modelwith the following assumptions: 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% 14.48May 2016 Grant 0.84% —% 2.65 33.3% 7.19November 2016 Grant 0.96% —% 2.14 35.2% 17.84March 2017 Grant 1.54% —% 2.83 34.2% 17.0578Table of ContentsTotal compensation expense related to PSUs was $3.5 million, $2.5 million and $1.4 million for the years ended December 31, 2017, 2016 and 2015,respectively. At December 31, 2017, total unrecognized compensation expense related to non-vested PSUs was $3.9 million, which is expected to berecognized over a weighted average period of 1.7 years.A summary of the Company's non-vested PSU activity during the years ending December 31, 2017 was as follows: Number of Shares Weighted-AverageGrant Date Fair ValueNon-vested shares, December 31, 2016 692,562 $9.25Granted 286,25117.05Forfeited (68,387)11.04Cancellations (d) (166,843) 14.48Non-vested shares, December 31, 2017 743,58310.91(d)The measurement period for PSUs issued in 2015 ended on December 31, 2017. The Company's total shareholder return compared to the peer group of companies resulted in noshares being issued because no PSUs were earned.Stock OptionsThe Company's Board approves the granting of incentive stock options and nonqualified stock options to officers, certain key employees and non-employeedirectors under the plans noted above. The stock options would generally vest three years from the grant date, which is the date the Board approved thegrants and expire no later than seven years after the grant date. The exercise price of the stock option would be fair value on the grant date. Upon exercise, anew share of Company common stock is issued for each stock option. Stock option activity for the years ended December 31, 2017 was as follows: Number of Shares Weighted AverageExercise Price AggregateIntrinsic Value(in millions)(e)Outstanding, December 31, 2016 55,000 $31.75 $—Forfeited (12,500) 31.75 —Outstanding, December 31, 2017 42,500 31.75 —(e)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.All Stock options are vested and there was no compensation expense related to stock options in 2017, 2016 and 2015. There were no stock options exercisedand no net cash proceeds from the exercise of stock options in 2017, 2016 and 2015.The following table summarizes information concerning outstanding and exercisable options at December 31, 2017: 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 42,500 — $31.75 0.1 42,500 $31.7514. 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 $275.4 million, $273.1 million and $232.5 million at December 31, 2017, 2016 and 2015, respectively. The increase at December 31, 2016primarily relates to letters of credit and issuance of surety bonds related to the SBB rail order in the Harsco Rail Segment. These standby letters of credit,bonds and bank guarantees are generally in force for up to 2 years. Certain issues have no scheduled expiration date. The Company pays fees to variousbanks and insurance companies that range from 0.4% to 3.5% per annum of the instrument's face value. If the Company were required to obtain replacementstandby letters of credit, bonds and bank guarantees at December 31, 2017 for those currently outstanding, it is the Company's opinion that the replacementcosts would be within the present fee structure.The Company has currency exposures in approximately 30 countries. The Company's primary foreign currency exposures during 2017 were in the EuropeanUnion, the U.K. and Brazil.79Table of ContentsOff-Balance Sheet Risk—Third-Party GuaranteesDuring 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 3 years at December 31, 2017. The maximum potential amount of futurepayments related to this guarantee is approximately $3 million at December 31, 2017. 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.Any liabilities related to the Company's obligation to stand ready to act on third-party guarantees are included, Other current liabilities or Other liabilities (asappropriate), on the Consolidated Balance Sheets. Any recognition of these liabilities did not have a material impact on the Company's financial position orresults of operations for 2017, 2016 or 2015.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.Derivative Instruments and Hedging ActivitiesThe Company uses derivative instruments, including foreign currency exchange forward contracts, interest rate swaps and cross-currency interest rate swaps("CCIRs"), to manage certain foreign currency and interest rate exposures. Derivative instruments are viewed as risk management tools by the Company andare 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 may be accounted for as cash flow hedges, as deemedappropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred in Accumulated othercomprehensive loss, a separate component of equity, and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedgedtransactions. 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: Asset Derivatives Liability Derivatives(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair ValueDecember 31, 2017 Derivatives designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $2,329 Other current liabilities $153Interest rate swaps Other current assets 464 Interest rate swaps Other assets 170 Other liabilities 1,368Total derivatives designated as hedging instruments $2,963 $1,521Derivatives not designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $2,915 Other current liabilities $6,970 Asset Derivatives Liability Derivatives(In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair ValueDecember 31, 2016 Derivatives designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $473 $166Cross-currency interest rate swaps Other current assets 514 —Total derivatives designated as hedging instruments $987 $166Derivatives not designated as hedging instruments:Foreign currency exchange forward contracts Other current assets $4,459 Other current liabilities $3,372All of the Company's derivatives are recorded on the Consolidated Balance Sheets at gross amounts and not offset. All of the Company's interest rate swaps,CCIRs and certain foreign currency exchange forward contracts are transacted under International Swaps and Derivatives Association ("ISDA")documentation. Each ISDA master agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets andliabilities subject to enforceable master netting arrangements resulted in a $0.2 million net liability at December 31, 2017. At December 31, 2016, sucharrangements did not result in a net asset or net liability.80Table of ContentsThe effect of derivative instruments on the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss):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, 2017:Foreign currency exchange forwardcontracts $3,547 Product revenues /Cost of services andproducts sold$(954) $— Interest rate swaps (734) — — Cross-currency interest rate swaps (205) Interest Expense1,002 Cost of services andproducts sold420(a) $2,608 $48 $420 Twelve Months Ended December 31, 2016:Foreign currency exchange forwardcontracts $2,294 Cost of services andproducts sold$(410) $— Cross-currency interest rate swaps (1,549) — Cost of services andproducts sold4,042(a) $745 $(410) $4,042 Twelve Months Ended December 31, 2015:Foreign currency exchange forwardcontracts $2,479 Cost of services andproducts sold$53 $— Cross-currency interest rate swaps 9,012 — Cost of services andproducts sold30,359(a) $11,491 $53 $30,359 (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 Gain (Loss) Recognized in Income on Derivative for theTwelve Months Ended December 31(b)(In thousands) 2017 2016 2015Foreign currency exchange forward contracts Cost of services and products sold $(23,572) $15,875 $(158)(b)These gains (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.81Table of ContentsThe 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.The following tables summarize, by major currency, the contractual amounts of the Company's foreign currency exchange forward contracts in U.S. dollars.The "Buy" amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies and the "Sell" amounts represent the U.S. dollarequivalent of commitments to sell foreign currencies. The recognized gains and losses offset amounts recognized in cost of services and products soldprincipally as a result of intercompany or third-party foreign currency exposures.Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, 2017:(In thousands) Type U.S. DollarEquivalent Maturity RecognizedGain (Loss)British pounds sterling Sell $76,761 January 2018 $(769)British pounds sterling Buy 5,960 January 2018 72Euros Sell 314,649 January 2018 through December 2018 (4,916)Euros Buy 223,111 January 2018 through November 2018 4,564Other currencies Sell 39,889 January 2018 through June 2018 (1,049)Other currencies Buy 11,487 January 2018 219Total $671,857 $(1,879)Contracted Amounts of Foreign Currency Exchange Forward Contracts Outstanding at December 31, 2016:(In thousands) Type U.S. DollarEquivalent Maturity RecognizedGain (Loss)British pounds sterling Sell $55,120 January 2017 $(228)British pounds sterling Buy 827 March 2017 (14)Euros Sell 326,797 January 2017 through December 2017 628Euros Buy 171,578 January 2017 through January 2018 (468)Other currencies Sell 43,455 January 2017 through September 2017 1,477Other currencies Buy 3,106 March 2017 (1)Total $600,883 $1,394In 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 $17.4 million, pre-tax net losses of $37.5 million and pre-tax net gains of $2.7 million related to hedges of netinvestments during 2017, 2016 and 2015, respectively, in Accumulated other comprehensive loss.Interest Rate SwapsThe Company uses interest rate swaps in conjunction with certain debt issuances in order to secure a fixed interest rate. The interest rate swaps are recordedon the Consolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps’ interest spread and changes in the creditworthiness of the counter-parties recorded in Accumulated other comprehensive loss. In January 2017, the Company entered into a series of interest rate swaps that cover the period from 2018 through 2021, and had the effect of converting$300.0 million of the Term Loan Facility from floating-rate to fixed-rate beginning in 2018. The fixed rates provided by the swaps replace the adjustedLIBOR rate in the interest calculation, ranging from 1.65% for 2018 to 2.71% for 2021.The following table indicates the notional amounts of the Company's interest rate swaps at December 31, 2017: AnnualNotional Amount Interest Rates(In millions) Receive PayMaturing 2018 through 2021 $300.0 Floating U.S. dollar rate Fixed U.S. dollar rate82Table of ContentsCross-Currency Interest Rate SwapsThe Company may use CCIRs in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these CCIRs, theCompany receives 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 indollars and the local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. The CCIRs are recorded on theConsolidated Balance Sheets at fair value, with changes in value attributed to the effect of the swaps' interest spread and changes in the credit worthiness ofthe counter-parties recorded in Accumulated other comprehensive loss. Changes in value attributed to the effect of foreign currency fluctuations are recordedon the Consolidated Statements of Operations and offset currency fluctuation effects on the debt principal. The Company had no outstanding CCIRs atDecember 31, 2017.During November 2017, the Company's final CCIR matured. During March 2016, the Company effected the early termination of the British pound sterlingCCIR with an original maturity date of 2020. The Company received $16.6 million in cash related to this termination. During August 2015, the Companyeffected the early termination of the euro CCIR with an original maturity date of 2018. The Company received $75.1 million in cash related to thistermination. Euro denominated foreign currency exchange forward contracts were entered into later in 2015 that provide similar protection from changes inforeign exchange rates to the terminated CCIR contract. There was no gain or loss recorded on these terminations as any change in value attributable to theeffect of foreign currency translation was previously recognized on the Consolidated Statements of Operations.Fair 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:Level 2 Fair Value Measurements(In thousands) December 31 2017 December 31 2016Assets Foreign currency exchange forward contracts $5,244 $4,932Interest rate swaps 634 —Cross-currency interest rate swaps — 514Liabilities Foreign-currency forward exchange contracts 7,123 3,538Interest rate swaps 1,368 —83Table of ContentsThe 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, 2017 and 2016:Level 3 Liabilities—Unit Adjustment Liability (c) for the Twelve Months Ended December 31 (In thousands) 2016Balance at beginning of year $79,934Reduction in the fair value related to election not to make 2016 payments (19,145)Sale of equity interest in Brand (65,461)Change in fair value to the unit adjustment liability 4,672Balance at end of year $—(c)See Note 4, Equity Method Investments, for additional information.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, interest rate swaps and CCIRs are based upon pricing models using market-based inputs (Level 2). Model inputs can be verified and valuation techniques do not involve significant management judgment.The 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, 2017 and 2016, the total fair value of long-term debt, including currentmaturities, was $599.1 million and $682.9 million, respectively, compared with a carrying value of $593.7 million and $673.4 million, respectively. Fairvalues for debt are based upon pricing models using market-based inputs (Level 2) for similar issues or on the current rates offered to the Company for debt ofthe same remaining 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 Segment. However, the Company's HarscoMetals & Minerals Segment and, to a lesser extent, the Harsco Rail Segment have several large customers throughout the world with significant accountsreceivable balances. Consolidation in the global 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.15. 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 2017, the Company had three reportable segments. These segments and the types ofproducts and services offered include the following:Harsco Metals & Minerals SegmentGlobal expertise in providing on-site services for material logistics, product quality improvement and resource recovery from 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; high-security fencing and boilers and water heaters. Major customers includeindustrial plants and the non-residential, commercial and public construction and retrofit markets; and the natural gas, natural gas processing andpetrochemical industries.84Table of ContentsHarsco Rail SegmentThis Segment manufactures railway track maintenance and safety equipment and provides track maintenance services. The major customers include privateand government-owned railroads and urban mass transit systems worldwide.Other InformationThe measurement basis of segment profit or loss is operating income (loss). There are no significant inter-segment sales. Corporate assets, at December 31,2017 and 2016, include principally cash, prepaid taxes, fair value of derivative instruments and U.S. deferred income taxes. Countries with revenues fromunaffiliated customers or net property, plant and equipment of ten percent or more of the consolidated totals (in at least one period presented) are as follows:Information by Geographic Area (a) Revenues from Unaffiliated Customers Year Ended December 31(In thousands) 2017 2016 2015U.S. $697,663 $614,327 $758,820U.K. 146,624 156,552 217,011All Other 762,775 680,344 747,261Totals including Corporate $1,607,062 $1,451,223 $1,723,092(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) 2017 2016 2015U.S. $120,555 $125,386 $142,506China 95,569 90,288 97,305Brazil 54,704 62,597 57,381All Other 208,919 211,984 266,843Totals including Corporate $479,747 $490,255 $564,035No single customer provided in excess of 10% of the Company's consolidated revenues in 2017, 2016 and 2015.In 2017 and 2016, the Harsco Metals & Minerals Segment had one customer and in 2015 two customers that each provided in excess of 10% of thisSegment's revenues under multiple long-term contracts at several mill sites. Should additional consolidations occur involving some of the steel industry'slarger companies which are customers of the Company, it would result in an increase in concentration of credit risk for the Company. The loss of any one ofthe contracts would not have a material adverse effect upon the Company's financial position or cash flows; however, it could have a significant effect onquarterly or annual results of operations.In 2017, the Harsco Industrial Segment had one customer, in 2016 no customers and in 2015 two customers that provided in excess of 10% of the Segment'srevenues. In 2017 and 2016, the Harsco Rail Segment had one customer and in 2015 two customers 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.Operating Information by Segment: Twelve Months Ended December 31(In thousands) 2017 2016 2015Revenues Harsco Metals & Minerals $1,011,328 $965,540 $1,106,162Harsco Industrial 299,592 247,542 357,256Harsco Rail 295,999 238,107 259,674Corporate 143 34 —Total Revenues $1,607,062 $1,451,223 $1,723,092 85Table of Contents Twelve Months Ended December 31(In thousands) 2017 2016 2015Operating Income (Loss) Harsco Metals & Minerals $105,257 $81,634 $26,289Harsco Industrial 35,174 23,182 57,020Harsco Rail 32,091 (17,527) 50,896Corporate (29,723) (23,820) (45,669)Total Operating Income $142,799 $63,469 $88,536Total Assets Harsco Metals & Minerals $1,184,280 $1,181,602 $1,286,336Harsco Industrial 113,410 107,987 119,830Harsco Rail 237,135 204,477 219,753Corporate 43,860 87,272 425,968Total Assets $1,578,685 $1,581,338 $2,051,887Depreciation and Amortization Harsco Metals & Minerals $112,329 $120,611 $136,579Harsco Industrial 7,360 7,223 6,266Harsco Rail 4,221 5,383 6,093Corporate 6,027 8,269 7,537Total Depreciation and Amortization $129,937 $141,486 $156,475Capital Expenditures Harsco Metals & Minerals $87,526 $62,322 $99,563Harsco Industrial 6,895 5,118 17,382Harsco Rail 2,403 1,696 1,957Corporate 1,490 204 4,650Total Capital Expenditures $98,314 $69,340 $123,552Reconciliation of Segment Operating Income to Consolidated Income (Loss) From Continuing Operations Before Income Taxes and Equity Income: Twelve Months Ended December 31(In thousands) 2017 2016 2015Segment operating income $172,522 $87,289 $134,205General Corporate expense (29,723) (23,820) (45,669)Operating income from continuing operations 142,799 63,469 88,536Interest income 2,469 2,475 1,574Interest expense (47,552) (51,584) (46,804)Loss on early extinguishment of debt (2,265) (35,337) —Change in fair value to the unit adjustment liability and loss on dilution and sale of equitymethod investment — (58,494) (8,491)Income (loss) from continuing operations before income taxes and equity income $95,451 $(79,471) $34,81586Table of ContentsInformation about Products and Services: Revenues from Unaffiliated Customers Twelve Months Ended December 31(In thousands) 2017 2016 2015Key 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 $1,011,328 $965,540 $1,106,162Railway track maintenance and safety equipment and track maintenance services 295,999 238,107 259,674Air-cooled heat exchangers 144,955 93,616 186,243Industrial grating and fencing products 116,598 115,914 129,869Heat transfer products 38,039 38,012 41,144General Corporate 143 34 —Consolidated Revenues $1,607,062 $1,451,223 $1,723,09216. Other Expenses, NetDuring 2017, 2016 and 2015, the Company recorded pre-tax other expenses, net of $4.6 million, $12.6 million and $30.6 million, respectively. The majorcomponents of this Consolidated Statements of Operations caption are as follows:(In thousands) 2017 2016 2015Net gains $(5,136) $(1,764) $(10,613)Employee termination benefit costs 7,350 10,777 14,914Other costs to exit activities 1,633 440 13,451Impaired asset write-downs 1,025 399 8,170Foreign currency gains related to Harsco Rail Segment advances on contracts — — (10,940)Harsco Metals & Minerals Segment separation costs — 3,235 9,922Subcontractor settlement — — 4,220Other expense (231) (467) 1,449Total $4,641 $12,620 $30,573Net GainsNet gains result from the sales of redundant properties (primarily land, buildings and related equipment) and non-core assets. In 2017, gains related to assetssold principally in Latin America and Western Europe. In 2016, gains related to assets sold principally in Western Europe, North America and Latin America.In 2015, gains related to assets sold principally in North America and Latin America. Net Gains(In thousands) 2017 2016 2015Harsco Metals & Minerals Segment $(1,354) $(1,828) $(7,059)Harsco Industrial Segment (3,782) 64 (3,554)Total $(5,136) $(1,764) $(10,613)Cash proceeds associated with these gains are included in Proceeds from sales of assets, in the cash flows from investing activities section of the ConsolidatedStatements of Cash Flows.87Table of ContentsEmployee 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 2017 related principally to the Harsco Metals & Minerals Segment, primarily in Latin America and WesternEurope. The employee termination benefits costs in 2016 related principally to the Harsco Metals & Minerals Segment, including a probable site exit and theimpact of Harsco Metals & Minerals Segment's Improvement Plan ("Project Orion"), primarily in Western Europe, Latin America and North America. Theemployee termination benefits costs in 2015 related principally to the Harsco Metals & Minerals Segment, including the impact of Project Orion, primarily inWestern Europe, North America and Asia Pacific. Employee Termination Benefit Costs(In thousands) 2017 2016 2015Harsco Metals & Minerals Segment $4,411 $8,491 $11,454Harsco Industrial Segment 617 947 561Harsco Rail Segment 1,133 297 145Corporate 1,189 1,042 2,754Total $7,350 $10,777 $14,914Other 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 2017, $1.6 million of exit costs were incurred, principally in Western Europe and North America. In 2016, $0.4 million of exit costs were incurred,principally in North America and Western Europe. 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 several years, related tothe estimated cost of processing and disposal. The Company's Bahrain operations are operated under a strategic venture for which its strategic venture partnerhas a 35% minority interest. Accordingly, the net impact of the charge to the Company's net income (loss) attributable to the Company was $4.6 million. Costs to Exit Activities(In thousands) 2017 2016 2015Harsco Metals & Minerals Segment $706 $220 $12,638Harsco Industrial Segment 371 40 —Corporate 556 180 813Total $1,633 $440 $13,45188Table of ContentsImpaired 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, Other, net, on theConsolidated Statements of Cash Flows as adjustments to reconcile net income (loss) to net cash provided by operating activities.In 2017, $1.0 million of impaired asset write-downs were incurred principally in the Harsco Metals & Minerals Segment, mostly in the Asia Pacific and NorthAmerica regions. In 2016, $0.4 million of impaired asset write-downs were incurred principally in the Harsco Metals & Minerals Segment, mostly in the AsiaPacific region. In 2015, $8.2 million of impaired asset write-downs were incurred in the Harsco Metals & Minerals Segment, mostly in North America, MiddleEast and Africa and the Asia Pacific regions. Impaired Asset Write-downs(In thousands) 2017 2016 2015Harsco Metals & Minerals Segment $706 $399 $8,170Harsco Industrial Segment 151 — —Corporate 168 — —Total $1,025 $399 $8,170Foreign 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 SBB. Harsco Metals & Minerals Segment Separation CostsThe Company has previously announced its intention to pursue strategic options for the separation of the Harsco Metals & Minerals Segment from the rest ofthe Company. In 2016 and 2015, the Company incurred $3.2 million and $9.9 million of expenses related to the strategic review of this initiative,respectively. After carefully studying alternatives to separate the Harsco Metals & Minerals Segment from the Company’s other businesses, and consideringthe future benefits of the ongoing business transformation and the expected recovery in the Company’s end markets, the Company has concluded such aseparation will not be pursued for the foreseeable future.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.89Table of Contents17. 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, 2017 and 2016 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, 2015 $(125,561) $(400) $(389,696) $(31) $(515,688)Other comprehensive income (loss) beforereclassifications (53,301)(a)(1,650)(b)(86,181)(c)26 (141,106)Realized (gains) losses reclassified fromaccumulated other comprehensive loss inconnection with loss on dilution of equity methodinvestment (See Note 4, Equity MethodInvestments) 28,641 1,636(1,534)— 28,743Amounts reclassified from accumulated othercomprehensive loss, net of tax 1,157 (263) 16,011 — 16,905Other comprehensive income (loss) from equitymethod investee 1,943 (405) 306 — 1,844Total other comprehensive income (loss) (21,560) (682) (71,398) 26 (93,614)Less: Other comprehensive loss attributable tononcontrolling interests 2,587 (7) — — 2,580Other comprehensive income (loss) attributable toHarsco Corporation (18,973) (689) (71,398) 26 (91,034)Balance at December 31, 2016 $(144,534) $(1,089) $(461,094) $(5) $(606,722) 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, 2016 $(144,534) $(1,089) $(461,094) $(5) $(606,722)Other comprehensive income (loss) beforereclassifications 36,011(a)1,967(b)5,143(c)22 43,143Amounts reclassified from accumulated othercomprehensive loss, net of tax — (70) 20,111 — 20,041Total other comprehensive income (loss) 36,011 1,897 25,254 22 63,184Less: Other comprehensive loss attributable tononcontrolling interests (3,044) — — — (3,044)Other comprehensive income (loss) attributable toHarsco Corporation 32,967 1,897 25,254 22 60,140Balance at December 31, 2017 $(111,567) $808 $(435,840) $17 $(546,582)(a)Principally foreign currency fluctuation.(b)Principally net change from periodic revaluations.(c)Principally changes due to annual actuarial remeasurements.90Table of ContentsAmounts reclassified from accumulated other comprehensive loss for 2017 and 2016 are as follows: Year EndedDecember 31 2017 Year EndedDecember 312016 Affected Caption on the Consolidated Statements ofOperations(In thousands) Amortization of defined benefit pension items (d):Actuarial losses $10,174 $8,490 Selling, general and administrative expensesActuarial losses 11,811 9,005 Cost of services and products soldPrior-service costs (58) (11) Selling, general and administrative expensesPrior-service costs 277 263 Cost of services and products soldSettlement/curtailment losses — 355 Selling, general and administrative expensesTotal before tax 22,204 18,102 Tax benefit (2,093) (2,091) Total reclassification of defined benefit pension items,net of tax $20,111 $16,011 Amortization of cash flow hedging instruments:Foreign currency exchange forward contracts $(936) $(408) Product revenuesForeign currency exchange forward contracts (18) (2) Cost of services and products soldCross-currency interest rate swaps 1,002 — Interest expenseTotal before tax 48 (410) Tax benefit (118) 147 Total reclassification of cash flow hedginginstruments $(70) $(263) Recognition of cumulative foreign exchange translation adjustments:Foreign exchange translation adjustments, before tax $— $1,157 Other expenses, netTax benefit — — Total reclassification of cumulative foreign exchangetranslation adjustments $— $1,157 (d)These accumulated other comprehensive loss components are included in the computation of NPPC. See Note 9, Employee Benefit Plans, for additional information.Realized (gains) losses reclassified from accumulated other comprehensive loss in connection with loss on dilution and sale of equity method investment areas follows:(In thousands) Twelve MonthsEnded Affected Caption on theConsolidated Statements of Operations December 31 2016 Foreign exchange translation adjustments $45,405 Change in fair value to the adjustment liability and loss on dilution and sale ofequity method investmentCash flow hedging instruments 2,593 Change in fair value to the adjustment liability and loss on dilution and sale ofequity method investmentDefined benefit pension obligations (2,433) Change in fair value to the adjustment liability and loss on dilution and sale ofequity method investmentTotal before tax 45,565 Tax benefit (e) (16,822) Total amounts reclassified from accumulated othercomprehensive loss in connection with loss on dilutionand sale of equity method investment $28,743 (e)For the year ended December 31, 2016 the tax benefit was not recognized on the Consolidated Statement of Operations since a valuation allowance was established against theresulting deferred tax assets. See Note 10, Income Taxes, for additional information.91Table of ContentsTwo-Year Summary of Quarterly Results (Unaudited)(In millions, except per share amounts) 2017 (a)Quarterly First Second Third Fourth Revenues $372.5 $394.9 $384.7 $455.0 Gross profit (b) 84.8 101.5 94.9 105.2 Net income (loss) attributable to Harsco Corporation 8.9 19.0 13.3 (33.4) Basic income (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.12 $0.23 $0.17 $(0.42) Discontinued operations (c) — 0.01 — 0.01 Basic income (loss) per share attributable toHarsco Corporation common stockholders $0.11(d)$0.24 $0.16(d)$(0.41) Diluted income (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $0.11 $0.22 $0.16 $(0.42) Discontinued operations (c) — — — 0.01 Diluted income (loss) per share attributable toHarsco Corporation common stockholders $0.11 $0.23(d)$0.16 $(0.41) 2016 (a)Quarterly First Second Third Fourth Revenues $353.3 $369.9 $367.8 $360.2 Gross profit (b) 70.2 53.0 81.5 76.0 Net loss attributable to Harsco Corporation (10.9) (26.2) (33.0) (15.6) Basic income (loss) per share attributable to Harsco Corporation common stockholders:Continuing operations $(0.13) $(0.35) $(0.41) $(0.19) Discontinued operations (c) — 0.02 — (0.01) Basic loss per share attributable to HarscoCorporation common stockholders $(0.14)(d)$(0.33) $(0.41) $(0.19)(d)Diluted loss per share attributable to Harsco Corporation common stockholders:Continuing operations $(0.13) $(0.35) $(0.41) $(0.19) Discontinued operations (c) — 0.02 — (0.01) Diluted loss per share attributable to HarscoCorporation common stockholders $(0.14)(d)$(0.33) $(0.41) $(0.19)(d)(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.92Table of ContentsItem 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, 2017. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that thedisclosure controls and procedures were effective at December 31, 2017. 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 2017.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, 2017 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.93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 2018 Annual Meeting ofStockholders (the "2018 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, 2017.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 2017Compensation" and "Non-Employee Director Compensation" of the 2018 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 2018 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 2018 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, 2017)" of the 2018 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 2018 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 2018 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 the2018 Proxy Statement.94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 Data402. 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 2017, 2016 and 201596Financial 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.95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 2017: Allowance for Doubtful Accounts $11,800 $5,346 $533 $(12,948)(a)$4,731Deferred Tax Assets—Valuation Allowance 146,097 33,041 10,097 (15,009)(b)174,226For the year 2016: Allowance for Doubtful Accounts $25,649 $(38) $(320) $(13,491)(a)$11,800Deferred Tax Assets—Valuation Allowance 110,680 38,490 (6,323) 3,250 146,097For 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)(b)110,680(a)Includes the write-off of previously reserved accounts receivable balances.(b)Includes a decrease of $11.6 million and $16.1 million for 2017 and 2015, respectively, related to pension adjustments recorded through Accumulated other comprehensive loss;and a $4.6 million decrease related to a U.S. tax rate change for 2017 and $6.3 million decrease related to a U.K. tax rate change for 2015.96Table of ContentsListing of Exhibits Filed with Form 10-K Description of Exhibit3(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 Exhibit 3.A to the Company's Annual Report onForm 10-K for the period 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 Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4(h) to the Company's Registration Statement onForm S-3 dated December 15, 1994, Registration No. 33-56885).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).10(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).10(a)(vi) Amendment and Restatement Agreement and First Amendment to Guarantee and Collateral Agreement, dated as of November 2, 2016,among the Company, the subsidiaries of the Company party thereto, Citibank N.A., as administrative agent and collateral agent and thelenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed November 8, 2016, Commission fileNo. 001-03970).10(a)(vii) Amendment No. 1, dated December 8, 2017, among Harsco Corporation, the subsidiaries of the Company party thereto, Citibank N.A.,as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to the Company's Current Reporton Form 8-K dated December 13, 2017, 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).97Table of Contents Description of Exhibit10(d) 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(e) 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(f) 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(g) 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(h) Amendment No. 1 to the Harsco Corporation 2013 Equity and Incentive Compensation Plan (incorporated by reference to theCompany's Current Report on Form 8-K dated May 1, 2017, Commission File Number 001-03970).10(i) 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(j) 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(k)(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(k)(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(l) 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(m)(i) 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).10(m)(ii) First Amendment to the Harsco Corporation Deferred Compensation Plan for Non Employee Directors (incorporated by reference to theCompany's Annual Report on Form 10-K for the period ended December 31, 2016, Commission File Number 001-03970).10(n) 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(o) 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(p) 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(q) 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(r) 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(s) 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(t) 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(u) 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(v) 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(w) 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).98Table of Contents Description of Exhibit10(x) 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(y) 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).10(z) Separation Agreement and General Release, dated August 15, 2016, between Harsco Corporation and Scott W. Jacoby (incorporated byreference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2016, Commission File Number 001-03970).10(aa)(i) 2016 Non-Employee Directors' Long-Term Equity Compensation Plan (incorporated by reference to the Company's Form S-8 dated May6, 2016, Commission File Number 001-03970).10(aa)(ii) First Amendment to 2016 Non-Employee Directors' Long-Term Equity Compensation Plan (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended June 30, 2016, Commission File Number 001-03970).10(bb) Form of Restricted Stock Units Agreement (Non-Employee Director) (incorporated by reference to the Company's Quarterly Report onForm 10-Q for the period ended June 30, 2016, Commission File Number 001-03970).10(cc) Form of Performance Share Units Agreement (effective for grants on or after April 26, 2016) (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended March 31, 2016, Commission File Number 001-03970).10(dd) Form of Restricted Stock Units Agreement (effective for grants on or after April 26, 2016) (incorporated by reference to the Company'sQuarterly Report on Form 10-Q for the period ended March 31, 2016, Commission File Number 001-03970).10(ee) Form of Stock Appreciation Rights Agreement (effective for grants on or after April 26, 2016) (incorporated by reference to theCompany's Quarterly Report on Form 10-Q for the period ended March 31, 2016, Commission File Number 001-03970).10(ff) Form of Performance Share Units Agreement (effective for grants on or after February 16, 2017).10(gg) Form of Restricted Stock Units Agreement (effective for grants on or after February 16, 2017).10(hh) Form of Stock Appreciation Rights Agreement (effective for grants on or after February 16, 2017).Director Indemnity Agreements10(ii) Form of Director Indemnification Agreement. 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, 2017, filedwith the Securities and Exchange Commission on February 22, 2018, formatted in XBRL (eXtensible Business Reporting Language):(i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Cash Flows;(iv) the Consolidated Statements of Changes in Equity; (v) the Consolidated Statements of Comprehensive Income (Loss) and (vi) theNotes to Consolidated Financial Statements.Exhibits other than those listed above are omitted for the reason that they are either not applicable or not material.Item 16. Form 10-K Summary.None.99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 22, 2018 /s/ PETER F. MINAN Peter F. MinanSenior Vice President and Chief Financial Officer(Principal Financial Officer) DATEFebruary 22, 2018 /s/ SAMUEL C. FENICE Samuel C. FeniceVice President and Corporate Controller(Principal 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 22, 2018F. Nicholas Grasberger, III /s/ PETER F. MINAN Senior Vice President and Chief Financial Officer (PrincipalFinancial and Accounting Officer) February 22, 2018Peter F. Minan /s/ DAVID C. EVERITT Non-Executive Chairman and Director February 22, 2018David C. Everitt /s/ JAMES F. EARL Director February 22, 2018James F. Earl /s/ KATHY G. EDDY Director February 22, 2018Kathy G. Eddy /s/ STUART E. GRAHAM Director February 22, 2018Stuart E. Graham /s/ TERRY D. GROWCOCK Director February 22, 2018Terry D. Growcock /s/ ELAINE LA ROCHE Director February 22, 2018Elaine La Roche /s/ MARIO LONGHI Director February 22, 2018Mario Longhi Director Edgar M. Purvis, Jr. /s/ PHILLIP C. WIDMAN Director February 22, 2018Phillip C. Widman 100Exhibit 10(ii)INDEMNIFICATION AGREEMENTThis INDEMNIFICATION AGREEMENT is made as of the __ day of ______, ____, by and between Harsco Corporation, aDelaware corporation (the "Corporation"), and the individual whose name appears on the signature page hereof (such individual beingreferred to herein as the "Indemnified Representative" and, together with other persons who may execute similar agreements, as"Indemnified Representatives").WHEREAS, the Indemnified Representative currently is and will be in the future serving in one or more capacities as adirector, officer, employee, or agent of the Corporation or, at the request of the Corporation, as a director, officer, employee, agentfiduciary, or trustee of, or in a similar capacity for, another corporation, partnership, joint venture, trust, employee benefit plan, or otherentity, and in so doing is and will be performing a valuable service to or on behalf of the Corporation;WHEREAS, the Board of Directors of the Corporation has determined that, in order to attract and retain qualified individuals,the Corporation will utilize commercially reasonable efforts to maintain, at its sole expense, liability insurance to protect personsserving the Corporation and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary andwide-spread practice among United States-based corporations and other business enterprises, the Corporation believes that, givencurrent market conditions and trends, such insurance may be available to it in the future only at higher premiums and with moreexclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are beingincreasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would havebeen brought only against the Corporation or business enterprise itself;WHEREAS, the Indemnified Representative is willing to continue to serve and to undertake additional duties andresponsibilities for and on behalf of the Corporation on the condition that he be indemnified contractually by the Corporation; andWHEREAS, as an inducement to the Indemnified Representative to continue to serve the Corporation, and in consideration forsuch continued service, the Corporation has agreed to indemnify the Indemnified Representative upon the terms set forth herein.NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legallybound hereby, the Corporation and the Indemnified Representative agree as follows:1. Agreement To Serve. The Indemnified Representative agrees to serve or continue to serve for or on behalf of theCorporation in each Official Capacity (as hereinafter defined) held now or in the future for so long as the IndemnifiedRepresentative is duly elected or appointed or until such time as the Indemnified Representative tenders a resignation in writing.This Agreement shall not be deemed an employment contract between the Corporation or any of its subsidiaries and anyIndemnified Representative who is an employee of the Corporation or any of its subsidiaries. The Indemnified Representativespecifically acknowledges that the Indemnified Representative's employment with the Corporation or any of its subsidiaries, ifany, is at will, and that the Indemnified Representative may be discharged at any time for any reason, with or without cause,except as may be otherwise provided in any written employment contract between the Indemnified Representative and theCorporation or any of its subsidiaries, other applicable formal severance policies duly adopted by the board of directors of theIndemnified Representative's employer, or, with respect to service as a Director of the Corporation, by the Corporation'sCertificate of Incorporation, By-Laws, and the Delaware General Corporation Law. The foregoing notwithstanding, thisAgreement shall continue in force after the Indemnified Representative has ceased to serve in any Official Capacity for or onbehalf of the Corporation or any of its subsidiaries.2. Indemnification.(a) Except as provided in Sections 3 and 5 hereof, the Corporation shall indemnify the IndemnifiedRepresentative against any Liability (as hereinafter defined) incurred by or assessed against the Indemnified Representative inconnection with any Proceeding (as hereinafter defined) in which the Indemnified Representative may be involved, as a partyor otherwise, by reason of the fact that the Indemnified Representative is or was serving in any Official Capacity held now or inthe future, including, without limitation, any Liability resulting from actual or alleged breach or neglect of duty, error,misstatement, misleading statement, omission, negligence, act giving rise to strict or product liability, act giving rise to liabilityfor environmental contamination, or other act or omission, whether occurring prior to or after the date of this Agreement. Asused in this Agreement:(i) "Liability" means any damage, judgment, amount paid in settlement, fine, penalty, punitive damage,or expense of any nature (including attorneys' fees and expenses);(ii) "Proceeding" means any threatened, pending, or completed action, suit, appeal, arbitration, or otherproceeding of any nature, whether civil, criminal, administrative, or investigative, whether formal or informal, andwhether brought by or in the right of the Corporation, a class of its security holders, or any other party; and(iii) "Official Capacity" means service to the Corporation as a director, officer, employee, or agent or,at the request of the Corporation, as a director, officer, employee, agent, fiduciary, or trustee of, or in a similar capacityfor, another corporation, partnership, joint venture, trust, employee benefit plan (including a plan qualified under theEmployee Retirement Income Security Act of 1974), or other entity.(b) Notwithstanding Section 2(a) hereof, except for a Proceeding brought pursuant to Section 5(d) of thisAgreement, the Corporation shall not indemnify the Indemnified Representative under this Agreement for any Liabilityincurred in a Proceeding initiated by the Indemnified Representative unless the Proceeding is authorized, either before or aftercommencement of the Proceeding, by the majority vote of a quorum of the Board of Directors of the Corporation. Anaffirmative defense or counterclaim of an Indemnified Representative shall not be deemed to constitute a Proceeding initiatedby the Indemnified Representative.3. Exclusions.(a) The Corporation shall not be liable under this Agreement to make any payment in connection with anyLiability incurred by the Indemnified Representative:(i) to the extent payment for such Liability is made to the Indemnified Representative under aninsurance policy obtained by the Corporation;(ii) to the extent payment is made to the Indemnified Representative for such Liability by theCorporation under its Certificate of Incorporation, By-Laws, the Delaware General Corporation Law, or otherwise thanpursuant to this Agreement;(iii) to the extent such Liability is determined in a final determination pursuant to Section 5(d) hereof tobe based upon or attributable to the Indemnified Representativegaining any personal profit to which such Indemnified Representative was not legally entitled;(iv) for any claim by or on behalf of the Corporation for recovery of profits resulting from the purchaseand sale or sale and purchase by such Indemnified Representative of equity securities of the Corporation pursuant toSection 16(b) of the Securities Exchange Act of 1934, as amended;(v) for which the conduct of the Indemnified Representative has been determined in a finaldetermination pursuant to Section 5(d) hereof to constitute bad faith or active and deliberate dishonesty, in either suchcase material to the cause of action or claim at issue in the Proceeding; or(vi) to the extent such indemnification has been determined in a final determination pursuant to Section5(d) hereof to be unlawful.(b) Any act, omission, liability, knowledge, or other fact of or relating to any other person, including any otherperson who is also an Indemnified Representative, shall not be imputed to the Indemnified Representative for the purposes ofdetermining the applicability of any exclusion set forth herein.(c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent shall not, of itself, create a presumption that the Indemnified Representative is not entitled toindemnification under this Agreement.4. Advancement of Expenses. The Corporation shall pay any Liability in the nature of an expense (includingattorneys' fees and expenses) incurred in good faith by the Indemnified Representative in advance of the final disposition of aProceeding within thirty (30) days of receipt of a demand for payment by the Indemnified Representative; provided, however,that the Indemnified Representative shall repay such amount if it shall ultimately be determined, pursuant to Section 5(d)hereof, that the Indemnified Representative is not entitled to be indemnified by the Corporation pursuant to this Agreement.The financial ability of the Indemnified Representative to repay an advance shall not be a prerequisite to the making of suchadvance.5. Indemnification Procedure.(a) The Indemnified Representative shall use his best efforts to notify promptly the Secretary of theCorporation of the commencement of any Proceeding or the occurrence of any event which might give rise to a Liability underthis Agreement, but the failure to so notify the Corporation shall not relieve the Corporation of any obligation which it mayhave to the Indemnified Representative under this Agreement or otherwise.(b) The Corporation shall be entitled, upon notice to the Indemnified Representative, to assume the defense ofany Proceeding with counsel reasonably satisfactory to the Indemnified Representative involved in such Proceeding or, if therebe more than one (1) Indemnified Representative involved in such Proceeding, to a majority of the Indemnified Representativesinvolved in such Proceeding. If, in accordance with the foregoing, the Corporation defends the Proceeding, the Corporationshall not be liable for the expenses (including attorneys' fees and expenses) of the Indemnified Representative incurred inconnection with the defense of such Proceeding subsequent to the required notice, unless (i) such expenses (includingattorneys' fees) have been authorized by the Corporation or (ii) the Corporation shall not in fact have employed counselreasonably satisfactory to such Indemnified Representative, or to the majority of Indemnified Representatives if more than one(1) is involved, to assume the defense of such Proceeding. The foregoing notwithstanding, the Indemnified Representative mayelect to retain counsel at the Indemnified Representative's own cost and expense to participate in the defense of suchProceeding.(c) The Corporation shall not be required to obtain the consent of the Indemnified Representative to thesettlement of any Proceeding which the Corporation has undertaken to defend if the Corporation assumes full and soleresponsibility for such settlement and the settlement grants the Indemnified Representative a complete and unqualified release inrespect of the potential Liability. The Corporation shall not be liable for any amount paid by an Indemnified Representative insettlement of any Proceeding that is not defended by the Corporation, unless the Corporation has consented to such settlement,which consent shall not be unreasonably withheld.(d) Except as set forth herein, any dispute concerning the right to indemnification under this Agreement andany other dispute arising hereunder, including but not limited to matters of validity, interpretation, application, and enforcement,shall be determined exclusively by and through final and binding arbitration in Camp Hill, Pennsylvania, each party heretoexpressly and conclusively waiving its or his right to proceed to a judicial determination with respect to suchmatter; provided, however, that in the event that a claim for indemnification against liabilities arising under the Securities Act of1933 (the "Act") (other than the payment by the Corporation of expenses incurred or paid by a director, officer, or controllingperson of the Corporation in the successful defense of any action, suit, or proceeding) is asserted by a director, officer, orcontrolling person in connection with securities being registered under the Act, the Corporation will, unless in the opinion of itscounsel the matter has been settled by controlling precedent, submit to a court of competent jurisdiction the question whethersuch indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication ofsuch issue. The arbitration shall be conducted in accordance with the commercial arbitration rules then in effect of theAmerican Arbitration Association before a panel of three (3) arbitrators, the first of whom shall be selected by the Corporation,the second of whom shall be selected by the Indemnified Representative, and the third of whom shall be selected by the othertwo (2) arbitrators. If for any reason arbitration under the arbitration rules of the American Arbitration Association cannot beinitiated, the necessary arbitrator or arbitrators shall be selected by the presiding judge of the state court of general jurisdiction inCumberland County, Pennsylvania. Each arbitrator selected as provided herein is required to be serving or to have served as adirector or an executive officer of a corporation whose shares of common stock, during at least one year of such service, werequoted in the NASDAQ National Market System or listed on the New York Stock Exchange or the American StockExchange. The Corporation shall reimburse the Indemnified Representative for the expenses (including attorneys' fees)incurred in prosecuting or defending such arbitration to the full extent of such expenses if the Indemnified Representative isawarded 50% or more of the monetary value of his claim or, if not, to the extent such expenses are determined by the arbitratorsto be allocable to the Corporation. It is expressly understood and agreed by the parties that a party may compel arbitrationpursuant to this Section 5(d) through an action for specific performance and that any award entered by the arbitrators may beenforced, without further evidence or proceedings, in any court of competent jurisdiction.(e) Upon payment under this Agreement to the Indemnified Representative with respect to any Liability, theCorporation shall be subrogated to the extent of such payment to all of the rights of the Indemnified Representative to recoveragainst any person with respect to such Liability, and the Indemnified Representative shall execute all documents andinstruments required and shall take such other actions as may be necessary to secure such rights, including the execution ofsuch documents as may be necessary for the Corporation to bring suit to enforce such rights.6. Contribution. If the indemnification provided for in this Agreement is unavailable for any reason to hold harmlessan Indemnified Representative in respect of any Liability or portion thereof, the Corporation shall contribute to such Liability orportion thereof in such proportion as is appropriate to reflect the relative benefits received by the Corporation and theIndemnified Representative from the transaction giving rise to the Liability.7. Non-Exclusivity. The rights granted to the Indemnified Representative pursuant to this Agreement shall not bedeemed exclusive of any other rights to which the Indemnified Representative may be entitled under statute, the provisions ofany certificate of incorporation, by-laws, or agreement, a vote of stockholders or directors, or otherwise, both as to action in anOfficial Capacity and in any other capacity.8. Reliance on Provisions. The Indemnified Representative shall be deemed to be acting in any Official Capacity inreliance upon the rights of indemnification provided by this Agreement. Without limiting the generality of the foregoing, theCorporation and the Indemnified Representative acknowledge the existence of Article III, Section 9 of the Corporation's By-Laws as restated and adopted by the Board of Directors on March 15, 1990 and effective April 25, 1990, and confirm that theIndemnified Representative is also acting in reliance thereon.9. Severability and Reformation. Any provision of this Agreement which is determined to be invalid or unenforceablein any jurisdiction or under any circumstance shall be ineffective only to the extent of such invalidity or unenforceability andshall be deemed reformed to the extent necessary to conform to the applicable law of such jurisdiction and still give maximumeffect to the intent of the parties hereto. Any such determination shall not invalidate or render unenforceable the remainingprovisions hereof and shall not invalidate or render unenforceable such provision in any other jurisdiction or under any othercircumstances.10. Notices. Any notice, claim, request, or demand required or permitted hereunder shall be in writing and shall bedeemed given if delivered personally or sent by telegram or by registered or certified mail, first class, postage prepaid: (i) if tothe Corporation, to Harsco Corporation, 350 Poplar Church Road, Camp Hill, Pennsylvania 17011, Attention: CorporateSecretary, or (ii) if to any Indemnified Representative, to the address of such Indemnified Representative listed on the signaturepage hereof, or to such other address as any party hereto shall have specified in a notice duly given in accordance with thisSection 10.11. Amendments; Binding Effect. No amendment, modification, termination, or cancellation of this Agreement shallbe effective as to the Indemnified Representative unless signed in writing by the Corporation and the IndemnifiedRepresentative. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to thebenefit of the Indemnified Representative's heirs, executors, administrators, and personal representatives.12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State ofDelaware, without regard to the conflict of laws provisions thereof.IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first set forth above.ATTEST: HARSCO CORPORATION WITNESS: INDEMNIFIED REPRESENTATIVE Exhibit 12HARSCO CORPORATIONComputation of Ratios of Earnings to Fixed Charges YEARS ENDED DECEMBER 31(In thousands)2017 (a) 2016 (a) 2015 (a) 2014 (a) 2013 (a) Pre-tax income (loss) from continuing operationsattributable to Harsco shareholders$91,429 $(79,699)(b)$34,846 $8,085 $(199,381)(c)Add: Consolidated Fixed Charges computed below58,515 63,649 62,720 67,181 78,637 Net adjustments for unconsolidated entities93 (5,670) (147) 1,558 (1,511) Net adjustments for capitalized interest187 194 466 (46) 53 Consolidated Earnings Available for FixedCharges$150,224 $(21,526)(b)$97,885 $76,778 $(122,202)(c) Consolidated Fixed Charges: Interest expense per financial statements (d)$47,552 $51,584 $46,804 $47,111 $49,654 Interest expense capitalized— — — 541 577 Portion of rentals (1/3) representing a reasonableapproximation of the interest factor10,963 12,065 15,916 19,529 28,406 Consolidated Fixed Charges$58,515 $63,649 $62,720 $67,181 $78,637 Consolidated Ratio of Earnings to Fixed Charges2.57 —(b) (e)1.56 1.14 —(c)(f)(a)Does not include interest related to uncertain tax position obligations.(b)During 2016, the Company recorded pre-tax charges of $43.5 million related to the sale of the Company's equity interest in Brand; pre-tax chargesof $45.1 million related to an estimated forward loss provision related to the Company's contracts with the federal railway system of Switzerland;and pre-tax charges of $35.3 million loss on early extinguishment of debt.(c)During 2013, the Company recorded a $272.3 million, non-cash pre-tax long-lived asset impairment charge.(d)Includes amortization of debt discount.(e)For the year ended December 31, 2016, the ratio coverage was less than 1:1. We would have needed to generate additional earnings of $85.2 millionto achieve a coverage of 1:1.(f)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.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%AluServ Middle East W.L.L.Bahrain65%Harsco Belgium S.P.R.L.Belgium100%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 (Beijing) Fertiliser Co., LtdChina100%Harsco Metals (Ningbo) Pty. Ltd.China70%Harsco Metals Tangshan Co. Ltd.China100%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 (Tangshan) Metallurgical Materials Technology Co., LtdChina65%Harsco (Tangshan) Renewable Resources Development Co., LtdChina51%Harsco Infrastructure CZ s.r.oCzech Republic100%Czech Slag- Nova Hut s.r.o.Czech Republic65%Harsco Metals CZ s.r.oCzech Republic100%Harsco Metals 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 and Minerals France S.A.S.France100%Harsco France S.A.S.France100%Harsco Metals Germany GmbHGermany100%Harsco Minerals Deutschland GmbHGermany100%Harsco Rail Europe 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 Kong100%Harsco Infrastructure Hong Kong LtdHong Kong100%Harsco India Metals Private LimitedIndia99.99%Harsco India Private Ltd.India91.78%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%Ballagio S.a.r.l.Luxembourg100%Excell Africa Holdings, Ltd.Luxembourg100%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%harsco Metals Kemaman Sdn BhdMalaysia100%Harsco Rail Malaysia 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%Hunnebeck Nederland B.V.Netherlands100%Minerval Metallurgic Additives B.V.Netherlands100%MultiServ Finance B.V.Netherlands100%MultiServ International B.V.Netherlands100%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%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 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%MultiServ Technologies (South Africa) Pty LtdSouth Africa100%Harsco Metals Gesmafesa S.A.Spain100%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%Montanus Industriforvaltning A.B.Sweden100%Harsco Switzerland Finance GmbHSwitzerland100%Harsco Switzerland Holding GmbHSwitzerland100%Harsco Metals (Thailand) Company Ltd.Thailand100%Harsco Metals Turkey Celik Limited SirketyTurkey100%Harsco Sun Demiryolu Ekipmanlari Uretim Ve Ticaret Limited SirketiTurkey51%Tosyali Harsco Geri Kazanim Teknolojileri Anonim SirketiTurkey50% 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 373 LtdU.K.100%Harsco Metals 385 plcU.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%Harsco Track Technologies LtdU.K.100%Mastclimbers LtdU.K.100%MultiServ Investment LimitedU.K.100%MultiServ LimitedU.K.100%MultiServ Logistics LimitedU.K.100%SGB Holdings LimitedU.K.100%SGB Investments Ltd.U.K.100%Short Brothers (Plant) Ltd.U.K.100%Harsco Defense Holding, LLCU.S.A.100%Harsco Financial Holdings Inc.U.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 Metro Rail, 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 Rail, LLCU.S.A.100%Harsco Switzerland Finance GmbH, IncU.S.A.100%Harsco Technologies LLCU.S.A.100%Protran Technology LLCU.S.A.100% HARSCO CORPORATION Exhibit 21Subsidiaries of Registrant Companies in which Harsco Corporation does not exert management control are not consolidated. These companies are listed below as unconsolidatedentities.Company NameCountry of IncorporationOwnershipPercentage P.T. Purna Baja HeckettIndonesia40%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, 333-188448, 333-211203, and 333-217616) of Harsco Corporation of our report dated February 22, 2018 relating to the financial statements,financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K. /s/PricewaterhouseCoopers LLPPhiladelphia, PennsylvaniaFebruary 22, 2018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 22, 2018 /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 22, 2018 /s/ PETER F. MINANPeter F. MinanSenior Vice President and Chief 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, 2017, 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 22, 2018/s/ F. NICHOLAS GRASBERGER, IIIF. Nicholas Grasberger, IIIPresident and Chief Executive Officer/s/ PETER F. MINANPeter F. MinanSenior Vice President and 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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